People love their pets. That love is paying off big for a little-known Meridian company that has quietly grown into the nation's biggest veterinary supply distributor and Idaho's third-largest publicly traded company.
MWI Veterinary Supply provides veterinarians everything from pet food to pharmaceutical products.
Pet owners spend millions on their pets. In recent years, they've put treatment on par with humans, paying veterinarians to complete high-end procedures like MRIs and CT scans.
"People have a love affair with pets," said Mike Cox, an analyst with Piper Jaffray who covers the industry. "They're treating them better and better, starting with better and high-end food and supplies and evolving to more-advanced medical care for pets. It all requires more supplies and more prescriptions being written."
That has brought millions to MWI's bottom line.
"We crossed the $100 million mark in 1998 and in the past nine years we've grown by about seven times," says MWI Veterinary Supply President and CEO Jim Cleary.
The company's roots go back more than 30 years. In 1976, Nampa veterinarian Millard Wallace Ickes started a small veterinary distribution business in the back of his veterinary practice. Ickes is now in his 80s and no longer with the company, but his initials still make up its name. His photo graces the walls of every distribution center and the corporate offices.
Today MWI has 13 distribution centers across the country that can deliver products to veterinarians overnight. MWI employs about 825 people, including nearly 200 in the Treasure Valley.
Earlier this month, the company reported $710 million in sales for fiscal 2007. It predicts sales of $825 million in 2008.
MWI went public in 2005 at $17 a share trading under the symbol "MWIV" on the Nasdaq Stock Exchange. Its stock is trading near its year high of $46. It closed at $42.98 a share Tuesday.
Because Washington Group International is now part of San Francisco-based URS Corp., MWI is now the Treasure Valley's third largest publicly traded company, behind Micron Technology and IdaCorp, the parent of Idaho Power Co.
Analysts like what they see.
"The company is doing quite well," said John Kreger, a health- care analyst with William Blair & Co. "The company has generally hit or exceeded expectations every quarter. Probably the most telling statistic is that the market is growing in single digits, yet MWI has been able to grow consistently at 15 percent or more."
A LARGE CUSTOMER BASE
The United States has more than 25,000 veterinary clinics, most of them independently owned. MWI serves about 16,000. Its distribution centers have access to more than 11,000 products from more than 450 vendors, including large pharmaceutical companies like Pfizer.
MWI also has an exclusive supplier agreement with Banfield Pet Hospitals, which has clinics in more than 650 PetSmart stores.
The company makes two-thirds of its sales to the companion animal market, which includes pets like dogs, cats and horses, and one-third to the production livestock market. The companion animal market has the highest growth at 8 to 10 percent a year, while the production market is growing at 2 percent or less a year, Cleary said.
Cox, the Piper Jaffray analyst, says the overall value of the veterinary market is about $5.5 billion. He said MWI is the second-largest supplier to the companion animal market behind Butler Animal Health Supply, a privately held company based in Dublin, Ohio. Butler does not serve the production-animal market, so MWI is bigger overall.
Because most veterinary clinics are small businesses, most suppliers don't have the resources to approach the clinics directly, so they need a distributor like MWI, Kreger said.
Cox said MWI does a good job creating relationships with customers through its sales force. Cleary said a sales person visits a clinic every three weeks.
Dr. Jeff Brourman, a veterinarian with the Westvet clinics in Garden City and Meridian, said MWI does a good job of getting the supplies his clinic needs quickly. His clinic specializes in emergency care and in specialized procedures and surgeries.
"A lot of people consider pets like their families, and they're expecting better care," Brourman said.
Most of MWI's products come from manufacturers, but MWI also has its own private label products.
MWI makes its money two ways: It marks up the prices from manufacturers for sale to veterinarians, and it receives bonuses or commissions from its manufacturers for meeting sales goals.
A GROWING MARKET
The growth in veterinary products mirrors a larger trend of people spending more on their pets.
Cleary says his company now supplies products for procedures that pet owners wouldn't have considered 10 to 20 years ago, like dentistry.
Since 1994, the American Pet Products Manufacturers Association has released an annual survey of expected spending on pet goods and services. The latest survey found that pet owners expect to spend nearly $41 billion in 2007, up from $38.5 billion the year before and $17 billion in 1994.
The survey said 63 percent of U.S. households own pets, with cats taking the top spot at 88.3 million cats, followed by dogs at just under 75 million.
Even in an economic downturn, people spend money on pet care, Kreger said. And with Baby Boomers getting older, Kreger expects pet ownership to increase.
"Their pets are replacing their kids," he said.
Ken Dey: 672-6757
