Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Patterson Companies Reports Fiscal 2023 Second Quarter Operating Results


Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of $1.63 billion (see attached Sales Summary for further details) in its fiscal second quarter ended October 29, 2022, a decrease of 1.4 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation, increased 0.7 percent over the prior year period.

Reported net income attributable to Patterson Companies, Inc. for the second quarter of fiscal 2023 was $54.1 million, or $0.55 per diluted share, compared to $48.3 million, or $0.49 per diluted share, in the second quarter of fiscal 2022. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization and integration and business restructuring expenses, totaled $61.2 million for the second quarter of fiscal 2023, or $0.63 per diluted share, compared to $57.1 million, or $0.58 per diluted share, in the second quarter of fiscal 2022. The year-over-year increase in reported and adjusted net income attributable to Patterson Companies, Inc. in the second quarter of fiscal 2023 is primarily due to operating margin expansion in both business segments.

"Our second quarter results reflect the strength of our strategy and talented team," said Don Zurbay, President and CEO of Patterson Companies. "Despite ongoing challenges in the macroeconomic environment, Patterson delivered internal sales growth, operating margin expansion in both of our segments and improved adjusted earnings performance. We also continued to execute our balanced capital allocation strategy by investing in our business, returning cash to shareholders and announcing two strategic transactions that deepen our value proposition.

"Patterson is well-positioned to achieve our goals and drive long-term shareholder value through the continued execution of our proven strategy. We remain committed to delivering on our fiscal 2023 EPS guidance."

Patterson Dental

Reported net sales in the Dental segment for the second quarter of fiscal 2023 were $628.9 million. Internal sales increased 1.6 percent compared to the fiscal 2022 second quarter. Internal sales of consumables declined 4.9 percent year-over-year primarily due to the continued moderation of infection control products compared to the pandemic-related performance in the year-ago period. Excluding infection control products, internal sales of consumables increased 1.0 percent year-over-year. Compared to the prior year period, internal sales of equipment increased 11.1 percent and internal sales of value-added services increased 7.8 percent.

Patterson Animal Health

Reported net sales in the Animal Health segment for the second quarter of fiscal 2023 were $1.0 billion. Internal sales growth of 0.7 percent year-over-year was driven by mid-single digit growth in companion animal and a low-single digit decline in production animal. Within the Animal Health segment, internal sales of consumables grew 0.6 percent, equipment and software decreased 1.6 percent and value-added services increased 19.5 percent compared to the prior year period.

Balance Sheet and Capital Allocation

During the first six months of fiscal 2023, Patterson Companies used $520.2 million of cash from operating activities and collected deferred purchase price receivables of $489.6 million, using $30.5 million in cash, compared to generating $46.6 million in the prior year period. Free cash flow1 (see definition below and attached free cash flow table) during the first six months of fiscal 2023 declined by $88.4 million compared to the first six months of fiscal 2022 due to an increased level of working capital during the first six months of fiscal 2023.

In the second quarter of fiscal 2023, 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 2023, Patterson Companies has returned $65.7 million to shareholders through cash dividends and share repurchases.

Year-to-Date Results

Consolidated reported net sales for the first six months of fiscal 2023 totaled $3.1 billion, a 3.5 percent year-over-year decrease. Sales in the first six months of fiscal 2022 reflected an extra week of sales results in the first quarter of fiscal 2022. Internal sales for the first six months of fiscal 2023, which are adjusted for the effects of currency translation and the extra week of selling results in the first quarter of fiscal 2022, increased 1.9 percent year-over-year. Through the first six months of fiscal 2023, Dental segment internal sales increased 0.5 percent, including a 3.8 percent decline in consumables and 6.5 percent growth in equipment and software. Through the first six months of fiscal 2023, Animal Health segment internal sales increased 3.1 percent, including 3.0 percent growth in consumables and 4.4 percent growth in equipment and software.

Reported net income attributable to Patterson Companies, Inc. was $78.7 million, or $0.81 per diluted share, compared to $82.3 million, or $0.84 per diluted share in last year's period. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization, integration and business restructuring expenses, legal reserves, inventory donation charges and gains on investments totaled $92.9 million, or $0.95 per diluted share, compared to $99.2 million, or $1.01 per diluted share, in the year-ago period.

Fiscal 2023 Guidance

Patterson Companies today reaffirmed its fiscal 2023 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis:

Our guidance reflects the strength of our business and competitive positioning, as well as our expectations for the North American and international end markets in which we operate, which we expect to be affected by the ongoing challenges of inflationary trends and higher interest rates as well as a potential slow-down in the broader economy. Beyond macroeconomic and geopolitical uncertainty, our guidance further assumes that there are no material adverse developments associated with 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 deal amortization, integration and business restructuring expenses, legal reserves, inventory donation charges and gains on investments 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 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 2023 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 2023 second quarter conference call can be heard for one week at 1-800-770-2030 and by providing the Conference ID 71954 when prompted.

About Patterson Companies Inc.

Patterson Companies Inc. (Nasdaq: PDCO) connects dental and animal health customers in North America and the U.K. to the latest products, technologies, services and innovative business solutions that enable operational and professional success. Our comprehensive portfolio, distribution network and supply chain is equaled only by our dedicated, knowledgeable people who deliver unrivalled expertise and unmatched customer service and support.

Learn more: pattersoncompanies.com

This press release contains, and our officers and representatives may from time to time make, certain "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, and the objectives and expectations of management. Forward-looking statements often include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "seeks" or words of similar meaning, or future or conditional verbs, such as "will," "should," "could" or "may."

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements.

Any number of factors could affect our actual results and cause such results to differ materially from those contemplated by any forward-looking statements, including, but not limited to, the following: the COVID-19 pandemic and measures taken in response thereto; uncertain macro-economic conditions, including inflationary pressures; 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 or other purchasing incentives; 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; turnover or loss of key personnel or highly skilled employees; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; risks related to climate change; 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, and the risks of the companion animal business, including the possibility of disease adversely affecting the pet population; risks from the formation or expansion 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; 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 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; and risks associated with information systems, software products and cyber-security attacks.

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 29,
2022

 

October 30,
2021

 

October 29,
2022

 

October 30,
2021

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,626,204

 

 

$

1,649,161

 

 

$

3,149,469

 

 

$

3,264,037

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

328,089

 

 

 

326,435

 

 

 

640,222

 

 

 

604,237

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

267,994

 

 

 

263,575

 

 

 

545,283

 

 

 

580,906

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

60,095

 

 

 

62,860

 

 

 

94,939

 

 

 

23,331

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Gains on investments

 

 

?

 

 

 

?

 

 

 

?

 

 

 

87,827

 

Other income, net

 

 

18,203

 

 

 

6,804

 

 

 

19,983

 

 

 

8,227

 

Interest expense

 

 

(7,544

)

 

 

(5,521

)

 

 

(13,107

)

 

 

(10,716

)

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

70,754

 

 

 

64,143

 

 

 

101,815

 

 

 

108,669

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

17,105

 

 

 

16,205

 

 

 

23,906

 

 

 

26,929

 

 

 

 

 

 

 

 

 

 

Net income

 

 

53,649

 

 

 

47,938

 

 

 

77,909

 

 

 

81,740

 

Net loss attributable to noncontrolling interests

 

 

(424

)

 

 

(392

)

 

 

(754

)

 

 

(586

)

Net income attributable to Patterson Companies, Inc.

 

$

54,073

 

 

$

48,330

 

 

$

78,663

 

 

$

82,326

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Patterson Companies, Inc.:

 

 

 

 

 

 

 

 

Basic

 

$

0.56

 

 

$

0.50

 

 

$

0.81

 

 

$

0.85

 

Diluted

 

$

0.55

 

 

$

0.49

 

 

$

0.81

 

 

$

0.84

 

 

 

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

 

 

 

Basic

 

 

96,913

 

 

 

97,321

 

 

 

96,771

 

 

 

97,089

 

Diluted

 

 

97,552

 

 

 

98,363

 

 

 

97,708

 

 

 

98,363

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.26

 

 

$

0.26

 

 

$

0.52

 

 

$

0.52

 

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

   

 

 

October 29, 2022

 

April 30, 2022

 

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

140,280

 

$

142,014

Receivables, net

 

 

454,649

 

 

447,162

Inventory

 

 

877,435

 

 

785,604

Prepaid expenses and other current assets

 

 

353,170

 

 

304,242

Total current assets

 

 

1,825,534

 

 

1,679,022

Property and equipment, net

 

 

208,120

 

 

213,140

Operating lease right-of-use assets, net

 

 

73,874

 

 

70,722

Goodwill and identifiable intangibles, net

 

 

372,845

 

 

393,244

Investments

 

 

157,777

 

 

139,182

Long-term receivables, net and other

 

 

242,318

 

 

246,320

Total assets

 

$

2,880,468

 

$

2,741,630

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

714,713

 

$

681,321

Other accrued liabilities

 

 

223,779

 

 

276,000

Operating lease liabilities

 

 

28,331

 

 

29,348

Current maturities of long-term debt

 

 

3,000

 

 

?

Borrowings on revolving credit

 

 

174,000

 

 

29,000

Total current liabilities

 

 

1,143,823

 

 

1,015,669

Long-term debt

 

 

485,522

 

 

488,554

Non-current operating lease liabilities

 

 

47,986

 

 

43,332

Other non-current liabilities

 

 

161,029

 

 

151,440

Total liabilities

 

 

1,838,360

 

 

1,698,995

Stockholders' equity

 

 

1,042,108

 

 

1,042,635

Total liabilities and stockholders' equity

 

$

2,880,468

 

$

2,741,630

 

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

   

 

 

Six Months Ended

 

 

October 29,
2022

 

October 30,
2021

Operating activities:

 

 

 

 

Net income

 

$

77,909

 

 

$

81,740

 

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

 

 

 

 

Depreciation and amortization

 

 

41,090

 

 

 

40,980

 

Gains on investments

 

 

?

 

 

 

(87,827

)

Non-cash employee compensation

 

 

8,393

 

 

 

13,497

 

Non-cash losses (gains) and other, net 

 

 

5,085

 

 

 

3,974

 

Change in assets and liabilities:

 

 

 

 

Receivables

 

 

(508,811

)

 

 

(583,939

)

Inventory

 

 

(100,596

)

 

 

(90,728

)

Accounts payable

 

 

41,557

 

 

 

165,250

 

Accrued liabilities

 

 

(47,519

)

 

 

(56,029

)

Other changes from operating activities, net

 

 

(37,269

)

 

 

(25,932

)

Net cash used in operating activities

 

 

(520,161

)

 

 

(539,014

)

Investing activities:

 

 

 

 

Additions to property and equipment

 

 

(26,779

)

 

 

(15,503

)

Collection of deferred purchase price receivables

 

 

489,639

 

 

 

585,647

 

Payments related to acquisitions, net of cash acquired

 

 

?

 

 

 

(19,793

)

Payments related to investments

 

 

(15,000

)

 

 

?

 

Sale of investments

 

 

?

 

 

 

57,245

 

Net cash provided by investing activities

 

 

447,860

 

 

 

607,596

 

Financing activities:

 

 

 

 

Dividends paid

 

 

(50,732

)

 

 

(50,407

)

Repurchases of common stock

 

 

(15,000

)

 

 

?

 

Draw (payment) on revolving credit

 

 

145,000

 

 

 

(10,000

)

Other financing activities

 

 

(1,766

)

 

 

1,959

 

Net cash provided by (used in) financing activities

 

 

77,502

 

 

 

(58,448

)

Effect of exchange rate changes on cash

 

 

(6,935

)

 

 

774

 

Net change in cash and cash equivalents

 

 

(1,734

)

 

 

10,908

 

Cash and cash equivalents at beginning of period

 

 

142,014

 

 

 

143,244

 

Cash and cash equivalents at end of period

 

$

140,280

 

 

$

154,152

 

 

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

   

 

 

October 29,
2022

 

October 30,
2021

 

Total
Sales
Growth

 

Foreign
Exchange
Impact

 

53rd
Week

 

Internal
Sales
Growth

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

 

$

1,301,256

 

 

$

1,344,812

 

 

(3.2

)%

 

(2.4

)%

 

?

%

 

(0.8

)%

Equipment and software

 

 

243,896

 

 

 

223,813

 

 

9.0

 

 

(0.5

)

 

?

 

 

9.5

 

Value-added services and other

 

 

81,052

 

 

 

80,536

 

 

0.6

 

 

(2.1

)

 

?

 

 

2.7

 

Total

 

$

1,626,204

 

 

$

1,649,161

 

 

(1.4

)%

 

(2.1

)%

 

?

%

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

 

$

337,489

 

 

$

356,654

 

 

(5.4

)%

 

(0.5

)%

 

?

%

 

(4.9

)%

Equipment and software

 

 

214,006

 

 

 

193,437

 

 

10.6

 

 

(0.5

)

 

?

 

 

11.1

 

Value-added services and other

 

 

77,428

 

 

 

72,124

 

 

7.4

 

 

(0.4

)

 

?

 

 

7.8

 

Total

 

$

628,923

 

 

$

622,215

 

 

1.1

%

 

(0.5

)%

 

?

%

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Animal Health

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

 

$

963,767

 

 

$

988,158

 

 

(2.5

)%

 

(3.1

)%

 

?

%

 

0.6

%

Equipment and software

 

 

29,890

 

 

 

30,376

 

 

(1.6

)

 

?

 

 

?

 

 

(1.6

)

Value-added services and other

 

 

9,339

 

 

 

8,933

 

 

4.5

 

 

(15.0

)

 

?

 

 

19.5

 

Total

 

$

1,002,996

 

 

$

1,027,467

 

 

(2.4

)%

 

(3.1

)%

 

?

%

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

Value-added services and other

 

$

(5,715

)

 

$

(521

)

 

n/m

 

 

?

%

 

?

%

 

n/m

 

Total

 

$

(5,715

)

 

$

(521

)

 

n/m

 

 

?

%

 

?

%

 

n/m

 

 

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

   

 

 

October 29,
2022

 

October 30,
2021

 

Total
Sales
Growth

 

Foreign
Exchange
Impact

 

53rd
Week

 

Internal
Sales
Growth

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

 

$

2,563,025

 

 

$

2,686,486

 

(4.6

)%

 

(2.2

)%

 

(3.6

)%

 

1.2

%

Equipment and software

 

 

417,831

 

 

 

407,265

 

2.6

 

 

(0.4

)

 

(3.2

)

 

6.2

 

Value-added services and other

 

 

168,613

 

 

 

170,286

 

(1.0

)

 

(1.7

)

 

(2.9

)

 

3.6

 

Total

 

$

3,149,469

 

 

$

3,264,037

 

(3.5

)%

 

(1.9

)%

 

(3.5

)%

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

 

$

675,329

 

 

$

733,230

 

(7.9

)%

 

(0.5

)%

 

(3.6

)%

 

(3.8

)%

Equipment and software

 

 

360,516

 

 

 

350,403

 

2.9

 

 

(0.5

)

 

(3.1

)

 

6.5

 

Value-added services and other

 

 

150,995

 

 

 

145,449

 

3.8

 

 

(0.4

)

 

(2.9

)

 

7.1

 

Total

 

$

1,186,840

 

 

$

1,229,082

 

(3.4

)%

 

(0.5

)%

 

(3.4

)%

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Animal Health

 

 

 

 

 

 

 

 

 

 

 

 

Consumable

 

$

1,887,696

 

 

$

1,953,256

 

(3.4

)%

 

(2.8

)%

 

(3.6

)%

 

3.0

%

Equipment and software

 

 

57,315

 

 

 

56,862

 

0.8

 

 

?

 

 

(3.6

)

 

4.4

 

Value-added services and other

 

 

18,355

 

 

 

20,139

 

(8.9

)

 

(11.6

)

 

(3.9

)

 

6.6

 

Total

 

$

1,963,366

 

 

$

2,030,257

 

(3.3

)%

 

(2.8

)%

 

(3.6

)%

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

Value-added services and other

 

$

(737

)

 

$

4,698

 

n/m

 

 

?

%

 

?

%

 

n/m

 

Total

 

$

(737

)

 

$

4,698

 

n/m

 

 

?

%

 

?

%

 

n/m

 

 

PATTERSON COMPANIES, INC.

OPERATING INCOME BY SEGMENT

(In thousands)

(Unaudited)

   

 

 

Three Months Ended

 

Six Months Ended

 

 

October 29,
2022

 

October 30,
2021

 

October 29,
2022

 

October 30,
2021

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

Dental

 

$

60,950

 

 

$

55,570

 

 

$

97,845

 

 

$

54,484

 

Animal Health

 

 

28,316

 

 

 

26,135

 

 

 

50,175

 

 

 

49,940

 

Corporate

 

 

(29,171

)

 

 

(18,845

)

 

 

(53,081

)

 

 

(81,093

)

Total

 

$

60,095

 

 

$

62,860

 

 

$

94,939

 

 

$

23,331

 

 

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

 

For the three months ended October 29, 2022

 

GAAP

 

Deal
amortization

 

Integration
and business
restructuring
expenses

 

Legal
reserves

 

Inventory
donation
charges

 

Gains on
investments

 

Non-GAAP

Operating income

 

$

60,095

 

 

$

9,327

 

$

?

 

$

?

 

$

?

 

$

?

 

$

69,422

 

Other income (expense), net

 

 

10,659

 

 

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

 

10,659

 

Income before taxes

 

 

70,754

 

 

 

9,327

 

 

?

 

 

?

 

 

?

 

 

?

 

 

80,081

 

Income tax expense

 

 

17,105

 

 

 

2,237

 

 

?

 

 

?

 

 

?

 

 

?

 

 

19,342

 

Net income

 

 

53,649

 

 

 

7,090

 

 

?

 

 

?

 

 

?

 

 

?

 

 

60,739

 

Net loss attributable to noncontrolling interests

 

 

(424

)

 

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

 

(424

)

Net income attributable to Patterson Companies, Inc.

 

$

54,073

 

 

$

7,090

 

$

?

 

$

?

 

$

?

 

$

?

 

$

61,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.55

 

 

$

0.07

 

$

?

 

$

?

 

$

?

 

$

?

 

$

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income as a % of sales

 

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

4.3

%

Effective tax rate

 

 

24.2

%

 

 

 

 

 

 

 

 

 

 

 

 

24.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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 29, 2022

 

GAAP

 

Deal
amortization

 

Integration
and business
restructuring
expenses

 

Legal
reserves

 

Inventory
donation
charges

 

Gains on
investments

 

Non-GAAP

Operating income

 

$

94,939

 

 

$

18,678

 

$

?

 

$

?

 

$

?

 

$

?

 

 

$

113,617

 

Other income (expense), net

 

 

6,876

 

 

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

 

 

6,876

 

Income before taxes

 

 

101,815

 

 

 

18,678

 

 

?

 

 

?

 

 

?

 

 

?

 

 

 

120,493

 

Income tax expense

 

 

23,906

 

 

 

4,474

 

 

?

 

 

?

 

 

?

 

 

?

 

 

 

28,380

 

Net income

 

 

77,909

 

 

 

14,204

 

 

?

 

 

?

 

 

?

 

 

?

 

 

 

92,113

 

Net loss attributable to noncontrolling interests

 

 

(754

)

 

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

 

 

(754

)

Net income attributable to Patterson Companies, Inc.

 

$

78,663

 

 

$

14,204

 

$

?

 

$

?

 

$

?

 

$

?

 

 

$

92,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.81

 

 

$

0.15

 

$

?

 

$

?

 

$

?

 

$

?

 

 

$

0.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income as a % of sales

 

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

3.6

%

Effective tax rate

 

 

23.5

%

 

 

 

 

 

 

 

 

 

 

 

 

23.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* May not sum due to rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

PATTERSON COMPANIES, INC.

FREE CASH FLOW

(In thousands)

(Unaudited)

   

 

 

Six Months Ended

 

 

October 29,
2022

 

October 30,
2021

Net cash used in operating activities

 

$

(520,161

)

 

$

(539,014

)

Additions to property and equipment

 

 

(26,779

)

 

 

(15,503

)

Collection of deferred purchase price receivables

 

 

489,639

 

 

 

585,647

 

Free cash flow

 

$

(57,301

)

 

$

31,130

 


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