DOW JONES NEWSWIRES
Patterson Cos.'s (PDCO) fiscal second-quarter profit rose 5.2%
on sales boosts from acquisitions while the dental-equipment
maker's core operations continued to hold up amid the
recession.
President and Chief Executive James Wiltz, who plans to retire
next spring, noted dental practitioners are trending toward buying
equipment "with rapid and high rates of return." That is benefiting
Patterson's dental-restorative products but hurting basic
equipment.
Patterson, which controls roughly a third of the North American
dental-spending market, has cut costs by freezing wages and some of
its hiring to match lower demand. A big chunk of dental spending is
discretionary, in particular cosmetic procedures such as
teeth-whitening and work considered nonemergency, such as replacing
an aging crown.
For the quarter ended Oct. 24, Patterson reported a profit of
$49.3 million, or 41 cents a share, up from $46.9 million, or 40
cents a share, a year earlier. Revenue rose 7.3% to $815 million on
acquisitions.
Analysts on average estimated earnings of 41 cents on revenue of
$789 million, according to a poll by Thomson Reuters.
Gross margin fell to 32.7% from 33.4%.
Though Patterson has expanded into medical and animal-health
products, it depends heavily on its dental unit, which sells
everything from toothbrushes to X-ray machines. Dental-unit sales
rose $330,000 to $537.2 million as consumable supplies and office
products fell 2% and equipment and software rose 4%.
Sales at the veterinary unit jumped 30%, due mostly to
acquisitions. Wiltz said equipment sales "remained soft."
At Patterson's rehabilitation businesses, revenue climbed 18%,
also largely due to takeovers. But Wiltz noted the business
performed better than expected amid market-share gains.
Shares of Patterson, which reiterated its fiscal-year earnings
target, closed Wednesday at $26.32 and were inactive premarket. The
stock is up 40% this year.
-By Kathy Shwiff and Kevin Kingsbury, Dow Jones Newswires;
212-416-2357; Kathy.Shwiff@dowjones.com