VCA Inc (WOOF) has reported a 6.16 percent rise in profit for the quarter ended Sep. 30, 2016. The company has earned $58.23 million, or $0.71 a share in the quarter, compared with $54.85 million, or $0.67 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $64.35 million, or $0.79 a share compared with $55.64 million or $0.68 a share, a year ago.
Revenue during the quarter grew 19.06 percent to $656.85 million from $551.72 million in the previous year period. Gross margin for the quarter contracted 111 basis points over the previous year period to 23.84 percent. Total expenses were 83.71 percent of quarterly revenues, up from 82.40 percent for the same period last year. That has resulted in a contraction of 131 basis points in operating margin to 16.29 percent.
Operating income for the quarter was $107 million, compared with $97.08 million in the previous year period.
However, the adjusted operating income for the quarter stood at $117.83 million compared to $98.37 million in the prior year period. At the same time, adjusted operating margin improved 11 basis points in the quarter to 17.94 percent from 17.83 percent in the last year period.
Bob Antin, chairman and chief executive officer, stated, "We had an outstanding quarter highlighted by 16.2% growth in our adjusted diluted earnings per common share. We continue to experience healthy organic revenue growth and increasing gross margins in both our core Animal Hospital and Laboratory businesses. Given our results relative to our expectations and our future acquisition pipeline, we remain optimistic with respect to our results for the full year ended December 31, 2016.
VCA Inc expects revenue to be in the range of $2,520 million to $2,540 million for financial year 2016. For fiscal year 2016, Vca Antech forecasts net income to be in the range of $210 million to $218 million. For financial year 2016, the company projects diluted earnings per share to be in the range of $2.57 to $2.67. For financial year 2016, the company projects diluted earnings per share to be in the range of $2.87 to $2.97 on adjusted basis.
Operating cash flow improves
VCA Inc has generated cash of $290.88 million from operating activities during the nine month period, up 17.76 percent or $43.87 million, when compared with the last year period.
The company has spent $696.14 million cash to meet investing activities during the nine month period as against cash outgo of $174.77 million in the last year period. It has incurred net capital expenditure of $88.85 million on net basis during the nine month period, up 61.54 percent or $33.85 million from year ago period.
Cash flow from financing activities was $379.14 million for the nine month period as against cash outgo of $77.80 million in the last year period.
Cash and cash equivalents stood at $72.91 million as on Sep. 30, 2016, down 2.77 percent or $2.08 million from $74.99 million on Sep. 30, 2015.
Working capital turns negative
Working capital of VCA Inc has turned negative to $1.05 million on Sep. 30, 2016 from positive $22.87 million on Sep. 30, 2015. Current ratio was at 1 as on Sep. 30, 2016, down from 1.10 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 8 days for the quarter from 15 days for the last year period. Days sales outstanding went down to 11 days for the quarter compared with 13 days for the same period last year.
Days inventory outstanding has decreased to 6 days for the quarter compared with 12 days for the previous year period. At the same time, days payable outstanding was almost stable at 9 days for the quarter, when compared with the previous year period.
Debt increases substantially
VCA Inc has witnessed an increase in total debt over the last one year. It stood at $1,278.63 million as on Sep. 30, 2016, up 45.11 percent or $397.48 million from $881.16 million on Sep. 30, 2015. Total debt was 39.84 percent of total assets as on Sep. 30, 2016, compared with 36.24 percent on Sep. 30, 2015. Debt to equity ratio was at 0.83 as on Sep. 30, 2016, up from 0.74 as on Sep. 30, 2015.
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