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1ST HALF: MWI VETERINARY'S REVENUES UP 28%, NET INCOME UP 11%
Source: MWI Veterinary news release

To view the complete report, click here.

MWI Veterinary Supply, Inc. (NASDAQ: MWIV) (the "Company") announced financial results today for its second quarter ended March 31, 2014.

"Our results for the quarter were impressive in spite of the severe winter weather conditions that impacted our operations and sales," said Jim Cleary, President and Chief Executive Officer. "Our revenue growth was strong and we are very pleased with the tremendous progress our combined team has made towards integrating IVESCO."

Total revenues increased 24.0% to $1.409 billion for the six months ended March 31, 2014, compared to $1.136 billion for the six months ended March 31, 2013. Excluding the revenues resulting from the acquisition of substantially all of the assets of IVESCO during the month of November 2013, revenue growth in the United States was 8.8% for the six months ended March 31, 2014 compared to the six months ended March 31, 2013.

Revenue growth was impacted by severe weather conditions experienced during the quarter ended March 31, 2014. Revenues in the United Kingdom decreased 4.7% for the six months ended March 31, 2014, consisting of a 7.9% organic decrease, offset in part by a 3.2% increase related to foreign currency translation. Commissions increased 2.6% to $9.7 million for the six months ended March 31, 2014, compared to $9.5 million for the six months ended March 31, 2013.

Gross profit increased by 18.8% to $180.1 million for the six months ended March 31, 2014, compared to $151.6 million for the six months ended March 31, 2013. Gross profit as a percentage of total revenues was 12.8% for the six months ended March 31, 2014, compared to 13.3% for the six months ended March 31, 2013.

Product margin as a percentage of total revenues decreased partially due to the addition of the IVESCO business in November 2013. The product margin on this business is lower than our overall product margin. This serves to reduce the overall product margin of the consolidated company when compared to our results for the same period in the prior year.

In addition, there were pricing pressures as market participants strove to achieve sales goals. Vendor rebates for the six months ended March 31, 2014 increased by approximately $6.5 million compared to the six months ended March 31, 2013, primarily due to the growth in revenues and timing of manufacturer programs.

Operating income increased 12.3% to $57.6 million for the six months ended March 31, 2014, compared to $51.3 million for the six months ended March 31, 2013. SG&A expenses increased 22.4% to $116.8 million for the six months ended March 31, 2014, compared to $95.4 million for the six months ended March 31, 2013.

The increase in SG&A expenses was primarily due to the addition of IVESCO in November 2013. SG&A expenses as a percentage of total revenues were 8.3% for the six months ended March 31, 2014 compared to 8.4% for the six months ended March 31, 2013. We incurred approximately $1.6 million of integration and acquisition related costs during the six months ended March 31, 2014 in connection with our recently completed IVESCO acquisition.

Our effective tax rate for the six months ended March 31, 2014 was 38.8%, compared to 38.1% for the six months ended March 31, 2013. The increase was primarily due to higher estimated state income taxes.

Net income increased 10.6% to $35.2 million for the six months ended March 31, 2014, compared to $31.9 million for the six months ended March 31, 2013. Diluted earnings per share were $2.76 and $2.51 for the six months ended March 31, 2014 and 2013, respectively, an increase of 10.0%.


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