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Patterson Companies, Inc. (Nasdaq: PDCO) today reported that consolidated sales totaled $880.1 million in its fiscal first quarter,
ended July 27, 2013, a decrease of 1.0 percent from $889.2 million in the year-earlier period. Net income was $45.9 million, or $0.45 per diluted share, compared to net income of $47.5 million, or $0.45 per diluted share, in the year-ago period. The company’s fiscal 2014 first quarter investment in information technology lowered diluted earnings per share by approximately $0.01.
Commenting on the company’s fiscal 2014 first quarter, Patterson Companies Chairman and Chief Executive Officer Scott P. Anderson said: “While we knew the first quarter would be challenging, results were in line with our expectations. We lapped exceptionally strong prior-year gains from a CEREC® trade-up program in our dental segment. We are encouraged by the increased consumable sales in the quarter in our dental and veterinary businesses, which typically signal strengthening underlying market conditions. This, along with the growth initiatives we have under way, gives us confidence in our full-year outlook.”
The company also announced that it plans to divest several non-core product lines in its medical segment. As a result, Patterson will incur a pre-tax restructuring charge in the range of $15-$17 million, or approximately $0.12 per diluted share, the majority of which will be taken in the fiscal 2014 second quarter. Divesting these product lines is estimated to generate operational savings of approximately $2 million, or $0.01 per diluted share, beginning in fiscal 2015.
Improved consumable sales in the fiscal 2014 first quarter were not enough to overcome the impact of a highly successful prior year CEREC trade-up program. As a result, sales for the Patterson Dental business decreased 2.3 percent from the year earlier period to $554.2 million. Patterson Dental comprised approximately two-thirds of total company sales. By category versus the year-ago quarter, sales of:
Consumable dental supplies rose 3.3 percent;
Dental equipment declined 11.7 percent; and
Other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, decreased 1.4 percent.
Anderson stated: “We are the proven leader in the dental equipment market, offering best-in-class technology and basic equipment that is wrapped with Patterson’s industry-leading after-sales support platform. Since the economic downturn, dentists have remained cautious about expanding and upgrading their basic practice infrastructure and we believe there is considerable pent-up demand for investments in their businesses. Additionally, sales of the new CEREC Omnicam®, which was introduced in fiscal 2013, are strong and meeting expectations. As a result, we are confident in the growth prospects for our dental equipment sales this fiscal year.”