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| 8-K - FORM 8-K - PATTERSON COMPANIES, INC. | d8k.htm |
Exhibit 99.1
Patterson Companies Reports Strong Fourth Quarter Operating Results
St. Paul, MN—May 26, 2011—Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $883,819,000 for the fourth quarter of fiscal 2011 ended April 30, an increase of 9% from $812,762,000 in the year-earlier quarter. Net income was $62,707,000 or $0.53 per diluted share, compared to $61,805,000 or $0.52 per diluted share in the fourth quarter of fiscal 2010.
Fiscal 2011 consolidated sales totaled $3,415,670,000, up 6% from $3,237,376,000 in fiscal 2010. Net income for the year came to $225,385,000 or $1.89 per diluted share, an increase of 6% from $212,254,000 or $1.78 per diluted share in fiscal 2010. During fiscal 2011, Patterson used internally-generated cash to buy back 3.3 million shares of its common stock, including 1.9 million shares repurchased in the fourth quarter.
Sales of Patterson Dental Supply, Patterson’s largest business, totaled $573,120,000 in the fourth quarter, up 5% from $547,264,000 in the year-earlier period.
| • | Sales of consumable dental supplies and printed office products rose 3% from last year’s fourth quarter. |
| • | Sales of dental equipment and software increased 11% from the year-earlier level, paced by mid-teen sales growth of new-technology equipment, including CEREC dental restorative systems and digital radiography products. Sales of basic dental equipment, including chairs, units and lights, posted single-digit growth in the fourth quarter. |
| • | Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth, increased 4% from last year’s fourth quarter, excluding the impact of the equipment financing business. |
Fourth quarter sales of Patterson Medical, the rehabilitation supply and equipment unit, rose 22% to $126,758,000. Internally-generated sales increased 3% for this period, while the June 2010 acquisitions of the healthcare businesses of DCC Healthcare accounted for the balance of the year-over-year sales growth. Sales of the Webster Veterinary unit increased 14% from the year-earlier period to $183,941,000, reflecting improved sales of both consumable supplies and equipment and software.
Scott P. Anderson, president and chief executive officer, commented: “We are encouraged by the solid performances of our three businesses in the fourth quarter. We believe the fundamentals of the North American dental market are continuing to strengthen as evidenced by our improved consumables sales growth in recent periods. Given this market firming, we believe the improvement in our dental equipment business indicates that dentists are gradually becoming more confident about investing in their practices. Equipment sales also benefited from additional marketing programs implemented at the beginning of the quarter. As a result of these factors, we believe that we are rebuilding sales momentum in our dental equipment business.”
He continued: “We are encouraged by Patterson Medical’s overall performance during this period. Internally-generated sales attained planned levels and benefited from solid demand for the unit’s industry-leading range of consumable supplies. The integration of the acquired DCC units is proceeding on schedule, and incremental expenses related to this process are expected to diminish significantly going forward. We continue to believe Patterson Medical is well positioned, domestically and internationally, as an ongoing growth driver.”
Anderson added: “Webster Veterinary’s fourth quarter sales growth benefited from strong demand for new combination products in the flea/tick and heartworm category, which helped fuel a 12% increase in sales of consumable supplies. In addition, Webster posted continued strong sales of veterinary equipment and software, which rose 41% from last year’s fourth quarter. Webster’s equipment business has been growing at solid rates in recent quarters, and we intend to continue investing in this relatively new portion of Webster’s operation.”
Patterson issued financial guidance of $1.90 to $2.00 per diluted share for fiscal 2012. This guidance includes the impact of non-cash expense related to its Employee Stock Ownership Plan, which will affect earnings by an estimated $0.12 per share beginning in fiscal 2012. In addition, fiscal 2012 will be a 52-week sales year, compared to the 53 weeks in fiscal 2011 due to Patterson’s 52/53-week fiscal year convention.
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
Webster Veterinary is the nation’s second largest distributor of consumable veterinary supplies, equipment and software, diagnostic products, vaccines and pharmaceuticals 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. The Company cautions shareholders and prospective investors that the following factors, among others, may cause actual results to differ materially from those indicated by the forward-looking statements: competition within the dental, veterinary, and rehabilitative and assistive living supply industries; changes in the economics of dentistry, including reduced growth in expenditures by private dental insurance plans, the effects of economic conditions and the effects of healthcare reform, which may affect future per capita expenditures for dental services and the ability and willingness of dentists to invest in high-technology products; the effects of healthcare related legislation and regulation which may affect expenditures or reimbursements for rehabilitative and assistive products; changes in the economics of the veterinary supply market, including reduced growth in per capita expenditures for veterinary services and reduced growth in the number of households owning pets; the ability of the Company to maintain satisfactory relationships with its sales force; unexpected loss of key senior management personnel; unforeseen operating risks; risks associated with the dependence on manufacturers of the Company’s products; and the ability of the Company to successfully integrate the recent acquisitions into its existing business. Forward-looking statements are qualified in their entirety by the cautionary language set forth in the Company’s filings with the Securities and Exchange Commission.
For additional information contact:
| R. Stephen Armstrong | Richard G. Cinquina | |
| Executive Vice President & CFO | Equity Market Partners | |
| 651/686-1600 | 904/415-1415
|
Fourth Quarter Conference Call and Replay
Patterson’s fourth quarter earnings conference call will start at 10:00 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 web site. A replay of the fourth quarter conference call can be heard for one month at 1-303-590-3030 and providing the conference ID: 4438846.
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share amounts)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| April 30, 2011 |
April 24, 2010 |
April 30, 2011 |
April 24, 2010 |
|||||||||||||
| Net sales |
$ | 883,819 | $ | 812,762 | $ | 3,415,670 | $ | 3,237,376 | ||||||||
| Gross profit |
303,949 | 288,111 | 1,144,225 | 1,089,401 | ||||||||||||
| Operating expenses |
199,824 | 187,863 | 768,217 | 734,110 | ||||||||||||
| Operating income |
104,125 | 100,248 | 376,008 | 355,291 | ||||||||||||
| Other expense, net |
(5,643 | ) | (3,838 | ) | (20,121 | ) | (16,250 | ) | ||||||||
| Income before taxes |
98,482 | 96,410 | 355,887 | 339,041 | ||||||||||||
| Income taxes |
35,775 | 34,605 | 130,502 | 126,787 | ||||||||||||
| Net income |
$ | 62,707 | $ | 61,805 | $ | 225,385 | $ | 212,254 | ||||||||
| Earnings per share: |
||||||||||||||||
| Basic |
$ | 0.53 | $ | 0.52 | $ | 1.91 | $ | 1.79 | ||||||||
| Diluted |
$ | 0.53 | $ | 0.52 | $ | 1.89 | $ | 1.78 | ||||||||
| Shares: |
||||||||||||||||
| Basic |
117,529 | 118,798 | 118,290 | 118,443 | ||||||||||||
| Diluted |
118,269 | 119,518 | 119,066 | 119,202 | ||||||||||||
| Dividends declared per common share |
$ | 0.12 | $ | 0.10 | $ | 0.42 | $ | 0.10 | ||||||||
| Gross margin |
34.4 | % | 35.4 | % | 33.5 | % | 33.7 | % | ||||||||
| Operating expenses as a % of net sales |
22.6 | % | 23.1 | % | 22.5 | % | 22.7 | % | ||||||||
| Operating income as a % of net sales |
11.8 | % | 12.3 | % | 11.0 | % | 11.0 | % | ||||||||
| Effective tax rate |
36.3 | % | 35.9 | % | 36.7 | % | 37.4 | % | ||||||||
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PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| April 30, 2011 |
April 24, 2010 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and short-term investments |
$ | 388,665 | $ | 340,591 | ||||
| Receivables, net |
465,170 | 452,746 | ||||||
| Inventory |
336,094 | 288,725 | ||||||
| Prepaid expenses and other current assets |
40,780 | 51,696 | ||||||
| Total current assets |
1,230,709 | 1,133,758 | ||||||
| Property and equipment, net |
189,583 | 169,598 | ||||||
| Goodwill and other intangible assets |
1,022,832 | 1,005,677 | ||||||
| Investments and other |
121,844 | 113,936 | ||||||
| Total Assets |
$ | 2,564,968 | $ | 2,422,969 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 210,033 | $ | 193,626 | ||||
| Other accrued liabilities |
157,398 | 154,725 | ||||||
| Current maturities of long-term debt |
— | — | ||||||
| Total current liabilities |
367,431 | 348,351 | ||||||
| Long-term debt |
525,000 | 525,000 | ||||||
| Other non-current liabilities |
111,997 | 108,107 | ||||||
| Total liabilities |
1,004,428 | 981,458 | ||||||
| Stockholders’ equity |
1,560,540 | 1,441,511 | ||||||
| Total Liabilities and Stockholders’ Equity |
$ | 2,564,968 | $ | 2,422,969 | ||||
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PATTERSON COMPANIES, INC.
SUPPLEMENTARY FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| April 30, 2011 |
April 24, 2010 |
April 30, 2011 |
April 24, 2010 |
|||||||||||||
| Consolidated Net Sales |
||||||||||||||||
| Consumable and printed products |
$ | 578,930 | $ | 538,024 | $ | 2,232,876 | $ | 2,124,558 | ||||||||
| Equipment and software |
232,474 | 202,457 | 900,846 | 839,436 | ||||||||||||
| Other |
72,415 | 72,281 | 281,948 | 273,382 | ||||||||||||
| Total |
$ | 883,819 | $ | 812,762 | $ | 3,415,670 | $ | 3,237,376 | ||||||||
| Dental Supply |
||||||||||||||||
| Consumable and printed products |
$ | 320,536 | $ | 312,626 | $ | 1,253,224 | $ | 1,214,796 | ||||||||
| Equipment and software |
189,626 | 170,479 | 734,749 | 709,468 | ||||||||||||
| Other |
62,958 | 64,159 | 248,083 | 243,231 | ||||||||||||
| Total |
$ | 573,120 | $ | 547,264 | $ | 2,236,056 | $ | 2,167,495 | ||||||||
| Rehabilitation Supply |
||||||||||||||||
| Consumable and printed products |
$ | 87,281 | $ | 73,060 | $ | 348,641 | $ | 303,044 | ||||||||
| Equipment and software |
33,045 | 25,015 | 131,776 | 100,583 | ||||||||||||
| Other |
6,432 | 5,445 | 24,317 | 22,670 | ||||||||||||
| Total |
$ | 126,758 | $ | 103,520 | $ | 504,734 | $ | 426,297 | ||||||||
| Veterinary Supply |
||||||||||||||||
| Consumable and printed products |
$ | 171,113 | $ | 152,338 | $ | 631,011 | $ | 606,718 | ||||||||
| Equipment and software |
9,803 | 6,963 | 34,321 | 29,385 | ||||||||||||
| Other |
3,025 | 2,677 | 9,548 | 7,481 | ||||||||||||
| Total |
$ | 183,941 | $ | 161,978 | $ | 674,880 | $ | 643,584 | ||||||||
| Other (Expense) Income, net |
||||||||||||||||
| Interest income |
$ | 1,082 | $ | 2,059 | $ | 8,200 | $ | 8,550 | ||||||||
| Interest expense |
(6,341 | ) | (6,311 | ) | (25,840 | ) | (25,694 | ) | ||||||||
| Other |
(384 | ) | 414 | (2,481 | ) | 894 | ||||||||||
| Total |
$ | (5,643 | ) | $ | (3,838 | ) | $ | (20,121 | ) | $ | (16,250 | ) | ||||
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PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
| Twelve Months Ended | ||||||||
| April 30, 2011 |
April 24, 2010 |
|||||||
| Operating activities: |
||||||||
| Net income |
$ | 225,385 | $ | 212,254 | ||||
| Depreciation & amortization |
41,339 | 39,474 | ||||||
| Share-based compensation |
10,481 | 8,826 | ||||||
| Change in assets and liabilities, net of acquired |
(14,593 | ) | 4,931 | |||||
| Net cash provided by operating activities |
262,612 | 265,485 | ||||||
| Investing activities: |
||||||||
| Additions to property and equipment, net of disposals |
(36,822 | ) | (29,804 | ) | ||||
| Acquisitions and equity investments |
(52,187 | ) | (53,672 | ) | ||||
| Net cash used in investing activities |
(89,009 | ) | (83,476 | ) | ||||
| Financing activities: |
||||||||
| Cash dividends paid |
(49,992 | ) | (11,886 | ) | ||||
| Repurchases of common stock |
(97,153 | ) | — | |||||
| Other financing activities |
13,923 | (8,069 | ) | |||||
| Net cash used in financing activities |
(133,222 | ) | (19,955 | ) | ||||
| Effect of exchange rate changes on cash |
7,693 | 20,472 | ||||||
| Net increase in cash and cash equivalents |
$ | 48,074 | $ | 182,526 | ||||