Patterson Cos. met fourth-quarter earnings expectations and issued better-than-expected revenue and profit guidance for fiscal 2019, giving its lagging share price a sorely needed boost.
"Our fourth-quarter results met our revised expectations and reflected the impact of ongoing challenges that the company has been facing," said Patterson President and CEO Mark Walchirk in a news release. "Looking ahead, we are executing on a number of initiatives to stabilize the core business and build a stronger platform for fiscal 2019, and expect to return to profit growth in the second half of the year."
Shares of Patterson, which had been down 51 percent over the last year, jumped up 10 percent in early trading Thursday before slipping back later in the morning. It closed Thursday at $23.28, up 3.3 percent.
For the fourth quarter that ended April 28, Patterson reported earnings of $20.9 million, or 23 cents per share. Adjusted earnings of 30 cents per share met analysts' expectations and the company's own revised fourth-quarter expectations.
In the fourth quarter last year, Patterson reported earnings of $61.7 million, or 65 cents per share and adjusted earnings of 69 cents per share
Sales are still down, 3.1 percent to $1.4 billion for the quarter and 2.3 percent to $5.5 billion for the fiscal year. Adjusted earnings for the year were $1.68 per share, down from the $2.34 per share in fiscal 2017.
Mendota Heights-based Patterson operates in two segments: dental and animal health. The best performance in the fourth quarter came from the production-animal health unit, which sells health supplies for farm animals. The unit's sales grew 2.8 percent in the quarter, while the companion-animal side was up 1.9 percent.
The Patterson Dental segment continues to struggle. Fourth-quarter sales were $545.8 million, down from $607.3 million in the fourth quarter last year. Sales of dental equipment and software were off the most, down 20.2 percent, in part due to the lower average sale price of its expanded dental equipment portfolio.
The company is still feeling the effect on its revenue from a sales-force realignment and the implementation of an enterprise-resource planning (ERP) system. But Walchirk told analysts that the strategic plans put in place are taking effect and they expect to see a return to earnings growth in the second half of fiscal 2019 and should build on momentum from there.
Patterson announced that it expects adjusted earnings in fiscal 2019 to be in the range of $1.73 to $1.83 per diluted share, better than the consensus estimate from 18 analysts tracked by Thomson Reuters of $1.72 per share for fiscal 2019.
Walchirk, who started as CEO of Patterson Nov. 20, began a strategic planning process with the board of directors earlier this year. He told analysts he expects to share more news on that process in the next several months.