EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Patterson Companies Reports First Quarter Operating Results

Dental Technology and Veterinary Supply Revenues Lead Performance

St. Paul, MN—August 20, 2009—Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $789,579,000 for the first quarter of fiscal 2010 ended July 25, an increase of 6% from $743,859,000 in the year-earlier quarter. The strong performance of technology offerings in the dental equipment business, as well as higher sales of veterinary supplies, helped offset the impact of the weak economy on other portions of Patterson’s business. Acquisitions, net of negative foreign currency adjustments, accounted for the majority of the first quarter sales growth. Net income was $45,057,000 or $0.38 per diluted share, compared to $45,964,000 or $0.39 per diluted share in the first quarter of 2009.

Sales of Patterson Dental Supply, Patterson’s largest business, were $510,991,000 in the first quarter, down 2% from $519,885,000 in the year-earlier period.

 

   

Sales of consumable dental supplies and printed office products were down 1% from last year’s first quarter or 2% after the impact of foreign currency, net of acquisitions.

 

   

Sales of dental equipment and software declined 2% from the year-earlier level. Sales of CEREC® dental restorative systems rose 84%, while sales of digital x-ray systems and related software gained 16%. These increases largely offset a 16% decline in sales of such basic equipment as chairs, units and lights.

 

   

Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth, rose 1% from last year’s first quarter.

Sales of the Webster Veterinary unit increased 37% in the first quarter of fiscal 2010 to $169,181,000. Internal growth accounted for 8% of this increase, with the October 2008 acquisition of Columbus Serum Company accounting for the balance. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, increased 9% to $109,407,000, reflecting the positive impact of the April 2009 acquisition of Mobilis Healthcare Group and the purchase of Empi Therapy Supply from DJO Incorporated during the first quarter. Patterson Medical’s revenue growth was negatively affected by foreign currency adjustments, although to a lesser extent than in the prior two quarters.

James W. Wiltz, president and chief executive officer, commented: “Despite the ongoing impact of the recession on our business, we are generally satisfied with Patterson’s first quarter results. Within our Patterson Dental unit, sales of consumable supplies held up relatively well, although many patients continued to defer higher level and discretionary dental procedures. The effect of the recession was particularly evident on sales of basic dental equipment. However, dental practitioners continued investing in CEREC dental restorative products and digital radiography systems, reflecting our belief that the recession is causing many dentists to focus their investments on equipment with rapid rates of return. We believe the 84% increase in first quarter CEREC sales also was driven by the growing market acceptance of this next-generation system, which occupies the industry-leading position in its product category. In addition, sales of digital x-ray systems are continuing to benefit from the strong emphasis our sales force is placing on this technology, which is a proven and cost-effective means for boosting dental office productivity.”

He continued: “In addition to the Columbus Serum acquisition, our Webster unit benefited from increased sales of veterinary supplies due to higher levels of patient activity during the first quarter. However, many veterinary practices continued to defer equipment purchases in view of the weak economy. Patterson Medical’s performance somewhat exceeded our expectations for this period, even though sales of rehabilitation equipment to acute care hospitals and clinics remained sluggish due to the economy. The assimilation of the Mobilis acquisition, which substantially increased Patterson Medical’s presence in the U.K. rehabilitation market, is proceeding on schedule. Patterson’s first quarter earnings also benefited from cost control measures that have been implemented in recent periods.”


Wiltz concluded: “Although recessionary conditions will continue to affect our performance for at least several more quarters, we remain optimistic about our prospects. Our businesses enjoy significant competitive advantages, enabling them to capitalize upon the fundamental, long-term strength of their markets. In addition, Patterson is continuing to generate substantial operating cash flows, which are ample for supporting our various growth initiatives.”

Patterson is maintaining its earnings guidance of $1.70 to $1.80 per diluted share for full-year fiscal 2010.

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; 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.

 

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 27, 2009 by dialing 1-303-590-3000 and providing the 4138186 conference ID.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     July 25,
2009
   April 25,
2009
     (Unaudited)     

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 175,377    $ 158,065

Receivables, net

     484,128      476,156

Inventory

     299,481      269,934

Prepaid expenses and other current assets

     40,823      33,440
             

Total current assets

     999,809      937,595

Property and equipment, net

     170,863      166,500

Goodwill and other intangible assets

     1,000,947      968,036

Other

     76,947      61,489
             

Total Assets

   $ 2,248,566    $ 2,133,620
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 199,381    $ 180,933

Other accrued liabilities

     150,074      131,367

Current maturities of long-term debt

     14,000      22,000
             

Total current liabilities

     363,455      334,300

Long-term debt

     525,000      525,000

Other non-current liabilities

     100,352      88,000
             

Total liabilities

     988,807      947,300

Stockholders’ equity

     1,259,759      1,186,320
             

Total Liabilities and Stockholders’ Equity

   $ 2,248,566    $ 2,133,620
             

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended  
     July 25,
2009
    July 26,
2008
 

Net sales

   $ 789,579      $ 743,859   

Gross profit

     258,684        251,730   

Operating expenses

     181,894        172,136   
                

Operating income

     76,790        79,594   

Other expense, net

     (4,358     (5,912
                

Income before taxes

     72,432        73,682   

Income taxes

     27,375        27,718   
                

Net income

   $ 45,057      $ 45,964   
                

Earnings per share:

    

Basic

   $ 0.38      $ 0.39   

Diluted

   $ 0.38      $ 0.39   

Shares:

    

Basic

     118,119        117,890   

Diluted

     118,643        118,712   

Gross margin

     32.8     33.8

Operating expenses as a % of net sales

     23.0     23.1

Operating income as a % of net sales

     9.7     10.7

Effective tax rate

     37.8     37.6

 

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PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 25,
2009
    July 26,
2008
 

Consolidated Net Sales

    

Consumable and printed products

   $ 546,740      $ 498,183   

Equipment and software

     177,654        181,292   

Other

     65,185        64,384   
                

Total

   $ 789,579      $ 743,859   
                

Dental Supply

    

Consumable and printed products

   $ 305,568      $ 312,593   

Equipment and software

     147,687        150,365   

Other

     57,736        56,927   
                

Total

   $ 510,991      $ 519,885   
                

Rehabilitation Supply

    

Consumable and printed products

   $ 80,348      $ 70,373   

Equipment and software

     23,440        24,793   

Other

     5,619        5,534   
                

Total

   $ 109,407      $ 100,700   
                

Veterinary Supply

    

Consumable and printed products

   $ 160,824      $ 115,217   

Equipment and software

     6,527        6,134   

Other

     1,830        1,923   
                

Total

   $ 169,181      $ 123,274   
                

Other (Expense) Income, net

    

Interest income

   $ 2,460      $ 1,922   

Interest expense

     (6,619     (8,052

Other

     (199     218   
                
   $ (4,358   $ (5,912
                

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 25,
2009
    July 26,
2008
 

Operating activities:

    

Net income

   $ 45,057      $ 45,964   

Depreciation & amortization

     8,857        6,383   

Share-based compensation

     2,230        1,962   

Change in assets and liabilities, net of acquired

     (9,308     (21,713
                

Net cash provided by operating activities

     46,836        32,596   

Investing activities:

    

Additions to property and equipment, net of disposals

     (8,008     (11,479

Acquisitions

     (28,113     (513
                

Net cash used in investing activities

     (36,121     (11,992

Net cash (used in) provided by financing activities

     (4,775     2,407   

Effect of exchange rate changes on cash

     11,372        (25
                

Net increase in cash and cash equivalents

   $ 17,312      $ 22,986