MWI’s Cleary looks for growth in the year ahead

The timing for MWI Veterinary Supply’s annual national sales meeting and trade show, Aug. 1 – 6 in Carlsbad, Calif., couldn’t have been better. Just a few days earlier, the Meridian, Idaho-based company reported that total revenues for its third quarter were $347.7 million, 40 percent higher than revenues for the same period in 2009. Although 23 percent of that growth was related to the company’s acquisition of Centaur Services Ltd., a supplier of animal health products in the United Kingdom, 17 percent was due to organic growth in the United States. Net income increased 38 percent, to $9.1 million.

The meeting had over 600 attendees between the MWI sales team and its vendors. At the core of the meeting were breakout sessions with sponsoring vendors, as well as a busy trade show floor, where MWI reps had the chance to get hands-on learning on the products they sell. The keynote speaker was Lance Fox, DVM, a well-known motivational speaker, who climbed Mount Everest. There was also a special night of entertainment provided by the Naughty Dawgs, a top notch rock band made up of MWI sales reps. The tone of the meeting, on the heels of reporting record growth, was very upbeat.

“One of the nice things about our growth is that it occurred across a number of geographic regions and across all the species categories,” said MWI President and CEO Jim Cleary, speaking with Vet-Advantage Publisher Chris Kelly. That said, the largest growth came in the companion animal market and in areas of the United States on which MWI has set its sights – in the Northeast, Southeast and Midwest.

Cleary attributed the growth to a number of factors, not the least of which was the addition of 22 outside sales reps since Oct. 1, 2009. Many of the new reps came from manufacturers, including Fort Dodge, following that company’s acquisition last year by Pfizer. “These are people who have experience in the industry, customer relationships and good training,” he said.

“We’ve seen great growth among the new reps, but we’ve also seen nice growth among our tenured reps,” he continued. Thirty-seven percent of the company’s growth in the United States through June 30, 2010 has come from existing customers, while 63 percent has come from new customers.

In addition to augmenting the sales force, MWI did some restructuring, creating an eastern sales district under the direction of Spencer Breithaupt, who reports to MWI Vice President of Sales Jeff Danielson. “That gives us additional resources and focus in the eastern part of the country,” said Cleary.

While MWI is celebrating a successful quarter, the company is also looking forward to a stronger year. “The production animal market seems to be improving,” said Cleary. The past 18 months have been “challenging” for those serving the production animal market, he said. But cow/calf operations and feedlots are showing signs of strengthening. “And while dairies are not out of the woods yet, they are certainly doing better than they were a year ago.” The equine market has probably been
affected more than the others by the adverse economy, he pointed out.

Cleary is also expecting growth from sales of flea/tick and heartworm products. “Last year, we represented solely the Merial line,” he pointed out. “Now, being able to carry all lines helps us, because when our customers call us, they are able to order virtually all of their products from us. There’s no longer any reason for an MWI customer to call another distributor.”

Though the industry probably won’t see the rapid growth it saw in the past decade, it should return to low growth in 2010 and beyond, said Cleary. “And if you compare that to 98 percent of the industries out there, veterinary is still a lot better than they are.”

“We want to lead the industry in value, efficiency and innovation,” said Cleary. The company will continue to invest in its sales force, both existing sales reps as well as new ones. “We’ll also continue to invest in our value-added services and technologies, including our e-commerce platform, which we feel is leading edge.” In fact, MWI’s Internet sales to independent veterinary practices and producers grew by 44 percent for the third quarter compared to the same period in the prior fiscal year. Product sales from the Internet as a percentage of sales in the United States increased to 36 percent for the third quarter, compared to 32 percent for the same period in the prior fiscal year.

“We find that when a customer uses mwivet.com, they become a more loyal customer, their average order size goes up and errors go down,” said Cleary. More than 10 years ago, MWI made the decision to compensate outside and inside sales reps for sales generated over the Internet. As a result, reps are free to encourage their customers to order online. “It really frees up their time to provide higher-value service to the clinic, and to detail products and programs,” he said.

The company will also continue to invest in its SWEEP™ inventory management system for clinics, as well as its pharmacy fulfillment services for companion and production animals, said Cleary.

MWI will also continue to invest in its distribution network. The company has 12 distribution centers, the largest being the 105,000 square-foot Kansas City facility. MWI also recently announced it will move into a larger, improved facility in Visalia, Calif. The new distribution center will measure 87,000 square feet with 30-foot clearance. The existing facility is just 52,000 square feet with 18-foot clearance.

“We have been really successful at continuously improving our efficiency, which we define as driving down our operating expenses as a percent of sales,” said Cleary. In fact, the company’s selling, general and administrative (SG&A) expenses as a percentage of total revenues were 7.9 percent for the third quarter, compared to 9.2 percent for the same period in the prior fiscal year.

This fiscal year, MWI will have approximately $1.2 billion of revenues, excluding the gross sales from agency commissions, said Cleary. “If we included agency, they would be substantially higher. But I focus on being better, not bigger. Bigger isn’t better. Better is better.”

Sidebar – 1:
Award winners
Brian VanBeek Highest Overall Sales Central States
Clint Herbst Highest Overall Sales Southwest
Dagmar Sachs Highest Overall Sales Southeast
Jayne Robinson Highest Overall Sales Northwest
Michelle Periko Highest Overall Sales Gulf States
Nate Jackman Highest Overall Sales Great Lakes
Rita Zitterman Highest Overall Sales California
Scott Koch Highest Overall Sales Northeast
Tom Woods Highest Overall Sales Rocky Mountain

Sidebar – 2:
Charlie Quick:
Joe King Award Winner“In the time that we knew Joe King, we learned that he was a simple individual. He worked hard, played hard and had a very focused view on his business. He lived what the MWI core values (Customer Service, Integrity, Dedication, Innovation, Quality) state and believed that customer needs were everything. We also admired his entrepreneurial spirit in entering a VERY competitive market and finding success. He chose the best team, worked hard, and believed in what he was doing.” Congratulations.