 Second quarter GAAP net sales of 1.03 billion, an increase of 2 year-over-year; non-GAAP organic net sales increased 5 year-over-year Second quarter GAAP net income of 54 million, including a 70 million after-tax gain on sale of scil animal care, as compared to a GAAP net loss of 10 million in the prior year period; second quarter non-GAAP adjusted net income of 30 million, an increase of 25 year-over-year Second quarter non-GAAP adjusted EBITDA of 63 million, an increase of 19 year-over-year Ended the second quarter of 2020 with 414 million in cash and cash equivalents on the balance sheet and more than 700 million in available liquidity Full year 2020 non-GAAP adjusted EBITDA guidance in the range of 200 million to 210 million, which assumes no significant additional supply chain disruption or economic impact related to COVID-19 in the second half of the yearPORTLAND, Maine, Aug. 11, 2020 GLOBE NEWSWIRE -- Covetrus Nasdaq: CVET, a global leader in animal-health technology and services, today announced financial results for the second quarter of 2020, which ended June 30, 2020.I am extremely proud of our teams exceptional efforts and accomplishments during the second quarter to support our customers around the globe during COVID-19. Our strong second quarter financial results demonstrate our progress, and our 2020 guidance showcases the confidence we have in our business, said Ben Wolin, Covetrus president and chief executive officer. While uncertainties tied to the global pandemic and the pace and recovery of our end-market remain, continued investments in our organizational health, innovation and customer success puts us in a strong position to capitalize on our strategic opportunities and to deliver shareholder value in the quarters and years ahead.Summary Operating Results Unaudited Three Months Ended June 30, Six Months Ended June 30, In millions, except per share data 2020 2019 2020 2019 Net sales 1,026 1,009 2,091 1,950 Income loss before taxes 59 5 24 22 Net income loss attributable to Covetrus 54 10 20 23 Diluted earnings loss per share EPS 0.40 0.09 0.15 0.22 Non-GAAP Measures: a Pro Forma Net sales 1,026 1,009 2,091 1,974 Organic net sales growth 5 7 Adjusted EBITDA 63 53 111 103 Adjusted net income 30 24 50 42 a Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations for non-GAAP financial items to the most directly comparable GAAP financial items are provided under Reconciliation of Non-GAAP Financial Measures at the end of this release.Second Quarter 2020 ResultsNet sales for the second quarter of 2020 were 1.03 billion, an increase of 2 compared to the second quarter of 2019. Foreign exchange was a 2 headwind to net sales growth during the period. Non-GAAP organic net sales increased 5 year-over-year, driven by strong net sales growth in the Companys prescription management business as well as positive supply chain net sales growth in North America and APAC Emerging Markets, supported by a recovery in end-market demand in May and June.Net income attributable to Covetrus in the second quarter of 2020 was 54 million, or 0.40 per diluted share, which compared to Net loss of 10 million, or a loss of 0.09 per diluted share, in the second quarter of 2019. The primary driver of the year-over-year increase was a 70 million after-tax gain on the sale of scil animal care.Non-GAAP adjusted EBITDA was 63 million for the second quarter of 2020 versus 53 million in the prior year. Changes in foreign exchange negatively impacted adjusted EBITDA by 1 million year-over-year. The primary driver of the 19 year-over-year increase was positive growth and contribution from the Companys prescription management business and cost containment measures in response to COVID-19, which offset the COVID-19 net sales headwinds and the lost adjusted EBITDA contribution from scil animal care, which was divested on April 1, 2020.Non-GAAP adjusted net income was 30 million for the second quarter of 2020, compared to 24 million in the prior year period, driven by the same factors impacting non-GAAP adjusted EBITDA.First Half 2020 ResultsNet sales for the first half of 2020 were 2.09 billion, an increase of 7 compared to the first half of 2019. Foreign exchange was a 2 headwind to sales growth during the period. Non-GAAP pro forma organic net sales increased 7 year-over-year, driven by strong net sales growth in the Companys prescription management business and positive supply chain net sales across all of the Companys geographic segments, reflective of the growth and resiliency of the Companys end-market and strong sales execution.Net income attributable to Covetrus in the first half of 2020 was 20 million, or 0.15 per diluted share, which compared to net loss of 23 million, or a loss of 0.22 per diluted share, in the first half of 2019. The primary driver of the year-over-year increase was a 70 million after-tax gain on the sale of scil animal care.Non-GAAP adjusted EBITDA was 111 million for the first half of 2020 versus 103 million in the prior year period on a pro forma basis. Changes in foreign exchange negatively impacted adjusted EBITDA by 2 million year-over-year. The primary driver of the 8 year-over-year increase was accelerated growth and contribution from the Companys prescription management business and cost containment measures in response to COVID-19 uncertainties, which offset the year-over-year impact from increased corporate overhead tied to establishing an independent, global public company.Non-GAAP adjusted net income was 50 million for the first half of 2020, compared to 42 million in the prior year on a pro forma basis, driven by the same factors impacting non-GAAP adjusted EBITDA.Second Quarter 2020 Segment Financial HighlightsThe Companys operations are organized and reported by geography -- North America, Europe, and APAC Emerging Markets.North AmericaNorth America segment net sales for the second quarter, ended June 30, 2020, of 602 million increased 9 compared to the same period of the prior year. Non-GAAP organic net sales increased 10 year-over-year. During the second quarter of 2020, supply chain non-GAAP organic net sales increased 2 year-over-year and prescription management net sales increased 66 year-over-year. COVID-19 had a negative impact on supply chain net sales during the month of April, with sales trends recovering during the months of May and June. COVID-19 had a positive impact on the Companys prescription management business as e-commerce for prescription pet medications spiked amidst the pandemic.North America segment adjusted EBITDA for the second quarter, ended June 30, 2020, of 55 million increased 28 compared to the same period of the prior year, reflecting the strong net sales growth and the significant improvement in profitability in the Companys prescription management business as well as a modest increase in the overall contribution from the rest of the Companys North American businesses during the second quarter as compared to prior year.EuropeEurope segment net sales for second quarter, ended June 30, 2020, of 342 million decreased 8 compared to the same period of the prior year. Non-GAAP pro forma organic net sales declined 2 compared to the same period of the prior year. The inventory stocking pull forward of net sales into the first quarter of 2020 as well as COVID-19-related headwinds during April and May drove the decline in net sales as compared to the prior year.Europe segment adjusted EBITDA for the second quarter, ended June 30, 2020, of 16 million decreased 16 compared to the same period of the prior year, as the lost contribution from the scil animal care business, which was divested on April 1, changes in foreign exchange, and the decline in net sales, including the impact from the inventory stocking dynamic discussed above, more than offset the benefit from cost containment actions implemented during the quarter to mitigate the COVID-19 impact.APAC Emerging MarketsAPAC Emerging Markets segment net sales for the second quarter, ended June 30, 2020, of 85 million decreased by 6 compared to the same period of the prior year. Non-GAAP pro forma organic net sales increased 4 compared to the same period of the prior year, with strong sales execution more than offsetting the COVID-19 headwind.APAC Emerging Markets segment adjusted EBITDA for the second quarter, ended June 30, 2020, of 5 million increased 25 compared to the same period of the prior year, driven by strong operating leverage from the positive net sales growth delivered during the quarter, including the benefit from cost containment actions implemented during the quarter to mitigate the COVID-19 impact.Financial Position and LiquidityCovetrus generated 54 million of net cash from operating activities during the six months ended June 30, 2020, as compared to 3 million during the prior year period. Free cash flow, a non-GAAP financial measure that is defined as cash flow from operating activities less purchases of property and equipment, was 30 million during the six months ended June 30, 2020 as compared to negative 18 million in the prior year period. The year-over-year increase in free cash flow reflects improved operating earnings and strong working capital management in response to the uncertainty created by COVID-19.At quarter-end, the Company had 414 million in cash and cash equivalents, 1.14 billion in term loan debt, and no borrowings outstanding on its 300 million revolving credit facility. 