Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Patterson Companies Reports Fiscal 2022 Second-Quarter Operating Results By: Patterson Companies Inc. via Business Wire December 01, 2021 at 07:00 AM EST Reported net sales increased 6.2 percent year-over-year to $1.65 billion, and internal sales increased 8.3 percent. Dental segment internal sales decreased 2.0 percent year-over-year and increased 9.8 percent compared to the pre-pandemic period of the second quarter of fiscal 2020. Animal Health segment internal sales increased 16.2 percent year-over-year and increased 24.3 percent compared to the pre-pandemic period of the second quarter of fiscal 2020. Delivered second-quarter GAAP earnings of $0.49 per diluted share and adjusted earnings1 of $0.58 per diluted share. Increased fiscal 2022 GAAP earnings guidance range to $1.69 to $1.79 per diluted share and adjusted earnings1 guidance range to $2.00 to $2.10 per diluted share. Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of $1.65 billion (see attached Sales Summary for further details) in its fiscal second quarter ended October 30, 2021, an increase of 6.2 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships and contributions from recent acquisitions, increased 8.3 percent over the prior year. Reported net income attributable to Patterson Companies, Inc. for the second quarter of fiscal 2022 was $48.3 million, or $0.49 per diluted share, compared to $54.1 million, or $0.56 per diluted share, in the second quarter of fiscal 2021. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization and integration and business restructuring expenses, totaled $57.1 million for the second quarter of fiscal 2022, or $0.58 per diluted share, compared to $61.1 million in the same quarter of fiscal 2021, or $0.63 per diluted share. The year-over-year decline in reported and adjusted net income attributable to Patterson Companies, Inc. is primarily due to lower expenses in the prior year period associated with COVID-19. The year-over-year decline was partially offset by strong sales performance in the Animal Health segment during the second quarter of fiscal 2022. “Our top and bottom line results during the second quarter and first half of fiscal 2022 reflect the strong focus and execution of our team and that our value proposition continues to resonate with our customers,” said Mark Walchirk, President and CEO of Patterson Companies. “Given our momentum and confidence in the business, we are increasing our adjusted EPS guidance range for fiscal 2022. We remain focused on leveraging the combined strength of Patterson’s team, strategy and deep value proposition to serve our customers, accelerate our growth and drive long-term value creation.” Patterson Dental Reported net sales in our Dental segment for the second quarter of fiscal 2022, which represented approximately 38 percent of total company sales, were $622.2 million. Internal sales decreased 2.0 percent compared to the fiscal 2021 second quarter, including a 0.8 percent decline in consumables and a 3.0 percent decline in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 9.8 percent, including 16.7 percent growth in consumables and 2.3 percent growth in equipment and software. Patterson Animal Health Reported net sales in our Animal Health segment for the second quarter of fiscal 2022, which comprised approximately 62 percent of the company’s total sales, were $1.0 billion. Internal sales growth of 16.2 percent was driven by continued strong performance in companion animal and additional recovery in production animal and included 15.8 percent growth in consumables and 37.8 percent growth in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 24.3 percent, including 23.5 percent growth in consumables and 72.6 percent growth in equipment and software. Balance Sheet and Capital Allocation During the first six months of fiscal 2022, Patterson Companies used $539.0 million of cash from operating activities and collected deferred purchase price receivables of $585.6 million, generating $46.6 million in cash, compared to a use of cash of $14.1 million during the first six months of fiscal 2021. Free cash flow1 (see definition below and attached free cash flow table) during the first six months of fiscal 2022 improved by $59.6 million compared to the fiscal 2021 period due to a decreased level of working capital during fiscal 2022. In the second quarter of fiscal 2022, Patterson Companies declared a quarterly cash dividend of $0.26 per share and returned $25.3 million in cash dividends to shareholders. Through the first six months of fiscal 2022, Patterson Companies has returned $50.4 million in cash dividends to shareholders. Year-to-Date Results Consolidated reported net sales for the first six months of fiscal 2022 totaled $3.3 billion, a 16.6 percent year-over-year increase. Sales in the first six months of fiscal 2022 reflected an extra week of sales results in the fiscal first quarter versus the prior year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022, increased 13.9 percent compared to the first six months of fiscal 2021. Through the first six months of fiscal 2022, Dental segment internal sales increased 10.8 percent, including 13.8 percent growth in consumables and 8.2 percent growth in equipment and software. Through the first six months of fiscal 2022, Animal Health segment internal sales increased 16.4 percent, including 15.7 percent growth in consumables and 42.7 percent growth in equipment and software. Reported net income attributable to Patterson Companies, Inc. was $82.3 million, or $0.84 per diluted share, compared to a $78.5 million, or $0.82 per diluted share in last year's period. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses totaled $99.2 million, or $1.01 per diluted share, compared to adjusted net income attributable to Patterson Companies, Inc. of $92.6 million, or $0.96 per diluted share, in the year-ago period. Fiscal 2022 Guidance Patterson Companies today updated its fiscal 2022 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis: GAAP earnings are expected to be in the range of $1.69 to $1.79 per diluted share, compared to our prior guidance of $1.64 to $1.74 per diluted share. Non-GAAP adjusted earnings1 are expected to be in the range of $2.00 to $2.10 per diluted share, compared to our prior guidance of $1.95 to $2.05 per diluted share. Our non-GAAP adjusted earnings1 guidance excludes the after-tax impact of: Gains on investments of approximately $65.4 million ($0.67 per diluted share). Inventory donation charges of approximately $36.9 million ($0.37 per diluted share). Deal amortization expenses of approximately $29.4 million ($0.30 per diluted share). Legal reserves of approximately $27.5 million ($0.28 per diluted share). Integration and business restructuring expenses of approximately $3.2 million ($0.03 per diluted share). Our guidance is for current operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions, dispositions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions remain consistent with current market conditions and that there are no material adverse developments associated with the pandemic. 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 gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses along with the related tax effects of these items. 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, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022. 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 second-quarter 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. Second-Quarter Conference Call and Replay Patterson Companies’ fiscal 2022 second-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 2022 second-quarter conference call can be heard for one week at 1-800-770-2030 and by providing the Conference ID 73285 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: the COVID-19 pandemic and measures taken in response thereto; our dependence on relationships with sales representatives and service technicians to retain customers and develop business; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on suppliers to manufacture and supply substantially all of the products we sell; the risk of the products we sell becoming obsolete or containing undetected errors; adverse changes in supplier rebates; the risk that private label sales could adversely affect our relationships with suppliers; our dependence on positive perceptions of Patterson’s reputation; risks inherent in acquiring and disposing of assets or other businesses and the risks inherent in integrating acquired businesses; our ability to comply with restrictive covenants in our credit agreement; our dependence on leadership development and succession planning; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; the effects of the highly competitive and consolidating dental and animal health supply markets in which we compete; exposure to the risks of the animal production business, including changing consumer demand, the cyclical livestock market, and other factors outside our control; risks from the formation of GPOs, provider networks and buying groups that may shift purchasing decisions and place us at a competitive disadvantage; increases in over-the-counter sales and e-commerce options for companion animal products or sales of companion animal products from non-veterinarian sources; change and uncertainty in the health care industry, including the effects of health care reform; failure to comply with existing or future U.S. or foreign laws and regulations including those governing the distribution of pharmaceuticals and controlled substances; public concern over the abuse of opioid medication in the U.S.; failure to comply with health care fraud or other laws and regulations; litigation risks, 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 evolving data privacy laws and regulations; tax legislation; the risks inherent in international operations, including currency fluctuations; risks associated with information systems and cyber-security attacks; disruptions from our enterprise resource planning system; and the risk of being required to record significant impairment charges if our Dental segment’s goodwill or other intangible assets become impaired. 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 Six Months Ended October 30, 2021 October 24, 2020 October 30, 2021 October 24, 2020 Net sales $ 1,649,161 $ 1,553,168 $ 3,264,037 $ 2,799,005 Gross profit 326,435 320,368 604,237 574,184 Operating expenses 263,575 246,662 580,906 462,606 Operating income 62,860 73,706 23,331 111,578 Other income (expense): Gains on investments — — 87,827 — Other income, net 6,804 3,223 8,227 5,257 Interest expense (5,521) (6,381) (10,716) (13,072) Income before taxes 64,143 70,548 108,669 103,763 Income tax expense 16,205 16,722 26,929 25,735 Net income 47,938 53,826 81,740 78,028 Net loss attributable to noncontrolling interests (392) (234) (586) (439) Net income attributable to Patterson Companies, Inc. $ 48,330 $ 54,060 $ 82,326 $ 78,467 Earnings per share attributable to Patterson Companies, Inc.: Basic $ 0.50 $ 0.57 $ 0.85 $ 0.82 Diluted $ 0.49 $ 0.56 $ 0.84 $ 0.82 Weighted average shares: Basic 97,321 95,518 97,089 95,341 Diluted 98,363 96,415 98,363 96,105 Dividends declared per common share $ 0.26 $ 0.26 $ 0.52 $ 0.52 PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) October 30, 2021 April 24, 2021 ASSETS Current assets: Cash and cash equivalents $ 154,152 $ 143,244 Receivables, net 481,844 449,235 Inventory 830,121 736,778 Prepaid expenses and other current assets 333,314 286,672 Total current assets 1,799,431 1,615,929 Property and equipment, net 213,362 219,438 Operating lease right-of-use assets, net 74,095 77,217 Goodwill and identifiable intangibles, net 413,634 419,576 Long-term receivables, net and other 402,203 419,351 Total assets $ 2,902,725 $ 2,751,511 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 773,230 $ 609,264 Other accrued liabilities 244,883 294,400 Operating lease liabilities 31,191 32,252 Current maturities of long-term debt 100,750 100,750 Borrowings on revolving credit 43,000 53,000 Total current liabilities 1,193,054 1,089,666 Long-term debt 488,091 487,545 Non-current operating lease liabilities 45,217 48,318 Other non-current liabilities 164,381 161,311 Total liabilities 1,890,743 1,786,840 Stockholders' equity 1,011,982 964,671 Total liabilities and stockholders' equity $ 2,902,725 $ 2,751,511 PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended October 30, 2021 October 24, 2020 Operating activities: Net income $ 81,740 $ 78,028 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 40,980 38,881 Gains on investments (87,827) — Non-cash employee compensation 13,497 16,660 Non-cash losses (gains) and other, net 3,974 5,976 Change in assets and liabilities: Receivables (583,939) (505,535) Inventory (90,728) 58,238 Accounts payable 165,250 (179,276) Accrued liabilities (56,029) 24,555 Other changes from operating activities, net (25,932) 39,469 Net cash used in operating activities (539,014) (423,004) Investing activities: Additions to property and equipment (15,503) (14,370) Collection of deferred purchase price receivables 585,647 408,907 Acquisitions, net of cash acquired (19,793) — Sale of investments 57,245 396 Net cash provided by investing activities 607,596 394,933 Financing activities: Dividends paid (50,407) (25,009) (Payment) draw on revolving credit (10,000) 111,000 Other financing activities 1,959 631 Net cash (used in) provided by financing activities (58,448) 86,622 Effect of exchange rate changes on cash 774 2,986 Net change in cash and cash equivalents 10,908 61,537 Cash and cash equivalents at beginning of period 143,244 77,944 Cash and cash equivalents at end of period $ 154,152 $ 139,481 PATTERSON COMPANIES, INC. SALES SUMMARY (Dollars in thousands) (Unaudited) October 30, 2021 October 24, 20201 Total Sales Growth Foreign Exchange Impact 53rd Week Other 2 Internal Sales Growth Three Months Ended Consolidated net sales Consumable $ 1,344,812 $ 1,241,586 8.3 % 1.0 % — % (3.8) % 11.1 % Equipment and software 223,813 220,227 1.6 0.5 — — 1.1 Value-added services and other 80,536 91,355 (11.8) 0.7 — (0.1) (12.4) Total $ 1,649,161 $ 1,553,168 6.2 % 0.9 % — % (3.0) % 8.3 % Dental Consumable $ 356,654 $ 357,849 (0.3) % 0.5 % — % — % (0.8) % Equipment and software 193,437 198,181 (2.4) 0.6 — — (3.0) Value-added services and other 72,124 75,718 (4.7) 0.3 — — (5.0) Total $ 622,215 $ 631,748 (1.5) % 0.5 % — % — % (2.0) % Animal Health Consumable $ 988,158 $ 883,737 11.8 % 1.3 % — % (5.3) % 15.8 % Equipment and software 30,376 22,046 37.8 — — — 37.8 Value-added services and other 8,933 8,394 6.4 4.7 — (1.5) 3.2 Total $ 1,027,467 $ 914,177 12.4 % 1.3 % — % (5.1) % 16.2 % Corporate Value-added services and other $ (521) $ 7,243 n/m — % — % — % n/m Total $ (521) $ 7,243 n/m — % — % — % n/m 1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021. October 30, 2021 October 24, 20201 Total Sales Growth Foreign Exchange Impact 53rd Week Other 2 Internal Sales Growth Six Months Ended Consolidated net sales Consumable $ 2,686,486 $ 2,286,567 17.5 % 1.8 % 4.3 % (3.8) % 15.2 % Equipment and software 407,265 349,658 16.5 1.0 3.5 — 12.0 Value-added services and other 170,286 162,780 4.6 1.2 3.0 (0.1) 0.5 Total $ 3,264,037 $ 2,799,005 16.6 % 1.7 % 4.1 % (3.1) % 13.9 % Dental Consumable $ 733,230 $ 614,452 19.3 % 1.0 % 4.5 % — % 13.8 % Equipment and software 350,403 311,198 12.6 1.1 3.3 — 8.2 Value-added services and other 145,449 136,393 6.6 0.5 2.9 — 3.2 Total $ 1,229,082 $ 1,062,043 15.7 % 1.0 % 3.9 % — % 10.8 % Animal Health Consumable $ 1,953,256 $ 1,672,115 16.8 % 2.1 % 4.2 % (5.2) % 15.7 % Equipment and software 56,862 38,460 47.8 — 5.1 — 42.7 Value-added services and other 20,139 15,755 27.8 8.0 5.2 (1.2) 15.8 Total $ 2,030,257 $ 1,726,330 17.6 % 2.1 % 4.2 % (5.1) % 16.4 % Corporate Value-added services and other $ 4,698 $ 10,632 (55.8) % — % — % — % (55.8) % Total $ 4,698 $ 10,632 (55.8) % — % — % — % (55.8) % 1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021. PATTERSON COMPANIES, INC. OPERATING INCOME BY SEGMENT (In thousands) (Unaudited) Three Months Ended Six Months Ended October 30, 2021 October 24, 2020 October 30, 2021 October 24, 2020 Operating income (loss) Dental $ 55,570 $ 72,957 $ 54,484 $ 110,726 Animal Health 26,135 17,591 49,940 34,990 Corporate (18,845) (16,842) (81,093) (34,138) Total $ 62,860 $ 73,706 $ 23,331 $ 111,578 PATTERSON COMPANIES, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Dollars in thousands, except per share amounts) (Unaudited) For the three months ended October 30, 2021 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 62,860 $ 9,614 $ 1,863 $ — $ — $ — $ 74,337 Other income (expense), net 1,283 — — — — — 1,283 Income before taxes 64,143 9,614 1,863 — — — 75,620 Income tax expense 16,205 2,269 466 — — — 18,940 Net income 47,938 7,345 1,397 — — — 56,680 Net loss attributable to noncontrolling interests (392) — — — — — (392) Net income attributable to Patterson Companies, Inc. $ 48,330 $ 7,345 $ 1,397 $ — $ — $ — $ 57,072 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.49 $ 0.07 $ 0.01 $ — $ — $ — $ 0.58 Operating income as a % of sales 3.8 % 4.5 % Effective tax rate 25.3 % 25.0 % For the three months ended October 24, 2020 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 73,706 $ 9,250 $ — $ — $ — $ — $ 82,956 Other income (expense), net (3,158) — — — — — (3,158) Income before taxes 70,548 9,250 — — — — 79,798 Income tax expense 16,722 2,199 — — — — 18,921 Net income 53,826 7,051 — — — — 60,877 Net loss attributable to noncontrolling interests (234) — — — — — (234) Net income attributable to Patterson Companies, Inc. $ 54,060 $ 7,051 $ — $ — $ — $ — $ 61,111 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.56 $ 0.07 $ — $ — $ — $ — $ 0.63 Operating income as a % of sales 4.7 % 5.3 % Effective tax rate 23.7 % 23.7 % * 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 six months ended October 30, 2021 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 23,331 $ 19,155 $ 4,245 $ 36,000 $ 49,194 $ — $ 131,925 Other income (expense), net 85,338 — — — — (87,827) (2,489) Income before taxes 108,669 19,155 4,245 36,000 49,194 (87,827) 129,436 Income tax expense 26,929 4,506 1,061 8,460 12,308 (22,396) 30,868 Net income 81,740 14,649 3,184 27,540 36,886 (65,431) 98,568 Net loss attributable to noncontrolling interests (586) — — — — — (586) Net income attributable to Patterson Companies, Inc. $ 82,326 $ 14,649 $ 3,184 $ 27,540 $ 36,886 $ (65,431) $ 99,154 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.84 $ 0.15 $ 0.03 $ 0.28 $ 0.37 $ (0.67) $ 1.01 Operating income as a % of sales 0.7 % 4.0 % Effective tax rate 24.8 % 23.8 % For the six months ended October 24, 2020 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 111,578 $ 18,503 $ — $ — $ — $ — $ 130,081 Other income (expense), net (7,815) — — — — — (7,815) Income before taxes 103,763 18,503 — — — — 122,266 Income tax expense 25,735 4,400 — — — — 30,135 Net income 78,028 14,103 — — — — 92,131 Net loss attributable to noncontrolling interests (439) — — — — — (439) Net income attributable to Patterson Companies, Inc. $ 78,467 $ 14,103 $ — $ — $ — $ — $ 92,570 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.82 $ 0.15 $ — $ — $ — $ — $ 0.96 Operating income as a % of sales 4.0 % 4.6 % Effective tax rate 24.8 % 24.6 % * May not sum due to rounding PATTERSON COMPANIES, INC. FREE CASH FLOW (In thousands) (Unaudited) Six Months Ended October 30, 2021 October 24, 2020 Net cash used in operating activities $ (539,014) $ (423,004) Additions to property and equipment (15,503) (14,370) Collection of deferred purchase price receivables 585,647 408,907 Free cash flow $ 31,130 $ (28,467) View source version on businesswire.com: https://www.businesswire.com/news/home/20211201005196/en/Contacts INVESTOR CONTACT: John M. Wright, Investor Relations Patterson Companies Inc. 651.686.1364 investor.relations@pattersoncompanies.com MEDIA CONTACT: Patterson Corporate Communications Patterson Companies Inc. 651.905.3349 corporate.communications@pattersoncompanies.com WEB: pattersoncompanies.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Patterson Companies Reports Fiscal 2022 Second-Quarter Operating Results By: Patterson Companies Inc. via Business Wire December 01, 2021 at 07:00 AM EST Reported net sales increased 6.2 percent year-over-year to $1.65 billion, and internal sales increased 8.3 percent. Dental segment internal sales decreased 2.0 percent year-over-year and increased 9.8 percent compared to the pre-pandemic period of the second quarter of fiscal 2020. Animal Health segment internal sales increased 16.2 percent year-over-year and increased 24.3 percent compared to the pre-pandemic period of the second quarter of fiscal 2020. Delivered second-quarter GAAP earnings of $0.49 per diluted share and adjusted earnings1 of $0.58 per diluted share. Increased fiscal 2022 GAAP earnings guidance range to $1.69 to $1.79 per diluted share and adjusted earnings1 guidance range to $2.00 to $2.10 per diluted share. Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of $1.65 billion (see attached Sales Summary for further details) in its fiscal second quarter ended October 30, 2021, an increase of 6.2 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships and contributions from recent acquisitions, increased 8.3 percent over the prior year. Reported net income attributable to Patterson Companies, Inc. for the second quarter of fiscal 2022 was $48.3 million, or $0.49 per diluted share, compared to $54.1 million, or $0.56 per diluted share, in the second quarter of fiscal 2021. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization and integration and business restructuring expenses, totaled $57.1 million for the second quarter of fiscal 2022, or $0.58 per diluted share, compared to $61.1 million in the same quarter of fiscal 2021, or $0.63 per diluted share. The year-over-year decline in reported and adjusted net income attributable to Patterson Companies, Inc. is primarily due to lower expenses in the prior year period associated with COVID-19. The year-over-year decline was partially offset by strong sales performance in the Animal Health segment during the second quarter of fiscal 2022. “Our top and bottom line results during the second quarter and first half of fiscal 2022 reflect the strong focus and execution of our team and that our value proposition continues to resonate with our customers,” said Mark Walchirk, President and CEO of Patterson Companies. “Given our momentum and confidence in the business, we are increasing our adjusted EPS guidance range for fiscal 2022. We remain focused on leveraging the combined strength of Patterson’s team, strategy and deep value proposition to serve our customers, accelerate our growth and drive long-term value creation.” Patterson Dental Reported net sales in our Dental segment for the second quarter of fiscal 2022, which represented approximately 38 percent of total company sales, were $622.2 million. Internal sales decreased 2.0 percent compared to the fiscal 2021 second quarter, including a 0.8 percent decline in consumables and a 3.0 percent decline in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 9.8 percent, including 16.7 percent growth in consumables and 2.3 percent growth in equipment and software. Patterson Animal Health Reported net sales in our Animal Health segment for the second quarter of fiscal 2022, which comprised approximately 62 percent of the company’s total sales, were $1.0 billion. Internal sales growth of 16.2 percent was driven by continued strong performance in companion animal and additional recovery in production animal and included 15.8 percent growth in consumables and 37.8 percent growth in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 24.3 percent, including 23.5 percent growth in consumables and 72.6 percent growth in equipment and software. Balance Sheet and Capital Allocation During the first six months of fiscal 2022, Patterson Companies used $539.0 million of cash from operating activities and collected deferred purchase price receivables of $585.6 million, generating $46.6 million in cash, compared to a use of cash of $14.1 million during the first six months of fiscal 2021. Free cash flow1 (see definition below and attached free cash flow table) during the first six months of fiscal 2022 improved by $59.6 million compared to the fiscal 2021 period due to a decreased level of working capital during fiscal 2022. In the second quarter of fiscal 2022, Patterson Companies declared a quarterly cash dividend of $0.26 per share and returned $25.3 million in cash dividends to shareholders. Through the first six months of fiscal 2022, Patterson Companies has returned $50.4 million in cash dividends to shareholders. Year-to-Date Results Consolidated reported net sales for the first six months of fiscal 2022 totaled $3.3 billion, a 16.6 percent year-over-year increase. Sales in the first six months of fiscal 2022 reflected an extra week of sales results in the fiscal first quarter versus the prior year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022, increased 13.9 percent compared to the first six months of fiscal 2021. Through the first six months of fiscal 2022, Dental segment internal sales increased 10.8 percent, including 13.8 percent growth in consumables and 8.2 percent growth in equipment and software. Through the first six months of fiscal 2022, Animal Health segment internal sales increased 16.4 percent, including 15.7 percent growth in consumables and 42.7 percent growth in equipment and software. Reported net income attributable to Patterson Companies, Inc. was $82.3 million, or $0.84 per diluted share, compared to a $78.5 million, or $0.82 per diluted share in last year's period. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses totaled $99.2 million, or $1.01 per diluted share, compared to adjusted net income attributable to Patterson Companies, Inc. of $92.6 million, or $0.96 per diluted share, in the year-ago period. Fiscal 2022 Guidance Patterson Companies today updated its fiscal 2022 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis: GAAP earnings are expected to be in the range of $1.69 to $1.79 per diluted share, compared to our prior guidance of $1.64 to $1.74 per diluted share. Non-GAAP adjusted earnings1 are expected to be in the range of $2.00 to $2.10 per diluted share, compared to our prior guidance of $1.95 to $2.05 per diluted share. Our non-GAAP adjusted earnings1 guidance excludes the after-tax impact of: Gains on investments of approximately $65.4 million ($0.67 per diluted share). Inventory donation charges of approximately $36.9 million ($0.37 per diluted share). Deal amortization expenses of approximately $29.4 million ($0.30 per diluted share). Legal reserves of approximately $27.5 million ($0.28 per diluted share). Integration and business restructuring expenses of approximately $3.2 million ($0.03 per diluted share). Our guidance is for current operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions, dispositions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions remain consistent with current market conditions and that there are no material adverse developments associated with the pandemic. 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 gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses along with the related tax effects of these items. 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, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022. 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 second-quarter 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. Second-Quarter Conference Call and Replay Patterson Companies’ fiscal 2022 second-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 2022 second-quarter conference call can be heard for one week at 1-800-770-2030 and by providing the Conference ID 73285 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: the COVID-19 pandemic and measures taken in response thereto; our dependence on relationships with sales representatives and service technicians to retain customers and develop business; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on suppliers to manufacture and supply substantially all of the products we sell; the risk of the products we sell becoming obsolete or containing undetected errors; adverse changes in supplier rebates; the risk that private label sales could adversely affect our relationships with suppliers; our dependence on positive perceptions of Patterson’s reputation; risks inherent in acquiring and disposing of assets or other businesses and the risks inherent in integrating acquired businesses; our ability to comply with restrictive covenants in our credit agreement; our dependence on leadership development and succession planning; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; the effects of the highly competitive and consolidating dental and animal health supply markets in which we compete; exposure to the risks of the animal production business, including changing consumer demand, the cyclical livestock market, and other factors outside our control; risks from the formation of GPOs, provider networks and buying groups that may shift purchasing decisions and place us at a competitive disadvantage; increases in over-the-counter sales and e-commerce options for companion animal products or sales of companion animal products from non-veterinarian sources; change and uncertainty in the health care industry, including the effects of health care reform; failure to comply with existing or future U.S. or foreign laws and regulations including those governing the distribution of pharmaceuticals and controlled substances; public concern over the abuse of opioid medication in the U.S.; failure to comply with health care fraud or other laws and regulations; litigation risks, 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 evolving data privacy laws and regulations; tax legislation; the risks inherent in international operations, including currency fluctuations; risks associated with information systems and cyber-security attacks; disruptions from our enterprise resource planning system; and the risk of being required to record significant impairment charges if our Dental segment’s goodwill or other intangible assets become impaired. 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 Six Months Ended October 30, 2021 October 24, 2020 October 30, 2021 October 24, 2020 Net sales $ 1,649,161 $ 1,553,168 $ 3,264,037 $ 2,799,005 Gross profit 326,435 320,368 604,237 574,184 Operating expenses 263,575 246,662 580,906 462,606 Operating income 62,860 73,706 23,331 111,578 Other income (expense): Gains on investments — — 87,827 — Other income, net 6,804 3,223 8,227 5,257 Interest expense (5,521) (6,381) (10,716) (13,072) Income before taxes 64,143 70,548 108,669 103,763 Income tax expense 16,205 16,722 26,929 25,735 Net income 47,938 53,826 81,740 78,028 Net loss attributable to noncontrolling interests (392) (234) (586) (439) Net income attributable to Patterson Companies, Inc. $ 48,330 $ 54,060 $ 82,326 $ 78,467 Earnings per share attributable to Patterson Companies, Inc.: Basic $ 0.50 $ 0.57 $ 0.85 $ 0.82 Diluted $ 0.49 $ 0.56 $ 0.84 $ 0.82 Weighted average shares: Basic 97,321 95,518 97,089 95,341 Diluted 98,363 96,415 98,363 96,105 Dividends declared per common share $ 0.26 $ 0.26 $ 0.52 $ 0.52 PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) October 30, 2021 April 24, 2021 ASSETS Current assets: Cash and cash equivalents $ 154,152 $ 143,244 Receivables, net 481,844 449,235 Inventory 830,121 736,778 Prepaid expenses and other current assets 333,314 286,672 Total current assets 1,799,431 1,615,929 Property and equipment, net 213,362 219,438 Operating lease right-of-use assets, net 74,095 77,217 Goodwill and identifiable intangibles, net 413,634 419,576 Long-term receivables, net and other 402,203 419,351 Total assets $ 2,902,725 $ 2,751,511 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 773,230 $ 609,264 Other accrued liabilities 244,883 294,400 Operating lease liabilities 31,191 32,252 Current maturities of long-term debt 100,750 100,750 Borrowings on revolving credit 43,000 53,000 Total current liabilities 1,193,054 1,089,666 Long-term debt 488,091 487,545 Non-current operating lease liabilities 45,217 48,318 Other non-current liabilities 164,381 161,311 Total liabilities 1,890,743 1,786,840 Stockholders' equity 1,011,982 964,671 Total liabilities and stockholders' equity $ 2,902,725 $ 2,751,511 PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended October 30, 2021 October 24, 2020 Operating activities: Net income $ 81,740 $ 78,028 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 40,980 38,881 Gains on investments (87,827) — Non-cash employee compensation 13,497 16,660 Non-cash losses (gains) and other, net 3,974 5,976 Change in assets and liabilities: Receivables (583,939) (505,535) Inventory (90,728) 58,238 Accounts payable 165,250 (179,276) Accrued liabilities (56,029) 24,555 Other changes from operating activities, net (25,932) 39,469 Net cash used in operating activities (539,014) (423,004) Investing activities: Additions to property and equipment (15,503) (14,370) Collection of deferred purchase price receivables 585,647 408,907 Acquisitions, net of cash acquired (19,793) — Sale of investments 57,245 396 Net cash provided by investing activities 607,596 394,933 Financing activities: Dividends paid (50,407) (25,009) (Payment) draw on revolving credit (10,000) 111,000 Other financing activities 1,959 631 Net cash (used in) provided by financing activities (58,448) 86,622 Effect of exchange rate changes on cash 774 2,986 Net change in cash and cash equivalents 10,908 61,537 Cash and cash equivalents at beginning of period 143,244 77,944 Cash and cash equivalents at end of period $ 154,152 $ 139,481 PATTERSON COMPANIES, INC. SALES SUMMARY (Dollars in thousands) (Unaudited) October 30, 2021 October 24, 20201 Total Sales Growth Foreign Exchange Impact 53rd Week Other 2 Internal Sales Growth Three Months Ended Consolidated net sales Consumable $ 1,344,812 $ 1,241,586 8.3 % 1.0 % — % (3.8) % 11.1 % Equipment and software 223,813 220,227 1.6 0.5 — — 1.1 Value-added services and other 80,536 91,355 (11.8) 0.7 — (0.1) (12.4) Total $ 1,649,161 $ 1,553,168 6.2 % 0.9 % — % (3.0) % 8.3 % Dental Consumable $ 356,654 $ 357,849 (0.3) % 0.5 % — % — % (0.8) % Equipment and software 193,437 198,181 (2.4) 0.6 — — (3.0) Value-added services and other 72,124 75,718 (4.7) 0.3 — — (5.0) Total $ 622,215 $ 631,748 (1.5) % 0.5 % — % — % (2.0) % Animal Health Consumable $ 988,158 $ 883,737 11.8 % 1.3 % — % (5.3) % 15.8 % Equipment and software 30,376 22,046 37.8 — — — 37.8 Value-added services and other 8,933 8,394 6.4 4.7 — (1.5) 3.2 Total $ 1,027,467 $ 914,177 12.4 % 1.3 % — % (5.1) % 16.2 % Corporate Value-added services and other $ (521) $ 7,243 n/m — % — % — % n/m Total $ (521) $ 7,243 n/m — % — % — % n/m 1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021. October 30, 2021 October 24, 20201 Total Sales Growth Foreign Exchange Impact 53rd Week Other 2 Internal Sales Growth Six Months Ended Consolidated net sales Consumable $ 2,686,486 $ 2,286,567 17.5 % 1.8 % 4.3 % (3.8) % 15.2 % Equipment and software 407,265 349,658 16.5 1.0 3.5 — 12.0 Value-added services and other 170,286 162,780 4.6 1.2 3.0 (0.1) 0.5 Total $ 3,264,037 $ 2,799,005 16.6 % 1.7 % 4.1 % (3.1) % 13.9 % Dental Consumable $ 733,230 $ 614,452 19.3 % 1.0 % 4.5 % — % 13.8 % Equipment and software 350,403 311,198 12.6 1.1 3.3 — 8.2 Value-added services and other 145,449 136,393 6.6 0.5 2.9 — 3.2 Total $ 1,229,082 $ 1,062,043 15.7 % 1.0 % 3.9 % — % 10.8 % Animal Health Consumable $ 1,953,256 $ 1,672,115 16.8 % 2.1 % 4.2 % (5.2) % 15.7 % Equipment and software 56,862 38,460 47.8 — 5.1 — 42.7 Value-added services and other 20,139 15,755 27.8 8.0 5.2 (1.2) 15.8 Total $ 2,030,257 $ 1,726,330 17.6 % 2.1 % 4.2 % (5.1) % 16.4 % Corporate Value-added services and other $ 4,698 $ 10,632 (55.8) % — % — % — % (55.8) % Total $ 4,698 $ 10,632 (55.8) % — % — % — % (55.8) % 1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021. PATTERSON COMPANIES, INC. OPERATING INCOME BY SEGMENT (In thousands) (Unaudited) Three Months Ended Six Months Ended October 30, 2021 October 24, 2020 October 30, 2021 October 24, 2020 Operating income (loss) Dental $ 55,570 $ 72,957 $ 54,484 $ 110,726 Animal Health 26,135 17,591 49,940 34,990 Corporate (18,845) (16,842) (81,093) (34,138) Total $ 62,860 $ 73,706 $ 23,331 $ 111,578 PATTERSON COMPANIES, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Dollars in thousands, except per share amounts) (Unaudited) For the three months ended October 30, 2021 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 62,860 $ 9,614 $ 1,863 $ — $ — $ — $ 74,337 Other income (expense), net 1,283 — — — — — 1,283 Income before taxes 64,143 9,614 1,863 — — — 75,620 Income tax expense 16,205 2,269 466 — — — 18,940 Net income 47,938 7,345 1,397 — — — 56,680 Net loss attributable to noncontrolling interests (392) — — — — — (392) Net income attributable to Patterson Companies, Inc. $ 48,330 $ 7,345 $ 1,397 $ — $ — $ — $ 57,072 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.49 $ 0.07 $ 0.01 $ — $ — $ — $ 0.58 Operating income as a % of sales 3.8 % 4.5 % Effective tax rate 25.3 % 25.0 % For the three months ended October 24, 2020 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 73,706 $ 9,250 $ — $ — $ — $ — $ 82,956 Other income (expense), net (3,158) — — — — — (3,158) Income before taxes 70,548 9,250 — — — — 79,798 Income tax expense 16,722 2,199 — — — — 18,921 Net income 53,826 7,051 — — — — 60,877 Net loss attributable to noncontrolling interests (234) — — — — — (234) Net income attributable to Patterson Companies, Inc. $ 54,060 $ 7,051 $ — $ — $ — $ — $ 61,111 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.56 $ 0.07 $ — $ — $ — $ — $ 0.63 Operating income as a % of sales 4.7 % 5.3 % Effective tax rate 23.7 % 23.7 % * 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 six months ended October 30, 2021 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 23,331 $ 19,155 $ 4,245 $ 36,000 $ 49,194 $ — $ 131,925 Other income (expense), net 85,338 — — — — (87,827) (2,489) Income before taxes 108,669 19,155 4,245 36,000 49,194 (87,827) 129,436 Income tax expense 26,929 4,506 1,061 8,460 12,308 (22,396) 30,868 Net income 81,740 14,649 3,184 27,540 36,886 (65,431) 98,568 Net loss attributable to noncontrolling interests (586) — — — — — (586) Net income attributable to Patterson Companies, Inc. $ 82,326 $ 14,649 $ 3,184 $ 27,540 $ 36,886 $ (65,431) $ 99,154 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.84 $ 0.15 $ 0.03 $ 0.28 $ 0.37 $ (0.67) $ 1.01 Operating income as a % of sales 0.7 % 4.0 % Effective tax rate 24.8 % 23.8 % For the six months ended October 24, 2020 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 111,578 $ 18,503 $ — $ — $ — $ — $ 130,081 Other income (expense), net (7,815) — — — — — (7,815) Income before taxes 103,763 18,503 — — — — 122,266 Income tax expense 25,735 4,400 — — — — 30,135 Net income 78,028 14,103 — — — — 92,131 Net loss attributable to noncontrolling interests (439) — — — — — (439) Net income attributable to Patterson Companies, Inc. $ 78,467 $ 14,103 $ — $ — $ — $ — $ 92,570 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.82 $ 0.15 $ — $ — $ — $ — $ 0.96 Operating income as a % of sales 4.0 % 4.6 % Effective tax rate 24.8 % 24.6 % * May not sum due to rounding PATTERSON COMPANIES, INC. FREE CASH FLOW (In thousands) (Unaudited) Six Months Ended October 30, 2021 October 24, 2020 Net cash used in operating activities $ (539,014) $ (423,004) Additions to property and equipment (15,503) (14,370) Collection of deferred purchase price receivables 585,647 408,907 Free cash flow $ 31,130 $ (28,467) View source version on businesswire.com: https://www.businesswire.com/news/home/20211201005196/en/Contacts INVESTOR CONTACT: John M. Wright, Investor Relations Patterson Companies Inc. 651.686.1364 investor.relations@pattersoncompanies.com MEDIA CONTACT: Patterson Corporate Communications Patterson Companies Inc. 651.905.3349 corporate.communications@pattersoncompanies.com WEB: pattersoncompanies.com
Reported net sales increased 6.2 percent year-over-year to $1.65 billion, and internal sales increased 8.3 percent. Dental segment internal sales decreased 2.0 percent year-over-year and increased 9.8 percent compared to the pre-pandemic period of the second quarter of fiscal 2020. Animal Health segment internal sales increased 16.2 percent year-over-year and increased 24.3 percent compared to the pre-pandemic period of the second quarter of fiscal 2020. Delivered second-quarter GAAP earnings of $0.49 per diluted share and adjusted earnings1 of $0.58 per diluted share. Increased fiscal 2022 GAAP earnings guidance range to $1.69 to $1.79 per diluted share and adjusted earnings1 guidance range to $2.00 to $2.10 per diluted share.
Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of $1.65 billion (see attached Sales Summary for further details) in its fiscal second quarter ended October 30, 2021, an increase of 6.2 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships and contributions from recent acquisitions, increased 8.3 percent over the prior year. Reported net income attributable to Patterson Companies, Inc. for the second quarter of fiscal 2022 was $48.3 million, or $0.49 per diluted share, compared to $54.1 million, or $0.56 per diluted share, in the second quarter of fiscal 2021. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization and integration and business restructuring expenses, totaled $57.1 million for the second quarter of fiscal 2022, or $0.58 per diluted share, compared to $61.1 million in the same quarter of fiscal 2021, or $0.63 per diluted share. The year-over-year decline in reported and adjusted net income attributable to Patterson Companies, Inc. is primarily due to lower expenses in the prior year period associated with COVID-19. The year-over-year decline was partially offset by strong sales performance in the Animal Health segment during the second quarter of fiscal 2022. “Our top and bottom line results during the second quarter and first half of fiscal 2022 reflect the strong focus and execution of our team and that our value proposition continues to resonate with our customers,” said Mark Walchirk, President and CEO of Patterson Companies. “Given our momentum and confidence in the business, we are increasing our adjusted EPS guidance range for fiscal 2022. We remain focused on leveraging the combined strength of Patterson’s team, strategy and deep value proposition to serve our customers, accelerate our growth and drive long-term value creation.” Patterson Dental Reported net sales in our Dental segment for the second quarter of fiscal 2022, which represented approximately 38 percent of total company sales, were $622.2 million. Internal sales decreased 2.0 percent compared to the fiscal 2021 second quarter, including a 0.8 percent decline in consumables and a 3.0 percent decline in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 9.8 percent, including 16.7 percent growth in consumables and 2.3 percent growth in equipment and software. Patterson Animal Health Reported net sales in our Animal Health segment for the second quarter of fiscal 2022, which comprised approximately 62 percent of the company’s total sales, were $1.0 billion. Internal sales growth of 16.2 percent was driven by continued strong performance in companion animal and additional recovery in production animal and included 15.8 percent growth in consumables and 37.8 percent growth in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 24.3 percent, including 23.5 percent growth in consumables and 72.6 percent growth in equipment and software. Balance Sheet and Capital Allocation During the first six months of fiscal 2022, Patterson Companies used $539.0 million of cash from operating activities and collected deferred purchase price receivables of $585.6 million, generating $46.6 million in cash, compared to a use of cash of $14.1 million during the first six months of fiscal 2021. Free cash flow1 (see definition below and attached free cash flow table) during the first six months of fiscal 2022 improved by $59.6 million compared to the fiscal 2021 period due to a decreased level of working capital during fiscal 2022. In the second quarter of fiscal 2022, Patterson Companies declared a quarterly cash dividend of $0.26 per share and returned $25.3 million in cash dividends to shareholders. Through the first six months of fiscal 2022, Patterson Companies has returned $50.4 million in cash dividends to shareholders. Year-to-Date Results Consolidated reported net sales for the first six months of fiscal 2022 totaled $3.3 billion, a 16.6 percent year-over-year increase. Sales in the first six months of fiscal 2022 reflected an extra week of sales results in the fiscal first quarter versus the prior year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022, increased 13.9 percent compared to the first six months of fiscal 2021. Through the first six months of fiscal 2022, Dental segment internal sales increased 10.8 percent, including 13.8 percent growth in consumables and 8.2 percent growth in equipment and software. Through the first six months of fiscal 2022, Animal Health segment internal sales increased 16.4 percent, including 15.7 percent growth in consumables and 42.7 percent growth in equipment and software. Reported net income attributable to Patterson Companies, Inc. was $82.3 million, or $0.84 per diluted share, compared to a $78.5 million, or $0.82 per diluted share in last year's period. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses totaled $99.2 million, or $1.01 per diluted share, compared to adjusted net income attributable to Patterson Companies, Inc. of $92.6 million, or $0.96 per diluted share, in the year-ago period. Fiscal 2022 Guidance Patterson Companies today updated its fiscal 2022 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis: GAAP earnings are expected to be in the range of $1.69 to $1.79 per diluted share, compared to our prior guidance of $1.64 to $1.74 per diluted share. Non-GAAP adjusted earnings1 are expected to be in the range of $2.00 to $2.10 per diluted share, compared to our prior guidance of $1.95 to $2.05 per diluted share. Our non-GAAP adjusted earnings1 guidance excludes the after-tax impact of: Gains on investments of approximately $65.4 million ($0.67 per diluted share). Inventory donation charges of approximately $36.9 million ($0.37 per diluted share). Deal amortization expenses of approximately $29.4 million ($0.30 per diluted share). Legal reserves of approximately $27.5 million ($0.28 per diluted share). Integration and business restructuring expenses of approximately $3.2 million ($0.03 per diluted share). Our guidance is for current operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions, dispositions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions remain consistent with current market conditions and that there are no material adverse developments associated with the pandemic. 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 gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses along with the related tax effects of these items. 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, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022. 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 second-quarter 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. Second-Quarter Conference Call and Replay Patterson Companies’ fiscal 2022 second-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 2022 second-quarter conference call can be heard for one week at 1-800-770-2030 and by providing the Conference ID 73285 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: the COVID-19 pandemic and measures taken in response thereto; our dependence on relationships with sales representatives and service technicians to retain customers and develop business; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on suppliers to manufacture and supply substantially all of the products we sell; the risk of the products we sell becoming obsolete or containing undetected errors; adverse changes in supplier rebates; the risk that private label sales could adversely affect our relationships with suppliers; our dependence on positive perceptions of Patterson’s reputation; risks inherent in acquiring and disposing of assets or other businesses and the risks inherent in integrating acquired businesses; our ability to comply with restrictive covenants in our credit agreement; our dependence on leadership development and succession planning; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; the effects of the highly competitive and consolidating dental and animal health supply markets in which we compete; exposure to the risks of the animal production business, including changing consumer demand, the cyclical livestock market, and other factors outside our control; risks from the formation of GPOs, provider networks and buying groups that may shift purchasing decisions and place us at a competitive disadvantage; increases in over-the-counter sales and e-commerce options for companion animal products or sales of companion animal products from non-veterinarian sources; change and uncertainty in the health care industry, including the effects of health care reform; failure to comply with existing or future U.S. or foreign laws and regulations including those governing the distribution of pharmaceuticals and controlled substances; public concern over the abuse of opioid medication in the U.S.; failure to comply with health care fraud or other laws and regulations; litigation risks, 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 evolving data privacy laws and regulations; tax legislation; the risks inherent in international operations, including currency fluctuations; risks associated with information systems and cyber-security attacks; disruptions from our enterprise resource planning system; and the risk of being required to record significant impairment charges if our Dental segment’s goodwill or other intangible assets become impaired. 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 Six Months Ended October 30, 2021 October 24, 2020 October 30, 2021 October 24, 2020 Net sales $ 1,649,161 $ 1,553,168 $ 3,264,037 $ 2,799,005 Gross profit 326,435 320,368 604,237 574,184 Operating expenses 263,575 246,662 580,906 462,606 Operating income 62,860 73,706 23,331 111,578 Other income (expense): Gains on investments — — 87,827 — Other income, net 6,804 3,223 8,227 5,257 Interest expense (5,521) (6,381) (10,716) (13,072) Income before taxes 64,143 70,548 108,669 103,763 Income tax expense 16,205 16,722 26,929 25,735 Net income 47,938 53,826 81,740 78,028 Net loss attributable to noncontrolling interests (392) (234) (586) (439) Net income attributable to Patterson Companies, Inc. $ 48,330 $ 54,060 $ 82,326 $ 78,467 Earnings per share attributable to Patterson Companies, Inc.: Basic $ 0.50 $ 0.57 $ 0.85 $ 0.82 Diluted $ 0.49 $ 0.56 $ 0.84 $ 0.82 Weighted average shares: Basic 97,321 95,518 97,089 95,341 Diluted 98,363 96,415 98,363 96,105 Dividends declared per common share $ 0.26 $ 0.26 $ 0.52 $ 0.52 PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) October 30, 2021 April 24, 2021 ASSETS Current assets: Cash and cash equivalents $ 154,152 $ 143,244 Receivables, net 481,844 449,235 Inventory 830,121 736,778 Prepaid expenses and other current assets 333,314 286,672 Total current assets 1,799,431 1,615,929 Property and equipment, net 213,362 219,438 Operating lease right-of-use assets, net 74,095 77,217 Goodwill and identifiable intangibles, net 413,634 419,576 Long-term receivables, net and other 402,203 419,351 Total assets $ 2,902,725 $ 2,751,511 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 773,230 $ 609,264 Other accrued liabilities 244,883 294,400 Operating lease liabilities 31,191 32,252 Current maturities of long-term debt 100,750 100,750 Borrowings on revolving credit 43,000 53,000 Total current liabilities 1,193,054 1,089,666 Long-term debt 488,091 487,545 Non-current operating lease liabilities 45,217 48,318 Other non-current liabilities 164,381 161,311 Total liabilities 1,890,743 1,786,840 Stockholders' equity 1,011,982 964,671 Total liabilities and stockholders' equity $ 2,902,725 $ 2,751,511 PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended October 30, 2021 October 24, 2020 Operating activities: Net income $ 81,740 $ 78,028 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 40,980 38,881 Gains on investments (87,827) — Non-cash employee compensation 13,497 16,660 Non-cash losses (gains) and other, net 3,974 5,976 Change in assets and liabilities: Receivables (583,939) (505,535) Inventory (90,728) 58,238 Accounts payable 165,250 (179,276) Accrued liabilities (56,029) 24,555 Other changes from operating activities, net (25,932) 39,469 Net cash used in operating activities (539,014) (423,004) Investing activities: Additions to property and equipment (15,503) (14,370) Collection of deferred purchase price receivables 585,647 408,907 Acquisitions, net of cash acquired (19,793) — Sale of investments 57,245 396 Net cash provided by investing activities 607,596 394,933 Financing activities: Dividends paid (50,407) (25,009) (Payment) draw on revolving credit (10,000) 111,000 Other financing activities 1,959 631 Net cash (used in) provided by financing activities (58,448) 86,622 Effect of exchange rate changes on cash 774 2,986 Net change in cash and cash equivalents 10,908 61,537 Cash and cash equivalents at beginning of period 143,244 77,944 Cash and cash equivalents at end of period $ 154,152 $ 139,481 PATTERSON COMPANIES, INC. SALES SUMMARY (Dollars in thousands) (Unaudited) October 30, 2021 October 24, 20201 Total Sales Growth Foreign Exchange Impact 53rd Week Other 2 Internal Sales Growth Three Months Ended Consolidated net sales Consumable $ 1,344,812 $ 1,241,586 8.3 % 1.0 % — % (3.8) % 11.1 % Equipment and software 223,813 220,227 1.6 0.5 — — 1.1 Value-added services and other 80,536 91,355 (11.8) 0.7 — (0.1) (12.4) Total $ 1,649,161 $ 1,553,168 6.2 % 0.9 % — % (3.0) % 8.3 % Dental Consumable $ 356,654 $ 357,849 (0.3) % 0.5 % — % — % (0.8) % Equipment and software 193,437 198,181 (2.4) 0.6 — — (3.0) Value-added services and other 72,124 75,718 (4.7) 0.3 — — (5.0) Total $ 622,215 $ 631,748 (1.5) % 0.5 % — % — % (2.0) % Animal Health Consumable $ 988,158 $ 883,737 11.8 % 1.3 % — % (5.3) % 15.8 % Equipment and software 30,376 22,046 37.8 — — — 37.8 Value-added services and other 8,933 8,394 6.4 4.7 — (1.5) 3.2 Total $ 1,027,467 $ 914,177 12.4 % 1.3 % — % (5.1) % 16.2 % Corporate Value-added services and other $ (521) $ 7,243 n/m — % — % — % n/m Total $ (521) $ 7,243 n/m — % — % — % n/m 1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021. October 30, 2021 October 24, 20201 Total Sales Growth Foreign Exchange Impact 53rd Week Other 2 Internal Sales Growth Six Months Ended Consolidated net sales Consumable $ 2,686,486 $ 2,286,567 17.5 % 1.8 % 4.3 % (3.8) % 15.2 % Equipment and software 407,265 349,658 16.5 1.0 3.5 — 12.0 Value-added services and other 170,286 162,780 4.6 1.2 3.0 (0.1) 0.5 Total $ 3,264,037 $ 2,799,005 16.6 % 1.7 % 4.1 % (3.1) % 13.9 % Dental Consumable $ 733,230 $ 614,452 19.3 % 1.0 % 4.5 % — % 13.8 % Equipment and software 350,403 311,198 12.6 1.1 3.3 — 8.2 Value-added services and other 145,449 136,393 6.6 0.5 2.9 — 3.2 Total $ 1,229,082 $ 1,062,043 15.7 % 1.0 % 3.9 % — % 10.8 % Animal Health Consumable $ 1,953,256 $ 1,672,115 16.8 % 2.1 % 4.2 % (5.2) % 15.7 % Equipment and software 56,862 38,460 47.8 — 5.1 — 42.7 Value-added services and other 20,139 15,755 27.8 8.0 5.2 (1.2) 15.8 Total $ 2,030,257 $ 1,726,330 17.6 % 2.1 % 4.2 % (5.1) % 16.4 % Corporate Value-added services and other $ 4,698 $ 10,632 (55.8) % — % — % — % (55.8) % Total $ 4,698 $ 10,632 (55.8) % — % — % — % (55.8) % 1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021. PATTERSON COMPANIES, INC. OPERATING INCOME BY SEGMENT (In thousands) (Unaudited) Three Months Ended Six Months Ended October 30, 2021 October 24, 2020 October 30, 2021 October 24, 2020 Operating income (loss) Dental $ 55,570 $ 72,957 $ 54,484 $ 110,726 Animal Health 26,135 17,591 49,940 34,990 Corporate (18,845) (16,842) (81,093) (34,138) Total $ 62,860 $ 73,706 $ 23,331 $ 111,578 PATTERSON COMPANIES, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Dollars in thousands, except per share amounts) (Unaudited) For the three months ended October 30, 2021 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 62,860 $ 9,614 $ 1,863 $ — $ — $ — $ 74,337 Other income (expense), net 1,283 — — — — — 1,283 Income before taxes 64,143 9,614 1,863 — — — 75,620 Income tax expense 16,205 2,269 466 — — — 18,940 Net income 47,938 7,345 1,397 — — — 56,680 Net loss attributable to noncontrolling interests (392) — — — — — (392) Net income attributable to Patterson Companies, Inc. $ 48,330 $ 7,345 $ 1,397 $ — $ — $ — $ 57,072 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.49 $ 0.07 $ 0.01 $ — $ — $ — $ 0.58 Operating income as a % of sales 3.8 % 4.5 % Effective tax rate 25.3 % 25.0 % For the three months ended October 24, 2020 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 73,706 $ 9,250 $ — $ — $ — $ — $ 82,956 Other income (expense), net (3,158) — — — — — (3,158) Income before taxes 70,548 9,250 — — — — 79,798 Income tax expense 16,722 2,199 — — — — 18,921 Net income 53,826 7,051 — — — — 60,877 Net loss attributable to noncontrolling interests (234) — — — — — (234) Net income attributable to Patterson Companies, Inc. $ 54,060 $ 7,051 $ — $ — $ — $ — $ 61,111 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.56 $ 0.07 $ — $ — $ — $ — $ 0.63 Operating income as a % of sales 4.7 % 5.3 % Effective tax rate 23.7 % 23.7 % * 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 six months ended October 30, 2021 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 23,331 $ 19,155 $ 4,245 $ 36,000 $ 49,194 $ — $ 131,925 Other income (expense), net 85,338 — — — — (87,827) (2,489) Income before taxes 108,669 19,155 4,245 36,000 49,194 (87,827) 129,436 Income tax expense 26,929 4,506 1,061 8,460 12,308 (22,396) 30,868 Net income 81,740 14,649 3,184 27,540 36,886 (65,431) 98,568 Net loss attributable to noncontrolling interests (586) — — — — — (586) Net income attributable to Patterson Companies, Inc. $ 82,326 $ 14,649 $ 3,184 $ 27,540 $ 36,886 $ (65,431) $ 99,154 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.84 $ 0.15 $ 0.03 $ 0.28 $ 0.37 $ (0.67) $ 1.01 Operating income as a % of sales 0.7 % 4.0 % Effective tax rate 24.8 % 23.8 % For the six months ended October 24, 2020 GAAP Deal amortization Integration and business restructuring expenses Legal reserves Inventory donation charges Gains on investments Non-GAAP Operating income $ 111,578 $ 18,503 $ — $ — $ — $ — $ 130,081 Other income (expense), net (7,815) — — — — — (7,815) Income before taxes 103,763 18,503 — — — — 122,266 Income tax expense 25,735 4,400 — — — — 30,135 Net income 78,028 14,103 — — — — 92,131 Net loss attributable to noncontrolling interests (439) — — — — — (439) Net income attributable to Patterson Companies, Inc. $ 78,467 $ 14,103 $ — $ — $ — $ — $ 92,570 Diluted earnings per share attributable to Patterson Companies, Inc.* $ 0.82 $ 0.15 $ — $ — $ — $ — $ 0.96 Operating income as a % of sales 4.0 % 4.6 % Effective tax rate 24.8 % 24.6 % * May not sum due to rounding PATTERSON COMPANIES, INC. FREE CASH FLOW (In thousands) (Unaudited) Six Months Ended October 30, 2021 October 24, 2020 Net cash used in operating activities $ (539,014) $ (423,004) Additions to property and equipment (15,503) (14,370) Collection of deferred purchase price receivables 585,647 408,907 Free cash flow $ 31,130 $ (28,467) View source version on businesswire.com: https://www.businesswire.com/news/home/20211201005196/en/
INVESTOR CONTACT: John M. Wright, Investor Relations Patterson Companies Inc. 651.686.1364 investor.relations@pattersoncompanies.com MEDIA CONTACT: Patterson Corporate Communications Patterson Companies Inc. 651.905.3349 corporate.communications@pattersoncompanies.com WEB: pattersoncompanies.com