EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Patterson Companies Reports Improved First Quarter Operating Results

St. Paul, MN—August 26, 2010—Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $849,787,000 for the first quarter of fiscal 2011 ended July 31, an increase of 8% from $789,579,000 in the year-earlier quarter. Sales for the current quarter included the impact of an extra or fourteenth week, which will make fiscal 2011 a 53-week year ending on April 30, 2011. Net income of $53,925,000 or $0.45 per diluted share rose 20% from $45,057,000 or $0.38 per diluted share in the first quarter of fiscal 2010.

Sales of Patterson Dental Supply, Patterson’s largest business, were $542,678,000 in the first quarter, up 6% from $510,991,000 in the year-earlier period.

 

   

Sales of consumable dental supplies and printed office products rose 7% from last year’s first quarter and were essentially unchanged from the year-earlier period after excluding the impact of the additional week.

 

   

Sales of dental equipment and software increased 5% from the year-earlier level. Equipment sales, net of CEREC® dental restoration systems, were up a strong 13%. It is difficult to measure the impact of an extra week on equipment sales due to such factors as the length of time from initial order to installation, which can span several months between quarters.

 

   

Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth, rose 8% from last year’s first quarter.

Sales of the Webster Veterinary unit increased 6% in the first quarter of fiscal 2011 to $179,635,000. Sales of Patterson Medical, the rehabilitation supply and equipment unit, increased 17% to $127,474,000. Acquisitions contributed approximately 10 percentage points of Patterson Medical’s first quarter sales growth, while the additional week accounted for approximately five percentage points.

Scott P. Anderson, president and chief executive officer, commented: “We are generally pleased with Patterson’s first quarter results, considering the ongoing effect of sluggish economic conditions within our served markets. Within Patterson Dental, we were encouraged by the strong sales growth of basic dental equipment, reflecting our ability to capture a significant share of the equipment business that has been deferred for the past two years. We believe this rebound in basic equipment sales is an indication that the dental market is starting to gradually strengthen. Sales of cone beam and panoramic imaging systems were robust. The sales performance of our CEREC line reflected the strong comparable level in last year’s first quarter, due to the high level of interest in our initial trade-up program following the introduction of the CEREC AC® early in calendar 2009. A similar CEREC trade-up program has been running during this year’s first quarter and will end later this month. For the full year, we continue to believe that CEREC sales should increase by at least 10%, and we are committing substantial marketing resources to accomplish this goal.”

He continued: “Patterson Medical posted solid first quarter operating results. The June acquisition of the rehabilitation businesses of DCC Healthcare has significantly strengthened and expanded Patterson Medical’s international footprint. The integration of this acquisition is proceeding on schedule. We believe Patterson Medical is well-positioned as a strong growth driver, and we are continuing to evaluate strategic acquisition opportunities for this business. We were generally pleased with Webster’s first quarter performance. The impact of the additional week was offset by several factors that affected the comparability of Webster’s sales. These include changes in the distribution arrangements for certain pharmaceuticals and the exit from the production animal business that was part of Columbus Serum. We also were pleased with Webster’s equipment sales, which were solidly higher in the quarter.”

Anderson added: “Our expectations for fiscal 2011 have not changed from our previous guidance, and we are maintaining our earnings forecast of $1.89 to $1.99 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.

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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 for one week by dialing 1-303-590-3030 and providing the conference ID: 4325698.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended  
     July 31,
2010
    July 25,
2009
 

Net sales

   $ 849,787      $ 789,579   

Gross profit

     280,200        258,684   

Operating expenses

     191,176        181,894   
                

Operating income

     89,024        76,790   

Other expense, net

     (3,257     (4,358
                

Income before taxes

     85,767        72,432   

Income taxes

     31,842        27,375   
                

Net income

   $ 53,925      $ 45,057   
                

Earnings per share:

    

Basic

   $ 0.45      $ 0.38   

Diluted

   $ 0.45      $ 0.38   

Shares:

    

Basic

     119,022        118,119   

Diluted

     119,784        118,643   

Dividends declared per common share

   $ 0.10      $ —     

Gross margin

     33.0     32.8

Operating expenses as a % of net sales

     22.5     23.0

Operating income as a % of net sales

     10.5     9.7

Effective tax rate

     37.1     37.8

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     July 31,
2010
   April 24,
2010
     (Unaudited)     

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 298,427    $ 340,591

Receivables, net

     454,941      452,746

Inventory

     336,382      288,725

Prepaid expenses and other current assets

     44,700      51,696
             

Total current assets

     1,134,450      1,133,758

Property and equipment, net

     178,721      169,598

Goodwill and other intangible assets

     1,024,753      1,005,677

Investments and other

     110,028      113,936
             

Total Assets

   $ 2,447,952    $ 2,422,969
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 180,472    $ 193,626

Other accrued liabilities

     148,838      154,725

Current maturities of long-term debt

     —        —  
             

Total current liabilities

     329,310      348,351

Long-term debt

     525,000      525,000

Other non-current liabilities

     107,761      108,107
             

Total liabilities

     962,071      981,458

Stockholders’ equity

     1,485,881      1,441,511
             

Total Liabilities and Stockholders’ Equity

   $ 2,447,952    $ 2,422,969
             

-more-


PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 31,
2010
    July 25,
2009
 

Consolidated Net Sales

    

Consumable and printed products

   $ 586,603      $ 546,740   

Equipment and software

     192,221        177,654   

Other

     70,963        65,185   
                

Total

   $ 849,787      $ 789,579   
                

Dental Supply

    

Consumable and printed products

   $ 325,992      $ 305,568   

Equipment and software

     154,571        147,687   

Other

     62,115        57,736   
                

Total

   $ 542,678      $ 510,991   
                

Rehabilitation Supply

    

Consumable and printed products

   $ 90,925      $ 80,348   

Equipment and software

     30,376        23,440   

Other

     6,173        5,619   
                

Total

   $ 127,474      $ 109,407   
                

Veterinary Supply

    

Consumable and printed products

   $ 169,686      $ 160,824   

Equipment and software

     7,274        6,527   

Other

     2,675        1,830   
                

Total

   $ 179,635      $ 169,181   
                

Other (Expense) Income, net

    

Interest income

   $ 2,643      $ 2,460   

Interest expense

     (6,890     (6,619

Other

     990        (199
                
   $ (3,257   $ (4,358
                

 

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 31,
2010
    July 25,
2009
 

Operating activities:

    

Net income

   $ 53,925      $ 45,057   

Depreciation & amortization

     9,523        8,857   

Share-based compensation

     2,669        2,230   

Change in assets and liabilities, net of acquired

     (43,359     (9,308
                

Net cash provided by operating activities

     22,758        46,836   

Investing activities:

    

Additions to property and equipment, net of disposals

     (9,130     (8,008

Acquisitions and equity investments

     (46,682     (28,113
                

Net cash used in investing activities

     (55,812     (36,121

Financing activities:

    

Cash dividends paid

     (11,916     —     

Other financing activities

     7,988        (4,775
                

Net cash used in financing activities

     (3,928     (4,775

Effect of exchange rate changes on cash

     (5,182     11,372   
                

Net (decrease) increase in cash and cash equivalents

   $ (42,164   $ 17,312