EX-99 2 dex99.htm PRESS RELEASE Press Release

Exhibit 99

 

Patterson Companies Reports Strongly Improved

Third Quarter Sales and Earnings

 

St. Paul, MN—February 24, 2005—Patterson Companies, Inc. (Nasdaq NMS: PDCO) today reported consolidated sales of $638,005,000 for the third quarter of fiscal 2005 ended January 29, an increase of 22% from $521,218,000 in the year-earlier quarter. Excluding four acquisitions earlier this year, internally generated sales were up approximately 15%. Net income increased 25% to $50,137,000 or $0.36 per diluted share, from $40,061,000 or $0.29 per diluted share in the third quarter of fiscal 2004.

 

The Patterson Dental Supply unit, Patterson’s largest business, reported sales growth of 18% to $499,796,000 in the third quarter. Substantially all of this growth was internally generated.

 

  Sales of consumable dental supplies and printed office products increased 10% in the third quarter. One extra selling day in the quarter accounted for an estimated one to two percentage points of the sales growth for this period. Consumable sales also benefited from the effectiveness of efforts to strengthen this portion of Patterson’s business. Patterson Dental’s sales force, the largest in the industry, totaled approximately 1,420 at the end of the third quarter.

 

  Sales of dental equipment and software rose 30% in the third quarter, generated by strong demand for both basic and new technology equipment in the U.S. and Canada.

 

  Sales of other services and products, consisting primarily of parts, technical service, software support, and insurance e-claims, increased 8% in the third quarter.

 

Sales of the Webster Veterinary Supply unit increased 64% in the third quarter to $70,701,000, which included contributions from the acquisitions of ProVet in April 2004 and Milburn Distributions, Inc. in October. As previously reported, ProHeart 6, an injectable heartworm medication, was voluntarily withdrawn from the U.S. market by its manufacturer in September 2004. On an annual basis, ProHeart 6 contributed sales of approximately $12 million. Excluding the nearly $3 million of ProHeart 6 sales in last year’s third quarter and the impact of the two acquisitions earlier this year, Webster’s sales increased approximately 12% in this year’s third quarter. This result was particularly positive since the third quarter is Webster’s seasonally lowest period of the fiscal year.

 

Sales of AbilityOne Products Corp., Patterson’s rehabilitation supply and equipment unit, increased 27% in the third quarter to $67,508,000. Excluding the May 2004 acquisition of Medco Supply Company, as well as the impact of the additional selling day in the quarter and currency adjustments related to its foreign operations, AbilityOne’s internally generated sales increased approximately 9%.

 

Peter L. Frechette, chairman and chief executive officer, commented: “We are very encouraged by Patterson’s strongly improved sales and earnings in this year’s third quarter. Virtually every aspect of our dental business is continuing to perform at a high level. Sales of dental consumables registered their highest growth rate in recent years, while demand remains strong for basic equipment and new-generation dental systems, including the CEREC®3D dental restorative system, digital radiography and related networking systems. Dental practices are investing heavily in equipment and software that strengthens office productivity and improves clinical outcomes. As the leading distributor of dental equipment by a considerable margin, Patterson Dental is extremely well positioned to capitalize upon these ongoing investment trends.”

 

Frechette continued: “AbilityOne’s third quarter performance in comparison to the year-earlier period was affected by below-plan sales, modestly lower gross margins and certain unanticipated expenses. We believe this is a short-term situation and corrective actions are now underway. We are very encouraged by the solid performance of our Webster unit, which posted strong sales growth during the seasonally slow winter months despite the lost ProHeart revenues. Webster is pursuing a number of promising new opportunities, and we are optimistic about the prospects of our veterinary supply business.”

 

Patterson is forecasting earnings of $0.38 to $0.40 per diluted share for the fourth quarter of fiscal 2005 ending April 30, which is consistent with the Company’s previously-issued financial guidance of $1.34 to $1.36 for the full fiscal year.


About Patterson Companies, Inc.

 

Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets.

 

Dental Market

 

As Patterson’s largest business, Patterson Dental Supply 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 Market

 

Webster Veterinary Supply is the nation’s second largest distributor of consumable veterinary supplies, equipment, diagnostic products, vaccines and pharmaceuticals to companion-pet veterinary clinics.

 

Rehabilitation Market

 

AbilityOne Products Corp. 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.

 

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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; 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.

 

For additional information contact:     
R. Stephen Armstrong    Richard G. Cinquina
Executive Vice President & CFO    Equity Market Partners
651/686-1600    904/261-2210 or 800/522-1744

 

Third Quarter Conference Call and Replay

 

Patterson’s third quarter earnings conference call will start at 11:00 a.m. Eastern today. To participate, call 1-800-366-7417 about 10 minutes before the start time and ask for the Patterson Companies conference call. A replay of the conference call can be heard through March 3, 2005 by dialing 1-303-590-3000 and providing the 11024161 pass code. Investors also can listen to a live webcast of the conference call at www.pattersoncompanies.com. Listeners should go to this website at least 15 minutes prior to the call to download and install any necessary audio software. The conference call will be archived on Patterson’s web site.


Patterson Companies, Inc.

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended

    Nine Months Ended

 
     January 29,
2005


    January 24,
2004


    January 29,
2005


    January 24,
2004


 

Net sales

   $ 638,005     $ 521,218     $ 1,794,185     $ 1,431,990  

Gross profit

     227,328       190,873       635,924       501,776  

Operating expenses

     145,549       123,882       416,484       333,498  
    


 


 


 


Operating income

     81,779       66,991       219,440       168,278  

Other (expense) income, net

     (1,681 )     (2,790 )     (6,241 )     (1,070 )
    


 


 


 


Income before taxes

     80,098       64,201       213,199       167,208  

Income taxes

     29,961       24,140       79,743       62,868  
    


 


 


 


Net income

   $ 50,137     $ 40,061     $ 133,456     $ 104,340  
    


 


 


 


Earnings per share:

                                

Basic

   $ 0.37     $ 0.29     $ 0.98     $ 0.77  

Diluted

   $ 0.36     $ 0.29     $ 0.96     $ 0.76  

Shares:

                                

Basic

     136,924       135,988       136,728       135,826  

Diluted

     138,960       138,170       138,788       137,576  

Gross margin

     35.6 %     36.6 %     35.4 %     35.0 %

Operating expenses as a % of net sales

     22.8 %     23.8 %     23.2 %     23.2 %

Operating income as a % of net sales

     12.8 %     12.8 %     12.2 %     11.8 %

Effective tax rate

     37.4 %     37.6 %     37.4 %     37.6 %

Return on net sales

     7.9 %     7.7 %     7.4 %     7.3 %

 

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Patterson Companies, Inc.

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PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(In thousands)

(Unaudited)

 

     Three Months Ended

    Nine Months Ended

 
     January 29,
2005


   

January 24,

2004


    January 29,
2005


   

January 24,

2004


 

Consolidated Net Sales

                                

Consumable and printed products

   $ 365,408     $ 304,977     $ 1,122,411     $ 891,133  

Equipment and software

     229,349       177,589       542,008       430,214  

Other

     43,248       38,652       129,766       110,643  
    


 


 


 


Total

   $ 638,005     $ 521,218     $ 1,794,185     $ 1,431,990  
    


 


 


 


Rehabilitative Supply

                                

Actual

                                

Consumable and printed products

   $ 55,960     $ 42,725     $ 185,824     $ 68,291  

Equipment

     8,386       7,924       24,086       12,317  

Other

     3,162       2,340       10,048       4,223  
    


 


 


 


Total

   $ 67,508     $ 52,989     $ 219,958     $ 84,831  
    


 


 


 


Proforma

                   $ 219,958     $ 165,354 (a)
                    


 


Veterinary Supply

                                

Consumable and printed products

   $ 65,394     $ 40,076     $ 195,934     $ 149,075  

Equipment

     3,442       2,028       8,818       4,904  

Other

     1,865       980       5,144       3,566  
    


 


 


 


Total

   $ 70,701     $ 43,084     $ 209,896     $ 157,545  
    


 


 


 


Other (Expense) Income, net

                                

Interest income

   $ 1,533     $ 1,500     $ 4,034     $ 4,763  

Interest expense

     (3,303 )     (4,317 )     (10,852 )     (6,238 )

Other

     89       27       577       405  
    


 


 


 


     $ (1,681 )   $ (2,790 )   $ (6,241 )   $ (1,070 )
    


 


 


 



(a) Proforma basis, as if the acquisition of AbilityOne had occurred at the beginning of fiscal 2004, but does not give effect to the fiscal 2005 Medco acquisition.

 

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Patterson Companies, Inc.

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     January 29,
2005


   April 24,
2004


     (Unaudited)     

ASSETS

             

Current assets:

             

Cash and short-term investments

   $ 341,568    $ 295,178

Receivables, net

     296,021      285,249

Inventory

     199,885      173,022

Prepaid expenses and other current assets

     29,063      24,694
    

  

Total current assets

     866,537      778,143

Property and equipment, net

     91,742      77,233

Goodwill and other intangible assets

     748,535      698,217

Other

     41,165      35,364
    

  

Total Assets

   $ 1,747,979    $ 1,588,957
    

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

             

Current liabilities:

             

Accounts payable

   $ 180,073    $ 149,528

Other accrued liabilities

     130,276      94,129

Current maturities of long-term debt

     20,031      20,031
    

  

Total current liabilities

     330,380      263,688

Long-term debt

     411,534      479,556

Other non-current liabilities

     48,881      43,955
    

  

Total liabilities

     790,795      787,199

Stockholders’ equity

     957,184      801,758
    

  

Total Liabilities and Stockholders’ Equity

   $ 1,747,979    $ 1,588,957
    

  

 

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Patterson Companies, Inc.

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Nine Months Ended

 
     January 29,
2005


    January 24,
2004


 

Operating activities:

                

Net income

   $ 133,456     $ 104,340  

Depreciation & amortization

     20,239       13,314  

Change in assets and liabilities, net of acquired

     37,582       (24,303 )
    


 


Net cash provided by operating activities

     191,277       93,351  

Investing activities:

                

Additions to property and equipment, net

     (22,590 )     (11,290 )

Acquisitions

     (72,855 )     (581,782 )

(Purchase) sale of investments

     (4,207 )     14,731  
    


 


Net cash used in investing activities

     (99,652 )     (578,341 )

Net cash (used in) provided by financing activities

     (49,442 )     504,825  
    


 


Net increase in cash and cash equivalents

   $ 42,183     $ 19,835