Animal Health International, Inc. (AHII)
F3Q10 (Qtr End 03/31/10) Earnings Call Transcript
May 4, 2010 10:00 am ET
James Robison – Chairman, President and CEO
Bill Lacey – SVP and CFO
Mark Arnold – Piper Jaffray
Alfred Raymond [ph] – JP Morgan Chase
Ravi Fadah [ph] – William Blair
Andy Cash – Point Clear Value Management
Jason Bernard – Robert W. Baird
Alan Weber – Robotti & Company
Previous Statements by AHII
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Greetings and welcome to the Animal Health International third quarter 2010 conference call and webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. James Robison, Chief Executive Officer for Animal Health International. Thank you, Mr. Robison. You may begin.
Hi. Good morning. I’m Jim Robison, President and CEO, Animal Health International. With me this morning is Bill Lacey, our Chief Financial Officer. Bill will review the results for Q3 of our fiscal year, also our year-to-date results. I will then make brief comments and then we’ll open up for questions. Bill?
Thanks Jim. Before we begin, I'd like to point out that today's conference call is being recorded and will be available for replay on our webpage at ahii.com under Investor Relations. In addition, I'd like to remind everyone that some of the information discussed on this call, particularly our guidance for fiscal year 2010, our competitive position, future business prospects, revenue growth and market opportunities for the current fiscal year contain forward-looking statements that involve risk and uncertainty. These statements are based on current expectations. Actual results may differ materially from those set forth in such statements. Additional information concerning risk and other factors that may cause actual results to differ can be found in the company's filings with the SEC.
Please note that in addition to reporting financial results in accordance with generally accepted accounting principles or GAAP, AHI reports certain non-GAAP financial results, including EBITDA. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which can be found in the press release.
Finally, AHI has provided in its earnings release and will provide in this conference call forward-looking guidance. We will not provide any further guidance or updates on our performance during the year unless we do so in a public forum. AHI does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they're made.
I will then provide you with financial results of our third quarter of fiscal year 2010. Net sales compared to last year increased 9.4%. Net sales for the quarter were $165.1 million compared to $150.9 million for the same period last year.
Gross margin increased $2 million, with $2.4 million due to sales volume. Margins in the third quarter were 16.6% of net sales compared to 16.8% in the third quarter last year. SG&A expenses were 13.7% of sales compared to 14.3% last year. SG&A expenses were $22.6 million, compared to $22.2 million last year.
The EBITDA increased 39.4% over the third quarter last year. EBITDA was $5.1 million which is an increase of $1.4 million from the year earlier quarter, $3.7 million. Net income for the third quarter was $0.1 million compared to the third quarter last year, net loss of $0.3 million.
Fully diluted earnings per share were 0, versus $0.01 loss last year. Earnings per share without amortization or cash basis, EPS was $0.05 per share. Net income included a $0.4 million non-recurring non-cash charge, foreign currency exchange due to the early retirement of debt in Canada and a $0.6 million non-charge for the unamortized cost associated with unwinding interest rate swap.
The after tax effect was $0.7 million or $0.03 per share. Earnings per share without amortization over these non-tax non-recurring charges was $0.08 per share. I will discuss we sell it for the year-to-date. Net sales for the year-to-date were $496.9 million compared to $504.4 million for the same period last year.
Gross margin declined $5.2 million with $1.3 million due to lower sales volume and $4.4 million due to reduced profitability with one of our suppliers. Margins for the year to date were 16.6% of net sales, compared to 17.4% last year.
SG&A expenses declined $3.3 million from last year as a result of lower variable selling expense and cost reductions, partially offset by an accrual of $0.4 million for the final settlement and costs associated with a legal dispute. EBITDA for the year-to-date is $14.7 million which was a decrease of $2.6 million from last year, same quarter – excuse me – year-to-date.
Excluding the one-time legal settlement, EBITDA was $15.1 million down $2.2 million from last year. Net income for the year-to-date was $0.6 million compared to last year’s net income of $2.2 million. Fully diluted earnings per share were $0.02 versus $0.09 last year. Earnings per share without amortization or cash basis EPS was $0.16 for the first nine months.
Net income included – for the year-to-date included a $0.4 million non-recurring non-cash charge for foreign currency exchange due to the debt retirement in Canada as we discussed earlier and $1.3 million non-cash charge for the unamortized cost associated with unwinding interest rate swap.