MWIV Beats, Provides Strong Outlook

MWI Veterinary Supply's (MWIV - Analyst Report) fourth-quarter earnings came in at 53 cents per share, well above the Zacks Consensus Estimate of 44 cents and the year-ago earnings of 44 cents. The company reported revenues of $247.5 million, an increase of 10.1% compared to the corresponding quarter of last year. Approximately 60% of the growth in revenues was from new customers.

In addition to posting fourth quarter results, MWIV came out with full-year results for fiscal 2009. Revenues increased 13.2% to $941.3 million, while earnings per share were $2.02, up 24.7% compared to the previous year.

Gross margin during the quarter improved marginally to 14.1%, compared to 13.9% in the year-ago period. The primary reason for the improvement was a $250,000 decline in vendor rebates and an improvement in freight costs as a percentage of total revenues compared to the earlier quarter.

In the reported quarter, operating margin improved by 39 basis points to 4.28% in spite of an 8.5% increase in SG&A expenses. The primary reason for the increase in SG&A expenses were increased compensation costs, an increase in allowance for doubtful accounts, partially offset by a decrease in travel expenses.

At the end of the fourth quarter, MWIV had $14.3 million of cash, up from $3.4 million in September 2008.

The company is trying to push its product sales through the Internet and seems to have achieved success in this field. Internet sales to independent veterinary practices and producers grew by 32% for the quarter, compared to the fourth quarter in 2008. The proportion of products sold through the Internet with respect to total sales improved to 32% compared to 28% in the prior year period.

Based on a strong fiscal 2009, MWIV provided guidance for fiscal 2010. The company expects revenues in the range of $1.0 billion to $1.035 billion, representing growth of 6% to 10%, compared to revenues in fiscal 2009. Earnings are expected in the range of $2.15 - $2.23 per share.