In This Article:
A month has gone by since the last earnings report for Patterson Companies, Inc. PDCO. Shares have lost about 7.8% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is PDCO due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Patterson Companies reported adjusted earnings of 43 cents per share in third-quarter fiscal 2018, missing the Zacks Consensus Estimate of 51 cents. Earnings fell 25.9% year over year.
Net sales dipped 1.6% from the year-ago quarter to $1.375 billion, lagging the Zacks Consensus Estimate of $1.382 billion.
Adjusting the effects of foreign currency exchange, sales declined 2.7% on a year-over-year basis.
Decreased sales and gross margin-compression marred the company’s results in the reported quarter.
Segmental Analysis
Dental Segment
This segment provides a virtually complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists and dental laboratories throughout North America.
In the third quarter, dental sales (42% of total sales) declined 8.1% at cc year over year to approximately $577.9 million. Changes in sales force, disruptions from enterprise resource planning implementation and the expansion of the company’s digital equipment portfolio marred revenues in the segment.
Dental Consumable
Sales in the segment were $302.3 million, down 7.4% year over year.
Dental Equipment & Software
Sales at the segment declined 10.6% on a year-over-year basis to $207 million.
Other Services and Products
This segment is primarily composed of technical service, parts and labor, software support services and office supplies decreased 3.4% on a year-over-year basis to $65.6 million.
Animal Health Segment
This segment is a leading distributor of products, services and technologies to the production and companion animal health markets in North America and the U.K.
Coming to the third-quarter performance of the platform (58% of total sales), sales increased almost 4.2% at cc on a year-over-year basis to $794.9 million.
Margin Analysis
Gross profit in the reported quarter was $294.7 million, down 10.6% year over year. As a percentage of revenues, gross margin contracted 200 basis points (bps) to 21.4% in the quarter.
Operating income in the third quarter was $50.04 million, up 7.5% year over year. . As a percentage of revenues, operating margin expanded 31 bps to 21.4% in the quarter.