ST. PAUL, Minn. - Patterson Companies, Inc. (NASDAQ:PDCO) reported third-quarter earnings that fell short of Wall Street expectations, alongside a slight miss in revenue, causing the company's shares to tumble by 6.71%.
The company posted adjusted earnings of $0.59 per diluted share, just below the analyst estimate of $0.60. Revenue for the quarter was $1.62 billion, missing the consensus estimate of $1.63 billion.
The dental and animal health products company also revised its fiscal 2024 GAAP earnings guidance to a range of $1.99 to $2.04 per diluted share and adjusted earnings guidance to $2.30 to $2.35 per diluted share. This outlook is slightly weaker than the analyst consensus, which had forecast adjusted EPS of $2.36 for the fiscal year.
Despite the challenges, Patterson Companies experienced a 1.0% increase in year-over-year (YoY) net sales, reaching $1.62 billion. Internal sales saw a modest rise of 0.3%, primarily driven by a 6.3% growth in dental consumables. Excluding specific infection control products, this growth was even more pronounced at 7.2% YoY.
Don Zurbay, President and CEO of Patterson Companies, acknowledged the dynamic environment the company faced during the quarter. "Our dental consumables and production animal businesses both continued to generate above-market sales growth, demonstrating the deep, differentiated value proposition we provide customers across the markets we serve," he said. Zurbay also noted the ongoing headwinds in the dental equipment market and the company's strategic investments to enhance long-term performance.
The company remains committed to returning capital to shareholders, having returned $148.8 million through dividends and share repurchases during the fiscal third quarter.
Looking at the segments, Patterson Dental reported net sales of $637.1 million, with internal sales up 2.5% compared to the third quarter of the previous fiscal year. The Dental segment saw a 6.3% increase in consumables sales YoY. On the other hand, the Animal Health segment reported net sales of $967.3 million, with internal sales down 1.5% YoY, as growth in the production animal business was offset by reduced sales in the companion animal business.
The company's balance sheet and capital allocation reflected a use of $719.8 million in cash from operating activities, while free cash flow improved by $11.9 million compared to the same period in the previous fiscal year.
Patterson Companies' revised guidance reflects the strength of its business and competitive positioning, despite expectations of being affected by inflationary trends, higher interest rates, and a potential broader economic slowdown. The company's outlook also accounts for macroeconomic and geopolitical uncertainties.
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