Patterson Companies Reports Improved Fourth Quarter And Fiscal 2012 Operating Results

Patterson Companies, Inc. (Nasdaq: PDCO) today reported that consolidated sales totaled $936,334,000 in the fourth quarter of fiscal 2012 ended April 28, an increase of 6% from $883,819,000 in the year-earlier period. Net income of $62,143,000 or $0.58 per diluted share included incremental expense of $0.03 per diluted share related to Patterson’s Employee Stock Ownership Plan (ESOP). Excluding this ESOP-related expense, fourth quarter earnings were $0.61 per diluted share. Patterson reported earnings of $62,707,000 or $0.53 per diluted share in the fourth quarter of fiscal 2011.

For fiscal 2012, consolidated sales were $3,535,661,000 up 4% from $3,415,670,000 in fiscal 2011. The additional sales week in the first quarter of fiscal 2011, which made that year a 53-week period, negatively affected fiscal 2012 sales growth by approximately two percentage points. Net income in fiscal 2012 of $212,815,000 or $1.92 per diluted share included ESOP-related expense of $0.13 per diluted share. Excluding this expense, earnings were $2.05 per diluted share. Earnings in fiscal 2011 were $225,385,000 or $1.89 per diluted share.

Sales of Patterson Dental, Patterson’s largest business, increased 4% from the year-earlier period to $598,862,000 in the fourth quarter.
  • Sales of consumable dental supplies and printed office products increased 3% in the fourth quarter.
  • Sales of dental equipment and software rose more than 6% from the year-earlier level, driven by a double-digit increase in sales of CEREC dental restorative systems.
  • Sales of other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, increased 6% from last year’s fourth quarter.

Fourth quarter sales of the Webster Veterinary unit increased 13% to $207,500,000, with the August 2011 acquisition of American Veterinary Supply Corporation, a full-service veterinary distributor located on Long Island, accounting for approximately 2% of the unit’s sales growth. Sales of Patterson Medical, the rehabilitation supply and equipment unit, rose 3% to $129,972,000.

Scott P. Anderson, president and chief executive officer, commented: “We are encouraged by Patterson’s improved fourth quarter results as each of our three businesses operated at planned levels despite persistently soft economic conditions. Within Patterson Dental, sales of consumable supplies increased for the fourth consecutive quarter, an indication of the continued strengthening of the overall North American dental market. We also are encouraged by the solid improvement in sales of dental equipment given the fact that equipment sales were particularly robust in the year-earlier period. In addition to mid-single digit sales growth of basic equipment, we benefited from strong demand for CEREC systems from new users. We believe this reflects the growing acceptance of CAD/CAM and other new digital technologies that are enabling dentists to strengthen productivity, generate additional income and improve clinical outcomes. To capitalize upon this growing market trend, which is still at an early stage, we will continue to focus our marketing initiatives on Patterson Dental’s industry-leading offerings of technology products.”

Anderson added: “Webster’s record fourth quarter sales growth was driven by robust demand for consumable supplies, including the new combination flea-tick-heartworm medication Trifexcis®. Despite the challenging economy, pet owners are increasing expenditures on veterinary care. Through its full-service platform, which includes equipment and a new technical service capability, our companion-pet veterinary unit is positioned to capitalize upon positive pet ownership and spending trends.”

He said: “Patterson Medical’s fourth quarter performance was paced by above-plan sales of consumables in the North American market. However, this unit’s equipment business continues to be affected by the uncertainty associated with changes in the U.S. health care system. We believe the impact of this situation will likely persist in fiscal 2013. However, Patterson Medical is positioned to take maximum advantage of worldwide demographic trends fueling the growth of the rehabilitation market. Consistent with its global business strategy, Patterson Medical acquired Australian-based Surgical Synergies Pty Ltd. in April, a $10.0 million distributor of physiotherapy, rehabilitation and mobility products that strengthens our previously established position in the Australian and New Zealand rehabilitation markets.”

Patterson repurchased approximately 1.2 million common shares during the fourth quarter under its 25 million share buyback authorization that expires in 2016. For the year, 12 million shares were acquired, with approximately 11 million shares remaining available for repurchase under this authorization. In addition, Patterson’s quarterly cash dividend was increased 17% to $0.14 per share in March, 2012, bringing the annual dividend rate to $0.56 per share. Including share repurchases and quarterly dividends, Patterson returned over $400 million to its shareholders in fiscal 2012.

Patterson issued financial guidance of $2.10 to $2.16 per diluted share for fiscal 2013. The comparability between fiscal 2013 and 2012 will not be affected by the difference in the level of ESOP expense, since that item is now fully grandfathered into Patterson’s ongoing cost structure.
 

ESOP Expense Reconciliation Table
Dollars in thousands, except EPS
  Three Months Ended   Twelve Months Ended
April 28, 2012   April 30, 2011 April 28, 2012   April 30, 2011
Net Income $ 62,143 $ 62,707 $ 212,815 $ 225,385
Incremental ESOP Expense   3,496     -     13,867     -  
Adjusted Net Income (non-GAAP) $ 65,639   $ 62,707   $ 226,682   $ 225,385  
 
 
Diluted Earnings Per Share $ 0.58 $ 0.53 $ 1.92 $ 1.89
Incremental ESOP expense $ 0.03       $ 0.13      
Adjusted Earnings Per Share (non-GAAP) $ 0.61   $ 0.53   $ 2.05   $ 1.89  
 

About Patterson Companies, Inc.Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets. Dental MarketAs 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 MarketWebster Veterinary is the nation’s second largest distributor of consumable veterinary supplies, equipment and software, diagnostic products, vaccines and pharmaceuticals to companion-pet veterinary clinics. Rehabilitation MarketPatterson 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.

Fourth Quarter Conference Call and Replay

Patterson’s fourth quarter earnings conference call will start at 10:00 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 month at 1-303-590-3030 and providing the conference ID: 4538441.
     
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share amounts)
(Unaudited)
 
 

 Three Months Ended 
Twelve Months Ended
April 28, April 30, April 28, April 30,
2012 2011 2012 2011
 
 
Net sales $ 936,334 $ 883,819 $ 3,535,661 $ 3,415,670
 
Gross profit 313,721 303,949 1,162,514 1,144,225
 
Operating expenses   210,870     199,824     804,505     768,217  
 
Operating income 102,851 104,125 358,009 376,008
 
Other expense, net   (8,804 )   (5,643 )   (28,197 )   (20,121 )
 
Income before taxes 94,047 98,482 329,812 355,887
 
Income taxes   31,904     35,775     116,997     130,502  
 
Net income

$
62,143   $ 62,707   $ 212,815   $ 225,385  
 
 
Earnings per share:
Basic $ 0.59 $ 0.53 $ 1.93 $ 1.91
Diluted $ 0.58 $ 0.53 $ 1.92 $ 1.89
 
Shares:
Basic 105,865 117,529 110,121 118,290
Diluted 106,708 118,269 110,846 119,066
 
Dividends declared per common share $ 0.14 $ 0.12 $ 0.50 $ 0.42
 
Gross margin 33.5 % 34.4 % 32.9 % 33.5 %
 
Operating expenses as a % of net sales 22.5 % 22.6 % 22.8 % 22.5 %
 
Operating income as a % of net sales 11.0 % 11.8 % 10.1 % 11.0 %
 
Effective tax rate 33.9 % 36.3 % 35.5 % 36.7 %
 
 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
   
 
April 28, April 30,
2012 2011
(Unaudited)
ASSETS
Current assets:
Cash and short-term investments $ 573,781 $ 388,665
Receivables, net 464,869 465,170
Inventory 319,952 336,094
Prepaid expenses and other current assets   44,911     40,780  
Total current assets 1,403,513 1,230,709
 
Property and equipment, net 195,465 189,583
Goodwill and other intangible assets 1,022,809 1,022,832
Investments and other   117,581     121,844  
 
Total Assets $ 2,739,368   $ 2,564,968  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 207,915 $ 210,033
Other accrued liabilities 196,733 157,398
Current maturities of long-term debt   125,000     -  
Total current liabilities 529,648 367,431
 
Long-term debt 725,000 525,000
Other non-current liabilities   109,518     111,997  
Total liabilities 1,364,166 1,004,428
 
Stockholders' equity   1,375,202     1,560,540  
 
Total Liabilities and Stockholders' Equity $ 2,739,368   $ 2,564,968  
 
 
PATTERSON COMPANIES, INC.
SUPPLEMENTARY FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
       
 
 

 Three Months Ended 
Twelve Months Ended
April 28, April 30, April 28, April 30,
2012 2011 2012 2011
 
Consolidated Net Sales
Consumable and printed products $ 616,487 $ 578,930 $ 2,312,309 $ 2,232,876
Equipment and software 243,352 232,474 930,601 900,846
Other   76,495     72,415     292,751     281,948  
Total $ 936,334   $ 883,819   $ 3,535,661   $ 3,415,670  
 
Dental Supply
Consumable and printed products $ 331,054 $ 320,536 $ 1,263,515 $ 1,253,224
Equipment and software 201,321 189,626 768,633 734,749
Other   66,487     62,958     255,727     248,083  
Total $ 598,862   $ 573,120   $ 2,287,875   $ 2,236,056  
 
Rehabilitation Supply
Consumable and printed products $ 90,769 $ 87,281 $ 363,004 $ 348,641
Equipment and software 32,107 33,045 123,649 131,776
Other   7,096     6,432     26,687     24,317  
Total $ 129,972   $ 126,758   $ 513,340   $ 504,734  
 
Veterinary Supply
Consumable and printed products $ 194,664 $ 171,113 $ 685,790 $ 631,011
Equipment and software 9,924 9,803 38,319 34,321
Other   2,912     3,025     10,337     9,548  
Total $ 207,500   $ 183,941   $ 734,446   $ 674,880  
 
Other (Expense) Income, net
Interest income $ 1,176 $ 1,082 $ 4,954 $ 8,200
Interest expense (9,463 ) (6,341 ) (30,343 ) (25,840 )
Other   (517 )   (384 )   (2,808 )   (2,481 )
$ (8,804 ) $ (5,643 ) $ (28,197 ) $ (20,121 )
 
 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
   
Twelve Months Ended
April 28, April 30,
2012 2011
 
 
Operating activities:
Net income $ 212,815 $ 225,385
Depreciation & amortization 42,209 41,339
Stock-based compensation 12,615 10,481
ESOP compensation 756 2,128
Change in assets and liabilities, net of acquired  

52,763
    (16,721 )
Net cash provided by operating activities

321,158
262,612
 
Investing activities:
Additions to property and equipment, net of disposals (29,650 ) (36,822 )
Acquisitions and equity investments   (22,620 )   (52,187 )
Net cash used in investing activities (52,270 ) (89,009 )
 
Financing activities:
Dividends paid (54,741 ) (49,992 )
Share repurchases (362,379 ) (97,153 )
Proceeds from issuance of long-term debt 325,000 -
Other financing activities  

14,061
    13,923  
Net cash used in financing activities

(78,059
) (133,222 )
 
Effect of exchange rate changes on cash   (5,713 )   7,693  
 
 
Net increase in cash and cash equivalents $ 185,116   $ 48,074  
 

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX