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Henry Schein Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: HSIC

So before I go further, I'll ask Steven now to address the financial aspects and -- of the quarter, and then I'll come back to give you a little bit more color. Thank you. Steven?

Steven Paladino

Okay. Thank you, Stan, and good morning to everyone. I'm also pleased to be reporting overall solid financial results for the second quarter of 2012. I'd like to point out that our 2012 second quarter results include approximately $3.4 million pretax of restructuring costs, and that is approximately $0.03 per share. We announced this restructuring on our fourth quarter 2011 conference call. And you'll see on Exhibit B to this morning's earnings release that we have reconciled GAAP to non-GAAP income for this item. We have now completed the restructuring, and we do not expect any further cost from that program for the remainder of 2012.

Turning to our financial performance. Our net sales for the quarter ended June 30, 2012 were $2.2 billion, reflecting a 3.3% increase compared with the second quarter of 2011. This consists of 6.5% growth in local currencies and a 3.2% decline related to foreign currency exchange. In local currencies, our internal sales growth was 4.6% and our acquisition growth was 1.9%. You could see further details of our sales growth that are contained on Exhibit A of our earnings news release.

Our operating margin for the second quarter of 2012 was 7%. This was a decline of 7 basis points compared to last year's operating margin for the second quarter. However, I think it's important to look at the operating margin excluding restructuring costs, which we believe is a more appropriate measure. And when looking at it that way, our adjusted operating margin for the quarter actually improved by 8 basis points to 7.2%. I also like to point out that the current year acquisitions, if we would exclude those because they initially come in at lower margins, and so we can integrate and get some synergies, if we exclude those current year acquisitions also, our operating margin for the second quarter improved by 16 basis points and would have been about 7.3%.

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