Question-and-Answer Session
Operator
Our first question today is from Lisa Gill – JP Morgan.
Analyst for Lisa Gill – JP Morgan
The organic revenue growth was very impressive in the quarter and I just wanted to drill down on the key drivers there. Obviously field lab placements were up nicely in the fourth quarter, and one of your competitors cited customer buy-ins ahead of price increase on the production side, so any commentary there would be helpful.
Secondly, you had provided some commentary about the negotiations with suppliers in your prepared remarks. I was just wondering if you can give us any incremental update as to the status of the negotiation with the one vendor where you’ve had the rebate issues in the past?
Jim Robison
Yes, I’d be happy to do that. First regarding sales, the drivers for the quarter were -- let me first say that we’re in line with our forecast regarding organic growth. When you net out things that could have driven the unusually high sales performance, which I’ll comment on in a moment, we’re in line with our organic growth forecast.
One thing that drove the sales were, as noted by another competitor, price increases by two rather large vendors January 1. A second thing was that our dairy customers were unusually healthy financially so there is a little bit of forward buying there.
The economics in the production animal business were not necessarily favorable in any way. As a matter of fact, given high wheat prices, there was a lack of grazing in the cow/calf stocker market that usually occurs. A lot of animals went straight to the feed yard so we didn’t see any unusual occurrences relating to placements during the quarter.
Analyst for Lisa Gill – JP Morgan
With respect to the negotiations with the supplier?
Jim Robison
We’ve got all of our agreements negotiated with the exception of one and it relates to that particular supplier mentioned. We have made progress in moving more of the margin to transactional and less to rebate. We will see an improvement, we believe, this year in transactional margin from that vendor. We’re still working with them on an appropriate margin, as we’ve done historically, for what we call high-value initiatives and compensation for growth. We are hoping to reach as we have in the past, favorable conclusions on those matters.
Analyst for Lisa Gill – JP Morgan
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