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Animal Health International, Inc. (AHII) announced its financial results on Thursday for the fourth quarter and fiscal year ended June 30, 2009.
Net sales declined 8.9%, or $15.8 million, to $162.5 million for the fourth quarter. Net loss was $29.4 million or $1.21 per fully diluted share. Last year, net income for the fourth quarter was $2.7 million or $0.11 per fully diluted share.
Net sales for the year declined 6.9%, or $49.6 million, to $666.9 million. Net loss was $27.1 million or $1.12 per fully diluted share. Last year, the net income for the year was $11.1 million or $0.46 per fully diluted share.
William Lacey, CFO of Animal Health International, commented in a conference call, "Our net sales declined as a result of lower spending from production animal customers whose profits have been constrained by fluctuating commodity prices."
He added, "In fiscal 2009, lower volumes reduced gross margin by $9.5 million, and reductions in rebates reduced gross margin by $14.3 million."
Jim Robison, Chairman and CEO of Animal Health International, explained, "We actually had an increase in unit volumes and decreased revenues due to the subsantial deflation in certain products, mostly in the dairy sector. We also believe that we lost some high-volume, low-margin business of about $10-$20 million as a result of a lack of participation in discounting around a couple of key vendors, and some compensation policy decisions during the year. Going into the Fall of last year, we began to tighten terms so that we would not inherit other peoples' problems. The decrease in goss profit is mostly caused by the reduction in rebates, primarily due to the change in policies of our largest vendor."
He noted, "Our vet business performed relatively well last year compared to the rest of our business."
The Company believes that the economic factors affecting its industry will improve in the next twelve months. Although the exact timing of a recovery is difficult to predict, the Company is currently projecting that conditions will improve in the third quarter of fiscal year 2010. Revenue for the fiscal year ending June 2010 is expected to be $650 to $685 million. EBITDA is estimated to be $22 to $27 million and net income is expected to be $2.3 to $5.3 million or $0.09 to $0.22 per share.
The Company does not expect a significant improvement in its end markets in the first fiscal quarter. Revenue for the first quarter ending September 30, 2009 is expected to be $150 to $155 million. EBITDA is estimated to be $2.5 to $3.5 and net loss is expected to be $2.0 to $1.0 million or $0.08 to $0.04 per share.
Mr. Robison added, "We are seeing some recovery in the beef market, however, the beef industy lost $5 billion last year at the feeder level. Losses in the dairy industry have narrowed due to a pretty nice reduction in inputs and a slight uptick over the last 120 days in milk prices."
He concluded, "The next couple of quarters are going to be very tough, However, we have complete confidence that the imbalance of demand and supply will mitigate, and our customers will become profitable again. When that happens, we are well positioned to regain a lot of the ground that we lost over the last year."
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