EX-99 2 dex99.htm PRESS RELEASE Press release

Exhibit 99

Patterson Companies Reports Improved Second Quarter Operating Results

St. Paul, MN—November 21, 2007—Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $741,992,000 for the second quarter of fiscal 2008 ended October 27, an increase of 7% from $694,273,000 in the year-earlier quarter. Net income came to $53,741,000 or $0.39 per diluted share, up 11% from $48,237,000 or $0.35 per diluted share in the second quarter of fiscal 2007.

Second quarter earnings benefited from an increase in the dental gross margin and further strengthening of the consolidated operating expense ratio, reflecting improvements in Patterson’s cost structure that have been achieved by consolidating distribution facilities and other functions at the corporate level. Revenues for this period were adversely affected by below-plan sales of dental equipment and software.

Sales of Patterson Dental, Patterson’s largest business, increased 4% to $534,505,000 in this year’s second quarter.

 

   

Sales of consumable dental supplies and printed office products increased 7%.

 

 

 

Sales of dental equipment declined 2% in the second quarter. Sales of CEREC 3D® dental restorative systems, which were only modestly lower year-over-year, benefited from solid demand for the next-generation crown milling chamber that is sold both as an upgrade for existing installations and as an option on new system sales. Sales of basic dental equipment also were down slightly in the second quarter.

 

   

Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth increased 13% in the second quarter.

Sales of the Webster Veterinary unit increased 14% in the second quarter of fiscal 2008 to $108,924,000. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, rose 14% to $98,563,000, which included contributions from the eight branch offices that have been opened during the past year.

James W. Wiltz, president and chief executive officer, commented: “Patterson Dental recorded a mixed performance in this year’s second quarter, but on balance, we are disappointed with the overall results of this unit. Sales of consumable dental supplies were solid during this period, but sales of dental equipment and software fell short of forecasted levels. Sales growth of Patterson’s veterinary business remained strong in the quarter, and the positive outlook for this unit is reinforced by the anticipated impact of two important flea and tick medications that were introduced late in the second quarter. We also are encouraged by the initial results of Patterson Medical’s branch office strategy, which is making a solid contribution to the growth of our rehabilitation business. The recent acquisition of a developer of industry-leading practice management software for physical therapists, while not expected to have an immediate impact on Patterson Medical’s sales growth, should further strengthen the full-service, value-added business platform of our rehabilitation unit.”

Wiltz continued: “We are cautious about the near-term outlook of our equipment business, since it appears that certain economic and industry conditions may be causing some customers to temporarily delay new capital investments in their practices. Given this uncertainty, we are forecasting earnings of $0.44 to $0.46 per diluted share for the third quarter of fiscal 2008 ending January 26, 2008. We also are reducing our full-year fiscal 2008 guidance to $1.68 to $1.72 per diluted share from the previously-issued guidance of $1.73 to $1.77.”

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

 


Second Quarter Conference Call and Replay

Patterson’s second 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 second quarter conference call can be heard through November 28, 2007 by dialing 1-303-590-3000 and providing the 11102301 confirmation code.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended     Six Months Ended  
     October 27,
2007
    October 28,
2006
    October 27,
2007
    October 28,
2006
 

Net sales

   $ 741,992     $ 694,273     $ 1,443,395     $ 1,349,761  

Gross profit

     252,299       235,629       489,433       458,043  

Operating expenses

     166,686       157,608       328,613       311,485  
                                

Operating income

     85,613       78,021       160,820       146,558  

Other income (expense), net

     755       (1,502 )     1,360       (3,343 )
                                

Income before taxes

     86,368       76,519       162,180       143,215  

Income taxes

     32,627       28,282       60,895       53,394  
                                

Net income

   $ 53,741     $ 48,237     $ 101,285     $ 89,821  
                                

Earnings per share:

        

Basic

   $ 0.40     $ 0.35     $ 0.75     $ 0.65  

Diluted

   $ 0.39     $ 0.35     $ 0.74     $ 0.65  

Shares:

        

Basic

     135,907       137,757       135,846       137,983  

Diluted

     136,923       138,728       136,834       138,948  

Gross margin

     34.0 %     33.9 %     33.9 %     33.9 %

Operating expenses as a % of net sales

     22.5 %     22.7 %     22.8 %     23.1 %

Operating income as a % of net sales

     11.5 %     11.2 %     11.1 %     10.8 %

Effective tax rate

     37.8 %     37.0 %     37.5 %     37.3 %

Return on net sales

     7.2 %     6.9 %     7.0 %     6.7 %

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     October 27,
2007
   April 28,
2007
     (Unaudited)     

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 345,142    $ 241,791

Receivables, net

     348,346      361,401

Inventory

     280,444      250,207

Prepaid expenses and other current assets

     37,640      33,091
             

Total current assets

     1,011,572      886,490

Property and equipment, net

     132,391      131,952

Goodwill and other intangible assets

     772,844      762,930

Other

     158,119      158,948
             

Total Assets

   $ 2,074,926    $ 1,940,320
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 181,774    $ 182,761

Other accrued liabilities

     133,976      144,694

Current maturities of long-term debt

     50,008      50,014
             

Total current liabilities

     365,758      377,469

Long-term debt

     130,069      130,010

Other non-current liabilities

     67,532      53,627
             

Total liabilities

     563,359      561,106

Stockholders’ equity

     1,511,567      1,379,214
             

Total Liabilities and Stockholders’ Equity

   $ 2,074,926    $ 1,940,320
             

-more-


PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended     Six Months Ended  
     October 27,
2007
    October 28,
2006
    October 27,
2007
    October 28,
2006
 

Consolidated Net Sales

        

Consumable and printed products

   $ 480,023     $ 440,394     $ 943,564     $ 874,209  

Equipment and software

     200,029       198,575       380,889       368,020  

Other

     61,940       55,304       118,942       107,532  
                                

Total

   $ 741,992     $ 694,273     $ 1,443,395     $ 1,349,761  
                                

Dental Supply

        

Consumable and printed products

   $ 310,130     $ 289,892     $ 605,537     $ 569,309  

Equipment and software

     168,989       173,252       321,722       320,250  

Other

     55,386       49,056       106,973       95,350  
                                

Total

   $ 534,505     $ 512,200     $ 1,034,232     $ 984,909  
                                

Rehabilitation Supply

        

Consumable and printed products

   $ 69,796     $ 63,941     $ 136,118     $ 125,727  

Equipment

     23,919       18,575       45,094       35,721  

Other

     4,848       4,195       8,613       7,928  
                                

Total

   $ 98,563     $ 86,711     $ 189,825     $ 169,376  
                                

Veterinary Supply

        

Consumable and printed products

   $ 100,097     $ 86,561     $ 201,909     $ 179,173  

Equipment and software

     7,121       6,748       14,073       12,049  

Other

     1,706       2,053       3,356       4,254  
                                

Total

   $ 108,924     $ 95,362     $ 219,338     $ 195,476  
                                

Other Income (Expense), net

        

Interest income

   $ 2,710     $ 2,120     $ 5,058     $ 4,067  

Interest expense

     (2,599 )     (3,830 )     (5,096 )     (7,636 )

Other

     644       208       1,398       226  
                                
   $ 755     $ (1,502 )   $ 1,360     $ (3,343 )
                                

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Six Months Ended  
     October 27,
2007
    October 28,
2006
 

Operating activities:

    

Net income

   $ 101,285     $ 89,821  

Depreciation & amortization

     12,324       12,856  

Share-based compensation

     3,978       4,065  

Change in assets and liabilities, net of acquired

     (8,748 )     (24,267 )
                

Net cash provided by operating activities

     108,839       82,475  

Investing activities:

    

Additions to property and equipment, net of disposals

     (9,180 )     (9,726 )

Acquisitions

     (11,539 )     (8,665 )
                

Net cash used in investing activities

     (20,719 )     (18,391 )

Net cash provided by (used in) financing activities

     7,111       (106,811 )

Effect of exchange rate changes on cash

     8,147       (107 )
                

Net increase (decrease) in cash and cash equivalents

   $ 103,378     $ (42,834 )