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Patterson Companies Reports Fiscal 2024 Third Quarter Operating Results

  • Third quarter reported net sales increased 1.0 percent year-over-year to $1.62 billion.
  • Internal sales increased 0.3 percent year-over-year, driven by dental consumables growth of 6.3 percent; excluding certain infection control products, internal sales of dental consumables increased 7.2 percent year-over-year.
  • Delivered third quarter GAAP earnings of $0.52 per diluted share and adjusted earnings of $0.59 per diluted share.
  • Returned $148.8 million to shareholders through dividends and share repurchases.
  • Revises fiscal 2024 GAAP earnings guidance to $1.99 to $2.04 per diluted share and adjusted earnings1 guidance to $2.30 to $2.35 per diluted share.

ST. PAUL, Minn.--(BUSINESS WIRE)--Patterson Companies, Inc. (Nasdaq: PDCO) today reported operating results for its fiscal 2024 third quarter ended January 27, 2024.

“Patterson navigated a dynamic environment during our fiscal third quarter to deliver sales growth and gross margin expansion”

“Patterson navigated a dynamic environment during our fiscal third quarter to deliver sales growth and gross margin expansion,” said Don Zurbay, President and CEO of Patterson Companies. “Our dental consumables and production animal businesses both continued to generate above-market sales growth, demonstrating the deep, differentiated value proposition we provide customers across the markets we serve.

“We have revised our guidance to reflect current expectations for the fourth quarter, including continued headwinds in the dental equipment market. During the fiscal third quarter, we remained focused on enhancing our long-term performance, including strategic investments in our capabilities and additional actions to enhance profitability. Our continued commitment to return capital to shareholders – including nearly $150 million during the fiscal third quarter – further underscores our confidence in the resilience of our end markets and Patterson’s value creation potential.”

Third Quarter Fiscal 2024 Results

Consolidated net sales were $1.62 billion (see attached Sales Summary for further details), an increase of 1.0 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation, contributions from recent acquisitions and the net impact of an interest rate swap, increased 0.3 percent over the prior year period.

Reported net income attributable to Patterson Companies, Inc. for the third quarter of fiscal 2024 was $47.7 million, or $0.52 per diluted share, compared to $53.9 million, or $0.55 per diluted share, in the third quarter of fiscal 2023. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization, totaled $55.0 million for the third quarter of fiscal 2024, or $0.59 per diluted share, compared to $61.1 million, or $0.62 per diluted share, in the third quarter of fiscal 2023. The year-over-year decrease in reported and adjusted net income attributable to Patterson Companies, Inc. in the third quarter of fiscal 2024 was primarily due to lower sales of dental equipment and increased operating expenses compared to the prior year period.

Patterson Dental

Reported net sales in the Dental segment for the third quarter of fiscal 2024 were $637.1 million. Internal sales increased 2.5 percent compared to the fiscal 2023 third quarter. Internal sales of consumables increased 6.3 percent year-over-year. Excluding the deflationary impact of certain infection control products, internal sales of consumables increased 7.2 percent year-over-year. Compared to the prior year period, internal sales of equipment decreased 2.4 percent and internal sales of value-added services decreased 0.2 percent.

Patterson Animal Health

Reported net sales in the Animal Health segment for the third quarter of fiscal 2024 were $967.3 million. Internal sales decreased 1.5 percent year-over-year as positive growth in the production animal business was more than offset by reduced sales in the companion animal business. Within the Animal Health segment, internal sales of consumables decreased 2.0 percent, internal sales of equipment decreased 5.9 percent and internal sales of value-added services increased 44.2 percent.

Balance Sheet and Capital Allocation

During the first nine months of fiscal 2024, Patterson Companies used $719.8 million of cash from operating activities and collected deferred purchase price receivables of $770.3 million, generating $50.5 million in cash, compared to generating $29.8 million in the prior year period. Free cash flow1 (see definition below and attached free cash flow table) during the first nine months of fiscal 2024 improved by $11.9 million compared to the first nine months of fiscal 2023 due to a decreased level of working capital during the first nine months of fiscal 2024.

In the third quarter of fiscal 2024, Patterson declared a quarterly cash dividend of $0.26 per share, returning $24.7 million in cash dividends to shareholders. Also, under an existing share repurchase authorization, the company repurchased approximately $124.1 million of shares during the third quarter of fiscal 2024. Through the first nine months of fiscal 2024, Patterson Companies returned $289.6 million to shareholders in the form of cash dividends and share repurchases. At the end of the third quarter of fiscal 2024, Patterson had approximately $195 million of share repurchase authority remaining on its current share repurchase authorization.

Year-to-Date Results

Consolidated reported net sales for the first nine months of fiscal 2024 totaled $4.85 billion, a 2.0 percent year-over-year increase. Internal sales for the first nine months of fiscal 2024, which are adjusted for the effects of currency translation, contributions from recent acquisitions and the net impact of an interest rate swap, increased 1.2 percent year-over-year. Through the first nine months of fiscal 2024, Dental segment internal sales increased 1.4 percent, including a 4.6 percent increase in consumables, a 4.7 percent decline in equipment and a 2.9 percent increase in value-added services. Through the first nine months of fiscal 2024, Animal Health segment internal sales increased 0.8 percent, including 0.3 percent growth in consumables, a 3.0 percent decline in equipment and a 59.5 percent increase in value-added services.

Reported net income attributable to Patterson Companies, Inc. was $118.9 million, or $1.26 per diluted share, compared to $132.6 million, or $1.35 per diluted share in last year's period. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization, totaled $140.9 million, or $1.49 per diluted share, compared to $154.0 million, or $1.57 per diluted share, in the year-ago period.

Fiscal 2024 Guidance

Patterson Companies today revised 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 $1.99 to $2.04 per diluted share.
  • Non-GAAP adjusted earnings1 are expected to be in the range of $2.30 to $2.35 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 and additional 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 term “internal sales” used in this release represents net sales adjusted for the effects of currency translation, contributions from recent acquisitions and the net impact of an interest rate swap. 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 excluding the impact of foreign currency, an interest rate swap and recent acquisitions provides useful supplementary information to investors in light of fluctuations in these variables that are independent of our period-over-period performance.

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.

The Reconciliation of GAAP to non-GAAP Measures table appearing behind the accompanying financial information is provided to adjust reported GAAP measures, namely net sales, gross profit, operating expenses, operating income, other income (expense), net, income before taxes, income tax expense, net income, net loss attributable to noncontrolling interests, net income attributable to Patterson Companies, Inc., and diluted earnings per share attributable to Patterson Companies, Inc. for the impact of deal amortization and an interest rate swap along with any related tax effects of these items.

  • Deal amortization represents non-cash intangible amortization expense, primarily related to the acquisition of Animal Health International.
  • Interest rate swap -- Our customer financing net sales include the impact of changes in interest rates on deferred purchase price receivables, as the average interest rate in our contract portfolio may not fluctuate at the same rate as interest rate markets, resulting in an increase or reduction of gain on contract sales.

    We enter into an interest rate swap to hedge a portion of the related interest rate risk. These agreements do not qualify for hedge accounting, and the gains or losses on an interest rate swap are reported in other income and expense in our condensed consolidated statements of operation and other comprehensive income.

    We present a non-GAAP adjustment to reclassify the mark-to-market adjustment on the interest rate swap from other income (expense) to net sales to align the swap impact with the impact on customer financing net sales. We believe adjusted net sales, adjusted gross profit and adjusted operating income, which include the gains and losses on the interest rate swap, provides additional comparability from period to period because they present the impact of interest rate fluctuations, net of the mark-to-market swap adjustment, within adjusted net sales. We note the net impact of interest rate fluctuations has a minimal impact on net income.

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.

Third Quarter Conference Call and Replay

Patterson Companies’ fiscal 2024 third 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 third quarter conference call can be heard for one week at 1-800-770-2030 and by providing the Conference ID 67281 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

 

Nine Months Ended

 

January 27,
2024

 

January 28,
2023

 

January 27,
2024

 

January 28,
2023

 

 

 

 

 

 

 

 

Net sales

$

1,616,095

 

 

$

1,600,850

 

 

$

4,845,612

 

 

$

4,750,319

 

 

 

 

 

 

 

 

 

Gross profit

 

351,006

 

 

 

342,962

 

 

 

1,009,087

 

 

 

983,184

 

 

 

 

 

 

 

 

 

Operating expenses

 

280,994

 

 

 

267,040

 

 

 

843,950

 

 

 

812,323

 

 

 

 

 

 

 

 

 

Operating income

 

70,012

 

 

 

75,922

 

 

 

165,137

 

 

 

170,861

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Other income, net

 

3,653

 

 

 

3,096

 

 

 

22,650

 

 

 

23,079

 

Interest expense

 

(11,725

)

 

 

(9,731

)

 

 

(31,879

)

 

 

(22,838

)

 

 

 

 

 

 

 

 

Income before taxes

 

61,940

 

 

 

69,287

 

 

 

155,908

 

 

 

171,102

 

 

 

 

 

 

 

 

 

Income tax expense

 

14,347

 

 

 

15,440

 

 

 

37,330

 

 

 

39,346

 

 

 

 

 

 

 

 

 

Net income

 

47,593

 

 

 

53,847

 

 

 

118,578

 

 

 

131,756

 

Net loss attributable to noncontrolling interests

 

(110

)

 

 

(82

)

 

 

(317

)

 

 

(836

)

Net income attributable to Patterson Companies, Inc.

$

47,703

 

 

$

53,929

 

 

$

118,895

 

 

$

132,592

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Patterson Companies, Inc.:

 

 

 

 

 

 

 

Basic

$

0.52

 

 

$

0.55

 

 

$

1.26

 

 

$

1.37

 

Diluted

$

0.52

 

 

$

0.55

 

 

$

1.26

 

 

$

1.35

 

 

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

 

 

Basic

 

92,009

 

 

 

97,327

 

 

 

94,088

 

 

 

96,957

 

Diluted

 

92,519

 

 

 

97,977

 

 

 

94,704

 

 

 

97,881

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.26

 

 

$

0.26

 

 

$

0.78

 

 

$

0.78

 

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

January 27, 2024

 

April 29, 2023

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

123,998

 

$

159,669

Receivables, net

 

484,530

 

 

477,384

Inventory

 

902,733

 

 

795,072

Prepaid expenses and other current assets

 

321,302

 

 

351,011

Total current assets

 

1,832,563

 

 

1,783,136

Property and equipment, net

 

226,013

 

 

212,283

Operating lease right-of-use assets, net

 

108,506

 

 

92,956

Goodwill and identifiable intangibles, net

 

359,593

 

 

388,293

Investments

 

164,459

 

 

160,022

Long-term receivables, net and other

 

248,815

 

 

242,456

Total assets

$

2,939,949

 

$

2,879,146

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

683,300

 

$

724,993

Other accrued liabilities

 

234,151

 

 

250,949

Operating lease liabilities

 

31,137

 

 

28,390

Current maturities of long-term debt

 

4,125

 

 

36,000

Borrowings on revolving credit

 

331,000

 

 

45,000

Total current liabilities

 

1,283,713

 

 

1,085,332

Long-term debt

 

448,219

 

 

451,231

Non-current operating lease liabilities

 

80,499

 

 

67,376

Other non-current liabilities

 

155,353

 

 

156,672

Total liabilities

 

1,967,784

 

 

1,760,611

Stockholders' equity

 

972,165

 

 

1,118,535

Total liabilities and stockholders' equity

$

2,939,949

 

$

2,879,146

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

 

January 27,
2024

 

January 28,
2023

 

 

 

 

Operating activities:

 

 

 

Net income

$

118,578

 

 

$

131,756

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

65,198

 

 

 

62,298

 

Non-cash employee compensation

 

15,395

 

 

 

11,349

 

Non-cash losses (gains) and other, net

 

4,120

 

 

 

7,227

 

Change in assets and liabilities:

 

 

 

Receivables

 

(744,275

)

 

 

(729,039

)

Inventory

 

(106,328

)

 

 

(155,184

)

Accounts payable

 

(43,533

)

 

 

20,947

 

Accrued liabilities

 

(14,510

)

 

 

(40,909

)

Other changes from operating activities, net

 

(14,494

)

 

 

(36,642

)

Net cash used in operating activities

 

(719,849

)

 

 

(728,197

)

Investing activities:

 

 

 

Additions to property and equipment and software

 

(51,196

)

 

 

(42,442

)

Collection of deferred purchase price receivables

 

770,319

 

 

 

758,001

 

Payments related to acquisitions, net of cash acquired

 

(1,108

)

 

 

(33,257

)

Payments related to investments

 

 

 

 

(15,000

)

Net cash provided by investing activities

 

718,015

 

 

 

667,302

 

Financing activities:

 

 

 

Dividends paid

 

(75,021

)

 

 

(75,954

)

Repurchases of common stock

 

(214,587

)

 

 

(15,000

)

Payments on long-term debt

 

(35,250

)

 

 

 

Draw on revolving credit

 

286,000

 

 

 

146,000

 

Other financing activities

 

4,767

 

 

 

12,866

 

Net cash provided by (used in) financing activities

 

(34,091

)

 

 

67,912

 

Effect of exchange rate changes on cash

 

254

 

 

 

(1,741

)

Net change in cash and cash equivalents

 

(35,671

)

 

 

5,276

 

Cash and cash equivalents at beginning of period

 

159,669

 

 

 

142,014

 

Cash and cash equivalents at end of period

$

123,998

 

 

$

147,290

 

 

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

 

 

January 27,
2024

 

January 28,
2023

 

Total
Sales
Growth

 

Foreign
Exchange
Impact

 

Net
Interest
Rate
Swap

 

Acquisition
Impact

 

Internal
Sales
Growth

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

1,262,290

 

$

1,250,859

 

0.9

%

 

0.6

%

 

%

 

0.1

%

 

0.2

%

Equipment

 

245,262

 

 

252,671

 

(2.9

)

 

 

 

 

 

 

 

(2.9

)

Value-added services and other

 

108,543

 

 

97,320

 

11.5

 

 

0.4

 

 

(1.7

)

 

3.4

 

 

9.4

 

Total

$

1,616,095

 

$

1,600,850

 

1.0

%

 

0.5

%

 

(0.1

)%

 

0.3

%

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

350,953

 

$

330,199

 

6.3

%

 

%

 

%

 

%

 

6.3

%

Equipment

 

211,352

 

 

216,642

 

(2.4

)

 

 

 

 

 

 

 

(2.4

)

Value-added services and other

 

74,832

 

 

74,955

 

(0.2

)

 

 

 

 

 

 

 

(0.2

)

Total

$

637,137

 

$

621,796

 

2.5

%

 

%

 

%

 

%

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Animal Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

911,337

 

$

920,660

 

(1.0

)%

 

0.8

%

 

%

 

0.2

%

 

(2.0

)%

Equipment

 

33,910

 

 

36,029

 

(5.9

)

 

 

 

 

 

 

 

(5.9

)

Value-added services and other

 

22,030

 

 

12,689

 

73.6

 

 

3.0

 

 

 

 

26.4

 

 

44.2

 

Total

$

967,277

 

$

969,378

 

(0.2

)%

 

0.8

%

 

%

 

0.5

%

 

(1.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

Value-added services and other

$

11,681

 

$

9,676

 

20.7

%

 

%

 

(16.8

)%

 

%

 

37.5

%

Total

$

11,681

 

$

9,676

 

20.7

%

 

%

 

(16.8

)%

 

%

 

37.5

%

 

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

 

 

January 27,
2024

 

January 28,
2023

 

Total
Sales
Growth

 

Foreign
Exchange
Impact

 

Net
Interest
Rate
Swap

 

Acquisition
Impact

 

Internal
Sales
Growth

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

3,897,378

 

$

3,813,884

 

2.2

%

 

0.6

%

 

%

 

0.2

%

 

1.4

%

Equipment

 

639,526

 

 

670,502

 

(4.6

)

 

(0.1

)

 

 

 

 

 

(4.5

)

Value-added services and other

 

308,708

 

 

265,933

 

16.1

 

 

0.4

 

 

(1.2

)

 

5.2

 

 

11.7

 

Total

$

4,845,612

 

$

4,750,319

 

2.0

%

 

0.5

%

 

(0.1

)%

 

0.4

%

 

1.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

1,049,492

 

$

1,005,528

 

4.4

%

 

(0.2

)%

 

%

 

%

 

4.6

%

Equipment

 

549,028

 

 

577,158

 

(4.9

)

 

(0.2

)

 

 

 

 

 

(4.7

)

Value-added services and other

 

232,298

 

 

225,950

 

2.8

 

 

(0.1

)

 

 

 

 

 

2.9

 

Total

$

1,830,818

 

$

1,808,636

 

1.2

%

 

(0.2

)%

 

%

 

%

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Animal Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

$

2,847,886

 

$

2,808,356

 

1.4

%

 

0.9

%

 

%

 

0.2

%

 

0.3

%

Equipment

 

90,498

 

 

93,344

 

(3.0

)

 

 

 

 

 

 

 

(3.0

)

Value-added services and other

 

64,505

 

 

31,044

 

107.8

 

 

4.0

 

 

 

 

44.3

 

 

59.5

 

Total

$

3,002,889

 

$

2,932,744

 

2.4

%

 

0.9

%

 

%

 

0.7

%

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

Value-added services and other

$

11,905

 

$

8,939

 

33.2

%

 

%

 

(35.7

)%

 

%

 

68.9

%

Total

$

11,905

 

$

8,939

 

33.2

%

 

%

 

(35.7

)%

 

%

 

68.9

%

 

PATTERSON COMPANIES, INC.

OPERATING INCOME BY SEGMENT

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

January 27,
2024

 

January 28,
2023

 

January 27,
2024

 

January 28,
2023

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

Dental

$

53,630

 

 

$

60,302

 

 

$

147,577

 

 

$

158,147

 

Animal Health

 

32,104

 

 

 

30,197

 

 

 

88,143

 

 

 

80,372

 

Corporate

 

(15,722

)

 

 

(14,577

)

 

 

(70,583

)

 

 

(67,658

)

Total

$

70,012

 

 

$

75,922

 

 

$

165,137

 

 

$

170,861

 

 

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

 

For the three months ended January 27, 2024

 

GAAP

 

Deal
amortization

 

Interest rate
swap

 

Non-GAAP

Net sales

 

$

1,616,095

 

 

$

 

 

$

(3,474

)

 

$

1,612,621

 

Gross profit

 

 

351,006

 

 

 

 

 

 

(3,474

)

 

 

347,532

 

Operating expenses

 

 

280,994

 

 

 

(9,630

)

 

 

 

 

 

271,364

 

Operating income

 

 

70,012

 

 

 

9,630

 

 

 

(3,474

)

 

 

76,168

 

Other income (expense), net

 

 

(8,072

)

 

 

 

 

 

3,474

 

 

 

(4,598

)

Income before taxes

 

 

61,940

 

 

 

9,630

 

 

 

 

 

 

71,570

 

Income tax expense

 

 

14,347

 

 

 

2,304

 

 

 

 

 

 

16,651

 

Net income

 

 

47,593

 

 

 

7,326

 

 

 

 

 

 

54,919

 

Net loss attributable to noncontrolling interests

 

 

(110

)

 

 

 

 

 

 

 

 

(110

)

Net income attributable to Patterson Companies, Inc.

 

$

47,703

 

 

$

7,326

 

 

$

 

 

$

55,029

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

 

$

0.52

 

 

$

0.08

 

 

$

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

21.7

%

 

 

 

 

 

 

21.6

%

Operating margin

 

 

4.3

%

 

 

 

 

 

 

4.7

%

Effective tax rate

 

 

23.2

%

 

 

 

 

 

 

23.3

%

 

 

 

 

 

 

 

 

 

For the three months ended January 28, 2023

 

GAAP

 

Deal
amortization

 

Interest rate
swap

 

Non-GAAP

Net sales

 

$

1,600,850

 

 

$

 

 

$

(1,849

)

 

$

1,599,001

 

Gross profit

 

 

342,962

 

 

 

 

 

 

(1,849

)

 

 

341,113

 

Operating expenses

 

 

267,040

 

 

 

(9,482

)

 

 

 

 

 

257,558

 

Operating income

 

 

75,922

 

 

 

9,482

 

 

 

(1,849

)

 

 

83,555

 

Other income (expense), net

 

 

(6,635

)

 

 

 

 

 

1,849

 

 

 

(4,786

)

Income before taxes

 

 

69,287

 

 

 

9,482

 

 

 

 

 

 

78,769

 

Income tax expense

 

 

15,440

 

 

 

2,272

 

 

 

 

 

 

17,712

 

Net income

 

 

53,847

 

 

 

7,210

 

 

 

 

 

 

61,057

 

Net loss attributable to noncontrolling interests

 

 

(82

)

 

 

 

 

 

 

 

 

(82

)

Net income attributable to Patterson Companies, Inc.

 

$

53,929

 

 

$

7,210

 

 

$

 

 

$

61,139

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

 

$

0.55

 

 

$

0.07

 

 

$

 

 

$

0.62

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

21.4

%

 

 

 

 

 

 

21.3

%

Operating margin

 

 

4.7

%

 

 

 

 

 

 

5.2

%

Effective tax rate

 

 

22.3

%

 

 

 

 

 

 

22.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* May not sum due to rounding

 

 

 

 

 

 

 

 

 

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

 

For the nine months ended January 27, 2024

 

GAAP

 

Deal
amortization

 

Interest rate
swap

 

Non-GAAP

Net sales

 

$

4,845,612

 

 

$

 

 

$

6,087

 

 

$

4,851,699

 

Gross profit

 

 

1,009,087

 

 

 

 

 

 

6,087

 

 

 

1,015,174

 

Operating expenses

 

 

843,950

 

 

 

(28,884

)

 

 

 

 

 

815,066

 

Operating income

 

 

165,137

 

 

 

28,884

 

 

 

6,087

 

 

 

200,108

 

Other income (expense), net

 

 

(9,229

)

 

 

 

 

 

(6,087

)

 

 

(15,316

)

Income before taxes

 

 

155,908

 

 

 

28,884

 

 

 

 

 

 

184,792

 

Income tax expense

 

 

37,330

 

 

 

6,913

 

 

 

 

 

 

44,243

 

Net income

 

 

118,578

 

 

 

21,971

 

 

 

 

 

 

140,549

 

Net loss attributable to noncontrolling interests

 

 

(317

)

 

 

 

 

 

 

 

 

(317

)

Net income attributable to Patterson Companies, Inc.

 

$

118,895

 

 

$

21,971

 

 

$

 

 

$

140,866

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

 

$

1.26

 

 

$

0.23

 

 

$

 

 

$

1.49

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

20.8

%

 

 

 

 

 

 

20.9

%

Operating margin

 

 

3.4

%

 

 

 

 

 

 

4.1

%

Effective tax rate

 

 

23.9

%

 

 

 

 

 

 

23.9

%

 

 

 

 

 

 

 

 

 

For the nine months ended January 28, 2023

 

GAAP

 

Deal
amortization

 

Interest rate
swap

 

Non-GAAP

Net sales

 

$

4,750,319

 

 

$

 

 

$

9,275

 

 

$

4,759,594

 

Gross profit

 

 

983,184

 

 

 

 

 

 

9,275

 

 

 

992,459

 

Operating expenses

 

 

812,323

 

 

 

(28,160

)

 

 

 

 

 

784,163

 

Operating income

 

 

170,861

 

 

 

28,160

 

 

 

9,275

 

 

 

208,296

 

Other income (expense), net

 

 

241

 

 

 

 

 

 

(9,275

)

 

 

(9,034

)

Income before taxes

 

 

171,102

 

 

 

28,160

 

 

 

 

 

 

199,262

 

Income tax expense

 

 

39,346

 

 

 

6,746

 

 

 

 

 

 

46,092

 

Net income

 

 

131,756

 

 

 

21,414

 

 

 

 

 

 

153,170

 

Net loss attributable to noncontrolling interests

 

 

(836

)

 

 

 

 

 

 

 

 

(836

)

Net income attributable to Patterson Companies, Inc.

 

$

132,592

 

 

$

21,414

 

 

$

 

 

$

154,006

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Patterson Companies, Inc.*

 

$

1.35

 

 

$

0.22

 

 

$

 

 

$

1.57

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

20.7

%

 

 

 

 

 

 

20.9

%

Operating margin

 

 

3.6

%

 

 

 

 

 

 

4.4

%

Effective tax rate

 

 

23.0

%

 

 

 

 

 

 

23.1

%

 

 

 

 

 

 

 

 

 

* May not sum due to rounding

 

 

 

 

 

 

 

PATTERSON COMPANIES, INC.

FREE CASH FLOW

(In thousands)

(Unaudited)

 

 

Nine Months Ended

 

January 27,
2024

 

January 28,
2023

Net cash used in operating activities

$

(719,849

)

 

$

(728,197

)

Additions to property and equipment and software

 

(51,196

)

 

 

(42,442

)

Collection of deferred purchase price receivables

 

770,319

 

 

 

758,001

 

Free cash flow

$

(726

)

 

$

(12,638

)

 

 

 

 

 

Contacts

INVESTOR John M. Wright, Investor Relations
COMPANY: Patterson Companies Inc.
TEL: 651.686.1364
EMAIL: investor.relations@pattersoncompanies.com

MEDIA: Patterson Corporate Communications
COMPANY: Patterson Companies Inc.
TEL: 651.905.3349
EMAIL: corporate.communications@pattersoncompanies.com

WEB: pattersoncompanies.com