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8-K - FORM 8-K - PATTERSON COMPANIES, INC.d401551d8k.htm

Exhibit 99.1

Patterson Companies Reports On-Plan First Quarter Operating Results

St. Paul, MN—August 23, 2012—Patterson Companies, Inc. (Nasdaq: PDCO) today reported operating results for the first quarter of fiscal 2013 ended July 28.

 

   

Consolidated sales increased 5% to $889,225,000 from $847,422,000 in the year-earlier period.

 

   

Net income of $47,538,000 or $0.45 per diluted share, compared to $48,610,000 or $0.42 per diluted share in the first quarter of fiscal 2012. Net income in this year’s first quarter was affected by the absorption of $3.2 million of incremental interest expense related to Patterson’s debt issuance in the third quarter of fiscal 2012.

Sales of Patterson Dental, Patterson’s largest business, increased 6% from the year-earlier period to $567,392,000 in this year’s first quarter.

   

Sales of consumable dental supplies and printed office products increased 1% in the first quarter, excluding the 0.6% negative impact related to Canadian currency exchange rates.

 

   

Sales of dental equipment and software rose more than 19% from the year-earlier level, driven by double-digit sales increases of both CEREC® dental restorative systems and basic equipment.

 

   

Sales of other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, increased 3% from last year’s first quarter.

Internally generated sales of the Webster Veterinary unit increased more than 10% in the first quarter. A change in a distribution agreement for nutritional products late in last year’s fourth quarter reduced Webster’s first quarter sales growth by approximately six percentage points, while the August 2011 acquisition of American Veterinary Supply Corporation added 2.5 percentage points of sales growth. Reflecting these factors, Webster’s first quarter sales increased nearly 6.5% to $191,090,000. Sales of Patterson Medical, the rehabilitation supply and equipment unit, declined 3% to $130,743,000, due primarily to weakness in its equipment business. The impact of negative foreign exchange rates largely offset the nearly 2% sales contribution from Patterson Medical’s April 2012 acquisition of Surgical Synergies Pty Ltd., a distributor of physiotherapy, rehabilitation and mobility products serving the Australian and New Zealand markets.

Scott P. Anderson, president and chief executive officer, commented: “We are generally pleased with Patterson’s on-plan first quarter results despite persistently soft economic conditions both in North America and our foreign markets. Within Patterson Dental, sales of consumable supplies were below forecasted levels, and we are intensifying our focus on this key component of our sales mix. However, the exceptionally strong sales growth of CEREC products and low double-digit sales growth of basic equipment more than compensated for the below-plan consumables sales. Our robust CEREC sales were generated in part by strong demand from new users, reflecting the ongoing trend toward the digitization of dentistry. We believe sales will receive an additional boost from the recent introduction by Sirona Dental Systems, Inc. (NYSE: SIRO) of a revolutionary powder-free intraoral camera that will make CEREC significantly easier to use. This camera, which will be available on new CEREC systems, will start selling in the second quarter as production ramps up. In addition, Patterson and Sirona, the undisputed leader in digital dental technology that also manufactures Schick® digital sensors, recently expanded our exclusive North American marketing agreement to cover Sirona’s complete product line, including digital panoramic and cone beam x-rays. This move further strengthens Patterson Dental’s position as the leading distributor of dental technology and other equipment.


“Webster, whose solid first quarter sales growth was generated by robust demand for consumable supplies, is currently implementing a range of strategies aimed at further strengthening its full-service platform,” he continued. “The expansion and training of its field sales force are aimed at boosting sales of both consumables and equipment. To further spur its equipment business, Webster plans to achieve full national coverage for technical support by the end of fiscal 2013. In addition, Webster is continuing to strengthen its growing range of technology solutions for veterinarians and their clients. Reflecting these and other initiatives, Webster is strengthening its competitive position to capitalize upon favorable pet ownership and consumer spending trends, and we intend to continue investing in this growing business.”

Anderson added: “First quarter sales of Patterson Medical’s industry-leading range of consumable supplies were largely consistent with forecasted levels. Despite U.S. healthcare regulatory uncertainties and the weak economic environment both here and abroad, we believe Patterson Medical, as the only single source of supply in the rehabilitation market, is strongly positioned to take maximum advantage of worldwide demographic trends that will have a favorable long-term affect on the rehabilitation market.”

Patterson repurchased approximately 1.1 million common shares during the first quarter under its 25 million-share buyback authorization that expires in 2016. Approximately 10 million shares remain available for repurchase under this authorization.

Patterson remains on track toward achieving its previously issued financial guidance of $2.10 to $2.16 per diluted share in fiscal 2013.

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 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:

 

R. Stephen Armstrong    Richard G. Cinquina
Executive Vice President & CFO    Equity Market Partners

651/686-1600

   904/415-1415

First Quarter Conference Call and Replay

Patterson’s first 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 first quarter conference call can be heard for one month at 1-303-590-3030 and providing the conference ID: 4559525.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts)

(Unaudited)

 

     Three Months Ended  
     July 28,
2012
    July 30,
2011
 

Net sales

   $ 889,225      $ 847,422   

Gross profit

     285,700        278,276   

Operating expenses

     203,108        196,283   
  

 

 

   

 

 

 

Operating income

     82,592        81,993   

Other expense, net

     (8,891     (5,135
  

 

 

   

 

 

 

Income before taxes

     73,701        76,858   

Income taxes

     26,163        28,248   
  

 

 

   

 

 

 

Net income

   $ 47,538      $ 48,610   
  

 

 

   

 

 

 

Earnings per share:

    

Basic

   $ 0.45      $ 0.42   

Diluted

   $ 0.45      $ 0.42   

Shares:

    

Basic

     105,035        115,576   

Diluted

     105,783        116,285   

Dividends declared per common share

   $ 0.14      $ 0.12   

Gross margin

     32.1     32.8

Operating expenses as a % of net sales

     22.8     23.2

Operating income as a % of net sales

     9.3     9.7

Effective tax rate

     35.5     36.8


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     July 28,
2012
     April 28,
2012
 
     (Unaudited)         

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 580,753       $ 573,781   

Receivables, net

     413,690         464,869   

Inventory

     318,128         319,952   

Prepaid expenses and other current assets

     49,039         44,911   
  

 

 

    

 

 

 

Total current assets

     1,361,610         1,403,513   

Property and equipment, net

     193,495         195,465   

Goodwill and other intangible assets

     1,019,165         1,022,809   

Investments and other

     126,202         117,581   
  

 

 

    

 

 

 

Total Assets

   $ 2,700,472       $ 2,739,368   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 202,253       $ 207,915   

Other accrued liabilities

     174,101         196,733   

Current maturities of long-term debt

     125,000         125,000   
  

 

 

    

 

 

 

Total current liabilities

     501,354         529,648   

Long-term debt

     725,000         725,000   

Other non-current liabilities

     108,376         109,518   
  

 

 

    

 

 

 

Total liabilities

     1,334,730         1,364,166   

Stockholders’ equity

     1,365,742         1,375,202   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 2,700,472       $ 2,739,368   
  

 

 

    

 

 

 


PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 28,     July 30,  
     2012     2011  

Consolidated Net Sales

    

Consumable and printed products

   $ 587,558      $ 574,962   

Equipment and software

     227,042        199,651   

Other

     74,625        72,809   
  

 

 

   

 

 

 

Total

   $ 889,225      $ 847,422   
  

 

 

   

 

 

 

Dental Supply

    

Consumable and printed products

   $ 310,156      $ 308,869   

Equipment and software

     191,939        161,027   

Other

     65,297        63,471   
  

 

 

   

 

 

 

Total

   $ 567,392      $ 533,367   
  

 

 

   

 

 

 

Rehabilitation Supply

    

Consumable and printed products

   $ 96,027      $ 96,716   

Equipment and software

     27,889        31,057   

Other

     6,827        6,679   
  

 

 

   

 

 

 

Total

   $ 130,743      $ 134,452   
  

 

 

   

 

 

 

Veterinary Supply

    

Consumable and printed products

   $ 181,375      $ 169,377   

Equipment and software

     7,214        7,567   

Other

     2,501        2,659   
  

 

 

   

 

 

 

Total

   $ 191,090      $ 179,603   
  

 

 

   

 

 

 

Other (Expense) Income, net

    

Interest income

   $ 1,499      $ 1,829   

Interest expense

     (9,568     (6,353

Other

     (822     (611
  

 

 

   

 

 

 
   $ (8,891   $ (5,135
  

 

 

   

 

 

 


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 28,
2012
    July 30,
2011
 

Operating activities:

    

Net income

   $ 47,538      $ 48,610   

Depreciation & amortization

     11,485        9,082   

Stock-based compensation

     3,738        3,180   

ESOP compensation

     5,700        5,700   

Change in assets and liabilities, net of acquired

     (8,703     144   
  

 

 

   

 

 

 

Net cash provided by operating activities

     59,758        66,716   

Investing activities:

    

Additions to property and equipment, net of disposals

     (3,206     (10,247

Acquisitions and equity investments

     —          —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (3,206     (10,247

Financing activities:

    

Dividends paid

     (14,817     (13,801

Share repurchases

     (34,472     (59,913

Other financing activities

     4,116        4,199   
  

 

 

   

 

 

 

Net cash used in financing activities

     (45,173     (69,515

Effect of exchange rate changes on cash

     (4,407     (1,843
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

   $ 6,972      $ (14,889