VCA Antech, Inc. (WOOF) Q2 2010 Earnings Conference Call July 22, 2010 4:30 PM ET Executives Tom Fuller – CFO and VP Bob Antin – Chairman, President and CEO Analysts Ryan Daniels – William Blair & Company Mark Arnold – Piper Jaffray Dawn Brock – Kaufman Brothers Rob Mains – Morgan Keegan Maggie (ph) – SunTrust Robinson Mitra Ramgopal – Sidoti Presentation Operator
I would now like to turn the conference over to our host for today, Mr. Tom Fuller, CFO.Tom Fuller Thank you, Karen, and thank you all for joining us for the second quarter 2010 WOOF earnings call. Today we reported second quarter earnings of $0.44 per diluted share. In the second quarter of 2009 we reported $0.44 per share, but that included a %0.04 charge for writing of something developed software, $5.3 million pretax charge, $0.94 per share on adjusted basis we approved last year, $0.48 per share compared to $0.44 per diluted share in this year's quarter. Our consolidated revenues for the quarter were up 2.6% to 354 million. Adjusted operating income decreased 9.8% and adjusted operating margins decreased 260 basis points to 18.9%. The adjusted refers to prior numbers only as I mentioned above we had a $5.3 million charge to the software for the share. There are no adjustments in the current year quarter. The decrease in adjusted operating income and operating margins all came in all three segments. Hospital margins were down 200 basis points, Lab margins down 160 basis points and MedTech down 460 basis points. That's surprising given the state of the economy; we continue to see pressure on our internal growth rates. Hospital sales revenue was down 2% and Laboratory internal growth was down 0.5%. I used declines and revenue put pressure on our consolidated operating income and margins. Adjusted operating income was down 7.3 million. However this decrease was offset pricely by a $3 million reduction in interest expense and as report it was down $0.4 per share compared to $0.44 in the prior year. As I mentioned our growth rates relative to prior quarters were down slightly but our characterizing is stable. -0.5% decline internal growth in the lab there be 0.2% increase in the second quarter, so basically flat. Hospitals were down 2% compared to 1.6% so there is a small decline and fairly stable. In the Antech division, total revenues increased 0.2%, $83 million due to an acquisition. Internal growth in Antech was -0.5% and on that operating income was down 2.9% and margins were down 160 basis points to 41%.
In terms of the growth – components of the growth a 2.3% increase in average requisition to $23.22 was offset by a 2.8% decline. The number of requisitions at 3,563,000, this decline is due to the slow up of the economy on our volumes. Total requisitions for the quarter was 3,573,000. In terms of our lab facilities, we added one lab in the quarter so we ended the quarter with 48 laboratories, including four in Canada and 44 domestically.In Household division revenues increased 2.4% to 267.6 million, all that coming from acquisitions. Our sales revenue was down 2%. Gross cover margins decreased 7.7% and gross profit margins declined 200 basis points, 15.3% and most of that decline came in in our same-store margins which declined 180 basis points down to 18.6%. You'll recall that we held margins really well to the third quarter of 2009 mostly through cutting labor cost. You'll also recall each quarter went by we suggested it'll be more, more difficult to cut labor and cut expenses and hold margin. I think we saw that in the second quarter where we lost 180 basis points on same-store growth with 2%. Read the rest of this transcript for free on seekingalpha.com