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Patterson Companies Reports Fiscal 2020 Third-Quarter Operating Results

2/27/20
  • Third-quarter reported net sales increased 4.3 percent year-over-year to $1.46 billion; internal sales also increased 4.3 percent.
  • Adjusted operating margin1 increased 40 bps to 4.3 percent.
  • Dental segment internal sales increased 8.0 percent driven by growth in consumables, equipment and value-added services.
  • Animal Health segment internal sales increased 1.3 percent.
  • Delivered third-quarter GAAP earnings of $0.24 per diluted share and adjusted earnings1 of $0.47 per diluted share.
  • Raises fiscal 2020 GAAP earnings guidance range to $0.49 to $0.54 per diluted share, and adjusted earnings1 guidance range to $1.50 to $1.55 per diluted share.

ST. PAUL, Minn.--(BUSINESS WIRE)-- Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of approximately $1.46 billion (see attached Sales Summary for further details) in its fiscal third quarter ended January 25, 2020, an increase of 4.3 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation and changes in product selling relationships, also increased 4.3 percent.

Reported net income attributable to Patterson Companies, Inc. for the third quarter of fiscal 2020 totaled $23.2 million, or $0.24 per diluted share, compared to $31.2 million, or $0.33 per diluted share, in the third quarter of fiscal 2019. The year-over-year decrease in the period is primarily the result of a pre-tax charge related to the early retirement of debt and restructuring costs.

Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization costs, integration and business restructuring expenses, legal expenses, accelerated debt-related costs and discrete tax matters, totaled $44.5 million for the third quarter of fiscal 2020, or $0.47 per diluted share, compared to $35.6 million in the same quarter of fiscal 2019, or $0.38 per diluted share. The year-over-year increase in the period is primarily attributable to the improved performance across all three categories of Patterson’s dental segment, including consumables, equipment and value-added services.

“Patterson’s focused and disciplined approach to accelerate performance drove both improved top-line growth and margin expansion during the third quarter,” said Mark Walchirk, President and CEO of Patterson Companies. “In our Dental segment, we achieved positive consumables growth and continued to generate strong sales growth in equipment and value-added services. In Animal Health, we delivered continued growth in our companion business and trends in our production business improved despite end market challenges. As a result of our improved performance, we are raising our fiscal 2020 adjusted earnings guidance range to $1.50 to $1.55 from its prior range of $1.36 to $1.46 per diluted share.”

Patterson Dental

Reported net sales in our Dental segment for the third quarter of fiscal 2020, which represented approximately 44 percent of total company sales, were $626.6 million compared to $579.7 million in the third quarter of last year. Internal sales increased 8.0 percent compared to the fiscal 2019 third quarter.

Patterson Animal Health

Reported net sales in our Animal Health segment for the third quarter of fiscal 2020, which comprised approximately 56 percent of the company’s total sales, were $817.3 million compared to $807.5 million in the third quarter of last year. Internal sales for the segment increased 1.3 percent from the fiscal 2019 third quarter.

Balance Sheet and Capital Allocation

During the first nine months of fiscal 2020 Patterson Companies used $169.0 million of cash from operating activities and collected deferred purchase price receivables of $359.3 million, netting $190.3 million in cash, compared to a total of $384.9 million in the first nine months of fiscal 2019. The previous year period contained a trade accounts receivable facility amount of $171.0 million and the current period contained a trade accounts receivable facility amount of $29.0 million. Free cash flow1 (see definition below and attached free cash flow table) generated year-to-date in fiscal 2020 is $51.5 million lower than the year ago period primarily due to the timing of cash conversion associated with the financing of a higher level of equipment sales and increased inventory.

In the third quarter of fiscal 2020, Patterson Companies paid $25.0 million in cash dividends to shareholders. On a year-to-date basis, Patterson has returned $75.5 million in cash dividends to shareholders.

Year-to-Date Results

Consolidated reported net sales for the first nine months of fiscal 2020 totaled $4.2 billion, a 1.6 percent year-over-year increase. Internal sales have increased 2.2 percent compared to the first nine months of fiscal 2019. Reported net income attributable to Patterson Companies, Inc. was $20.1 million, or $0.21 per diluted share, compared to $55.6 million, or $0.60 per diluted share in last year's period. The year-over-year decline is primarily due to an increase in legal expenses and a pre-tax charge related to the early retirement of debt, partially offset by an investment gain. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization costs, integration and business restructuring expenses, legal expenses, accelerated debt-related costs, discrete tax matters and an investment gain, totaled $106.5 million, or $1.12 per diluted share, compared to $95.9 million, or $1.03 per diluted share, in the year-ago period. The year-over-year increase is primarily attributable to improved performance in the dental segment across consumables, equipment and value-added services.

FY2020 Guidance

Patterson Companies today updated its fiscal 2020 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis:

  • GAAP earnings are now expected to be in the range of $0.49 to $0.54 per diluted share.
  • Non-GAAP adjusted earnings1 are now expected to be in the range of $1.50 to $1.55 per diluted share.
  • Ournon-GAAP adjusted earnings1 guidance excludes the after-tax impact of the following approximate amounts:
    • Deal amortization costs of $28.2 million ($0.30 per diluted share).
    • Integration and business restructuring expenses of $12.4 million ($0.13 per diluted share).
    • Legal expenses of $74.1 million ($0.78 per diluted share).
    • Accelerated debt-related costs of $7.5 million ($0.08 per diluted share).
    • Investment gain of $26.5 million ($0.28 per diluted share).

Our guidance is for current operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions similar to those experienced in fiscal 2019.

1Non-GAAP Financial Measures

The Reconciliation of GAAP to non-GAAP Measures table appearing behind the accompanying financial information is provided to adjust reported GAAP measures, namely operating income, income before taxes, income tax expense, net income, net income attributable to Patterson Companies, Inc. and diluted earnings per share attributable to Patterson Companies, Inc., for the impact of deal amortization costs, integration and business restructuring expenses, legal expenses, accelerated debt-related costs and an investment gain, along with the related tax effects of these items.

The term “free cash flow” used in this release is defined as net cash provided by (used in) operating activities less capital expenditures less the one-time benefit from the initiation of our trade account receivables facility plus collection of deferred purchase price receivables.

In addition, the term “internal sales” used in this release represents net sales adjusted to exclude foreign currency impact and changes in product selling relationships. Foreign currency impact represents the difference in results that is attributable to fluctuations in currency exchange rates the company uses to convert results for all foreign entities where the functional currency is not the U.S. dollar. The company calculates the impact as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period's currency exchange rates. The company believes the disclosure of net sales changes in constant currency provides useful supplementary information to investors in light of significant fluctuations in currency rates.

Management believes that these non-GAAP measures may provide a helpful representation of the company's third-quarter performance and earnings guidance, and enable comparison of financial results between periods where certain items may vary independent of business performance. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

Third-Quarter Conference Call and Replay

Patterson Companies’ fiscal 2020 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 the Patterson Companies website. A replay of the fiscal 2020 third-quarter conference call can be heard for one week at 800-585-8367 and by providing the Conference ID 8859746 when prompted.

About Patterson Companies, Inc.

Patterson Companies, Inc. (Nasdaq: PDCO) is a value-added distributor serving the dental and animal health markets.

Dental Market

Patterson’s Dental segment 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.

Animal Health Market

Patterson’s Animal Health segment is a leading distributor of products, services and technologies to both the production and companion animal health markets in North America and the U.K.

The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those disclosed in the statement.

This press release contains, and our officers and representatives may from time to time make, certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, and the objectives and expectations of management. Forward-looking statements often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could” or “may.” Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements.

Any number of factors could affect our actual results and cause such results to differ materially from those contemplated by any forward-looking statements, including, but not limited to, the following: the effects of the highly competitive dental and animal health supply markets in which we compete; general economic conditions, including political and economic uncertainty; our dependence on relationships with sales representatives, service technicians and customers; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on suppliers for the manufacture and supply of the products we sell; the risk that private label sales could adversely affect our sales of other products; our dependence on positive perceptions of Patterson’s reputation; litigation risks, including new or unanticipated litigation developments; changes in consumer preferences; fluctuations in quarterly financial results; risks from the expansion of customer purchasing power; increased competition from third-party online commerce sites; the risks inherent in international operations, including currency fluctuations; the effects of health care reform; failure to comply with regulatory requirements and data privacy laws; risks from disruption to our information systems; cyberattacks or other privacy or data security breaches; volatility in the financial markets; volatility in the price of our common stock; our dependence on our senior management; disruptions from our enterprise resource planning system initiatives; and risks associated with interest rate fluctuations. The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive, accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results.

You should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, (“Risk Factors”) in our most recent Form 10-K, and information which may be contained in our other filings with the U.S. Securities and Exchange Commission, or SEC, when reviewing any forward-looking statement. Investors should understand it is impossible to predict or identify all such factors or risks. As such, you should not consider the foregoing list, or the risks identified in our SEC filings, to be a complete discussion of all potential risks or uncertainties.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to release publicly any revisions to any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

January 25,
2020

 

January 26,
2019

 

January 25,
2020

 

January 26,
2019

 

 

 

 

 

 

 

 

Net sales

$

1,456,155

 

 

$

1,396,745

 

 

$

4,203,550

 

 

$

4,137,817

 

 

 

 

 

 

 

 

 

Gross profit

311,830

 

 

299,509

 

 

903,378

 

 

878,248

 

 

 

 

 

 

 

 

 

Operating expenses

268,014

 

 

254,146

 

 

861,034

 

 

787,155

 

 

 

 

 

 

 

 

 

Operating income

43,816

 

 

45,363

 

 

42,344

 

 

91,093

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Other income, net

2,307

 

 

1,427

 

 

34,493

 

 

8,621

 

Interest expense

(16,584)

 

 

(9,172)

 

 

(34,320)

 

 

(29,849)

 

 

 

 

 

 

 

 

 

Income before taxes

29,539

 

 

37,618

 

 

42,517

 

 

69,865

 

 

 

 

 

 

 

 

 

Income tax expense

6,567

 

 

6,564

 

 

23,087

 

 

14,674

 

 

 

 

 

 

 

 

 

Net income

22,972

 

 

31,054

 

 

19,430

 

 

55,191

 

Net loss attributable to noncontrolling interests

(255)

 

 

(171)

 

 

(710)

 

 

(447)

 

Net income attributable to Patterson Companies, Inc.

$

23,227

 

 

$

31,225

 

 

$

20,140

 

 

$

55,638

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Patterson Companies, Inc.:

 

 

 

 

 

 

 

Basic

$

0.25

 

 

$

0.34

 

 

$

0.21

 

 

$

0.60

 

Diluted

$

0.24

 

 

$

0.33

 

 

$

0.21

 

 

$

0.60

 

 

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

 

 

Basic

94,267

 

 

92,818

 

 

94,052

 

 

92,677

 

Diluted

95,021

 

 

93,653

 

 

94,828

 

 

93,347

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.26

 

 

$

0.26

 

 

$

0.78

 

 

$

0.78

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

January 25, 2020

 

April 27, 2019

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

106,169

 

 

$

95,646

 

Receivables, net

451,255

 

 

582,094

 

Inventory

866,313

 

 

761,018

 

Prepaid expenses and other current assets

268,937

 

 

165,605

 

Total current assets

1,692,674

 

 

1,604,363

 

Property and equipment, net

306,687

 

 

305,790

 

Operating lease right-of-use assets

83,302

 

 

 

Goodwill and identifiable intangibles, net

1,140,342

 

 

1,167,379

 

Long-term receivables, net and other

290,547

 

 

191,737

 

Total assets

$

3,513,552

 

 

$

3,269,269

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

802,610

 

 

$

648,418

 

Other accrued liabilities

272,300

 

 

203,319

 

Operating lease liabilities

31,547

 

 

 

Current maturities of long-term debt

 

 

23,975

 

Borrowings on revolving credit

95,000

 

 

 

Total current liabilities

1,201,457

 

 

875,712

 

Long-term debt

587,455

 

 

725,341

 

Non-current operating lease liabilities

53,413

 

 

 

Other non-current liabilities

199,259

 

 

187,709

 

Total liabilities

2,041,584

 

 

1,788,762

 

Stockholders' equity

1,471,968

 

 

1,480,507

 

Total liabilities and stockholders' equity

$

3,513,552

 

 

$

3,269,269

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

 

January 25,
2020

 

January 26,
2019

 

 

 

 

Operating activities:

 

 

 

Net income

$

19,430

 

 

$

55,191

 

Adjustments to reconcile net income to net cash provided by (used
in) operating activities:

 

 

 

Depreciation and amortization

61,892

 

 

62,425

 

Investment gain

(34,334)

 

 

 

Non-cash employee compensation

28,661

 

 

22,282

 

Accelerated amortization of costs on early retirement of debt

8,984

 

 

 

Deferred consideration in securitized receivables

(359,329)

 

 

(308,592)

 

Change in assets and liabilities, net of acquired

105,740

 

 

245,038

 

Net cash provided by (used in) operating activities

(168,956)

 

 

76,344

 

Investing activities:

 

 

 

Additions to property and equipment

(32,872)

 

 

(33,926)

 

Collection of deferred purchase price receivables

359,329

 

 

308,592

 

Other investing activities

 

 

2,875

 

Net cash provided by investing activities

326,457

 

 

277,541

 

Financing activities:

 

 

 

Dividends paid

(75,522)

 

 

(74,731)

 

Proceeds from issuance of long-term debt, net

296,700

 

 

 

Payments on long-term debt

(460,840)

 

 

(244,010)

 

Draw on revolving credit

95,000

 

 

13,000

 

Other financing activities

(3,319)

 

 

6,228

 

Net cash used in financing activities

(147,981)

 

 

(299,513)

 

Effect of exchange rate changes on cash

1,003

 

 

75

 

Net change in cash and cash equivalents

10,523

 

 

54,447

 

Cash and cash equivalents at beginning of period

95,646

 

 

62,984

 

Cash and cash equivalents at end of period

$

106,169

 

 

$

117,431

 

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

 

 

January 25,
2020

 

January 26,
2019

 

Total
Sales
Growth

 

Foreign
Exchange
Impact

 

Other (a)

 

Internal
Sales
Growth

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

1,091,571

 

 

$

1,079,566

 

 

1.1

%

 

0.3

%

 

(0.3)

%

 

1.1

%

Equipment and software

270,325

 

 

234,251

 

 

15.4

 

 

0.1

 

 

 

 

15.3

 

Value-added services and other

94,259

 

 

82,928

 

 

13.7

 

 

0.2

 

 

 

 

13.5

 

Total

$

1,456,155

 

 

$

1,396,745

 

 

4.3

%

 

0.2

%

 

(0.2)

%

 

4.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Dental

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

300,406

 

 

$

294,708

 

 

1.9

%

 

0.1

%

 

%

 

1.8

%

Equipment and software

252,874

 

 

217,649

 

 

16.2

 

 

0.1

 

 

 

 

16.1

 

Value-added services and other

73,309

 

 

67,376

 

 

8.8

 

 

0.1

 

 

 

 

8.7

 

Total

$

626,589

 

 

$

579,733

 

 

8.1

%

 

0.1

%

 

%

 

8.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Animal Health

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

791,165

 

 

$

784,858

 

 

0.8

%

 

0.3

%

 

(0.4)

%

 

0.9

%

Equipment and software

17,451

 

 

16,602

 

 

5.1

 

 

 

 

 

 

5.1

 

Value-added services and other

8,669

 

 

6,035

 

 

43.6

 

 

1.1

 

 

 

 

42.5

 

Total

$

817,285

 

 

$

807,495

 

 

1.2

%

 

0.3

%

 

(0.4)

%

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

Value-added services and other

$

12,281

 

 

$

9,517

 

 

29.0

%

 

%

 

%

 

29.0

%

Total

$

12,281

 

 

$

9,517

 

 

29.0

%

 

%

 

%

 

29.0

%

 

 

 

 

 

 

 

 

 

 

 

 

(a) Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and nine months ended January 25, 2020.

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

 

 

January 25,
2020

 

January 26,
2019

 

Total
Sales
Growth

 

Foreign
Exchange
Impact

 

Other (a)

 

Internal
Sales
Growth

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

3,315,759

 

 

$

3,327,214

 

 

(0.3)

%

 

(0.4)

%

 

(0.3)

%

 

0.4

%

Equipment and software

612,167

 

 

563,269

 

 

8.7

 

 

(0.1)

 

 

 

 

8.8

 

Value-added services and other

275,624

 

 

247,334

 

 

11.4

 

 

(0.1)

 

 

 

 

11.5

 

Total

$

4,203,550

 

 

$

4,137,817

 

 

1.6

%

 

(0.4)

%

 

(0.2)

%

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Dental

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

905,540

 

 

$

902,753

 

 

0.3

%

 

(0.1)

%

 

%

 

0.4

%

Equipment and software

566,750

 

 

520,292

 

 

8.9

 

 

(0.1)

 

 

 

 

9.0

 

Value-added services and other

220,038

 

 

205,268

 

 

7.2

 

 

(0.1)

 

 

 

 

7.3

 

Total

$

1,692,328

 

 

$

1,628,313

 

 

3.9

%

 

(0.1)

%

 

%

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Animal Health

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

2,410,219

 

 

$

2,424,461

 

 

(0.6)

%

 

(0.6)

%

 

(0.4)

%

 

0.4

%

Equipment and software

45,417

 

 

42,977

 

 

5.7

 

 

 

 

 

 

5.7

 

Value-added services and other

27,376

 

 

20,679

 

 

32.4

 

 

(1.2)

 

 

 

 

33.6

 

Total

$

2,483,012

 

 

$

2,488,117

 

 

(0.2)

%

 

(0.6)

%

 

(0.4)

%

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

Value-added services and other

$

28,210

 

 

$

21,387

 

 

31.9

%

 

%

 

%

 

31.9

%

Total

$

28,210

 

 

$

21,387

 

 

31.9

%

 

%

 

%

 

31.9

%

 

(a) Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and nine months ended January 25, 2020.

PATTERSON COMPANIES, INC.

OPERATING INCOME BY SEGMENT

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

January 25,
2020

 

January 26,
2019

 

January 25,
2020

 

January 26,
2019

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

Dental

$

48,822

 

 

$

51,120

 

 

$

135,458

 

 

$

128,587

 

Animal Health

13,438

 

 

15,033

 

 

51,236

 

 

56,096

 

Corporate

(18,444)

 

 

(20,790)

 

 

(144,350)

 

 

(93,590)

 

Total

$

43,816

 

 

$

45,363

 

 

$

42,344

 

 

$

91,093

 

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

 

For the three months ended
January 25, 2020

 

GAAP

 

Deal
amortization

 

Integration
and business
restructuring
expenses

 

Legal
expenses

 

Accelerated
debt-related
costs

 

Discrete
tax
matters

 

Investment
gain

 

Non-GAAP

Operating income

 

$

43,816

 

 

$

9,267

 

 

$

7,714

 

 

$

2,288

 

 

$

 

 

$

 

 

$

 

 

$

63,085

 

Other income (expense), net

 

(14,277)

 

 

 

 

 

 

 

 

8,984

 

 

 

 

 

 

(5,293)

 

Income before taxes

 

29,539

 

 

9,267

 

 

7,714

 

 

2,288

 

 

8,984

 

 

 

 

 

 

57,792

 

Income tax expense (benefit)

 

6,567

 

 

2,200

 

 

1,928

 

 

572

 

 

2,246

 

 

 

 

 

 

13,513

 

Net income

 

22,972

 

 

7,067

 

 

5,786

 

 

1,716

 

 

6,738

 

 

 

 

 

 

44,279

 

Net loss attributable to
noncontrolling interests

 

(255)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(255)

 

Net income attributable to
Patterson Companies, Inc.

 

$

23,227

 

 

$

7,067

 

 

$

5,786

 

 

$

1,716

 

 

$

6,738

 

 

$

 

 

$

 

 

$

44,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share
attributable to Patterson
Companies, Inc.*

 

$

0.24

 

 

$

0.07

 

 

$

0.06

 

 

$

0.02

 

 

$

0.07

 

 

$

 

 

$

 

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income as a % of sales

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

4.3

%

Effective tax rate

 

22.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

23.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended
January 26, 2019

 

GAAP

 

Deal
amortization

 

Integration
and business
restructuring
expenses

 

Legal
expenses

 

Accelerated
debt-related
costs

 

Discrete
tax
matters

 

Investment
gain

 

Non-GAAP

Operating income

 

$

45,363

 

 

$

9,274

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

54,637

 

Other income (expense), net

 

(7,745)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,745)

 

Income before taxes

 

37,618

 

 

9,274

 

 

 

 

 

 

 

 

 

 

 

 

46,892

 

Income tax expense (benefit)

 

6,564

 

 

2,219

 

 

 

 

 

 

 

 

2,686

 

 

 

 

11,469

 

Net income

 

31,054

 

 

7,055

 

 

 

 

 

 

 

 

(2,686)

 

 

 

 

35,423

 

Net loss attributable to
noncontrolling interests

 

(171)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(171)

 

Net income attributable to
Patterson Companies, Inc.

 

$

31,225

 

 

$

7,055

 

 

$

 

 

$

 

 

$

 

 

$

(2,686)

 

 

$

 

 

$

35,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share
attributable to Patterson
Companies, Inc.*

 

$

0.33

 

 

$

0.08

 

 

$

 

 

$

 

 

$

 

 

$

(0.03)

 

 

$

 

 

$

0.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income as a % of sales

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

3.9

%

Effective tax rate

 

17.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

24.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* May not sum due to rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

 

For the nine months ended
January 25, 2020

 

GAAP

 

Deal
amortization

 

Integration
and business
restructuring
expenses

 

Legal
expenses‡

 

Accelerated
debt-related
costs

 

Discrete
tax
matters

 

Investment
gain

 

Non-GAAP

Operating income

 

$

42,344

 

 

$

27,758

 

 

$

13,461

 

 

$

81,254

 

 

$

 

 

$

 

 

$

 

 

$

164,817

 

Other income (expense), net

 

173

 

 

 

 

 

 

 

 

9,943

 

 

 

 

(34,334)

 

 

(24,218)

 

Income before taxes

 

42,517

 

 

27,758

 

 

13,461

 

 

81,254

 

 

9,943

 

 

 

 

(34,334)

 

 

140,599

 

Income tax expense (benefit)

 

23,087

 

 

6,601

 

 

3,370

 

 

7,113

 

 

2,486

 

 

 

 

(7,884)

 

 

34,773

 

Net income

 

19,430

 

 

21,157

 

 

10,091

 

 

74,141

 

 

7,457

 

 

 

 

(26,450)

 

 

105,826

 

Net loss attributable to
noncontrolling interests

 

(710)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(710)

 

Net income attributable to
Patterson Companies, Inc.

 

$

20,140

 

 

$

21,157

 

 

$

10,091

 

 

$

74,141

 

 

$

7,457

 

 

$

 

 

$

(26,450)

 

 

$

106,536

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share
attributable to Patterson
Companies, Inc.*

 

$

0.21

 

 

$

0.22

 

 

$

0.11

 

 

$

0.78

 

 

$

0.08

 

 

$

 

 

$

(0.28)

 

 

$

1.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income as a % of sales

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

3.9

%

Effective tax rate

 

54.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

24.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended
January 26, 2019

 

GAAP

 

Deal
amortization

 

Integration
and business
restructuring
expenses

 

Legal
expenses

 

Accelerated
debt-related
costs

 

Discrete
tax
matters

 

Investment
gain

 

Non-GAAP

Operating income

 

$

91,093

 

 

$

28,955

 

 

$

 

 

$

28,263

 

 

$

 

 

$

 

 

$

 

 

$

148,311

 

Other income (expense), net

 

(21,228)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,228)

 

Income before taxes

 

69,865

 

 

28,955

 

 

 

 

28,263

 

 

 

 

 

 

 

 

127,083

 

Income tax expense (benefit)

 

14,674

 

 

6,794

 

 

 

 

7,523

 

 

 

 

2,686

 

 

 

 

31,677

 

Net income

 

55,191

 

 

22,161

 

 

 

 

20,740

 

 

 

 

(2,686)

 

 

 

 

95,406

 

Net loss attributable to
noncontrolling interests

 

(447)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(447)

 

Net income attributable to
Patterson Companies, Inc.

 

$

55,638

 

 

$

22,161

 

 

$

 

 

$

20,740

 

 

$

 

 

$

(2,686)

 

 

$

 

 

$

95,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share
attributable to Patterson
Companies, Inc.*

 

$

0.60

 

 

$

0.24

 

 

$

 

 

$

0.22

 

 

$

 

 

$

(0.03)

 

 

$

 

 

$

1.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income as a % of sales

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

3.6

%

Effective tax rate

 

21.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

24.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

‡ Includes costs and expenses incurred in the first quarter of fiscal 2020 of $17,666 related to the settlement of litigation with SourceOne Dental, Inc., costs and expenses incurred in the second quarter of fiscal 2020 of $58,300 related to the probable settlement of litigation with the U.S. Attorney's Office for the Western District of Virginia and $5,288 related to other settlements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* May not sum due to rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PATTERSON COMPANIES, INC.

FREE CASH FLOW

(In thousands)

(Unaudited)

 

 

Nine Months Ended

 

January 25, 2020

 

January 26, 2019

 

 

 

 

Net cash provided by (used in) operating activities

$

(168,956)

 

 

$

76,344

 

Additions to property and equipment

(32,872)

 

 

(33,926)

 

Collection of deferred purchase price receivables

359,329

 

 

308,592

 

Impact of trade account receivables facility

(29,000)

 

 

(171,000)

 

Free cash flow

$

128,501

 

 

$

180,010

 

 

 

 

 

 

INVESTORS: John M. Wright, Investor Relations
COMPANY: Patterson Companies Inc.
TEL: 651.686.1364
EMAIL: john.wright@pattersoncompanies.com

MEDIA: Patterson Corporate Communications
COMPANY: Patterson Companies Inc.
TEL: 651.905.3349
EMAIL: corporate.communications@pattersoncompanies.com

WEB: pattersoncompanies.com

Source: Patterson Companies, Inc.

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