February 19, 2015

Patterson Companies Reports Fiscal 2015 Third Quarter Operating Results

  • Sales totaled $1.1 billion, with earnings per diluted share of $0.55
  • Nine-month sales up 8.9 percent to $3.2 billion; year-to-date EPS per diluted share increases to $1.59 from $1.42 a year ago
  • Dental consumables sales rise 4.0 percent and veterinary sales increase 3.5 percent on a constant currency basis
  • Company reaffirms earnings guidance range of $2.20 to $2.30 per diluted share for fiscal 2015

ST. PAUL, Minn.--(BUSINESS WIRE)-- Patterson Companies, Inc. (Nasdaq:PDCO) today reported that consolidated sales totaled $1.1 billion (see attached Sales Summary for further details) in its fiscal third quarter ended January 24, 2015, essentially flat with the same period last year. Net income totaled $54.7 million, or $.55 per diluted share, compared to $57.9 million, or $0.57 per diluted share, in the prior year (excluding costs related to the Medical unit restructuring). Net income and EPS in the prior-year period benefited from an adjustment to non-cash, stock based compensation of $8 million, or $0.05 per diluted share.

"We continued to execute against our strategic plan in the fiscal third quarter, are on track to meet our financial objectives and are confident in the strength of our business," said Scott Anderson, chairman and chief executive officer. "During the quarter, we witnessed several positive trends including the sales of dental consumables which provided another quarter of sequential growth. Our investments in our people, new talent and go-to-market strategies are positioning us well to capitalize on long-term opportunities."

Patterson Dental
Sales for Patterson Dental, the company's largest business that accounts for approximately 58 percent of total sales, decreased to $620.8 million, down 2.6 percent on a constant currency basis from the year-earlier period. Also on a constant currency basis, sales by category versus the prior-year quarter were as follows:

  • Consumable dental supplies increased 4.0 percent;
  • Dental equipment and software declined 13.2 percent. We believe this reflected the industry-wide impact of a late reinstatement of tax incentives for U.S. customers; and
  • Other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, improved 6.5 percent.

Commented Anderson, "Again this quarter, we saw solid growth in consumables, which we believe indicates continued increased office visits and overall demand for dental services. In equipment, our combination of strong core and technology offerings, industry leading service and support, and the trend toward digitization of the dental office will continue to make this market a strong one for us, and we believe in our ability to serve it better than anyone else."

Patterson Veterinary
Sales for Patterson Veterinary, the company's second largest business, increased to $337.8 million, or up 3.5 percent on a constant currency basis. For veterinary sales by category, again on a constant currency basis, versus the year-ago quarter:

  • Consumable sales rose 3.5 percent;
  • Equipment sales increased 3.5 percent; and
  • Sales of other services and products, consisting primarily of technical service, parts and labor, and software support services, were up 3.0 percent.

Anderson continued, "Patterson Veterinary, which amounts to just under one-third of our total sales, again reported growth in the fiscal third quarter, in spite of a shift in product mix from buy-sell to agency in the pharmaceutical product category. We continue to maintain the focus on enhancing our products and technologies across our geographic footprint that has led to our success in this market."

Patterson Medical
Sales for Patterson Medical, the company's rehabilitation supply and equipment business, totaled $104.7 million for the fiscal 2015 third quarter, or up 2.6 percent, excluding currency and divestiture impacts. Consolidated sales of Patterson Medical currently represent approximately 10 percent of total company sales.

Anderson said, "It's clear that the new focus in Patterson Medical continues to drive improved performance in this segment. Patterson Medical's ongoing operations delivered its third consecutive quarter of growth. We are confident that our emphasis on select rehabilitation markets gives the business a solid platform for future growth."

Share Repurchases and Dividends
Year to date, Patterson has repurchased approximately 1.2 million shares of its outstanding common stock, with a value of $47.5 million, leaving approximately 21 million shares for repurchase under the current authorization. The company also paid $20.2 million in cash dividends to shareholders in the fiscal third quarter and $60.3 million through the first nine months of fiscal 2015.

Year-to-Date Results
Consolidated sales for the first nine months of fiscal 2015 totaled $3.2 billion, an increase of 8.9 percent from $3.0 billion in the year-earlier period. Net income was $158.7 million, or $1.59 per diluted share, compared to net income of $152.5 million, or $1.50 per diluted share, in the year-earlier period; results from the nine months of fiscal 2014 exclude $0.08 per share of costs for the Patterson Medical restructuring.

Business Outlook
Anderson concluded, "As we move toward the end of our fiscal year, we are encouraged by improving market conditions and stable-to-strengthening demand across all of our businesses. We have taken, and continue to take, the steps necessary to position Patterson to capitalize on these improving fundamentals by driving efficiencies and enriching our product and service offerings and our geographic reach. We reaffirm our earnings guidance range for fiscal 2015 of $2.20-$2.30 per diluted share."

The following non-GAAP table is provided to adjust reported net income for the impact of the costs associated with restructuring the medical segment. Management believes that the adjusted income amounts provide a helpful representation of the company's current quarter performance.

               
(Dollars in thousands, except EPS)
Three Months Ended Nine Months Ended
January 24, 2015     January 25, 2014 January 24, 2015     January 25, 2014
Net Income - reported $ 54,676 $ 57,021 $ 158,743 $ 144,941
Restructuring costs   -   916   -   7,566
Net Income - adjusted $ 54,676 $ 57,937 $ 158,743 $ 152,507
 
Diluted Earnings Per Share - reported $ 0.55 $ 0.56 $ 1.59 $ 1.42
Restructuring costs   -   0.01   -   0.08
Diluted Earnings Per Share - adjusted $ 0.55 $ 0.57 $ 1.59 $ 1.50
 

Third Quarter Conference Call and Replay
Patterson's third quarter earnings conference call will start at 10 a.m. Eastern today. Investors can listen to a live webcast of the conference call at www.pattersoncompanies.com. The conference call will be archived on Patterson's website. A replay of the third quarter conference call can be heard for one week at 888-203-1112 and by providing the Conference ID 2506208, when prompted.

About Patterson Companies, Inc.
Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets.
Dental Market
As Patterson's largest business, Patterson Dental provides a virtually complete range of consumable dental products, equipment and software, turnkey digital solutions and value-added services to dentists and dental laboratories throughout North America.
Veterinary Market
Patterson Veterinary is a leading distributor in the U.S. and U.K. of consumable veterinary supplies, equipment and software, diagnostic products, vaccines and pharmaceuticals predominantly to companion-pet veterinary clinics.
Rehabilitation Market
Patterson Medical is the world's leading distributor of rehabilitation supplies and non-wheelchair assistive patient products to the physical and occupational therapy markets. The unit's global customer base includes hospitals, long-term care facilities, clinics and dealers.

This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond the Company's ability to control. Any statements made in this press release about the Company's future financial conditions, results of operations, expectations, plans, or prospects, including the information under the heading "Business Outlook", constitute forward-looking statements. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "projects," "should," "targets" and/or similar expressions. These forward-looking statements are based on the Company's current estimates and assumptions and, as such, involve uncertainty and risk. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those contemplated by the forward-looking statements because of a number of factors, including the factors described in Item 1A of the Company's most recent Annual Report on Form 10-K, which factors are incorporated herein by reference. Any forward-looking statement in this release speaks only as of the date in which it is made. Except to the extent required under the federal securities laws, the Company does not intend to update or revise the forward-looking statements.

 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share amounts)
(Unaudited)
               
Three Months Ended   Nine Months Ended
January 24, January 25, January 24, January 25,
2015 2014 2015 2014
 
Net sales $ 1,063,312 $ 1,082,679 $ 3,226,166 $ 2,961,638
 
Gross profit 302,559 311,461 904,606 882,410
 
Operating expenses   211,803     214,810     637,875     629,255  
 
Operating income 90,756 96,651 266,731 253,155
 
Other expense, net   (8,195 )   (8,710 )   (23,245 )   (25,366 )
 
Income before taxes 82,561 87,941 243,486 227,789
 
Income taxes   27,885     30,920     84,743     82,848  
 
Net income $ 54,676   $ 57,021   $ 158,743   $ 144,941  
 
Earnings per share:
Basic $ 0.55 $ 0.56 $ 1.60 $ 1.43
Diluted $ 0.55 $ 0.56 $ 1.59 $ 1.42
 
Shares:
Basic 98,842 101,105 98,991 101,067
Diluted 99,540 101,999 99,699 101,962
 
Dividends declared per common share $ 0.20 $ 0.16 $ 0.60 $ 0.48
 
Gross margin - adjusted 28.5 % 28.9 % 30.7 % 30.9 %
NVS - - -2.7 -1.0
Medical restructuring   -     -0.1     -     -0.1  
Gross margin - reported 28.5 % 28.8 % 28.0 % 29.8 %
 
Operating expenses as a % of net sales - adjusted 19.9 % 19.8 % 21.7 % 21.9 %
NVS - - -2.0 -0.9
Medical restructuring   -     -     -     0.2  
Operating expenses as a % of net sales - reported 19.9 % 19.8 % 19.7 % 21.2 %
 
Operating income as a % of net sales - adjusted 8.5 % 9.0 % 9.0 % 9.0 %
NVS - - -0.7 -0.1
Medical restructuring   -     -0.1     -     -0.3  
Operating income as a % of net sales - reported 8.5 % 8.9 % 8.3 % 8.6 %
 
Effective tax rate - adjusted 33.8 % 35.1 % 35.1 % 35.7 %
NVS - - -0.3 -0.3
Medical restructuring   -     0.1     -     1.0  
Effective tax rate - reported 33.8 % 35.2 % 34.8 % 36.4 %
 
 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
       
January 24, April 26,
2015 2014
(Unaudited)
ASSETS
Current assets:
Cash and short-term investments $ 342,047 $ 305,683
Receivables, net 590,260 607,580
Inventory 514,619 436,463
Prepaid expenses and other current assets   54,340   65,991
Total current assets 1,501,266 1,415,717
 
Property and equipment, net 225,418 204,939
Goodwill and other intangible assets 1,040,517 1,067,583
Investments and other   104,331   176,438
 
Total Assets $ 2,871,532 $ 2,864,677
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 341,425 $ 342,056
Other accrued liabilities   227,637   201,407
Total current liabilities 569,062 543,463
 
Long-term debt 725,000 725,000
Other non-current liabilities   122,782   124,550
Total liabilities 1,416,844 1,393,013
 
Stockholders' equity   1,454,688   1,471,664
 
Total Liabilities and Stockholders' Equity $ 2,871,532 $ 2,864,677
 
 
PATTERSON COMPANIES, INC.
SALES SUMMARY
(Dollars in thousands)
(Unaudited)
                   
Total Foreign Constant
January 24, January 25, Sales Exchange Currency
2015 2014

  Growth  

  Impact  

  Growth  

Three Months Ended  
 
Consolidated Net Sales
Consumable and printed products

1

$ 725,215 $ 711,613 1.9 % -1.5 % 3.4 %
Equipment and software

1

257,651 294,009 -12.4 % -0.7 % -11.7 %
Other   80,446   77,057 4.4 % -0.9 % 5.3 %
Total $ 1,063,312 $ 1,082,679 -1.8 % -1.2 % -0.6 %
 
Dental Supply
Consumable and printed products

1

$ 331,826 $ 321,421 3.2 % -0.8 % 4.0 %
Equipment and software

1

220,739 255,998 -13.8 % -0.6 % -13.2 %
Other   68,248   64,546 5.7 % -0.8 % 6.5 %
Total $ 620,813 $ 641,965 -3.3 % -0.7 % -2.6 %
 
Veterinary Supply
Consumable and printed products $ 316,401 $ 312,514 1.2 % -2.3 % 3.5 %
Equipment and software 15,109 14,607 3.4 % -0.1 % 3.5 %
Other   6,305   6,281 0.4 % -2.6 % 3.0 %
Total $ 337,815 $ 333,402 1.3 % -2.2 % 3.5 %
 
Rehabilitation Supply
Consumable and printed products $ 76,988 $ 77,678 -0.9 % -1.5 % 0.6 %
Equipment and software 21,803 23,404 -6.8 % -1.9 % -4.9 %
Other   5,893   6,230 -5.4 % -1.1 % -4.3 %
Total $ 104,684 $ 107,312 -2.4 % -1.6 % -0.8 %
 
Nine Months Ended  
 
Consolidated Net Sales
Consumable and printed products

1

$ 2,312,831 $ 2,036,205 13.6 % -0.4 % 14.0 %
Equipment and software

1

665,653 695,721 -4.3 % -0.6 % -3.7 %
Other   247,682   229,712 7.8 % -0.5 % 8.3 %
Total $ 3,226,166 $ 2,961,638 8.9 % -0.4 % 9.3 %
 
Dental Supply
Consumable and printed products

1

$ 1,002,385 $ 977,446 2.6 % -0.6 % 3.2 %
Equipment and software

1

565,483 587,382 -3.7 % -0.6 % -3.1 %
Other   207,347   194,420 6.6 % -0.5 % 7.1 %
Total $ 1,775,215 $ 1,759,248 0.9 % -0.6 % 1.5 %
 
Veterinary Supply
Consumable and printed products $ 1,047,512 $ 792,638 32.2 % -0.4 % 32.6 %
Equipment and software 31,167 32,243 -3.3 % 0.0 % -3.3 %
Other   21,910   16,325 34.2 % -0.3 % 34.5 %
Total $ 1,100,589 $ 841,206 30.8 % -0.3 % 31.1 %
 
Rehabilitation Supply
Consumable and printed products $ 262,935 $ 266,121 -1.2 % 0.3 % -1.5 %
Equipment and software 69,002 76,096 -9.3 % -0.4 % -8.9 %
Other   18,425   18,967 -2.9 % 0.0 % -2.9 %
Total $ 350,362 $ 361,184 -3.0 % 0.2 % -3.2 %
 

1 Certain products were reclassed from equipment to consumables in current and prior periods

 
 
PATTERSON COMPANIES, INC.
SUPPLEMENTARY FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
               
Three Months Ended Nine Months Ended
January 24, January 25, January 24, January 25,
2015 2014 2015 2014
 
Operating Income
Dental Supply $ 66,717 $ 73,513 $ 178,938 $ 181,846
Veterinary Supply 11,864 12,003 40,187 33,175
Rehabilitation Supply   12,175     11,135     47,606     38,134  
$ 90,756   $ 96,651   $ 266,731   $ 253,155  
 
Other (Expense) Income, net
Interest income $ 1,305 $ 1,593 $ 3,912 $ 3,892
Interest expense (8,512 ) (9,237 ) (25,824 ) (26,581 )
Other   (988 )   (1,066 )   (1,333 )   (2,677 )
$ (8,195 ) $ (8,710 ) $ (23,245 ) $ (25,366 )
 
 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
       
Nine Months Ended

 January 24, 

 January 25, 

2015 2014
 
Operating activities:
Net income $ 158,743 $ 144,941
Depreciation & amortization 36,897 36,683
Non-cash employee compensation 20,570 14,840
Change in assets and liabilities, net of acquired   (58,125 )   (46,714 )
Net cash provided by operating activities 158,085 149,750
 
Investing activities:
Additions to property and equipment, net (44,520 ) (30,263 )
Acquisitions and equity investments, net of cash (8,730 ) (140,774 )
Purchase of investments - (99,232 )
Proceeds from sales 46,369 -
Other investing activities   (543 )   2,110  
Net cash used in investing activities (7,424 ) (268,159 )
 
Financing activities:
Dividends paid (60,340 ) (65,333 )
Share repurchases (47,539 ) (42,734 )
Draw on revolver 130,000 135,000
Payment on revolver (130,000 ) -
Other financing activities   6,484     13,756  
Net cash (used in) provided by financing activities (101,395 ) 40,689
 
Effect of exchange rate changes on cash   (24,452 )   (3,533 )
 
Net increase (decrease) in cash and cash equivalents $ 24,814   $ (81,253 )
 

Patterson Companies, Inc.
Ann B. Gugino, 651-686-1600
Vice President & CFO

Source: Patterson Companies, Inc.

News Provided by Acquire Media


Close window | Back to top

Copyright 2017 Patterson Companies, Inc.