Henry Schein Reports Record Third Quarter Results
Net sales for the third quarter of 2009 were
Income from continuing operations attributable to
"We are pleased to report net sales growth in local currencies of approximately 7% excluding sales of seasonal influenza vaccines, with solid increases in our
"We continue to believe that the market for Dental consumable merchandise has stabilized and, as expected, our decrease in sales of Dental equipment has improved from the previous quarter's rate of decline," commented Mr. Bergman.
"During the third quarter we sold approximately 6.5 million doses of seasonal influenza vaccine, and as of today we have sold approximately 8.5 million doses for the year," said Mr. Bergman. "Sales growth of nearly 9% excluding seasonal influenza vaccine reflects strong sales of consumable products, as well as sales of products related to the treatment and prevention of the H1N1 virus."
"We had double-digit local currency sales growth in our International dental, medical and veterinary businesses during the quarter," added Mr. Bergman.
"During the quarter we saw continued strong growth in electronic services, as well as the beneficial impact of the acquisition of a European veterinary software and practice management business," explained Mr. Bergman.
Year-to-Date Results
For the first nine months of 2009, net sales of
Income from continuing operations attributable to
2009 EPS Guidance
Henry Schein today updated 2009 financial guidance, as follows:
-- Fourth quarter 2009 diluted EPS attributable to Henry Schein, Inc. is
expected to be $0.89 to $0.91 .
-- 2009 diluted EPS attributable to Henry Schein, Inc. is expected to be
$3.14 to $3.16 excluding the unusual items included in Exhibit B. This
represents growth of approximately 8% compared with restated 2008
results of $2.92 , excluding charges related to the Lehman Brothers
bankruptcy as well as restructuring costs.
-- Guidance for 2009 diluted EPS attributable to Henry Schein, Inc. is for
current continuing operations including completed or previously
announced acquisitions, and does not include the impact of potential
future acquisitions, if any.
2010 EPS Guidance
Henry Schein today introduced 2010 financial guidance, as follows:
-- 2010 diluted EPS attributable to Henry Schein, Inc. is expected to be
$3.40 to $3.56 , representing growth of 8% to 13% compared with the
midpoint of 2009 guidance.
-- Guidance for 2010 diluted EPS attributable to Henry Schein, Inc. is for
current continuing operations including completed or previously
announced acquisitions, and does not include the impact of potential
future acquisitions, if any.
Third Quarter Conference Call Webcast
The Company will hold a conference call to discuss third quarter financial results today, beginning at
About Henry Schein
Henry Schein, a Fortune 500® company and a member of the NASDAQ 100® Index, is recognized for its excellent customer service and highly competitive prices. The Company's four business groups - Dental,
Headquartered in
In accordance with the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements are identified by the use of such terms as "may," "could," "expect," "intend," "believe," "plan," "estimate," "forecast," "project," "anticipate" or other comparable terms. A full discussion of our operations and financial condition, including factors that may affect our business and future prospects, is contained in documents we have filed with the
Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: decreased customer demand and changes in vendor credit terms; disruptions in financial markets; general economic conditions; competitive factors; changes in the healthcare industry; changes in regulatory requirements that affect us; risks associated with our international operations; fluctuations in quarterly earnings; our dependence on third parties for the manufacture and supply of our products; transitional challenges associated with acquisitions, including the failure to achieve anticipated synergies; financial risks associated with acquisitions; regulatory and litigation risks; the dependence on our continued product development, technical support and successful marketing in the technology segment; our dependence upon sales personnel and key customers; our dependence on our senior management; possible increases in the cost of shipping our products or other service issues with our third-party shippers; risks from rapid technological change; risks from potential increases in variable interest rates; possible volatility of the market price of our common stock; certain provisions in our governing documents that may discourage third-party acquisitions of us; and changes in tax legislation that affect us. The order in which these factors appear should not be construed to indicate their relative importance or priority.
We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. We undertake no duty and have no obligation to update forward-looking statements.
(TABLES TO FOLLOW)
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 26, September 27, September 26, September 27,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $1,659,433 $1,644,209 $4,752,255 $4,799,234
Cost of sales 1,183,166 1,168,615 3,361,707 3,389,847
--------- --------- --------- ---------
Gross profit 476,267 475,594 1,390,548 1,409,387
Operating
expenses:
Selling,
general and
administrative 362,382 360,180 1,060,062 1,094,512
Restructuring
costs - - 4,043 -
--- --- ----- ---
Operating
income 113,885 115,414 326,443 314,875
Other income
(expense):
Interest income 2,387 4,260 7,674 12,217
Interest expense (5,171) (9,240) (18,329) (26,816)
Other, net 1,938 (4,863) 1,595 (5,524)
----- ------ ----- ------
Income from
continuing
operations
before taxes,
equity in
earnings of
affiliates and
noncontrolling
interests 113,039 105,571 317,383 294,752
Income taxes (15,864) (34,355) (83,402) (98,787)
Equity in earnings
of affiliates 1,200 1,602 3,777 4,020
----- ----- ----- -----
Income from
continuing
operations 98,375 72,818 237,758 199,985
Income (loss)
from
discontinued
operations,
net of tax 2,373 (52) 2,715 (828)
----- --- ----- ----
Net income 100,748 72,766 240,473 199,157
Less: Net income
attributable to
noncontrolling
interests (4,327) (5,278) (15,728) (15,659)
------ ------ ------- -------
Net income
attributable to
Henry Schein,
Inc. $96,421 $67,488 $224,745 $183,498
======= ======= ======== ========
Amounts
attributable to
Henry Schein,
Inc.:
Income from
continuing
operations $94,045 $67,548 $222,143 $184,239
Income (loss)
from
discontinued
operations,
net of tax 2,376 (60) 2,602 (741)
----- --- ----- ----
Net income $96,421 $67,488 $224,745 $183,498
======= ======= ======== ========
Earnings per share
attributable to
Henry Schein, Inc. :
From continuing
operations:
Basic $1.06 $0.76 $2.50 $2.07
===== ===== ===== =====
Diluted $1.03 $0.74 $2.45 $2.00
===== ===== ===== =====
From discontinued
operations:
Basic $0.03 $0.00 $0.03 $(0.01)
===== ===== ===== ======
Diluted $0.02 $0.00 $0.03 $0.00
===== ===== ===== =====
From net income:
Basic $1.09 $0.76 $2.53 $2.06
===== ===== ===== =====
Diluted $1.05 $0.74 $2.48 $2.00
===== ===== ===== =====
Weighted-average
common shares
outstanding:
Basic 88,796 88,930 88,843 89,216
====== ====== ====== ======
Diluted 91,513 91,376 90,576 91,908
====== ====== ====== ======
Note: The above prior period amounts have been restated to reflect the
effects of discontinued operations, the adoption of ASC Topic 470-20
related to convertible debt and ASC Topic 810-10-65 related to the
presentation of noncontrolling interests.
HENRY SCHEIN, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
September 26, December 27,
2009 2008
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $317,607 $369,570
Accounts receivable,
net of reserves of
$47,890 and $42,855 764,285 734,027
Inventories, net 770,370 731,654
Deferred income taxes 40,747 36,974
Prepaid expenses and other 186,744 193,841
------- -------
Total current assets 2,079,753 2,066,066
Property and equipment, net 257,602 247,835
Goodwill 977,054 922,952
Other intangibles, net 212,042 214,093
Investments and other 176,888 148,264
------- -------
Total assets $3,703,339 $3,599,210
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $507,462 $554,773
Bank credit lines 1,731 4,936
Current maturities of
long-term debt 23,933 156,405
Accrued expenses:
Payroll and related 148,665 135,523
Taxes 83,951 69,792
Other 263,392 262,236
------- -------
Total current
liabilities 1,029,134 1,183,665
Long-term debt 242,511 256,648
Deferred income taxes 107,953 95,399
Other liabilities 72,038 58,109
Redeemable noncontrolling
interests 177,513 233,035
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01
par value, 1,000,000
shares authorized,
none outstanding - -
Common stock, $.01 par
value, 240,000,000
shares authorized,
90,448,417
outstanding on
September 26, 2009
and 89,351,849
outstanding on
December 27, 2008 904 894
Additional paid-in
capital 533,508 492,505
Retained earnings 1,406,199 1,181,454
Accumulated other
comprehensive income 71,863 29,721
------ ------
Total Henry Schein, Inc.
stockholders' equity 2,012,474 1,704,574
Noncontrolling interests 61,716 67,780
------ ------
Total stockholders'
equity 2,074,190 1,772,354
--------- ---------
Total liabilities and
stockholders' equity $3,703,339 $3,599,210
========== ==========
Note: The above prior period amounts have been restated to reflect the
adoption of ASC Topic 480-10 related to redeemable noncontrolling
interests, ASC Topic 470-20 related to convertible debt and ASC Topic
810-10-65 related to the presentation of noncontrolling interests.
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 26, September 27, September 26, September 27,
2009 2008 2009 2008
---- ---- ---- ----
Cash flows from
operating
activities:
Net income $100,748 $72,766 $240,473 $199,157
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Gain on sale
of discontinued
operation,
net of tax (2,382) - (2,382) -
Depreciation
and
amortization 20,196 19,475 60,930 59,183
Amortization
of bond
discount 1,509 1,422 4,473 4,214
Stock-based
compensation
expense 6,041 6,844 18,344 23,060
Provision for
losses on
trade and other
accounts
receivable 1,042 1,107 2,754 3,711
Provision for
(benefit from)
deferred income
taxes (23,712) 1,137 (29,633) (2,705)
Stock issued
to 401(k) plan 5,301 4,662 5,301 4,662
Undistributed
earnings of
affiliates (1,200) (1,602) (3,777) (4,020)
Other 1,044 (815) 2,535 (2,132)
Changes in
operating
assets and
liabilities,
net of
acquisitions:
Accounts
receivable (27,231) (59,999) (12,788) (66,751)
Inventories (23,482) (63,118) (10,234) (68,182)
Other current
assets (3,276) (14,438) (806) (3,460)
Accounts
payable and
accrued
expenses 84,204 82,539 (56,813) 41,927
------ ------ ------- ------
Net cash provided
by operating
activities 138,802 49,980 218,377 188,664
------- ------ ------- -------
Cash flows from
investing
activities:
Purchases of
fixed assets (10,014) (14,653) (38,417) (38,119)
Payments for
equity
investment and
business
acquisitions,
net of cash
acquired (71,422) (2,349) (97,911) (25,930)
Cash received
from business
divestitures 12,716 - 12,716 -
Purchases of
available-for-
sale securities - - - (35,925)
Proceeds from
sales of
available-for-
sale securities 4,690 725 8,730 1,572
Net proceeds from
foreign exchange
forward contract
settlements - 14,142 275 9,090
Other (8,578) (897) (11,258) 3,607
------ ---- ------- -----
Net cash used in
investing
activities (72,608) (3,032) (125,865) (85,705)
------- ------ -------- -------
Cash flows from
financing
activities:
Proceeds from
(repayments of)
bank borrowings (436) 722 (3,829) (5,786)
Principal payments
for long-term
debt (150,840) (24,190) (153,452) (30,139)
Proceeds from
issuance of
stock upon
exercise of
stock options 5,761 12,346 9,689 25,041
Payments for
repurchases of
common stock - (23,298) - (54,945)
Excess tax
benefits related
to stock-based
compensation 2,138 5,962 2,821 10,635
Other (379) (455) (2,127) (1,856)
---- ---- ------ ------
Net cash used in
financing
activities (143,756) (28,913) (146,898) (57,050)
-------- ------- -------- -------
Net change in
cash and cash
equivalents (77,562) 18,035 (54,386) 45,909
Effect of exchange
rate changes on
cash and cash
equivalents 1,296 (1,103) 2,423 (5,135)
Cash and cash
equivalents,
beginning
of period 393,873 271,432 369,570 247,590
------- ------- ------- -------
Cash and cash
equivalents,
end of period $317,607 $288,364 $317,607 $288,364
======== ======== ======== ========
Note: The above prior period amounts have been restated to reflect the
adoption of ASC Topic 470-20 related to convertible debt and ASC Topic
810-10-65 related to the presentation of noncontrolling interests.
Exhibit A
Henry Schein, Inc.
2009 Third Quarter
Sales Growth Rate Summary
(unaudited)
Q3 2009 over Q3 2008
--------------------
Consolidated Dental Medical International Technology
------------ ------ ------- ------------- ----------
Internal Sales
Growth -0.6% -4.9% -4.2% 7.0% 4.6%
Acquisitions 4.6% 2.4% 1.1% 9.9% 2.7%
--- --- --- --- ---
Local Currency
Sales Growth 4.0% -2.5% -3.1% 16.9% 7.3%
Foreign Currency
Exchange -3.1% -0.5% 0.0% -8.4% -1.9%
---- ---- --- ---- ----
Total Sales
Growth 0.9% -3.0% -3.1% 8.5% 5.4%
=== ==== ==== === ===
Total Sales
Growth excluding
influenza vaccine
sales 3.7% -3.0% 8.6% 8.5% 5.4%
Local Currency
Sales Growth
excluding
influenza
vaccine sales 6.9% -2.5% 8.6% 16.9% 7.3%
Q3 YTD 2009 over Q3 YTD 2008
----------------------------
Consolidated Dental Medical International Technology
------------ ------ ------- ------------- ----------
Internal Sales
Growth 0.2% -4.5% -0.4% 5.3% 6.8%
Acquisitions 4.7% 2.3% 1.2% 10.1% 0.9%
--- --- --- ---- ---
Local Currency
Sales Growth 4.9% -2.2% 0.8% 15.4% 7.7%
Foreign Currency
Exchange -5.9% -1.3% 0.0% -15.0% -3.4%
---- ---- --- ----- ----
Total Sales
Growth -1.0% -3.5% 0.8% 0.4% 4.3%
==== ==== === === ===
Total Sales
Growth excluding
influenza vaccine
sales -0.1% -3.5% 5.1% 0.4% 4.3%
Local Currency
Sales Growth
excluding
influenza vaccine
sales 5.9% -2.2% 5.1% 15.4% 7.7%
Exhibit B
Henry Schein, Inc.
2009 Third Quarter and YTD
Reconciliation of GAAP income from continuing operations to non-GAAP
income from continuing operations
(in thousands, except per share data)
(unaudited)
Third Quarter % YTD %
2009 2008 Growth 2009 2008 Growth
Income from Continuing
Operations attributable
to Henry Schein, Inc. $94,045 $67,548 39.2% $222,143 $184,239 20.6%
Diluted EPS from
Continuing Operations
attributable to Henry
Schein, Inc. $1.03 $0.74 39.2% $2.45 $2.00 22.5%
Non-GAAP Adjustments
(after-tax)
Foreign tax benefit $(20,845) - $(20,845) -
Costs related to
foreign tax benefit 1,080 - 1,080 -
Adjustments related
to Lehman Brothers
Bankruptcy (338) $3,045 (338) $3,045
Other non-recurring
income/expense, net (1,028) - (1,028) -
Restructuring costs - - 2,784 -
--- --- ----- ---
Total non-GAAP
adjustments to income
from Continuing
Operations attributable
to Henry Schein, Inc. $(21,131) $3,045 $(18,347) $3,045
Total non-GAAP
adjustments to
diluted EPS from
Continuing Operations
attributable to Henry
Schein, Inc. $(0.23) $0.03 $(0.20) $0.03
Non-GAAP income from
Continuing Operations
attributable to Henry
Schein, Inc. $72,914 $70,593 3.3% $203,796 $187,284 8.8%
Non-GAAP diluted EPS
from Continuing
Operations attributable
to Henry Schein, Inc. $0.80 $0.77 3.9% $2.25 $2.04 10.3%
----- ----- --- ----- ----- ----
This non-GAAP comparison is being presented in order to provide a more
comparable basis for analysis. Earnings per share numbers may not sum
due to rounding.
SOURCE
Investors: Steven Paladino, Executive Vice President and Chief Financial Officer, steven.paladino@henryschein.com, +1-631-843-5500, or Media: Susan Vassallo, Vice President, Corporate Communications, susan.vassallo@henryschein.com, +1-631-843-5562