Disclaimer/Forward-Looking Statements

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Transcription:

Disclaimer/Forward-Looking Statements This presentation may contain forward-looking statements based on current management expectations. Numerous factors, including those related to market conditions and those detailed in our Annual Report on Form 10-K, may cause results to differ materially from those anticipated in forward-looking statements. Many of the factors that will determine the Company s future results are beyond the ability of the Company to control or predict. These statements are subject to risks and uncertainties and, therefore, actual results may differ materially. Potential investors should not place undue reliance on forward-looking statements, which reflect management s views only as of the date hereof. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. 2

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Investment Highlights Industry dynamics driving demand for animal health products in companion and production markets Market leading position with international footprint and expansion opportunities Broad product portfolio and value-added services Longstanding relationships with diversified customer and vendor bases Premier sales and marketing franchise Strong and consistent financial performance driven by organic growth Strong balance sheet that provides great flexibility in taking advantage of new opportunities Experienced management team 4

Our Company Leading distributor of animal health products to veterinarians and producers across U.S. and U.K. Over 37 years of operating history More than 41,000 products sold, with over 19,000 in our distribution centers, from approximately 700 vendors Strong financial performance 5

MWI Company Overview Strategic Objectives Be #1 or #2 in our industry: animal health distribution Lead our industry in value, efficiency and innovation Deliver strong financial results and corporate governance Be the employer of choice in animal health distribution Core values Customer service Integrity Dedication Innovation Quality 6

MWI Company Overview (cont.) Leading distributor of animal health products in U.S. Revenues of $2.35 billion in fiscal year 2013 Named by Fortune in top 100 fastest-growing companies 2009-2013 Efficient operating expenses as percent of sales Constantly expanding and upgrading infrastructure and technology Moved, expanded or updated 16 distribution centers in last seven years E-commerce growth of 27% in 2013 Focused on being employer of choice Named one of best companies to work for in Idaho in 2011-2012 Actively promoting employee wellness, and seeing good results 7

Recent Developments Revenue growth in 2013 of 13.1% to $2.35 billion, including revenue growth of 14.4% in the US Gross profit as a % of revenues improved to 13.0% in 2013 compared to 12.9% in 2012 Operating income increased 17.0% and operating income as a % of revenues improved to 4.3% from 4.1% Net income increased 17.5%. Diluted earnings per share of $4.95 compared to $4.23 Internet sales to independent veterinary practices and producers in the United States grew by approximately 30.6% during fourth quarter of fiscal 2013. Diagnostics Unlimited program performing well, as revenues to all customers reached approximately $43 million for fourth quarter of fiscal 2013, a 51% increase over prior year fourth quarter. Acquired substantially all of the assets of IVESCO Holdings LLC, on November 1, 2013 8

IVESCO Acquired substantially all of the assets on November 1, 2013. Expected annual revenues of $400 million. MWI will own the IVESCO business for 11 months during fiscal 2014. Business units: mixed animal practice veterinarians, swine integrators, dealers, poultry integrators and cattle. Value-added services include bio-secure truck routes, technical service expertise in entomology, water quality and rodent control, product stewardship, microbiological monitoring, SOP development and implementation. 90 field sales representatives, 45 inside sales representatives. 11 shipping facilities across the United States. 9

Stable Industry Dynamics U.S. Animal Health Product Sales 8.3 7.1 7.6 6.5 6.7 6.1 5.3 5.6 4.3 4.4 4.5 4.7 4.9 2012 U.S. Animal Health Product Sales By Segment Companion Animal, 57% Production Animal, 43% Large, fragmented U.S. market with favorable growth characteristics 64,000 practicing veterinarians Approximately 700 vendors Diversified customer and vendor bases Distributors play vital role Frequent, small orders Clinics avoid storing and managing inventory Importance of sales representatives Long-term relationships Product information / consultation No third party reimbursement risk Source: Sundale Research. Industry sales are based on prices at the manufacturers level. 11

Companion Animal Market Consists of approximately: 96 million cats 83 million dogs 8 million horses Other pets Increased spending driven by: Human-animal bond Rising numbers of households with pets Focus on animal health / preventative care Technology migration from human health to veterinary medicine Aging pet population Large market with attractive growth profile Note: Number of cats, dogs, and horses are for the U.S. only. Source: APPA 2013-2014 National Pet Owner s Survey. 12

Production Animal Market Includes cattle, swine, poultry, and other food-producing animals 89 million cattle (January 1 inventory) 68 million swine (September 1 inventory) Spending driven by: Economic decisions Improved productivity / yield Disease prevention 2013 impacted by the recent droughts Significant market with volume driven by large order sales Source: USDA Agriculture statistics 13

Importance of Distributors Distributors Customers Single source for multiple products Timely product delivery Reduced number of vendors Inventory management Product information Consultation Vendors Cost-effective access to a fragmented market Logistics and distribution Sales and marketing support Ability to move market share Flexible selling models 14

Competitive Landscape Competitive market Competition from both numerous vendors and distributors Key Competitors (1) Competing factors include: Customer relationships Service and delivery Product selection Price e-business capabilities Industry consolidation continues (1) Excludes vendors and other national, regional, local and specialty distributors. 15

The MWI approach: Broad Product Portfolio Over 19,000 products stocked in MWI warehouses Over 18,000 additional products available by special order Continually evaluate product portfolio to improve offerings Key products include: Pharmaceuticals, Vaccines and Parasiticides Diagnostics, Capital Equipment & Supplies Veterinary Pet Food & Nutritional Products 17

MWI Revenue Mix Excluding Agency Including Agency Companion animal 59% 64% Production animal 41% 36% 18

The MWI approach: Product Revenue Mix, including agency products 14% Pharmaceuticals 4% 2% 7% 8% 31% Parasiticides Vaccines Micro Feed Ingredients Diagnostics Capital Equipment Pet Foods 13% 21% Other Supplies 19

The MWI approach: Expansive Vendor Network Sources products from approximately 700 vendors Provides cost-effective access to large and diverse customer base The top 10 vendors accounted for 70% of our revenues in FY 2013 Length of relationship with many key vendors over 10 years Vendor consolidation represents a significant risk to our business MWI s size and reach have become increasingly important to its vendor base 20

Flexible Selling Arrangements Agency Relationships Do not purchase and take inventory of products Upon receipt of order, transmit order to vendor, who picks, packs and ships order Receive commission payment for soliciting order Agency relationships with several leading animal health product vendors Gross billings of $349.0 million, generating commission revenue of $18.9 million in FY 2013 21

The MWI approach: Strong Customer Relationships Independent Veterinary Practices Corporate Clients Often small, privately-held Place at least one order / week Independent veterinary practices and producers account for approximately 87% of our product sales Nation s largest private veterinary practice Customer for over 17 years Highly efficient ordering process Feeders Advantage Buying group of several of the largest cattle feeders in U.S. Customer for over 17 years Highly efficient ordering process 22

The MWI approach: Premier Sales and Marketing Franchise Sales Representatives Direct Marketing Telesales Reps Field Sales Reps 94 111 134 155 163 186 189 217 224 316 324 75 79 93 106 117 135 141 159 170 168 176 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Dual coverage approach with frequent contact Act as business consultants Continuous training initiatives Performance driven compensation Significant industry experience Over 1 million pieces of direct marketing material distributed Comprehensive and specialty catalogs, loyalty programs, product/vendor programs, flyers, order stuffers 23

Sales Reps by Location 24

The MWI approach: Value-Added Services Technology systems closely integrated with customers day-to-day operations E-Commerce Platform E-Commerce Product Sales as a Percent of Total Sales 18% 21% 23% 24% 27% 31% 34% 36% 39% 43% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ** US Revenues only, excluding Micro 25

The MWI approach: Value-Added Services E-commerce platform Pharmacy fulfillment platforms SWEEP and Cubex Inventory systems Micro s technologies and technical services Equipment procurement consultation Special order fulfillment Educational seminars Value-added services increase loyalty of customer base 26

MWI Growth Strategies Pursue Strategic Acquisitions Increase Share of Spend from Existing Customers Increase Overall Productivity and Profitability Expand Number of Veterinarians Served Offer Innovative, Differentiated Solutions to Veterinarians Expand Agreements with Existing and New Vendors 27

Strong Growth in Revenues ($ in millions) FYE Sept 30, Total Revenues $2,500.0 $2,347.5 $2,250.0 $2,000.0 $2,075.1 $1,750.0 $1,500.0 $1,250.0 $1,000.0 $750.0 $500.0 $250.0 $195.6 $221.4 $281.2 $341.7 $394.3 $496.7 $606.2 $710.1 $1,565.3 $1,229.3 $831.4 $941.3 $0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 FY 2014 Revenue Guidance: $2.89 - $2.94 Billion 29

Condensed Consolidated Balance Sheets ($ in thousands) Assets 9/30/2013 9/30/2012 Cash $ 953 $ 514 Receivables, net 307,445 288,922 Inventories 326,093 251,375 Other current assets 8,331 11,674 Total Current Assets 642,822 552,485 Total Assets $ 802,555 $ 696,383 Liabilities Line-of-credit $ 18,801 $ 48,080 Accounts payable 324,057 258,741 Accrued expenses & other current liabilities 21,919 20,289 Total Current Liabilities 364,777 327,110 Deferred income taxes 9,321 7,180 Long-term debt & other long-term liabilities 2,138 2,791 Stockholders' Equity 426,319 359,302 Total Liabilities & Stockholders' Equity $ 802,555 $ 696,383 Due to the borrowings incurred as a result of the IVESCO acquisition, the balance on the revolving credit facility as of November 1, 2013 increased by approximately $78.7 million. 30

Return on Invested Capital (After Tax) 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 31