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Patterson Companies Reports 4Q Results [Manufacturing Close - Up](Manufacturing Close - Up Via Acquire Media NewsEdge) Patterson Companies, Inc. reported that consolidated sales totaled $1.1 billion in its fiscal fourth quarter ended April 26, an increase of 14.2 percent from $964.9 million in the year-earlier period. In a company release on May 22, Patterson Companies noted that Net income was $61.4 million, or $0.61 per diluted share (excluding costs related to the Medical unit restructuring), versus net income of $63.6 million, or $0.62 per diluted share, in the year-ago period. Fiscal 2014 fourth quarter results included $156.0 million of consolidated sales and an earnings contribution of $0.01 per diluted share from the acquisition of NVS, which closed on August 16, 2013. Fiscal 2014 fourth quarter results reflect the second full-quarter contribution from NVS. "We were challenged by a tough macro environment in the fiscal fourth quarter," said Scott Anderson, chairman and chief executive officer. "The impact of the severe winter weather and currency fluctuations combined to constrain our performance. However, as we entered the spring months, activity has normalized." As previously disclosed, the company is implementing a global information technology initiative in order to enable Patterson to accommodate future growth, assist in securing future productivity gains and enhance the customer experience. Investments in this initiative reduced the fiscal 2014 fourth quarter earnings by approximately $0.02 per share. Patterson Dental Sales for Patterson Dental, representing approximately 60 percent of total sales and the largest of Patterson's businesses, decreased approximately 1.5 percent on a constant currency basis, from the year-earlier period, to $622.8 million in the fourth quarter of fiscal 2014. By category, again on a constant currency basis, versus the year-ago quarter, sales of: -Consumable dental supplies were up 0.4 percent to $337.7 million; -Dental equipment and software declined 4.7 percent, with basic equipment categories, however, posting strong gains; and -Other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, were up modestly from prior year levels. Commented Anderson, "We saw slight gains in consumable product sales and solid growth in basic equipment sales in the fiscal fourth quarter. While technology sales were down during the period, this comparison is against a strong quarter in fiscal 2013, and we remain confident in the underlying strength of our technology and services platform. Fourth quarter results were also impacted by unfavorable Canadian currency fluctuations and their effect on pricing in that geography." Patterson Veterinary Fourth quarter fiscal 2014 sales for the Patterson Veterinary unit increased over 77 percent from the prior year period to $361.8 million. Patterson Veterinary now constitutes nearly one-third of the company's total sales. U.S. sales, which exclude NVS, were up nearly 1.0 percent from the previous year, totaling approximately $205.8 million. For U.S. sales, versus the year-ago fourth quarter: -Consumable veterinary sales totaled $190.2 million, down approximately 0.5 percent to prior year levels; and -Veterinary equipment sales rose 24.0 percent to $11.5 million. Anderson said, "We saw strong growth in equipment sales, reflecting the solid partnerships with our equipment manufacturers and Patterson's best-in-class service and support model. Our performance represents the third consecutive quarter of double- digit equipment sales growth. We also continue to be pleased with NVS, our U.K.-based veterinary business, and its contribution to our performance." Patterson Medical Sales for Patterson Medical, the rehabilitation supply and equipment unit, were essentially flat with prior year levels, after accounting for the planned divestiture of non-core product lines in the fiscal first quarter as part of the restructuring of the division. Results in this period include approximately $0.06 per share of charges for the previously announced restructuring, which was completed during the fourth quarter, and reduced fiscal year results by $0.13 per share. The charges are predominantly non-cash. According to Anderson, "From both a strategic and financial perspective, the actions we took in fiscal 2014 were the right ones. We can now focus our efforts on those rehabilitation areas with the highest growth potential. We also believe that the restructuring will generate annual operational savings of approximately $2 million, or $0.01 per share, beginning in fiscal 2015. We are confident that we have positioned our Medical business for future success." Fiscal 2014 Full Year Results Consolidated sales for fiscal 2014 totaled nearly $4.1 billion, an increase of approximately 12 percent from $3.6 billion in the prior fiscal year. Excluding the NVS acquisition, consolidated sales for fiscal 2014 grew nominally. Net income was $213.9 million, or $2.10 per diluted share, compared to net income of $210.3 million, or $2.03 per diluted share, in the year-ago period. The full year fiscal 2014 results include: eight and one-half months of contribution from the NVS acquisition, or $0.04 per diluted share; a $0.07 per share expense impact from the planned technology investments; and excludes $0.13 per share of costs for the Patterson Medical restructuring. Share Dividends and Repurchases In March, the company increased its quarterly dividend rate by 25 percent to $0.20 per share. Patterson paid $20.3 million in cash dividends to shareholders in the fiscal fourth quarter. Approximately 1.2 million shares, with a value of $49 million, were purchased in the period. For the fiscal 2014 full year, Patterson repurchased approximately 2.4 million shares of its outstanding common stock, leaving approximately 22 million shares for repurchase under the current authorization. "Looking back on fiscal 2014, we took a number of steps to set the stage for growth going forward. In addition to purchasing NVS to expand our Veterinary footprint, we reinforced our leadership position in technology with our Dental customers. As part of our capital allocation strategy and commitment to our shareholders, we significantly raised the dividend and executed on our share repurchase plan. On the operations side of the business, our IT platform investments have allowed us to streamline parts of the organization and redeploy our resources to high potential initiatives." Business Outlook Anderson continued, "We enter fiscal 2015 with a conservative view of our markets, due to the continued uncertainty in global economies. However, we are confident in our ability to execute in any economic environment. With a streamlined and more efficient organization, we believe we have positioned Patterson for the future. With that as a backdrop, we are providing our fiscal 2015 earnings guidance in the range of $2.20 to $2.30 per diluted share." The fiscal 2015 annual financial outlook includes the following expectations: -Stable North American and international markets, with conditions similar to fiscal 2014; -No impact from share repurchases that may occur during the year; -The long-term extension of the $250 million of debt that is due in March; and -No material acquisitions during the year. Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets. More information: www.pattersoncompanies.com ((Comments on this story may be sent to [email protected])) (c) 2014 ProQuest Information and Learning Company; All Rights Reserved. |