- Sales from continuing operations
totaled a record $1.4 billion, up 44 percent on a constant currency
basis, including the impact of recently acquired Animal Health
International, Inc.
- Dental segment sales rose 3.1
percent on a constant currency basis.
- Animal Health segment sales up 109
percent on a constant currency basis, with $414.0 million in sales,
attributed to the company’s recent acquisition of Animal Health
International, Inc.
- Adjusted EPS from continuing
operations1 totaled $0.56, a 27 percent increase over
prior year, which reflects an increase in health insurance claims
of $3.2 million after-tax, or $0.03 per diluted share.
- Company reaffirms adjusted earnings
guidance for fiscal 2016 of $2.40 to $2.50 per share.
Patterson Companies, Inc. (Nasdaq: PDCO) today reported
consolidated sales from continuing operations of $1.4 billion (see
attached Sales Summary for further details) in its fiscal second
quarter ended October 31, 2015, up 42 percent over the same period
last year. Sales in this fiscal 2016 period include a full quarter
of results from the recent Animal Health International, Inc.
acquisition.
Adjusted net income from continuing operations1, which reflects
adjustments to exclude certain non-recurring and deal amortization
costs, was $55.3 million for the second quarter of fiscal 2016,
representing a 26 percent gain over $43.8 million in the same
quarter last year. Adjusted diluted earnings per share from
continuing operations1 was $0.56 in the 2016 second quarter,
representing a 27 percent year-over-year increase. The second
quarter was affected by higher-than-anticipated healthcare claims
and the impact of foreign currency. Reported net income from
continuing operations was $42.6 million, or $0.43 per diluted
share, compared to $41.9 million, or $0.42 per share, in last
year’s fiscal second quarter.
“We are in the middle of a significant year for Patterson and
continue to build momentum,” said Scott Anderson, chairman and
chief executive officer. “We have transformed and repositioned our
company in the markets we serve. Our Dental and Animal Health
businesses have broadened product offerings and our employees are
focused on exceptional customer service and support. We have
positioned our company to capitalize on the compelling long-term
demographic, technology and productivity trends in our
markets.”
Patterson Dental
Sales for Patterson Dental, which represent approximately 43
percent of total sales, rose to $601.3 million, up 3.1 percent on a
constant currency basis from the same quarter last year. On that
same basis, year-over-year sales by category were as follows:
- Consumable dental supplies improved 3.3
percent
- Equipment sales, led by technology,
rose 2.2 percent
- Other services and products, primarily
composed of technical service, parts and labor, software support
services and office supplies, climbed 4.2 percent
Commented Anderson, “Again this quarter, we saw an encouraging
rise in CEREC sales, especially among new users, and steady growth
in the consumables category. Results from these two areas confirm
our confidence in what we see as stable-to-steadily improving
dynamics in the North American dental market.”
Patterson Animal Health
Sales for Patterson Animal Health, which comprises approximately
56 percent of the company’s total sales, more than doubled to
$774.5 million. Sales from Animal Health International, Inc. added
$414.0 million to the Animal Health segment during the quarter.
Without the contribution from Animal Health International, and
accounting for normalized changes in veterinary diagnostic
manufacturer relationships, segment sales improved 3.2 percent on a
constant currency basis, with U.S. consumables rising 4.8 percent
organically.
Anderson continued, “In our Animal Health business, we continued
to integrate the Animal Health International, Inc. acquisition and
we are pleased with the business integration process and synergies
we are gaining. Moreover, our established U.S. companion animal
business performed well, growing sales over 5 percent on a constant
currency basis. We are confident in the strengthened scale and
market position of our new animal health platform.”
Discontinued Operations
On August 28, 2015, Patterson Companies completed the sale of
Patterson Medical to Madison Dearborn Partners for approximately
$715 million. As a result of the sale, results of Patterson Medical
are classified and reported as discontinued operations in all
periods beginning with the fiscal 2016 first quarter.
Share Repurchases and Dividends
Fiscal year to date, Patterson repurchased approximately 3.9
million shares of its outstanding common stock, with a value of
$175.8 million, leaving approximately 17 million shares for
repurchase under the current authorization. The company also paid
$22.2 million in cash dividends to shareholders in the second
quarter and $45.4 million in the first half of fiscal 2016.
Year-to-Date Results1
Consolidated sales from continuing operations for the first six
months of fiscal 2016 totaled $2.5 billion, representing a 32
percent year-over-year increase. Adjusted net income from
continuing operations was $102.2 million, or $1.03 per diluted
share, compared to adjusted net income from continuing operations
of $84.0 million, or $0.84 per diluted share, in the year-ago
period, as outlined in the Second Quarter and Six-Month
Reconciliation table1. Fiscal 2016 also includes the impact of an
extra week.
Business Outlook
Anderson concluded, “We are confident in the opportunities
before us and our ability to capitalize on them. The Animal Health
integration is on track and we remain focused on our customers’
success. In Dental, we have substantial momentum in our technology
sales, stability in consumables and new, expanded opportunities
from a broader equipment portfolio. We continue to create value for
shareholders as we invest in our business, pay dividends and
repurchase shares. We reaffirm our fiscal 2016 adjusted earnings
guidance range on a continuing operations basis of $2.40 to $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 impact of additional share
repurchases for the remainder of the fiscal year
- Excludes transaction-related costs,
integration expense, deal amortization, accelerated debt issuance
costs, non-recurring IT initiative training costs and tax costs
related to cash repatriation (See Second Quarter and Six-Month
Reconciliation table below)
- Excludes the discontinued operations
for Medical
1 Second Quarter and Six-Month Reconciliation
The following non-GAAP table is provided to adjust reported net
income and earnings per share for the impact of tax affected
one-time costs, current and prior deal-amortization costs and tax
costs related to cash repatriation. Management believes that the
adjusted net income and EPS amounts may provide a helpful
representation of the company’s current quarter performance.
(Dollars in thousands, except EPS)
Three
Months Ended Six Months Ended October 31, 2015
October 25, 2014 October 31,
2015 October 25, 2014 Net Income
from Continuing Operations - Reported $ 42,563 $ 41,865 $ 62,874 $
80,190 Transaction-Related Costs 677 - 9,979 - Deal Amortization
6,974 1,917 11,586 3,837 Integration Expense 1,328 - 2,054 -
Accelerated Debt Issuance Costs 3,205 - 3,205 - Non-Recurring IT
Training Costs 30 - 175 - Tax Impact of Repatriation of Cash
500 - 12,300 - Net Income from Continuing
Operations - Adjusted $ 55,277 $ 43,782 $ 102,173 $ 84,027
Diluted Earnings Per Share from Continuing Operations - Reported $
0.43 $ 0.42 $ 0.63 $ 0.80 Transaction-Related Costs 0.01 - 0.10 -
Deal Amortization 0.07 0.02 0.12 0.04 Integration Expense 0.01 -
0.02 - Accelerated Debt Issuance Costs 0.03 - 0.03 - Non-Recurring
IT Training Costs 0.00 - 0.00 - Tax Impact of Repatriation of Cash
0.01 - 0.12 - Diluted Earnings Per
Share from Continuing Operations - Adjusted* $ 0.56 $ 0.44 $ 1.03 $
0.84 *Fiscal 2016 year-to-date EPS does not foot due to
rounding
Second Quarter Conference Call and Replay
Patterson’s second 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
second quarter conference call can be heard for one week at
888-203-1112 and by providing the Conference ID 404442, when
prompted.
About Patterson Companies, Inc.
Patterson Companies, Inc. is a value-added distributor serving
the dental and animal health markets.
Dental Market
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.
Animal Health Market
Patterson Animal Health, formerly Patterson Veterinary, is a
leading, full-line distributor in North America and the U.K. of
animal health products, services and technologies to both the
production-animal and companion-pet markets.
This press release contains certain
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 Patterson's ability to control.
Forward-looking statements generally can be identified by words
such as "believes," "expects," "anticipates," "foresees,"
"forecasts," "estimates" or other words or phrases of similar
import. It is uncertain whether any of the events anticipated by
the forward-looking statements will transpire or occur, or if any
of them do, what impact they will have on the results of operations
and financial condition of Patterson or the price of Patterson
stock. These forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ materially
from those indicated in such forward-looking statements, including
but not limited to the other risks and important factors contained
and identified in Patterson's filings with the Securities and
Exchange Commission, such as its Quarterly Reports on Form 10-Q and
Annual Reports on Form 10-K, any of which could cause actual
results to differ materially from the forward-looking statements.
Any forward-looking statement in this press release speaks only as
of the date on which it is made. Except to the extent required
under the federal securities laws, Patterson 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
Six Months Ended October 31, October 25,
October 31, October 25, 2015 2014
2015 2014 Net sales $ 1,389,210 $ 978,220 $
2,532,080 $ 1,917,176 Gross profit 330,899 259,287 619,143
509,904 Operating expenses 247,436
187,147 473,503 371,768
Operating income from continuing operations 83,463 72,140 145,640
138,136 Other expense, net (16,200 ) (7,767 )
(27,673 ) (15,165 ) Income from continuing
operations before taxes 67,263 64,373 117,967 122,971 Income
taxes 24,700 22,508 55,093
42,781 Net income from continuing
operations 42,563 41,865 62,874 80,190 Net income from discontinued
operations (7,142 ) 11,913 2,250
23,877 Net income $ 35,421 $ 53,778 $
65,124 $ 104,067 Basic earnings per share:
Continuing operations $ 0.43 $ 0.42 $ 0.64 $ 0.81 Discontinued
operations (0.07 ) 0.12 0.02
0.24 Net basic earnings per share $ 0.36 $
0.54 $ 0.66 $ 1.05 Diluted earnings per
share: Continuing operations $ 0.43 $ 0.42 $ 0.63 $ 0.80
Discontinued operations (0.07 ) 0.12
0.02 0.24 Net diluted earnings per share $
0.36 $ 0.54 $ 0.65 $ 1.04
Shares: Basic 98,525 98,802 98,981 99,066 Diluted 99,185 99,376
99,674 99,779 Dividends declared per common share $ 0.22 $
0.20 $ 0.44 $ 0.40 Gross margin - reported 23.8 % 26.5 %
24.5 % 26.6 % Operating expenses as a % of net sales -
adjusted 16.8 % 18.9 % 17.3 % 19.1 % Adjustments1 1.0
0.2 1.4 0.3 Operating
expenses as a % of net sales - reported 17.8 % 19.1 % 18.7 % 19.4 %
Operating income as a % of net sales - adjusted 7.0 % 7.7 %
7.1 % 7.5 % Adjustments1 (1.0 ) (0.3 ) (1.3 )
(0.3 ) Operating income as a % of net sales - reported 6.0 %
7.4 % 5.8 % 7.2 % Effective tax rate - adjusted 35.9 % 34.8
% 35.2 % 34.6 % Adjustments1 0.8 0.2
11.5 0.2 Effective tax rate - reported
36.7 % 35.0 % 46.7 % 34.8 %
1
Refer to the press release for the
definition of adjustments to reported results
PATTERSON COMPANIES, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands)
October 31, April 25, 2015 2015
(Unaudited) ASSETS Current assets: Cash and
short-term investments $ 95,451 $ 400,632 Receivables 734,461
586,263 Inventory 752,849 408,422 Prepaid expenses and other
current assets 83,169 59,561 Current assets held for sale -
118,347 Total current assets 1,665,930 1,573,225 Property
and equipment, net 272,190 204,133 Goodwill and other intangible
assets 1,354,674 424,949 Investments and other 159,044 109,605
Long-term assets held for sale - 635,794 Total assets
$ 3,451,838 $ 2,947,706
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 492,469 $
323,294 Other accrued liabilities 209,896 215,075 Current
maturities of long-term debt 15,991 - Borrowings on revolving
credit 80,000 - Current liabilities held for sale -
39,316 Total current liabilities 798,356 577,685 Long-term debt
1,034,884 725,000 Other non-current liabilities 255,341 81,484
Long-term liabilities held for sale - 49,414 Total
liabilities 2,088,581 1,433,583 Stockholders' equity
1,363,257 1,514,123 Total liabilities and stockholders'
equity $ 3,451,838 $ 2,947,706
PATTERSON COMPANIES,
INC. SALES SUMMARY (Dollars in thousands)
(Unaudited) Total Foreign Animal
Health October 31, October 25, Sales
Exchange International Internal 2015
2014 Growth Impact Impact Growth
Three Months
Ended
Consolidated net sales Consumable1 $ 1,087,489 $ 686,165
58.5 % (2.2 ) % 60.7 % - % Equipment and software 207,809 204,409
1.7 (1.7 ) 0.3 3.1 Other1 93,912 87,646 7.1
(1.4 ) (1.0 ) 9.5 Total $ 1,389,210 $ 978,220 42.0 %
(2.0 ) % 42.6 % 1.4 % Dental Consumable1 $
332,436 $ 326,562 1.8 % (1.5 ) % - % 3.3 % Equipment and software
196,767 195,962 0.4 (1.8 ) - 2.2 Other1 72,119 70,112
2.9 (1.3 ) - 4.2 Total $ 601,322 $ 592,636 1.5
% (1.6 ) % - % 3.1 % Animal Health
Consumable1 $ 755,053 $ 359,603 110.0 % (2.8 ) % 115.4 % (2.6 ) %
Equipment and software 11,042 8,447 30.7 (0.2 ) - 30.9 Other1
8,358 8,424 (0.8 ) (3.8 ) (11.6 ) 14.6 Total $
774,453 $ 376,474 105.7 % (2.8 ) % 110.0 % (1.5 ) %
Corporate Other1 $ 13,435 $ 9,110 47.5 % - % -
% 47.5 % Total $ 13,435 $ 9,110 47.5 % -
% - % 47.5 %
Six Months
Ended
Consolidated net sales Consumable1 $ 1,982,796 $ 1,381,804
43.5 % (2.4 ) % 42.7 % 3.2 % Equipment and software 361,292 360,803
0.1 (1.6 ) 0.3 1.4 Other1 187,992 174,569 7.7
(1.4 ) (0.1 ) 9.2
Total
$ 2,532,080 $ 1,917,176 32.1 % (2.2 ) % 30.8 % 3.5
% Dental Consumable1 $ 690,488 $ 651,852 5.9 % (1.5 )
% - % 7.4 % Equipment and software 340,437 344,745 (1.2 ) (1.7 ) -
0.5 Other1 145,514 138,913 4.8 (1.2 ) -
6.0 Total $ 1,176,439 $ 1,135,510 3.6 % (1.5 ) % -
% 5.1 % Animal Health Consumable1 $ 1,292,308
$ 729,952 77.0 % (3.3 ) % 80.3 % - % Equipment and software 20,855
16,058 29.9 (0.2 ) - 30.1 Other1 18,587 16,764 10.9
(4.4 ) (3.0 ) 18.3 Total $ 1,331,750 $ 762,774 74.6
% (3.2 ) % 76.8 % 1.0 % Corporate
Other1 $ 23,891 $ 18,892 26.5 % - % - % 26.5
% Total $ 23,891 $ 18,892 26.5 % - % -
% 26.5 %
1
Certain sales were reclassified from
consumable to other in current and prior periods.
PATTERSON COMPANIES, INC.
SUPPLEMENTARY FINANCIAL DATA (In thousands, except per
share data) (Unaudited) Three Months Ended
Six Months Ended October 31, October 25,
October 31, October 25, 2015 2014
2015 2014 Operating income (loss) Dental $ 74,094 $
73,427 $ 141,346 $ 135,976 Animal Health 25,177 14,336 38,149
28,323 Corporate (15,808 ) (15,623 ) (33,855 )
(26,163 ) $ 83,463 $ 72,140 $ 145,640 $
138,136 Other (expense) income, net Interest income $
629 $ 749 $ 1,418 $ 1,999 Interest expense (17,154 ) (8,544 )
(29,297 ) (17,312 ) Other 325 28
206 148 $ (16,200 ) $ (7,767 ) $ (27,673 ) $
(15,165 )
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) Six Months Ended
October 31, October 25, 2015 2014
Operating activities: Net income $ 65,124 $ 104,067 Net income from
discontinued operations 2,250 23,877
Net income from continuing operations 62,874 80,190 Adjustments to
reconcile net income to net cash provided by
operating activities:
Depreciation & amortization 38,400 21,014 Non-cash employee
compensation 13,541 11,940 Change in assets and liabilities, net of
acquired (128,782 ) (36,599 ) Net cash (used in)
provided by operating activities - continuing operations (13,967 )
76,545 Net cash (used in) provided by operating activities -
discontinued operations (38,985 ) 21,850 Net
cash (used in) provided by operating activities (52,952 ) 98,395
Investing activities: Additions to property and equipment,
net of disposals (40,978 ) (29,190 ) Acquisitions and equity
investments (1,105,229 ) - Proceeds from sale 48,744 40,775
Purchase of investments - (543 ) Net cash
(used in) provided by investing activities - continuing operations
(1,097,463 )
11,042 Net cash provided by investing activities - discontinued
operations 715,430
4,598 Net cash (used in) provided by investing
activities (382,033 )
15,640 Financing activities: Dividends paid (45,356 )
(40,174 ) Share repurchases (160,579 ) (47,539 ) Proceeds from
issuance of long-term debt, net 988,400 - Draw on revolver 80,000 -
Retirement of long-term debt (674,125 ) - Other financing
activities 2,894 844 Net cash provided
by (used in) financing activities 191,234 (86,869 ) Effect
of exchange rate changes on cash (8,058 ) (7,202 )
Net change in cash and cash equivalents $ (251,809 ) $ 19,964
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151124005273/en/
Patterson Companies, Inc.Ann B. GuginoExecutive Vice President
& CFO651-686-1600orJohn WrightVice President, Investor
Relations651-686-1364
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