EX-99 2 dex99.htm PRESS RELEASE Press release

Exhibit 99

Patterson Companies Reports Improved Third Quarter Operating Results

St. Paul, MN—February 21, 2008—Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $776,946,000 for the third quarter of fiscal 2008 ended January 26, an increase of 10% from $709,494,000 in the third quarter of fiscal 2007. This year’s third quarter encompassed one less selling day than the year-earlier period. Including this selling day in Patterson’s third quarter results would have had the effect of increasing consolidated sales by one to two percentage points. Net income came to $60,364,000 or $0.45 per diluted share, up 3% from $58,591,000 or $0.43 per diluted share in the third quarter of fiscal 2007.

Third quarter revenue and earnings growth was consistent with Patterson’s expectations. Revenues benefited from solidly higher sales of dental equipment, including basic equipment and CEREC 3D® dental restorative systems. As forecasted, earnings growth was affected by reduced gross margins, resulting largely from a shift in the quarter’s sales mix and pressure from the ongoing expansion of the medical unit’s branch office structure. In addition, Patterson’s results in last year’s third quarter included a nonrecurring $1.7 million tax benefit.

Sales of Patterson Dental, Patterson’s largest business, increased 9% to $584,942,000 in this year’s third quarter.

 

   

Sales of consumable dental supplies and printed office products increased 4%, or by 5% to 6% after giving effect to the reduced number of selling days in the quarter.

 

 

 

Sales of dental equipment increased a strong 13% in the third quarter. Sales of basic dental equipment, including digital radiography systems and related software, rose 14% during this period, while sales of the CEREC 3D® dental restorative system were up 10% year-over-year.

 

   

Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth, increased 21% in the third quarter.

Sales of the Webster Veterinary unit increased 14% in the third quarter of fiscal 2008 to $107,620,000. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, rose 8% to $84,384,000, which included contributions from the branch offices that have been opened during the past year.

James W. Wiltz, president and chief executive officer, commented: “We are encouraged by Patterson’s third quarter operating results, which were driven in large part by the performance of our Patterson Dental unit. In addition to solid sales of consumable dental supplies, our dental business benefited from a strong rebound in equipment sales. We also are encouraged by the 10% year-over-year sales growth of the CEREC line. Now that the market transition to CEREC’s new software and crown milling chamber is largely behind us, we are starting to see a growing level of momentum in CEREC system sales. We believe the sales progress generated in the third quarter for both CEREC systems and basic dental equipment should continue in this year’s fourth quarter.”

He continued: “Patterson’s veterinary business remained strong during this period, even though the third quarter is the slowest period of our fiscal year for sales of such seasonal product as heartworm and flea and tick medications. We also are encouraged by the initial results of Patterson Medical’s branch office strategy, which is part of this unit’s initiative to strengthen its value-added business model. Three new branches were opened during the quarter, bringing to 12 the number of offices Patterson Medical was operating.”


During the third quarter, cash totaling $264 million was used to purchase approximately 8 million Patterson common shares. Under the expanded stock repurchase plan that was authorized on December 24, 2007, approximately 17 million shares remain available for repurchase.

Patterson is forecasting earnings of $0.50 to $0.52 per diluted share for the fourth quarter of fiscal 2008 ending April 26, which reflects the impact of shares repurchased in the third quarter. The Company also tightened its full-year 2008 guidance to $1.69 to $1.71.

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.

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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   904/415-1415   

 

 

Third Quarter Conference Call and Replay

Patterson’s third 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 third quarter conference call can be heard through February 28, 2008 by dialing 1-303-590-3000 and providing the 11108940 confirmation code.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     January 26,
2008
    January 27,
2007
    January 26,
2008
    January 27,
2007
 

Net sales

   $ 776,946     $ 709,494     $ 2,220,341     $ 2,059,255  

Gross profit

     269,138       250,266       758,571       708,309  

Operating expenses

     172,024       157,580       500,637       469,065  
                                

Operating income

     97,114       92,686       257,934       239,244  

Other income (expense), net

     402       (1,701 )     1,762       (5,044 )
                                

Income before taxes

     97,516       90,985       259,696       234,200  

Income taxes

     37,152       32,394       98,047       85,788  
                                

Net income

   $ 60,364     $ 58,591     $ 161,649     $ 148,412  
                                

Earnings per share:

        

Basic

   $ 0.45     $ 0.43     $ 1.20     $ 1.08  

Diluted

   $ 0.45     $ 0.43     $ 1.19     $ 1.07  

Shares:

        

Basic

     134,050       135,601       135,247       137,189  

Diluted

     134,935       136,567       136,201       138,154  

Gross margin

     34.6 %     35.3 %     34.2 %     34.4 %

Operating expenses as a % of net sales

     22.1 %     22.2 %     22.5 %     22.8 %

Operating income as a % of net sales

     12.5 %     13.1 %     11.6 %     11.6 %

Effective tax rate

     38.1 %     35.6 %     37.8 %     36.6 %

Return on net sales

     7.8 %     8.3 %     7.3 %     7.2 %

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     January 26,    April 28,
     2008    2007
     (Unaudited)     

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 171,228    $ 241,791

Receivables, net

     366,838      361,401

Inventory

     288,777      250,207

Prepaid expenses and other current assets

     36,681      33,091
             

Total current assets

     863,524      886,490

Property and equipment, net

     133,980      131,952

Goodwill and other intangible assets

     773,147      762,930

Other

     159,019      158,948
             

Total Assets

   $ 1,929,670    $ 1,940,320
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 187,031    $ 182,761

Other accrued liabilities

     175,631      144,694

Current maturities of long-term debt

     130,052      50,014
             

Total current liabilities

     492,714      377,469

Long-term debt

     60,057      130,010

Other non-current liabilities

     70,415      53,627
             

Total liabilities

     623,186      561,106

Stockholders’ equity

     1,306,484      1,379,214
             

Total Liabilities and Stockholders’ Equity

   $ 1,929,670    $ 1,940,320
             

 

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PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     January 26,     January 27,     January 26,     January 27,  
     2008     2007     2008     2007  

Consolidated Net Sales

        

Consumable and printed products

   $ 449,721     $ 420,934     $ 1,393,285     $ 1,295,143  

Equipment and software

     262,200       234,159       643,089       602,179  

Other

     65,025       54,401       183,967       161,933  
                                

Total

   $ 776,946     $ 709,494     $ 2,220,341     $ 2,059,255  
                                

Dental Supply

        

Consumable and printed products

   $ 294,638     $ 283,183     $ 900,175     $ 852,492  

Equipment and software

     231,564       205,265       553,286       525,515  

Other

     58,740       48,700       165,713       144,050  
                                

Total

   $ 584,942     $ 537,148     $ 1,619,174     $ 1,522,057  
                                

Rehabilitation Supply

        

Consumable and printed products

   $ 58,481     $ 54,057     $ 194,599     $ 179,784  

Equipment and software

     21,280       20,058       66,374       55,779  

Other

     4,623       3,968       13,236       11,896  
                                

Total

   $ 84,384     $ 78,083     $ 274,209     $ 247,459  
                                

Veterinary Supply

        

Consumable and printed products

   $ 96,602     $ 83,694     $ 298,511     $ 262,867  

Equipment and software

     9,356       8,836       23,429       20,885  

Other

     1,662       1,733       5,018       5,987  
                                

Total

   $ 107,620     $ 94,263     $ 326,958     $ 289,739  
                                

Other Income (Expense), net

        

Interest income

   $ 2,813     $ 1,868     $ 7,871     $ 5,935  

Interest expense

     (2,383 )     (3,366 )     (7,479 )     (11,002 )

Other

     (28 )     (203 )     1,370       23  
                                
   $ 402     $ (1,701 )   $ 1,762     $ (5,044 )
                                

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Nine Months Ended  
     January 26,     January 27,  
     2008     2007  

Operating activities:

    

Net income

   $ 161,649     $ 148,412  

Depreciation & amortization

     19,497       19,337  

Share-based compensation

     5,954       5,881  

Change in assets and liabilities, net of acquired

     (18,967 )     (56,718 )
                

Net cash provided by operating activities

     168,133       116,912  

Investing activities:

    

Additions to property and equipment, net of acquired

     (16,344 )     (14,730 )

Proceeds from disposals of property and equipment

     —         9,163  

Acquisitions

     (12,967 )     (12,665 )
                

Net cash used in investing activities

     (29,311 )     (18,232 )

Net cash used in financing activities

     (215,865 )     (169,089 )

Effect of exchange rate changes on cash

     6,480       (1,519 )
                

Net decrease in cash and cash equivalents

   $ (70,563 )   $ (71,928 )
                

 

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