Exhibit 99.1
VCA Antech, Inc. Reports Fourth Quarter Results
LOS ANGELES--(BUSINESS WIRE)--Feb. 21, 2006--VCA Antech, Inc.
(NASDAQ:WOOF):
-- Fourth quarter diluted earnings per common share increased
25.0% to $0.20
-- Fourth quarter revenue increased 23.0% to $217.0 million
Our company, VCA Antech, Inc. (NASDAQ:WOOF), a leading animal
healthcare company in the United States, today reported financial
results for its fourth quarter ended December 31, 2005, as follows:
revenue increased 23.0% to $217.0 million; operating income increased
13.2% to $33.3 million; net income increased 28.0% to $17.1 million;
and diluted earnings per common share increased 25.0% to $0.20. Our
tax provision for the quarter ended December 31, 2005, reflects an
adjustment relating to prior periods of approximately $1.3 million
that is a result of a decrease in our state statutory tax rate.
We also reported our financial results for the year ended December
31, 2005 as follows: revenue increased 24.6% to $839.7 million;
operating income increased 17.8% to $159.2 million; reported net
income was $67.8 million; and reported diluted earnings per common
share was $0.81. Reported net income and reported diluted earnings per
common share for the year ended December 31, 2005 included an
after-tax charge of $11.7 million, or $0.14 per diluted common share,
for debt retirement costs related to the refinancing of our senior
term notes and the repurchase of our 9.875% senior subordinated notes.
Reported net income and reported diluted earnings per common share for
the year ended December 31, 2004 included an after-tax credit for
certain significant items in the net amount of $605,000. Excluding
these items from the years ended December 31, 2005 and 2004, adjusted
net income increased 26.3% to $79.5 million and adjusted diluted
earnings per common share increased 25.0% to $0.95.
Bob Antin, Chairman and CEO, stated, "We had another strong
quarter marked by continued growth in our core businesses. Our
laboratory internal revenue growth for the fourth quarter of 2005 was
10.6%, generating a 12.3% increase in laboratory gross profit and an
increase in laboratory gross profit margins to 42.0% compared to 41.4%
in the comparable prior year quarter. Our laboratory operating margins
increased to 35.2% compared to 34.9% in the fourth quarter of 2004.
"Our continued effort to integrate recent acquisitions is
proceeding well and the operating results for our animal hospital
segment were in line with our expectations. Our consolidated animal
hospital revenue for the fourth quarter of 2005 grew 26.5%, generating
a 21.0% increase in animal hospital gross profit, reflecting a gross
profit margin of 16.7% compared to 17.4% in the comparable prior year
quarter. Our animal hospital same-store revenue growth for the fourth
quarter of 2005, adjusted for one additional business day, was 4.4%
and our same-store gross profit margins were 17.4% compared to 17.6%
in the comparable prior year quarter. Our consolidated animal hospital
operating margins for the fourth quarter of 2005 were 13.5% compared
to 14.6% in the comparable prior year quarter.
"Our medical technology segment revenue grew 62.4% in the fourth
quarter to $9.9 million. Operating income for the fourth quarter was
$284,000. We are excited by the sales growth and the positive
acceptance of our products in the veterinary profession."
Non-GAAP Financial Measures
We believe investors' understanding of our total performance is
enhanced by disclosing adjusted operating income, adjusted operating
margin, adjusted net income and adjusted diluted earnings per common
share. We define adjusted net income, adjusted operating income,
adjusted operating margin and adjusted diluted earnings per common
share as the reported items, adjusted to exclude certain significant
items. For the periods presented in this press release, the only
significant item that was excluded from adjusted operating income and
adjusted operating margin was a litigation settlement reimbursement
recognized during the first quarter of 2004 as a result of the Company
settling a claim with its insurance company. The only significant
items excluded from adjusted net income were the litigation settlement
reimbursement recognized during the first quarter of 2004, debt
retirement costs incurred during the second and fourth quarters of
2004, and debt retirement costs incurred during the second quarter of
2005. Adjusted diluted earnings per common share is adjusted net
income divided by diluted common shares outstanding.
Management uses adjusted operating income, adjusted operating
margin, adjusted net income and adjusted diluted earnings per common
share because they exclude the effect of the litigation settlement
reimbursement and debt retirement costs and related expenses that we
believe are not representative of our core operations for the periods
presented. As a result, these non-GAAP financial measures help to
provide meaningful comparisons of our overall performance from one
reporting period to another and meaningful assessments of our future
performance and related trends.
There is a material limitation associated with the use of these
non-GAAP financial measures: adjusted operating income and adjusted
operating margin exclude the impact of significant items (in this
case, the litigation settlement reimbursement) on current performance;
and adjusted net income excludes the impact of significant items (in
this case, the litigation settlement reimbursement and debt retirement
costs and related expenses) on current performance; and adjusted
diluted earnings per common share does not depict diluted earnings per
common share in accordance with GAAP.
To compensate for the limitations in the non-GAAP financial
measures discussed above, our disclosures provide a complete
understanding of all adjustments found in non-GAAP financial measures,
and we reconcile the non-GAAP financial measures to the GAAP financial
measures in the attached financial schedules titled "Supplemental
Operating Data."
Conference Call
We will discuss our company's fourth quarter 2005 financial
results during a conference call today, February 21, 2006 at 4:30 p.m.
Eastern Time. You can access a live broadcast of the call by visiting
our website at http://investor.vcaantech.com. You can also access the
call via telephone by dialing (800) 289-0496. Interested parties
should call at least 10 minutes prior to the start of the call to
register.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including our statement regarding continued growth in our core
businesses and our expectations regarding our acquisition of Pet's
Choice, Inc. Among the important factors that could cause actual
results to differ are: a material adverse change in our financial
condition or operations; the rate of our laboratory internal revenue
growth and animal hospital same-store revenue growth; the level of
direct costs and our ability to maintain revenue at a level necessary
to maintain expected operating margins; the level of selling, general
and administrative costs; the effects of competition; any impairment
in the carrying value of our goodwill; the effects of our recent
acquisitions, including Pet's Choice, Inc., and our ability to
effectively manage our growth and achieve operating synergies; changes
in prevailing interest rates; our ability to service our debt; and
general economic conditions. These and other risk factors are
discussed in our periodic reports filed with the SEC, including our
Report on Form 10-K for the year ended December 31, 2004 and our
periodic Report on Form 10-Q for the quarter ended September 30, 2005,
and the reader is directed to these statements for a further
discussion of important factors that could cause actual results to
differ materially from those in the forward-looking statements.
We own, operate and manage the largest networks of freestanding
veterinary hospitals and veterinary-exclusive clinical laboratories in
the country, and we supply ultrasound and digital radiography
equipment to the veterinary industry.
VCA Antech, Inc.
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2005 and 2004
(Unaudited - In Thousands, Except Per Share Amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
------------------ -------------------
2005 2004 2005 2004
--------- -------- --------- ---------
Revenue:
Laboratory $53,793 $48,623 $222,064 $200,441
Animal hospital 158,437 125,284 607,565 481,023
Medical technology 9,893 6,090 30,330 6,090
Intercompany (5,146) (3,557) (20,293) (13,465)
--------- -------- --------- ---------
216,977 176,440 839,666 674,089
--------- -------- --------- ---------
Direct costs 165,016 132,254 613,799 490,558
Gross profit:
Laboratory 22,602 20,130 98,926 87,780
Animal hospital 26,443 21,851 118,239 93,546
Medical technology 3,022 2,205 9,433 2,205
Intercompany (106) - (731) -
--------- -------- --------- ---------
51,961 44,186 225,867 183,531
--------- -------- --------- ---------
Selling, general and
administrative:
Laboratory 3,646 3,161 13,993 12,660
Animal hospital 4,642 3,534 16,224 12,761
Medical technology 2,738 1,842 9,033 1,842
Corporate 7,216 6,217 26,935 20,994
--------- -------- --------- ---------
18,242 14,754 66,185 48,257
--------- -------- --------- ---------
Write-down and loss on sale of
assets 414 5 441 59
--------- -------- --------- ---------
Operating income 33,305 29,427 159,241 135,215
Interest expense, net 6,261 6,780 25,043 25,492
Other income 123 153 122 338
Minority interest expense 800 641 3,109 2,558
Debt retirement costs - 70 19,282 880
--------- -------- --------- ---------
Income before provision for
income taxes 26,367 22,089 111,929 106,623
Provision for income taxes 9,316 8,772 44,113 43,051
--------- -------- --------- ---------
Net income $17,051 $13,317 $67,816 $63,572
========= ======== ========= =========
Diluted earnings per common
share $0.20 $0.16 $0.81 $0.76
========= ======== ========= =========
Shares used for computing
diluted earnings per common
share 84,369 83,541 83,996 83,361
========= ======== ========= =========
VCA Antech, Inc.
Supplemental Operating Data
For the Three and Twelve Months Ended December 31, 2005 and 2004
(Unaudited - In Thousands, Except Per Share Amounts)
Table #1 Three Months Twelve Months
Reconciliation of net income Ended December 31, Ended December 31,
to adjusted net income ------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net income $17,051 $13,317 $67,816 $63,572
Certain significant items:
Debt retirement costs - 70 19,282 880
Litigation settlement
reimbursement - - - (1,124)
Related income tax benefit - (29) (7,578) (361)
--------- --------- --------- ---------
- 41 11,704 (605)
--------- --------- --------- ---------
Adjusted net income $17,051 $13,358 $79,520 $62,967
========= ========= ========= =========
Table #2
Reconciliation of diluted
earnings per common share to
adjusted diluted earnings per
common share
Diluted earnings per common
share $0.20 $0.16 $0.81 $0.76
Certain significant items as
detailed in Table #1, net of
income tax benefit - - 0.14 -
--------- --------- --------- ---------
Adjusted diluted earnings per
common share $0.20 $0.16 $0.95 $0.76
========= ========= ========= =========
Shares used for computing
adjusted diluted earnings per
common share 84,369 83,541 83,996 83,361
========= ========= ========= =========
Table #3
Reconciliation of operating
income to adjusted operating
income and operating margin
to adjusted operating margin
Revenue $216,977 $176,440 $839,666 $674,089
========= ========= ========= =========
Operating income $33,305 $29,427 $159,241 $135,215
Operating margin 15.3% 16.7% 19.0% 20.1%
Certain significant items:
Litigation settlement
reimbursement - - - (1,124)
--------- --------- --------- ---------
Adjusted operating income $33,305 $29,427 $159,241 $134,091
========= ========= ========= =========
Adjusted operating margin 15.3% 16.7% 19.0% 19.9%
VCA Antech, Inc.
Supplemental Operating Data - Continued
For the Three and Twelve Months Ended December 31, 2005 and 2004
(Unaudited - In Thousands)
Three Months Twelve Months
Table #4 Ended December 31, Ended December 31,
------------------- ------------------
Depreciation and amortization 2005 2004 2005 2004
--------- --------- -------- ---------
Depreciation and amortization
included in direct costs:
Laboratory $1,134 $899 $3,894 $3,426
Animal hospital 3,404 2,827 12,381 10,446
Medical technology 284 270 1,116 270
Intercompany (28) - (64) -
--------- --------- -------- ---------
4,794 3,996 17,327 14,142
Depreciation and amortization
included in selling, general
and administrative expense: 594 412 2,008 1,673
--------- --------- -------- ---------
Total depreciation and
amortization $5,388 $4,408 $19,335 $15,815
========= ========= ======== =========
As of December 31, 2005 and 2004
(Unaudited - In Thousands)
Table #5 December 31,
-------------------
Selected consolidated balance
sheet data 2005 2004
--------- ---------
Cash $58,488 $30,964
Accounts receivable, net $36,104 $28,936
Stockholders' equity $309,512 $232,759
Total assets $897,073 $742,100
Debt:
Revolving credit facility $- $-
Senior term notes 436,613 223,313
9.875% senior subordinated
notes - 170,000
Other debt and capital leases 16,099 3,576
--------- ---------
Total debt $452,712 $396,889
========= =========
VCA Antech, Inc.
Supplemental Operating Data - Continued
For the Twelve Months Ended December 31, 2005 and 2004
(Unaudited - In Thousands)
For the Twelve Months
Table #6 Ended December 31,
---------------------
Selected cash flow and expense data 2005 2004
---------- ----------
Net cash provided by operating activities $115,100 $86,359
Rent expense $27,531 $21,137
Capital expenditures $29,209 $23,954
CONTACT: VCA Antech, Inc.
Tomas Fuller, 310-571-6505