Patterson reports consolidated sales of $820,084,000 for third-quarter of fiscal 2010

Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $820,084,000 for the third quarter of fiscal 2010 ended January 23, an increase of 1% from $811,023,000 in the year-earlier quarter. Net income of $56,049,000 or $.47 per diluted share rose 6% from $52,807,000 or $0.45 per diluted share in the third quarter of fiscal 2009.

Sales of Patterson Dental Supply, Patterson’s largest business, were $572,073,000 in the third quarter, down 2% from $584,140,000 in the year-earlier period.

• Sales of consumable dental supplies and printed office products rose 2% from last year’s third quarter. Internally-generated sales, excluding foreign currency adjustments and acquisitions, were up slightly, marking the first such sales growth for consumables since the fall of 2008 when the national economy started to deteriorate sharply.
• Sales of dental equipment and software declined 10% from the year-earlier level, which was consistent with Patterson’s forecast for this period.
• Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth, rose 10% from last year’s third quarter.

Sales of the Webster Veterinary unit increased 5% in the third quarter of fiscal 2010 to $151,771,000. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, increased 18% to $96,240,000. The acquisitions of Mobilis Healthcare Group in April 2009 and Empi Therapy Solutions in June 2009 accounted for the majority of the third quarter sales increase.

James W. Wiltz, president and chief executive officer, commented: “Patterson’s third quarter operating results were largely consistent with our internal forecasts as our businesses continued to experience the impact of weak economic conditions. We are encouraged that sales of dental consumable supplies started trending upward in the third quarter. However, we believe the purchasing decisions of dental practitioners for new equipment continued to be affected by the soft economy. Sales of dental equipment also faced a difficult comparison with the third quarter of fiscal 2009, when Patterson Dental significantly outperformed the dental equipment market. Although sales of CEREC dental restorative systems were down modestly in the third quarter, sales were up on a sequential quarterly basis. This was encouraging since new systems accounted for a substantial portion of third quarter CEREC sales, not trade-ins for the upgraded imaging unit. We believe the unequalled performance of CEREC has made it the most viable choice for dentists purchasing next-generation CAD/CAM equipment.”

He continued: “Sales of our Webster unit were consistent with forecasted levels in the third quarter, which is the seasonally softest period of the year for our veterinary business. Equipment sales remained sluggish as many veterinary practices continued to be cautious toward purchasing equipment. Patterson Medical’s performance also met our third quarter expectations. We believe this unit continued to gain market share in this period. The assimilation of the Mobilis and Empi acquisitions are proceeding on schedule, and we are pleased with their contributions to our third quarter performance.”

Patterson’s third quarter earnings also benefited from cost control measures that have been instituted in response to the economic downturn. The impact of acquisition-related expenses started diminishing in the third quarter and is expected to continue moderating over the balance of the year.

For full-year fiscal 2010, Patterson is forecasting earnings of $1.74 to $1.78 per diluted share as the company narrowed its previously reported range of $1.70 to $1.80.

As previously announced, Mr. Wiltz will retire as president and chief executive officer of Patterson Companies at the end of the current fiscal year on April 24, 2010. At that time, Scott P. Anderson, currently president of the Patterson Dental Supply subsidiary, will assume those positions.