Patterson Companies Q4 Profit Down 12%, Results Miss View; Issues Weak Outlook

(RTTNews) - Patterson Companies, Inc. (PDCO), a distributor of dental, veterinary and rehabilitation supplies, on Thursday reported a 12 percent decline in profit for the fourth quarter from last year, as double-digit growth in sales was more than offset by restructuring costs.

Both revenue and adjusted earnings per share for the latest quarter missed analysts' estimates. In addition, the company forecast earnings for fiscal 2015 below Street expectations.

Scott Anderson, chairman and chief executive officer of Patterson Companies said, "We were challenged by a tough macro environment in the fiscal fourth quarter. The impact of the severe winter weather and currency fluctuations combined to constrain our performance."

The St. Paul, Minnesota-based company's net income for the fourth quarter was $55.67 million or $0.55 per share, down from $63.56 million or $0.62 per share in the year-ago period. The latest quarter's results include charges of about $5.70 million or $0.06 per share related to restructuring of the Patterson Medical division that was completed during the quarter.

Excluding the restructuring costs, adjusted net income for the quarter was $61.37 million or $0.61 per share, compared to $63.56 million or $0.62 per share in the prior-year period. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.66 per share for the quarter. Analysts' estimates typically exclude special items.

However, consolidated sales for the quarter grew 14 percent to $1.10 billion from $964.93 million in the year-earlier period. Analysts had a consensus revenue estimate of $1.13 billion for the quarter.

The latest quarter's results included $156 million of consolidated sales and an earnings contribution of $0.01 per share from the acquisition of National Veterinary Services Limited or NVS, which closed on August 16, 2013. The latest results reflect the second full-quarter contribution from NVS.

Sales for Patterson Dental, representing about 60 percent of total sales and the largest of Patterson's businesses, decreased 2 percent from the year-ago period, to $622.85 million.

Sales for Patterson Veterinary surged 77 percent from the prior-year period to $361.84 million. Patterson Veterinary now constitutes nearly one-third of the company's total sales. U.S. sales, which exclude NVS, rose about 1 percent to $205.8 million.

However, 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 first quarter as part of a restructuring of the division.

Anderson said, "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."

For fiscal 2014, Patterson's net income was $200.61 million or $1.97 per share, down from $210.27 million or $2.03 per share in the previous year. Adjusted net income was $213.88 million or $2.10 per share, compared to $210.27 million or $2.03 per share last year.

However, consolidated sales for the year grew 12 percent to $4.06 billion from $3.64 billion in the prior year.

Street expected the company to report earnings of $2.16 per share for the year on revenues of $4.09 billion.

Looking ahead to fiscal 2015, Patterson forecasts earnings in a range of $2.20 to $2.30 per share. Analysts expect the company to earn $2.38 per share for the year.

The company said it was entering fiscal 2015 with a conservative view of its markets, due to the continued uncertainty in global economies. However, it added that it was confident in its ability to execute in any economic environment.

PDCO is trading at $39.94, down $1.09 or 2.66 percent on a volume of 1.01 million shares.