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Patterson Companies (PDCO) Beats on Q2 Earnings & Revenues

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Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 58 cents in second-quarter fiscal 2022, which surpassed the Zacks Consensus Estimate of 50 cents by 16%. However, the bottom line declined 7.9% from the prior-year quarter.

GAAP EPS in the quarter was 49 cents, down 12.5% from the prior-year quarter.

Revenue Details

Net sales in the quarter were $1.65 billion, outpacing the Zacks Consensus Estimate by 9.9%. The top line improved 4.2% year over year.

Segmental Analysis

The company currently distributes products through subsidiaries — Patterson Dental and Patterson Animal Health.

Dental Segment

This segment provides a complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists, and laboratories throughout North America.

In the fiscal second quarter, dental sales dipped 1.5% year over year to $622 million.

Dental Consumable

Sales in the sub-segment totaled $356.7 million, down 0.3% year over year.

Patterson Companies, Inc. Price, Consensus and EPS Surprise

Patterson Companies, Inc. Price, Consensus and EPS Surprise

Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote

Dental Equipment & Software

Sales in the segment fell 2.4% on a year-over-year basis to $193.4 million.

Value-added Services and Other

This segment comprises technical service, parts and labor, software support services and office supplies. Sales at the segment declined 4.7% on a year-over-year basis to $72.1 million.

Animal Health Segment

This segment is a leading distributor of veterinary supplies to clinics, public and private institutions and shelters across the United States.

In the fiscal second quarter, the segment sales increased 12.4% on a year-over-year basis to $1.03 billion.

Corporate

Sales at the segment were ($0.5) million, against the year-ago quarter’s sales of $7.2 million.

Margin Analysis

Gross profit in the reported quarter was $326.4 million, up 1.9% year over year. As a percentage of revenues, gross margin of 19.8% contracted 80 basis points (bps) on a year-over-year basis.

Operating expenses in the reported quarter amounted to $263.6 million, up 6.9% from the prior-year quarter.

The company reported an operating income of $62.9 million, down 14.7% from the year-ago quarter. As a percentage of revenues, operating margin of 3.8% contracted 90 bps on a year-over-year basis.

Financial Position

The company exited the fiscal second quarter with cash and cash equivalents of $481.8 million, compared with $136.9 million on a sequential basis.

Cumulative net cash used in operating activities at the end of the fiscal second quarter was $539 million, noticeably wider than the year-ago quarter’s net cash utilized in operating activities of $423 million.

Fiscal 2022 Earnings Outlook

Patterson Companies updated its earnings outlook for fiscal 2022. The company now projects adjusted EPS in the range of $2.00 to $2.10 (up from the prior range of $1.95 to $2.05). The Zacks Consensus Estimate for the same is pegged at $2.03 per share.

Our Take

Patterson Companies ended second-quarter fiscal 2022 on a strong note, wherein both earnings and revenues beat the consensus mark. The company witnessed solid performance in the Animal Health segment in the quarter under review. Prudent cost savings approach and solid sales execution worked in favor of the stock. Sustained momentum in Animal Health business, and the company’s solid position in the market got reflected in the fiscal second-quarter results. A raised earnings outlook for fiscal 2022 is encouraging.

A broad spectrum of products cushions the company against economic downturns in the MedTech space. We believe that a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships are key catalysts.

However, weakness in the Dental segment is disappointing. Contraction in both gross and operating margins remains a headwind.

Zacks Rank

Patterson Companies carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and AmerisourceBergen Corporation (ABC - Free Report) .

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Thermo Fisher’s revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher has an estimated long-term growth rate of 14%. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%.

Medpace, currently sporting a Zacks Rank #1, reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.

Medpace has an estimated long-term growth rate of 16.4%. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 11.9%.

AmerisourceBergen, carrying a Zacks Rank #2 (Buy), reported fourth-quarter fiscal 2021 adjusted EPS of $2.39, which beat the Zacks Consensus Estimate by 1.27%. Revenues of $58.91 billion outpaced the consensus mark by 3.9%.

AmerisourceBergen has an estimated long-term growth rate of 11.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 5.48%.