Business Wire | Dec 1, 2021 07:00AM EST

Patterson Companies Reports Fiscal 2022 Second-Quarter Operating Results

Dec. 01, 2021

ST. PAUL, Minn.--(BUSINESS WIRE)--Dec. 01, 2021--Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of $1.65 billion (see attached Sales Summary for further details) in its fiscal second quarter ended October 30, 2021, an increase of 6.2 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships and contributions from recent acquisitions, increased 8.3 percent over the prior year.

Reported net income attributable to Patterson Companies, Inc. for the second quarter of fiscal 2022 was $48.3 million, or $0.49 per diluted share, compared to $54.1 million, or $0.56 per diluted share, in the second quarter of fiscal 2021. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes deal amortization and integration and business restructuring expenses, totaled $57.1 million for the second quarter of fiscal 2022, or $0.58 per diluted share, compared to $61.1 million in the same quarter of fiscal 2021, or $0.63 per diluted share. The year-over-year decline in reported and adjusted net income attributable to Patterson Companies, Inc. is primarily due to lower expenses in the prior year period associated with COVID-19. The year-over-year decline was partially offset by strong sales performance in the Animal Health segment during the second quarter of fiscal 2022.

"Our top and bottom line results during the second quarter and first half of fiscal 2022 reflect the strong focus and execution of our team and that our value proposition continues to resonate with our customers," said Mark Walchirk, President and CEO of Patterson Companies. "Given our momentum and confidence in the business, we are increasing our adjusted EPS guidance range for fiscal 2022. We remain focused on leveraging the combined strength of Patterson's team, strategy and deep value proposition to serve our customers, accelerate our growth and drive long-term value creation."

Patterson Dental

Reported net sales in our Dental segment for the second quarter of fiscal 2022, which represented approximately 38 percent of total company sales, were $622.2 million. Internal sales decreased 2.0 percent compared to the fiscal 2021 second quarter, including a 0.8 percent decline in consumables and a 3.0 percent decline in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 9.8 percent, including 16.7 percent growth in consumables and 2.3 percent growth in equipment and software.

Patterson Animal Health

Reported net sales in our Animal Health segment for the second quarter of fiscal 2022, which comprised approximately 62 percent of the company's total sales, were $1.0 billion. Internal sales growth of 16.2 percent was driven by continued strong performance in companion animal and additional recovery in production animal and included 15.8 percent growth in consumables and 37.8 percent growth in equipment and software. Compared to the pre-pandemic period of the second quarter of fiscal 2020, internal sales increased 24.3 percent, including 23.5 percent growth in consumables and 72.6 percent growth in equipment and software.

Balance Sheet and Capital Allocation

During the first six months of fiscal 2022, Patterson Companies used $539.0 million of cash from operating activities and collected deferred purchase price receivables of $585.6 million, generating $46.6 million in cash, compared to a use of cash of $14.1 million during the first six months of fiscal 2021. Free cash flow1 (see definition below and attached free cash flow table) during the first six months of fiscal 2022 improved by $59.6 million compared to the fiscal 2021 period due to a decreased level of working capital during fiscal 2022.

In the second quarter of fiscal 2022, Patterson Companies declared a quarterly cash dividend of $0.26 per share and returned $25.3 million in cash dividends to shareholders. Through the first six months of fiscal 2022, Patterson Companies has returned $50.4 million in cash dividends to shareholders.

Year-to-Date Results

Consolidated reported net sales for the first six months of fiscal 2022 totaled $3.3 billion, a 16.6 percent year-over-year increase. Sales in the first six months of fiscal 2022 reflected an extra week of sales results in the fiscal first quarter versus the prior year. Internal sales, which are adjusted for the effects of currency translation, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022, increased 13.9 percent compared to the first six months of fiscal 2021. Through the first six months of fiscal 2022, Dental segment internal sales increased 10.8 percent, including 13.8 percent growth in consumables and 8.2 percent growth in equipment and software. Through the first six months of fiscal 2022, Animal Health segment internal sales increased 16.4 percent, including 15.7 percent growth in consumables and 42.7 percent growth in equipment and software.

Reported net income attributable to Patterson Companies, Inc. was $82.3 million, or $0.84 per diluted share, compared to a $78.5 million, or $0.82 per diluted share in last year's period. Adjusted net income1 attributable to Patterson Companies, Inc., which excludes gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses totaled $99.2 million, or $1.01 per diluted share, compared to adjusted net income attributable to Patterson Companies, Inc. of $92.6 million, or $0.96 per diluted share, in the year-ago period.

Fiscal 2022 Guidance

Patterson Companies today updated its fiscal 2022 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted1 basis:

* GAAP earnings are expected to be in the range of $1.69 to $1.79 per diluted share, compared to our prior guidance of $1.64 to $1.74 per diluted share. * Non-GAAP adjusted earnings1 are expected to be in the range of $2.00 to $2.10 per diluted share, compared to our prior guidance of $1.95 to $2.05 per diluted share. * Our non-GAAP adjusted earnings1 guidance excludes the after-tax impact of: Gains on investments of approximately $65.4 million ($0.67 per diluted share). Inventory donation charges of approximately $36.9 million ($0.37 per diluted share). Deal amortization expenses of approximately $29.4 million ($0.30 per diluted share). Legal reserves of approximately $27.5 million ($0.28 per diluted share). Integration and business restructuring expenses of approximately $3.2 million ($0.03 per diluted share).

Our guidance is for current operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions, dispositions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions remain consistent with current market conditions and that there are no material adverse developments associated with the pandemic.

1Non-GAAP Financial Measures

The Reconciliation of GAAP to non-GAAP Measures table appearing behind the accompanying financial information is provided to adjust reported GAAP measures, namely operating income, other income (expense), net, income before taxes, income tax expense, net income, net income attributable to Patterson Companies, Inc. and diluted earnings per share attributable to Patterson Companies, Inc., for the impact of gains on investments, inventory donation charges, deal amortization, legal reserves and integration and business restructuring expenses along with the related tax effects of these items.

The term "free cash flow" used in this release is defined as net cash used in operating activities less capital expenditures plus the collection of deferred purchase price receivables.

In addition, the term "internal sales" used in this release represents net sales adjusted to exclude the impact of foreign currency, changes in product selling relationships, contributions from recent acquisitions and the extra week of selling results in the first quarter of fiscal 2022. Foreign currency impact represents the difference in results that is attributable to fluctuations in currency exchange rates the company uses to convert results for all foreign entities where the functional currency is not the U.S. dollar. The company calculates the impact as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period's currency exchange rates. The company believes the disclosure of net sales changes in constant currency provides useful supplementary information to investors in light of fluctuations in currency rates.

Management believes that these non-GAAP measures may provide a helpful representation of the company's second-quarter performance and enable comparison of financial results between periods where certain items may vary independent of business performance. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

Second-Quarter Conference Call and Replay

Patterson Companies' fiscal 2022 second-quarter conference call will start at 8:30 a.m. Eastern today. Investors can listen to a live webcast of the conference call at www.pattersoncompanies.com. The conference call will be archived on the Patterson Companies website. A replay of the fiscal 2022 second-quarter conference call can be heard for one week at 1-800-770-2030 and by providing the Conference ID 73285 when prompted.

About Patterson Companies Inc.

Patterson Companies Inc. (Nasdaq: PDCO) connects dental and animal health customers in North America and the U.K. to the latest products, technologies, services and innovative business solutions that enable operational and professional success. Our comprehensive portfolio, distribution network and supply chain is equaled only by our dedicated, knowledgeable people who deliver unrivalled expertise and unmatched customer service and support.

Learn more: pattersoncompanies.com

This press release contains, and our officers and representatives may from time to time make, certain "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, and the objectives and expectations of management. Forward-looking statements often include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "seeks" or words of similar meaning, or future or conditional verbs, such as "will," "should," "could" or "may."

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements.

Any number of factors could affect our actual results and cause such results to differ materially from those contemplated by any forward-looking statements, including, but not limited to, the following: the COVID-19 pandemic and measures taken in response thereto; our dependence on relationships with sales representatives and service technicians to retain customers and develop business; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on suppliers to manufacture and supply substantially all of the products we sell; the risk of the products we sell becoming obsolete or containing undetected errors; adverse changes in supplier rebates; the risk that private label sales could adversely affect our relationships with suppliers; our dependence on positive perceptions of Patterson's reputation; risks inherent in acquiring and disposing of assets or other businesses and the risks inherent in integrating acquired businesses; our ability to comply with restrictive covenants in our credit agreement; our dependence on leadership development and succession planning; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; the effects of the highly competitive and consolidating dental and animal health supply markets in which we compete; exposure to the risks of the animal production business, including changing consumer demand, the cyclical livestock market, and other factors outside our control; risks from the formation of GPOs, provider networks and buying groups that may shift purchasing decisions and place us at a competitive disadvantage; increases in over-the-counter sales and e-commerce options for companion animal products or sales of companion animal products from non-veterinarian sources; change and uncertainty in the health care industry, including the effects of health care reform; failure to comply with existing or future U.S. or foreign laws and regulations including those governing the distribution of pharmaceuticals and controlled substances; public concern over the abuse of opioid medication in the U.S.; failure to comply with health care fraud or other laws and regulations; litigation risks, including the diversion of management's attention, the cost of defending against such actions, the possibility of damage awards or settlements, fines or penalties, or equitable remedies (including but not limited to the revocation of or non-renewal of licenses) and inherent uncertainty; failure to comply with evolving data privacy laws and regulations; tax legislation; the risks inherent in international operations, including currency fluctuations; risks associated with information systems and cyber-security attacks; disruptions from our enterprise resource planning system; and the risk of being required to record significant impairment charges if our Dental segment's goodwill or other intangible assets become impaired.

The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive, accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results.

You should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, ("Risk Factors") in our most recent Form 10-K and information which may be contained in our other filings with the U.S. Securities and Exchange Commission, or SEC, when reviewing any forward-looking statement.

Investors should understand it is impossible to predict or identify all such factors or risks. As such, you should not consider the foregoing list, or the risks identified in our SEC filings, to be a complete discussion of all potential risks or uncertainties.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to release publicly any revisions to any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended Six Months Ended

October 30, October 24, October 30, October 24, 2021 2020 2021 2020



Net sales $ 1,649,161 $ 1,553,168 $ 3,264,037 $ 2,799,005

Gross profit 326,435 320,368 604,237 574,184

Operating 263,575 246,662 580,906 462,606 expenses

Operating income 62,860 73,706 23,331 111,578

Other income (expense):

Gains on - - 87,827 - investments

Other income, net 6,804 3,223 8,227 5,257

Interest expense (5,521) (6,381) (10,716) (13,072)

Income before 64,143 70,548 108,669 103,763 taxes

Income tax 16,205 16,722 26,929 25,735 expense

Net income 47,938 53,826 81,740 78,028

Net lossattributable to (392) (234) (586) (439) noncontrollinginterests

Net incomeattributable to $ 48,330 $ 54,060 $ 82,326 $ 78,467 PattersonCompanies, Inc.

Earnings pershareattributable to PattersonCompanies, Inc.:

Basic $ 0.50 $ 0.57 $ 0.85 $ 0.82

Diluted $ 0.49 $ 0.56 $ 0.84 $ 0.82

Weighted average shares:

Basic 97,321 95,518 97,089 95,341

Diluted 98,363 96,415 98,363 96,105

Dividendsdeclared per $ 0.26 $ 0.26 $ 0.52 $ 0.52 common share

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

October 30, 2021

April 24, 2021

ASSETS

Current assets:

Cash and cash equivalents

$

154,152

$

143,244

Receivables, net

481,844

449,235

Inventory

830,121

736,778

Prepaid expenses and other current assets

333,314

286,672

Total current assets

1,799,431

1,615,929

Property and equipment, net

213,362

219,438

Operating lease right-of-use assets, net

74,095

77,217

Goodwill and identifiable intangibles, net

413,634

419,576

Long-term receivables, net and other

402,203

419,351

Total assets

$

2,902,725

$

2,751,511

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

773,230

$

609,264

Other accrued liabilities

244,883

294,400

Operating lease liabilities

31,191

32,252

Current maturities of long-term debt

100,750

100,750

Borrowings on revolving credit

43,000

53,000

Total current liabilities

1,193,054

1,089,666

Long-term debt

488,091

487,545

Non-current operating lease liabilities

45,217

48,318

Other non-current liabilities

164,381

161,311

Total liabilities

1,890,743

1,786,840

Stockholders' equity

1,011,982

964,671

Total liabilities and stockholders' equity

$

2,902,725

$

2,751,511

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

October 30, 2021 April 24, 2021



ASSETS

Current assets:

Cash and cash equivalents $ 154,152 $ 143,244

Receivables, net 481,844 449,235

Inventory 830,121 736,778

Prepaid expenses and other current assets 333,314 286,672

Total current assets 1,799,431 1,615,929

Property and equipment, net 213,362 219,438

Operating lease right-of-use assets, net 74,095 77,217

Goodwill and identifiable intangibles, net 413,634 419,576

Long-term receivables, net and other 402,203 419,351

Total assets $ 2,902,725 $ 2,751,511



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 773,230 $ 609,264

Other accrued liabilities 244,883 294,400

Operating lease liabilities 31,191 32,252

Current maturities of long-term debt 100,750 100,750

Borrowings on revolving credit 43,000 53,000

Total current liabilities 1,193,054 1,089,666

Long-term debt 488,091 487,545

Non-current operating lease liabilities 45,217 48,318

Other non-current liabilities 164,381 161,311

Total liabilities 1,890,743 1,786,840

Stockholders' equity 1,011,982 964,671

Total liabilities and stockholders' equity $ 2,902,725 $ 2,751,511

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended

October 30, 2021

October 24, 2020

Operating activities:

Net income

$

81,740

$

78,028

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

40,980

38,881

Gains on investments

(87,827)

-

Non-cash employee compensation

13,497

16,660

Non-cash losses (gains) and other, net

3,974

5,976

Change in assets and liabilities:

Receivables

(583,939)

(505,535)

Inventory

(90,728)

58,238

Accounts payable

165,250

(179,276)

Accrued liabilities

(56,029)

24,555

Other changes from operating activities, net

(25,932)

39,469

Net cash used in operating activities

(539,014)

(423,004)

Investing activities:

Additions to property and equipment

(15,503)

(14,370)

Collection of deferred purchase price receivables

585,647

408,907

Acquisitions, net of cash acquired

(19,793)

-

Sale of investments

57,245

396

Net cash provided by investing activities

607,596

394,933

Financing activities:

Dividends paid

(50,407)

(25,009)

(Payment) draw on revolving credit

(10,000)

111,000

Other financing activities

1,959

631

Net cash (used in) provided by financing activities

(58,448)

86,622

Effect of exchange rate changes on cash

774

2,986

Net change in cash and cash equivalents

10,908

61,537

Cash and cash equivalents at beginning of period

143,244

77,944

Cash and cash equivalents at end of period

$

154,152

$

139,481

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended

October 30, October 24, 2021 2020



Operating activities:

Net income $ 81,740 $ 78,028

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization 40,980 38,881

Gains on investments (87,827) -

Non-cash employee compensation 13,497 16,660

Non-cash losses (gains) and other, net 3,974 5,976

Change in assets and liabilities:

Receivables (583,939) (505,535)

Inventory (90,728) 58,238

Accounts payable 165,250 (179,276)

Accrued liabilities (56,029) 24,555

Other changes from operating activities, net (25,932) 39,469

Net cash used in operating activities (539,014) (423,004)

Investing activities:

Additions to property and equipment (15,503) (14,370)

Collection of deferred purchase price receivables 585,647 408,907

Acquisitions, net of cash acquired (19,793) -

Sale of investments 57,245 396

Net cash provided by investing activities 607,596 394,933

Financing activities:

Dividends paid (50,407) (25,009)

(Payment) draw on revolving credit (10,000) 111,000

Other financing activities 1,959 631

Net cash (used in) provided by financing activities (58,448) 86,622

Effect of exchange rate changes on cash 774 2,986

Net change in cash and cash equivalents 10,908 61,537

Cash and cash equivalents at beginning of period 143,244 77,944

Cash and cash equivalents at end of period $ 154,152 $ 139,481

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

October 30, 2021

October 24, 20201

TotalSalesGrowth

ForeignExchangeImpact

53rd Week

Other 2

Internal SalesGrowth

Three Months Ended

Consolidated net sales

Consumable

$

1,344,812

$

1,241,586

8.3

%

1.0

%

-

%

(3.8)

%

11.1

%

Equipment and software

223,813

220,227

1.6

0.5

-

-

1.1

Value-added services and other

80,536

91,355

(11.8)

0.7

-

(0.1)

(12.4)

Total

$

1,649,161

$

1,553,168

6.2

%

0.9

%

-

%

(3.0)

%

8.3

%

Dental

Consumable

$

356,654

$

357,849

(0.3)

%

0.5

%

-

%

-

%

(0.8)

%

Equipment and software

193,437

198,181

(2.4)

0.6

-

-

(3.0)

Value-added services and other

72,124

75,718

(4.7)

0.3

-

-

(5.0)

Total

$

622,215

$

631,748

(1.5)

%

0.5

%

-

%

-

%

(2.0)

%

Animal Health

Consumable

$

988,158

$

883,737

11.8

%

1.3

%

-

%

(5.3)

%

15.8

%

Equipment and software

30,376

22,046

37.8

-

-

-

37.8

Value-added services and other

8,933

8,394

6.4

4.7

-

(1.5)

3.2

Total

$

1,027,467

$

914,177

12.4

%

1.3

%

-

%

(5.1)

%

16.2

%

Corporate

Value-added services and other

$

(521)

$

7,243

n/m

-

%

-

%

-

%

n/m

Total

$

(521)

$

7,243

n/m

-

%

-

%

-

%

n/m

1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021.

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)

October October Total Foreign 53rd Other^ Internal 30, 2021 24, 2020^1 Sales Exchange Week 2 Sales Growth Impact Growth

Three Months Ended



Consolidated net sales

Consumable $ 1,344,812 $ 1,241,586 8.3 % 1.0 % - % (3.8) % 11.1 %

Equipment 223,813 220,227 1.6 0.5 - - 1.1 and software

Value-addedservices and 80,536 91,355 (11.8) 0.7 - (0.1) (12.4) other

Total $ 1,649,161 $ 1,553,168 6.2 % 0.9 % - % (3.0) % 8.3 %



Dental

Consumable $ 356,654 $ 357,849 (0.3) % 0.5 % - % - % (0.8) %

Equipment 193,437 198,181 (2.4) 0.6 - - (3.0) and software

Value-addedservices and 72,124 75,718 (4.7) 0.3 - - (5.0) other

Total $ 622,215 $ 631,748 (1.5) % 0.5 % - % - % (2.0) %



Animal Health

Consumable $ 988,158 $ 883,737 11.8 % 1.3 % - % (5.3) % 15.8 %

Equipment 30,376 22,046 37.8 - - - 37.8 and software

Value-addedservices and 8,933 8,394 6.4 4.7 - (1.5) 3.2 other

Total $ 1,027,467 $ 914,177 12.4 % 1.3 % - % (5.1) % 16.2 %



Corporate

Value-addedservices and $ (521) $ 7,243 n/m - % - % - % n/mother

Total $ (521) $ 7,243 n/m - % - % - % n/m





1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021.





October 30, October 24, Total Foreign 53rd Other^ Internal 2021 2020^1 Sales Exchange Week 2 Sales Growth Impact Growth

Six Months Ended

Consolidated net sales

Consumable $ 2,686,486 $ 2,286,567 17.5 % 1.8 % 4.3 % (3.8) % 15.2 %

Equipment 407,265 349,658 16.5 1.0 3.5 - 12.0 and software

Value-addedservices and 170,286 162,780 4.6 1.2 3.0 (0.1) 0.5 other

Total $ 3,264,037 $ 2,799,005 16.6 % 1.7 % 4.1 % (3.1) % 13.9 %



Dental

Consumable $ 733,230 $ 614,452 19.3 % 1.0 % 4.5 % - % 13.8 %

Equipment 350,403 311,198 12.6 1.1 3.3 - 8.2 and software

Value-addedservices and 145,449 136,393 6.6 0.5 2.9 - 3.2 other

Total $ 1,229,082 $ 1,062,043 15.7 % 1.0 % 3.9 % - % 10.8 %



Animal Health

Consumable $ 1,953,256 $ 1,672,115 16.8 % 2.1 % 4.2 % (5.2) % 15.7 %

Equipment 56,862 38,460 47.8 - 5.1 - 42.7 and software

Value-addedservices and 20,139 15,755 27.8 8.0 5.2 (1.2) 15.8 other

Total $ 2,030,257 $ 1,726,330 17.6 % 2.1 % 4.2 % (5.1) % 16.4 %



Corporate

Value-addedservices and $ 4,698 $ 10,632 (55.8) % - % - % - % (55.8) %other

Total $ 4,698 $ 10,632 (55.8) % - % - % - % (55.8) %

1 Certain sales were reclassified between categories to conform to the current period presentation. 2 Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and six months ended October 30, 2021. Other represents the impact of this change in revenue recognition, as well as the impact of an acquisition on sales during the three and six months ended October 30, 2021.

PATTERSON COMPANIES, INC.

OPERATING INCOME BY SEGMENT

(In thousands)

(Unaudited)

Three Months Ended Six Months Ended

October 30, October 24, October 30, October 24, 2021 2020 2021 2020



Operating income (loss)

Dental $ 55,570 $ 72,957 $ 54,484 $ 110,726

Animal Health 26,135 17,591 49,940 34,990

Corporate (18,845) (16,842) (81,093) (34,138)

Total $ 62,860 $ 73,706 $ 23,331 $ 111,578

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

For the three months ended October 30, 2021

GAAP

Deal amortization

Integration and business restructuring expenses

Legal reserves

Inventory donation charges

Gains on investments

Non-GAAP

Operating income

$

62,860

$

9,614

$

1,863

$

-

$

-

$

-

$

74,337

Other income (expense), net

1,283

-

-

-

-

-

1,283

Income before taxes

64,143

9,614

1,863

-

-

-

75,620

Income tax expense

16,205

2,269

466

-

-

-

18,940

Net income

47,938

7,345

1,397

-

-

-

56,680

Net loss attributable to noncontrolling interests

(392)

-

-

-

-

-

(392)

Net income attributable to Patterson Companies, Inc.

$

48,330

$

7,345

$

1,397

$

-

$

-

$

-

$

57,072

Diluted earnings per share attributable to Patterson Companies, Inc.*

$

0.49

$

0.07

$

0.01

$

-

$

-

$

-

$

0.58

Operating income as a % of sales

3.8

%

4.5

%

Effective tax rate

25.3

%

25.0

%

For the three months ended October 24, 2020

GAAP

Deal amortization

Integration and business restructuring expenses

Legal reserves

Inventory donation charges

Gains on investments

Non-GAAP

Operating income

$

73,706

$

9,250

$

-

$

-

$

-

$

-

$

82,956

Other income (expense), net

(3,158)

-

-

-

-

-

(3,158)

Income before taxes

70,548

9,250

-

-

-

-

79,798

Income tax expense

16,722

2,199

-

-

-

-

18,921

Net income

53,826

7,051

-

-

-

-

60,877

Net loss attributable to noncontrolling interests

(234)

-

-

-

-

-

(234)

Net income attributable to Patterson Companies, Inc.

$

54,060

$

7,051

$

-

$

-

$

-

$

-

$

61,111

Diluted earnings per share attributable to Patterson Companies, Inc.*

$

0.56

$

0.07

$

-

$

-

$

-

$

-

$

0.63

Operating income as a % of sales

4.7

%

5.3

%

Effective tax rate

23.7

%

23.7

%

* May not sum due to rounding

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

For the three Integration Inventorymonths ended GAAP Deal and business Legal donation Gains on Non-GAAPOctober 30, amortization restructuring reserves charges investments2021 expenses

Operating $ 62,860 $ 9,614 $ 1,863 $ - $ - $ - $ 74,337 income

Other income 1,283 - - - - - 1,283 (expense), net

Income before 64,143 9,614 1,863 - - - 75,620 taxes

Income tax 16,205 2,269 466 - - - 18,940 expense

Net income 47,938 7,345 1,397 - - - 56,680

Net lossattributableto (392) - - - - - (392) noncontrollinginterests

Net incomeattributableto Patterson $ 48,330 $ 7,345 $ 1,397 $ - $ - $ - $ 57,072 Companies,Inc.



Dilutedearnings pershareattributable $ 0.49 $ 0.07 $ 0.01 $ - $ - $ - $ 0.58 to PattersonCompanies,Inc.*



Operatingincome as a % 3.8 % 4.5 %of sales

Effective tax 25.3 % 25.0 %rate



For the three Integration Inventorymonths ended GAAP Deal and business Legal donation Gains on Non-GAAPOctober 24, amortization restructuring reserves charges investments2020 expenses

Operating $ 73,706 $ 9,250 $ - $ - $ - $ - $ 82,956 income

Other income (3,158) - - - - - (3,158) (expense), net

Income before 70,548 9,250 - - - - 79,798 taxes

Income tax 16,722 2,199 - - - - 18,921 expense

Net income 53,826 7,051 - - - - 60,877

Net lossattributableto (234) - - - - - (234) noncontrollinginterests

Net incomeattributableto Patterson $ 54,060 $ 7,051 $ - $ - $ - $ - $ 61,111 Companies,Inc.



Dilutedearnings pershareattributable $ 0.56 $ 0.07 $ - $ - $ - $ - $ 0.63 to PattersonCompanies,Inc.*



Operatingincome as a % 4.7 % 5.3 %of sales

Effective tax 23.7 % 23.7 %rate





* May not sumdue to rounding

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

For the six months ended October 30, 2021

GAAP

Deal amortization

Integration and business restructuring expenses

Legal reserves

Inventory donation charges

Gains on investments

Non-GAAP

Operating income

$

23,331

$

19,155

$

4,245

$

36,000

$

49,194

$

-

$

131,925

Other income (expense), net

85,338

-

-

-

-

(87,827)

(2,489)

Income before taxes

108,669

19,155

4,245

36,000

49,194

(87,827)

129,436

Income tax expense

26,929

4,506

1,061

8,460

12,308

(22,396)

30,868

Net income

81,740

14,649

3,184

27,540

36,886

(65,431)

98,568

Net loss attributable to noncontrolling interests

(586)

-

-

-

-

-

(586)

Net income attributable to Patterson Companies, Inc.

$

82,326

$

14,649

$

3,184

$

27,540

$

36,886

$

(65,431)

$

99,154

Diluted earnings per share attributable to Patterson Companies, Inc.*

$

0.84

$

0.15

$

0.03

$

0.28

$

0.37

$

(0.67)

$

1.01

Operating income as a % of sales

0.7

%

4.0

%

Effective tax rate

24.8

%

23.8

%

For the six months ended October 24, 2020

GAAP

Deal amortization

Integration and business restructuring expenses

Legal reserves

Inventory donation charges

Gains on investments

Non-GAAP

Operating income

$

111,578

$

18,503

$

-

$

-

$

-

$

-

$

130,081

Other income (expense), net

(7,815)

-

-

-

-

-

(7,815)

Income before taxes

103,763

18,503

-

-

-

-

122,266

Income tax expense

25,735

4,400

-

-

-

-

30,135

Net income

78,028

14,103

-

-

-

-

92,131

Net loss attributable to noncontrolling interests

(439)

-

-

-

-

-

(439)

Net income attributable to Patterson Companies, Inc.

$

78,467

$

14,103

$

-

$

-

$

-

$

-

$

92,570

Diluted earnings per share attributable to Patterson Companies, Inc.*

$

0.82

$

0.15

$

-

$

-

$

-

$

-

$

0.96

Operating income as a % of sales

4.0

%

4.6

%

Effective tax rate

24.8

%

24.6

%

* May not sum due to rounding

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)

For the six Integration Inventorymonths ended GAAP Deal and business Legal donation Gains on Non-GAAPOctober 30, amortization restructuring reserves charges investments2021 expenses

Operating $ 23,331 $ 19,155 $ 4,245 $ 36,000 $ 49,194 $ - $ 131,925 income

Other income 85,338 - - - - (87,827) (2,489) (expense), net

Income before 108,669 19,155 4,245 36,000 49,194 (87,827) 129,436 taxes

Income tax 26,929 4,506 1,061 8,460 12,308 (22,396) 30,868 expense

Net income 81,740 14,649 3,184 27,540 36,886 (65,431) 98,568

Net lossattributableto (586) - - - - - (586) noncontrollinginterests

Net incomeattributableto Patterson $ 82,326 $ 14,649 $ 3,184 $ 27,540 $ 36,886 $ (65,431) $ 99,154 Companies,Inc.



Dilutedearnings pershareattributable $ 0.84 $ 0.15 $ 0.03 $ 0.28 $ 0.37 $ (0.67) $ 1.01 to PattersonCompanies,Inc.*



Operatingincome as a % 0.7 % 4.0 %of sales

Effective tax 24.8 % 23.8 %rate



For the six Integration Inventorymonths ended GAAP Deal and business Legal donation Gains on Non-GAAPOctober 24, amortization restructuring reserves charges investments2020 expenses

Operating $ 111,578 $ 18,503 $ - $ - $ - $ - $ 130,081 income

Other income (7,815) - - - - - (7,815) (expense), net

Income before 103,763 18,503 - - - - 122,266 taxes

Income tax 25,735 4,400 - - - - 30,135 expense

Net income 78,028 14,103 - - - - 92,131

Net lossattributableto (439) - - - - - (439) noncontrollinginterests

Net incomeattributableto Patterson $ 78,467 $ 14,103 $ - $ - $ - $ - $ 92,570 Companies,Inc.



Dilutedearnings pershareattributable $ 0.82 $ 0.15 $ - $ - $ - $ - $ 0.96 to PattersonCompanies,Inc.*



Operatingincome as a % 4.0 % 4.6 %of sales

Effective tax 24.8 % 24.6 %rate



* May not sum due to rounding

PATTERSON COMPANIES, INC.

FREE CASH FLOW

(In thousands)

(Unaudited)

Six Months Ended

October 30, 2021

October 24, 2020

Net cash used in operating activities

$

(539,014)

$

(423,004)

Additions to property and equipment

(15,503)

(14,370)

Collection of deferred purchase price receivables

585,647

408,907

Free cash flow

$

31,130

$

(28,467)

View source version on businesswire.com: https://www.businesswire.com/news/home/20211201005196/en/

CONTACT: INVESTOR CONTACT: John M. Wright, Investor Relations Patterson Companies Inc. 651.686.1364 investor.relations@pattersoncompanies.com MEDIA CONTACT: Patterson Corporate Communications Patterson Companies Inc. 651.905.3349 corporate.communications@pattersoncompanies.com WEB: pattersoncompanies.com