Patterson Companies, Inc. (PDCO) reported earnings per share of 52 cents for the fourth quarter, beating the Zacks Consensus Estimate of 50 cents and the year-ago earnings of 46 cents. Earnings per share in fiscal 2010 was $1.78, compared to the Zacks Consensus Estimate of $1.76 and last year’s profit of $1.69.
Quarterly Results
Total sales in the fourth quarter increased 4% year over year to roughly $812.8 million. Excluding acquisitions and favorable foreign currency translation, net sales increased 1% year over year.
In terms of business segments: Dental Supply revenues increased 3% year over year to $547.3 million. Veterinary Supply sales increased 2% year over year to $162.0 million. Rehabilitation Supply revenues increased 18% year over year to $103.5 million. Growth in Rehabilitation Supply sales was primarily due to the acquisitions of Mobilis Healthcare Group in April 2009 and Empi Therapy Solutions in June 2009.
In terms of products: Consumable and printed products sales increased 3.7% year over year to $538.0 million. Equipment and software sales increased 2.1% year over year to $202.5 million. Other category of revenues registered a growth of 15.1% year over year to $72.3 million.
Patterson witnessed an expansion in margins in the fourth quarter. Gross margin increased 90 basis points (bps) year over year to 35.4%. Operating margin increased 40 bps year over year to 12.3%.
Fiscal Year Results
Total sales in fiscal 2010 increased 5% year over year to approximately $3,237.4 million. Dental Supply revenues declined 0.3% year over year to $2,167.5 million. Veterinary Supply sales increased 16.9% year over year to $643.6 million. Rehabilitation Supply revenues increased 15.5% year over year to $426.3 million.
Consumable and printed products sales increased 6.9% year over year to $2,124.6 million. Equipment and software sales declined 1.5% year over year to $839.4 million. Other category of revenues registered a growth of 7% year over year to $273.4 million.
Balance Sheet and Cash Flow
Patterson ended fiscal 2010 with cash and short-term investments of roughly $340.6 million, an increase of 115.5% year over year. Cash flow from operations was $265.5 million, an increase of 114.1% year over year.
Outlook
Patterson has provided an earnings-per-share guidance for fiscal 2011. For the year, the company expects earnings per share to range between $1.89 and $1.99.
Patterson is a distributor of dental, companion-pet veterinarian and rehabilitation supplies in the U.S. and Canada.
Currently, we have a ‘Neutral’ recommendation on Patterson.
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