pdco-20230729

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 10-Q

____________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED July 29, 2023.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-20572

__________________________________________________________

PATTERSON COMPANIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

____________________________________________________________


Minnesota		41-0886515
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)
1031 Mendota Heights Road
St. Paul	Minnesota	55120
(Address of Principal Executive Offices)		(Zip Code)

(651) 686-1600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $.01	PDCO	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 22, 2023, there were 95,850,000 shares of Common Stock of the registrant issued and outstanding.


			Page
PART I - FINANCIAL INFORMATION

Item 1- Financial Statements			3

Condensed Consolidated Balance Sheets			3

Condensed Consolidated Statements of Operations and Other Comprehensive Income			4

Condensed Consolidated Statements of Changes in Stockholders' Equity			5

Condensed Consolidated Statements of Cash Flows			7

Notes to Condensed Consolidated Financial Statements			8

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations			18

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			22

Item 4 - Controls and Procedures			22

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings			23

Item 1A - Risk Factors			23

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			23

Item 5 - Other Information			23

Item 6 - Exhibits			25

Signatures			26


	July 29, 2023		April 29, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	108,573	$	159,669
Receivables, net of allowance for doubtful accounts of $4,265 and $3,667	408,929		477,384
Inventory	912,666		795,072
Prepaid expenses and other current assets	341,974		351,011
Total current assets	1,772,142		1,783,136
Property and equipment, net	221,300		212,283
Operating lease right-of-use assets, net	99,267		92,956
Long-term receivables, net	124,743		121,717
Goodwill	156,629		156,420
Identifiable intangibles, net	222,543		231,873
Investments	160,993		160,022
Other non-current assets, net	126,014		120,739
Total assets	$	2,883,631	$	2,879,146
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	717,426	$	724,993
Accrued payroll expense	51,754		82,253
Other accrued liabilities	176,657		168,696
Operating lease liabilities	29,910		28,390
Current maturities of long-term debt	36,000		36,000
Borrowings on revolving credit	76,000		45,000
Total current liabilities	1,087,747		1,085,332
Long-term debt	450,603		451,231
Non-current operating lease liabilities	72,406		67,376
Other non-current liabilities	161,634		156,672
Total liabilities	1,772,390		1,760,611
Stockholders’ equity:
Common stock, $0.01 par value: 600,000 shares authorized; 95,806 and 96,350 shares issued and outstanding	958		964
Additional paid-in capital	242,290		233,706
Accumulated other comprehensive loss	(81,633)		(89,262)
Retained earnings	948,730		972,127

Total Patterson Companies, Inc. stockholders' equity	1,110,345		1,117,535
Noncontrolling interests	896		1,000
Total stockholders’ equity	1,111,241		1,118,535
Total liabilities and stockholders’ equity	$	2,883,631	$	2,879,146


	Three Months Ended
	July 29, 2023		July 30, 2022
Net sales	$	1,576,745	$	1,523,265
Cost of sales	1,257,690		1,211,132
Gross profit	319,055		312,133
Operating expenses	280,833		277,289
Operating income	38,222		34,844
Other income (expense):

Other income, net	11,901		1,780
Interest expense	(9,512)		(5,563)
Income before taxes	40,611		31,061
Income tax expense	9,481		6,801


Net income	31,130		24,260
Net loss attributable to noncontrolling interests	(104)		(330)
Net income attributable to Patterson Companies, Inc.	$	31,234	$	24,590
Earnings per share attributable to Patterson Companies, Inc.:


Basic	$	0.33	$	0.25



Diluted	$	0.32	$	0.25
Weighted average shares:
Basic	95,544		96,629
Diluted	96,190		97,794
Dividends declared per common share	$	0.26	$	0.26
Comprehensive income:
Net income	$	31,130	$	24,260
Foreign currency translation gain (loss)	7,368		(4,991)
Cash flow hedges, net of tax	261		261
Comprehensive income	$	38,759	$	19,530


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Non-controlling Interests		Total
	Shares	Amount
Balance at April 30, 2022	96,762	$	968	$	200,520	$	(81,516)	$	921,704	$	959	$	1,042,635
Foreign currency translation	—	—		—		(4,991)		—		—		(4,991)
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		24,590		(330)		24,260
Dividends declared	—	—		—		—		(25,667)		—		(25,667)
Common stock issued	653	6		(2,148)		—		—		—		(2,142)
Repurchases of common stock	(516)	(5)		—		—		(14,995)		—		(15,000)
Stock-based compensation	—	—		7,159		—		—		—		7,159
Contribution from noncontrolling interest	—	—		—		—		—		500		500



Balance at July 30, 2022	96,899	969		205,531		(86,246)		905,632		1,129		1,027,015
Foreign currency translation	—	—		—		(17,591)		—		—		(17,591)
Cash flow hedges	—	—		—		260		—		—		260
Net income (loss)	—	—		—		—		54,073		(424)		53,649
Dividends declared	—	—		—		—		(25,138)		—		(25,138)
Common stock issued	150	1		2,178		—		—		—		2,179

Stock-based compensation	—	—		1,234		—		—		—		1,234
Contribution from noncontrolling interest	—	—		—		—		—		500		500
Balance at October 29, 2022	97,049	970		208,943		(103,577)		934,567		1,205		1,042,108
Foreign currency translation	—	—		—		14,197		—		—		14,197
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		53,929		(82)		53,847
Dividends declared	—	—		—		—		(25,581)		—		(25,581)
Common stock issued	659	7		14,626		—		—		—		14,633

Stock-based compensation	—	—		2,956		—		—		—		2,956

Balance at January 28, 2023	97,708	977		226,525		(89,119)		962,915		1,123		1,102,421
Foreign currency translation	—	—		—		(403)		—		—		(403)
Cash flow hedges	—	—		—		260		—		—		260
Net income (loss)	—	—		—		—		74,965		(123)		74,842
Dividends declared	—	—		—		—		(25,276)		—		(25,276)
Common stock issued	146	2		2,987		—		—		—		2,989
Repurchases of common stock	(1,504)	(15)		—		—		(40,477)		—		(40,492)
Stock-based compensation	—	—		4,194		—		—		—		4,194

Balance at April 29, 2023	96,350	$	964	$	233,706	$	(89,262)	$	972,127	$	1,000	$	1,118,535


Derivative type	Classification	July 29, 2023		April 29, 2023
Assets:
Interest rate contracts	Prepaid expenses and other current assets	$	7,081	$	5,875
Interest rate contracts	Other non-current assets, net	27,484		23,210
Total asset derivatives		$	34,565	$	29,085
Liabilities:
Interest rate contracts	Other accrued liabilities	$	231	$	267
Interest rate contracts	Other non-current liabilities	15,387		12,993
Total liability derivatives		$	15,618	$	13,260


	July 29, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	3,612	$	3,612	$	—	$	—
DPP receivable - receivables securitization program	210,260		—		—		210,260
DPP receivable - customer financing	105,609		—		—		105,609
Derivative instruments	34,565		—		34,565		—
Total assets	$	354,046	$	3,612	$	34,565	$	315,869
Liabilities:
Derivative instruments	$	15,618	$	—	$	15,618	$	—


	Three Months Ended
	July 29, 2023		July 30, 2022
Operating activities:
Net income	$	31,130	$	24,260


Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	11,406		10,827
Amortization	9,627		9,351



Non-cash employee compensation	7,015		7,159



Non-cash losses (gains) and other, net	2,268		3,559

Change in assets and liabilities:
Receivables	(154,602)		(171,148)
Inventory	(114,323)		(91,124)
Accounts payable	(11,093)		(22,926)
Accrued liabilities	(21,715)		(60,061)

Other changes from operating activities, net	(13,079)		(12,436)


Net cash used in operating activities	(253,366)		(302,539)
Investing activities:
Additions to property and equipment and software	(17,087)		(14,554)
Collection of deferred purchase price receivables	242,013		252,909
Payments related to acquisitions, net of cash acquired	(1,108)		—





Net cash provided by investing activities	223,818		238,355
Financing activities:


	Three Months Ended
	July 29, 2023		July 30, 2022
Consolidated net sales
United States	$	1,291,371	$	1,260,398
United Kingdom	191,611		162,221
Canada	93,763		100,646
Total	$	1,576,745	$	1,523,265
Dental net sales
United States	$	510,250	$	499,835
Canada

SEC Form 10-Q filed by Patterson Companies Inc.