Attached files

file filename
8-K - FORM 8-K - PATTERSON COMPANIES, INC.d543360d8k.htm

Exhibit 99.1

 

LOGO

Patterson Companies Reports Fourth Quarter and

Fiscal 2013 Operating Results

 

   

Fiscal fourth quarter consolidated sales up more than 3 percent from prior year

 

   

Strong dental sales driven by a nearly 14 percent increase in equipment and software

 

   

Company provides consolidated sales and earnings guidance for fiscal 2014

St. Paul, Minn—May 23, 2013—Patterson Companies, Inc. (Nasdaq: PDCO) today reported that consolidated sales totaled $964.9 million in its fiscal fourth quarter, ended Apr. 27, 2013, an increase of 3.1 percent from $936.3 million in the year-earlier period. Net income was $63.6 million, or $0.62 per diluted share, compared to net income of $62.1 million, or $0.58 per diluted share, in the year-ago period.

Patterson Dental

Sales for this segment increased 6.4 percent from the year-earlier period to $636.9 million in the fourth quarter of fiscal 2013. This is the company’s largest business, accounting for approximately two-thirds of total sales. By category versus the year-ago quarter:

 

   

Sales of consumable dental supplies were up 2.4 percent;

 

   

Sales of dental equipment rose nearly 14 percent, driven by strong performances in all categories; and

 

   

Sales of other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, increased more than 4 percent.

Scott P. Anderson, chairman and chief executive officer, commented: “We are encouraged by Patterson Dental’s fourth-quarter performance and believe it provides momentum as we enter fiscal 2014. Fourth quarter performance was led by strong double-digit growth in our equipment lines, even against strong comparables from the prior-year period. We believe there are growth opportunities from all our equipment offerings, including technology, as dentistry migrates to a digital platform. Coupled with Patterson’s industry-leading after-sales support offerings, we provide a compelling value proposition for our customers. Through the Patterson Technology Center, training programs and other value-added services, we enhance the customer experience and become a critical component of the dentist’s practice.”

Patterson Veterinary

Fourth quarter fiscal 2013 sales for the Patterson Veterinary unit increased by approximately 2 percent, to $204.4 million, excluding the impact from the change in a nutritional distribution agreement in the spring of 2012.

Anderson continued: “Patterson Veterinary constituted approximately 21 percent of Patterson Companies’ total sales in the fiscal fourth quarter, as year-over-year performance stemmed from modest gains in consumable supply sales. Net of the impact of the nutritional distribution agreement change, we saw sales growth, despite the very strong year-ago performance that was driven in part by an earlier and more severe flea, tick and heartworm season. We have spent the


last year building our equipment, technology and service infrastructure, and during the quarter Patterson attained our goal of being a national technical service provider. We believe we are well-positioned for fiscal 2014 and remain committed both to building our equipment and service strategy and to taking advantage of the favorable marketplace dynamics, as pet owners increase their veterinary care spending.”

Patterson Medical

Sales for Patterson Medical, the rehabilitation supply and equipment unit, declined to $123.6 million from $130.0 million, primarily reflecting weak international sales during the quarter. Sales from Patterson Medical currently represent approximately 13 percent of total company sales.

Anderson said: “While Patterson Medical sales continue to be hampered by uncertainty surrounding healthcare reform and sluggish global economic and market conditions. These current macroeconomic factors are likely to persist in the short-term, yet we are confident in the long-term value of this business due to the compelling underlying demographics and our industry-leading product offering.”

Full Year Results

Consolidated sales for the fiscal 2013 full year totaled $3.6 billion, an increase of 3 percent from $3.5 billion in the prior fiscal year. Net income was $210.3 million, or $2.03 per diluted share, compared to net income of $212.8 million, or $1.92 per diluted share, in the prior fiscal year. Fiscal 2013 net income includes a $6.1 million increase in interest expense from fiscal 2012.

For the full fiscal year 2013, Patterson repurchased approximately 5.2 million common shares under its share buyback authorization. In March 2013, the company announced that its Board of Directors had authorized a new repurchase program for up to 25 million shares, which will be repurchased systematically and, as market conditions allow, through open market transactions until March 19, 2018. Approximately 24.4 million shares remain available for repurchase under this authorization.

During the quarter, the Board of Directors also approved an increase in the quarterly cash dividend of 14 percent, to $0.16 per diluted share from $0.14 per diluted share, bringing the annual dividend payment to $0.64 per diluted share for fiscal 2014.

Business Outlook

Anderson continued, “We remain cautiously optimistic as we look ahead to fiscal 2014 and believe that the year will be supported by continued stabilization of the North American economy. Also, we are announcing a major undertaking to transform our information systems. Our total investment over the next five years is estimated at $55 to $65 million. While approximately half of this investment will be capitalized and amortized, we believe that an incremental $10 million will be expensed on this effort in fiscal 2014. With that as a back drop, we are providing our fiscal 2014 earnings guidance in the range of $2.10 to $2.20 per diluted share.”

“Patterson is committed to expanding our investment in information technology in order to support our strategic growth initiatives, further enhance the customer experience, and secure future productivity gains. Ultimately, we believe these investments are critical to providing Patterson with the flexibility to adjust our platform as opportunities warrant, in order to create long-term shareholder value,” concluded Anderson.

The fiscal 2014 annual financial outlook includes the following expectations:

 

   

Stable economic conditions in North America;


   

Modest operating margin expansion, excluding information technology investments;

 

   

EPS impact of $0.06 from information technology investments;

 

   

No impact from share repurchases that may occur during the year; and

 

   

Cash flow generation similar to fiscal 2013 levels.

Fourth Quarter Conference Call and Replay

Patterson’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 web site. A replay of the fourth quarter conference call can be heard for one week at 1-303-590-3030 and providing the conference ID: 4618893.

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     Twelve Months Ended  
     April 27,     April 28,     April 27,     April 28,  
     2013     2012     2013     2012  

Net sales

   $ 964,933      $ 936,334      $ 3,637,212      $ 3,535,661   

Gross profit

     324,177        313,721        1,190,769        1,162,514   

Operating expenses

     219,721        210,870        836,314        804,505   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     104,456        102,851        354,455        358,009   

Other expense, net

     (8,257     (8,804     (33,338     (28,197
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     96,199        94,047        321,117        329,812   

Income taxes

     32,637        31,904        110,845        116,997   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 63,562      $ 62,143      $ 210,272      $ 212,815   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.63      $ 0.59      $ 2.04      $ 1.93   

Diluted

   $ 0.62      $ 0.58      $ 2.03      $ 1.92   

Shares:

        

Basic

     101,249        105,865        103,030        110,121   

Diluted

     102,134        106,708        103,807        110,846   

Dividends declared per common share

   $ 0.16      $ 0.14      $ 0.58      $ 0.50   

Gross margin

     33.6     33.5     32.7     32.9

Operating expenses as a % of net sales

     22.8     22.5     23.0     22.8

Operating income as a % of net sales

     10.8     11.0     9.7     10.1

Effective tax rate

     33.9     33.9     34.5     35.5


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     April 27,      April 28,  
     2013      2012  
     (Unaudited)         

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 505,228       $ 573,781   

Receivables, net

     448,158         464,869   

Inventory

     360,563         319,952   

Prepaid expenses and other current assets

     42,554         44,911   
  

 

 

    

 

 

 

Total current assets

     1,356,503         1,403,513   

Property and equipment, net

     192,020         195,465   

Goodwill and other intangible assets

     1,016,064         1,022,809   

Investments and other

     108,026         117,581   
  

 

 

    

 

 

 

Total Assets

   $ 2,672,613       $ 2,739,368   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 249,795       $ 207,915   

Other accrued liabilities

     193,891         196,733   

Current maturities of long-term debt

     —            125,000   
  

 

 

    

 

 

 

Total current liabilities

     443,686         529,648   

Long-term debt

     725,000         725,000   

Other non-current liabilities

     113,804         109,518   
  

 

 

    

 

 

 

Total liabilities

     1,282,490         1,364,166   

Stockholders’ equity

     1,390,123         1,375,202   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 2,672,613       $ 2,739,368   
  

 

 

    

 

 

 


PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     April 27,     April 28,     April 27,     April 28,  
     2013     2012     2013     2012  

Consolidated Net Sales

        

Consumable and printed products

   $ 617,942      $ 616,487      $ 2,343,407      $ 2,312,309   

Equipment and software

     267,080        243,352        993,767        930,601   

Other

     79,911        76,495        300,038        292,751   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 964,933      $ 936,334      $ 3,637,212      $ 3,535,661   
  

 

 

   

 

 

   

 

 

   

 

 

 

Dental Supply

        

Consumable and printed products

   $ 338,988      $ 331,054      $ 1,273,222      $ 1,263,515   

Equipment and software

     228,598        201,321        843,880        768,633   

Other

     69,349        66,487        262,868        255,727   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 636,935      $ 598,862      $ 2,379,970      $ 2,287,875   
  

 

 

   

 

 

   

 

 

   

 

 

 

Veterinary Supply

        

Consumable and printed products

   $ 191,236      $ 194,664      $ 709,021      $ 685,790   

Equipment and software

     9,299        9,924        35,069        38,319   

Other

     3,837        2,912        11,155        10,337   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 204,372      $ 207,500      $ 755,245      $ 734,446   
  

 

 

   

 

 

   

 

 

   

 

 

 

Rehabilitation Supply

        

Consumable and printed products

   $ 87,718      $ 90,769      $ 361,164      $ 363,004   

Equipment and software

     29,183        32,107        114,818        123,649   

Other

     6,725        7,096        26,015        26,687   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 123,626      $ 129,972      $ 501,997      $ 513,340   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (Expense) Income, net

        

Interest income

   $ 1,049      $ 1,176      $ 4,541      $ 4,954   

Interest expense

     (8,589     (9,463     (36,397     (30,343

Other

     (717     (517     (1,482     (2,808
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (8,257   $ (8,804   $ (33,338   $ (28,197
  

 

 

   

 

 

   

 

 

   

 

 

 


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Twelve Months Ended  
     April 27,     April 28,  
     2013     2012  

Operating activities:

    

Net income

   $ 210,272      $ 212,815   

Depreciation & amortization

     46,002        42,209   

Stock-based compensation

     14,625        12,615   

ESOP compensation

     20,577        756   

Change in assets and liabilities, net of acquired

     7,719        52,763   
  

 

 

   

 

 

 

Net cash provided by operating activities

     299,195        321,158   

Investing activities:

    

Additions to property and equipment, net of disposals

     (21,983     (29,650

Acquisitions and equity investments

     (14,650     (22,620

Other investing activities

     6,595        —      
  

 

 

   

 

 

 

Net cash used in investing activities

     (30,038     (52,270

Financing activities:

    

Dividends paid

     (43,767     (54,741

Share repurchases

     (179,525     (362,379

Retirement of long term debt

     (125,000     —      

Proceeds from issuance of long-term debt

     —           325,000   

Other financing activities

     17,194        14,061   
  

 

 

   

 

 

 

Net cash used in financing activities

     (331,098     (78,059

Effect of exchange rate changes on cash

     (6,612     (5,713
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

   $ (68,553   $ 185,116