Patterson Companies Inc. (PDCO) finished fiscal 2011 on a high note. The Minnesota-based distributor of dental and veterinary products posted fourth-quarter fiscal 2011 (ended April 30) earnings per share of 53 cents, ahead of the Zacks Consensus Estimate of 51 cents and the year-ago earnings of 52 cents. Net income edged up roughly 1.5% year over year to $62.7 million owing to higher sales.
For fiscal 2011, earnings per share of $1.89 beat the Zacks Consensus Estimate by a penny while exceeded the year-ago earnings of $1.78. Profit climbed 6% year over year to $225.4 million.
Revenues
Revenues for the quarter climbed 8.7% year over year to roughly $883.8 million, surpassing the Zacks Consensus Estimate of $847 million. For the full year, revenues rose 5.5% year over year to $3,415.7 million, also beating the Zacks Consensus Estimate of $3,380 million.
Revenues in the fourth quarter were driven by growth across the board. Patterson registered healthy growth in its dental technology equipment business, which bounced back from a soft third quarter.
By product catergory, revenues from consumable and printed products rose 7.6% year over year to $578.9 million. Equipment and software sales surged 14.8% to $232.5 million. Other revenues increased modestly to $72.4 million.
Segment Analysis
By business segments, revenues from Patterson’s core Dental Supply division rose 4.7% year over year in the quarter to $573.1 million, driven by higher dental equipment and software sales (up 11%). Consumable and printed product sales grew 2.5% to $320.5 million.
Dental equipment revenues were boosted by healthy sales from Patterson’s CEREC dental restoration systems and digital imaging products, backed by the company’s promotional initiatives and recovery in the North American dental market.
Webster Veterinary Supply unit posted healthy growth in the quarter with revenues climbing 13.6% to roughly $183.9 million, buoyed by solid sales of consumable supplies (up 12%) and veterinary equipment and software (up 41%).
Patterson’s Rehabilitation Supply (“Patterson Medical”) business continues its strong growth momentum with sales cruising 22.4% year over year to roughly $126.8 million, bolstered by the acquisition of DCC Healthcare.
Margins
Gross margin for the fourth quarter contracted to 34.4% from 35.4% a year-ago. Operating margin declined to 11.8% from 12.3% a year ago. Operating expenses (as a percentage of sales) fell to 22.6% from 23.1% in the earlier-year quarter.
Financial Health
Patterson ended fiscal 2011 with cash and short-term investments of roughly $388.7 million, up 14% year over year. Log-term debt remained flat year over year and sequentially at $525 million. Patterson generated operating cash flow of $262.6 million during the year, down 1.1% year over year. The company repurchased 3.3 million shares during fiscal 2011 including 1.9 million shares in the fourth quarter.
Guidance
Looking ahead, Patterson expects earnings per share of between $1.90 and $2.00 for fiscal 2012. The guidance is below the current Zacks Consensus Estimate of $2.08. Moreover, the company stated that fiscal 2012 will be a 52-week sales year versus 53 weeks in fiscal 2011.
Patterson provides a wide range of consumable supplies, equipment and software and value-added services to its customers. The company competes head-to-head with Henry Schein Inc (HSIC) in the dental market. We currently have a Neutral recommendation on the stock, backed by a short-term Zacks #3 Rank (Hold).
HENRY SCHEIN IN (HSIC): Free Stock Analysis Report
Be the first to comment