The Motley Fool

National Veterinary Care Ltd (ASX:NVL) reports revenue growth of 26%

National Veterinary Care Ltd (ASX: NVL) has reported its annual result for the year to 30 June 2018.

The veterinary clinic operator reported 26% growth of revenue to $84.2 million. General practice clinic organic revenue growth achieved was 2.51%, which is not bad compared to the standalone vet segment of Greencross Limited (ASX: GXL).

During the year National Vet Care acquired and integrated 13 vet businesses.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 8.5% to $13.1 million. However, the underlying EBITDA margin decreased by 220 basis points to 15.9%, which was a major decrease.

Underlying net profit after tax (NPAT) grew by 6.5% to $6.29 million and the underlying earnings per share (EPS) declined by 6% to 10.73 cents.

The statutory NPAT grew by 41.9% to $6.24 million and statutory EPS increased by 25.7% to 10.63 cents.

The annual dividend was maintained at 3 cents per share, fully franked.

National Vet Care achieved operating ungeared, pre-tax cash flow conversion of 111%. The net debt/EBITDA leverage ratio stood at a fairly healthy 1.82 times at the end of FY18.

The company’s pet wellness program, called ‘Best for Pet’, continues to be a key business initiative and a driver of organic growth. The membership number has swelled to 20,000 members and is offered in 56 clinics.

Managing Director Tomas Steenackers said “The size of National Vet Care’s addressable market within Australia and New Zealand has increased and is now more than $3 billion. The new acquisitions, together with organic growth within the clinics, strong growth in member numbers for the wellness program and a focus on value initiatives and refining our offering through the Management Services and Procurement Group, have all contributed to National Veterinary Care’s FY18’s result.”

Trading update and FY19 guidance

The company said that general practice organic growth for July 2018 was 2.5%.

In FY19 the company has guided for revenue growth of 25%, the gross margin will be in line with FY18 and an underlying EBITDA margin of 16%.

Foolish takeaway

The collapse of the EBITDA margin was the most disappointing part of the result, which led to the muted profit growth despite the strong revenue growth. It was pleasing to see that like for like (LFL) growth continues in FY19, even if it’s only a little faster than inflation.

As long as the margin doesn’t deteriorate further, FY19 could be a bumper year. I’m still happy to hold my shares for the long-term.

A better growth share for FY19 could be this top share which is a leader in the auto industry.

The best dividend stock to buy in September

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison owns shares of Greencross Limited and NATVETCARE FPO. The Motley Fool Australia owns shares of and has recommended Greencross Limited. The Motley Fool Australia owns shares of NATVETCARE FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here’s the best part: we think there’s one ASX stock that’s uniquely positioned to profit immensely from this explosive new industry… taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more