ST. PAUL, Minn.--(BUSINESS WIRE)--Patterson Companies, Inc. (Nasdaq: PDCO) today reported that consolidated sales totaled $1.1 billion (see attached Sales Summary for further details) in its fiscal fourth quarter ended April 25, 2015; 4.2 percent higher than fiscal 2014. Reported net income totaled $64.5 million, or $0.65 per diluted share, compared to $55.7 million, or $0.55 per diluted share during the same period last fiscal year. After adjusting for one-time transaction costs related to the pending acquisition of Animal Health International and the potential sale of Patterson Medical, fourth quarter fiscal 2015 earnings per diluted share were $0.68.
“Executing on our strategic plan and focusing on operational discipline enabled Patterson to close fiscal 2015 with healthy contributions from all three of our businesses,” said Scott Anderson, chairman and chief executive officer. “We are encouraged by the momentum we are seeing in all of our business units. As we work to complete the acquisition of Animal Health International and the potential sale of our Medical unit, we are confident that the transformation we are pursuing for Patterson will lead to long-term growth and success.”
Patterson Dental
Sales for Patterson Dental, which accounts
for approximately 59 percent of total sales, increased to $679.1
million, up 10.3 percent on a constant currency basis, from the
year-earlier period. Also, on a constant currency basis, sales by
category versus the prior-year quarter were as follows:
- Dental equipment and software improved 23.3 percent led by strong CEREC CAD/CAM and digital technology sales;
- Consumable dental supplies increased 3.3 percent; and
- Other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, climbed 6.0 percent.
Commented Anderson, “We are pleased with the growth and share gains in technology-oriented sales, driven by Patterson’s industry-leading sales, technical service and after-sales support. We believe that dentists’ willingness to invest in technology affirms the trend toward dental-office digitization. Our technology and expanding core dental equipment offerings, complemented by Patterson’s high-touch service, position us well to capitalize on stable-to-steadily improving market dynamics.”
Patterson Veterinary
Sales for Patterson Veterinary, the
company’s second largest business, increased to $356.0 million, or up
2.7 percent on a constant currency basis. For veterinary sales by
category, again on a constant currency basis, versus the year-ago
quarter:
- Consumable sales rose 1.7 percent;
- Equipment sales increased 31.8 percent; and
- Sales of other services and products, consisting primarily of technical service, parts and labor, and software support services, were up 2.5 percent.
Anderson continued, “Patterson Veterinary, which represented about one-third of our total sales, reported growth in the fiscal fourth quarter as we continue to transition to a new diagnostic manufacturer relationship. We believe our recently announced agreement to acquire Animal Health International will strengthen the scale and market position of Patterson Veterinary, expanding our presence in production and companion animal markets.”
On May 4, 2015, Patterson Companies announced a definitive agreement to acquire Animal Health International, Inc., a leading production animal health distribution company in the United States. This acquisition will more than double the size of Patterson's veterinary business. The combined unit will offer a range of products and services to customers in the United States, Canada and the United Kingdom.
Patterson Medical
Sales for Patterson Medical, the company’s
rehabilitation supply and equipment business, totaled $113.8 million in
the fiscal 2015 fourth quarter, up 3.7 percent, excluding currency and
prior-year divestiture impacts. Consolidated sales of Patterson Medical
currently represent approximately 10 percent of total company sales.
Anderson said, “Earlier this month, we announced the potential sale of our Medical unit. Our initiatives to improve the performance of Patterson Medical were again demonstrated as we posted sales gains for the fourth consecutive quarter. We believe that Patterson Medical will flourish under a new owner that can focus on driving growth in the rehabilitation space.”
Share Repurchases and Dividends
For the fiscal 2015 year,
Patterson repurchased approximately 1.2 million shares of its
outstanding common stock, with a value of $47.5 million, leaving
approximately 21 million shares for repurchase under the current
authorization. The company also increased its dividend in the fiscal
fourth quarter by 10 percent to $0.22 per share and paid $21.5
million in cash dividends to shareholders in the period. The company
paid $81.8 million in dividend payments for fiscal year 2015.
Full-Year Results
Consolidated sales for the full fiscal
2015 year totaled $4.4 billion, up 8.7 percent on a constant currency
basis from $4.1 billion in fiscal 2014. Adjusted net income was $226.2
million, or $2.27 per diluted share (adjusted for $0.03 per diluted
share of one-time transaction costs related to the acquisition of Animal
Health International and the potential sale of Patterson Medical),
compared to adjusted net income of $213.9 million, or $2.10 per diluted
share, in fiscal 2014 (adjusted for $0.13 per share of costs for the
Patterson Medical restructuring).
Business Outlook
Anderson concluded, “We begin fiscal 2016
with optimism and momentum. Our previously announced agreement to
acquire Animal Health International, along with the potential
divestiture of our Medical unit, have the potential to transform
Patterson Companies and our growth profile. As we move into the new
fiscal year, we are encouraged by the stable-to-strengthening demand
across all of our businesses. We are establishing our adjusted fiscal
2016 earnings guidance in the range of $2.40-$2.50 per diluted share.”
The fiscal 2016 annual financial outlook and adjusted earnings guidance:
- Assumes stable North American and international markets – conditions similar to fiscal 2015
- Includes the impact of an extra week in fiscal 2016 compared to the previous year
-
Excludes the following:
- Approximately $0.05 of one-time training costs related to the company’s enterprise resource planning implementation
- The impact from additional share repurchases that may occur
- The impact of the Animal Health International acquisition and potential Medical divestiture
Fourth Quarter and Full Fiscal Year Reconciliation
The
following non-GAAP table is provided to adjust reported net income for
the impact of the costs associated with restructuring the medical
segment and one-time transaction costs related to the pending
acquisition of Animal Health International and the potential sale of
Patterson Medical. Management believes that the adjusted income amounts
provide a helpful representation of the company’s current quarter
performance.
| (Dollars in thousands, except EPS) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| April 25, 2015 | April 26, 2014 | April 25, 2015 | April 26, 2014 | |||||||||||||
| Net Income - reported | $ | 64,518 | $ | 55,670 | $ | 223,261 | $ | 200,612 | ||||||||
| Restructuring costs | - | 5,701 | - | 13,267 | ||||||||||||
| One-time transaction costs | 2,894 | - | 2,894 | - | ||||||||||||
| Net Income - adjusted | $ | 67,412 | $ | 61,371 | $ | 226,155 | $ | 213,879 | ||||||||
| Diluted Earnings Per Share - reported | $ | 0.65 | $ | 0.55 | $ | 2.24 | $ | 1.97 | ||||||||
| Restructuring costs | - | 0.06 | - | 0.13 | ||||||||||||
| One-time transaction costs | 0.03 | - | 0.03 | - | ||||||||||||
| Diluted Earnings Per Share - adjusted | $ | 0.68 | $ | 0.61 | $ | 2.27 | $ | 2.10 | ||||||||
Fourth Quarter Conference Call and Replay
Patterson’s fourth
quarter earnings conference call will start at 10 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 Patterson’s website. A replay of
the fourth quarter conference call can be heard for one week at
888-203-1112 and by providing the Conference ID 1982881, when prompted.
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
Patterson Veterinary is a leading distributor in the
U.S. and U.K. of consumable veterinary supplies, equipment and software,
diagnostic products, vaccines and pharmaceuticals predominantly 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. Any statements made in this press release about the Company’s future financial conditions, results of operations, expectations, plans, or prospects, including the information under the heading “Business Outlook”, constitute forward-looking statements. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," “projects,” “should,” "targets" and/or similar expressions. These forward-looking statements are based on the Company’s current estimates and assumptions and, as such, involve uncertainty and risk. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those contemplated by the forward-looking statements because of a number of factors, including the factors described in Item 1A of the Company’s most recent Annual Report on Form 10-K, which factors are incorporated herein by reference. Any forward-looking statement in this release speaks only as of the date in which it is made. Except to the extent required under the federal securities laws, the Company does not intend to update or revise the forward-looking statements.
| PATTERSON COMPANIES, INC. | ||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
| April 25, | April 26, | April 25, | April 26, | |||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
| Net sales | $ | 1,148,854 | $ | 1,102,077 | $ | 4,375,020 | $ | 4,063,715 | ||||||||||||||||
| Gross profit | 333,600 | 315,868 | 1,238,206 | 1,198,278 | ||||||||||||||||||||
| Operating expenses | 226,904 | 223,267 | 864,779 | 852,522 | ||||||||||||||||||||
| Operating income | 106,696 | 92,601 | 373,427 | 345,756 | ||||||||||||||||||||
| Other expense, net | (7,511 | ) | (7,479 | ) | (30,756 | ) | (32,844 | ) | ||||||||||||||||
| Income before taxes | 99,185 | 85,122 | 342,671 | 312,912 | ||||||||||||||||||||
| Income taxes | 34,667 | 29,452 | 119,410 | 112,300 | ||||||||||||||||||||
| Net income | $ | 64,518 | $ | 55,670 | $ | 223,261 | $ | 200,612 | ||||||||||||||||
| Earnings per share: | ||||||||||||||||||||||||
| Basic | $ | 0.65 | $ | 0.56 | $ | 2.26 | $ | 1.99 | ||||||||||||||||
| Diluted | $ | 0.65 | $ | 0.55 | $ | 2.24 | $ | 1.97 | ||||||||||||||||
| Shares: | ||||||||||||||||||||||||
| Basic | 98,981 | 99,707 | 98,989 | 100,727 | ||||||||||||||||||||
| Diluted | 99,677 | 100,684 | 99,694 | 101,643 | ||||||||||||||||||||
| Dividends declared per common share | $ | 0.22 | $ | 0.20 | $ | 0.82 | $ | 0.68 | ||||||||||||||||
| Gross margin - adjusted | 29.0 | % | 28.7 | % | 32.2 | % | 32.2 | % | ||||||||||||||||
| NVS | - | - | (3.9 | ) | (2.6 | ) | ||||||||||||||||||
| Medical restructuring | - | - | - | (0.1 | ) | |||||||||||||||||||
| Gross margin - reported | 29.0 | % | 28.7 | % | 28.3 | % | 29.5 | % | ||||||||||||||||
| Operating expenses as a % of net sales - adjusted | 19.3 | % | 19.7 | % | 22.5 | % | 22.6 | % | ||||||||||||||||
| NVS | - | - | (2.8 | ) | (1.9 | ) | ||||||||||||||||||
| One-time transaction costs | 0.4 | - | 0.1 | - | ||||||||||||||||||||
| Medical restructuring | - | 0.6 | - | 0.3 | ||||||||||||||||||||
| Operating expenses as a % of net sales - reported | 19.7 | % | 20.3 | % | 19.8 | % | 21.0 | % | ||||||||||||||||
| Operating income as a % of net sales - adjusted | 9.7 | % | 9.0 | % | 9.7 | % | 9.6 | % | ||||||||||||||||
| NVS | - | - | (1.1 | ) | (0.7 | ) | ||||||||||||||||||
| One-time transaction costs | (0.4 | ) | - | (0.1 | ) | - | ||||||||||||||||||
| Medical restructuring | - | (0.6 | ) | - | (0.4 | ) | ||||||||||||||||||
| Operating income as a % of net sales - reported | 9.3 | % | 8.4 | % | 8.5 | % | 8.5 | % | ||||||||||||||||
| Effective tax rate - adjusted | 35.1 | % | 33.7 | % | 35.2 | % | 35.2 | % | ||||||||||||||||
| NVS | - | - | (0.4 | ) | (0.3 | ) | ||||||||||||||||||
| One-time transaction costs | (0.1 | ) | - | - | - | |||||||||||||||||||
| Medical restructuring | - | 0.9 | - | 1.0 | ||||||||||||||||||||
| Effective tax rate - reported | 35.0 | % | 34.6 | % | 34.8 | % | 35.9 | % | ||||||||||||||||
| PATTERSON COMPANIES, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| April 25, | April 26, | |||||||
| 2015 | 2014 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and short-term investments | $ | 400,632 | $ | 305,683 | ||||
| Receivables | 644,139 | 607,580 | ||||||
| Inventory | 456,687 | 436,463 | ||||||
| Prepaid expenses and other current assets | 71,767 | 65,991 | ||||||
| Total current assets | 1,573,225 | 1,415,717 | ||||||
| Property and equipment, net | 226,805 | 204,939 | ||||||
| Goodwill and other intangible assets | 1,036,928 | 1,067,583 | ||||||
| Investments and other | 110,748 | 176,438 | ||||||
| Total assets | $ | 2,947,706 | $ | 2,864,677 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 349,635 | $ | 342,056 | ||||
| Other accrued liabilities | 228,050 | 201,407 | ||||||
| Total current liabilities | 577,685 | 543,463 | ||||||
| Long-term debt | 725,000 | 725,000 | ||||||
| Other non-current liabilities | 130,898 | 124,550 | ||||||
| Total liabilities | 1,433,583 | 1,393,013 | ||||||
| Stockholders' equity | 1,514,123 | 1,471,664 | ||||||
| Total liabilities and stockholders' equity | $ | 2,947,706 | $ | 2,864,677 | ||||
| PATTERSON COMPANIES, INC. | |||||||||||||||||||||||
| SALES SUMMARY | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Total | Foreign | Constant | |||||||||||||||||||||
| April 25, | April 26, | Sales | Exchange | Currency | |||||||||||||||||||
| 2015 | 2014 | Growth | Impact | Growth | |||||||||||||||||||
|
Three Months Ended |
|||||||||||||||||||||||
| Consolidated net sales | |||||||||||||||||||||||
| Consumable and printed products1 | $ | 770,282 | $ | 774,286 | (0.5 | ) | % | (2.8 | ) | % | 2.3 | % | |||||||||||
| Equipment and software1 | 292,414 | 244,367 | 19.7 | (1.8 | ) | 21.5 | |||||||||||||||||
| Other | 86,158 | 83,424 | 3.3 | (1.4 | ) | 4.7 | |||||||||||||||||
| Total | $ | 1,148,854 | $ | 1,102,077 | 4.2 | % | (2.5 | ) | % | 6.7 | % | ||||||||||||
| Dental supply | |||||||||||||||||||||||
| Consumable and printed products1 | $ | 353,597 | $ | 345,932 | 2.2 | % | (1.1 | ) | % | 3.3 | % | ||||||||||||
| Equipment and software1 | 252,859 | 207,750 | 21.7 | (1.6 | ) | 23.3 | |||||||||||||||||
| Other | 72,624 | 69,166 | 5.0 | (1.0 | ) | 6.0 | |||||||||||||||||
| Total | $ | 679,080 | $ | 622,848 | 9.0 | % | (1.3 | ) | % | 10.3 | % | ||||||||||||
| Veterinary supply | |||||||||||||||||||||||
| Consumable and printed products | $ | 332,915 | $ | 342,294 | (2.7 | ) | % | (4.4 | ) | % | 1.7 | % | |||||||||||
| Equipment and software | 15,504 | 11,777 | 31.6 | (0.2 | ) | 31.8 | |||||||||||||||||
| Other | 7,562 | 7,768 | (2.7 | ) | (5.2 | ) | 2.5 | ||||||||||||||||
| Total | $ | 355,981 | $ | 361,839 | (1.6 | ) | % | (4.3 | ) | % | 2.7 | % | |||||||||||
| Rehabilitation supply | |||||||||||||||||||||||
| Consumable and printed products | $ | 83,769 | $ | 86,060 | (2.7 | ) | % | (3.1 | ) | % | 0.4 | % | |||||||||||
| Equipment and software | 24,052 | 24,840 | (3.2 | ) | (4.0 | ) | 0.8 | ||||||||||||||||
| Other | 5,972 | 6,490 | (8.0 | ) | (1.6 | ) | (6.4 | ) | |||||||||||||||
| Total | $ | 113,793 | $ | 117,390 | (3.1 | ) | % | (3.2 | ) | % | 0.1 | % | |||||||||||
|
Twelve Months Ended |
|||||||||||||||||||||||
| Consolidated net sales | |||||||||||||||||||||||
| Consumable and printed products1 | $ | 3,083,113 | $ | 2,810,491 | 9.7 | % | (1.1 | ) | % | 10.8 | % | ||||||||||||
| Equipment and software1 | 958,067 | 940,088 | 1.9 | (0.9 | ) | 2.8 | |||||||||||||||||
| Other | 333,840 | 313,136 | 6.6 | (0.7 | ) | 7.3 | |||||||||||||||||
| Total | $ | 4,375,020 | $ | 4,063,715 | 7.7 | % | (1.0 | ) | % | 8.7 | % | ||||||||||||
| Dental supply | |||||||||||||||||||||||
| Consumable and printed products1 | $ | 1,355,982 | $ | 1,323,378 | 2.5 | % | (0.8 | ) | % | 3.3 | % | ||||||||||||
| Equipment and software1 | 818,342 | 795,132 | 2.9 | (0.9 | ) | 3.8 | |||||||||||||||||
| Other | 279,971 | 263,586 | 6.2 | (0.7 | ) | 6.9 | |||||||||||||||||
| Total | $ | 2,454,295 | $ | 2,382,096 | 3.0 | % | (0.8 | ) | % | 3.8 | % | ||||||||||||
| Veterinary supply | |||||||||||||||||||||||
| Consumable and printed products | $ | 1,380,427 | $ | 1,134,932 | 21.6 | % | (1.6 | ) | % | 23.2 | % | ||||||||||||
| Equipment and software | 46,671 | 44,020 | 6.0 | (0.1 | ) | 6.1 | |||||||||||||||||
| Other | 29,472 | 24,093 | 22.3 | (1.9 | ) | 24.2 | |||||||||||||||||
| Total | $ | 1,456,570 | $ | 1,203,045 | 21.1 | % | (1.5 | ) | % | 22.6 | % | ||||||||||||
| Rehabilitation supply | |||||||||||||||||||||||
| Consumable and printed products | $ | 346,704 | $ | 352,181 | (1.6 | ) | % | (0.5 | ) | % | (1.1 | ) | % | ||||||||||
| Equipment and software | 93,054 | 100,936 | (7.8 | ) | (1.3 | ) | (6.5 | ) | |||||||||||||||
| Other | 24,397 | 25,457 | (4.2 | ) | (0.4 | ) | (3.8 | ) | |||||||||||||||
| Total | $ | 464,155 | $ | 478,574 | (3.0 | ) | % | (0.7 | ) | % | (2.3 | ) | % | ||||||||||
|
1 Certain products were reclassed from equipment to consumables in current and prior periods |
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PATTERSON COMPANIES, INC. |
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|
SUPPLEMENTARY FINANCIAL DATA |
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|
(In thousands) |
||||||||||||||||||||
|
(Unaudited) |
||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| April 25, | April 26, | April 25, | April 26, | |||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Operating income | ||||||||||||||||||||
| Dental supply | $ | 70,637 | $ | 67,292 | $ | 249,575 | $ | 249,138 | ||||||||||||
| Veterinary supply | 16,483 | 16,680 | 56,670 | 49,855 | ||||||||||||||||
| Rehabilitation supply | 19,576 | 8,629 | 67,182 | 46,763 | ||||||||||||||||
| $ | 106,696 | $ | 92,601 | $ | 373,427 | $ | 345,756 | |||||||||||||
| Other (expense) income, net | ||||||||||||||||||||
| Interest income | $ | 952 | $ | 1,090 | $ | 4,864 | $ | 4,982 | ||||||||||||
| Interest expense | (7,868 | ) | (9,132 | ) | (33,693 | ) | (35,713 | ) | ||||||||||||
| Other | (595 | ) | 563 | (1,927 | ) | (2,113 | ) | |||||||||||||
| $ | (7,511 | ) | $ | (7,479 | ) | $ | (30,756 | ) | $ | (32,844 | ) | |||||||||
| PATTERSON COMPANIES, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Twelve Months Ended | ||||||||||
| April 25, | April 26, | |||||||||
| 2015 | 2014 | |||||||||
| Operating activities: | ||||||||||
| Net income | $ | 223,261 | $ | 200,612 | ||||||
| Depreciation & amortization | 51,330 | 49,986 | ||||||||
| Non-cash employee based compensation | 26,485 | 20,018 | ||||||||
| Change in assets and liabilities, net of acquired | (38,385 | ) | (74,780 | ) | ||||||
| Net cash provided by operating activities | 262,691 | 195,836 | ||||||||
| Investing activities: | ||||||||||
| Additions to property and equipment, net of disposals | (62,945 | ) | (40,387 | ) | ||||||
| Acquisitions and equity investments | (10,515 | ) | (145,815 | ) | ||||||
| Proceeds from sale | 46,369 | 6,546 | ||||||||
| Purchase of investments | (543 | ) | (99,672 | ) | ||||||
| Other investing activity | 18,035 | (4,436 | ) | |||||||
| Net cash used in investing activities | (9,599 | ) | (283,764 | ) | ||||||
| Financing activities: | ||||||||||
| Dividends paid | (81,760 | ) | (85,657 | ) | ||||||
| Share repurchases | (47,539 | ) | (96,486 | ) | ||||||
| Payment on revolver | (130,000 | ) | (135,000 | ) | ||||||
| Draw on revolver | 130,000 | 135,000 | ||||||||
| Settlement of swap | (29,003 | ) | - | |||||||
| Retirement of long-term debt | (250,000 | ) | - | |||||||
| Proceeds from issuance of long-term debt | 250,000 | - | ||||||||
| Other financing activities | 7,367 | 21,942 | ||||||||
| Net cash used in financing activities | (150,935 | ) | (160,201 | ) | ||||||
| Effect of exchange rate changes on cash | (19,805 | ) | 7,809 | |||||||
| Net increase (decrease) in cash and cash equivalents | $ | 82,352 | $ | (240,320 | ) | |||||
