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8-K - FORM 8-K - PATTERSON COMPANIES, INC.d490334d8k.htm

Exhibit 99.1

 

LOGO

Patterson Companies Reports Third Quarter Operating Results

St. Paul, Minn—Feb. 21, 2012— Patterson Companies, Inc. (Nasdaq: PDCO) today reported that consolidated sales totaled $915,861,000 in its fiscal third quarter, ended Jan. 26, 2013, an increase of 2.3% from $895,030,000 in the year-earlier period. Net income was $53,630,000, or $0.52 per diluted share, compared to net income of $53,108,000, or $0.50 per diluted share, in the year-ago period.

All Patterson Companies’ business lines in the fiscal 2013 third quarter were affected by two fewer days in the selling period, due to the company’s fiscal calendar and the timing of holidays. This is most notable in the consumable categories with an approximate 2 percentage point negative impact, on a comparable basis to the year-ago results.

Patterson Dental

Sales for Patterson Dental, Patterson’s largest business, increased 3.5% from the year-earlier period to $626,494,000 in the third quarter of fiscal 2013.

 

   

Sales of consumable dental supplies, adjusted to exclude the impact of the fewer selling days in the period, were up 1.2% (down 0.9%, as reported)

 

   

Sales of dental equipment and software rose nearly 10% from the year-earlier level, driven by strong performances in technology categories, particularly digital imaging

 

   

Sales of other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, were up 2.3% from last year’s third quarter

Scott P. Anderson, president and chief executive officer, commented: “We are pleased with Patterson’s third-quarter performance. Within Patterson Dental we posted solid sales levels, led by sales of CEREC® systems and digital radiography products. Sales of the industry-leading CEREC Omnicam system – an innovative 3D CAD/CAM digital camera for dentists – had been constrained last quarter due to product availability issues. Sales in this quarter were robust, as the manufacturer, Sirona Dental Systems, Inc., fulfilled their delivery commitments. We believe there are growth opportunities from all our technology offerings as dentistry migrates to a digital platform, and we will continue to support these categories with targeted marketing initiatives, as necessary.”

Patterson Veterinary

Third quarter fiscal 2013 sales for the Patterson Veterinary unit increased 2.4%, adjusted to exclude the impact of the fewer selling days (up 0.4%, as reported), to $175,408,000. Also, excluding the impact from the change in a nutritional distribution agreement in the spring of 2012, sales would have grown by approximately 7 additional percentage points in the period. Effective Jan. 1, 2013, Patterson Companies renamed its Webster Veterinary Supply unit to Patterson Veterinary Supply. In a move designed to further leverage the Patterson brand, the company believes it is strengthening its visibility and position in the United States companion-pet veterinary market.


Anderson continued: “Patterson Veterinary constituted approximately 20% of Patterson Companies’ total sales levels in the third quarter. Year-over-year performance was driven by gains in consumable supply sales. Despite the challenging economy, and what is typically the seasonally slowest period for this business, we continue to see positive trends in this unit. We remain committed to building our equipment and technical service strategy to capture market share as pet owners increase their veterinary care spending. We believe we can continue to reshape the market, as Patterson redefines the industry sales model.”

Patterson Medical

Sales for Patterson Medical, the rehabilitation supply and equipment unit, declined slightly to $113,959,000, primarily reflecting weak equipment sales during the quarter. Sales from Patterson Medical currently represent approximately 15% of total company sales.

Anderson concluded: “Patterson Medical sales were essentially in-line with our internal forecasts for the third quarter. Performance has been affected by the continued uncertainty surrounding the nation’s health care system and in international markets from the continued austerity measures that have dampened demand throughout fiscal 2013. Although this situation is likely to persist in the short-term, we believe Patterson Medical is well positioned to leverage its technology and portfolio of value-added products to capture future growth opportunities in the rehabilitation market.”

Year to Date Results

Consolidated sales for the first nine months of fiscal 2013 totaled $2,672,279,000, an increase of nearly 3% from $2,599,327,000 in the year-earlier period. Net income was $146,710,000, or $1.41 per diluted share, compared to net income of $150,672,000, $1.34 per diluted share, in the year-ago period.

During the third quarter Patterson repurchased approximately 1.4 million common shares under its 25 million share buyback authorization that expires in 2016. Approximately 7 million shares remain available for repurchase under this authorization.

Patterson maintained its financial guidance for fiscal 2013 for earnings per diluted share of $2.00 to $2.06.

Third Quarter Conference Call and Replay

Patterson’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 web site. A replay of the third quarter conference call can be heard for one week at 1-303-590-3030 and providing the conference ID: 4594665.

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

Patterson Veterinary is a leading 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:

  

Ann Gugino

   R. Stephen Armstrong

Vice President, Planning and Strategy

   Executive Vice President & CFO

651-686-1600

   651-686-1600

Source: Patterson Companies, Inc.

  

# # #


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     January 26,     January 28,     January 26,     January 28,  
     2013     2012     2013     2012  

Net sales

   $ 915,861      $ 895,030      $ 2,672,279      $ 2,599,327   

Gross profit

     300,293        289,534        866,592        848,793   

Operating expenses

     210,755        199,628        616,593        593,635   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     89,538        89,906        249,999        255,158   

Other expense, net

     (7,738     (8,043     (25,081     (19,393
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     81,800        81,863        224,918        235,765   

Income taxes

     28,170        28,755        78,208        85,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 53,630      $ 53,108      $ 146,710      $ 150,672   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.53      $ 0.50      $ 1.42      $ 1.35   

Diluted

   $ 0.52      $ 0.50      $ 1.41      $ 1.34   

Shares:

        

Basic

     102,130        106,504        103,624        111,539   

Diluted

     102,896        107,206        104,374        112,226   

Dividends declared per common share

   $ 0.14      $ 0.12      $ 0.42      $ 0.36   

Gross margin

     32.8     32.3     32.4     32.7

Operating expenses as a % of net sales

     23.0     22.3     23.1     22.8

Operating income as a % of net sales

     9.8     10.0     9.4     9.8

Effective tax rate

     34.4     35.1     34.8     36.1

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     January 26,      April 28,  
     2013      2012  
     (Unaudited)         

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 472,449       $ 573,781   

Receivables, net

     421,506         464,869   

Inventory

     352,646         319,952   

Prepaid expenses and other current assets

     41,527         44,911   
  

 

 

    

 

 

 

Total current assets

     1,288,128         1,403,513   

Property and equipment, net

     191,385         195,465   

Goodwill and other intangible assets

     1,022,437         1,022,809   

Investments and other

     135,540         117,581   
  

 

 

    

 

 

 

Total Assets

   $ 2,637,490       $ 2,739,368   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 220,870       $ 207,915   

Other accrued liabilities

     186,157         196,733   

Current maturities of long-term debt

     50,000         125,000   
  

 

 

    

 

 

 

Total current liabilities

     457,027         529,648   

Long-term debt

     725,000         725,000   

Other non-current liabilities

     104,730         109,518   
  

 

 

    

 

 

 

Total liabilities

     1,286,757         1,364,166   

Stockholders’ equity

     1,350,733         1,375,202   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 2,637,490       $ 2,739,368   
  

 

 

    

 

 

 

 

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PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     January 26,     January 28,     January 26,     January 28,  
     2013     2012     2013     2012  

Consolidated Net Sales

        

Consumable and printed products

   $ 551,149      $ 550,888      $ 1,725,465      $ 1,695,822   

Equipment and software

     292,726        273,573        726,687        687,249   

Other

     71,986        70,569        220,127        216,256   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 915,861      $ 895,030      $ 2,672,279      $ 2,599,327   
  

 

 

   

 

 

   

 

 

   

 

 

 

Dental Supply

        

Consumable and printed products

   $ 308,700      $ 311,356      $ 934,234      $ 932,461   

Equipment and software

     254,033        231,372        615,282        567,312   

Other

     63,761        62,313        193,519        189,240   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 626,494      $ 605,041      $ 1,743,035      $ 1,689,013   
  

 

 

   

 

 

   

 

 

   

 

 

 

Rehabilitation Supply

        

Consumable and printed products

   $ 80,628      $ 80,510      $ 273,446      $ 272,235   

Equipment and software

     27,301        28,783        85,635        91,542   

Other

     6,030        6,053        19,290        19,591   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 113,959      $ 115,346      $ 378,371      $ 383,368   
  

 

 

   

 

 

   

 

 

   

 

 

 

Veterinary Supply

        

Consumable and printed products

   $ 161,821      $ 159,022      $ 517,785      $ 491,126   

Equipment and software

     11,392        13,418        25,770        28,395   

Other

     2,195        2,203        7,318        7,425   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 175,408      $ 174,643      $ 550,873      $ 526,946   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (Expense) Income, net

        

Interest income

   $ 1,151      $ 1,052      $ 3,492      $ 3,778   

Interest expense

     (9,113     (8,358     (27,808     (20,880

Other

     224        (737     (765     (2,291
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (7,738   $ (8,043   $ (25,081   $ (19,393
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Nine Months Ended  
     January 26,     January 28,  
     2013     2012  

Operating activities:

    

Net income

   $ 146,710      $ 150,672   

Depreciation & amortization

     33,307        30,432   

Stock-based compensation

     10,985        9,428   

ESOP compensation

     17,100        544   

Change in assets and liabilities, net of acquired

     (28,766     37,586   
  

 

 

   

 

 

 

Net cash provided by operating activities

     179,336        228,662   

Investing activities:

    

Additions to property and equipment, net of disposals

     (14,259     (25,051

Acquisitions and equity investments

     (14,650     (14,193
  

 

 

   

 

 

 

Net cash used in investing activities

     (28,909     (39,244

Financing activities:

    

Dividends paid

     (43,745     (39,800

Share repurchases

     (140,468     (323,519

Proceeds from issuance of long-term debt

     —           325,000   

Other financing activities

     (65,790     7,935   
  

 

 

   

 

 

 

Net cash used in financing activities

     (250,003     (30,384

Effect of exchange rate changes on cash

     (1,756     (9,607
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

   $ (101,332   $ 149,427