Patterson Companies (PDCO) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 net sales rose 1.5% year-over-year to $6.57 billion; Q4 net sales up 0.1% to $1.72 billion.

• Fiscal 2024 GAAP EPS was $1.98; adjusted EPS was $2.30; Q4 GAAP EPS $0.74, adjusted EPS $0.82, both impacted by a $0.04 per share hit from the Change Healthcare cyberattack.

• Strong growth in dental consumables (up 3.7% in Q4, 4.4% for the year) and production animal segments, offset by dental equipment softness.

• Returned $327.9 million to shareholders via dividends and share repurchases in fiscal 2024.

• Strategic investments in software, value-added services, and M&A advanced long-term growth objectives.

Financial highlights

• Q4 gross margin was 21.5% (GAAP), 21.8% (adjusted); operating margin 5.1% (GAAP), 6.0% (adjusted).

• Fiscal 2024 gross margin was 21.0% (GAAP), 21.2% (adjusted); operating margin 3.9% (GAAP), 4.6% (adjusted).

• Q4 adjusted net income was $74.4 million ($0.82 per share), down from $82.4 million ($0.84) last year; full-year adjusted net income was $215.3 million ($2.30 per share), down from $236.4 million ($2.42).

• Free cash flow for fiscal 2024 was $171.3 million, down from $179.8 million in fiscal 2023.

• Q4 adjusted operating expenses: 15.8% of net sales; full-year: 16.5%.

Outlook and guidance

• Fiscal 2025 GAAP EPS guidance: $2.00–$2.10; adjusted EPS: $2.33–$2.43, implying ~3% growth at midpoint.

• Guidance assumes stable market conditions, flat operating margin, and continued modest negative impact from the Change Healthcare transition, especially in Q1.

• Adjusted guidance excludes ~$29.1 million in deal amortization ($0.33 per share).

• Ongoing investments in commercial software expected to continue, offset by margin mix improvements and efficiencies.

• Guidance excludes unplanned share repurchases, future acquisitions, and certain non-recurring items.