Henry Schein, Inc. Announces Record Second Quarter Results
- EPS Reaches $0.35 on 31% Net Income Growth -
MELVILLE, N.Y., Aug. 3 /PRNewswire/ -- Henry Schein, Inc. (Nasdaq: HSIC) today announced financial results for the second quarter and year-to-date ended June 27, 1998, compared to restated results for 1997.
For the second quarter of 1998, net sales increased 15% to $428 million from $373 million for the second quarter last year. Excluding merger and integration costs and including pro forma adjustments, net income rose 31% to $13.5 million as compared to $10.3 million for last year's second quarter. The Company reported diluted earnings per share, after adjustments, of $0.35 versus $0.28 in the 1997 second quarter, a 25% increase. Average shares outstanding were 38,736,000 for the quarter -- 7% greater than the prior year.
Year-to-date, net sales of $831 million represents a 17% increase over the prior year. Excluding merger and integration costs and including pro forma adjustments, net income of $22.2 million reflects 38% growth compared to 1997. Diluted earnings per share, after adjustments, increased by 29% to $0.58 compared to $0.45 for the prior year. Average shares outstanding were 38,221,000 -- 8% higher than in 1997.
In a separate release, the Company announced earlier today that it has entered into a definitive agreement to acquire Meer Dental Supply Company, a leading full-service dental distributor serving over 40,000 dentists, dental laboratories and institutions in the United States. Meer Dental, with over $180 million in 1997 sales, will merge its operations with Sullivan-Schein Dental(TM), a division of Henry Schein.
Commenting on the financial results, Stanley M. Bergman, Chairman, Chief Executive Officer, and President of Henry Schein, stated, "We continue to be pleased with our financial results, reporting yet another quarter of exceptional performance. Adjusted net income and earnings per share grew by 31% and 25% respectively for the quarter, both impressive figures indeed."
Mr. Bergman added, "The second quarter results also clearly reflect the success of our growth strategies. Excluding merger and integration costs, our operating margin for the quarter reached 5.1% of net sales, a 100 basis point improvement over the second quarter of 1997. For the year-to-date, adjusted operating margin grew by 80 basis points. This performance is a result of the synergies derived from the continuing integrations of the Sullivan Dental and Micro Bio-Medics acquisitions, as well as our continuing strategy of leveraging our core infrastructure.
"In addition, during the quarter we announced acquisitions adding approximately $77 million in annual revenue, strengthening our market reach in three key regions -- Arcona Health in Canada, Bedsole Medical in the southern region of the United States, and Regional Health Care in Australia and New Zealand," continued Mr. Bergman. "These transactions are consistent with the Company's growth strategies of increasing market penetration, both domestically and internationally."
Mr. Bergman concluded, "I am also proud to report that on June 15th we began shipping orders out of our new 400,000 square foot, state-of-the art, Northeast distribution center in Denver, Pennsylvania. As we proceed with our distribution center consolidation strategy, the anticipated improvements in reductions in processing costs and customer service will be major factors in our continued growth. I remain as excited as ever about the future prospects of Henry Schein."
Henry Schein, Inc. is the largest distributor of healthcare products to office-based healthcare practitioners, including dental practices and laboratories, physician practices and veterinary clinics. The Company, recognized for its excellent customer service and low prices, serves more than 250,000 customers worldwide. For more information, visit the Henry Schein website at http://www.henryschein.com.
Certain information contained herein includes information that is forward-looking. The matters referred to in forward-looking statements may be affected by the risks and uncertainties involved in the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in the Company's Securities and Exchange Commission filings.
HENRY SCHEIN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
(restated) (restated)
Net sales $427,873 $373,434 $830,905 $712,483
Cost of sales 293,754 262,502 575,295 501,514
Gross profit 134,119 110,932 255,610 210,969
Operating expenses:
Selling, general and
administrative 112,300 95,537 219,525 185,939
Merger and integration
costs 8,536 1,826 12,400 4,353
Operating income 13,283 13,569 23,685 20,677
Other income (expense):
Interest income 1,419 1,444 3,131 2,981
Interest expense (2,505) (1,012) (4,662) (2,032)
Other - net (35) 69 45 (6)
Income before taxes
on income, minority
interest and equity
in earnings of
affiliates 12,162 14,070 22,199 21,620
Taxes on income 5,567 6,021 9,820 10,029
Minority interest in
net loss of subsidiaries (144) (112) (143) (126)
Equity in earnings
of affiliates 474 380 655 330
Net income $7,213 $8,541 $13,177 $12,047
Adjusted net income:
Net income $7,213 $8,541 $13,177 $12,047
Adjustments:
Merger and integration
costs 8,536 1,826 12,400 4,353
Tax effect on merger and
integration costs (2,294) (320) (3,331) (320)
Proforma tax adjustment
- Dentrix -- 252 -- --
Adjusted net income $13,455 $10,299 $22,246 $16,080
Adjusted net income
per common share:
Basic $0.37 $0.30 $0.61 $0.47
Diluted $0.35 $0.28 $0.58 $0.45
Weighted average shares:
Basic 36,764 34,606 36,325 34,172
Diluted 38,736 36,332 38,221 35,549
Restated to reflect results of Sullivan Dental Products, Inc. and Micro
Bio-Medics, Inc. which were accounted for under the pooling of interests
method of accounting.
HENRY SCHEIN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
June 27, December 27,
1998 1997
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $15,513 $7,824
Accounts receivable,
less reserves of $12,901
and $13,048, respectively 291,230 261,665
Inventories 234,813 212,848
Deferred income taxes 13,451 13,323
Other 45,968 39,396
Total current assets 600,975 535,056
Property and equipment, net
of accumulated depreciation
of $62,685 and $57,997
respectively 59,185 54,449
Goodwill and other
intangibles, net of
accumulated amortization
of $14,338 and $10,395,
respectively 131,134 122,217
Investments and other 44,990 29,472
$836,284 $741,194
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $163,614 $129,806
Bank credit lines 17,611 11,973
Accruals:
Salaries and related expenses21,954 20,729
Merger and integration costs 12,980 17,056
Other 42,653 39,095
Current maturities of
long-term debt 4,340 9,370
Total current liabilities 263,152 228,029
Long-term debt 124,154 93,192
Other liabilities 8,264 6,550
Total liabilities 395,570 327,771
Minority interest 2,085 2,225
Stockholders' equity:
Common stock, $.01 par value,
authorized 60,000,000; issued
and outstanding 36,114,367 and
35,146,892, respectively 361 352
Preferred stock - Class A
- 558,000 shares and Class B
- 45,500 shares 6 0
Additional paid-in capital 337,311 322,998
Deferred compensation (1,625) (1,625)
Retained earnings 105,415 92,238
Treasury stock, at cost
(62,479 shares) (1,156) (1,156)
Foreign currency
translation adjustment (1,683) (1,609)
Total stockholders'
equity 438,629 411,198
$836,284 $741,194
SOURCE Henry Schein, Inc.