- 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
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 DentalSales 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 VeterinarySales 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 MedicalSales 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 DividendsYear 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 ResultsConsolidated 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 OutlookAnderson 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 ReplayPatterson’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 MarketAs 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
MarketPatterson 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 MarketPatterson 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, 651-686-1600Vice
President & CFO
Patterson Companies (NASDAQ:PDCO)
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