Importance of Leadership in a 5-Star Company
The management team is a major driver of the success of the company. Stanley Bergman, who has a background in accounting, is the chairman and CEO. He has been with the company for 32 years. He worked his way up the corporate ladder from being the vice president of finance for five years then four years as executive vice president. Since 1989 he has been the CEO of Henry Schein. James Breslawski, an accountant, is president and CEO of Henry Schein Global, and has been with the company for 32 years.
Steven Paladino, CFO, has been with the company for 20 years. Mark Mlotek, CSO and has been with the company for 17 years. Stanley Komaroff has been with the company for 10 years, and was the attorney for the law firm that represented Henry Schein for many years. Now he is a senior adviser and a member of the company’s executive management committee. He concentrates on business development, acquisitions, international matters and legal matters.
This unique management team has been involved with the company for many decades. The corporate and cultural memory of the leaders in this company is an important asset. They are increasing the net income of the company year after year by using acquisitions. The management team has a history of increasing net income and earnings per share year after year.
Buffet-Munger considers this an undervalued company based on its P/E ratio. There are 11 gurus that have a position in the stock. For the last 10 years revenue growth has been 10%. The EBITDA growth for the last 10 years is 13.4%. Free cash flow growth for the last 10 years has been 17.2%. Book value growth for the last 10 years has been 13.3%. Due to do to acquisitions free cash flow growth for the last 12 months has been 3.9% and book value growth for the last 12 months has been 3.1.
Henry Schein relies on acquisition growth. In the past eight years they have acquired over 50 companies. Seven of these acquisitions were in 2012.
In 2011 they acquired Provet Holdings a veterinary products distributor in Australia. They also acquired Alpha Scientific a surgical, pharmaceutical and laboratory products distributor. The acquisition of AUV from the Netherlands distributes products to 2000 large and small animal veterinarians. AUV also has a consulting business serving veterinary practices. C&M Vetlink, located in Ireland, was recently acquired. These acquisitions help the company to expand its international footprint to grow across a new geographic area to distribute at all products.
Micro MD is a recent acquisition from Canada which promotes patient communications and care coordination within medical offices. It helps the practices to become cost-effective, use electronic medical records EMR, data backup, electronic patient payments and inpatient communications. This acquisition will help the company grow due to the aging population and to comply with government regulations.
Qualitative analysis shows the quality of the board members and key executives. The company has strong top line growth through acquisitions and due to the long-term management team. Most of them have a stake in keeping the company growing and profitable, since the company went public in Nov. 8, 1995.
I am building a 3% position in stock for each 100,000.00% of capital. I will buy 1% at $84.70, 1% at $82.25 and 1% at $79.60 all will be GTC limit orders.
Donald R. Berger, D.D.S., F.A.A.P. I attended the University of Bridgeport for three years, and was accepted to Temple University School of Dentistry and graduated in 1972. I served in the United States Army for two years. I did a pediatric dental residency for two years at Temple University School of Dentistry and St. Christopher’s Hospital for Children. In 1983, I became a Diplomate, American Board of Pediatric Dentistry. Starting in 2000 I mentored with a professional trader for numerous years. I became a registered investment advisor in Pennsylvania; I provide advisory services to individuals, corporations and institutions.
Website: http://www.Dberger.org Email: donald@Dberger.org