Heska Corporation - Shareholder/Analyst Call

Apr.30.13 | About: Heska Corporation (HSKA)

Heska Corporation (NASDAQ:HSKA)

April 30, 2013 11:00 am ET

Executives

Robert B. Grieve - Co-Founder, Chairman and Chief Executive Officer

Jason A. Napolitano - Chief Financial Officer, Executive Vice President and Secretary

William A. Aylesworth - Lead Director and Member of Audit Committee

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Heska Annual Stockholder Meeting on Tuesday, the 30th of April, 2013. [Operator Instructions] I will now hand the conference over to Dr. Bob Grieve. Please go ahead, sir.

Robert B. Grieve

Thank you, Alex. Good morning, ladies and gentlemen. I'm Robert Grieve, Chairman and Chief Executive Officer of Heska Corporation, which I will refer to as Heska or the company. It's a pleasure to welcome all of you who are here in person, via webcast or via teleconference, to Heska's 2013 Annual Meeting of Stockholders. I'd like to proceed to introduce the officers and directors present at the meeting. To begin with, our Board of Directors. First, Bill Aylesworth, who's our Lead Director, Former Chief Financial Officer of Texas Instruments; Peter Eio, Former President, LEGO Systems; Irwin Gordon, CEO of Landes Foods and Founder and Managing Partner at Trion LLC; Sharon Riley, Former CEO, UT Southwestern University Hospitals; and then Carol Wrenn, Founder and President of Sky River Helicopters.

In addition, I have -- we have Jason Napolitano present, our Executive Vice President, CFO and Secretary; Nancy Wisnewski, EVP, Product Development and Customer Support; Mike Bent, Vice President, Principal Accounting Officer and Controller; Jessica Gard, Vice President, Human Resources; and Claudine Zachara, Vice President, Marketing and Communications.

I'd also would like to introduce guests who include Bob Bond, EKS&H LLP, our independent registered public accountant, and Mike Madden and his colleagues at EKS&H LLP. Also Bill Hardin, our colleague and outside counsel from Osborn Maledon.

I'm now pleased to call the meeting into order. Will the Secretary of the Meeting, Jason Napolitano, please report on the calling and notice of this annual meeting.

Jason A. Napolitano

Stockholders of record, as of the close of business on March 8, 2013, are entitled to notice of and to vote at this meeting. Notice of this annual meeting of stockholders in the form required by law and the bylaws of the company was mailed on or about March 20, 2013 to the stockholders of record as of the close of business on March 8, 2013.

The affidavit to evidence of the mailing of this notice will be filed with the minutes of this meeting. In addition, Ria Hahn [ph] of Computershare Trust Company has been appointed as Inspector of Election, and her oath of office will be filed with the minutes. Ms. Hahn [ph] has with her a list of stockholders entitled to vote at this meeting.

Robert B. Grieve

I declare the meeting has been duly called and the notice has been duly given. Will the Inspector of Election please present her report?

Unknown Executive

Dr. Grieve, there are present in person or by proxy at least a majority of the outstanding shares of common stock.

Robert B. Grieve

Thank you. I declare that a quorum is present and that this meeting is ready to transact business. The proposals discussed today will be submitted to a vote. The formal voting process on each proposal will commence immediately after such proposal has been discussed. Stockholders may vote either by proxy or written ballot. Once the votes are counted and the results announced for all non-advisory matters properly before this meeting, we will adjourn the meeting. We will then have a brief discussion regarding our Director selection process, and I'm referring to the former directors. We have reserved time for questions following this discussion.

There are 5 items of business on the agenda for this year's meeting. The first item is the election of 2 directors to serve a 3-year term expiring at the annual meeting in 2016, or until their successors are duly elected and qualified. As stated in the proxy statement, the Corporate Governance Committee of the Board of Directors has nominated 2 persons to serve as directors for the next 3-year term.

G. Irwin Gordon is the CEO of Landes Foods and also a Founder and Managing Partner of Trion LLC, who has served as a Heska Director since May 2001, and Carol Wrenn, the Founder and President of Sky River Helicopters LLC, who has served as a Heska Director since her appointment in January 2013.

No other nominations were received within the period specified by the company's bylaws or Rule 14a-8, under the Securities and Exchange Act of 1934 as amended. And accordingly, the 2 individuals nominated by our Board are the only persons on whom the stockholders will be voting. Our Board of Directors unanimously recommends a vote for the election of each of these individuals as Directors. We are voting by written proxy and ballot. If there is any stockholder present who has not voted or who wishes to change an earlier vote, please raise your hand, so that a proxy or a ballot may be distributed to you.

If you have previously voted by proxy, you do not need to vote today unless you would like to change your vote. Those voting, well, there's -- no one's raised their hand, I'll say the -- in the event that someone does and -- to feel free to do that. Those voting in person should please complete or receive your proxies or ballots and prepare to give them to the inspector.

The polls are open for this first item of business and will remain open until stockholders have had the opportunity to vote. After which time, I will announce the closing of the polls.

Will the inspector please collect all proxies and ballots? The polls are now closed on the first item of business. Will the inspector please make a tally of the votes?

Unknown Executive

Dr. Grieve, I have prepared a report on the tally of the votes cast on the first item of business and submit a duly signed inspector's report and certificate.

Robert B. Grieve

Based upon Ms. Hahn's [ph] report, the nominees for election to the Board have been duly elected. The second item on the agenda is the approval of an amendment and restatement of our 1997 employee stock purchase plan, which would, among other things, increase the authorized number of shares, which could be issued into the plan by 50,000, and allow for a purchase price that's no lower than the lesser of a 5% discount at the beginning of an offering period of up to 27 months, or a 15% discount at the time of purchase. Our Board of Directors unanimously recommends a vote for the amendment and restatement of the company's 1997 employee stock purchase plan. We are voting by written proxy and ballot. If there is any stockholder present who has not voted or who wishes to change an earlier vote, please raise your hand so that a proxy or a ballot may be distributed to you. If you have previously voted by proxy, you do not need to vote today unless you would like to change your vote.

Those voting in person should please complete your proxies or ballots at this time, and prepare to give them to the inspector. The polls are now open on the second item of the business and will remain open until stockholders have had the opportunity to vote, after which time, I will announce the closing of the polls.

Will the inspector please collect all proxies and ballots? The polls are now closed on the second item of business.

Unknown Executive

Dr. Grieve, I have prepared a report on the tally of the votes cast on the second item of business and submit a duly signed inspector's report and certificate.

Robert B. Grieve

Based upon Ms. Hahn's [ph] report, the amendment and restatement of the company's 1997 stock incentive plan has been approved. The third item on the agenda is to ratify the Audit Committee of the Board's -- the Board of Director's appointment of EKS&H LLP, which I will refer to as EKS&H, as Heska's independent registered public accountant for the current fiscal year. Our Board of Directors unanimously recommends a vote for the ratification of EKS&H as Heska's independent registered public accountant for 2013. We are voting by written proxy and ballot. If there's any stockholder present who has not voted or who wishes to change an earlier vote, please raise your hand so that a proxy or a ballot may be distributed to you. If you have previously voted by proxy, you do not need to vote today unless you would like to change your vote.

For those voting in person, you should please complete your proxies or ballots at this time, and prepare to give them to the inspector. The polls are now open on the third item of business and will remain open until stockholders have had the opportunity to vote, after which time, I will announce the closing of the polls.

Will the inspector please collect all proxies and ballots? The polls are now closed on the third item of business.

Unknown Executive

Dr. Grieve, I have prepared a report on the tally of votes cast on the third item of business and submit a duly signed inspector's report and certificate.

Robert B. Grieve

Based upon Ms. Hahn's [ph] report, the appointment of EKS&H as the company's independent registered public accountant for 2013 has been ratified. The fourth item on the agenda is to offer approval of our executive compensation in a nonbinding advisory vote. Our Board of Directors unanimously recommends a vote for approval of our executive compensation in a nonbinding advisory vote. We are voting by written proxy and ballot. If there is any stockholder present who has not voted or who wishes to change an earlier vote, please raise your hand so that a proxy or a ballot may be distributed to you. If you have previously voted by proxy, you do not need to vote today unless you would like to change your vote.

Those voting in person should please complete your proxies or ballots at this time, and prepare to give them to the inspector. The polls are now open on the fourth item of business and will remain open until stockholders have had the opportunity to vote, after which time, I will announce the closing of the polls. Will the inspector please collect all proxies and the ballots? The polls are now closed on the fourth item of business.

Unknown Executive

Dr. Grieve, I have prepared a report on the tally of the votes cast on the fourth item of business and submit a duly signed inspector's report and certificate.

Robert B. Grieve

Based upon Ms. Hahn's [ph] report, the company's executive compensation has been approved in a nonbinding advisory vote. The fifth item on the agenda is to conduct an advisory vote on the frequency of a nonbinding advisory vote on executive compensation. This vote is required this year by the Dodd-Frank Wall Street Reform and Consumer Protection Act in Section 14A of the Securities and Exchange Act of 1934. By law, stockholders and public companies are to cast an advisory vote on the frequency of a nonbinding advisory executive compensation vote at least every 6 years. Our Board unanimously recommends a vote for a 1-year frequency to holding a nonbinding advisory vote on the compensation paid to our named executive officers.

We are voting by written proxy and ballot. If there is any stockholder present who has not voted or who wishes to change an earlier vote, please raise your hand so that a proxy or a ballot may be distributed to you. If previously voted by proxy, you do not need to vote today until you would like to change your vote.

Those voting in person should please complete your proxies or ballots at this time, and prepare to give them to the inspector. The polls are now open on the fifth item of business and will remain open until stockholders have had the opportunity to vote, after which time, I will announce the closing of the polls. Will the inspector please collect all proxies and ballots? The polls are now closed on the fifth item of business.

Unknown Executive

Dr. Grieve, I have prepared a report on the tally of the votes cast on the fifth item of business and submit a duly signed inspector's report.

Robert B. Grieve

As the 5 items on which we have voted are the only items of business eligible to be brought before this year's meeting, the formal business of the meeting is now concluded. I will now entertain a motion to adjourn the meeting and following the adjournment of the formal meeting, we will have a brief discussion regarding our Director selection process and our current and former directors.

William A. Aylesworth

Chairman, I move to adjourn the meeting.

Robert B. Grieve

For the benefit of the telephonic audio and web audience, Mr. Aylesworth, Lead Director, has moved to adjourn the meeting.

Jason A. Napolitano

I second the motion.

Robert B. Grieve

Again for the benefit of those connected by audio, either a WebEx or by telephone, Mr. Napolitano, Secretary, has seconded the motion. All those in favor, please say aye?

[Voting]

Robert B. Grieve

All those opposed, please say nay.

[Voting]

Robert B. Grieve

The motion is carried and the annual meeting is adjourned.

We will now have a brief discussion regarding our Director selection process and our current and former directors, but before we begin, I'd like to point out that during the course of this meeting, and any question-and-answer period afterwards, officers of the company may make forward-looking statements regarding future events or the future financial performance of the company.

Such statements are predictions only, and actual events or results could differ materially from those made in any forward-looking statements due to a number of risks and uncertainties, many of which are beyond our control, including assumptions about future events based on current expectations, plans, business development efforts, near- and long-term objectives, potential new business strategies, organization changes, changing markets, marketing efforts, future business performance and outlook.

Forward-looking statements speak only as of the time of the statement. Heska does not undertake and specifically disclaims any obligation to update any forward-looking statement. I refer you to the company's most recent filings with the Securities and Exchange Commission, which contain and identify additional information covering factors that could cause the results to differ materially from those contained in our projections or forward-looking statements.

Now our approach to nominating new directors was discussed in detail in the proxy statements issued in relation to this meeting, and I'd like to say a few words on this regard here.

Our Corporate Governance Committee determines desired skills and conducts searches for matching candidates. I have been pleased with the quality of the individuals we have been able to attract as Directors since our initial public offering. At the time of our initial public offering in July 1997, our Board consisted of 2 officers, 3 representatives of large investors, 1 former CEO and 1 former CEO of an acquired subsidiary.

Beginning in late 1998, we made a concerted effort to attract high-quality, independent directors who would represent our shareholders without even the perception of any conflict of interest.

We added one such candidate to our Board on January 1 of this year, Carol Wrenn. Carol was suggested as a candidate by an equity research and analyst who covered our stock. In addition to her recent entrepreneurial activity, she brings significant animal health experience to our Board. Carol was the President of the Alpharma's Animal Health Division from 2001 to 2009, as well as Chair of the Animal Health Institute from 2007 to 2009. Similarly, Bill Aylesworth, current Chair of our Audit Committee, joined as an Independent Director in June 2000. Irwin Gordon, current Chair of our Compensation Committee, joined as an Independent Director in May 2001. And Sharon Riley, current Chair of our Corporate Governance Committee, joined as an Independent Director in July, 2011. Peter Eio, Outgoing Chair of our Audit Committee, joined as an Independent Director in October 2002.

At this point, Peter, to the extent that you're comfortable, I wonder if you could stand for us. I'd like to call to the attention of the audience some of your accomplishments. Peter Eio has served the Board of Directors and shareholders with distinction, from October 2002 to April 2013. It's Peter's final Heska Board in a shareholder meeting. Peter's credentials include 2 honorary doctoral degrees, including in 2009, Doctor of Commercial science from Hartford University. Peter was honored with -- to receive the Prince Henrik Medal of Honor for services in the Danish industry in 1992. His work experiences are extensive, including a directorship of the private company, as well as board service on several charitable and educational organizations. Notably, he served in prominent leadership roles at LEGO Systems where he retired as President in 2001.

Peter served extensively on standing committees for Heska over the past decade, including chairmanship of both the Compensation Committee and the Audit Committee. Peter provided great support and insight to both the Board and to me as CEO. His wisdom, his crafty humor, and his perspectives on the proper use of English will all be missed in the boardroom and on countless telephonic Board meetings. But just the same, each of us looks forward to a treasured friendship into the future. Thank you, Peter.

Louise McCormick served from our -- on our Board from January 2008 to March 15, 2013, when she retired from the Board in connection with her recent relocation to the United Kingdom. Louise received her bachelor and master degrees from the University of Florida and her J.D. from the University of Connecticut Law School. Louise had a career spanning over 25 years with Aetna, with retirement in 2001. Her responsibilities spanned finance, strategic planning and legal positions, including corporate secretary in securities counsel and vice president of strategy, finance and administration.

We are very grateful for Louise's service to our Board, including the standing committees, most recently as Chair of our Corporate Governance Committee. We wish her well, both personally and professionally in this new chapter in her life.

Now I'd turn in acknowledgment to our dear friend and colleague, John F. Sasen Sr. John served the Board of -- Heska Board of Directors from October 1998 until his death on February 26, 2013. He was our first truly Independent Outside-Director. Personally, he was a non-relenting source of support to me as I assumed the CEO role shortly after he joined the Board. The Board, and in turn, the shareholders benefited from John's insights, a long career in sales and marketing and innumerable connections with specific experiences. John's career was most notably with PSS, for he was one of the very earliest employees helping to steer the company through numerous challenges and opportunities over 20 years.

Finally and just before John's death, he played a key role in the acquisition of PSS by McKesson Corporation, joining the McKesson leadership team as Senior Vice President of Marketing. Prior to PSS, John worked in various sales and marketing roles at beBecton Dickinson for over 20 years. In addition to his long service on our Board, John had been Chairman of the Health Industry Distribution Association Education Foundation and Executive Director of the Health Industry Distributor Association. He was also a Director of television and Director of the Boy's Home Foundation. John was a remarkable man and a wonderful Director and is missed.

This concludes my formal remarks. At this time, I would like to provide any of you the opportunity to ask questions. Those of you here in attendance at headquarters in Colorado. Are there questions? Ken [ph]?

Unknown Shareholder

I know this is a real early, but could you comment at all about how the unitors [ph] sales organization of Quatra [ph] about its integration progress?

Robert B. Grieve

Certainly. I'll comment briefly, at least, on that. As you noticed early and again, for the audience here and for those on the telephone and the webcast, Ken Turbovich [ph] has just -- a shareholder and a former research analyst of the company, asks about the integration progress with Quatra [ph] U.S. and I would say, Ken, that it's going extremely well, let's say better than I would have anticipated. The primary focus has been on the integration of commercial efforts, particularly sales. And we'll see, by midyear, ongoing integration in the operations. But at this point, the most progress has been made, I think, where the most value is held, and that's the integration of sales efforts. Thanks for the question. Anything else? And hearing none, I'd like to thank everyone here, today, for your interest and support. Thank you, also, for those that have connected by phone or WebEx. We appreciate the opportunity, with the interest and support. And thank you very much for joining us. Good day.

Operator

Thank you. This concludes the Heska Annual Stockholder Meeting. Thank you for participating. You may now disconnect.

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