Exhibit 99.1
VCA Antech, Inc. Reports First Quarter Results
LOS ANGELES--(BUSINESS WIRE)--April 26, 2006--VCA Antech, Inc.
(NASDAQ:WOOF):
-- Revenue increased 25.3% to $234.2 million
-- Gross profit increased 25.7% to $63.5 million
-- Reported diluted earnings per common share was $0.35
-- Adjusted diluted earnings per common share increased 28.6% to
$0.27
VCA Antech, Inc. (NASDAQ:WOOF), a leading animal healthcare
company in the United States, today reported financial results for the
quarter ended March 31, 2006 as follows: revenue increased 25.3% to a
first quarter record of $234.2 million; gross profit increased 25.7%
to $63.5 million; net income was $29.7 million; and diluted earnings
per common share was $0.35.
The quarter ended March 31, 2006 includes a tax benefit in the
amount of $6.8 million, or $0.08 per diluted common share, due to a
favorable outcome of an income tax audit that resulted in a change to
our estimated tax liabilities. Excluding this item, adjusted net
income for the quarter increased 32.5% to $22.9 million and adjusted
diluted earnings per common share increased 28.6% to $0.27.
Bob Antin, Chairman and CEO, stated, "We had an outstanding first
quarter marked by continued growth in our core businesses. On a 25.3%
increase in consolidated revenue, gross profit increased 25.7% and our
consolidated gross profit margin increased to 27.1% compared to 27.0%
in the first quarter of 2005. Our consolidated operating margin was
19.1% compared to 19.5% in the comparable prior year quarter.
Operating income for the first quarter of 2006 includes a non-cash
compensation charge of $776,000, or 0.3% of consolidated revenue, as a
result of adopting SFAS No. 123R on January 1, 2006.
"We are also pleased to report that our strong cash position and
operating cash flows during the quarter allowed us to voluntarily
prepay $40.0 million of our senior term notes.
"Our laboratory internal revenue growth was 15.2%, generating a
19.6% increase in laboratory gross profit and an increase in
laboratory gross profit margin to 46.4% compared to 44.7% in the
comparable prior year quarter. Our laboratory operating margin
increased to 39.7% compared to 38.4% in the comparable prior year
quarter.
"Our consolidated animal hospital revenue increased 27.9% to
$170.5 million. We saw improvements in the performance of those animal
hospitals that we have operated for more than one year. We experienced
animal hospital same-store revenue growth, adjusted for one additional
business day, of 5.3% and animal hospital same-store gross profit
margin increased to 19.8% from 19.5% in the comparable prior year
period. We continue to experience lower gross profit margins on animal
hospitals acquired within the last year, including Pet's Choice, Inc.
(acquired on July 1, 2005), resulting in a consolidated animal
hospital gross profit margin of 19.1% for the first quarter of 2006 as
compared to 19.3% in the comparable period in 2005. Our consolidated
animal hospital operating margin for the first quarter of 2006 was
16.4% compared to 16.5% in the comparable prior year quarter. The
consolidated animal hospital operating income for the first quarter of
2006 includes a non-cash compensation charge of $215,000 as a result
of adopting SFAS No. 123R.
"Our medical technology revenue increased 78.2% to $8.0 million,
resulting in an increase in gross profit margin to 31.3% compared to
23.2% in the comparable prior year quarter. Our medical technology
segment reported an operating loss of $149,000 compared to an
operating loss of $528,000 reported in the first quarter of 2005."
Non-GAAP Financial Measures
We believe investors' understanding of our total performance is
enhanced by disclosing adjusted net income and adjusted diluted
earnings per common share. We define adjusted net income and adjusted
diluted earnings per common share as the reported items, adjusted to
exclude certain significant items. Adjusted diluted earnings per
common share is adjusted net income divided by diluted common shares
outstanding.
Management uses adjusted net income and adjusted diluted earnings
per common share because they exclude the effect of significant items
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. For the first quarter of 2006, the
only item excluded in computing adjusted net income and adjusted
diluted earnings per common share was the $6.8 million tax benefit
recorded during that period. No items were excluded for the comparable
quarter in 2005.
There is a material limitation associated with the use of these
non-GAAP financial measures: our computation of adjusted net income
excludes the impact of these excluded items and as a result, our
computation of 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 first quarter 2006 financial results
during a conference call today, April 26, 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 800-289-0544. 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. 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 our recent acquisitions,
including Pet's Choice, Inc., and our ability to effectively manage
our growth and achieve operating synergies; a continued decline in
demand for some of our products and services; any disruption in our
information technology systems or transportation networks; the effects
of competition; any impairment in the carrying value of our goodwill;
changes in prevailing interest rates; our ability to service our debt;
and general economic conditions. These and other risk factors are
discussed in our Report on Form 10-K for the year ended December 31,
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 Income Statements
For the Three Months Ended March 31, 2006 and 2005
(Unaudited -- In Thousands, Except Per Share Amounts)
Three Months
Ended March 31,
--------------------------------
2006 2005
--------------- --------------
Revenue:
Laboratory $ 61,537 $ 53,439
Animal hospital 170,523 133,354
Medical technology 7,992 4,484
Intercompany (5,872) (4,414)
--------------- --------------
234,180 186,863
--------------- --------------
Direct costs 170,659 136,336
Gross profit:
Laboratory 28,550 23,869
Animal hospital 32,597 25,735
Medical technology 2,502 1,039
Intercompany (128) (116)
--------------- --------------
63,521 50,527
--------------- --------------
Selling, general and administrative:
Laboratory 4,094 3,365
Animal hospital 4,823 3,703
Medical technology 2,651 1,567
Corporate 7,317 5,497
--------------- --------------
18,885 14,132
--------------- --------------
Gain on sale of assets (118) (10)
--------------- --------------
Operating income 44,754 36,405
Interest expense, net 6,312 6,667
Other (income) expense (66) 64
Minority interest expense 774 685
--------------- --------------
Income before provision for income
taxes 37,734 28,989
Provision for income taxes 8,075 11,743
--------------- --------------
Net income $ 29,659 $ 17,246
=============== ==============
Diluted earnings per common share $ 0.35 $ 0.21
=============== ==============
Shares used for computing diluted
earnings per common share 84,583 83,511
=============== ==============
VCA Antech, Inc.
Supplemental Operating Data
For the Three Months Ended March 31, 2006 and 2005
(Unaudited -- In Thousands, Except Per Share Amounts)
Three Months
Ended March 31,
--------------------------------
2006 2005
--------------- --------------
Table #1
Reconciliation of net income to
adjusted net income
Net income $ 29,659 $ 17,246
Certain significant item:
Tax benefit (6,806) -
--------------- --------------
Adjusted net income $ 22,853 $ 17,246
=============== ==============
Table #2
Reconciliation of diluted earnings
per common share to adjusted diluted
earnings per common share
Diluted earnings per common share $ 0.35 $ 0.21
Certain significant item as detailed
in Table #1 (0.08) -
--------------- --------------
Adjusted diluted earnings per common
share $ 0.27 $ 0.21
=============== ==============
Shares used for computing adjusted
diluted earnings per common share 84,583 83,511
=============== ==============
Table #3
Depreciation and amortization
Depreciation and amortization
included in direct costs:
Laboratory $ 1,057 $ 887
Animal hospital 3,506 2,726
Medical technology 318 278
Intercompany (31) -
--------------- --------------
4,850 3,891
--------------- --------------
Depreciation and amortization
included in selling, general and
administrative expense 572 451
--------------- --------------
Total depreciation and amortization $ 5,422 $ 4,342
=============== ==============
VCA Antech, Inc.
Supplemental Operating Data - Continued
As of March 31, 2006 and December 31, 2005
(Unaudited - In Thousands)
March 31, December 31,
2006 2005
--------------- --------------
Table #4
Selected consolidated balance sheet
data
Cash $ 32,180 $ 58,488
Accounts receivable, net $ 36,773 $ 36,104
Stockholders' equity $ 341,437 $ 308,751
Total assets $ 886,193 $ 897,073
Debt:
Revolving credit facility $ - $ -
Senior term notes 395,563 436,613
Other debt and capital leases 19,150 16,099
--------------- --------------
Total debt $ 414,713 $ 452,712
=============== ==============
For the Three Months Ended March 31, 2006 and 2005
(Unaudited -- In Thousands)
For the Three Months
Ended March 31,
--------------------------------
2006 2005
--------------- --------------
Table #5
Selected cash flow and expense data
Net cash provided by operating
activities $ 38,477 $ 35,368
Rent expense $ 7,690 $ 6,052
Capital expenditures $ 7,860 $ 7,209
CONTACT: VCA Antech, Inc.
Tom Fuller, 310-571-6505