- First quarter reported net sales increased 3.5 percent
year-over-year to $1.6 billion, and internal sales increased 2.8
percent.
- Drove adjusted operating margin1 expansion for
business overall and across both Dental and Animal Health
segments.
- Delivered first quarter GAAP earnings of $0.32 per diluted
share and adjusted earnings of $0.40 per diluted share, a 25
percent increase over the prior year period.
- Returned $54.9 million to shareholders through dividends and
share repurchases.
- Reaffirmed fiscal 2024 GAAP earnings guidance of $2.14 to
$2.24 per diluted share and adjusted earnings1 guidance of $2.45 to
$2.55 per diluted share.
Patterson Companies, Inc. (Nasdaq: PDCO) today reported
consolidated net sales of $1.6 billion (see attached Sales Summary
for further details) in its fiscal 2024 first quarter ended July
29, 2023, an increase of 3.5 percent compared to the same period
last year. Internal sales, which are adjusted for the effects of
currency translation and contributions from recent acquisitions,
increased 2.8 percent over the prior year period.
Reported net income attributable to Patterson Companies, Inc.
for the first quarter of fiscal 2024 was $31.2 million, or $0.32
per diluted share, compared to $24.6 million, or $0.25 per diluted
share, in the first quarter of fiscal 2023. Adjusted net income1
attributable to Patterson Companies, Inc., which excludes deal
amortization, totaled $38.6 million for the first quarter of fiscal
2024, or $0.40 per diluted share, compared to $31.7 million, or
$0.32 per diluted share, in the first quarter of fiscal 2023. The
year-over-year increase in reported and adjusted net income
attributable to Patterson Companies, Inc. in the first quarter of
fiscal 2024 is primarily due to sales execution and operating
margin expansion within both business segments.
“Patterson had a strong start to fiscal 2024, delivering
internal sales growth and enhanced profitability in the first
quarter,” said Don Zurbay, President and CEO of Patterson
Companies. “Our initiatives to drive margin improvement were
successful in helping us achieve adjusted operating margin
expansion across the company and the Dental and Animal Health
segments. Continued execution of our proven strategy and the
resilient end markets in which we operate make us well positioned
to drive improved performance over the long term.”
Patterson Dental Reported net sales in the Dental segment
for the first quarter of fiscal 2024 were $567.3 million. Internal
sales increased 2.1 percent compared to the fiscal 2023 first
quarter. Internal sales of consumables increased 4.6 percent
year-over-year. Excluding the deflationary impact of certain
infection control products, internal sales of consumables increased
6.9 percent year-over-year. Compared to the prior year period,
internal sales of equipment decreased 5.7 percent and internal
sales of value-added services increased 5.8 percent.
Patterson Animal Health Reported net sales in the Animal
Health segment for the first quarter of fiscal 2024 were $1.01
billion. Internal sales growth of 4.0 percent year-over-year was
driven by growth in both the companion animal and production animal
businesses. Within the Animal Health segment, internal sales of
consumables grew 3.5 percent, equipment and software decreased 3.7
percent and value-added services increased 72.3 percent.
Balance Sheet and Capital Allocation During the first
quarter of fiscal 2024, Patterson Companies used $253.4 million of
cash from operating activities and collected deferred purchase
price receivables of $242.0 million, using $11.4 million in cash,
compared to using $49.6 million in the prior year period. Free cash
flow1 (see definition below and attached free cash flow table)
during the first quarter of fiscal 2024 improved by $35.7 million
compared to the first quarter of fiscal 2023 due to a decreased
level of working capital during the first quarter of fiscal
2024.
In the first quarter of fiscal 2024, Patterson Companies
declared a quarterly cash dividend of $0.26 per share and returned
$25.4 million in cash dividends to shareholders. Also, under an
existing share repurchase authorization, the company repurchased
approximately $29.5 million of shares during the first quarter of
fiscal 2024. As of the end of the first quarter of fiscal 2024,
Patterson had approximately $380 million of share repurchase
authority remaining on its current share repurchase
authorization.
Fiscal 2024 Guidance Patterson Companies today reaffirmed
its fiscal 2024 earnings guidance, which is provided on both a GAAP
and non-GAAP adjusted1 basis:
- GAAP earnings are expected to be in the range of $2.14 to $2.24
per diluted share.
- Non-GAAP adjusted earnings1 are expected to be in the range of
$2.45 to $2.55 per diluted share.
- Our non-GAAP adjusted earnings1 guidance excludes the after-tax
impact of:
- Deal amortization expenses of approximately $29.3 million
($0.31 per diluted share).
Our guidance reflects the strength of our business and
competitive positioning, as well as our expectations for the North
American and international end markets in which we operate, which
we expect to be affected by the ongoing challenges of inflationary
trends and higher interest rates as well as a potential slow-down
in the broader economy. Beyond macroeconomic and geopolitical
uncertainty, our guidance further assumes that there are no
material adverse developments associated with wide-spread public
health concerns.
1Non-GAAP Financial Measures The Reconciliation of GAAP
to non-GAAP Measures table appearing behind the accompanying
financial information is provided to adjust reported GAAP measures,
namely operating income, other income (expense), net income before
taxes, income tax expense, net income, net income attributable to
Patterson Companies, Inc. and diluted earnings per share
attributable to Patterson Companies, Inc., for the impact of deal
amortization along with the related tax effect of this item.
The term “free cash flow” used in this release is defined as net
cash used in operating activities less capital expenditures plus
the collection of deferred purchase price receivables.
In addition, the term “internal sales” used in this release
represents net sales adjusted to exclude the impact of foreign
currency and the impact from recent acquisitions. Foreign currency
impact represents the difference in results that is attributable to
fluctuations in currency exchange rates the company uses to convert
results for all foreign entities where the functional currency is
not the U.S. dollar. The company calculates the impact as the
difference between the current period results translated using the
current period currency exchange rates and using the comparable
prior period's currency exchange rates. The company believes the
disclosure of net sales changes in constant currency provides
useful supplementary information to investors in light of
fluctuations in currency rates.
Management believes that these non-GAAP measures may provide a
helpful representation of the company's performance and enable
comparison of financial results between periods where certain items
may vary independent of business performance. These non-GAAP
financial measures are presented solely for informational and
comparative purposes and should not be regarded as a replacement
for corresponding, similarly captioned, GAAP measures.
First Quarter Conference Call and Replay Patterson
Companies’ fiscal 2024 first quarter conference call will start at
8:30 a.m. Eastern today. Investors can listen to a live webcast of
the conference call at www.pattersoncompanies.com. The conference
call will be archived on the Patterson Companies website. A replay
of the fiscal 2024 first quarter conference call can be heard for
one week at 1-800-770-2030 and by providing the Conference ID 71954
when prompted.
About Patterson Companies Inc. Patterson Companies Inc.
(Nasdaq: PDCO) connects dental and animal health customers in North
America and the U.K. to the latest products, technologies, services
and innovative business solutions that enable operational and
professional success. Our comprehensive portfolio, distribution
network and supply chain is equaled only by our dedicated,
knowledgeable people who deliver unrivalled expertise and unmatched
customer service and support.
Learn more: pattersoncompanies.com
This press release contains, and our officers and
representatives may from time to time make, certain
“forward-looking statements” within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995, including statements regarding future financial performance,
and the objectives and expectations of management. Forward-looking
statements often include words such as “believes,” “expects,”
“anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of
similar meaning, or future or conditional verbs, such as “will,”
“should,” “could” or “may.”
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding the
future of our business, future plans and strategies, projections,
anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not place undue
reliance on any of these forward-looking statements.
Any number of factors could affect our actual results and cause
such results to differ materially from those contemplated by any
forward-looking statements, including, but not limited to, the
following: wide-spread public health concerns as we experienced,
and may continue to experience, with the COVID-19 pandemic; our
dependence on suppliers to manufacture and supply substantially all
of the products we sell; potential disruption of distribution
capabilities, including service issues with third-party shippers;
our dependence on relationships with sales representatives and
service technicians to retain customers and develop business;
adverse changes in supplier rebates or other purchasing incentives;
risks of selling private label products, including the risk of
adversely affecting our relationships with suppliers; the risk of
technological and market obsolescence for the products we sell; the
risk of failing to innovate and develop new and enhanced software
and e-services products; our dependence on positive perceptions of
Patterson’s reputation; risks associated with illicit human use of
pharmaceutical products we distribute; risks inherent in acquiring
and disposing of assets or other businesses and risks inherent in
integrating acquired businesses; turnover or loss of key personnel
or highly skilled employees; risks associated with information
systems, software products and cyber-security attacks; risks
related to climate change; our ability to comply with restrictive
covenants and other limits in our credit agreement; the risk that
our governing documents and Minnesota law may discourage takeovers
and business combinations; the effects of the highly competitive
dental and animal health supply markets in which we compete; the
effects of consolidation within the dental and animal health supply
markets; exposure to the risks of the animal production business,
including changing consumer demand, the cyclical livestock market,
weather conditions, the availability of natural resources and other
factors outside our control, and the risks of the companion animal
business, including the possibility of disease adversely affecting
the pet population; exposure to the risks of the health care
industry, including changes in demand due to political, economic
and regulatory influences and other factors outside our control;
increases in over-the-counter sales and e-commerce options; risks
from the formation or expansion of GPOs, provider networks and
buying groups that may place us at a competitive disadvantage;
risks of litigation and government inquiries and investigations,
including the diversion of management’s attention, the cost of
defending against such actions, the possibility of damage awards or
settlements, fines or penalties, or equitable remedies (including
but not limited to the revocation of or non-renewal of licenses)
and inherent uncertainty; failure to comply with health care fraud
or other laws and regulations; change and uncertainty in the health
care industry; failure to comply with existing or future U.S. or
foreign laws and regulations including those governing the
distribution of pharmaceuticals and controlled substances; failure
to comply with evolving data privacy laws and regulations; tax
legislation; risks inherent in international operations, including
currency fluctuations; and uncertain macro-economic conditions,
including inflationary pressures.
The order in which these factors appear should not be construed
to indicate their relative importance or priority. We caution that
these factors may not be exhaustive, accordingly, any
forward-looking statements contained herein should not be relied
upon as a prediction of actual results.
You should carefully consider these and other relevant factors,
including those risk factors in Part I, Item 1A, (“Risk Factors”)
in our most recent Form 10-K and information which may be contained
in our other filings with the U.S. Securities and Exchange
Commission, or SEC, when reviewing any forward-looking
statement.
Investors should understand it is impossible to predict or
identify all such factors or risks. As such, you should not
consider the foregoing list, or the risks identified in our SEC
filings, to be a complete discussion of all potential risks or
uncertainties.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. We do not undertake any
obligation to release publicly any revisions to any forward-looking
statements whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
PATTERSON COMPANIES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended
July 29, 2023
July 30, 2022
Net sales
$
1,576,745
$
1,523,265
Gross profit
319,055
312,133
Operating expenses
280,833
277,289
Operating income
38,222
34,844
Other income (expense):
Other income, net
11,901
1,780
Interest expense
(9,512
)
(5,563
)
Income before taxes
40,611
31,061
Income tax expense
9,481
6,801
Net income
31,130
24,260
Net loss attributable to noncontrolling
interests
(104
)
(330
)
Net income attributable to Patterson
Companies, Inc.
$
31,234
$
24,590
Earnings per share attributable to
Patterson Companies, Inc.:
Basic
$
0.33
$
0.25
Diluted
$
0.32
$
0.25
Weighted average shares:
Basic
95,544
96,629
Diluted
96,190
97,794
Dividends declared per common share
$
0.26
$
0.26
PATTERSON COMPANIES,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
July 29, 2023
April 29, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
108,573
$
159,669
Receivables, net
408,929
477,384
Inventory
912,666
795,072
Prepaid expenses and other current
assets
341,974
351,011
Total current assets
1,772,142
1,783,136
Property and equipment, net
221,300
212,283
Operating lease right-of-use assets,
net
99,267
92,956
Goodwill and identifiable intangibles,
net
379,172
388,293
Investments
160,993
160,022
Long-term receivables, net and other
250,757
242,456
Total assets
$
2,883,631
$
2,879,146
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
717,426
$
724,993
Other accrued liabilities
228,411
250,949
Operating lease liabilities
29,910
28,390
Current maturities of long-term debt
36,000
36,000
Borrowings on revolving credit
76,000
45,000
Total current liabilities
1,087,747
1,085,332
Long-term debt
450,603
451,231
Non-current operating lease
liabilities
72,406
67,376
Other non-current liabilities
161,634
156,672
Total liabilities
1,772,390
1,760,611
Stockholders' equity
1,111,241
1,118,535
Total liabilities and stockholders'
equity
$
2,883,631
$
2,879,146
PATTERSON COMPANIES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
July 29, 2023
July 30, 2022
Operating activities:
Net income
$
31,130
$
24,260
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
21,033
20,178
Non-cash employee compensation
7,015
7,159
Non-cash losses (gains) and other, net
2,268
3,559
Change in assets and liabilities:
Receivables
(154,602
)
(171,148
)
Inventory
(114,323
)
(91,124
)
Accounts payable
(11,093
)
(22,926
)
Accrued liabilities
(21,715
)
(60,061
)
Other changes from operating activities,
net
(13,079
)
(12,436
)
Net cash used in operating activities
(253,366
)
(302,539
)
Investing activities:
Additions to property and equipment and
software
(17,087
)
(14,554
)
Collection of deferred purchase price
receivables
242,013
252,909
Payments related to acquisitions, net of
cash acquired
(1,108
)
—
Net cash provided by investing
activities
223,818
238,355
Financing activities:
Dividends paid
(25,432
)
(25,418
)
Repurchases of common stock
(29,508
)
(15,000
)
Payments on long-term debt
(750
)
—
Draw on revolving credit
31,000
116,000
Other financing activities
1,574
(2,142
)
Net cash provided by (used in) financing
activities
(23,116
)
73,440
Effect of exchange rate changes on
cash
1,568
(1,710
)
Net change in cash and cash
equivalents
(51,096
)
7,546
Cash and cash equivalents at beginning of
period
159,669
142,014
Cash and cash equivalents at end of
period
$
108,573
$
149,560
PATTERSON COMPANIES,
INC.
SALES SUMMARY
(Dollars in thousands)
(Unaudited)
July 29, 2023
July 30, 2022
Total
Sales
Growth
Foreign
Exchange
Impact
Acquisition Impact
Internal Sales
Growth
Three Months Ended
Consolidated net sales
Consumable
$
1,315,725
$
1,261,769
4.3
%
0.3
%
0.2
%
3.8
%
Equipment
163,971
173,935
(5.7
)
(0.3
)
—
(5.4
)
Value-added services and other
97,049
87,561
10.8
0.1
5.8
4.9
Total
$
1,576,745
$
1,523,265
3.5
%
0.2
%
0.5
%
2.8
%
Dental
Consumable
$
352,047
$
337,840
4.2
%
(0.4
)%
—
%
4.6
%
Equipment
137,549
146,510
(6.1
)
(0.4
)
—
(5.7
)
Value-added services and other
77,704
73,567
5.6
(0.2
)
—
5.8
Total
$
567,300
$
557,917
1.7
%
(0.4
)%
—
%
2.1
%
Animal Health
Consumable
$
963,678
$
923,929
4.3
%
0.5
%
0.3
%
3.5
%
Equipment
26,422
27,425
(3.7
)
—
—
(3.7
)
Value-added services and other
20,890
9,016
131.7
2.7
56.7
72.3
Total
$
1,010,990
$
960,370
5.3
%
0.5
%
0.8
%
4.0
%
Corporate
Value-added services and other
$
(1,545
)
$
4,978
(131.0
)%
—
%
—
%
(131.0
)%
Total
$
(1,545
)
$
4,978
(131.0
)%
—
%
—
%
(131.0
)%
PATTERSON COMPANIES,
INC.
OPERATING INCOME BY
SEGMENT
(In thousands)
(Unaudited)
Three Months Ended
July 29, 2023
July 30, 2022
Operating income (loss)
Dental
$
38,670
$
36,895
Animal Health
29,693
21,859
Corporate
(30,141
)
(23,910
)
Total
$
38,222
$
34,844
PATTERSON COMPANIES,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
(Dollars in thousands, except
per share amounts)
(Unaudited)
For the three months ended July 29,
2023
GAAP
Deal amortization
Non-GAAP
Operating income
$
38,222
$
9,626
$
47,848
Other income (expense), net
2,389
—
2,389
Income before taxes
40,611
9,626
50,237
Income tax expense
9,481
2,304
11,785
Net income
31,130
7,322
38,452
Net loss attributable to noncontrolling
interests
(104
)
—
(104
)
Net income attributable to Patterson
Companies, Inc.
$
31,234
$
7,322
$
38,556
Diluted earnings per share attributable to
Patterson Companies, Inc.*
$
0.32
$
0.08
$
0.40
Operating income as a % of sales
2.4
%
3.0
%
Effective tax rate
23.3
%
23.5
%
For the three months ended July 30,
2022
GAAP
Deal amortization
Non-GAAP
Operating income
$
34,844
$
9,351
$
44,195
Other income (expense), net
(3,783
)
—
(3,783
)
Income before taxes
31,061
9,351
40,412
Income tax expense
6,801
2,237
9,038
Net income
24,260
7,114
31,374
Net loss attributable to noncontrolling
interests
(330
)
—
(330
)
Net income attributable to Patterson
Companies, Inc.
$
24,590
$
7,114
$
31,704
Diluted earnings per share attributable to
Patterson Companies, Inc.*
$
0.25
$
0.07
$
0.32
Operating income as a % of sales
2.3
%
2.9
%
Effective tax rate
21.9
%
22.4
%
* May not sum due to rounding
PATTERSON COMPANIES,
INC.
FREE CASH FLOW
(In thousands)
(Unaudited)
Three Months Ended
July 29, 2023
July 30, 2022
Net cash used in operating activities
$
(253,366
)
$
(302,539
)
Additions to property and equipment and
software
(17,087
)
(14,554
)
Collection of deferred purchase price
receivables
242,013
252,909
Free cash flow
$
(28,440
)
$
(64,184
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230830658901/en/
INVESTORS: John M. Wright, Investor Relations TEL:
651.686.1364 EMAIL:
investor.relations@pattersoncompanies.com
MEDIA: Patterson Corporate Communications TEL:
651.905.3349 EMAIL:
corporate.communications@pattersoncompanies.com
WEB: pattersoncompanies.com
Patterson Companies (NASDAQ:PDCO)
Historical Stock Chart
From Jul 2024 to Aug 2024
Patterson Companies (NASDAQ:PDCO)
Historical Stock Chart
From Aug 2023 to Aug 2024