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Patterson Companies Reports Fiscal 2020 Second-Quarter Operating Results

Patterson Companies Reports Fiscal 2020 Second-Quarter Operating Results

  • Second-quarter reported net sales increased 1.0 percent to $1.42 billion, and internal sales increased 1.9 percent.
  • Adjusted operating margin increased year-over-year by 40 bps to 4.0 percent.
  • Dental segment internal sales increased 4.2 percent driven by strong equipment sales, improving trends in consumables and value-added services performance.
  • Animal Health segment internal sales increased 0.7 percent as strong Companion Animal performance offset macro challenges in the Production Animal business. 
  • Company made significant progress toward the resolution of legal matters and recorded reserve for agreement in principle with the U.S. Attorney’s Office for the Western District of Virginia.
  • Delivered second-quarter GAAP loss of $0.35 per diluted share and adjusted earnings1 of $0.39 per diluted share.
  • Updates GAAP earnings guidance range to $0.42 to $0.52 per diluted share, including the impact of the legal reserve.
  • Raises adjusted earnings1 guidance range to $1.36 to $1.46 per diluted share.

Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of approximately $1.42 billion (see attached Sales Summary for further details) in its fiscal second quarter ended October 26, 2019, an increase of 1.0 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation and changes in product selling relationships, increased 1.9 percent.

Reported net loss attributable to Patterson Companies, Inc. for the second quarter of fiscal 2020 was $33.1 million, or $0.35 per diluted share, compared to net income attributable to Patterson Companies, Inc. of $28.9 million, or $0.31 per diluted share, in the second quarter of fiscal 2019. During the quarter Patterson recorded a reserve of $58.3 million related to the agreement in principle with the U.S. Attorney’s Office for the Western District of Virginia’s (“USAO-WDVA”) investigation into the sales of prescription animal health products.

Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization costs, integration and business restructuring expenses, legal reserve expenses and accelerated debt issuance costs, totaled $36.6 million for the second quarter of fiscal 2020, or $0.39 per diluted share, compared to $36.3 million in the same quarter of fiscal 2019, or $0.39 per diluted share.

“Patterson’s continued revenue growth and improved profitability in the second quarter underscore the traction we're gaining from our ongoing actions to drive performance improvement,” said Mark Walchirk, President and CEO of Patterson Companies. “We continue to focus on building upon our momentum to grow our business on the top and bottom line, invest for the future and deliver enhanced value for our customers and shareholders. As a result of the progress we have made against our strategic priorities during the first two quarters of fiscal 2020, we are raising our adjusted earnings guidance for the year.”

Patterson Animal Health

Reported net sales in our Animal Health segment for the second quarter of fiscal 2020, which comprised approximately 60 percent of the company’s total sales, were $848.2 million compared to $855.4 million in the second quarter of last year. Internal sales for the segment increased 0.7 percent from the fiscal 2019 second quarter.

Patterson Dental

Reported net sales in our Dental segment for the second quarter of fiscal 2020, which represented approximately 40 percent of total company sales, were $564.6 million compared to $542.5 million in the second quarter of last year. Internal sales increased 4.2 percent compared to the fiscal 2019 second quarter.

Balance Sheet and Capital Allocation

During the first six months of fiscal 2020 Patterson Companies used $14.7 million of cash from operating activities and collected deferred purchase price receivables of $212.3 million, netting $197.7 million in cash, compared to a total of $365.8 million in the first six months of fiscal 2019. However, the previous year contained the initiation of the trade accounts receivable facility in the amount of $171.0 million. On an adjusted free cash flow1 basis, cash generated year-to-date in fiscal 2020 is $2.1 million higher than the year ago period.

In the second quarter of fiscal 2020, Patterson Companies paid $25.0 million in cash dividends to shareholders. On a year-to-date basis, Patterson has returned $50.5 million in cash dividends to shareholders.

Year-to-Date Results

Consolidated reported net sales for the first six months of fiscal 2020 totaled $2.75 billion, a 0.2 percent year-over-year increase. Internal sales have increased 1.2 percent compared to the first six months of fiscal 2019. Reported net loss attributable to Patterson Companies, Inc. was $3.1 million, or $0.03 per diluted share, compared to net income attributable to Patterson Companies, Inc. of $24.4 million, or $0.26 per diluted share in last year's period. The year-over-year decline is attributable to the increase in legal reserves, partially offset by an investment gain. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization costs, integration and business restructuring costs, legal reserve expenses, accelerated debt issuance costs and an investment gain, totaled $62.0 million, or $0.65 per diluted share, compared to adjusted net income attributable to Patterson Companies, Inc. of $60.3 million, or $0.65 per diluted share, in the year-ago period.

Legal Updates

Patterson recently reached an agreement in principle with the USAO-WDVA that the Company understands will resolve the government’s investigation into Animal Health International’s sales of prescription animal health products to certain persons and/or locations not licensed to receive them, and other non-compliant licensing, dispensing, distribution and related sales processes disclosed by the Company during the investigation. Patterson continues to cooperate fully with the government, in addition to conducting its own internal, company-wide investigation into licensing, dispensing, distribution and related sales practices and shared its findings with the government. Patterson’s investigation resulted in modifications of the Company’s processes that are designed to drive compliance with relevant regulations.

Under the terms of the agreement in principle with the USAO-WDVA, Patterson’s subsidiary, Animal Health International, Inc., will pay a total fine and forfeiture of $52.8 million and plead guilty to a strict-liability misdemeanor offense under the Federal Food, Drug and Cosmetic Act in connection with the failure to comply with federal law relating to the sales of prescription animal health products. In addition, Patterson and Animal Health International will enter into a Non-Prosecution Agreement. The agreement in principle with the USAO-WDVA is subject to negotiation of final terms, approval by all necessary parties, execution of definitive documents, and court approval. Upon reaching this agreement in principle with the USAO-WDVA, Patterson recorded a reserve of $58.3 million in its Corporate segment for the three and six months ended October 26, 2019 to account for the anticipated settlement of this matter and certain related costs and expenses.

As previously announced in November 2019, Patterson reached a settlement agreement with the Federal Trade Commission (“FTC”) regarding an administrative complaint filed by the FTC concerning alleged conduct in 2013 related to the company’s willingness to negotiate with “buying groups.” Patterson continues to categorically deny any wrongdoing, but for business reasons, determined that a settlement is in its best interest, and allows the company to avoid further costs, distraction and uncertainty. As a result of the settlement, Patterson and the FTC agreed not to appeal the initial recommendation of the Administrative Law Judge (“ALJ”) and Patterson agreed to abide by the terms of the ALJ’s proposed remedial order, which did not impose any monetary fine on the company or require an outside monitor. As part of the settlement, Patterson agreed to maintain its ongoing personnel training on antitrust laws and to continue making independent decisions with regard to “buying groups.”

“Patterson has made significant progress toward the resolution of legal matters facing the Company and has implemented substantial enhancements to its compliance program. As a result, Patterson is in an even stronger position to execute on our strategic goals,” said Walchirk. “Importantly, we do not expect any changes to our capital allocation strategy as a result of the agreement in principle with the U.S. Attorney’s Office for the Western District of Virginia.”

FY2020 Guidance

Patterson Companies today updated its fiscal 2020 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis:

  • GAAP earnings are now expected to be in the range of $0.42 to $0.52 per diluted share.
  • Non-GAAP adjusted earnings1 are now expected to be in the range of $1.36 to $1.46 per diluted share.
  • Our non-GAAP adjusted earnings1 guidance excludes the after-tax impact of:

- Deal amortization expenses of approximately $28.2 million ($0.30 per diluted share).

- Integration and business restructuring expenses of approximately $7.3 million ($0.08 per diluted share).

- Legal reserve expenses of approximately $72.4 million ($0.76 per diluted share).

- Accelerated debt issuance costs of approximately $1.5 million ($0.02 per diluted share).

- Accelerated derivative amortization expense of approximately $6.0 million ($0.06 per diluted share).

- Investment gain of approximately $26.5 million ($0.28 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 or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions similar to those experienced in fiscal 2019.

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, 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 reserve costs, accelerated debt issuance costs and an investment gain, along with the related tax effects of these items.

The term “adjusted free cash flow” used in this release is defined as net cash provided by (used in) operating activities less capital expenditures less the one-time benefit from the fiscal 2019 initiation of our trade account receivables facility plus collection of deferred purchase price receivables.

In addition, the term “internal sales” used in this release represents net sales adjusted to exclude foreign currency impact and changes in product selling relationships. 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 significant fluctuations in currency rates.

Management believes that these non-GAAP measures may provide a helpful representation of the company's second-quarter performance and earnings guidance, 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 2020 second-quarter earnings conference call will start at 10 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 2020 second-quarter conference call can be heard for one week at 800-585-8367 and by providing the Conference ID 3799444 when prompted.

About Patterson Companies, Inc.

Patterson Companies, Inc. (Nasdaq: PDCO) is a value-added distributor serving the dental and animal health markets.

Dental Market

Patterson’s Dental segment provides a virtually complete range of consumable dental products, equipment and software, turnkey digital solutions and value-added services to dentists and dental laboratories throughout North America.

Animal Health Market

Patterson’s Animal Health segment is a leading distributor of products, services and technologies to both the production and companion animal health markets in North America and the U.K.

This press release contains certain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond Patterson's ability to control. Forward-looking statements generally can be identified by words such as "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of Patterson or the price of Patterson stock. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such risks and uncertainties include, without limitation, operations disruptions attributable to our enterprise resource planning system implementation; our ability to attract or retain qualified sales representatives and service technicians who relate directly with our customers; the reduction, modification, cancellation or delay of purchases of innovative, high-margin equipment; material changes in our purchasing relationships with suppliers; changes in general market and economic conditions; and the other risks and important factors contained and identified in Patterson's filings with the Securities and Exchange Commission, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, any of which could cause actual results to differ materially from the forward-looking statements. Any forward-looking statement in this press release speaks only as of the date on which it is made. Except to the extent required under the federal securities laws, Patterson does not intend to update or revise the forward-looking statements.

PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended Six Months Ended
October 26,
2019
October 27,
2018
October 26,
2019
October 27,
2018
 
Net sales

$

1,418,744

 

$

1,404,752

 

$

2,747,395

 

$

2,741,072

 

 
Gross profit

 

301,494

 

 

295,076

 

 

591,548

 

 

578,739

 

 
Operating expenses

 

319,640

 

 

253,860

 

 

593,020

 

 

533,009

 

 
Operating income (loss)

 

(18,146

)

 

41,216

 

 

(1,472

)

 

45,730

 

 
Other income (expense):
Other income, net

 

269

 

 

5,941

 

 

32,186

 

 

7,194

 

Interest expense

 

(9,046

)

 

(9,456

)

 

(17,736

)

 

(20,677

)

 
Income (loss) before taxes

 

(26,923

)

 

37,701

 

 

12,978

 

 

32,247

 

 
Income tax expense

 

6,426

 

 

9,055

 

 

16,520

 

 

8,110

 

 
Net income (loss)

 

(33,349

)

 

28,646

 

 

(3,542

)

 

24,137

 

Net loss attributable to noncontrolling interests

 

(220

)

 

(223

)

 

(455

)

 

(276

)

Net income (loss) attributable to Patterson Companies, Inc.

$

(33,129

)

$

28,869

 

$

(3,087

)

$

24,413

 

 
Earnings (loss) per share attributable to Patterson Companies, Inc.:
Basic

$

(0.35

)

$

0.31

 

$

(0.03

)

$

0.26

 

Diluted

$

(0.35

)

$

0.31

 

$

(0.03

)

$

0.26

 

 
Weighted average shares:
Basic

 

94,093

 

 

92,683

 

 

93,944

 

 

92,606

 

Diluted

 

94,093

 

 

93,289

 

 

93,944

 

 

93,144

 

 
Dividends declared per common share

$

0.26

 

$

0.26

 

$

0.52

 

$

0.52

 

PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
October 26,
2019
April 27,
2019
ASSETS
Current assets:
Cash and cash equivalents

$

129,575

$

95,646

Receivables, net

 

581,288

 

582,094

Inventory

 

787,406

 

761,018

Prepaid expenses and other current assets

 

189,163

 

165,605

Total current assets

 

1,687,432

 

1,604,363

Property and equipment, net

 

308,008

 

305,790

Operating lease right-of-use assets

 

83,166

 

-

Goodwill and identifiable intangibles, net

 

1,148,832

 

1,167,379

Long-term receivables, net and other

 

208,019

 

191,737

Total assets

$

3,435,457

$

3,269,269

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

766,485

$

648,418

Other accrued liabilities

 

263,914

 

203,319

Operating lease liabilities

 

31,028

 

-

Current maturities of long-term debt

 

-

 

23,975

Total current liabilities

 

1,061,427

 

875,712

Long-term debt

 

663,513

 

725,341

Non-current operating lease liabilities

 

53,932

 

-

Other non-current liabilities

 

197,961

 

187,709

Total liabilities

 

1,976,833

 

1,788,762

Stockholders' equity

 

1,458,624

 

1,480,507

Total liabilities and stockholders' equity

$

3,435,457

$

3,269,269

PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended
October 26,
2019
October 27,
2018
 
Operating activities:
Net income (loss)

$

(3,542

)

$

24,137

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization

 

41,275

 

 

41,926

 

Investment gain

 

(34,334

)

 

-

 

Non-cash employee compensation

 

19,302

 

 

13,926

 

Deferred consideration in securitized receivables

 

(212,307

)

 

(165,567

)

Change in assets and liabilities, net of acquired

 

174,953

 

 

285,792

 

Net cash provided by (used in) operating activities

 

(14,653

)

 

200,214

 

Investing activities:
Additions to property and equipment

 

(22,851

)

 

(22,094

)

Collection of deferred purchase price receivables

 

212,307

 

 

165,567

 

Other investing activities

 

-

 

 

2,875

 

Net cash provided by investing activities

 

189,456

 

 

146,348

 

Financing activities:
Dividends paid

 

(50,504

)

 

(49,980

)

Payments on long-term debt

 

(87,090

)

 

(180,321

)

Payments on revolving credit

 

-

 

 

(16,000

)

Other financing activities

 

(4,067

)

 

3,592

 

Net cash used in financing activities

 

(141,661

)

 

(242,709

)

Effect of exchange rate changes on cash

 

787

 

 

(1,322

)

Net change in cash and cash equivalents

 

33,929

 

 

102,531

 

Cash and cash equivalents at beginning of period

 

95,646

 

 

62,984

 

Cash and cash equivalents at end of period

$

129,575

 

$

165,515

 

PATTERSON COMPANIES, INC.
SALES SUMMARY
(Dollars in thousands)
(Unaudited)
 
October 26,
2019
October 27,
2018
Total
Sales
Growth
Foreign
Exchange
Impact
Other (a) Internal Sales
Growth
Three Months Ended
 
Consolidated net sales
Consumable

$

1,128,171

$

1,138,251

(0.9

)

%

(0.8

)

%

(0.3

)

%

0.2

 

%

Equipment and software

 

202,605

 

182,120

11.2

 

(0.1

)

-

 

11.3

 

Value-added services and other

 

87,968

 

84,381

4.3

 

(0.3

)

-

 

4.6

 

Total

$

1,418,744

$

1,404,752

1.0

 

%

(0.6

)

%

(0.3

)

%

1.9

 

%

 
Dental
Consumable

$

303,123

$

303,806

(0.2

)

%

(0.1

)

%

-

 

%

(0.1

)

%

Equipment and software

 

188,192

 

167,686

12.2

 

(0.1

)

-

 

12.3

 

Value-added services and other

 

73,288

 

71,024

3.2

 

(0.1

)

-

 

3.3

 

Total

$

564,603

$

542,516

4.1

 

%

(0.1

)

%

-

 

%

4.2

 

%

 
Animal Health
Consumable

$

825,048

$

834,445

(1.1

)

%

(1.0

)

%

(0.5

)

%

0.4

 

%

Equipment and software

 

14,413

 

14,434

(0.1

)

-

 

-

 

(0.1

)

Value-added services and other

 

8,727

 

6,529

33.7

 

(2.4

)

-

 

36.1

 

Total

$

848,188

$

855,408

(0.8

)

%

(1.0

)

%

(0.5

)

%

0.7

 

%

 
Corporate
Value-added services and other

$

5,953

$

6,828

(12.8

)

%

-

 

%

-

 

%

(12.8

)

%

Total

$

5,953

$

6,828

(12.8

)

%

-

 

%

-

 

%

(12.8

)

%

 
 
Six Months Ended
 
Consolidated net sales
Consumable

$

2,224,188

$

2,247,648

(1.0

)

%

(0.8

)

%

(0.3

)

%

0.1

 

%

Equipment and software

 

341,842

 

329,018

3.9

 

(0.2

)

-

 

4.1

 

Value-added services and other

 

181,365

 

164,406

10.3

 

(0.3

)

-

 

10.6

 

Total

$

2,747,395

$

2,741,072

0.2

 

%

(0.7

)

%

(0.3

)

%

1.2

 

%

 
Dental
Consumable

$

605,134

$

608,045

(0.5

)

%

(0.2

)

%

-

 

%

(0.3

)

%

Equipment and software

 

313,876

 

302,643

3.7

 

(0.2

)

-

 

3.9

 

Value-added services and other

 

146,729

 

137,892

6.4

 

(0.1

)

-

 

6.5

 

Total

$

1,065,739

$

1,048,580

1.6

 

%

(0.2

)

%

-

 

%

1.8

 

%

 
Animal Health
Consumable

$

1,619,054

$

1,639,603

(1.3

)

%

(1.0

)

%

(0.5

)

%

0.2

 

%

Equipment and software

 

27,966

 

26,375

6.0

 

-

 

-

 

6.0

 

Value-added services and other

 

18,707

 

14,644

27.7

 

(2.1

)

-

 

29.8

 

Total

$

1,665,727

$

1,680,622

(0.9

)

%

(1.0

)

%

(0.5

)

%

0.6

 

%

 
Corporate
Value-added services and other

$

15,929

$

11,870

34.2

 

%

-

 

%

-

 

%

34.2

 

%

Total

$

15,929

$

11,870

34.2

 

%

-

 

%

-

 

%

34.2

 

%

 
 
(a) Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 26, 2019.
PATTERSON COMPANIES, INC.
OPERATING INCOME BY SEGMENT
(In thousands)
(Unaudited)
 
Three Months Ended Six Months Ended
October 26,
2019
October 27,
2018
October 26,
2019
October 27,
2018
 
Operating income (loss)
Dental

$

52,632

 

$

41,594

 

$

86,636

 

$

77,467

 

Animal Health

 

18,174

 

 

22,031

 

 

37,798

 

 

41,063

 

Corporate

 

(88,952

)

 

(22,409

)

 

(125,906

)

 

(72,800

)

Total

$

(18,146

)

$

41,216

 

$

(1,472

)

$

45,730

 

PATTERSON COMPANIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Dollars in thousands, except per share amounts)
(Unaudited)
 
For the three months ended October 26, 2019 GAAP Deal
amortization
Integration and
business
restructuring
expenses
Legal reserve
expenses†
Accelerated
debt issuance
costs
Investment
gain
Non-GAAP
Operating income (loss)

$

(18,146

)

$

9,238

$

3,792

$

61,300

$

-

$

-

 

$

56,184

 

Other income (expense), net

 

(8,777

)

 

-

 

-

 

-

 

959

 

-

 

 

(7,818

)

Income (loss) before taxes

 

(26,923

)

 

9,238

 

3,792

 

61,300

 

959

 

-

 

 

48,366

 

Income tax expense (benefit)

 

6,426

 

 

2,200

 

948

 

2,125

 

240

 

-

 

 

11,939

 

Net income (loss)

 

(33,349

)

 

7,038

 

2,844

 

59,175

 

719

 

-

 

 

36,427

 

Net loss attributable to noncontrolling interests

 

(220

)

 

-

 

-

 

-

 

-

 

-

 

 

(220

)

Net income (loss) attributable to Patterson Companies, Inc.

$

(33,129

)

$

7,038

$

2,844

$

59,175

$

719

$

-

 

$

36,647

 

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

$

(0.35

)

$

0.07

$

0.03

$

0.62

$

0.01

$

-

 

$

0.39

 

 
Operating income (loss) as a % of sales

 

(1.3

%)

 

4.0

%

Effective tax rate

 

(23.9

%)

 

24.7

%

 
For the three months ended October 27, 2018 GAAP Deal
amortization
Integration and
business
restructuring
expenses
Legal reserve
expenses
Accelerated
debt issuance
costs
Investment
gain
Non-GAAP
Operating income (loss)

$

41,216

 

$

9,715

$

-

$

-

$

-

$

-

 

$

50,931

 

Other income (expense), net

 

(3,515

)

 

-

 

-

 

-

 

-

 

-

 

 

(3,515

)

Income (loss) before taxes

 

37,701

 

 

9,715

 

-

 

-

 

-

 

-

 

 

47,416

 

Income tax expense (benefit)

 

9,055

 

 

2,289

 

-

 

-

 

-

 

-

 

 

11,344

 

Net income (loss)

 

28,646

 

 

7,426

 

-

 

-

 

-

 

-

 

 

36,072

 

Net loss attributable to noncontrolling interests

 

(223

)

 

-

 

-

 

-

 

-

 

-

 

 

(223

)

Net income (loss) attributable to Patterson Companies, Inc.

$

28,869

 

$

7,426

$

-

$

-

$

-

$

-

 

$

36,295

 

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

$

0.31

 

$

0.08

$

-

$

-

$

-

$

-

 

$

0.39

 

 
Operating income (loss) as a % of sales

 

2.9

%

 

3.6

%

Effective tax rate

 

24.0

%

 

23.9

%

 
† Includes costs and expenses incurred in the second quarter of fiscal 2020 of $58,300 related to the probable settlement of litigation with the U.S. Attorney's Office for the Western District of Virginia and $3,000 related to a settlement with a vendor to exit a purchase agreement.
 
* May not sum due to rounding
 
For the six months ended October 26, 2019 GAAP Deal
amortization
Integration and
business
restructuring
expenses
Legal reserve
expenses‡
Accelerated
debt issuance
costs
Investment
gain
Non-GAAP
Operating income (loss)

$

(1,472

)

$

18,491

$

5,747

$

78,966

$

-

$

-

 

$

101,732

 

Other income (expense), net

 

14,450

 

 

-

 

-

 

-

 

959

 

(34,334

)

 

(18,925

)

Income (loss) before taxes

 

12,978

 

 

18,491

 

5,747

 

78,966

 

959

 

(34,334

)

 

82,807

 

Income tax expense (benefit)

 

16,520

 

 

4,401

 

1,442

 

6,541

 

240

 

(7,884

)

 

21,260

 

Net income (loss)

 

(3,542

)

 

14,090

 

4,305

 

72,425

 

719

 

(26,450

)

 

61,547

 

Net loss attributable to noncontrolling interests

 

(455

)

 

-

 

-

 

-

 

-

 

-

 

 

(455

)

Net income (loss) attributable to Patterson Companies, Inc.

$

(3,087

)

$

14,090

$

4,305

$

72,425

$

719

$

(26,450

)

$

62,002

 

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

$

(0.03

)

$

0.15

$

0.05

$

0.76

$

0.01

$

(0.28

)

$

0.65

 

 
Operating income (loss) as a % of sales

 

(0.1

%)

 

3.7

%

Effective tax rate

 

127.3

%

 

25.7

%

 
For the six months ended October 27, 2018 GAAP Deal
amortization
Integration and
business
restructuring
expenses
Legal reserve
expenses
Accelerated
debt issuance
costs
Investment
gain
Non-GAAP
Operating income (loss)

$

45,730

 

$

19,681

$

-

$

28,263

$

-

$

-

 

$

93,674

 

Other income (expense), net

 

(13,483

)

 

-

 

-

 

-

 

-

 

-

 

 

(13,483

)

Income (loss) before taxes

 

32,247

 

 

19,681

 

-

 

28,263

 

-

 

-

 

 

80,191

 

Income tax expense (benefit)

 

8,110

 

 

4,575

 

-

 

7,523

 

-

 

-

 

 

20,208

 

Net income (loss)

 

24,137

 

 

15,106

 

-

 

20,740

 

-

 

-

 

 

59,983

 

Net loss attributable to noncontrolling interests

 

(276

)

 

-

 

-

 

-

 

-

 

-

 

 

(276

)

Net income (loss) attributable to Patterson Companies, Inc.

$

24,413

 

$

15,106

$

-

$

20,740

$

-

$

-

 

$

60,259

 

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

$

0.26

 

$

0.16

$

-

$

0.22

$

-

$

-

 

$

0.65

 

 
Operating income (loss) as a % of sales

 

1.7

%

 

3.4

%

Effective tax rate

 

25.1

%

 

25.2

%

 
‡ Includes costs and expenses incurred in the first quarter of fiscal 2020 of $17,666 related to the settlement of litigation with SourceOne Dental, Inc. and costs and expenses incurred in the second quarter of fiscal 2020 of $58,300 related to the probable settlement of litigation with the U.S. Attorney's Office for the Western District of Virginia and $3,000 related to a settlement with a vendor to exit a purchase agreement.
 
* May not sum due to rounding
PATTERSON COMPANIES, INC.
ADJUSTED FREE CASH FLOW
(In thousands)
(Unaudited)
 
Six Months Ended
October 26, 2019 October 27, 2018
 
Net cash provided by (used in) operating activities

$

(14,653

)

$

200,214

 

Additions to property and equipment

 

(22,851

)

 

(22,094

)

Free cash flow

 

(37,504

)

 

178,120

 

 
Collection of deferred purchase price receivables

 

212,307

 

 

165,567

 

Initiation of trade account receivables facility

 

-

 

 

(171,000

)

Adjusted free cash flow

$

174,803

 

$

172,687

 

 

INVESTORS: John M. Wright, Investor Relations
COMPANY: Patterson Companies Inc.
TEL: 651.686.1364
EMAIL: john.wright@pattersoncompanies.com

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

WEB: pattersoncompanies.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20191205005235/en/