Patterson Cos. (PDCO) Tops Q2 EPS by 5c; Raises FY20 EPS Guidance

Patterson Cos. (NASDAQ: PDCO) reported Q2 EPS of $0.39, $0.05 better than the analyst estimate of $0.34. Revenue for the quarter came in at $1.42 billion versus the consensus estimate of $1.42 billion.

• 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’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.”

GUIDANCE:

Patterson Cos. sees FY2020 EPS of $1.36-$1.46, versus the consensus of $1.37.

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).

For earnings history and earnings-related data on Patterson Cos. (PDCO) click here.

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