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MWI Veterinary Supply Inc. Reports Operating Results (10-Q)

February 03, 2011 | About:
10qk

10qk

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MWI Veterinary Supply Inc. (MWIV) filed Quarterly Report for the period ended 2011-02-03.

Mwi Vet Supply has a market cap of $780.2 million; its shares were traded at around $62.65 with a P/E ratio of 23.2 and P/S ratio of 0.6. Mwi Vet Supply had an annual average earning growth of 22.3% over the past 5 years.Mutual Fund and Other Gurus that owns MWIV: Mario Gabelli of GAMCO Investors, Mario Gabelli of GAMCO Investors, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

In the United States, our top ten vendors supplied products that accounted for approximately 71% and 68% of our revenues for the three months ended December 31, 2010 and 2009, respectively, and 71% of our revenues for the fiscal year ended September 30, 2010. Pfizer supplied products that accounted for approximately 26% and 25% of our revenues during the three months ended December 31, 2010 and 2009, respectively, and 25% of our revenues for our fiscal year ended September 30, 2010. Of the Pfizer supplied products, production animal products under a livestock agreement accounted for approximately 14% and 13% of our revenues during the three months ended December 31, 2010 and 2009, respectively, and approximately 12% of our revenues for our fiscal year ended September 30, 2010. Intervet-Schering, a subsidiary of Schering Plough, supplied products that accounted for approximately 11% and 10% of our revenues during the three months ended December 31, 2010 and 2009, respectively, and 10% of our revenues for our fiscal year ended September 30, 2010. Boehringer Ingelheim supplied products that accounted for approximately 9% and 7% of our revenues during the three months ended December 31, 2010 and 2009, respectively, and 10% of our revenues for our fiscal year ended September 30, 2010. Merial, a subsidiary of Sanofi-Aventis, supplies the majority of their products to us under an agency relationship. Commission revenue generated from Merial products accounted for approximately 27% and 53% of total commission revenues during the three months ended December 31, 2010 and 2009, respectively, and 49% of total commission revenues for our fiscal year ended September 30, 2010.

Total Revenues. Total revenues increased 55.1% to $366,174 for the three months ended December 31, 2010, from $236,111 for the three months ended December 31, 2009. Of the 55.1% revenue growth, 28.6% was due to organic growth in the United States and 26.5% or $62,534 was related to the acquisition of Centaur. The growth in organic revenues came from increased business as a result of the bankruptcy and liquidation of a competitor that is no longer in business, a broader product line with new flea, tick and heartworm products, growth from our e-commerce platform and the addition of sales representatives over the past twelve months. The increase in organic revenues during the three months ended December 31, 2010 was partially due to market share gains due to the fact that certain of our existing customers as well as new customers placed additional orders with us because their primary supplier was no longer available to meet their needs. Organic revenues attributable to existing customers represented approximately 51% of the growth in revenues during the three months ended December 31, 2010. Organic revenues attributable to new customers represented approximately 49% of the growth in revenues during the three months ended December 31, 2010. For the purpose of calculating growth rates of new and existing customer revenue, we have defined a new customer as a customer that did not purchase product from us in the corresponding fiscal quarter of the prior year, with the remaining customer base being considered an existing customer. Revenues from new customers for each fiscal quarter are summed to arrive at the estimated year-to-date revenue for new customers. Additionally, the organic growth was partially due to the increase in revenues from the sale of flea, tick and heartworm products that we did not sell in the same period of the prior fiscal year due to our previously exclusive arrangement with Merial. Certain new flea, tick and heartworm products that we now distribute are sold under “buy/sell” arrangements while most flea, tick and heartworm products in the past were sold under an agency agreement. The product sales under a “buy-sell” arrangement results in greater revenue than product sales under an agency arrangement because we recognize product sales under a “buy-sell” arrangement as total sales net of estimated product returns and sales tax, whereas we only recognize commission revenue in product sales under an agency relationship.

Product sales to related party increased by 33.1% to $14,723 for the three months ended December 31, 2010, from $11,058 for the three months ended December 31, 2009. Commissions increased 3.9% to $3,714 for the three months ended December 31, 2010, from $3,574 for the three months ended December 31, 2009. Certain incentives were achieved during the quarter ended December 31, 2009 that were not offered during the quarter ended December 31, 2010. Growth in our gross billings from agency contracts was consistent with our organic growth.

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