MWI Veterinary Supply (MWIV) is looking to expand its presence in the international market. Recently, the company acquired UK based Centaur Services Limited, an animal health products supplier, for approximately $47 million. Centaur, with a distribution center in Somerset, had revenues of GBP 140 million (approximately $220 million) in the full year, 2009.
Following the acquisition, MWIV raised its revenue guidance for 2010. The company expects revenues in the range of $1.14 billion – $1.18 billion, up from the earlier guidance of $1.0 billion to $1.035 billion. The revised guidance represents a 21% – 25% growth compared to 2009 revenues. However, the transaction is expected to be neutral to earnings in 2010, considering acquisition-related expenses.
Last week, MWIV began fiscal 2010 on a strong note with first quarter earnings per share (EPS) of 63 cents surpassing the Zacks Consensus Estimate of 50 cents and the year-ago earnings of 48 cents. The company reported $236.1 million in revenues, a growth of 2% compared to the corresponding period last year.
Increased buying occurred during the reported quarter to pre-empt a price increase that was implemented in January 2010. While revenues from companion animal products recorded robust growth, sales of production animal products declined due to a change in contract and unfavorable economic conditions.
We are pleased with the momentum maintained by the company over the past few years. Revenues since 2000 have grown at a CAGR of 19.04%. The company, one of the leading distributors of animal health products to veterinarians across the US, has acquired many companies to either expand its presence in areas where it has low market share or to establish its presence. We have a Neutral recommendation on the stock.
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