In This Article:
A month has gone by since the last earnings report for Patterson Cos. (PDCO). Shares have lost about 11% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Patterson Cos. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Patterson Companies Q2 Earnings Beat, Animal Health Up
Patterson Companies reported adjusted earnings of 39 cents per share in the second quarter of fiscal 2019, beating the Zacks Consensus Estimate of 36 cents. Earnings however fell 23.5% year over year.
Net sales in the quarter were $1.40 billion, up 1.4% year over year, missing the Zacks Consensus Estimate by a slight 0.01%.
Segmental Analysis
The company currently distributes products through subsidiaries — Patterson Dental and Patterson Animal Health.
Dental Segment
This segment provides a virtually complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists as well as laboratories throughout North America.
In the second quarter, dental sales (39% of total sales) declined 2% year over year to approximately $542.5 million.
Dental Consumable
Sales in the sub-segment were $303.8 million, down 2.4% year over year.
Dental Equipment & Software
Sales in the segment fell 1.1% on a year-over-year basis to $167.7 million.
Other
This segment comprises technical service, parts and labor, software support services as well as office supplies. Sales in the segment declined 2.6% on a year-over-year basis to $71 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.
Coming to the second-quarter performance of the platform (61% of total sales), sales increased almost 3.9% on a year-over-year basis to $855.4 million.
Corporate
Sales at the segment were $6.83 million, down 19.9% year over year.
Gross Margin Analysis
Gross profit in the reported quarter was $295.1 million, down 6.5% year over year. As a percentage of revenues, gross margin contracted 180 basis points (bps) to 21% in the second quarter.
Operating expenses in the reported quarter totaled $253.9 million, up 4% on a year-over-year basis.
Guidance
For fiscal 2019, Patterson Companies has retained its guidance. Notably, earnings per share are expected in the range of $1.40 to $1.50.