EX-99.1 2 d358563dex991.htm PRESS RELEASE OF PATTERSON COMPANIES, INC., DATED MAY 24, 2012 Press Release of Patterson Companies, Inc., dated May 24, 2012

Exhibit 99.1

Patterson Companies Reports Improved Fourth Quarter

And Fiscal 2012 Operating Results

St. Paul, MN—May 24, 2012— Patterson Companies, Inc. (Nasdaq: PDCO) today reported that consolidated sales totaled $936,334,000 in the fourth quarter of fiscal 2012 ended April 28, an increase of 6% from $883,819,000 in the year-earlier period. Net income of $62,143,000 or $0.58 per diluted share included incremental expense of $0.04 per diluted share related to Patterson’s Employee Stock Ownership Plan (ESOP). Excluding this ESOP-related expense, fourth quarter earnings were $0.61 per diluted share. Patterson reported earnings of $62,707,000 or $0.53 per diluted share in the fourth quarter of fiscal 2011.

For fiscal 2012, consolidated sales were $3,535,661,000 up 4% from $3,415,670,000 in fiscal 2011. The additional sales week in the first quarter of fiscal 2011, which made that year a 53-week period, negatively affected fiscal 2012 sales growth by approximately two percentage points. Net income in fiscal 2012 of $212,815,000 or $1.92 per diluted share included ESOP-related expense of $0.13 per diluted share. Excluding this expense, earnings were $2.05 per diluted share. Earnings in fiscal 2011 were $225,385,000 or $1.89 per diluted share.

Sales of Patterson Dental, Patterson’s largest business, increased 4% from the year-earlier period to $598,862,000 in the fourth quarter.

   

Sales of consumable dental supplies and printed office products increased 3% in the fourth quarter.

 

   

Sales of dental equipment and software rose more than 6% from the year-earlier level, driven by a double-digit increase in sales of CEREC dental restorative systems.

 

   

Sales of other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, increased 6% from last year’s fourth quarter.

Fourth quarter sales of the Webster Veterinary unit increased 13% to $207,500,000, with the August 2011 acquisition of American Veterinary Supply Corporation, a full-service veterinary distributor located on Long Island, accounting for approximately 2% of the unit’s sales growth. Sales of Patterson Medical, the rehabilitation supply and equipment unit, rose 3% to $129,972,000.

Scott P. Anderson, president and chief executive officer, commented: “We are encouraged by Patterson’s improved fourth quarter results as each of our three businesses operated at planned levels despite persistently soft economic conditions. Within Patterson Dental, sales of consumable supplies increased for the fourth consecutive quarter, an indication of the continued strengthening of the overall North American dental market. We also are encouraged by the solid improvement in sales of dental equipment given the fact that equipment sales were particularly robust in the year-earlier period. In addition to mid-single digit sales growth of basic equipment, we benefited from strong demand for CEREC systems from new users. We believe this reflects the growing acceptance of CAD/CAM and other new digital technologies that are enabling dentists to strengthen productivity, generate additional income and improve clinical outcomes. To capitalize upon this growing market trend, which is still at an early stage, we will continue to focus our marketing initiatives on Patterson Dental’s industry-leading offerings of technology products.”

Anderson added: “Webster’s record fourth quarter sales growth was driven by robust demand for consumable supplies, including the new combination flea-tick-heartworm medication Trifexcis®. Despite the challenging economy, pet owners are increasing expenditures on veterinary care. Through its full-service platform, which includes equipment and a new technical service capability, our companion-pet veterinary unit is positioned to capitalize upon positive pet ownership and spending trends.”


He said: “Patterson Medical’s fourth quarter performance was paced by above-plan sales of consumables in the North American market. However, this unit’s equipment business continues to be affected by the uncertainty associated with changes in the U.S. health care system. We believe the impact of this situation will likely persist in fiscal 2013. However, Patterson Medical is positioned to take maximum advantage of worldwide demographic trends fueling the growth of the rehabilitation market. Consistent with its global business strategy, Patterson Medical acquired Australian-based Surgical Synergies Pty Ltd. in April, a $10.0 million distributor of physiotherapy, rehabilitation and mobility products that strengthens our previously established position in the Australian and New Zealand rehabilitation markets.”

Patterson repurchased approximately 1.2 million common shares during the fourth quarter under its 25 million share buyback authorization that expires in 2016. For the year, 12 million shares were acquired, with approximately 11 million shares remaining available for repurchase under this authorization. In addition, Patterson’s quarterly cash dividend was increased 17% to $0.14 per share in March, 2012, bringing the annual dividend rate to $0.56 per share. Including share repurchases and quarterly dividends, Patterson returned over $400 million to its shareholders in fiscal 2012.

Patterson issued financial guidance of $2.10 to $2.16 per diluted share for fiscal 2013. The comparability between fiscal 2013 and 2012 will not be affected by the difference in the level of ESOP expense, since that item is now fully grandfathered into Patterson’s ongoing cost structure.

ESOP Expense Reconcilliation Table

Dollars in thousands, except EPS

 

     Three Months Ended      Twelve Months Ended  
     April 28, 2012      April 30, 2011      April 28, 2012      April 30, 2011  

Net Income

   $ 62,143       $ 62,707       $ 212,815       $ 225,385   

Incremental ESOP Expense

     3,496         —           13,867         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Net Income (non-GAAP)

   $ 65,639       $ 62,707       $ 226,682       $ 225,385   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted Earnings Per Share

   $ 0.58       $ 0.53       $ 1.92       $ 1.89   

Incremental ESOP expense

     0.03            0.13      
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Earnings Per Share (non-GAAP)

   $ 0.61       $ 0.53       $ 2.05       $ 1.89   
  

 

 

    

 

 

    

 

 

    

 

 

 

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.

# # #

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   

Fourth Quarter Conference Call and Replay

Patterson’s fourth 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. The conference call will be archived on Patterson’s web site. A replay of the fourth quarter conference call can be heard for one month at 1-303-590-3030 and providing the conference ID: 4538441.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     April 28,     April 30,     April 28,     April 30,  
     2012     2011     2012     2011  

Net sales

   $ 936,334      $ 883,819      $ 3,535,661      $ 3,415,670   

Gross profit

     313,721        303,949        1,162,514        1,144,225   

Operating expenses

     210,870        199,824        804,505        768,217   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     102,851        104,125        358,009        376,008   

Other expense, net

     (8,804     (5,643     (28,197     (20,121
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     94,047        98,482        329,812        355,887   

Income taxes

     31,904        35,775        116,997        130,502   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 62,143      $ 62,707      $ 212,815      $ 225,385   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.59      $ 0.53      $ 1.93      $ 1.91   

Diluted

   $ 0.58      $ 0.53      $ 1.92      $ 1.89   

Shares:

        

Basic

     105,865        117,529        110,121        118,290   

Diluted

     106,708        118,269        110,846        119,066   

Dividends declared per common share

   $ 0.14      $ 0.12      $ 0.50      $ 0.42   

Gross margin

     33.5     34.4     32.9     33.5

Operating expenses as a % of net sales

     22.5     22.6     22.8     22.5

Operating income as a % of net sales

     11.0     11.8     10.1     11.0

Effective tax rate

     33.9     36.3     35.5     36.7

 

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     April 28,      April 30,  
     2012      2011  
     (Unaudited)         

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 573,781       $ 388,665   

Receivables, net

     464,869         465,170   

Inventory

     319,952         336,094   

Prepaid expenses and other current assets

     44,911         40,780   
  

 

 

    

 

 

 

Total current assets

     1,403,513         1,230,709   

Property and equipment, net

     195,465         189,583   

Goodwill and other intangible assets

     1,022,809         1,022,832   

Investments and other

     117,581         121,844   
  

 

 

    

 

 

 

Total Assets

   $ 2,739,368       $ 2,564,968   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 207,915       $ 210,033   

Other accrued liabilities

     196,733         157,398   

Current maturities of long-term debt

     125,000         —     
  

 

 

    

 

 

 

Total current liabilities

     529,648         367,431   

Long-term debt

     725,000         525,000   

Other non-current liabilities

     109,518         111,997   
  

 

 

    

 

 

 

Total liabilities

     1,364,166         1,004,428   

Stockholders’ equity

     1,375,202         1,560,540   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 2,739,368       $ 2,564,968   
  

 

 

    

 

 

 

 

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PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     April 28,     April 30,     April 28,     April 30,  
     2012     2011     2012     2011  

Consolidated Net Sales

        

Consumable and printed products

   $ 616,487      $ 578,930      $ 2,312,309      $ 2,232,876   

Equipment and software

     243,352        232,474        930,601        900,846   

Other

     76,495        72,415        292,751        281,948   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 936,334      $ 883,819      $ 3,535,661      $ 3,415,670   
  

 

 

   

 

 

   

 

 

   

 

 

 

Dental Supply

        

Consumable and printed products

   $ 331,054      $ 320,536      $ 1,263,515      $ 1,253,224   

Equipment and software

     201,321        189,626        768,633        734,749   

Other

     66,487        62,958        255,727        248,083   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 598,862      $ 573,120      $ 2,287,875      $ 2,236,056   
  

 

 

   

 

 

   

 

 

   

 

 

 

Rehabilitation Supply

        

Consumable and printed products

   $ 90,769      $ 87,281      $ 363,004      $ 348,641   

Equipment and software

     32,107        33,045        123,649        131,776   

Other

     7,096        6,432        26,687        24,317   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 129,972      $ 126,758      $ 513,340      $ 504,734   
  

 

 

   

 

 

   

 

 

   

 

 

 

Veterinary Supply

        

Consumable and printed products

   $ 194,664      $ 171,113      $ 685,790      $ 631,011   

Equipment and software

     9,924        9,803        38,319        34,321   

Other

     2,912        3,025        10,337        9,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 207,500      $ 183,941      $ 734,446      $ 674,880   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (Expense) Income, net

        

Interest income

   $ 1,176      $ 1,082      $ 4,954      $ 8,200   

Interest expense

     (9,463     (6,341     (30,343     (25,840

Other

     (517     (384     (2,808     (2,481
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (8,804   $ (5,643   $ (28,197   $ (20,121
  

 

 

   

 

 

   

 

 

   

 

 

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Twelve Months Ended  
     April 28,     April 30,  
     2012     2011  

Operating activities:

    

Net income

   $ 212,815      $ 225,385   

Depreciation & amortization

     42,209        41,339   

Stock-based compensation

     12,615        10,481   

ESOP compensation

     756        2,128   

Change in assets and liabilities, net of acquired

     52,763        (16,721
  

 

 

   

 

 

 

Net cash provided by operating activities

     321,158        262,612   

Investing activities:

    

Additions to property and equipment, net of disposals

     (29,650     (36,822

Acquisitions and equity investments

     (22,620     (52,187
  

 

 

   

 

 

 

Net cash used in investing activities

     (52,270     (89,009

Financing activities:

    

Dividends paid

     (54,741     (49,992

Share repurchases

     (362,379     (97,153

Proceeds from issuance of long-term debt

     325,000        —     

Other financing activities

     14,061        13,923   
  

 

 

   

 

 

 

Net cash used in financing activities

     (78,059     (133,222

Effect of exchange rate changes on cash

     (5,713     7,693   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

   $ 185,116      $ 48,074