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Patterson Companies (PDCO) Q1 Earnings In Line, Sales Hurt by FX
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Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 40 cents for first-quarter fiscal 2024, on par with the Zacks Consensus Estimate. The bottom line increased 25% from the prior-year quarter’s level.
GAAP EPS in the quarter was 32 cents, up 28% from that recorded in the year-ago period.
Revenue Details
Net sales in the quarter were $1.58 billion, which lagged the Zacks Consensus Estimate by 0.4%. The top line increased 3.5% year over year. Internal sales, adjusted for the effects of currency translation, increased 2.8% from the prior-year quarter’s figure.
Segmental Analysis
The company currently distributes products through its 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 first quarter of fiscal 2024, dental sales improved 1.7% year over year to $567.3 million.
Dental Consumable
Sales in the sub-segment totaled $352 million, up 4.2% from the year-ago quarter’s number.
Dental Equipment
Sales in the segment declined 6.1% on a year-over-year basis to $137.5 million.
Value-added Services and Other
This segment comprises of technical service, parts and labor, software support services and office supplies. Sales improved 5.6% year over year to $77.7 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 first quarter, sales increased 5.3% to $1.01 billion from the prior-year period’s level.
Corporate
The segment recorded revenues of $1.5 million against expenses of $5 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $319.1 million, up 2.2% year over year. As a percentage of revenues, the gross margin of 20.2% contracted approximately 30 basis points (bps) on a year-over-year basis.
Operating expenses amounted to $280.8 million, up 1.1% from the prior-year quarter’s figure.
The company reported an operating income of $38.2 million, up 9.7% from the year-ago quarter’s level.
Financial Position
PDCO exited the fiscal first quarter with cash and cash equivalents of $108.6 million compared with $159.7 million on a sequential basis.
Cumulative net cash used in operating activities at the end of the quarter totaled $253.4 million compared with $302.5 million in the year-ago period.
Fiscal 2024 Earnings Outlook
Patterson Companies reiterated its earnings guidance for fiscal 2024. The company projects adjusted EPS in the range of $2.45-$2.55. The Zacks Consensus Estimate for the same is pegged at $2.50.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies ended first-quarter fiscal 2024 on a mixed note, wherein earnings were in line with the consensus mark but revenues beat the same.
Both the Dental and the Animal Health segment showed signs of improvement. Sales at both the segments were hurt by unfavorable currency movement. A prudent cost-savings approach and solid sales execution worked in favor of the stock, expanding adjusted operating margin. Sustained momentum in the Animal Health business bodes well.
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 the key catalysts.
Zacks Rank and Other Stocks to Consider
Patterson Companies currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 74.3% year to date compared with the industry’s 16.1% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 11% year to date against the industry’s 9.7% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 12.4% year to date compared with the industry’s 15.5% growth.
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Patterson Companies (PDCO) Q1 Earnings In Line, Sales Hurt by FX
Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 40 cents for first-quarter fiscal 2024, on par with the Zacks Consensus Estimate. The bottom line increased 25% from the prior-year quarter’s level.
GAAP EPS in the quarter was 32 cents, up 28% from that recorded in the year-ago period.
Revenue Details
Net sales in the quarter were $1.58 billion, which lagged the Zacks Consensus Estimate by 0.4%. The top line increased 3.5% year over year. Internal sales, adjusted for the effects of currency translation, increased 2.8% from the prior-year quarter’s figure.
Segmental Analysis
The company currently distributes products through its 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 first quarter of fiscal 2024, dental sales improved 1.7% year over year to $567.3 million.
Dental Consumable
Sales in the sub-segment totaled $352 million, up 4.2% from the year-ago quarter’s number.
Dental Equipment
Sales in the segment declined 6.1% on a year-over-year basis to $137.5 million.
Value-added Services and Other
This segment comprises of technical service, parts and labor, software support services and office supplies. Sales improved 5.6% year over year to $77.7 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 first quarter, sales increased 5.3% to $1.01 billion from the prior-year period’s level.
Corporate
The segment recorded revenues of $1.5 million against expenses of $5 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $319.1 million, up 2.2% year over year. As a percentage of revenues, the gross margin of 20.2% contracted approximately 30 basis points (bps) on a year-over-year basis.
Operating expenses amounted to $280.8 million, up 1.1% from the prior-year quarter’s figure.
The company reported an operating income of $38.2 million, up 9.7% from the year-ago quarter’s level.
Financial Position
PDCO exited the fiscal first quarter with cash and cash equivalents of $108.6 million compared with $159.7 million on a sequential basis.
Cumulative net cash used in operating activities at the end of the quarter totaled $253.4 million compared with $302.5 million in the year-ago period.
Fiscal 2024 Earnings Outlook
Patterson Companies reiterated its earnings guidance for fiscal 2024. The company projects adjusted EPS in the range of $2.45-$2.55. The Zacks Consensus Estimate for the same is pegged at $2.50.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote
Our Take
Patterson Companies ended first-quarter fiscal 2024 on a mixed note, wherein earnings were in line with the consensus mark but revenues beat the same.
Both the Dental and the Animal Health segment showed signs of improvement. Sales at both the segments were hurt by unfavorable currency movement. A prudent cost-savings approach and solid sales execution worked in favor of the stock, expanding adjusted operating margin. Sustained momentum in the Animal Health business bodes well.
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 the key catalysts.
Zacks Rank and Other Stocks to Consider
Patterson Companies currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
Align Technology, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 74.3% year to date compared with the industry’s 16.1% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 11% year to date against the industry’s 9.7% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 12.4% year to date compared with the industry’s 15.5% growth.