Patterson Cos. saw second-quarter sales rise but profits fall amid lower dental margins and ongoing restructuring changes designed to turn the company around.
The Mendota Heights-based distributor of dental and animal health supplies reported second-quarter sales rose 1.4 percent to $1.4 billion, barely missing the $1.42 billion consensus forecast that analysts expected.
Net income fell 28.8 percent to $28.6 million, or 31 cents per share, for the fiscal quarter ending Oct. 28.
Excluding deal amortization, integration and business restructuring costs, adjusted profits totaled $36.3 million, or 39 cents a share, which beat analysts’ average expectations by 2 cents a share.
“Our second-quarter results met our expectations and we continue to make progress on our focused initiatives to improve performance and build a stronger Patterson,” said President and CEO Mark Walchirk in a statement. “While we still have much work ahead, our team has delivered two consecutive quarters of year-over-year revenue growth, operating margin improvement from the fiscal first quarter and continued strong cash flow generation.”
He reiterated that full fiscal 2019 earnings should be 84 to 94 cents per share. Excluding a $20 million legal reserve and other one-time items, adjusted 2019 earnings are expected to be $1.40 to $1.50 a share.
For the second quarter, Patterson’s animal health business saw its revenue rise 4 percent to $855.4 million, contributing 61 percent of total company sales. Dental division sales fell 2 percent to $542.5 million.
In February 2016, Patterson and two main dental-supply competitors were made part of class-action lawsuit alleging they conspired against competitors. Walchirk told analysts that Patterson believes the claims are without merit and is not admitting to any liability. Even so, the company has entered into settlement discussions and set aside funds to cover potential legal costs.
Patterson’s stock closed down 6 percent Thursday at $23.09.