Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

VCA Antech, Inc. (WOOF)

Q4 2008 Earnings Call Transcript

February 19, 2009 4:30 pm ET

Executives

Tomas Fuller – VP, CFO and Secretary

Bob Antin – President and CEO

Analysts

Ryan Daniels – William Blair

Art Henderson – Jefferies & Company

Robert Willoughby – Bank of America

Rob Mains – Morgan Keegan

Mark Arnold – Piper Jaffray

Mitra Ramgopal – Sidoti

Operator

Good day and welcome to the VCA Antech Incorporated fourth quarter 2008 financial results conference call. Today’s conference is being recorded. Before we commence the discussion, I would like to preface the comments made today with a statement regarding forward-looking information. The information contained in this presentation includes forward-looking statements that involve risks and uncertainties.

Such statements appear in a number of places in this presentation and include statements regarding

One, our intent two, our belief or current expectations with respect to our revenues and operating results in future periods three, our expansion plans four, and our business strategy and ability to successfully execute on that strategy. We caution you not to place undue reliance on such forward-looking statements. Such statements are not guarantees of our future performance and involve risks and uncertainties. Our actual results may differ materially from those projected in this presentation for this reason, among others, discussed in our filings with the Securities and Exchange Commission. The information in this presentation concerning our forecast for future periods represent our outlook only as of today's date, February 19, 2009, and we undertake no obligation to update or revise any forward-looking statements whether as a result of new developments or otherwise.

Our earnings and guidance releases are available on our website at www.investor.vcaantech.com. In addition, an audio file of this conference call can and will be available on our website for a period of three months.

At this time, I like to turn the conference over to Mr. Tom Fuller. Please go ahead, sir.

Tomas Fuller

Thank you. And thank you all for joining us on the fourth quarter 2008 WOOF earnings call.

I'm pleased to announce that we had a very solid quarter for the fourth quarter of 2008, and clearly we are as most companies feeling the continued challenge in the economy. It has remained difficult for us to maintain our historical organic growth rate as. So, we see some deleveraging, but I think operating team has done a fantastic job of managing costs, focusing on margins, focusing on acquisitions; we had a pretty strong quarter.

And for the fourth quarter of 2008, we reported $0.30 per share compared to $0.29 per share in the fourth quarter of 2007, and I would point out that the fourth quarter of 2007 and 2008 include the credit for the decline of estimated workers compensation liability for prior year policies. So, the 2008 number of $0.30 per diluted share included $0.02 credit for the workers comp.

For the year, we reported a $1.55 per share compared to $1.41 per share in 2007, representing a 10% increase over the prior year.

For the fourth quarter, revenue increased 6.7% to $303 million and gross profit increased 6.6%, operating income increased 6.5% and we saw margins both operating margins and gross profit margins being flat. Gross profit margins of 24.4%, same as prior year and operating margins flat at 16.8% for both years.

In Antech Diagnostics, we saw a 1% increase in revenue to $69 million for the quarter, driven primarily by acquisitions and one additional billing day. Gross profit decreased 6.9%, operating profit decreased 10.8%, and operating margins were down 460 basis points from 38.9% in 2007 down to 34.3% in 2008. Much of that decrease is due to our expansion to Canada similar to the prior quarter, some R&D initiatives, and general deleveraging including especially our transportation network, which is a very large fixed cost in the lab business.

Our internal growth for the quarter, we saw a 1.7% increase in number of acquisitions to 2,901,000, and a 1.7% decrease in average requisition to $23.64 and that decrease are similar to the prior quarters due to mix, our fecal test, and a reduction in test per sample. Total requisitions for the quarter was 2,932,000.

In our lab count, we added two labs, two STAT labs during the quarter. So, we went from a count of 42 at the beginning of the quarter to 44 at the end of quarter and end of the 2008 year.

VCA Animal Hospitals had a really good quarter, 9.4% increase in revenues to $229 million primarily from acquisitions as internal growth was essentially flat. On that 9.4% revenue increase, gross profit increased 19.5%, gross profit margins increased from 16% in 2007 to 17.5% in the fourth quarter of 2008.

Same-store margins, showed a great increase of 210 basis point improvement in same-store gross profit margins up from flat revenue growth, 16.2% last year to 18.3% this year. From that 210 – with same-store margins up 210 basis points, our combined hospital margins were up 150 basis points due to the lower margins at acquired hospitals bringing the combined margins down, with great margin improvement of 210 basis points same-store improvement.

Operating margins were up, as I said, 190 basis points from 13.3% in 2007 to 15.3 in 2008 due to the improvement in the gross profit margins as well as our G&A expense as a percentage of revenue declining 20 basis points in 2008 compared to 2007 down to 22.3%.

The components of same-store growth; average order increased 5.3% to $145.51, and the number of orders decreased 5.1%. Similar to what we saw in the first 3 quarter, we had a very strong quarter for acquisitions and ended the year in a very strong note. We acquired 8 animal hospitals with annual revenues of $31.7 million taking us to a $118 million total for the year with 51 total hospitals acquired.

For the $31.7 million revenue acquired, we paid $35.8 million, which comes in a bit higher than we have seen in 113%, but I would point out that 2 of those 8 acquisitions were two fairly large hospitals, which for strategic reasons we paid a higher than normal price. Taking those two hospitals out of our average purchase price is 101%. So, right in line with what we have seen for the past 20 years.

The hospital count, we started with 467 hospitals. We acquired 8, of those 8 we merged two of those into existing facilities, and we closed and merged and sold two other facilities. We ended the quarter with 471 hospitals. So, started with 467, adding a net six from acquisitions, close 2, give us 471.

Medical Technologies; our Medical Technologies business had a very good quarter, 70% decrease in revenues down to 12.9%. We actually saw an increase in gross profit of 1.1% gross profit margin improvement from 35.2% last year to 35.3% in the fourth quarter of 2008, and much of that improvement is due to – in our selling digital radiology business, selling a configuration with less and low margin personal equipment. So, we had lower sales and higher margin sales, and we also generated more revenue from our support and customer services, which is very high margin. Operating income increased 29.6% from $3.1 million [ph] last year to just $21.7 million [ph] in 2008. Operating margins were up 380 basis points to 13.4%. So, decline in revenues but a very strong improvement in margins in Sound Technologies.

In terms of the balance sheet, we ended the quarter with $89 million of cash. Our debt position is $553 million of debt, which includes $522 million of the senior term notes of which we have interest-rate swaps of $325 million, about 4.5% LIBOR. So the cash for that is the 4.5% plus anticipated margins of 6% rate on the $325 million, and the balance $29 million, roughly $20 million floats at LIBOR plus 150. Current LIBOR is around 0.5%. That is around 2%.

Operating cash flow for the quarter significant $50.6 million, up 33.5% from the prior year which does not, I think the annual number that 15.5% increase to $193 million is more than an indicative number. The fourth quarter number was impacted by timing of tax payments, which were less then we saw in the prior years, we saw a very big increase.

CapEx for the quarter $15.3 million for the quarter and $55 million for the year. I think all in all, as we see the weakness in the economy and pressure on our internal growth rate; we have done a fantastic job of managing through it, which gets us into looking forward into the 2009 year.

We continue to see weakness in the economy as most companies are, and I think we will see more of it, which has made it difficult for us to maintain our historical growth rate and clearly revenue growth is much more volatile. Having said that, we have done a fantastic job of managing our cost structure, and I think the industry is a great place to be. Pets continue to be a very important part of our lives. We continue to be bonded with our pets, but I think we have been and hope to be very resilient and hold up well in this economy.

Based on looking forward, the guidance range has broadened that we see in the past. We are currently looking at revenues of $1.36 billion to $1.39 billion, net income of the range of $135.2 million to $141.1 million and diluted earnings per share in the range of $1.56 to $1.63 per share.

And now Bob will go through some operating results.

Bob Antin

Thank you very much, Tom. Probably the piece that I could add to Tom is that we are grateful in this world where visibility is tough, we have been fortunate to operate within a very tight range in spite of feeling the economy in a lot of different markets. Overall, the business seems to be holding.

On the hospital site, we still have a good deal of our hospitals that are running positive making efforts and continuing growth. And there are some markets that we do feel and those of the ones that were repeated in the past, and while there is very little correlation we do see the areas like Las Vegas, some of the Florida markets, Detroit, Riverside, and California being pressed by their economy. We absolutely see it. And fortunately, the management has been very good on the hospital side in managing the revenue and also the expenses.

In addition to that, a little bit of the cloudiness is we had – you hate in this market even to mention weather, but unfortunately in some of the areas where we had, we were impacted a little bit with the very, very peculiar winter particularly in the Northwest and certainly the Midwest. So, it added a little bit to it but having said that with the pressure of the economy and even the weather in some places closing down cities and airports for almost a week at a time. I think the results in the hospitals are phenomenal. So, I think the hospitals did a great job.

On the lab side, the lab seems to feel the environment. As Tom said it has run flat, up a little bit for the year. We still continue to hold market share, and market share is just about flat. While it is competitive, we have done a good job. We have expanded into Canada, and now we have opened up four locations in Canada. So, we are taking on some additional expense as a result of expanding into a new market and investing in some R&D, but I think they have done a great job and I think we will continue to focus heavily on the expense side of the lab business.

Our Medical Technologies, has Tom mentioned there, gross profit margins improved and I think they – as an area in technology the average selling expense for digital radiography and ultrasound is among the largest expenditures. And they too feel the headwind of the market, but nonetheless there still continues to be a good flow of orders. But we expect that we will feel those headwinds in medical technology as we did in the fourth quarter.

All in all, I think, for the company and the industry, it has been a phenomenal place relative to everything else and even in itself it is pretty clear that pet owners are amazingly resilient. And I think our hospitals and the veterinarians who work at our hospitals in the industry have done a phenomenal job offering the comfort to pet owners. So, they still feel comfortable coming into the hospitals.

With that I will turn it over now and open it up to questions.

Question-and-Answer Session

Operator

(Operator instructions) We will have our first question from Ryan Daniels with William Blair.

Ryan Daniels – William Blair

Hi, good evening guys. Just a couple of quick questions, first off on the cost controls during the quarter, was there anything specific at this period that allows you to have such strong gross margin performance, as going into the quarter just having better expectations of the volume choppiness or did you have any specific supply agreements renegotiated that should continue, any color there will be very helpful?

Tomas Fuller

I think it is all of the above. I don't think we're unusual. I think the operating people on the hospital side, who go to work every day with the smiling face, recognize what is out there. And, I think, we started to have some good visibility. So, watching composition salaries and ours became important. And I think they've done an excellent job. So we certainly we had he benefit there. I think, we also had benefit like most companies in redressing some of our agreements and they are across the board whether it be insurance supplies, and some of it had more success with others, but looking at expenses has been an important part of what we're doing as well as what other companies do. So, I think we felt it across, but I think the day-to-day management on the hospital side has been important.

Ryan Daniels – William Blair

Okay, great. And then if we think about your ’09 guidance, can you give us a feel for what you are incorporating in there from acquisitions. Do you anticipate a similar year, may be a little bit of a step down given the strength in ‘08, any color there?

Tomas Fuller

I think since the guidance didn't provide specifics, I think you will see a step down in the number of acquisitions at least included in the guidance. And some of that is going to be wait-and-see what the market does. Hopefully, we will continue to have the discipline to be selective in the acquisitions, but I think we started off pretty well. I think the first quarter was good, and we are just going to be patient throughout the rest of the year.

Ryan Daniels – William Blair

Okay, if it is similar just kind of reading in the revenue –

Tomas Fuller

It will be likely be less than it was last year.

Ryan Daniels – William Blair

Okay, even if, I guess it is in the $70 million, $60 million range does that kind of portend, if you will, flat to slightly down same-store growth. I know you probably don't want to give guidance on that specific line-item, but backing into it, I guess we can kind of see that – is that a fair assumption?

Tomas Fuller

You know, I will give you from the last quarterly release to this one. I tell you because you know that we are always pretty conservative but direct. We like the rest of the world did not know what to expect, but I think give or take a few points, I think that is the world we're living in right now, which is why there is such a focus on expenses. So, we don't have a crystal ball either.

Ryan Daniels – William Blair

Sure, and then a few more quick ones and then I will hop off. The first one will be on pricing, did you guys implement the typical price increases you do every year, and has there been any push back on that?

Tomas Fuller

We have, on the lab side, we did provide increases in the beginning of February as we historically do. We don't think there's any push back but the invoices really haven't gone out. But I doubt it. And on the hospital side, it is gradual throughout the year. So, it has been no different.

Ryan Daniels – William Blair

On the hospital side, has there been any internal debate about maybe leveraging price a little bit more given that people who are coming – and the hard part seems to be getting people to come, but when they are there, they are still spending on their pets. So, have you been able to offset some of that volume weakness with greater pricing or might you try to do that in ‘09?

Tomas Fuller

I think in some markets they look at it, but I think there has been a general sensitivity because, you know, again we have some governor on pricing even in terms of what we the doctors can do inside the room with the client. So, you know, we are aware of it and we follow it, but I don't think we look at raising the prices significantly higher than they already are to try to offset volume.

Ryan Daniels – William Blair

Okay, and then the last question, I will hop off here, but just looking at the strength in your cash flows and kind of CapEx and at the M&A pipeline does come in a little bit, it looks like you're going to be sitting with well north of $100 million in cash next year. Any thoughts on what you may do with some of that excess cash, are you going to try to pay down debt or you know, any thoughts on that would be helpful.

Bob Antin

Out of all the priorities that are left out paying down debt would probably be our number one priority.

Ryan Daniels – William Blair

Okay, great. Thanks a lot and nice quarter guys.

Tomas Fuller

Thanks a lot, Ryan.

Operator

We will go next to Art Henderson with Jefferies & Company.

Art Henderson – Jefferies & Company

Hi, good afternoon. Very nice quarter. A couple of – just following off what Ryan was asking, your guidance that you have given out here for the next year, it does include acquisitions, did I understand that correctly?

Tomas Fuller

Yes.

Art Henderson – Jefferies & Company

Okay, all right, just wanted to make sure. Bob, just out in the field are you seeing multiple – barring I guess the two acquisitions of the larger, since that time have you seen any softening in the expectations from sellers?

Bob Antin

You know, you feel in some cases a greater desire to sell that I think is natural as the process goes on and if there is recovery or this recession gets any worse, I think you will see softening of prices but right now not really and I don't think it is a material issue anyway, just because the typical cash flow inside of the hospital is pretty good. But we haven't seen it yet.

Art Henderson – Jefferies & Company

Okay that is fair. And then on the cost side, you guys have done a lot of work last year to realign the cost aspects of your business, but as you think ahead, where would be the opportunities from here on out in terms of being able to reduce that overhead or any sort of variable costs?

Bob Antin

You know, on the individual hospitals, when you go to hospital side more than 50% of our hospitals are still growing. So, we are very fortunate. We are a great exception inside this world right now. In the areas where – in some of the areas where we’re weak, they do watch it, and they do pay attention, but you also have to realize there is some deleveraging that takes place and there is a point where cutting salaries certainly can't make up for lost revenue. But we pay close attention to it, and so far we have been pretty good at it.

Art Henderson – Jefferies & Company

Okay, last question, I can't remember historically if you have given out quarterly, not specific quarterly guidance, but in the first quarter is there any sort of directional aspects that you can give us relative to this quarter?

Tomas Fuller

You know, we don't give out quarterly guidance.

Art Henderson – Jefferies & Company

But from your comments, I guess you were saying that nothing has changed significantly in the business from Q4, as we got into the New Year.

Tomas Fuller

I think if you take a little bit, you know I'm real hesitant – to give or take a little bit, we are operating in the same world in the fourth quarter. But, you know, we do feel like everybody else the pressure. You know, when you turn on the TV set, you feel it but, the wonderful part of what we feel right now is most people in this industry have a happy smiling face. So that is an advantage – that is an advantage that we have. We absolutely feel it, and it goes up and down it goes up and down by markets. So it is – I'm giving you a long-winded answer without giving you an answer and I apologize.

Art Henderson – Jefferies & Company

No, that is fine. Thanks very much, very nice work.

Tomas Fuller

Thanks Art.

Operator

We will go next to Robert Willoughby with Bank of America.

Robert Willoughby – Bank of America

Hi, Bob and Tom, I did feel spending both acquisitions and the real estate brought on board, I guess, comes in about $145 million, there was a reference that you thought the deal spending would be lower, and a number of $70 million or so was thrown out. I mean is that the magnitude or are we going to be slightly lower than that because that is obviously a meaningful drop.

Tomas Fuller

Well, it is not a meaningful drop in terms of what we said in the past. I think we said that we seized an opportunity in ‘08, we seized an opportunity in ‘08 to be aggressive. I don't think our expectation, I think I said it in previous calls, was to ever match last year, but I think we are looking in that range. And if it changes, we will certainly let people know, but I think right now we are looking in that range, and I think we are getting off to a beginning of the year that seems like we are heading in that direction.

Bob Antin

You know, it is also – I think we want to be wise and keep an eye on the marketplace, prices do drop or vary in strength and so it is not hard and fast. I think we just have a good pipeline, and I think we as you know from the company, we have a pretty good history of being disciplined. So, I think we are going to follow that path.

Robert Willoughby – Bank of America

And a CapEx number, have you thrown that out for ‘09?

Bob Antin

No, we haven’t.

Robert Willoughby – Bank of America

Or something more normally above what you spent this year would be a reasonable expectation on a larger base of hospitals?

Bob Antin

I think that will be in the ballpark. I think your assumption is pretty good.

Robert Willoughby – Bank of America

And you brought on board a lot of real estates this year, is that an asset that potentially you would seek to sell going forward?

Tomas Fuller

You know, we have always – not the real estate, real estate business but sometimes it is necessitated and as part of the overall balance sheet we would consider it.

Robert Willoughby – Bank of America

But no plans for any major changes in the near future.

Tomas Fuller

No, no I don’t think we are looking currently at bundling all of our real estate and spinning it off, no.

Robert Willoughby – Bank of America

Okay, that's it. Thank you.

Tomas Fuller

Thank you.

Operator

(Operator instructions) We will go next to Rob Mains with Morgan Keegan.

Rob Mains – Morgan Keegan

Yes, good afternoon. Tom, one numbers question on the income statement, your tax rate in the quarter was higher than it has been in the past. Is that a true up?

Tomas Fuller

No, it is just nondeductible expenses that came through in the fourth quarter. So, we do not expect it to be the tax rate for next year.

Rob Mains – Morgan Keegan

Okay, so it will stay something like 39, 40 neighborhood.

Tomas Fuller

Yes.

Rob Mains – Morgan Keegan

Okay, in prior quarters you have talked about your higher acuity services, surgeries and things like that holding up better than the more routine services, is that still the case?

Tomas Fuller

I think right now actually it is hard to make it across the board. It depends on the market. In some of the specialty hospitals, and it is almost region by region. Some of the specialty hospitals are doing remarkably well, and others are feeling it but surgery as a rule of thumb is pressured. There is some pressure on surgery right now as there is boarding, which will be intuitive. I would suspect doggie day care, if we were in that business, we will be hurting them as well. But we do feel a little bit on surgery.

Rob Mains – Morgan Keegan

Okay, so if you were to compare specialty services versus routine services, kind of same growth rates between the two services?

Tomas Fuller

I would say overall specialty is probably a little softer, overall.

Rob Mains – Morgan Keegan

Okay.

Tomas Fuller

It is hard to tell [ph], because some of the specialty hospitals are up significantly and others, you know, in the areas that I would mention that were also impacted by the way by weather will be down. So, I think specialty by and large is – may be a little bit more affected than general right now.

Rob Mains – Morgan Keegan

Okay, when you – another question on the acquisition front, if you I understand what you are saying about reasonable to expect a less hectic acquisition this year than last. From where we are sitting right now versus where you where last year, is the pipeline looking same, larger, smaller?

Tomas Fuller

I think it is similar. I think it is similar – I think it is similar pipeline. You know, capital gains affected capital gains wasn’t raised, and the specter of it now maybe took some people's interest away, but the loss in people's retirements and 401(k) makes having money off the table for their life's work may be even more important now. So, I think the pipeline is pretty good.

Rob Mains – Morgan Keegan

Okay, in terms of what is going on in the labs, I got a couple of questions, one is, the two equipment manufacturers who both introduced new tabletops last year plus whatever, do you have any kind of sense as to whether you're getting some reference lab business or more reference lab business than in the past taken away by hospitals doing the services in-house?

Tomas Fuller

You know, it has always been a pressure and the machines that are coming in have a little more capability, but our own in-house lab still is negative. So, I think it is an area that we pay attention to but it is hard to tell. It is truly hard to tell. As I said we have maintained market share. I don't think are going to fall off, rather it is in our own hospitals or outside is terribly different. So, I think the flatness is really just coming from the market.

Rob Mains – Morgan Keegan

Okay. So if I look at the hospital same-store versus the lab same-store this quarter compared to the third quarter there is a more dramatic falloff in the lab business, can I kind of surmise from that that customers coming into the hospital are just doing less testing.

Tomas Fuller

I think you could – I think that would be a good one.

Rob Mains – Morgan Keegan

Okay, and then last question, when I look at the guidance for this year, the low end of your revenue guidance implies about 7% top line growth in 2009. You had 5% in the fourth quarter and given that you're not talking about any kind of significant pickup in volumes, so I assume that the difference is just going to be sort of tail of the acquisitions that you made this year.

Tomas Fuller

Exactly.

Rob Mains – Morgan Keegan

Okay, all right. I will get back in line then. Thanks.

Tomas Fuller

Thank you.

Operator

We will go next to Mark Arnold with Piper Jaffray.

Mark Arnold – Piper Jaffray

Nice quarter guys. I guess maybe just to start with, I think back in the third quarter you talked a lot about just the huge volatility and kind of week-to-week volumes, and I guess as the quarter, as the fourth quarter went along, did that volatility decrease significantly and if so does that give you even greater confidence I guess in your 2009 guidance?

Tomas Fuller

I can’t – the volatility.

Mark Arnold – Piper Jaffray

Well, I think you talked a lot about a week-to-week swings and even individual hospitals that were extremely dramatic.

Tomas Fuller

It is probably the same.

Mark Arnold – Piper Jaffray

Okay, so that hasn’t changed and you continue to see that. Okay, and then Bob I think you said that over 50% of your hospitals are still growing, has that changed materially from the third quarter. I think at that time you guys talked about two thirds of your hospitals still performing and you didn’t define what that meant but have you seen more of your hospitals feeling the – really feeling the impact at least at a more extreme level here in the fourth quarter or should we look at the overall performance about the same with –

Bob Antin

You know, my instinct is, my instinct is it is similar. But only one variable that came in was, as an example, we have a fair number of hospitals in the Northwest and if you recall Portland and Seattle were shut down, which did not happen in prior years. So, I think there is similar amount of volatility and, you know, the weather in the end I think had an impact on us, but I think the answer, the general answer is, the volatility is probably very similar.

Mark Arnold – Piper Jaffray

And then just one more question on the hospitals, to the extent that some of these facilities, particularly in certain markets are dramatically underperforming how much patients will you have particularly if you have clusters of facilities in the market to keep those facilities open versus merging additional facilities – merging facilities into one. And do you expect may be to do a little bit more of that then you have historically here in 2009 or is it still too early to tell.

Tomas Fuller

You know, it's a great question. And we are in the fortunate position of not having very many hospitals that are cash flow negative. And since they are not, the patience is probably pretty great. Where there are opportunities, where you do not have least exposure to merge, we look at that as a business strategy to begin with. But fortunately, we don't have very many hospitals that are cash flow negative. They may be underperforming to the average of our margins and performance, they may be short of doctor, which may be fixable, particularly in this market because the number of doctors available are much greater, but if we had this circumstance we would certainly look more aggressively to merge but fortunately we are not in a position where we have a whole lot of hospitals that are cash flow negative.

Mark Arnold – Piper Jaffray

Okay, just one lab question. You guys talk about expanding into Canada this year. It had a little bit of a drag on margins in Q3, and it sounds like in Q4. Do you expect these labs to contribute positively in 2009, and maybe just give us your expectations? I know there are very small but –

Tomas Fuller

Yes, we do expect it to ramp up there in revenue. We are the new kid on the block is. So, we are having to earn it. So, we are working hard and we do expect it to positively contribute in 2009.

Mark Arnold – Piper Jaffray

Great, thank you.

Tomas Fuller

Thank you, Sherlon.

Operator

We will go next to Mitra Ramgopal with Sidoti.

Mitra Ramgopal – Sidoti

Hi, guys. Just wanted to follow up again on the guidance that you issued, are you assuming that the situation we saw in the fourth quarter will continue, or things get a lot worse before they get better?

Tomas Fuller

I don't think we are giving – if I get your question I'm not – we are not trying to give first-quarter guidance, but to answer that I think really holds is you know, there is a little bit of choppiness, uncertainty that is going on. I don't know if that is any different than we felt in the fourth quarter, but if it is different it is not going to we hope it is not going to be and I am not sure.

Mitra Ramgopal – Sidoti

Okay. The one thing that I was trying to get at, for example, based on lot of forecasts out there already unemployment rate have increased significantly, potentially a lot more foreclosures et cetera. Just wondering given that could happen as the year progresses, this year’s guidance you say it is pretty conservative?

Tomas Fuller

Well, you know, I think we are trying as hard as we can to come up with a reasonable range, but you know if we see some of these large banks go out and it affects the communities, it is going to be hard but even if that does happen, we still have the bulk of our hospitals that are very, very healthy. But I think we assume some of that in our numbers but I don't think it is – I don't think we are capable of articulating the unexpected. So, I think we are pretty comfortable.

Mitra Ramgopal – Sidoti

Okay, thanks.

Operator

And it appears we have no further questions in the queue at this time. I will turn the conference back over to Mr. Antin for additional or closing remarks.

Bob Antin

Thank you very much, and we certainly recognize that we are in tough times, but we also recognize that as a company, I say this to many of the managers and executives on the phone, we are very fortunate to be in a great industry, and while we have certainly some challenges in managing expenses, we still have a wonderful circumstance where we have phenomenal clients, who look to your pet as they look to a member of their family. And while they are challenged, they are trying very hard to respond to their needs both on the client side both as the hospital owner, as a pet owner. And I just want to thank everybody for the great effort and we feel very fortunate. So, thank you very much. Bye.

Operator

That does conclude today's conference. You may disconnect at this time. We do appreciate your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: VCA Antech, Inc. Q4 2008 Earnings Call Transcript
This Transcript
All Transcripts