Animal Health International, Inc. Announces Its Second Quarter of Fiscal Year 2009 Earnings

Thursday, February 05, 2009 6:30 AM

WESTLAKE, Texas, Feb. 5, 2009 (GLOBE NEWSWIRE) -- Animal Health International, Inc. (Nasdaq:AHII) announced today that net sales declined 9.2%, or $18.7 million, to $184.5 million for the three months ended December 31, 2008, compared to $203.2 million for the same quarter last year. Net income was $2.3 million or $0.09 per fully diluted share. Last year, net income for the second quarter was $5.5 million or $0.23 per fully diluted share.


 * The decrease in net sales was primarily attributable to lower
   spending by production animal customers whose profits have been
   constrained by fluctuating commodity prices and the general
   economic slowdown.
 * Gross margin declined $7.6 million with $7.0 million due to lower
   rebates from vendors. Transactional margins increased $2.6 million.
   Margins declined $3.3 million due to lower sales volume. Margins in
   the second quarter were 17.5% of net sales compared to 19.6% last
   year.
 * SG&A expenses declined $1.9 million from last year as a result of
   lower variable selling expense as well as lower bonus and severance
   expense.
 * Earnings before interest, tax, depreciation and amortization
   (EBITDA) for the quarter was $8.1 million, a decrease of $5.8
   million when compared to the same period last year.

Year to date net sales declined 3.8%, or $14.1 million, to $353.5 million. Net income was $2.6 million or $0.10 per fully diluted share. Last year the net income for the year to date was $6.6 million or $0.27 per fully diluted share.


 * Gross margin declined $6.0 million with $6.3 million due to lower
   rebates from vendors. Transactional margins increased $2.4 million.
   The decline in organic sales volume resulted in a $4.5 million
   decline in gross margin, but was offset $2.7 million by margin
   generated in the first quarter by Kane Vet Supplies. Last year
   reflected only second quarter operations for Kane, as it was
   acquired in October 2007. Margins in the six months were 17.7% of
   net sales compared to 18.6% last year.
 * SG&A expenses increased $0.8 million from last year. Kane, acquired
   in October 2007, contributed $2.1 million to the increase in SG&A
   this year. Professional fees, severance and bonuses were down
   $1.3 million for the year to date.
 * Earnings before interest, tax, depreciation and amortization
   (EBITDA) for the first half was $13.0 million, a decrease of
   $6.9 million when compared to the same period last year.

"Results are inline with our revised earnings forecast. During the quarter we improved our transactional margins, reduced our operating expenses positioned our company to return to growth as protein markets improve," commented Jim Robison, President and Chief Executive Officer.

Fiscal Year 2009 Guidance

The following statements are based on current information and the Company assumes no obligation to update them. These statements are forward-looking and inherently uncertain.

The Company confirms its guidance for fiscal year 2009. Net sales for fiscal year 2009 are expected to be in the range of $650 to $680 million. EBITDA is estimated to be in the range of $29.0 to $33.0 million, and its net income for its fiscal year to be in the range of $7.3 to $9.3 million. This excludes any projections of future acquisitions.

At December 31, 2008 the Company's availability under its Revolver totaled $31.4 million, and the Company believes that it has sufficient liquidity in its line of credit to conduct its operations in the normal course for the next twelve months. The Company is in compliance with all of its financial covenants and expects to remain so for the next twelve months.

Conference Call

The Company plans to host its investor conference call today at 10:00 a.m. Eastern Standard Time to discuss these results and its business outlook. You can access the conference call by dialing 877-407-0778. Participants will be required to register their name and company affiliation for the conference call. Audio replay will be made available by accessing the Company's web site at www.ahii.com under the Investor Relations tab.

Use of Non-GAAP measures

EBITDA represents net income before interest expense, income tax expense, depreciation and amortization and acquisition costs. We present EBITDA as a supplemental performance measure because we believe it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), the age and book depreciation of fixed assets (affecting relative depreciation expense) and the impact of purchase accounting.

Related Stories