Patterson Meets Expectations

Patterson Companies, Inc. (PDCO - Analyst Report) reported fiscal second-quarter earnings per share of 41 cents, meeting the Zacks Consensus Estimate. However, earnings were better than the year-ago figure of 40 cents.
 
Sales
 
Total sales in the reported quarter increased 7% year over year to roughly $815 million. In terms of business segments: Dental Supply revenues were approximately flat year over year at $537.2 million. Veterinary Supply sales increased 30% year over year to $160.7 million. Growth can be attributed to strong demand for the company’s own products and the acquisition of Columbus Serum in October 2008.
 
Rehabilitation Supply revenues increased 18% year over year to $117.1 million primarily due to the company’s internal sales growth and acquisitions.
 
In terms of products: Consumable and printed products sales increased 9.1% year over year to $538.7 million. Equipment and software sales increased 4.5% year over year to $210.0 million. Other category of revenues registered a growth of 2.4% year over year to $66.3 million.
 
Margins
 
Patterson witnessed a contraction in margins. Gross margin declined 70 basis points (bps) year over year to 32.7%. Operating margin declined 50 bps year over year to 10.4%.
 
Balance Sheet & Cash Flow
 
Patterson ended the quarter with cash and short-term investments of roughly $170.2 million, an increase of approximately 8% in the first half of the fiscal year. The company had an outstanding long-term debt of roughly $525 million at the end of the second quarter. Cash flow from operations was $8.6 million for the quarter.
 
Outlook
 
Patterson reaffirmed its earnings per share guidance between $1.70 and $1.80 for full fiscal 2010.
 
Patterson Companies, Inc. is a distributor of dental, companion-pet veterinarian and rehabilitation supply markets in the U.S. and Canada.

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