VCA Inc. (NASDAQ:WOOF), a leading animal
healthcare company in the United States and Canada, today reported
financial results for the fourth quarter ended December 31, 2016,
as follows: revenue increased 20.5% to a fourth quarter record of
$643.1 million; gross profit increased 14.5% to $134.8 million;
operating income increased 16.3% to $77.2 million; net income
decreased 36.0% to $40.7 million; diluted earnings per common share
decreased 35.9% to $0.50; and Non-GAAP diluted earnings per common
share increased 16.0% to $0.58.
Our results for the prior-year quarter included a gain of $43.3
million, $26.4 million net of tax, or $0.32 per diluted common
share related to the sale of our Vetstreet business. Excluding this
item and acquisition-related amortization expense, our Non-GAAP net
income increased 15.7% to $47.4 million and Non-GAAP diluted
earnings per share increased 16.0% to $0.58.
We also reported our financial results for the twelve months
ended December 31, 2016 as follows: revenue increased 18.0% to $2.5
billion; gross profit increased 16.1% to $592.1 million; operating
income increased 17.2% to $386.3 million; net income decreased 0.9%
to $209.2 million; and diluted earnings per common share remained
flat at $2.56. Our financial results for the twelve months ended
December 31, 2016, on a Non-GAAP basis, are as follows: gross
profit increased 17.5% to $626.8 million; operating income
increased 22.8% to $428.2 million; net income increased 20.4% to
$236.3 million; and Non-GAAP diluted earnings per common share
increased 21.4% to $2.89.
Our financial results for the twelve months ended December 31,
2015 included the aforementioned gain on the sale of our Vetstreet
business and a business interruption insurance gain of $4.5
million, $2.8 million net of tax, or $0.03 per diluted common
share.
Bob Antin, Chairman and CEO, stated, “We had a strong fourth
quarter, which concluded another excellent year. We
experienced solid organic revenue growth of 4.9% and 5.3% in our
core Animal Hospital and Laboratory business segments,
respectively.
“Animal Hospital revenue in the fourth quarter of 2016 increased
26.2% to $539.4 million driven by acquisitions made in the past
twelve months and same-store revenue growth of 4.9%. Our
same-store gross profit margin increased to 15.4%, from 14.3% and
our total gross margin increased to 14.4% from 14.2% in the
prior-year quarter. During the quarter, we acquired 22 independent
animal hospitals, which had historical combined annual revenue of
$73.1 million, bringing our year-to-date total (including CAPNA) to
127 independent animal hospitals with historical combined annual
revenue of $397.0 million.
“Our Laboratory internal revenue in the fourth quarter of 2016
increased 5.3% to $98.4 million driven by an increase in average
revenue per requisition of 4.3%. Laboratory gross profit margin
decreased slightly to 48.5% from 48.8% and Non-GAAP Laboratory
operating margin increased to 39.1% from 38.4%.”
Non-GAAP Financial Measures
We believe investors’ understanding of our total performance is
enhanced by disclosing Non-GAAP financial measures including
Non-GAAP net income, Non-GAAP gross profit, Non-GAAP operating
income and Non-GAAP diluted earnings per common share. We define
these adjusted measures as the reported amounts, adjusted to
exclude certain significant items and amortization of intangibles
acquired in acquisitions.
Management believes these adjusted measures are useful to
management and investors in evaluating the Company's operational
performance and their use provides an additional tool for
evaluating the Company's operating results and trends. 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 related
trends.
There is a material limitation associated with the use of these
Non-GAAP financial measures: our adjusted measures exclude the
impact of these significant 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.”
As previously announced on January 9, 2017, we entered into an
Agreement and Plan of Merger with Mars, Incorporated (“Mars”) under
which Mars will acquire all of the outstanding shares of VCA for
$93 per share, or a total value of approximately $9.1 billion,
including $1.4 billion in outstanding debt. The Boards of
Directors of both companies have approved the transaction, which is
subject to certain customary closing conditions including, among
other things, VCA shareholder approval and customary regulatory
approvals. We expect the transaction to close in Q3 2017.
Conference Call and Webcast
In light of the previously announced agreement with Mars, the
previously scheduled earnings conference call and webcast with
analysts and investors scheduled for February 9, 2017 has been
cancelled. VCA does not intend to provide guidance for fiscal
2017.
Forward-Looking Statements
This document contains forward-looking statements within the
meaning of the securities laws with respect to the proposed
transaction between VCA Inc. (the “Company”), Mars and certain
subsidiaries of Mars. We have included herein statements that
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. We generally
identify forward-looking statements in this document using words
like “believe,” “intend,” “expect,” “estimate,” “may,” “plan,”
“should,” “could,” “forecast,” “looking ahead,” “possible,” “will,”
“project,” “contemplate,” “anticipate,” “predict,” “potential,”
“continue,” or similar expressions. You may find some of these
statements below and elsewhere in this document. These
forward-looking statements are not historical facts and are
inherently uncertain and outside of our control. Any or all of our
forward-looking statements in this document may turn out to be
incorrect. They can be affected by inaccurate assumptions we might
make, or by known or unknown risks and uncertainties. Many
factors mentioned in our discussion in this document will be
important in determining future results. Consequently, no
forward-looking statement can be guaranteed. Actual future results
may vary materially. Many factors could cause actual
future events to differ materially from the forward-looking
statements in this document, including but not limited to: (i) the
risk that the proposed transaction may not be completed in a timely
manner or at all, which may adversely affect the Company’s business
and the price of the common stock of the Company; (ii) the failure
to satisfy or obtain waivers of the conditions to the consummation
of the proposed transaction, including the adoption of the merger
agreement by the stockholders of the Company and the receipt of
certain governmental and regulatory approvals; (iii) the occurrence
of any event, change or other circumstances that could give rise to
the termination of the merger agreement; (iv) the effect of the
announcement or pendency of the proposed transaction on the
Company’s business relationships, operating results and business
generally; (v) risks that the proposed transaction disrupts current
plans and operations of the Company, including the risk of adverse
reactions or changes to business relationships with customers,
suppliers and other business partners of the Company; (vi)
potential difficulties in the hiring or retention of employees of
the Company as a result of the proposed transaction; (vii) risks
related to diverting management’s attention from the Company’s
ongoing business operations; (viii) potential litigation relating
to the merger agreement or the proposed transaction; (ix)
unexpected costs, charges or expenses resulting from the proposed
transaction, (x) competitive responses to the proposed transaction;
and (xi) legislative, regulatory and economic developments. The
foregoing list of factors is not exclusive. Additional risks
and uncertainties that could affect the Company’s financial and
operating results are included under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and elsewhere in the Company’s most
recent Annual Report on Form 10-K for the year ended December 31,
2015 filed with the Securities and Exchange Commission (the “SEC”)
on February 26, 2016, and the Company’s more recent reports filed
with the SEC. The Company can give no assurance that the
conditions to the proposed transaction will be satisfied, or that
it will close within the anticipated time period. Investors
and security holders are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
on which statements were made. Except as required by
applicable law, the Company undertakes no obligation to revise or
update any forward-looking statement, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Additional Information and Where to Find It
This document is being made in respect of the proposed
transaction between the Company, Mars and certain subsidiaries of
Mars. In connection with the proposed transaction, the Company
filed a preliminary proxy statement on Schedule 14A with the SEC on
February 3, 2017. Following the filing of the definitive proxy
statement with the SEC, the Company will mail the definitive proxy
statement and a proxy card to each stockholder entitled to vote at
the special meeting relating to the proposed transaction. The
Company also plans to file with the SEC other documents regarding
the proposed transaction. INVESTORS AND SECURITY HOLDERS OF THE
COMPANY ARE URGED TO CAREFULLY READ THESE MATERIALS (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO) IN THEIR ENTIRETY AND ANY OTHER
RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT
THE COMPANY WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY
AND THE PROPOSED TRANSACTION. When completed, a definitive
proxy statement and form of proxy will be mailed to the
stockholders of the Company. The definitive proxy statement, the
preliminary proxy statement and other relevant materials in
connection with the proposed transaction (when they become
available), and any other documents filed by the Company with the
SEC, may be obtained free of charge at the SEC’s website
(http://www.sec.gov) or through the investor relations section of
the Company’s website (http://investor.vca.com).
Participants in Solicitation
This document does not constitute a solicitation of proxy, an
offer to purchase or a solicitation of an offer to sell any
securities. The Company and its directors, executive officers
and certain employees may be deemed to be participants in the
solicitations of proxies from the Company’s stockholders with
respect to the meeting of stockholders that will be held to
consider the proposed transaction. Information about the
persons who may, under the SEC rules, be considered to be
participants in the solicitation of stockholders of the Company in
connection with the proposed transaction, is set forth in the proxy
statement for the Company’s 2016 Annual Meeting of Stockholders
filed with the SEC on March 4, 2016. Stockholders may obtain
additional information regarding the direct and indirect interests
of any such persons who may, under the SEC rules, be considered to
be participants in the solicitation of stockholders of the Company
in connection with the proposed transaction, including the
interests of the Company’s directors and executive officers in the
proposed transaction, which may be different than those of the
stockholders of the Company generally, by reading the proxy
statement and other relevant documents regarding the proposed
transaction when they become available, which the Company will file
with the SEC. Copies of these documents (when they become
available) may be obtained free of charge as described in the
preceding paragraph.
About VCA Inc.
We own, operate and manage the largest networks of freestanding
veterinary hospitals and veterinary-exclusive clinical laboratories
in the country. We also supply diagnostic imaging equipment
to the veterinary industry.
VCA Inc. |
Condensed, Consolidated Income
Statements |
(Unaudited) |
(In thousands, except per share
amounts) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenue: |
|
|
|
|
|
|
|
Animal
hospital |
$ |
539,403 |
|
|
$ |
427,544 |
|
|
$ |
2,091,780 |
|
|
$ |
1,697,870 |
|
Laboratory |
98,374 |
|
|
93,397 |
|
|
422,301 |
|
|
393,900 |
|
All
other |
27,954 |
|
|
33,254 |
|
|
93,751 |
|
|
126,988 |
|
Intercompany |
(22,650 |
) |
|
(20,475 |
) |
|
(90,969 |
) |
|
(85,083 |
) |
|
643,081 |
|
|
533,720 |
|
|
2,516,863 |
|
|
2,133,675 |
|
|
|
|
|
|
|
|
|
Direct costs |
508,322 |
|
|
416,024 |
|
|
1,924,799 |
|
|
1,623,604 |
|
|
|
|
|
|
|
|
|
Gross profit: |
|
|
|
|
|
|
|
Animal
hospital |
77,756 |
|
|
60,525 |
|
|
339,988 |
|
|
264,335 |
|
Laboratory |
47,689 |
|
|
45,609 |
|
|
219,158 |
|
|
201,702 |
|
All
other |
10,126 |
|
|
12,128 |
|
|
34,874 |
|
|
46,702 |
|
Intercompany |
(812 |
) |
|
(566 |
) |
|
(1,956 |
) |
|
(2,668 |
) |
|
134,759 |
|
|
117,696 |
|
|
592,064 |
|
|
510,071 |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense: |
|
|
|
|
|
|
|
Animal
hospital |
17,049 |
|
|
11,960 |
|
|
58,952 |
|
|
44,311 |
|
Laboratory |
10,253 |
|
|
10,181 |
|
|
39,979 |
|
|
38,075 |
|
All
other |
7,533 |
|
|
9,481 |
|
|
24,918 |
|
|
33,569 |
|
Corporate |
22,228 |
|
|
18,630 |
|
|
80,875 |
|
|
68,040 |
|
|
57,063 |
|
|
50,252 |
|
|
204,724 |
|
|
183,995 |
|
Business interruption
insurance gain, net |
— |
|
|
— |
|
|
— |
|
|
(4,523 |
) |
Net loss on sale of
assets |
478 |
|
|
1,063 |
|
|
1,006 |
|
|
829 |
|
Operating income |
77,218 |
|
|
66,381 |
|
|
386,334 |
|
|
329,770 |
|
Interest expense,
net |
8,191 |
|
|
5,680 |
|
|
32,453 |
|
|
21,076 |
|
Debt retirement
costs |
— |
|
|
— |
|
|
1,600 |
|
|
— |
|
Other expense
(income) |
83 |
|
|
271 |
|
|
(902 |
) |
|
359 |
|
Gain on sale of
business, net |
— |
|
|
(43,306 |
) |
|
— |
|
|
(43,306 |
) |
Income before provision
for income taxes |
68,944 |
|
|
103,736 |
|
|
353,183 |
|
|
351,641 |
|
Provision for income
taxes |
26,468 |
|
|
39,582 |
|
|
135,780 |
|
|
135,543 |
|
Net income |
42,476 |
|
|
64,154 |
|
|
217,403 |
|
|
216,098 |
|
Net income attributable
to noncontrolling interests |
1,788 |
|
|
559 |
|
|
8,207 |
|
|
5,049 |
|
Net income attributable
to VCA Inc. |
$ |
40,688 |
|
|
$ |
63,595 |
|
|
$ |
209,196 |
|
|
$ |
211,049 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.50 |
|
|
$ |
0.78 |
|
|
$ |
2.56 |
|
|
$ |
2.56 |
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding for diluted earnings per share |
81,811 |
|
|
81,461 |
|
|
81,725 |
|
|
82,414 |
|
VCA Inc. |
Condensed, Consolidated Balance
Sheets |
(Unaudited) |
(In thousands) |
|
|
December 31, 2016 |
|
December 31, 2015 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
81,409 |
|
|
$ |
98,888 |
|
Trade
accounts receivable, net |
85,593 |
|
|
76,634 |
|
Inventory |
57,590 |
|
|
51,523 |
|
Prepaid
expenses and other |
44,752 |
|
|
30,521 |
|
Prepaid
income taxes |
11,705 |
|
|
24,598 |
|
Total
current assets |
281,049 |
|
|
282,164 |
|
Property and equipment,
net |
613,224 |
|
|
507,753 |
|
Other assets: |
|
|
|
Goodwill |
2,164,422 |
|
|
1,517,650 |
|
Other
intangible assets, net |
212,577 |
|
|
97,377 |
|
Notes
receivable, net |
2,147 |
|
|
2,194 |
|
Other |
99,909 |
|
|
93,994 |
|
Total
assets |
$ |
3,373,328 |
|
|
$ |
2,501,132 |
|
Liabilities and Equity |
|
|
|
Current
liabilities: |
|
|
|
Current
portion of long-term obligations |
$ |
38,320 |
|
|
$ |
33,623 |
|
Accounts
payable |
68,587 |
|
|
52,337 |
|
Accrued
payroll and related liabilities |
97,806 |
|
|
75,519 |
|
Other
accrued liabilities |
91,783 |
|
|
70,828 |
|
Total current liabilities |
296,496 |
|
|
232,307 |
|
Long-term obligations,
less current portion |
1,309,397 |
|
|
832,718 |
|
Deferred income
taxes |
142,535 |
|
|
131,478 |
|
Other liabilities |
44,560 |
|
|
36,084 |
|
Total
liabilities |
1,792,988 |
|
|
1,232,587 |
|
Redeemable
noncontrolling interests |
11,615 |
|
|
11,511 |
|
VCA Inc. stockholders’
equity: |
|
|
|
Common
stock |
81 |
|
|
81 |
|
Additional paid-in capital |
32,157 |
|
|
19,708 |
|
Retained
earnings |
1,484,391 |
|
|
1,275,207 |
|
Accumulated other comprehensive loss |
(45,406 |
) |
|
(50,034 |
) |
Total VCA
Inc. stockholders’ equity |
1,471,223 |
|
|
1,244,962 |
|
Noncontrolling
interests |
97,502 |
|
|
12,072 |
|
Total
equity |
1,568,725 |
|
|
1,257,034 |
|
Total
liabilities and equity |
$ |
3,373,328 |
|
|
$ |
2,501,132 |
|
VCA Inc. |
Condensed, Consolidated Statements of Cash
Flows |
(Unaudited) |
(In thousands) |
|
|
Twelve Months Ended December 31, |
|
2016 |
|
2015 |
Cash flows from
operating activities: |
|
|
|
Net
income |
$ |
217,403 |
|
|
$ |
216,098 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Gain on
sale of business |
— |
|
|
(43,306 |
) |
Depreciation and amortization |
102,942 |
|
|
81,688 |
|
Amortization of debt issue costs |
1,652 |
|
|
1,741 |
|
Provision
for uncollectible accounts |
8,306 |
|
|
8,401 |
|
Debt
retirement costs |
1,600 |
|
|
— |
|
Net loss
on sale or disposal of assets |
1,006 |
|
|
829 |
|
Share-based compensation |
18,762 |
|
|
16,264 |
|
Deferred
income taxes |
18,339 |
|
|
56,722 |
|
Excess
tax benefit from share-based compensation |
(10,711 |
) |
|
(11,089 |
) |
Other |
7,229 |
|
|
2,159 |
|
Changes
in operating assets and liabilities: |
|
|
|
Trade
accounts receivable |
(13,555 |
) |
|
(28,720 |
) |
Inventory, prepaid expense and other assets |
(22,784 |
) |
|
(9,716 |
) |
Accounts
payable and other accrued liabilities |
16,124 |
|
|
10,812 |
|
Accrued
payroll and related liabilities |
19,993 |
|
|
11,323 |
|
Income
taxes |
23,525 |
|
|
4,339 |
|
Net cash
provided by operating activities |
389,831 |
|
|
317,545 |
|
Cash flows from
investing activities: |
|
|
|
Business
acquisitions, net of cash acquired |
(697,673 |
) |
|
(151,586 |
) |
Investment in Vetstreet Inc. |
— |
|
|
(9,552 |
) |
Property
and equipment additions |
(122,946 |
) |
|
(95,234 |
) |
Proceeds
from sale of assets |
1,729 |
|
|
6,762 |
|
Proceeds
from sale of business |
— |
|
|
48,000 |
|
Other |
(9,351 |
) |
|
(2,042 |
) |
Net cash
used in investing activities |
(828,241 |
) |
|
(203,652 |
) |
Cash flows from
financing activities: |
|
|
|
Repayment
of long-term obligations |
(1,274,924 |
) |
|
(35,017 |
) |
Proceeds
from issuance of long-term obligations |
1,255,000 |
|
|
— |
|
Proceeds
from revolving credit facility |
555,000 |
|
|
97,000 |
|
Repayment
of revolving credit facility |
(95,000 |
) |
|
— |
|
Payment
of financing costs |
(3,817 |
) |
|
— |
|
Distributions to noncontrolling interest partners |
(6,134 |
) |
|
(4,962 |
) |
Purchase
of noncontrolling interests |
(4,552 |
) |
|
(2,500 |
) |
Proceeds
from issuance of common stock under stock incentive plans |
3,965 |
|
|
2,683 |
|
Excess
tax benefit from share-based compensation |
10,711 |
|
|
11,089 |
|
Stock
repurchases |
(17,219 |
) |
|
(165,607 |
) |
Other |
(1,714 |
) |
|
2,041 |
|
Net cash
provided by (used in) financing activities |
421,316 |
|
|
(95,273 |
) |
Effect of currency
exchange rate changes on cash and cash equivalents |
(385 |
) |
|
(1,115 |
) |
(Decrease) increase in
cash and cash equivalents |
(17,479 |
) |
|
17,505 |
|
Cash and cash
equivalents at beginning of year |
98,888 |
|
|
81,383 |
|
Cash and cash
equivalents at end of year |
$ |
81,409 |
|
|
$ |
98,888 |
|
VCA Inc. |
Supplemental Operating Data |
(Unaudited - In thousands, except per share
amounts) |
|
Table
#1 |
|
|
|
|
|
|
|
Reconciliation
of net income attributable to |
Three Months Ended December
31, |
|
Twelve Months Ended December
31, |
VCA Inc.
to Non-GAAP net income |
|
attributable to VCA Inc.(1) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
Net income attributable
to VCA Inc. |
$ |
40,688 |
|
|
$ |
63,595 |
|
|
$ |
209,196 |
|
|
$ |
211,049 |
|
Adjustments to Other Long-term liabilities, net of tax (2) |
— |
|
|
— |
|
|
2,040 |
|
|
— |
|
Discrete
tax items (3) |
— |
|
|
— |
|
|
1,045 |
|
|
— |
|
Transaction costs related to the Mars Plan of Merger, net of tax
(4) |
464 |
|
|
— |
|
|
464 |
|
|
|
— |
|
Transaction costs related to the CAPNA acquisition, net of tax
(5) |
26 |
|
|
— |
|
|
843 |
|
|
— |
|
Debt
retirement costs, net of tax (6) |
— |
|
|
— |
|
|
974 |
|
|
— |
|
Business
interruption proceeds, net of tax (7) |
— |
|
|
— |
|
|
— |
|
|
(2,752 |
) |
Gain on
sale of business, net of tax (8) |
— |
|
|
(26,356 |
) |
|
— |
|
|
(26,356 |
) |
Acquisitions related amortization, net of tax (1) |
6,254 |
|
|
3,774 |
|
|
21,703 |
|
|
14,239 |
|
|
|
|
|
|
|
|
|
Non-GAAP net income
attributable to VCA Inc. |
$ |
47,432 |
|
|
$ |
41,013 |
|
|
$ |
236,265 |
|
|
$ |
196,180 |
|
|
|
|
|
|
|
|
|
Table
#2 |
Three Months Ended December
31, |
|
Twelve Months Ended December
31, |
Reconciliation
of diluted earnings per share to |
|
Non-GAAP
diluted earnings per share (1) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.50 |
|
|
$ |
0.78 |
|
|
$ |
2.56 |
|
|
$ |
2.56 |
|
Adjustments to Other Long-term liabilities, net of tax (2) |
— |
|
|
— |
|
|
0.02 |
|
|
— |
|
Discrete
tax items (3) |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
Transaction costs related to the Mars Plan of Merger, net of tax
(4) |
0.01 |
|
|
— |
|
|
0.01 |
|
|
— |
|
Transaction costs related to the CAPNA acquisition, net of tax
(5) |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
Debt
retirement costs, net of tax (6) |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
Business
interruption proceeds, net of tax (7) |
— |
|
|
— |
|
|
— |
|
|
(0.03 |
) |
Gain on
sale of business, net of tax (8) |
— |
|
|
(0.32 |
) |
|
— |
|
|
(0.32 |
) |
Acquisitions related amortization, net of tax (1) |
0.08 |
|
|
0.05 |
|
|
0.27 |
|
|
0.17 |
|
|
|
|
|
|
|
|
|
Non-GAAP diluted
earnings per share (9) |
$ |
0.58 |
|
|
$ |
0.50 |
|
|
$ |
2.89 |
|
|
$ |
2.38 |
|
Shares used for
computing |
|
|
|
|
|
|
|
diluted
earnings per share |
81,811 |
|
|
81,461 |
|
|
81,725 |
|
|
82,414 |
|
VCA Inc. |
Supplemental Operating Data
(continued) |
(Unaudited - In thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
Table
#3 |
Three Months Ended December
31, |
|
Twelve Months Ended December
31, |
Reconciliation
of consolidated gross profit to |
|
Non-GAAP
consolidated gross profit (1) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
Consolidated gross
profit |
$ |
134,759 |
|
|
$ |
117,696 |
|
|
$ |
592,064 |
|
|
$ |
510,071 |
|
Acquisitions related amortization (1) |
9,918 |
|
|
6,140 |
|
|
34,702 |
|
|
23,153 |
|
|
|
|
|
|
|
|
|
Non-GAAP consolidated
gross profit |
$ |
144,677 |
|
|
$ |
123,836 |
|
|
$ |
626,766 |
|
|
$ |
533,224 |
|
Non-GAAP consolidated
gross profit margin |
22.5 |
% |
|
23.2 |
% |
|
24.9 |
% |
|
25.0 |
% |
|
|
|
|
|
|
|
|
Table
#4 |
Three Months Ended December
31, |
|
Twelve Months Ended December
31, |
Reconciliation
of consolidated operating income to |
|
Non-GAAP
consolidated operating income (1) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
Consolidated operating
income |
$ |
77,218 |
|
|
$ |
66,381 |
|
|
$ |
386,334 |
|
|
$ |
329,770 |
|
Adjustments to Other Long-term liabilities (2) |
— |
|
|
— |
|
|
1,954 |
|
|
— |
|
Transaction costs related to the Mars Plan of Merger (4) |
762 |
|
|
|
— |
|
|
762 |
|
|
|
— |
|
Transaction costs related to the CAPNA acquisition (5) |
43 |
|
|
— |
|
|
1,386 |
|
|
— |
|
Business
interruption proceeds (7) |
— |
|
|
— |
|
|
— |
|
|
(4,523 |
) |
Acquisitions related amortization (1) |
11,073 |
|
|
6,201 |
|
|
37,782 |
|
|
23,396 |
|
|
|
|
|
|
|
|
|
Non-GAAP consolidated
operating income |
$ |
89,096 |
|
|
$ |
72,582 |
|
|
$ |
428,218 |
|
|
$ |
348,643 |
|
Non-GAAP consolidated
operating margin |
13.9 |
% |
|
13.6 |
% |
|
17.0 |
% |
|
16.3 |
% |
|
|
|
|
|
|
|
|
_________________________________________________
(1) Management believes that investors' understanding
of our performance is enhanced by disclosing adjusted measures as
the reported amounts, adjusted to exclude certain significant items
and acquisition-related amortization. Non-GAAP net income, Non-GAAP
diluted earnings per common share, Non-GAAP consolidated gross
profit and Non-GAAP consolidated operating income measures are not,
and should not be viewed as substitutes for U.S. generally accepted
accounting principles (GAAP) net income, its components and diluted
earnings per share.
(2) In the first quarter of 2016, we
recorded a non-cash charge to adjust certain long-term liabilities
for $3.4 million, or $2.0 million net of tax. $2.0 million of
this amount relates to compensation and $1.4 million relates to
interest accretion.
(3) In the first quarter of 2016, we
recorded a tax adjustment to our income tax liabilities for $1.0
million.
(4) As of the end of the fourth quarter, we
have recorded transaction costs of $762,000, or $464,000 net of
tax, related to the Plan of Merger between VCA and Mars.
(5) As of the end of the fourth quarter, we
have recorded transaction costs of $1.4 million, or $843,000 net of
tax, related to our acquisition of CAPNA.
(6) We incurred debt retirement costs of
$1.6 million, or $974,000 net of tax, in connection with our new
credit facility entered into on June 29, 2016.
(7) In the third quarter of 2015, we
received insurance proceeds related to the fire that damaged the
headquarters of our Medical Technology business resulting in a net
gain of $4.5 million.
(8) In the fourth quarter of 2015, we recognized a gain of
$43.3 million related to the sale of our wholly-owned subsidiary,
Vetstreet, Inc.
(9) Amounts may not foot due to rounding.
VCA Inc. |
Supplemental Operating Data
(continued) |
(Unaudited - In thousands, except per share
amounts) |
|
|
|
|
|
|
As of |
Table
#5 |
|
|
|
|
December 31, 2016 |
|
December 31, 2015 |
Selected
consolidated balance sheet data |
|
|
|
|
|
|
|
Long-term
Obligations: |
|
|
|
|
|
|
|
Senior
term notes |
|
|
|
|
$ |
869,000 |
|
|
$ |
585,000 |
|
Revolving
credit |
|
|
|
|
400,000 |
|
|
232,000 |
|
Other
debt and capital leases |
|
|
|
|
85,415 |
|
|
55,474 |
|
Total long-term
obligations |
|
|
|
|
$ |
1,354,415 |
|
|
$ |
872,474 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Twelve Months Ended December
31, |
Table
#6 |
|
Selected
expense data |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
Rent expense |
$ |
23,831 |
|
|
$ |
19,933 |
|
|
$ |
91,988 |
|
|
$ |
76,694 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization included |
|
|
|
|
|
|
|
in direct
costs: |
|
|
|
|
|
|
|
Animal
hospital |
$ |
23,751 |
|
|
$ |
17,042 |
|
|
$ |
84,432 |
|
|
$ |
65,850 |
|
Laboratory |
2,941 |
|
|
2,754 |
|
|
11,280 |
|
|
10,606 |
|
All
other |
691 |
|
|
926 |
|
|
2,911 |
|
|
3,797 |
|
Intercompany |
(658 |
) |
|
(554 |
) |
|
(2,463 |
) |
|
(2,156 |
) |
|
$ |
26,725 |
|
|
$ |
20,168 |
|
|
$ |
96,160 |
|
|
$ |
78,097 |
|
Depreciation and
amortization included in selling, |
|
|
|
|
|
|
|
general
and administrative expense |
2,145 |
|
|
886 |
|
|
6,782 |
|
|
3,591 |
|
Total depreciation and
amortization |
$ |
28,870 |
|
|
$ |
21,054 |
|
|
$ |
102,942 |
|
|
$ |
81,688 |
|
|
|
|
|
|
|
|
|
Share-based
compensation included in direct costs: |
|
|
|
|
|
|
|
Laboratory |
$ |
324 |
|
|
$ |
217 |
|
|
$ |
883 |
|
|
$ |
685 |
|
|
|
|
|
|
|
|
|
Share-based
compensation included in |
|
|
|
|
|
|
|
selling, general
and administrative expense: |
|
|
|
|
|
|
|
Animal
hospital |
1,203 |
|
|
715 |
|
|
3,542 |
|
|
2,696 |
|
Laboratory |
485 |
|
|
405 |
|
|
1,755 |
|
|
1,511 |
|
All
other |
256 |
|
|
493 |
|
|
716 |
|
|
1,119 |
|
Corporate |
2,825 |
|
|
2,348 |
|
|
11,866 |
|
|
10,253 |
|
|
4,769 |
|
|
3,961 |
|
|
17,879 |
|
|
15,579 |
|
Total share-based
compensation |
$ |
5,093 |
|
|
$ |
4,178 |
|
|
$ |
18,762 |
|
|
$ |
16,264 |
|
Contact:
Tomas Fuller
Chief Financial Officer
(310) 571-6505
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