- Sales totaled $1.1 billion, up 6.7
percent on constant currency basis, with adjusted earnings per
diluted share of $0.68
- Dental sales expanded by 10.3
percent on a constant currency basis, reflecting strong equipment
sales
- Full fiscal-year sales rose 8.7
percent on a constant currency basis, with adjusted earnings per
share of $2.27
- Company provides adjusted earnings
guidance range for fiscal year 2016
Patterson Companies, Inc. (Nasdaq: PDCO) today reported that
consolidated sales totaled $1.1 billion (see attached Sales Summary
for further details) in its fiscal fourth quarter ended April 25,
2015; 4.2 percent higher than fiscal 2014. Reported net income
totaled $64.5 million, or $0.65 per diluted share, compared to
$55.7 million, or $0.55 per diluted share during the same period
last fiscal year. After adjusting for one-time transaction costs
related to the pending acquisition of Animal Health International
and the potential sale of Patterson Medical, fourth quarter fiscal
2015 earnings per diluted share were $0.68.
“Executing on our strategic plan and focusing on operational
discipline enabled Patterson to close fiscal 2015 with healthy
contributions from all three of our businesses,” said Scott
Anderson, chairman and chief executive officer. “We are encouraged
by the momentum we are seeing in all of our business units. As we
work to complete the acquisition of Animal Health International and
the potential sale of our Medical unit, we are confident that the
transformation we are pursuing for Patterson will lead to long-term
growth and success.”
Patterson DentalSales for Patterson Dental, which
accounts for approximately 59 percent of total sales, increased to
$679.1 million, up 10.3 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:
- Dental equipment and software improved
23.3 percent led by strong CEREC CAD/CAM and digital technology
sales;
- Consumable dental supplies increased
3.3 percent; and
- Other services and products, consisting
primarily of technical service, parts and labor, software support
services and artificial teeth, climbed 6.0 percent.
Commented Anderson, “We are pleased with the growth and share
gains in technology-oriented sales, driven by Patterson’s
industry-leading sales, technical service and after-sales support.
We believe that dentists’ willingness to invest in technology
affirms the trend toward dental-office digitization. Our technology
and expanding core dental equipment offerings, complemented by
Patterson’s high-touch service, position us well to capitalize on
stable-to-steadily improving market dynamics.”
Patterson VeterinarySales for Patterson Veterinary, the
company’s second largest business, increased to $356.0 million, or
up 2.7 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 1.7 percent;
- Equipment sales increased 31.8 percent;
and
- Sales of other services and products,
consisting primarily of technical service, parts and labor, and
software support services, were up 2.5 percent.
Anderson continued, “Patterson Veterinary, which represented
about one-third of our total sales, reported growth in the fiscal
fourth quarter as we continue to transition to a new diagnostic
manufacturer relationship. We believe our recently announced
agreement to acquire Animal Health International will strengthen
the scale and market position of Patterson Veterinary, expanding
our presence in production and companion animal markets.”
On May 4, 2015, Patterson Companies announced a definitive
agreement to acquire Animal Health International, Inc., a leading
production animal health distribution company in the United States.
This acquisition will more than double the size of Patterson's
veterinary business. The combined unit will offer a range of
products and services to customers in the United States, Canada and
the United Kingdom.
Patterson MedicalSales for Patterson Medical, the
company’s rehabilitation supply and equipment business, totaled
$113.8 million in the fiscal 2015 fourth quarter, up 3.7 percent,
excluding currency and prior-year divestiture impacts. Consolidated
sales of Patterson Medical currently represent approximately 10
percent of total company sales.
Anderson said, “Earlier this month, we announced the potential
sale of our Medical unit. Our initiatives to improve the
performance of Patterson Medical were again demonstrated as we
posted sales gains for the fourth consecutive quarter. We believe
that Patterson Medical will flourish under a new owner that can
focus on driving growth in the rehabilitation space.”
Share Repurchases and DividendsFor the fiscal 2015 year,
Patterson 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 increased its dividend in the
fiscal fourth quarter by 10 percent to $0.22 per share and paid
$21.5 million in cash dividends to shareholders in the period.
The company paid $81.8 million in dividend payments for fiscal year
2015.
Full-Year ResultsConsolidated sales for the full fiscal
2015 year totaled $4.4 billion, up 8.7 percent on a constant
currency basis from $4.1 billion in fiscal 2014. Adjusted net
income was $226.2 million, or $2.27 per diluted share (adjusted for
$0.03 per diluted share of one-time transaction costs related to
the acquisition of Animal Health International and the potential
sale of Patterson Medical), compared to adjusted net income of
$213.9 million, or $2.10 per diluted share, in fiscal 2014
(adjusted for $0.13 per share of costs for the Patterson Medical
restructuring).
Business OutlookAnderson concluded, “We begin fiscal 2016
with optimism and momentum. Our previously announced agreement to
acquire Animal Health International, along with the potential
divestiture of our Medical unit, have the potential to transform
Patterson Companies and our growth profile. As we move into the new
fiscal year, we are encouraged by the stable-to-strengthening
demand across all of our businesses. We are establishing our
adjusted fiscal 2016 earnings guidance in the range of $2.40-$2.50
per diluted share.”
The fiscal 2016 annual financial outlook and adjusted earnings
guidance:
- Assumes stable North American and
international markets – conditions similar to fiscal 2015
- Includes the impact of an extra week in
fiscal 2016 compared to the previous year
- Excludes the following:
- Approximately $0.05 of one-time
training costs related to the company’s enterprise resource
planning implementation
- The impact from additional share
repurchases that may occur
- The impact of the Animal Health
International acquisition and potential Medical divestiture
Fourth Quarter and Full Fiscal Year ReconciliationThe
following non-GAAP table is provided to adjust reported net income
for the impact of the costs associated with restructuring the
medical segment and one-time transaction costs related to the
pending acquisition of Animal Health International and the
potential sale of Patterson Medical. 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 Twelve Months
Ended April 25, 2015 April 26, 2014
April 25, 2015 April 26, 2014 Net
Income - reported $ 64,518 $ 55,670 $ 223,261 $ 200,612
Restructuring costs - 5,701 - 13,267 One-time transaction costs
2,894 - 2,894 - Net Income - adjusted $
67,412 $ 61,371 $ 226,155 $ 213,879 Diluted Earnings Per
Share - reported $ 0.65 $ 0.55 $ 2.24 $ 1.97 Restructuring costs -
0.06 - 0.13 One-time transaction costs 0.03 -
0.03 - Diluted Earnings Per Share - adjusted $ 0.68 $ 0.61 $
2.27 $ 2.10
Fourth Quarter Conference Call and ReplayPatterson’s
fourth 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 fourth
quarter conference call can be heard for one week at 888-203-1112
and by providing the Conference ID 1982881, 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 per share
amounts) (Unaudited)
Three Months Ended Twelve Months
Ended April 25, April 26, April 25,
April 26, 2015 2014 2015 2014
Net sales $ 1,148,854 $ 1,102,077 $ 4,375,020 $ 4,063,715
Gross profit 333,600 315,868 1,238,206 1,198,278
Operating expenses 226,904 223,267
864,779 852,522 Operating income
106,696 92,601 373,427 345,756 Other expense, net
(7,511 ) (7,479 ) (30,756 ) (32,844 )
Income before taxes 99,185 85,122 342,671 312,912 Income
taxes 34,667 29,452 119,410
112,300 Net income $ 64,518 $
55,670 $ 223,261 $ 200,612 Earnings per
share: Basic $ 0.65 $ 0.56 $ 2.26 $ 1.99 Diluted $ 0.65 $ 0.55 $
2.24 $ 1.97 Shares: Basic 98,981 99,707 98,989 100,727
Diluted 99,677 100,684 99,694 101,643 Dividends declared per
common share $ 0.22 $ 0.20 $ 0.82 $ 0.68 Gross margin -
adjusted 29.0 % 28.7 % 32.2 % 32.2 % NVS - - (3.9 ) (2.6 ) Medical
restructuring - - -
(0.1 ) Gross margin - reported 29.0 % 28.7 % 28.3 % 29.5 %
Operating expenses as a % of net sales - adjusted 19.3 %
19.7 % 22.5 % 22.6 % NVS - - (2.8 ) (1.9 ) One-time transaction
costs 0.4 - 0.1 - Medical restructuring - 0.6
- 0.3 Operating expenses as a %
of net sales - reported 19.7 % 20.3 % 19.8 % 21.0 %
Operating income as a % of net sales - adjusted 9.7 % 9.0 % 9.7 %
9.6 % NVS - - (1.1 ) (0.7 ) One-time transaction costs (0.4 ) -
(0.1 ) - Medical restructuring - (0.6 )
- (0.4 ) Operating income as a % of net sales -
reported 9.3 % 8.4 % 8.5 % 8.5 % Effective tax rate -
adjusted 35.1 % 33.7 % 35.2 % 35.2 % NVS - - (0.4 ) (0.3 ) One-time
transaction costs (0.1 ) - - - Medical restructuring -
0.9 - 1.0
Effective tax rate - reported 35.0 % 34.6 % 34.8 % 35.9 %
PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands)
April 25, April 26, 2015 2014
(Unaudited) ASSETS Current assets: Cash and
short-term investments $ 400,632 $ 305,683 Receivables 644,139
607,580 Inventory 456,687 436,463 Prepaid expenses and other
current assets 71,767 65,991 Total current assets
1,573,225 1,415,717 Property and equipment, net 226,805 204,939
Goodwill and other intangible assets 1,036,928 1,067,583
Investments and other 110,748 176,438 Total assets $
2,947,706 $ 2,864,677
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 349,635 $
342,056 Other accrued liabilities 228,050 201,407
Total current liabilities 577,685 543,463 Long-term debt 725,000
725,000 Other non-current liabilities 130,898 124,550
Total liabilities 1,433,583 1,393,013 Stockholders' equity
1,514,123 1,471,664 Total liabilities and stockholders'
equity $ 2,947,706 $ 2,864,677
PATTERSON
COMPANIES, INC. SALES SUMMARY (Dollars in
thousands) (Unaudited)
Total
Foreign Constant April 25, April 26,
Sales Exchange Currency 2015
2014 Growth Impact Growth
Three Months
Ended
Consolidated net sales Consumable and printed products1 $
770,282 $ 774,286 (0.5 ) % (2.8 ) % 2.3 % Equipment and software1
292,414 244,367 19.7 (1.8 ) 21.5 Other 86,158 83,424
3.3 (1.4 ) 4.7 Total $ 1,148,854 $ 1,102,077 4.2
% (2.5 ) % 6.7 % Dental supply Consumable and
printed products1 $ 353,597 $ 345,932 2.2 % (1.1 ) % 3.3 %
Equipment and software1 252,859 207,750 21.7 (1.6 ) 23.3 Other
72,624 69,166 5.0 (1.0 ) 6.0 Total $
679,080 $ 622,848 9.0 % (1.3 ) % 10.3 %
Veterinary supply Consumable and printed products $ 332,915 $
342,294 (2.7 ) % (4.4 ) % 1.7 % Equipment and software 15,504
11,777 31.6 (0.2 ) 31.8 Other 7,562 7,768 (2.7 ) (5.2
) 2.5 Total $ 355,981 $ 361,839 (1.6 ) % (4.3 ) % 2.7
% Rehabilitation supply Consumable and printed products $
83,769 $ 86,060 (2.7 ) % (3.1 ) % 0.4 % Equipment and software
24,052 24,840 (3.2 ) (4.0 ) 0.8 Other 5,972 6,490
(8.0 ) (1.6 ) (6.4 ) Total $ 113,793 $ 117,390 (3.1 ) % (3.2 ) %
0.1 %
Twelve Months
Ended
Consolidated net sales Consumable and printed products1 $
3,083,113 $ 2,810,491 9.7 % (1.1 ) % 10.8 % Equipment and software1
958,067 940,088 1.9 (0.9 ) 2.8 Other 333,840 313,136
6.6 (0.7 ) 7.3 Total $ 4,375,020 $ 4,063,715 7.7
% (1.0 ) % 8.7 % Dental supply Consumable and
printed products1 $ 1,355,982 $ 1,323,378 2.5 % (0.8 ) % 3.3 %
Equipment and software1 818,342 795,132 2.9 (0.9 ) 3.8 Other
279,971 263,586 6.2 (0.7 ) 6.9 Total $
2,454,295 $ 2,382,096 3.0 % (0.8 ) % 3.8 %
Veterinary supply Consumable and printed products $ 1,380,427 $
1,134,932 21.6 % (1.6 ) % 23.2 % Equipment and software 46,671
44,020 6.0 (0.1 ) 6.1 Other 29,472 24,093 22.3
(1.9 ) 24.2 Total $ 1,456,570 $ 1,203,045 21.1 % (1.5
) % 22.6 % Rehabilitation supply Consumable and
printed products $ 346,704 $ 352,181 (1.6 ) % (0.5 ) % (1.1 ) %
Equipment and software 93,054 100,936 (7.8 ) (1.3 ) (6.5 ) Other
24,397 25,457 (4.2 ) (0.4 ) (3.8 ) Total $ 464,155 $
478,574 (3.0 ) % (0.7 ) % (2.3 ) %
1 Certain products were reclassed from
equipment to consumables in current and prior periods
PATTERSON COMPANIES, INC.
SUPPLEMENTARY FINANCIAL DATA
(In thousands)
(Unaudited)
Three Months Ended Twelve
Months Ended April 25, April 26,
April 25, April 26, 2015
2014 2015 2014 Operating income Dental
supply $ 70,637 $ 67,292 $ 249,575 $ 249,138 Veterinary supply
16,483 16,680 56,670 49,855 Rehabilitation supply 19,576
8,629 67,182 46,763
$ 106,696 $ 92,601 $ 373,427 $ 345,756
Other (expense) income, net Interest income $ 952 $
1,090 $ 4,864 $ 4,982 Interest expense (7,868 ) (9,132 ) (33,693 )
(35,713 ) Other (595 ) 563 (1,927 )
(2,113 ) $ (7,511 ) $ (7,479 ) $ (30,756 ) $ (32,844 )
PATTERSON COMPANIES, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Twelve Months
Ended April 25, April 26, 2015 2014
Operating activities: Net income $ 223,261 $ 200,612
Depreciation & amortization 51,330 49,986 Non-cash employee
based compensation 26,485 20,018 Change in assets and liabilities,
net of acquired (38,385 ) (74,780 ) Net cash provided
by operating activities 262,691 195,836 Investing
activities: Additions to property and equipment, net of disposals
(62,945 ) (40,387 ) Acquisitions and equity investments (10,515 )
(145,815 ) Proceeds from sale 46,369 6,546 Purchase of investments
(543 ) (99,672 ) Other investing activity 18,035
(4,436 ) Net cash used in investing activities (9,599 )
(283,764 ) Financing activities: Dividends paid (81,760 )
(85,657 ) Share repurchases (47,539 ) (96,486 ) Payment on revolver
(130,000 ) (135,000 ) Draw on revolver 130,000 135,000 Settlement
of swap (29,003 ) - Retirement of long-term debt (250,000 ) -
Proceeds from issuance of long-term debt 250,000 - Other financing
activities 7,367 21,942 Net cash used
in financing activities (150,935 ) (160,201 ) Effect of
exchange rate changes on cash (19,805 ) 7,809
Net increase (decrease) in cash and cash equivalents $
82,352 $ (240,320 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150521005353/en/
Patterson Companies, Inc.Ann B. Gugino, 651-686-1600Vice
President & CFO
Patterson Companies (NASDAQ:PDCO)
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