Patterson 3Q Profit Down 1.2% On Higher Operating Expenses

   DOW JONES NEWSWIRES 
 

Patterson Cos.' (PDCO) fiscal third-quarter profit declined 1.2% as lower dental and veterinary supply revenue more than offset an increase in rehabilitation supply sales and higher operating expenses.

The wholesaler of dental, veterinary and other products had seen especially strong sales in its dental business, although in the latest quarter, sales within the dental supply business dropped 2.6%. Patterson last week hinted sales in the dental equipment category were much softer than expected during the latest quarter.

Still, President and Chief Executive Scott P. Anderson said the company believed the fundamentals of the North American dental market are strengthening, as growth was seen for consumables during the quarter. However, Anderson said the dental technology equipment business "did not perform at planned levels."

For the quarter ended Jan. 29, Patterson posted a profit of $55.4 million, down from $56 million a year earlier. On a per-share basis, results were flat at 47 cents, as the company had 0.5% fewer shares outstanding in the latest period. Revenue inched up 0.6% to $824.7 million.

Last week, the company projected earnings of 46 cents to 47 cents on revenue of $825 million, a view that missed Wall Street's then expectations.

Gross margin jumped to 34.1% from 33.7%. Operating margins, however, narrowed to 11.2% from 11.4% as operating expenses grew 3.2%.

Sales of consumable and printed products--Patterson's biggest top-line contributor--rose 3.8%, while equipment and software revenue decreased 6.7%.

Shares closed at $32.74 Wednesday and were inactive in premarket trading.

-By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]