Animal Health International reports 58% increase in net sales for fourth quarter 2010

Animal Health International, Inc. (Nasdaq:AHII), a leading distributor of animal health products in the United States and Canada, today reported its financial results for the Company's fourth fiscal quarter, which ended June 30, 2010, as well as fiscal year performance. Results include the following highlights:

Three Months Ended June 30, 2010

• Net sales increased 5.8%, to $172.0 million, compared to $162.5 million for the same period a year ago.  The increase in net sales was primarily attributable to improving economics in the beef and dairy markets as well as growth in our veterinary business.
• Gross margins increased $2.5 million for the quarter, with $1.5 million due to higher sales volume. Improved profit margins contributed an additional $1.0 million. Margins increased to 16.6% of net sales, compared to 16.0% in the fourth quarter last year.
• Selling, General and Administrative (SG&A) expenses were 12.8% of sales compared to 17.4% last year. SG&A expenses decreased $6.2 million from the same period last year. Last year included a provision for bad debt of $2.7 million and a $1.8 million charge for stock option expense resulting from voluntary forfeitures.
• Net income was $0.7 million, or $0.03 per fully diluted share, compared to a loss of $39.2 million or $1.61 loss per fully diluted share in last year's fourth quarter. Net income included $1.0 million, net of tax, for the non-cash amortization of interest rate swaps, which were unwound earlier this year. Last year, the Company recorded a $35.0 million impairment of goodwill.
• Earnings before interest, tax, depreciation and amortization (EBITDA) increased by $6.9 million to $7.1 million for the quarter, compared to $0.2 million last year.  

Fiscal Year Ended June 30, 2010

• Net sales for the fiscal year were $668.9 million, compared to $666.9 for the same period a year ago. Net sales in the first half of the year declined 6.1% while sales in the second half of the year increased 7.5%, both compared to the same periods last year.
• Gross margin declined $2.6 million, compared to fiscal year 2009, with $5.2 million due to reduced profitability with one of our major suppliers while profitability from other suppliers increased by $2.3 million. The increase in sales volume contributed $0.3 million to gross margin. Margins for the fiscal year were 16.6% of net sales, compared to 17.1% last year.
• SG&A expenses declined to 13.6% of sales compared to 15.1% last year. SG&A declined $9.5 million from the same period last year. Last year included $4.5 million for the bad debt and stock option forfeiture discussed above.
• Net income was $1.3 million or $0.05 per fully diluted share, compared to a loss last year of $36.9 million or $-1.52 per fully diluted share. Net income included a $0.4 million one-time, non-cash charge for foreign currency exchange due to the early retirement of debt in Canada and a $2.9 million non-cash charge for the unamortized cost associated with unwinding interest rate swaps. Also included was $0.4 million for the final settlement of a legal dispute. The after tax effect of these one-time items was $2.3 million or $0.09 per share. Last year included a $35.0 million impairment of goodwill.
• EBITDA for the fiscal year increased $4.4 million to $21.9 million, compared to the same period last year.

Jim Robison, Chairman and Chief Executive Officer, stated, "Our sales growth was driven by improving economics in the beef and dairy industries as well as growth in sales to veterinarians. I am proud of how our team finished a tough year with sales up 7.5% in the second half, and enthusiastic about the way the new fiscal year has started."