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8-K - 8-K - PATTERSON COMPANIES, INC.d896913d8k.htm

Exhibit 99.1

 

PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

PATTERSON COMPANIES REPORTS FISCAL 2020

THIRD-QUARTER OPERATING RESULTS

 

   

Third-quarter reported net sales increased 4.3 percent year-over-year to $1.46 billion; internal sales also increased 4.3 percent.

 

   

Adjusted operating margin1 increased 40 bps to 4.3 percent.

 

   

Dental segment internal sales increased 8.0 percent driven by growth in consumables, equipment and value-added services.

 

   

Animal Health segment internal sales increased 1.3 percent.

 

   

Delivered third-quarter GAAP earnings of $0.24 per diluted share and adjusted earnings1 of $0.47 per diluted share.

 

   

Raises fiscal 2020 GAAP earnings guidance range to $0.49 to $0.54 per diluted share, and adjusted earnings1 guidance range to $1.50 to $1.55 per diluted share.

St. Paul, Minn. — February 27, 2020 — Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of approximately $1.46 billion (see attached Sales Summary for further details) in its fiscal third quarter ended January 25, 2020, an increase of 4.3 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation and changes in product selling relationships, also increased 4.3 percent.

Reported net income attributable to Patterson Companies, Inc. for the third quarter of fiscal 2020 totaled $23.2 million, or $0.24 per diluted share, compared to $31.2 million, or $0.33 per diluted share, in the third quarter of fiscal 2019. The year-over-year decrease in the period is primarily the result of a pre-tax charge related to the early retirement of debt and restructuring costs.

Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization costs, integration and business restructuring expenses, legal expenses, accelerated debt-related costs and discrete tax matters, totaled $44.5 million for the third quarter of fiscal 2020, or $0.47 per diluted share, compared to $35.6 million in the same quarter of fiscal 2019, or $0.38 per diluted share. The year-over-year increase in the period is primarily attributable to the improved performance across all three categories of Patterson’s dental segment, including consumables, equipment and value-added services.

“Patterson’s focused and disciplined approach to accelerate performance drove both improved top-line growth and margin expansion during the third quarter,” said Mark Walchirk, President and CEO of Patterson Companies. “In our Dental segment, we achieved positive consumables growth and continued to generate strong sales growth in equipment and value-added services. In Animal Health, we delivered continued growth in our companion business and trends in our production business improved despite end market challenges. As a result of our improved performance, we are raising our fiscal 2020 adjusted earnings guidance range to $1.50 to $1.55 from its prior range of $1.36 to $1.46 per diluted share.”

Patterson Dental

Reported net sales in our Dental segment for the third quarter of fiscal 2020, which represented approximately 44 percent of total company sales, were $626.6 million compared to $579.7 million in the third quarter of last year. Internal sales increased 8.0 percent compared to the fiscal 2019 third quarter.

Patterson Animal Health

Reported net sales in our Animal Health segment for the third quarter of fiscal 2020, which comprised approximately 56 percent of the company’s total sales, were $817.3 million compared to $807.5 million in the third quarter of last year. Internal sales for the segment increased 1.3 percent from the fiscal 2019 third quarter.

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

Balance Sheet and Capital Allocation

During the first nine months of fiscal 2020 Patterson Companies used $169.0 million of cash from operating activities and collected deferred purchase price receivables of $359.3 million, netting $190.3 million in cash, compared to a total of $384.9 million in the first nine months of fiscal 2019. The previous year period contained a trade accounts receivable facility amount of $171.0 million and the current period contained a trade accounts receivable facility amount of $29.0 million. Free cash flow1 (see definition below and attached free cash flow table) generated year-to-date in fiscal 2020 is $51.5 million lower than the year ago period primarily due to the timing of cash conversion associated with the financing of a higher level of equipment sales and increased inventory.

In the third quarter of fiscal 2020, Patterson Companies paid $25.0 million in cash dividends to shareholders. On a year-to-date basis, Patterson has returned $75.5 million in cash dividends to shareholders.

Year-to-Date Results

Consolidated reported net sales for the first nine months of fiscal 2020 totaled $4.2 billion, a 1.6 percent year-over-year increase. Internal sales have increased 2.2 percent compared to the first nine months of fiscal 2019. Reported net income attributable to Patterson Companies, Inc. was $20.1 million, or $0.21 per diluted share, compared to $55.6 million, or $0.60 per diluted share in last year’s period. The year-over-year decline is primarily due to an increase in legal expenses and a pre-tax charge related to the early retirement of debt, partially offset by an investment gain. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization costs, integration and business restructuring expenses, legal expenses, accelerated debt-related costs, discrete tax matters and an investment gain, totaled $106.5 million, or $1.12 per diluted share, compared to $95.9 million, or $1.03 per diluted share, in the year-ago period. The year-over-year increase is primarily attributable to improved performance in the dental segment across consumables, equipment and value-added services.

FY2020 Guidance

Patterson Companies today updated its fiscal 2020 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis:

 

   

GAAP earnings are now expected to be in the range of $0.49 to $0.54 per diluted share.

 

   

Non-GAAP adjusted earnings1 are now expected to be in the range of $1.50 to $1.55 per diluted share.

 

   

Our non-GAAP adjusted earnings1 guidance excludes the after-tax impact of the following approximate amounts:

 

   

Deal amortization costs of $28.2 million ($0.30 per diluted share).

 

   

Integration and business restructuring expenses of $12.4 million ($0.13 per diluted share).

 

   

Legal expenses of $74.1 million ($0.78 per diluted share).

 

   

Accelerated debt-related costs of $7.5 million ($0.08 per diluted share).

 

   

Investment gain of $26.5 million ($0.28 per diluted share).

Our guidance is for current operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions similar to those experienced in fiscal 2019.

1Non-GAAP Financial Measures

The Reconciliation of GAAP to non-GAAP Measures table appearing behind the accompanying financial information is provided to adjust reported GAAP measures, namely operating income, income before taxes, income tax expense, net income, net income attributable to Patterson Companies, Inc. and diluted earnings per share attributable to Patterson Companies, Inc., for the impact of deal amortization costs, integration and business restructuring expenses, legal expenses, accelerated debt-related costs and an investment gain, along with the related tax effects of these items.

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

The term “free cash flow” used in this release is defined as net cash provided by (used in) operating activities less capital expenditures less the one-time benefit from the initiation of our trade account receivables facility plus collection of deferred purchase price receivables.

In addition, the term “internal sales” used in this release represents net sales adjusted to exclude foreign currency impact and changes in product selling relationships. Foreign currency impact represents the difference in results that is attributable to fluctuations in currency exchange rates the company uses to convert results for all foreign entities where the functional currency is not the U.S. dollar. The company calculates the impact as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period’s currency exchange rates. The company believes the disclosure of net sales changes in constant currency provides useful supplementary information to investors in light of significant fluctuations in currency rates.

Management believes that these non-GAAP measures may provide a helpful representation of the company’s third-quarter performance and earnings guidance, and enable comparison of financial results between periods where certain items may vary independent of business performance. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

Third-Quarter Conference Call and Replay

Patterson Companies’ fiscal 2020 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 the Patterson Companies website. A replay of the fiscal 2020 third-quarter conference call can be heard for one week at 800-585-8367 and by providing the Conference ID 8859746 when prompted.

About Patterson Companies, Inc.

Patterson Companies, Inc. (Nasdaq: PDCO) is a value-added distributor serving the dental and animal health markets.

Dental Market

Patterson’s Dental segment 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’s Animal Health segment is a leading distributor of products, services and technologies to both the production and companion animal health markets in North America and the U.K.

The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those disclosed in the statement.

This press release contains, and our officers and representatives may from time to time make, certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, and the objectives and expectations of management. Forward-looking statements often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could” or “may.” Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements.

Any number of factors could affect our actual results and cause such results to differ materially from those contemplated by any forward-looking statements, including, but not limited to, the following: the effects of the highly competitive dental and animal health supply markets in which we compete; general economic conditions, including political and economic uncertainty; our dependence on relationships with sales representatives, service technicians and customers; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on suppliers for the manufacture and supply of the products we sell; the risk that private label sales could adversely affect our sales of other products; our dependence on positive perceptions of Patterson’s reputation; litigation risks, including new or unanticipated litigation developments; changes in consumer preferences; fluctuations in quarterly financial results; risks from the expansion of customer purchasing power; increased competition from third-party online commerce sites; the risks inherent in international operations, including currency fluctuations; the effects of health care reform; failure to comply with regulatory requirements and data privacy laws; risks from disruption to our information systems; cyberattacks or other privacy or data security breaches; volatility in the financial markets; volatility in the price of our common stock; our dependence on our senior management; disruptions from our enterprise resource planning system initiatives; and risks associated with interest rate fluctuations. The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive, accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results.

You should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, (“Risk Factors”) in our most recent Form 10-K, and information which may be contained in our other filings with the U.S. Securities and Exchange Commission, or SEC, when reviewing any forward-looking statement. Investors should understand it is impossible to predict or identify all such factors or risks. As such, you should not consider the foregoing list, or the risks identified in our SEC filings, to be a complete discussion of all potential risks or uncertainties.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to release publicly any revisions to any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

 

INVESTOR CONTACT:            John M. Wright, Investor Relations
COMPANY:    Patterson Companies Inc.
TEL:    651.686.1364
EMAIL:    john.wright@pattersoncompanies.com
MEDIA CONTACT:    Patterson Corporate Communications
COMPANY:    Patterson Companies Inc.
TEL:    651.905.3349
EMAIL:    corporate.communications@pattersoncompanies.com
WEB:    pattersoncompanies.com
SOURCE:    Patterson Companies Inc.

# # #

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     January 25,
2020
    January 26,
2019
    January 25,
2020
    January 26,
2019
 

Net sales

   $ 1,456,155   $ 1,396,745   $ 4,203,550   $ 4,137,817

Gross profit

     311,830     299,509     903,378     878,248

Operating expenses

     268,014     254,146     861,034     787,155
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     43,816     45,363     42,344     91,093

Other income (expense):

        

Other income, net

     2,307     1,427     34,493     8,621

Interest expense

     (16,584     (9,172     (34,320     (29,849
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     29,539     37,618     42,517     69,865

Income tax expense

     6,567     6,564     23,087     14,674
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     22,972     31,054     19,430     55,191

Net loss attributable to noncontrolling interests

     (255     (171     (710     (447
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Patterson Companies, Inc.

   $ 23,227   $ 31,225   $ 20,140   $ 55,638
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to Patterson Companies, Inc.:

        

Basic

   $ 0.25   $ 0.34   $ 0.21   $ 0.60
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.24   $ 0.33   $ 0.21   $ 0.60
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares:

        

Basic

     94,267     92,818     94,052     92,677

Diluted

     95,021     93,653     94,828     93,347

Dividends declared per common share

   $ 0.26   $ 0.26   $ 0.78   $ 0.78

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     January 25, 2020      April 27, 2019  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 106,169    $ 95,646

Receivables, net

     451,255      582,094

Inventory

     866,313      761,018

Prepaid expenses and other current assets

     268,937      165,605
  

 

 

    

 

 

 

Total current assets

     1,692,674      1,604,363

Property and equipment, net

     306,687      305,790

Operating lease right-of-use assets

     83,302      —    

Goodwill and identifiable intangibles, net

     1,140,342      1,167,379

Long-term receivables, net and other

     290,547      191,737
  

 

 

    

 

 

 

Total assets

   $ 3,513,552    $ 3,269,269
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 802,610    $ 648,418

Other accrued liabilities

     272,300      203,319

Operating lease liabilities

     31,547      —    

Current maturities of long-term debt

     —          23,975

Borrowings on revolving credit

     95,000      —    
  

 

 

    

 

 

 

Total current liabilities

     1,201,457      875,712

Long-term debt

     587,455      725,341

Non-current operating lease liabilities

     53,413      —    

Other non-current liabilities

     199,259      187,709
  

 

 

    

 

 

 

Total liabilities

     2,041,584      1,788,762

Stockholders’ equity

     1,471,968      1,480,507
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 3,513,552    $ 3,269,269
  

 

 

    

 

 

 

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Nine Months Ended  
     January 25,
2020
    January 26,
2019
 

Operating activities:

    

Net income

   $ 19,430   $ 55,191

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     61,892     62,425

Investment gain

     (34,334     —    

Non-cash employee compensation

     28,661     22,282

Accelerated amortization of costs on early retirement of debt

     8,984     —    

Deferred consideration in securitized receivables

     (359,329     (308,592

Change in assets and liabilities, net of acquired

     105,740     245,038
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (168,956     76,344

Investing activities:

    

Additions to property and equipment

     (32,872     (33,926

Collection of deferred purchase price receivables

     359,329     308,592

Other investing activities

     —         2,875
  

 

 

   

 

 

 

Net cash provided by investing activities

     326,457     277,541

Financing activities:

    

Dividends paid

     (75,522     (74,731

Proceeds from issuance of long-term debt, net

     296,700     —    

Payments on long-term debt

     (460,840     (244,010

Draw on revolving credit

     95,000     13,000

Other financing activities

     (3,319     6,228
  

 

 

   

 

 

 

Net cash used in financing activities

     (147,981     (299,513

Effect of exchange rate changes on cash

     1,003     75
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     10,523     54,447

Cash and cash equivalents at beginning of period

     95,646     62,984
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 106,169   $ 117,431
  

 

 

   

 

 

 

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

 

     January 25,
2020
     January 26,
2019
     Total
Sales
Growth
    Foreign
Exchange
Impact
    Other (a)     Internal
Sales
Growth
 

Three Months Ended

            

Consolidated net sales

            

Consumable

   $ 1,091,571    $ 1,079,566      1.1     0.3     (0.3 )%      1.1

Equipment and software

     270,325      234,251      15.4     0.1     —         15.3

Value-added services and other

     94,259      82,928      13.7     0.2     —         13.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1,456,155    $ 1,396,745      4.3     0.2     (0.2 )%      4.3
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Dental

              

Consumable

   $ 300,406    $ 294,708      1.9     0.1     —       1.8

Equipment and software

     252,874      217,649      16.2     0.1     —         16.1

Value-added services and other

     73,309      67,376      8.8     0.1     —         8.7
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 626,589    $ 579,733      8.1     0.1     —       8.0
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Animal Health

              

Consumable

   $ 791,165    $ 784,858      0.8     0.3     (0.4 )%      0.9

Equipment and software

     17,451      16,602      5.1     —         —         5.1

Value-added services and other

     8,669      6,035      43.6     1.1     —         42.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 817,285    $ 807,495      1.2     0.3     (0.4 )%      1.3
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Corporate

              

Value-added services and other

   $ 12,281    $ 9,517      29.0     —       —       29.0
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 12,281    $ 9,517      29.0     —       —       29.0
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and nine months ended January 25, 2020.

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

 

     January 25,
2020
     January 26,
2019
     Total
Sales
Growth
    Foreign
Exchange
Impact
    Other
(a)
    Internal
Sales
Growth
 

Nine Months Ended

              

Consolidated net sales

              

Consumable

   $ 3,315,759    $ 3,327,214      (0.3 )%      (0.4 )%      (0.3 )%      0.4

Equipment and software

     612,167      563,269      8.7       (0.1     —         8.8

Value-added services and other

     275,624      247,334      11.4       (0.1     —         11.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 4,203,550    $ 4,137,817      1.6     (0.4 )%      (0.2 )%      2.2
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Dental

              

Consumable

   $ 905,540    $ 902,753      0.3     (0.1 )%      —       0.4

Equipment and software

     566,750      520,292      8.9       (0.1     —         9.0

Value-added services and other

     220,038      205,268      7.2       (0.1     —         7.3
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1,692,328    $ 1,628,313      3.9     (0.1 )%          4.0
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Animal Health

              

Consumable

   $ 2,410,219    $ 2,424,461      (0.6 )%      (0.6 )%      (0.4 )%      0.4

Equipment and software

     45,417      42,977      5.7       —         —         5.7

Value-added services and other

     27,376      20,679      32.4       (1.2     —         33.6
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 2,483,012    $ 2,488,117      (0.2 )%      (0.6 )%      (0.4 )%      0.8
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Corporate

              

Value-added services and other

   $ 28,210    $ 21,387      31.9     —       —       31.9
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 28,210    $ 21,387      31.9     —       —       31.9
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and nine months ended January 25, 2020.

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

OPERATING INCOME BY SEGMENT

(In thousands)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
  

 

 

   

 

 

 
     January 25,
2020
    January 26,
2019
    January 25,
2020
    January 26,
2019
 

Operating income (loss)

        

Dental

   $ 48,822   $ 51,120   $ 135,458   $ 128,587

Animal Health

     13,438     15,033     51,236     56,096

Corporate

     (18,444     (20,790     (144,350     (93,590
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 43,816   $ 45,363   $ 42,344   $ 91,093
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

 

For the three months ended January 25, 2020

   GAAP     Deal
amortization
     Integration
and business
restructuring
expenses
     Legal
expenses
     Accelerated
debt-related
costs
     Discrete
tax
matters
    Investment
gain
     Non-GAAP  

Operating income

   $ 43,816   $ 9,267    $ 7,714    $ 2,288    $ —      $ —     $ —      $ 63,085

Other income (expense), net

     (14,277     —          —          —          8,984      —         —          (5,293
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Income before taxes

     29,539     9,267      7,714      2,288      8,984      —         —          57,792

Income tax expense (benefit)

     6,567     2,200      1,928      572      2,246      —         —          13,513
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income

     22,972     7,067      5,786      1,716      6,738      —         —          44,279

Net loss attributable to noncontrolling interests

     (255     —          —          —          —          —         —          (255
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income attributable to Patterson Companies, Inc.

   $ 23,227   $ 7,067    $ 5,786    $ 1,716    $ 6,738    $ —     $ —      $ 44,534
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

   $ 0.24   $ 0.07    $ 0.06    $ 0.02    $ 0.07    $ —     $ —      $ 0.47
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Operating income as a % of sales

     3.0                      4.3

Effective tax rate

     22.2                      23.4

For the three months ended January 26, 2019

   GAAP     Deal
amortization
     Integration
and business
restructuring
expenses
     Legal
expenses
     Accelerated
debt-related
costs
     Discrete
tax
matters
    Investment
gain
     Non-GAAP  

Operating income

   $ 45,363   $ 9,274    $ —      $ —      $ —      $ —     $ —      $ 54,637

Other income (expense), net

     (7,745     —          —          —          —          —         —          (7,745
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Income before taxes

     37,618     9,274      —          —          —          —         —          46,892

Income tax expense (benefit)

     6,564     2,219      —          —          —          2,686     —          11,469
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income

     31,054     7,055      —          —          —          (2,686     —          35,423

Net loss attributable to noncontrolling interests

     (171     —          —          —          —          —         —          (171
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income attributable to Patterson Companies, Inc.

   $ 31,225   $ 7,055    $ —      $ —      $ —      $ (2,686   $ —      $ 35,594
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

   $ 0.33   $ 0.08    $ —      $ —      $ —      $ (0.03   $ —      $ 0.38
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Operating income as a % of sales

     3.2                      3.9

Effective tax rate

     17.4                      24.5

 

*

May not sum due to rounding    

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

 

For the nine months ended January 25, 2020

   GAAP     Deal
amortization
     Integration
and business
restructuring
expenses
     Legal
expenses‡
     Accelerated
debt-related
costs
     Discrete
tax
matters
    Investment
gain
    Non-GAAP  

Operating income

   $ 42,344   $ 27,758    $ 13,461    $ 81,254    $ —      $ —     $ —     $ 164,817

Other income (expense), net

     173     —          —          —          9,943      —         (34,334     (24,218
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income before taxes

     42,517     27,758      13,461      81,254      9,943      —         (34,334     140,599

Income tax expense (benefit)

     23,087     6,601      3,370      7,113      2,486      —         (7,884     34,773
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     19,430     21,157      10,091      74,141      7,457      —         (26,450     105,826

Net loss attributable to noncontrolling interests

     (710     —          —          —          —          —         —         (710
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Patterson Companies, Inc.

   $ 20,140   $ 21,157    $ 10,091    $ 74,141    $ 7,457    $ —     $ (26,450   $ 106,536
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

   $ 0.21   $ 0.22    $ 0.11    $ 0.78    $ 0.08    $ —     $ (0.28   $ 1.12
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating income as a % of sales

     1.0                     3.9

Effective tax rate

     54.3                     24.7

For the nine months ended January 26, 2019

   GAAP     Deal
amortization
     Integration
and business
restructuring
expenses
     Legal
expenses
     Accelerated
debt-related
costs
     Discrete
tax
matters
    Investment
gain
    Non-GAAP  

Operating income

   $ 91,093   $ 28,955    $ —      $ 28,263    $ —      $ —     $ —     $ 148,311

Other income (expense), net

     (21,228     —          —          —          —          —         —         (21,228
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income before taxes

     69,865     28,955      —          28,263      —          —         —         127,083

Income tax expense (benefit)

     14,674     6,794      —          7,523      —          2,686     —         31,677
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     55,191     22,161      —          20,740      —          (2,686     —         95,406

Net loss attributable to noncontrolling interests

     (447     —          —          —          —          —         —         (447
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Patterson Companies, Inc.

   $ 55,638   $ 22,161    $ —      $ 20,740    $ —      $ (2,686   $ —     $ 95,853
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

   $ 0.60   $ 0.24    $ —      $ 0.22    $ —      $ (0.03   $ —     $ 1.03
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating income as a % of sales

     2.2                     3.6

Effective tax rate

     21.0                     24.9

 

Includes costs and expenses incurred in the first quarter of fiscal 2020 of $17,666 related to the settlement of litigation with SourceOne Dental, Inc., costs and expenses incurred in the second quarter of fiscal 2020 of $58,300 related to the probable settlement of litigation with the U.S. Attorney’s Office for the Western District of Virginia and $5,288 related to other settlements.

 

*

May not sum due to rounding

 

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PATTERSON COMPANIES | 1031 Mendota Heights Road | Saint Paul, MN 55120      NEWS RELEASE  

 

PATTERSON COMPANIES, INC.

FREE CASH FLOW

(In thousands)

(Unaudited)

 

     Nine Months Ended  
  

 

 

 
     January 25,
2020
    January 26,
2019
 

Net cash provided by (used in) operating activities

   $ (168,956   $ 76,344

Additions to property and equipment

     (32,872     (33,926

Collection of deferred purchase price receivables

     359,329     308,592

Impact of trade account receivables facility

     (29,000     (171,000
  

 

 

   

 

 

 

Free cash flow

   $ 128,501   $ 180,010
  

 

 

   

 

 

 

 

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