Patterson Companies Reports Second Quarter Operating Results

Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $867,193,000 for the second quarter of fiscal 2013 ended October 27, an increase of 1% from $856,875,000 in the year-earlier period. Net income of $45,542,000 or $0.44 per diluted share, compared to $48,954,000 or $0.43 per diluted share in the second quarter of fiscal 2012. Net income in this year’s second quarter was affected primarily by below-plan sales of dental equipment, as well as the absorption of $3.0 million of incremental interest expense related to Patterson’s debt issuance in the third quarter of fiscal 2012.

Patterson DentalPatterson Dental, Patterson’s largest business, reported sales of $549,149,000, substantially unchanged from last year’s second quarter.

• Sales of consumable dental supplies and printed office products increased 1%.
• Mid-single digit revenue growth of technology products was offset by softness in basic equipment resulting in a 3% decline in sales of dental equipment and software. Demand for the next-generation CEREC system incorporating the new Omnicam intraoral camera was strong during the quarter, but sales of this recently introduced system were constrained by product availability.
• Sales of other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, increased 2% from last year’s second quarter.

Webster VeterinaryInternally-generated sales of the Webster Veterinary unit increased 13% in the second quarter. A change in a distribution agreement for nutritional products in the fourth quarter of fiscal 2012 reduced Webster’s second quarter reported sales growth by approximately six percentage points. Webster reported sales of $184,375,000 for the quarter.

Patterson MedicalSales of Patterson Medical, the rehabilitation supply and equipment unit, which totaled $133,669,000, were virtually unchanged from the year-earlier period. 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, contributed approximately one percentage point of sales growth in the second quarter.

Scott P. Anderson, president and chief executive officer, commented: “Several areas of our business, including dental technology equipment and Webster Veterinary, performed well in the second quarter. On balance, however, we are not satisfied with our recent operating results, which did not meet our expectations, and we are committed to strengthening Patterson’s long-term performance. While our businesses, like many others, are challenged by current economic conditions, we will continue to make the investments that position Patterson to capitalize upon opportunities in each of our markets.”

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