Henry Schein Reports First Quarter Results; Net Income of $11.4 Million, Operating Cash Flow Improves by $22.1 Million
MELVILLE, N.Y.--(BUSINESS WIRE)--May 1, 2000--Henry Schein, Inc. (Nasdaq: HSIC) today announced financial results for the 2000 first quarter.
For the three months ended March 25, 2000, net sales increased to $554 million, from $536 million in the first quarter of last year. Net income was $11.4 million, or $0.28 per diluted share, compared with adjusted net income of $11.3 million, or $0.27 per diluted share, in the first quarter of 1999. Including merger and integration costs during the first quarter of 1999, net income increased 15%.
Cash flow from operations reached $8.9 million during the 2000 first quarter, compared with a negative $13.2 million last year. "This increase in operating cash flow is largely a result of our efforts to improve working capital and asset management," said Stanley M. Bergman, Chairman, Chief Executive Officer and President of Henry Schein, Inc. During the first quarter, the Company paid down approximately $13.7 million in debt.
The Company reported that first quarter 2000 Dental sales rose to $255 million. Compared with the 1999 first quarter, combined Medical, Veterinary, Technology and International sales, which comprise 54% of total sales, were up approximately 9% excluding foreign currency fluctuations, with all business units growing at above-market rates and Technology posting a 20% gain.
"All business units posted revenue growth during the quarter and, of particular note, we are beginning to see improvement in our Dental group's equipment sales and service business. As a Company, we are continuing to focus on this critical segment of our Dental business," said Mr. Bergman. "We are moving toward our stated goal to reduce annual Dental operating costs by $4 million to $6 million, and look forward to additional progress under our Dental rightsizing plan."
The Company also reported continued strong progress with its program to increase sales volume among Dental customers whose ordering patterns had declined, as evidenced by a 13% increase in sales among a targeted 2,100 customers, compared with the 1999 first quarter. "We look forward to expanding this program to additional customers during the year," commented Mr. Bergman.
"We are very pleased with the continued gains made in electronic order volume, as total sales from our ArubA(R) e-commerce suite of products increased by 49% during the quarter, led by an 81% rise in sales placed via our ArubA Web product. We intend to leverage this customer connectivity by offering additional value-added products and services via ArubA throughout the coming year," said Mr. Bergman.
The Company will hold a conference call to discuss these results on Tuesday, May 2, beginning at 10:00 a.m. Eastern Time. Individual investors are invited to listen to the conference call over the Internet through Vcall, a service of the Investor Broadcast Network, at www.vcall.com. To listen to the live call, please go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. In addition, a replay will be available shortly after the call has ended.
Henry Schein, Inc. is the largest distributor of healthcare products and services to office-based healthcare practitioners in the combined North American and European markets. Customers include dental practices and laboratories, physician practices and veterinary clinics, as well as government and other institutions. The Company, recognized for its excellent customer service and low prices, serves more than 400,000 customers worldwide.
Headquartered in Melville, New York, the Company employs over 6,500 people in 15 countries. Sales in 1999 were $2.3 billion. For more information, visit the Henry Schein website at 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 OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
-----------------------
March 25, March 27,
2000 1999
--------- ----------
Net sales $ 553,810 $ 536,335
Cost of sales 384,606 372,918
--------- ---------
Gross profit 169,204 163,417
Operating expenses:
Selling, general and administrative 145,727 139,769
Merger and integration costs 0 2,203
--------- ---------
Operating income 23,477 21,445
Other income (expense):
Interest income 1,096 2,333
Interest expense (5,852) (5,724)
Other - net (151) (189)
--------- ---------
Income before taxes on income,
minority interest and equity in
earnings (losses) of affiliates 18,570 17,865
Taxes on income 6,778 7,127
Minority interest in net income of subsidiaries 488 597
Equity in earnings (losses) of affiliates 94 (228)
--------- ---------
Net income $ 11,398 $ 9,913
========= =========
Adjusted net income:
Net income $ 11,398 $ 9,913
Adjustments:
Merger and integration costs 0 2,203
Tax effect on merger and integration
costs 0 (859)
--------- ---------
Adjusted net income $ 11,398 $ 11,257
========= =========
Adjusted net income per common share:
Basic $ 0.28 $ 0.28
========= =========
Diluted $ 0.28 $ 0.27
========= =========
Weighted average shares:
Basic 40,715 40,417
========= =========
Diluted 41,084 41,806
========= =========
HENRY SCHEIN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 25, Dec. 25,
2000 1999
------------- -------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,405 $ 26,019
Accounts receivable, less reserves of
$21,062 and $20,391, respectively 358,371 388,063
Inventories 292,697 285,590
Deferred income taxes 17,583 15,520
Prepaid expenses and other 66,657 63,617
----------- -----------
Total current assets 752,713 778,809
Property and equipment, net of accumulated
depreciation and amortization of $64,518
and $60,702, respectively 87,293 86,627
Goodwill and other intangibles, net of
accumulated amortization of $34,571 and
$31,356, respectively 288,275 295,113
Investments and other 44,058 43,553
----------- -----------
$ 1,172,339 $ 1,204,102
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 184,099 $ 198,983
Bank credit lines 40,556 41,527
Accruals:
Salaries and related expenses 31,006 31,188
Merger and integration costs 7,921 10,093
Other 54,564 64,710
Current maturities of long-term debt 3,139 3,879
----------- -----------
Total current liabilities 321,285 350,380
Long-term debt 306,263 318,218
Other liabilities 11,436 9,782
----------- -----------
Total liabilities 638,984 678,380
----------- -----------
Minority interest 7,070 7,855
----------- -----------
Stockholders' equity:
Common stock, $.01 par value,
authorized 120,000,000; issued and
outstanding 40,805,594 and 40,768,306,
respectively 408 407
Additional paid-in capital 362,159 361,757
Retained earnings 179,207 167,809
Treasury stock, at cost (62,479 shares) (1,156) (1,156)
Accumulated comprehensive income (13,773) (10,359)
Deferred compensation (560) (591)
----------- -----------
Total stockholders' equity 526,285 517,867
----------- -----------
$ 1,172,339 $ 1,204,102
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*T
CONTACT: Henry Schein, Inc., Melville
Steven Paladino, Executive Vice President and
Chief Financial Officer
(631) 843-5500
Susan Vassallo, Manager, Investor and Public Relations
(631) 843-5562
svassa@henryschein.com