Patterson first-quarter net income increases 20% to $53.93 million

Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $849,787,000 for the first quarter of fiscal 2011 ended July 31, an increase of 8% from $789,579,000 in the year-earlier quarter. Sales for the current quarter included the impact of an extra or fourteenth week, which will make fiscal 2011 a 53-week year ending on April 30, 2011. Net income of $53,925,000 or $0.45 per diluted share rose 20% from $45,057,000 or $0.38 per diluted share in the first quarter of fiscal 2010.

“Our expectations for fiscal 2011 have not changed from our previous guidance, and we are maintaining our earnings forecast of $1.89 to $1.99 per diluted share.”

Sales of Patterson Dental Supply, Patterson's largest business, were $542,678,000 in the first quarter, up 6% from $510,991,000 in the year-earlier period.

• Sales of consumable dental supplies and printed office products rose 7% from last year's first quarter and were essentially unchanged from the year-earlier period after excluding the impact of the additional week.
• Sales of dental equipment and software increased 5% from the year-earlier level. Equipment sales, net of CEREC® dental restoration systems, were up a strong 13%. It is difficult to measure the impact of an extra week on equipment sales due to such factors as the length of time from initial order to installation, which can span several months between quarters.
• Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth, rose 8% from last year's first quarter.

Sales of the Webster Veterinary unit increased 6% in the first quarter of fiscal 2011 to $179,635,000. Sales of Patterson Medical, the rehabilitation supply and equipment unit, increased 17% to $127,474,000. Acquisitions contributed approximately 10 percentage points of Patterson Medical's first quarter sales growth, while the additional week accounted for approximately five percentage points.

Scott P. Anderson, president and chief executive officer, commented: "We are generally pleased with Patterson's first quarter results, considering the ongoing effect of sluggish economic conditions within our served markets. Within Patterson Dental, we were encouraged by the strong sales growth of basic dental equipment, reflecting our ability to capture a significant share of the equipment business that has been deferred for the past two years. We believe this rebound in basic equipment sales is an indication that the dental market is starting to gradually strengthen. Sales of cone beam and panoramic imaging systems were robust. The sales performance of our CEREC line reflected the strong comparable level in last year's first quarter, due to the high level of interest in our initial trade-up program following the introduction of the CEREC AC® early in calendar 2009. A similar CEREC trade-up program has been running during this year's first quarter and will end later this month. For the full year, we continue to believe that CEREC sales should increase by at least 10%, and we are committing substantial marketing resources to accomplish this goal."

He continued: "Patterson Medical posted solid first quarter operating results. The June acquisition of the rehabilitation businesses of DCC Healthcare has significantly strengthened and expanded Patterson Medical's international footprint. The integration of this acquisition is proceeding on schedule. We believe Patterson Medical is well-positioned as a strong growth driver, and we are continuing to evaluate strategic acquisition opportunities for this business. We were generally pleased with Webster's first quarter performance. The impact of the additional week was offset by several factors that affected the comparability of Webster's sales. These include changes in the distribution arrangements for certain pharmaceuticals and the exit from the production animal business that was part of Columbus Serum. We also were pleased with Webster's equipment sales, which were solidly higher in the quarter."

Anderson added: "Our expectations for fiscal 2011 have not changed from our previous guidance, and we are maintaining our earnings forecast of $1.89 to $1.99 per diluted share."