pdco-20240727

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 27, 2024.


☐			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 20, 2024, there were 88,145,000 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			19

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			23

Item 4 - Controls and Procedures			23

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings			25

Item 1A - Risk Factors			25

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			25

Item 5 - Other Information			25

Item 6 - Exhibits			27

Signatures			28


	July 27, 2024		April 27, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	148,079	$	114,462
Receivables, net of allowance for doubtful accounts of $2,690 and $2,731	442,342		547,287
Inventory, net	849,504		782,898
Prepaid expenses and other current assets	322,185		334,116
Total current assets	1,762,110		1,778,763
Property and equipment, net	226,151		229,081
Operating lease right-of-use assets, net	124,473		122,295
Long-term receivables, net	132,683		129,876
Goodwill	156,211		156,328
Identifiable intangibles, net	183,955		193,261
Investments	167,386		166,320
Other non-current assets, net	121,789		120,808
Total assets	$	2,874,758	$	2,896,732
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	656,977	$	745,375
Accrued payroll expense	49,656		78,211
Other accrued liabilities	173,369		167,399
Operating lease liabilities	33,643		32,815
Current maturities of long-term debt	123,875		122,750
Borrowings on revolving credit	320,000		186,000
Total current liabilities	1,357,520		1,332,550
Long-term debt	327,153		328,911
Non-current operating lease liabilities	94,261		92,464
Other non-current liabilities	143,323		141,075
Total liabilities	1,922,257		1,895,000
Stockholders’ equity:
Common stock, $0.01 par value: 600,000 shares authorized; 88,146 and 89,701 shares issued and outstanding	881		897
Additional paid-in capital	265,584		258,679
Accumulated other comprehensive loss	(86,473)		(89,915)
Retained earnings	771,997		831,483

Total Patterson Companies, Inc. stockholders' equity	951,989		1,001,144
Noncontrolling interests	512		588
Total stockholders’ equity	952,501		1,001,732
Total liabilities and stockholders’ equity	$	2,874,758	$	2,896,732


	Three Months Ended
	July 27, 2024		July 29, 2023
Net sales	$	1,541,742	$	1,576,745
Cost of sales	1,229,133		1,257,690
Gross profit	312,609		319,055
Operating expenses	283,240		280,833
Operating income	29,369		38,222
Other income (expense):

Other income, net	1,714		11,901
Interest expense	(13,223)		(9,512)
Income before taxes	17,860		40,611
Income tax expense	4,221		9,481


Net income	13,639		31,130
Net loss attributable to noncontrolling interests	(76)		(104)
Net income attributable to Patterson Companies, Inc.	$	13,715	$	31,234
Earnings per share attributable to Patterson Companies, Inc.:


Basic	$	0.16	$	0.33



Diluted	$	0.15	$	0.32
Weighted average shares:
Basic	88,127		95,544
Diluted	88,645		96,190
Dividends declared per common share	$	0.26	$	0.26
Comprehensive income:
Net income	$	13,639	$	31,130
Foreign currency translation gain	3,181		7,368
Cash flow hedges, net of tax	261		261
Comprehensive income	$	17,081	$	38,759


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Non-controlling Interests		Total
	Shares	Amount
Balance at April 29, 2023	96,350	$	964	$	233,706	$	(89,262)	$	972,127	$	1,000	$	1,118,535
Foreign currency translation	—	—		—		7,368		—		—		7,368
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		31,234		(104)		31,130
Dividends declared	—	—		—		—		(25,134)		—		(25,134)
Common stock issued	565	5		1,569		—		—		—		1,574
Repurchases of common stock	(1,109)	(11)		—		—		(29,497)		—		(29,508)
Stock-based compensation	—	—		7,015		—		—		—		7,015




Balance at July 29, 2023	95,806	958		242,290		(81,633)		948,730		896		1,111,241
Foreign currency translation	—	—		—		(17,589)		—		—		(17,589)
Cash flow hedges	—	—		—		260		—		—		260
Net income (loss)	—	—		—		—		39,958		(103)		39,855
Dividends declared	—	—		—		—		(24,897)		—		(24,897)
Common stock issued	180	2		3,226		—		—		—		3,228
Repurchases of common stock	(1,897)	(19)		(661)		—		(60,964)		—		(61,644)
Stock-based compensation	—	—		4,635		—		—		—		4,635

Balance at October 28, 2023	94,089	941		249,490		(98,962)		902,827		793		1,055,089
Foreign currency translation	—	—		—		12,538		—		—		12,538
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		47,703		(110)		47,593
Dividends declared	—	—		—		—		(23,591)		—		(23,591)
Common stock issued	103	1		1,844		—		—		—		1,845
Repurchases of common stock	(4,101)	(41)		(1,219)		—		(124,055)		—		(125,315)
Stock-based compensation	—	—		3,745		—		—		—		3,745

Balance at January 27, 2024	90,091	901		253,860		(86,163)		802,884		683		972,165
Foreign currency translation	—	—		—		(4,012)		—		—		(4,012)
Cash flow hedges	—	—		—		260		—		—		260
Net income (loss)	—	—		—		—		67,036		(95)		66,941
Dividends declared	—	—		—		—		(23,521)		—		(23,521)
Common stock issued	107	1		2,462		—		—		—		2,463
Repurchases of common stock	(497)	(5)		(119)		—		(14,916)		—		(15,040)
Stock-based compensation	—	—		2,476		—		—		—		2,476

Balance at April 27, 2024	89,701	$	897	$	258,679	$	(89,915)	$	831,483	$	588	$	1,001,732


Derivative type	Classification	July 27, 2024		April 27, 2024
Assets:
Interest rate contracts	Prepaid expenses and other current assets	$	3,710	$	5,781
Interest rate contracts	Other non-current assets, net	16,815		21,193
Total asset derivatives		$	20,525	$	26,974
Liabilities:
Interest rate contracts	Other accrued liabilities	$	621	$	259
Interest rate contracts	Other non-current liabilities	13,358		13,198
Total liability derivatives		$	13,979	$	13,457


	July 27, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	5,131	$	5,131	$	—	$	—
DPP receivable - receivables securitization program	171,940		—		—		171,940
DPP receivable - customer financing	121,229		—		—		121,229
Derivative instruments	20,525		—		20,525		—
Total assets	$	318,825	$	5,131	$	20,525	$	293,169
Liabilities:
Derivative instruments	$	13,979	$	—	$	13,979	$	—


	Three Months Ended
	July 27, 2024		July 29, 2023
Operating activities:
Net income	$	13,639	$	31,130


Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	13,111		11,406
Amortization	9,639		9,627



Stock-based compensation	8,060		7,015



Non-cash losses (gains) and other, net	1,745		2,268

Change in assets and liabilities:
Receivables	(140,656)		(154,602)
Inventory	(65,292)		(114,323)
Accounts payable	(91,995)		(11,093)
Accrued liabilities	(22,698)		(21,715)

Other changes from operating activities, net	(10,523)		(13,079)


Net cash used in operating activities	(284,970)		(253,366)
Investing activities:
Additions to property and equipment and software	(13,507)		(17,087)
Collection of deferred purchase price receivables	271,834		242,013
Payments related to acquisitions, net of cash acquired	—		(1,108)





Net cash provided by investing activities	258,327		223,818
Financing activities:

SEC Form 10-Q filed by Patterson Companies Inc.