Patterson Companies Reports Fiscal 2024 Second Quarter Operating Results

Rhea-AI Summary

Patterson Companies, Inc. (Nasdaq: PDCO) reported a 1.6% increase in net sales to $1.65 billion in the second quarter of fiscal 2024. The company delivered GAAP earnings of $0.42 per diluted share and adjusted earnings of $0.50 per diluted share. Patterson revised its fiscal 2024 GAAP earnings guidance to $2.04 to $2.14 per diluted share and adjusted earnings guidance of $2.35 to $2.45 per diluted share.

Positive

• 1.6% increase in net sales
• Healthy sales growth in the production animal business
• Returned $85.9 million to shareholders through dividends and share repurchases
• Improved free cash flow during the first six months of fiscal 2024

Negative

• Decrease in internal sales of dental equipment by 6.3%
• Lower sales in certain high-tech dental equipment categories
• Year-over-year decrease in reported and adjusted net income attributable to Patterson Companies, Inc.
• Decreased level of working capital during the first six months of fiscal 2024

• Second quarter reported net sales increased 1.6 percent year-over-year to $1.65 billion.
• Internal sales increased 1.0 percent year-over-year, driven by dental consumables growth of 2.9 percent; excluding certain infection control products, internal sales of dental consumables increased 4.7 percent year-over-year.
• Delivered second quarter GAAP earnings of $0.42 per diluted share and adjusted earnings of $0.50 per diluted share.
• Returned $85.9 million to shareholders through dividends and share repurchases.
• Revises fiscal 2024 GAAP earnings guidance to $2.04 to $2.14 per diluted share and adjusted earnings¹ guidance of $2.35 to $2.45 per diluted share.

ST. PAUL, Minn.--(BUSINESS WIRE)-- Patterson Companies, Inc. (Nasdaq: PDCO) today reported operating results for its fiscal 2024 second quarter ended October 28, 2023.

“Our team executed well against softer than anticipated demand within our end markets,” said Don Zurbay, President and CEO of Patterson Companies. “Steady patient traffic supported strong performance in our broad and resilient dental consumables portfolio that was offset by lower sales in certain high-tech dental equipment categories. Our Animal Health segment benefitted from the depth of our offering and omnichannel presence across a wide range of animal species. We delivered healthy sales growth in our production animal business while our companion animal business was impacted by moderating veterinary clinic visits.

“The macro environment challenges we faced during the second quarter do not change our core objectives or continued conviction in making strategic investments in our distribution capabilities, software offerings, and value-added services. While we have adjusted our fiscal 2024 guidance to reflect our current expectations for the near term, we remain confident in the enduring strength and resiliency of the Dental and Animal Health end markets. We continue to believe that our talented team and comprehensive value proposition make Patterson well positioned to drive enhanced growth, profitability and value creation over the long term.”

Second Quarter Fiscal 2024 Results
Consolidated net sales were $1.65 billion (see attached Sales Summary for further details), an increase of 1.6 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation, contributions from recent acquisitions and the net impact of an interest rate swap, increased 1.0 percent over the prior year period.

Reported net income attributable to Patterson Companies, Inc. for the second quarter of fiscal 2024 was $40.0 million, or $0.42 per diluted share, compared to $54.1 million, or $0.55 per diluted share, in the second quarter of fiscal 2023. Adjusted net income¹ attributable to Patterson Companies, Inc., which excludes deal amortization, totaled $47.3 million for the second quarter of fiscal 2024, or $0.50 per diluted share, compared to $61.2 million, or $0.63 per diluted share, in the second quarter of fiscal 2023. The year-over-year decrease in reported and adjusted net income attributable to Patterson Companies, Inc. in the second quarter of fiscal 2024 was primarily due to lower sales of dental technology equipment and increased operating expenses compared to the prior year period.

Patterson Dental
Reported net sales in the Dental segment for the second quarter of fiscal 2024 were $626.4 million. Internal sales decreased 0.2 percent compared to the fiscal 2023 second quarter. Internal sales of consumables increased 2.9 percent year-over-year. Excluding the deflationary impact of certain infection control products, internal sales of consumables increased 4.7 percent year-over-year. Compared to the prior year period, internal sales of equipment decreased 6.3 percent and internal sales of value-added services increased 3.1 percent.

Patterson Animal Health
Reported net sales in the Animal Health segment for the second quarter of fiscal 2024 were $1.02 billion. Internal sales growth of 0.2 percent year-over-year was driven by growth in the production animal business, which more than offset reduced sales in the companion animal business. Within the Animal Health segment, internal sales of consumables decreased 0.6 percent, equipment increased 0.9 percent and value-added services increased 67.9 percent.

Balance Sheet and Capital Allocation
During the first six months of fiscal 2024, Patterson Companies used $485.3 million of cash from operating activities and collected deferred purchase price receivables of $489.5 million, generating $4.2 million in cash, compared to using $30.5 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 2024 improved by $28.0 million compared to the first six months of fiscal 2023 due to a decreased level of working capital during the first six months of fiscal 2024.

In the second quarter of fiscal 2024, Patterson declared a quarterly cash dividend of $0.26 per share and returned $24.9 million in cash dividends to shareholders. Also, under an existing share repurchase authorization, the company repurchased approximately $61.0 million of shares during the second quarter of fiscal 2024. Through the first six months of fiscal 2024, Patterson Companies returned $140.8 million to shareholders in the form of cash dividends and share repurchases. At of the end of the second quarter of fiscal 2024, Patterson had approximately $319 million of share repurchase authority remaining on its current share repurchase authorization.

Year-to-Date Results
Consolidated reported net sales for the first six months of fiscal 2024 totaled $3.23 billion, a 2.5 percent year-over-year increase. Internal sales for the first six months of fiscal 2024, which are adjusted for the effects of currency translation, contributions from recent acquisitions and the net impact of an interest rate swap, increased 1.6 percent year-over-year. Through the first six months of fiscal 2024, Dental segment internal sales increased 0.9 percent, including a 3.7 percent increase in consumables, a 6.0 percent decline in equipment and a 4.4 percent increase in value-added services. Through the first six months of fiscal 2024, Animal Health segment internal sales increased 2.0 percent, including 1.4 percent growth in consumables, a 1.3 percent decline in equipment and a 70.1 percent increase in value-added services.

Reported net income attributable to Patterson Companies, Inc. was $71.2 million, or $0.74 per diluted share, compared to $78.7 million, or $0.81 per diluted share in last year's period. Adjusted net income¹ attributable to Patterson Companies, Inc., which excludes deal amortization, totaled $85.8 million, or $0.90 per diluted share, compared to $92.9 million, or $0.95 per diluted share, in the year-ago period.

Fiscal 2024 Guidance
Patterson Companies today revised its fiscal 2024 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted¹ basis:

• GAAP earnings are expected to be in the range of $2.04 to $2.14 per diluted share.
• Non-GAAP adjusted earnings¹ are expected to be in the range of $2.35 to $2.45 per diluted share.
• Our non-GAAP adjusted earnings¹ guidance excludes the after-tax impact of:
  • Deal amortization expenses of approximately $29.3 million ($0.31 per diluted share).

Our guidance reflects the strength of our business and competitive positioning, as well as our expectations for the North American and international end markets in which we operate, which we expect to be affected by the ongoing challenges of inflationary trends and higher interest rates as well as additional slow-down in the broader economy. Beyond macroeconomic and geopolitical uncertainty, our guidance further assumes that there are no material adverse developments associated with wide-spread public health concerns.

¹Non-GAAP Financial Measures
The Reconciliation of GAAP to non-GAAP Measures table appearing behind the accompanying financial information is provided to adjust reported GAAP measures, namely net sales, gross profit, operating expenses, operating income, other income (expense), net, income before taxes, income tax expense, net income, net loss attributable to noncontrolling interests, net income attributable to Patterson Companies, Inc., and diluted earnings per share attributable to Patterson Companies, Inc. for the impact of deal amortization and an interest rate swap along with any related tax effects of these items.

• Interest rate swap -- Our customer financing net sales include the impact of changes in interest rates on deferred purchase price receivables, as the average interest rate in our contract portfolio may not fluctuate at the same rate as interest rate markets, resulting in an increase or reduction of gain on contract sales.
  
  We enter into an interest rate swap to hedge a portion of the related interest rate risk. These agreements do not qualify for hedge accounting, and the gains or losses on an interest rate swap are reported in other income and expense in our condensed consolidated statements of operation and other comprehensive income.
  
  Beginning this quarter and for the first quarter of fiscal 2024, we present a non-GAAP adjustment to reclassify the mark-to-market adjustment on the interest rate swap from other income (expense) to net sales to align the swap impact with the impact on customer financing net sales. We believe adjusted net sales, adjusted gross profit and adjusted operating income, which include the gains and losses on the interest rate swap, provides additional comparability from period to period because they present the impact of interest rate fluctuations, net of the mark-to-market swap adjustment, within adjusted net sales. We note the net impact of interest rate fluctuations has a minimal impact on net income. Deal amortization along with the related tax effect of this item. We believe this adjustment provides comparability with other companies.

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 for the effects of currency translation, contributions from recent acquisitions and the net impact of an interest rate swap. Foreign currency impact represents the difference in results that is attributable to fluctuations in currency exchange rates the company uses to convert results for all foreign entities where the functional currency is not the U.S. dollar. The company calculates the impact as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period’s currency exchange rates. The company believes the disclosure of net sales excluding the impact of foreign currency, an interest rate swap and recent acquisitions provides useful supplementary information to investors in light of fluctuations in these variables that are independent of our period-over-period performance.

Management believes that these non-GAAP measures may provide a helpful representation of the company’s performance and enable comparison of financial results between periods where certain items may vary independent of business performance. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

Second Quarter Conference Call and Replay
Patterson Companies’ fiscal 2024 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 2024 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: wide-spread public health concerns as we experienced, and may continue to experience, with the COVID-19 pandemic; our dependence on suppliers to manufacture and supply substantially all of the products we sell; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on relationships with sales representatives and service technicians to retain customers and develop business; adverse changes in supplier rebates or other purchasing incentives; risks of selling private label products, including the risk of adversely affecting our relationships with suppliers; the risk of technological and market obsolescence for the products we sell; the risk of failing to innovate and develop new and enhanced software and e-services products; our dependence on positive perceptions of Patterson’s reputation; risks associated with illicit human use of pharmaceutical products we distribute; risks inherent in acquiring and disposing of assets or other businesses and risks inherent in integrating acquired businesses; turnover or loss of key personnel or highly skilled employees; risks associated with information systems, software products and cyber-security attacks; risks related to climate change; our ability to comply with restrictive covenants and other limits in our credit agreement; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; the effects of the highly competitive dental and animal health supply markets in which we compete; the effects of consolidation within the dental and animal health supply markets; exposure to the risks of the animal production business, including changing consumer demand, the cyclical livestock market, weather conditions, the availability of natural resources and other factors outside our control, and the risks of the companion animal business, including the possibility of disease adversely affecting the pet population; exposure to the risks of the health care industry, including changes in demand due to political, economic and regulatory influences and other factors outside our control; increases in over-the-counter sales and e-commerce options; risks from the formation or expansion of GPOs, provider networks and buying groups that may place us at a competitive disadvantage; risks of litigation and government inquiries and investigations, including the diversion of management’s attention, the cost of defending against such actions, the possibility of damage awards or settlements, fines or penalties, or equitable remedies (including but not limited to the revocation of or non-renewal of licenses) and inherent uncertainty; failure to comply with health care fraud or other laws and regulations; change and uncertainty in the health care industry; failure to comply with existing or future U.S. or foreign laws and regulations including those governing the distribution of pharmaceuticals and controlled substances; failure to comply with evolving data privacy laws and regulations; tax legislation; risks inherent in international operations, including currency fluctuations; and uncertain macro-economic conditions, including inflationary pressures.

The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive, accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results.

You should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, (“Risk Factors”) in our most recent Form 10-K and information which may be contained in our other filings with the U.S. Securities and Exchange Commission, or SEC, when reviewing any forward-looking statement.

Investors should understand it is impossible to predict or identify all such factors or risks. As such, you should not consider the foregoing list, or the risks identified in our SEC filings, to be a complete discussion of all potential risks or uncertainties.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to release publicly any revisions to any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Six Months Ended
		October 28, 2023				October 29, 2022				October 28, 2023				October 29, 2022
Net sales		$	1,652,772			$	1,626,204			$	3,229,517			$	3,149,469
Gross profit			339,026				328,089				658,081				640,222
Operating expenses			282,123				267,994				562,956				545,283
Operating income			56,903				60,095				95,125				94,939
Other income (expense):
Other income, net			7,096				18,203				18,997				19,983
Interest expense			(10,642	)			(7,544	)			(20,154	)			(13,107	)
Income before taxes			53,357				70,754				93,968				101,815
Income tax expense			13,502				17,105				22,983				23,906
Net income			39,855				53,649				70,985				77,909
Net loss attributable to noncontrolling interests			(103	)			(424	)			(207	)			(754	)
Net income attributable to Patterson Companies, Inc.		$	39,958			$	54,073			$	71,192			$	78,663
Earnings per share attributable to Patterson Companies, Inc.:
Basic		$	0.42			$	0.56			$	0.75			$	0.81
Diluted		$	0.42			$	0.55			$	0.74			$	0.81
Weighted average shares:
Basic			94,710				96,913				95,127				96,771
Diluted			95,156				97,552				95,722				97,708
Dividends declared per common share		$	0.26			$	0.26			$	0.52			$	0.52

PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		October 28, 2023			April 29, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	113,886		$	159,669
Receivables, net			490,428			477,384
Inventory			858,028			795,072
Prepaid expenses and other current assets			328,334			351,011
Total current assets			1,790,676			1,783,136
Property and equipment, net			218,977			212,283
Operating lease right-of-use assets, net			101,532			92,956
Goodwill and identifiable intangibles, net			368,351			388,293
Investments			162,531			160,022
Long-term receivables, net and other			247,623			242,456
Total assets		$	2,889,690		$	2,879,146
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	688,687		$	724,993
Other accrued liabilities			223,723			250,949
Operating lease liabilities			30,132			28,390
Current maturities of long-term debt			36,000			36,000
Borrowings on revolving credit			170,000			45,000
Total current liabilities			1,148,542			1,085,332
Long-term debt			449,974			451,231
Non-current operating lease liabilities			74,393			67,376
Other non-current liabilities			161,692			156,672
Total liabilities			1,834,601			1,760,611
Stockholders' equity			1,055,089			1,118,535
Total liabilities and stockholders' equity		$	2,889,690		$	2,879,146

PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Six Months Ended
		October 28, 2023				October 29, 2022
Operating activities:
Net income		$	70,985			$	77,909
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			42,836				41,090
Non-cash employee compensation			11,650				8,393
Non-cash losses (gains) and other, net			3,166				5,085
Change in assets and liabilities:
Receivables			(487,186	)			(508,811	)
Inventory			(67,416	)			(100,596	)
Accounts payable			(30,911	)			41,557
Accrued liabilities			(24,908	)			(47,519	)
Other changes from operating activities, net			(3,492	)			(37,269	)
Net cash used in operating activities			(485,276	)			(520,161	)
Investing activities:
Additions to property and equipment and software			(33,467	)			(26,779	)
Collection of deferred purchase price receivables			489,452				489,639
Payments related to acquisitions, net of cash acquired			(1,108	)			—
Payments related to investments			—				(15,000	)
Net cash provided by investing activities			454,877				447,860
Financing activities:
Dividends paid			(50,331	)			(50,732	)
Repurchases of common stock			(90,491	)			(15,000	)
Payments on long-term debt			(1,500	)			—
Draw on revolving credit			125,000				145,000
Other financing activities			4,141				(1,766	)
Net cash provided by (used in) financing activities			(13,181	)			77,502
Effect of exchange rate changes on cash			(2,203	)			(6,935	)
Net change in cash and cash equivalents			(45,783	)			(1,734	)
Cash and cash equivalents at beginning of period			159,669				142,014
Cash and cash equivalents at end of period		$	113,886			$	140,280

PATTERSON COMPANIES, INC.
SALES SUMMARY
(Dollars in thousands)
(Unaudited)
		October 28, 2023			October 29, 2022				Total Sales Growth			Foreign Exchange Impact			Net Interest Rate Swap			Acquisition Impact			Internal Sales Growth
Three Months Ended
Consolidated net sales
Consumable		$	1,319,363		$	1,301,256			1.4	%		0.9	%		—	%		0.2	%		0.3	%
Equipment			230,293			243,896			(5.6	)		(0.2	)		—			—			(5.4	)
Value-added services and other			103,116			81,052			27.2			0.7			(12.7	)		6.5			32.7
Total		$	1,652,772		$	1,626,204			1.6	%		0.7	%		(0.6	)%		0.5	%		1.0	%
Dental
Consumable		$	346,492		$	337,489			2.7	%		(0.2	)%		—	%		—	%		2.9	%
Equipment			200,127			214,006			(6.5	)		(0.2	)		—			—			(6.3	)
Value-added services and other			79,762			77,428			3.0			(0.1	)		—			—			3.1
Total		$	626,381		$	628,923			(0.4	)%		(0.2	)%		—	%		—	%		(0.2	)%
Animal Health
Consumable		$	972,871		$	963,767			0.9	%		1.2	%		—	%		0.3	%		(0.6	)%
Equipment			30,166			29,890			0.9			—			—			—			0.9
Value-added services and other			21,585			9,339			131.1			6.5			—			56.7			67.9
Total		$	1,024,622		$	1,002,996			2.2	%		1.2	%		—	%		0.8	%		0.2	%
Corporate
Value-added services and other		$	1,769		$	(5,715	)		(131.0	)%		—	%		180.0	%		—	%		(311.0	)%
Total		$	1,769		$	(5,715	)		(131.0	)%		—	%		180.0	%		—	%		(311.0	)%

PATTERSON COMPANIES, INC.
SALES SUMMARY
(Dollars in thousands)
(Unaudited)
		October 28, 2023			October 29, 2022				Total Sales Growth			Foreign Exchange Impact			Net Interest Rate Swap			Acquisition Impact			Internal Sales Growth
Six Months Ended
Consolidated net sales
Consumable		$	2,635,088		$	2,563,025			2.8	%		0.6	%		—	%		0.2	%		2.0	%
Equipment			394,264			417,831			(5.6	)		(0.2	)		—			—			(5.4	)
Value-added services and other			200,165			168,613			18.7			0.4			(0.9	)		6.2			13.0
Total		$	3,229,517		$	3,149,469			2.5	%		0.4	%		—	%		0.5	%		1.6	%
Dental
Consumable		$	698,539		$	675,329			3.4	%		(0.3	)%		—	%		—	%		3.7	%
Equipment			337,676			360,516			(6.3	)		(0.3	)		—			—			(6.0	)
Value-added services and other			157,466			150,995			4.3			(0.1	)		—			—			4.4
Total		$	1,193,681		$	1,186,840			0.6	%		(0.3	)%		—	%		—	%		0.9	%
Animal Health
Consumable		$	1,936,549		$	1,887,696			2.6	%		0.9	%		—	%		0.3	%		1.4	%
Equipment			56,588			57,315			(1.3	)		—			—			—			(1.3	)
Value-added services and other			42,475			18,355			131.4			4.6			—			56.7			70.1
Total		$	2,035,612		$	1,963,366			3.7	%		0.9	%		—	%		0.8	%		2.0	%
Corporate
Value-added services and other		$	224		$	(737	)		(130.4	)%		—	%		212.3	%		—	%		(342.7	)%
Total		$	224		$	(737	)		(130.4	)%		—	%		212.3	%		—	%		(342.7	)%

PATTERSON COMPANIES, INC.
SALES SUMMARY
(Dollars in thousands)
(Unaudited)
		July 29, 2023				July 30, 2022			Total Sales Growth			Foreign Exchange Impact			Net Interest Rate Swap			Acquisition Impact			Internal Sales Growth
Three Months Ended
Consolidated net sales
Consumable		$	1,315,725			$	1,261,769		4.3	%		0.3	%		—	%		0.2	%		3.8	%
Equipment			163,971				173,935		(5.7	)		(0.3	)		—			—			(5.4	)
Value-added services and other			97,049				87,561		10.8			0.1			10.0			5.8			(5.1	)
Total		$	1,576,745			$	1,523,265		3.5	%		0.2	%		0.6	%		0.5	%		2.2	%
Dental
Consumable		$	352,047			$	337,840		4.2	%		(0.4	)%		—	%		—	%		4.6	%
Equipment			137,549				146,510		(6.1	)		(0.4	)		—			—			(5.7	)
Value-added services and other			77,704				73,567		5.6			(0.2	)		—			—			5.8
Total		$	567,300			$	557,917		1.7	%		(0.4	)%		—	%		—	%		2.1	%
Animal Health
Consumable		$	963,678			$	923,929		4.3	%		0.5	%		—	%		0.3	%		3.5	%
Equipment			26,422				27,425		(3.7	)		—			—			—			(3.7	)
Value-added services and other			20,890				9,016		131.7			2.7			—			56.7			72.3
Total		$	1,010,990			$	960,370		5.3	%		0.5	%		—	%		0.8	%		4.0	%
Corporate
Value-added services and other		$	(1,545	)		$	4,978		(131.0	)%		—	%		175.2	%		—	%		(306.2	)%
Total		$	(1,545	)		$	4,978		(131.0	)%		—	%		175.2	%		—	%		(306.2	)%

PATTERSON COMPANIES, INC.
OPERATING INCOME BY SEGMENT
(In thousands)
(Unaudited)
		Three Months Ended								Six Months Ended
		October 28, 2023				October 29, 2022				October 28, 2023				October 29, 2022
Operating income (loss)
Dental		$	55,277			$	60,950			$	93,947			$	97,845
Animal Health			26,346				28,316				56,039				50,175
Corporate			(24,720	)			(29,171	)			(54,861	)			(53,081	)
Total		$	56,903			$	60,095			$	95,125			$	94,939

PATTERSON COMPANIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Dollars in thousands, except per share amounts)
(Unaudited)
For the three months ended October 28, 2023		GAAP				Deal amortization				Interest rate swap				Non-GAAP
Net sales		$	1,652,772			$	—			$	2,786			$	1,655,558
Gross profit			339,026				—				2,786				341,812
Operating expenses			282,123				(9,628	)			—				272,495
Operating income			56,903				9,628				2,786				69,317
Other income (expense), net			(3,546	)			—				(2,786	)			(6,332	)
Income before taxes			53,357				9,628				—				62,985
Income tax expense			13,502				2,305				—				15,807
Net income			39,855				7,323				—				47,178
Net loss attributable to noncontrolling interests			(103	)			—				—				(103	)
Net income attributable to Patterson Companies, Inc.		$	39,958			$	7,323			$	—			$	47,281
Diluted earnings per share attributable to Patterson Companies, Inc.*		$	0.42			$	0.08			$	—			$	0.50
Gross margin			20.5	%											20.6	%
Operating margin			3.4	%											4.2	%
Effective tax rate			25.3	%											25.1	%
For the three months ended October 29, 2022		GAAP				Deal amortization				Interest rate swap				Non-GAAP
Net sales		$	1,626,204			$	—			$	13,072			$	1,639,276
Gross profit			328,089				—				13,072				341,161
Operating expenses			267,994				(9,327	)			—				258,667
Operating income			60,095				9,327				13,072				82,494
Other income (expense), net			10,659				—				(13,072	)			(2,413	)
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
Gross margin			20.2	%											20.8	%
Operating margin			3.7	%											5.0	%
Effective tax rate			24.2	%											24.2	%
* 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 28, 2023		GAAP				Deal amortization				Interest rate swap				Non-GAAP
Net sales		$	3,229,517			$	—			$	9,561			$	3,239,078
Gross profit			658,081				—				9,561				667,642
Operating expenses			562,956				(19,254	)			—				543,702
Operating income			95,125				19,254				9,561				123,940
Other income (expense), net			(1,157	)			—				(9,561	)			(10,718	)
Income before taxes			93,968				19,254				—				113,222
Income tax expense			22,983				4,609				—				27,592
Net income			70,985				14,645				—				85,630
Net loss attributable to noncontrolling interests			(207	)			—				—				(207	)
Net income attributable to Patterson Companies, Inc.		$	71,192			$	14,645			$	—			$	85,837
Diluted earnings per share attributable to Patterson Companies, Inc.*		$	0.74			$	0.15			$	—			$	0.90
Gross margin			20.4	%											20.6	%
Operating margin			2.9	%											3.8	%
Effective tax rate			24.5	%											24.4	%
For the six months ended October 29, 2022		GAAP				Deal amortization				Interest rate swap				Non-GAAP
Net sales		$	3,149,469			$	—			$	11,124			$	3,160,593
Gross profit			640,222				—				11,124				651,346
Operating expenses			545,283				(18,678	)			—				526,605
Operating income			94,939				18,678				11,124				124,741
Other income (expense), net			6,876				—				(11,124	)			(4,248	)
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
Gross margin			20.3	%											20.6	%
Operating margin			3.0	%											3.9	%
Effective tax rate			23.5	%											23.6	%
* 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 three months ended July 29, 2023		GAAP				Deal amortization				Interest rate swap				Non-GAAP
Net sales		$	1,576,745			$	—			$	6,775			$	1,583,520
Gross profit			319,055				—				6,775				325,830
Operating expenses			280,833				(9,626	)			—				271,207
Operating income			38,222				9,626				6,775				54,623
Other income (expense), net			2,389				—				(6,775	)			(4,386	)
Income before taxes			40,611				9,626				—				50,237
Income tax expense			9,481				2,304				—				11,785
Net income			31,130				7,322				—				38,452
Net loss attributable to noncontrolling interests			(104	)			—				—				(104	)
Net income attributable to Patterson Companies, Inc.		$	31,234			$	7,322			$	—			$	38,556
Diluted earnings per share attributable to Patterson Companies, Inc.*		$	0.32			$	0.08			$	—			$	0.40
Gross margin			20.2	%											20.6	%
Operating margin			2.4	%											3.4	%
Effective tax rate			23.3	%											23.5	%
For the three months ended July 30, 2022		GAAP				Deal amortization				Interest rate swap				Non-GAAP
Net sales		$	1,523,265			$	—			$	(1,948	)		$	1,521,317
Gross profit			312,133				—				(1,948	)			310,185
Operating expenses			277,289				(9,351	)			—				267,938
Operating income			34,844				9,351				(1,948	)			42,247
Other income (expense), net			(3,783	)			—				1,948				(1,835	)
Income before taxes			31,061				9,351				—				40,412
Income tax expense			6,801				2,237				—				9,038
Net income			24,260				7,114				—				31,374
Net loss attributable to noncontrolling interests			(330	)			—				—				(330	)
Net income attributable to Patterson Companies, Inc.		$	24,590			$	7,114			$	—			$	31,704
Diluted earnings per share attributable to Patterson Companies, Inc.*		$	0.25			$	0.07			$	—			$	0.32
Gross margin			20.5	%											20.4	%
Operating margin			2.3	%											2.8	%
Effective tax rate			21.9	%											22.4	%
* May not sum due to rounding

PATTERSON COMPANIES, INC.
FREE CASH FLOW
(In thousands)
(Unaudited)
		Six Months Ended
		October 28, 2023				October 29, 2022
Net cash used in operating activities		$	(485,276	)		$	(520,161	)
Additions to property and equipment and software			(33,467	)			(26,779	)
Collection of deferred purchase price receivables			489,452				489,639
Free cash flow		$	(29,291	)		$	(57,301	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231129971564/en/

INVESTORS:

John M. Wright, Investor Relations

Patterson Companies Inc.

651.686.1364

investor.relations@pattersoncompanies.com

MEDIA:

Patterson Corporate Communications

Patterson Companies Inc.

651.905.3349

corporate.communications@pattersoncompanies.com

pattersoncompanies.com

Source: Patterson Companies Inc.

FAQ

What are the reported net sales for Patterson Companies, Inc. in the second quarter of fiscal 2024?

Patterson Companies, Inc. reported net sales of $1.65 billion in the second quarter of fiscal 2024.

What was Patterson Companies, Inc.'s GAAP earnings per diluted share in the second quarter of fiscal 2024?

Patterson Companies, Inc. delivered GAAP earnings of $0.42 per diluted share in the second quarter of fiscal 2024.

What is the ticker symbol for Patterson Companies, Inc.?

Patterson Companies, Inc.'s ticker symbol is PDCO.

What is Patterson Companies, Inc.'s fiscal 2024 adjusted earnings guidance?

Patterson Companies, Inc. revised its fiscal 2024 adjusted earnings guidance to $2.35 to $2.45 per diluted share.