Patterson Companies Reports Improved Second Quarter Operating Results
Second quarter earnings benefited from an increase in the dental gross margin and further strengthening of the consolidated operating expense ratio, reflecting improvements in Patterson’s cost structure that have been achieved by consolidating distribution facilities and other functions at the corporate level. Revenues for this period were adversely affected by below-plan sales of dental equipment and software.
Sales of Patterson Dental, Patterson’s largest business, increased 4% to $534,505,000 in this year’s second quarter.
Sales of the Webster Veterinary unit increased 14% in the second quarter of fiscal 2008 to $108,924,000. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, rose 14% to $98,563,000, which included contributions from the eight branch offices that have been opened during the past year.
James W. Wiltz, president and chief executive officer, commented: “Patterson Dental recorded a mixed performance in this year’s second quarter, but on balance, we are disappointed with the overall results of this unit. Sales of consumable dental supplies were solid during this period, but sales of dental equipment and software fell short of forecasted levels. Sales growth of Patterson’s veterinary business remained strong in the quarter, and the positive outlook for this unit is reinforced by the anticipated impact of two important flea and tick medications that were introduced late in the second quarter. We also are encouraged by the initial results of Patterson Medical’s branch office strategy, which is making a solid contribution to the growth of our rehabilitation business. The recent acquisition of a developer of industry-leading practice management software for physical therapists, while not expected to have an immediate impact on Patterson Medical’s sales growth, should further strengthen the full-service, value-added business platform of our rehabilitation unit.”
Wiltz continued: “We are cautious about the near-term outlook of our equipment business, since it appears that certain economic and industry conditions may be causing some customers to temporarily delay new capital investments in their practices. Given this uncertainty, we are forecasting earnings of $0.44 to $0.46 per diluted share for the third quarter of fiscal 2008 ending January 26, 2008. We also are reducing our full-year fiscal 2008 guidance to $1.68 to $1.72 per diluted share from the previously-issued guidance of $1.73 to $1.77.”
About Patterson Companies, Inc.
Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets.
Dental Market
As Patterson’s largest business, Patterson Dental 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.
Veterinary Market
Webster Veterinary is the nation’s second largest distributor of consumable veterinary supplies, equipment and software, diagnostic products, vaccines and pharmaceuticals to companion-pet veterinary clinics.
Rehabilitation Market
Patterson Medical is the world’s leading distributor of rehabilitation supplies and non-wheelchair assistive patient products to the physical and occupational therapy markets. The unit’s global customer base includes hospitals, long-term care facilities, clinics and dealers.
This release contains 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 the Company’s ability to control. The Company cautions shareholders and prospective investors that the following factors, among others, may cause actual results to differ materially from those indicated by the forward-looking statements: competition within the dental, veterinary, and rehabilitative and assistive living supply industries; changes in the economics of dentistry, including reduced growth in expenditures by private dental insurance plans, the effects of economic conditions and the effects of healthcare reform, which may affect future per capita expenditures for dental services and the ability and willingness of dentists to invest in high-technology products; the effects of healthcare related legislation and regulation which may affect expenditures or reimbursements for rehabilitative and assistive products; changes in the economics of the veterinary supply market, including reduced growth in per capita expenditures for veterinary services and reduced growth in the number of households owning pets; the ability of the Company to maintain satisfactory relationships with its sales force; unforeseen operating risks; risks associated with the dependence on manufacturers of the Company’s products; and the ability of the Company to successfully integrate the recent acquisitions into its existing business. Forward-looking statements are qualified in their entirety by the cautionary language set forth in the Company's filings with the Securities and Exchange Commission.
Second Quarter Conference Call and Replay
Patterson’s second quarter earnings conference call will start at 10:00 a.m. Eastern today. Investors can listen to a live webcast of the conference call at . Listeners should go to this website at least 15 minutes prior to the call to download and install any necessary audio software. The conference call will be archived on Patterson’s web site. A replay of the second quarter conference call can be heard through November 28, 2007 by dialing 1-303-590-3000 and providing the 11102301 confirmation code.
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