EX-99 2 dex99.htm PRESS RELEASE Press release

Exhibit 99

Patterson Companies Reports Improved First Quarter Operating Results.

St. Paul, MN—August 23, 2007—Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $701,403,000 for the first quarter of fiscal 2008 ended July 28, an increase of 7% from $655,488,000 in the year-earlier quarter. Net income came to $47,544,000 or $0.35 per diluted share, up 14% from $41,584,000 or $0.30 per diluted share in the first quarter of fiscal 2007.

First quarter earnings benefited from an increase in the gross margin of its dental business, which accounts for approximately 75% of Patterson’s sales, as well as further improvements in Patterson’s overall cost structure.

Sales of Patterson Dental, Patterson’s largest business, increased 6% to $499,727,000 in this year’s first quarter.

 

   

Sales of consumable dental supplies and printed office products increased 6%.

 

   

Sales of dental equipment increased 4% in the first quarter. Sales of basic dental equipment rose 8%, which included a solid contribution from digital radiography systems and related software. Sales of CEREC 3D® dental restorative systems declined in the first quarter as the process of transitioning significant product upgrades into the marketplace took longer than anticipated during this period.

 

   

Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth increased 11% in the first quarter.

Sales of the Webster Veterinary unit increased 10% in the first quarter of fiscal 2008 to $110,414,000. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, rose 10% to $91,262,000, which included contributions from the six branch offices that have been opened since last year’s second quarter.

James W. Wiltz, president and chief executive officer, commented: “We are generally pleased by the first quarter performance of our dental business, which benefited from solid sales of consumable supplies and basic equipment. Demand also remained strong for digital radiography systems and software. In addition, we are experiencing solid demand, consistent with our expectations, from existing customers for the upgraded CEREC crown milling chamber that was introduced toward the end of fiscal 2007. The rate at which we receive the new milling chambers from the manufacturer will dictate the pace at which we can meet customer demand over the balance of fiscal 2008. We continue to believe that CEREC sales should strengthen as we progress through this fiscal year.”

He continued: “Patterson’s veterinary business benefited from continued sales growth of consumable supplies and a 30% increase in sales of equipment and IntraVet® practice management software. Webster’s strategic emphasis on equipment and software is a key part of the unit’s ongoing effort to expand its full-service, value-added proposition. Patterson Medical also recorded another quarter of solid sales growth, due to the positive impact of its branch office strategy and other growth initiatives. Like Webster, Patterson Medical is focused on strengthening its value-added platform, making us confident this business is on course towards realizing its potential in the large and growing rehabilitation market.”

Patterson is forecasting earnings of $0.39 to $0.41 per diluted share for the second quarter of fiscal 2008 ending October 27, 2007. Patterson also reiterated its previously issued fiscal 2008 financial guidance of $1.73 to $1.77 per diluted share.


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 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 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 Market

Patterson 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; 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

   904/415-1415

 


First Quarter Conference Call and Replay

Patterson’s first 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. 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. A replay of the first quarter conference call can be heard through August 30, 2007 by dialing 1-303-590-3000 and providing the 11095621 confirmation code.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended  
     July 28,
2007
    July 29,
2006
 

Net sales

     $701,403       $655,488  

Gross profit

     237,134       222,414  

Operating expenses

     161,927       153,877  
                

Operating income

     75,207       68,537  

Other income (expense), net

     605       (1,841 )
                

Income before taxes

     75,812       66,696  

Income taxes

     28,268       25,112  
                

Net income

   $ 47,544     $ 41,584  
                

Earnings per share:

    

Basic

   $ 0.35     $ 0.30  

Diluted

   $ 0.35     $ 0.30  

Shares:

    

Basic

     135,785       138,208  

Diluted

     136,745       139,168  

Gross margin

     33.8 %     34.0 %

Operating expenses as a % of net sales

     23.1 %     23.5 %

Operating income as a % of net sales

     10.7 %     10.5 %

Effective tax rate

     37.3 %     37.7 %

Return on net sales

     6.8 %     6.3 %

 

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

    

July 28,

2007

   April 28,
2007
     (Unaudited)     

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 294,232    $ 241,791

Receivables, net

     333,642      361,401

Inventory

     280,878      250,207

Prepaid expenses and other current assets

     34,589      33,091
             

Total current assets

     943,341      886,490

Property and equipment, net

     132,179      131,952

Goodwill and other intangible assets

     764,446      762,930

Other

     156,834      158,948
             

Total Assets

   $ 1,996,800    $ 1,940,320
             

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities:

     

Accounts payable

   $ 171,403    $ 182,761

Other accrued liabilities

     138,401      144,694

Current maturities of long-term debt

     50,008      50,014
             

Total current liabilities

     359,812      377,469

Long-term debt

     130,077      130,010

Other non-current liabilities

     68,020      53,627
             

Total liabilities

     557,909      561,106

Stockholders' equity

     1,438,891      1,379,214
             

Total Liabilities and Stockholders' Equity

   $ 1,996,800    $ 1,940,320
             

 

-more-


PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 28,
2007
    July 29,
2006
 

Consolidated Net Sales

    

Consumable and printed products

   $ 463,541     $ 433,815  

Equipment and software

     180,860       169,445  

Other

     57,002       52,228  
                

Total

   $ 701,403     $ 655,488  
                

Dental Supply

    

Consumable and printed products

   $ 295,407     $ 279,417  

Equipment and software

     152,733       146,998  

Other

     51,587       46,294  
                

Total

   $ 499,727     $ 472,709  
                

Rehabilitation Supply

    

Consumable and printed products

   $ 66,322     $ 61,786  

Equipment

     21,175       17,146  

Other

     3,765       3,733  
                

Total

   $ 91,262     $ 82,665  
                

Veterinary Supply

    

Consumable and printed products

   $ 101,812     $ 92,612  

Equipment and software

     6,952       5,301  

Other

     1,650       2,201  
                

Total

   $ 110,414     $ 100,114  
                

Other Income (Expense), net

    

Interest income

   $ 2,348     $ 1,947  

Interest expense

     (2,497 )     (3,806 )

Other

     754       18  
                
   $ 605     $ (1,841 )
                

 

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 28,
2007
    July 29,
2006
 

Operating activities:

    

Net income

   $ 47,544     $ 41,584  

Depreciation & amortization

     6,083       6,244  

Stock-based compensation

     1,969       2,068  

Change in assets and liabilities, net of acquired

     (2,456 )     2,626  
                

Net cash provided by operating activities

     53,140       52,522  

Investing activities:

    

Additions to property and equipment, net

     (5,007 )     (6,665 )

Acquisitions

     (2,828 )     (4,064 )
                

Net cash used in investing activities

     (7,835 )     (10,729 )

Net cash provided by (used in) financing activities

  

 

7,136

 

    (961 )
                

Net increase in cash and cash equivalents

   $ 52,441     $ 40,832