National Veterinary Care Ltd (ASX: NVL) is holding its AGM today and gave a trading update & guidance as part of the event.
In the presentation National Vet Care management reminded investors that in FY19 the company grew revenue by 43.6%, increased underlying earnings before interest, tax, depreciation and amortisation (EBITDA) by 37.7% and net profit rose by 28.9%. It also declared a dividend of 3.5 cents per share, an increase of 16.7%.
So far in FY20, National Vet Care has grown its network by 5.1% to 103 clinics, it has also increased its 'best for pet' members by 9.2% to 27,520. It has also increased the number of clinics using its management services (MS) by 17.4% to 500 – it now represents almost a quarter of the small animal market through its owned clinics and the ones using MS. It's targeting 600 clinics by the end of FY20.
Excluding Pet Doctors, the group's EBITDA margin improved from 16.2% in FY18 to 17.2% in FY19.
The vet business outlined a number of initiatives it plans to do to increase Pet Doctor's EBITDA margin from 14.3% in 2018 to around 20% by the end of 2020, which will then be a similar level to the company's other New Zealand clinics.
To improve group profitability further the company is focusing on using reporting tools to improve performance and help poorer performing clinics. It's also merging some of the small clinics to benefit from larger size operations.
In September 2019 it opened its first greenfield clinic in Queensland with all the usual pet services including grooming, cat boarding and dog daycare. Radiation treatment and hydro therapy are planned. This is a larger-than-usual clinic to accommodate the dog daycare and a coffee shop.
Trading update and guidance
Over the 12 months to 30 September 2019, the company has achieved total organic growth of 2.46%.
It's guiding FY20 underlying revenue to be above $140 million, which would be 20% growth above FY19's revenue total. The underlying EBITDA margin is expected to be 15.5% to 16% in FY20, compared to a margin of 15.4% in FY19.
Foolish takeaway
So it seems National Vet Care is predicting revenue growth of at least 20% and that underlying EBITDA can grow even faster.
