pdco-20210731

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 31, 2021.


☐			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 September 2, 2021, there were 97,322,000 shares of Common Stock of the registrant issued and outstanding.

Table of Contents

PATTERSON COMPANIES, INC.

INDEX


			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			20

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			25

Item 4 - Controls and Procedures			25

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings			26

Item 1A - Risk Factors			26

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			26

Item 6 - Exhibits			27

Signatures			28

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)


	July 31, 2021		April 24, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	136,930	$	143,244
Receivables, net of allowance for doubtful accounts of $5,857 and $6,138	373,533		449,235
Inventory	770,366		736,778
Prepaid expenses and other current assets	330,655		286,672
Total current assets	1,611,484		1,615,929
Property and equipment, net	216,397		219,438
Operating lease right-of-use assets, net	78,310		77,217
Long-term receivables, net	191,799		223,970
Goodwill, net	140,985		139,932
Identifiable intangibles, net	284,394		279,644
Investments	140,193		105,522
Other non-current assets	87,287		89,859
Total assets	$	2,750,849	$	2,751,511
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	593,091	$	609,264
Accrued payroll expense	63,650		118,425
Other accrued liabilities	236,005		175,975
Operating lease liabilities	32,388		32,252
Current maturities of long-term debt	100,750		100,750
Borrowings on revolving credit	42,000		53,000
Total current liabilities	1,067,884		1,089,666
Long-term debt	487,818		487,545
Non-current operating lease liabilities	48,719		48,318
Other non-current liabilities	165,823		161,311
Total liabilities	1,770,244		1,786,840
Stockholders’ equity:
Common stock, $0.01 par value: 600,000 shares authorized; 97,235 and 96,813 shares issued and outstanding	972		968
Additional paid-in capital	176,182		169,099
Accumulated other comprehensive loss	(62,007)		(62,592)
Retained earnings	864,197		855,741

Total Patterson Companies, Inc. stockholders' equity	979,344		963,216
Noncontrolling interests	1,261		1,455
Total stockholders’ equity	980,605		964,671
Total liabilities and stockholders’ equity	$	2,750,849	$	2,751,511

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND OTHER COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	July 31, 2021		July 25, 2020
Net sales	$	1,614,876	$	1,245,837
Cost of sales	1,337,074		992,021
Gross profit	277,802		253,816
Operating expenses	317,331		215,944
Operating (loss) income	(39,529)		37,872
Other income (expense):
Gains on investments	87,827		—
Other income, net	1,423		2,034
Interest expense	(5,195)		(6,691)
Income before taxes	44,526		33,215
Income tax expense	10,724		9,013


Net income	33,802		24,202
Net loss attributable to noncontrolling interests	(194)		(205)
Net income attributable to Patterson Companies, Inc.	$	33,996	$	24,407
Earnings per share attributable to Patterson Companies, Inc.:


Basic	$	0.35	$	0.26



Diluted	$	0.35	$	0.25
Weighted average shares:
Basic	96,864		95,189
Diluted	98,255		95,843
Dividends declared per common share	$	0.26	$	0.26
Comprehensive income:
Net income	$	33,802	$	24,202
Foreign currency translation gain	324		12,589
Cash flow hedges, net of tax	261		260
Comprehensive income	$	34,387	$	37,051

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Unearned ESOP Shares		Non-controlling Interests		Total
	Shares	Amount
Balance at April 25, 2020	95,947	$	959	$	146,606	$	(97,039)	$	799,652	$	(16,061)	$	2,327	$	836,444
Foreign currency translation	—	—		—		12,589		—		—		—		12,589
Cash flow hedges	—	—		—		260		—		—		—		260
Net income (loss)	—	—		—		—		24,407		—		(205)		24,202
Dividends declared	—	—		—		—		(24,472)		—		—		(24,472)
Common stock issued and related tax benefits	309	4		(899)		—		—		—		—		(895)

Stock based compensation	—	—		6,610		—		—		—		—		6,610




Balance at July 25, 2020	96,256	963		152,317		(84,190)		799,587		(16,061)		2,122		854,738
Foreign currency translation	—	—		—		3,327		—		—		—		3,327
Cash flow hedges	—	—		—		261		—		—		—		261
Net income (loss)	—	—		—		—		54,060		—		(234)		53,826
Dividends declared	—	—		—		—		(24,903)		—		—		(24,903)
Common stock issued and related tax benefits	240	2		1,209		—		—		—		—		1,211

Stock based compensation	—	—		4,267		—		—		—		—		4,267

Balance at October 24, 2020	96,496	965		157,793		(80,602)		828,744		(16,061)		1,888		892,727
Foreign currency translation	—	—		—		11,790		—		—		—		11,790
Cash flow hedges	—	—		—		261		—		—		—		261
Net income (loss)	—	—		—		—		48,759		—		(192)		48,567
Dividends declared	—	—		—		—		(25,265)		—		—		(25,265)
Common stock issued and related tax benefits	125	1		1,505		—		—		—		—		1,506

Stock based compensation	—	—		5,019		—		—		—		—		5,019

Balance at January 23, 2021	96,621	966		164,317		(68,551)		852,238		(16,061)		1,696		934,605
Foreign currency translation	—	—		—		5,699		—		—		—		5,699
Cash flow hedges	—	—		—		260		—		—		—		260
Net income (loss)	—	—		—		—		28,755		—		(241)		28,514
Dividends declared	—	—		—		—		(25,252)		—		—		(25,252)
Common stock issued and related tax benefits	192	2		(545)		—		—		—		—		(543)

Stock based compensation	—	—		5,327		—		—		—		—		5,327
ESOP activity	—	—		—		—		—		16,061		—		16,061
Balance at April 24, 2021	96,813	$	968	$	169,099	$	(62,592)	$	855,741	$	—	$	1,455	$	964,671

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Unearned ESOP Shares		Non-controlling Interests		Total
	Shares	Amount
Balance at April 24, 2021	96,813	$	968	$	169,099	$	(62,592)	$	855,741	$	—	$	1,455	$	964,671
Foreign currency translation	—	—		—		324		—		—		—		324
Cash flow hedges	—	—

SEC Form 10-Q filed by Patterson Companies, Inc.