Patterson Cos., whose share price has bucked the broader stock market trends most of the week, saw its stock price rise 6% on Thursday after reporting better than expected third-quarter results.
For the quarter ended Jan. 25, the dental and veterinary supply company based in Mendota Heights earned $23.2 million, or 24 cents per share, down from the same quarter a year ago. But adjusted earnings per share (EPS) were 47 cents, above the 37 cents analysts were expecting and a 24% increase over the same quarter a year ago.
Patterson has now topped analysts' earnings expectations for the third consecutive quarter and the improvement in the quarter was enough for the company to raise its adjusted earnings guidance for the remainder of the fiscal year which ends April 30.
Shares of Patterson were up as much as 12% in early trading Thursday, before settling down some as the broader market continues to slide. Patterson's shares were trading Thursday at the high end of its 52-week range of $15.73 to $25.70 per share. Shares closed at $24.01 on Thursday, half as much their August 2015 peak of $53 per share.
Patterson now expects to report adjusted EPS of $1.50 to $1.55 for the year, up from previous guidance of $1.36 to $1.46 per diluted share.
Patterson had not had much to cheer prior to this fiscal year, having missed analyst expectations in five of the previous six quarters, according to Thomson Reuters. However, management's strategic plans appear to be taking hold.
"It seems increasingly clear that management's turnaround efforts are working, with positive EPS growth now expected for the first time since 2016," John Kreger, an analyst with William Blair & Co., wrote in a research note Thursday.
Total revenue for the quarter was $1.5 billion, up from $1.4 billion reported in the same period a year ago. Internal sales, which adjust for currency fluctuations and changes in product selling relationships, were up 4.3% driven by gains in all three categories of its dental segment: equipment sales, consumable sales and value-added services.
Internal sales in Patterson's dental segment rose 8% in the third quarter, while internal sales in the larger animal health segment rose 1.3%.
"I want to congratulate our dental team for the strong quarter and the growth they delivered across all three categories of our dental business," Patterson CEO Mark Walchirk said in the earnings call.
Walchirk highlighted the performance of the dental consumables segment in the company's earnings call. He said the consumable category recorded 2% sales growth in the quarter, the first time it showed quarterly growth since early fiscal 2017. Walchirk credited long-term investments in the category, including remaking its sales organization, with the improved results. Dental equipment sales increased 16% in the quarter aided by innovative new equipment products from suppliers.
The animal health segment includes the production animal business and the companion animal, or pet, business. Challenges in the beef and dairy markets held down results for the unit.
Patrick Kennedy • 612-673-7926
