MELVILLE, N.Y., May 3, 2011 /PRNewswire/ -- Henry Schein, Inc. (NASDAQ: HSIC), the largest provider of healthcare products and services to office-based practitioners, today reported record financial results for the quarter ended March 26, 2011.
Net sales for the first quarter of 2011 were $1.9 billion, an increase of 10.6% compared with the first quarter of 2010. This consists of 9.9% growth in local currencies and 0.7% growth related to foreign currency exchange. Internal sales growth in local currencies was 3.8% (see Exhibit A for details of sales growth).
Net income attributable to Henry Schein, Inc. for the first quarter of 2011 was $76.5 million or $0.82 per diluted share, an increase of 10.6% and 9.3%, respectively, compared with first quarter 2010 adjusted net income, which excludes restructuring costs of $12.3 million or $0.09 per diluted share. EPS growth was 24.2% on an as-reported basis (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
"We are particularly pleased to report high-single to low-double digit sales growth in local currencies in all of our business groups," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein.
North American Dental sales of $662.8 million increased 7.8%, consisting of 7.2% growth in local currencies and 0.6% growth related to foreign currency exchange. The 7.2% growth in local currencies included 8.9% growth in Dental consumable merchandise sales and 1.3% growth in Dental equipment sales and service revenues.
"Solid gains in sales of Dental consumable merchandise are impressive in light of overall market conditions," commented Mr. Bergman. "We also are happy to report a fifth consecutive quarter of growth in Dental equipment sales and service revenues."
North American Medical sales of $319.8 million increased 12.4%. "We are very pleased with first quarter sales growth in our North American Medical group, which reflects particular strength in sales of clinical diagnostic products, as well as pharmaceuticals," remarked Mr. Bergman. "Shortly after the quarter closed we acquired Alpha Scientific, which strengthens our presence in the large and important California physician and medical laboratory market."
North American Animal Health sales of $230.6 million increased 11.6%, including internal growth of 7.5% and 4.1% acquisition growth related to the timing of the Butler Schein Animal Health transaction, which includes four days of sales being classified as acquisition growth in the quarter.
"For the past six months we have largely turned our focus at Butler Schein Animal Health to various initiatives to drive sales growth by expanding the breadth and depth of our product offerings, and strengthening customer relationships. First quarter results provide a positive indication regarding the success of these initiatives," commented Mr. Bergman.
International sales of $679.0 million increased 11.4%, consisting of 9.8% growth in local currencies and 1.6% growth related to foreign currency exchange.
"International sales growth during the quarter was primarily due to the acquisition of Provet Holdings, which was completed early in the first quarter and is performing in line with our model," added Mr. Bergman. "As expected the biennial IDS trade show, held in March, impacted sales of dental equipment in Europe during the quarter, yet the strong turnout and upbeat tone at the show suggests strength for the coming months."
Technology and Value-Added Services sales of $55.6 million increased 23.7% during the quarter, consisting of 22.9% growth in local currencies and 0.8% growth related to foreign currency exchange.
"Our Technology and Value-Added Services group has posted double-digit sales growth in local currencies for four consecutive quarters, continuing a longstanding trend of solid growth," explained Mr. Bergman. "First quarter results include particular strength in software sales in Australia and New Zealand, and in electronic services in the U.S."
Stock Repurchase PlanThe Company announced that it repurchased 409,755 shares of its common stock during the first quarter at an average price of $66.13 per share. The impact of the repurchase of shares on first quarter diluted EPS was immaterial. At the end of the first quarter, the Company had $72.9 million authorized for future repurchases of its common stock.
2011 EPS GuidanceHenry Schein today affirmed 2011 financial guidance, as follows:
First Quarter Conference Call WebcastThe Company will hold a conference call to discuss first quarter financial results today, beginning at 10:00 a.m. Eastern time. Individual investors are invited to listen to the conference call over the Internet through Henry Schein's Web site at www.henryschein.com. In addition, a replay will be available beginning shortly after the call has ended.
About Henry ScheinHenry Schein, a Fortune 500® company and a member of the NASDAQ 100® Index, is the largest provider of health care products and services to office-based practitioners. The Company is recognized for its excellent customer service and highly competitive prices. Henry Schein's five businesses – Dental, Medical, Animal Health, International and Technology – serve more than 700,000 customers worldwide, including dental practitioners and laboratories, physician practices and animal health practices, as well as government and other institutions.
The Company operates through a centralized and automated distribution network, which provides customers in more than 200 countries with a comprehensive selection of more than 90,000 national and Henry Schein private-brand products in stock, as well as more than 100,000 additional products available as special-order items. Henry Schein also provides exclusive, innovative technology offerings for dental, medical and veterinary professionals, including value-added practice management software and electronic health record solutions.Headquartered in Melville, N.Y., Henry Schein employs more than 14,000 people and has operations or affiliates in 25 countries. The Company's net sales reached a record $7.5 billion in 2010. For more information, visit the Henry Schein Web site at www.henryschein.com.
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 SEC and will be contained in all subsequent periodic filings we make with the SEC. These documents identify in detail important risk factors that could cause our actual performance to differ materially from current expectations.
Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: recently enacted healthcare legislation; effects of a highly competitive market; changes in the healthcare industry; changes in regulatory requirements; risks from expansion of customer purchasing power and multi-tiered costing structures; 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; risks from disruption to our information systems; general economic conditions; decreased customer demand and changes in vendor credit terms; disruptions in financial markets; our dependence upon sales personnel, manufacturers and 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; 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. 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 EndedMarch 26,March 27,20112010Net sales$1,947,761$
1,760,310Cost of sales1,381,9391,247,277Gross profit565,822513,033Operating expenses:Selling, general and administrative441,522396,989Restructuring costs-12,285Operating income124,300103,759Other income (expense):Interest income3,9333,388Interest expense(8,085)(9,087)Other, net323(115)Income before taxes, equity in earnings of affiliatesand noncontrolling interests120,47197,945Income taxes(39,153)(32,224)Equity in earnings of affiliates1,6531,531Net income82,97167,252Less: Net income attributable to noncontrollinginterests(6,476)(6,352)Net income attributable to Henry Schein, Inc.$76,495$
60,900Earnings per share attributable to Henry Schein, Inc.:Basic$0.84$
0.66Weighted-average common shares outstanding:Basic90,61589,508Diluted93,16192,721HENRY SCHEIN, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data)March 26,December 25,20112010(unaudited)ASSETSCurrent assets:Cash and cash equivalents $116,712$
150,348Accounts receivable, net of reserves of $58,745 and $56,267 934,952885,784Inventories, net 930,341870,206Deferred income taxes 51,36348,951Prepaid expenses and other 228,143214,013Total current assets2,261,5112,169,302Property and equipment, net 271,750252,573Goodwill 1,499,6891,424,794Other intangibles, net 458,480405,468Investments and other 303,564295,334Total assets $4,794,994$
4,547,471LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable $579,474$
590,029Bank credit lines 97,19441,508Current maturities of long-term debt 8,3574,487Accrued expenses:Payroll and related 153,892172,746Taxes 131,38791,581Other 263,899267,736Total current liabilities 1,234,2031,168,087Long-term debt 407,462395,309Deferred income taxes 196,358190,225Other liabilities 82,71176,753Total liabilities 1,920,7341,830,374Redeemable noncontrolling interests426,060304,140Commitments and contingenciesStockholders' equity: Preferred stock, $.01 par value, 1,000,000 shares authorized, none outstanding-- Common stock, $.01 par value, 240,000,000 shares authorized,92,261,494 outstanding on March 26, 2011 and 91,939,477 outstanding on December 25, 2010 923919 Additional paid-in capital 518,842601,014 Retained earnings 1,837,2291,779,178 Accumulated other comprehensive income89,83630,514 Total Henry Schein, Inc. stockholders' equity2,446,8302,411,625 Noncontrolling interests1,3701,332Total stockholders' equity 2,448,2002,412,957Total liabilities, redeemable noncontrolling interests and stockholders' equity $4,794,994$
4,547,471HENRY SCHEIN, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)Three Months EndedMarch 26,March 27,20112010Cash flows from operating activities:Net income
67,252Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,34824,572Amortization of bond discount -1,548Stock-based compensation expense 8,3456,142Provision for losses on trade and otheraccounts receivable 1,728994Provision for (benefit from) deferredincome taxes(6,772)272Undistributed earnings of affiliates (1,653)(1,531)Other 1,8351,361Changes in operating assets and liabilities,net of acquisitions:Accounts receivable 10,990(7,394)Inventories (6,944)14,482Other current assets (1,131)7,730Accounts payable and accrued expenses (70,138)(93,753)Net cash provided by operating activities 47,57921,675Cash flows from investing activities:Purchases of fixed assets (10,458)(9,062)Payments for equity investments and businessacquisitions, net of cash acquired (133,614)(108,946)Purchases of available-for-sale securities -(26,984)Proceeds from sales of available-for-sale securities 2,1001,300Other 1,308(720)Net cash used in investing activities (140,664)(144,412)Cash flows from financing activities:Proceeds from (repayments of) bank borrowings 55,660(931)Proceeds from issuance of long-term debt 3,000-Principal payments for long-term debt (1,526)(1,843)Proceeds from issuance of stock upon exerciseof stock options 18,81415,280Payments for repurchases of common stock(27,098)-Excess tax benefits related to stock-basedcompensation 5,7974,522Distributions to noncontrolling shareholders(1,062)(1,298)Acquisition of noncontrolling interests in subsidiaries(366)(10,000)Other (90)(90)Net cash provided by financing activities 53,1295,640Net change in cash and cash equivalents (39,956)(117,097)Effect of exchange rate changes on cash andcash equivalents 6,3201,331Cash and cash equivalents, beginning of period 150,348471,154Cash and cash equivalents, end of period
355,388Note: Certain prior period amounts have been reclassified to conform to the current presentation.Exhibit AHenry Schein, Inc.2011 First QuarterSales Growth Rate Summary(unaudited)Q1 2011 over Q1 2010ConsolidatedN.A. DentalN.A. MedicalN.A. Animal HealthInternationalTechnology/ VASInternal Sales Growth3.8%2.9%9.9%7.5%-0.1%13.8%Acquisitions6.1%4.3%2.5%4.1%9.9%9.1%Local Currency Sales Growth9.9%7.2%12.4%11.6%9.8%22.9%Foreign Currency Exchange0.7%0.6%0.0%0.0%1.6%0.8%Total Sales Growth10.6%7.8%12.4%11.6%11.4%23.7%Exhibit BHenry Schein, Inc.
2011 First QuarterReconciliation of GAAP results of net income attributable to Henry Schein, Inc. to
non-GAAP results of net income attributable to Henry Schein, Inc.(in thousands, except per share data)(unaudited)First Quarter and YTD20112010% GrowthFrom Net Income Attributable to Henry Schein, Inc.Net Income Attributable to Henry Schein, Inc.$ 76,495$ 60,90025.6%Diluted EPS from Net Income attributable to Henry Schein, Inc.$
.6624.2%Non-GAAP Adjustments (after-tax)Restructuring costs
$8,260Net Income attributable to Henry Schein, Inc.$$ 8,260Diluted EPS from Net Income attributable to Henry Schein, Inc.$
.09Adjusted Results From Net Income Attributable to Henry Schein, Inc.Net Income attributable to Henry Schein, Inc.$ 76,495$ 69,16010.6%Diluted EPS from Net Income attributable to Henry Schein, Inc.$
.759.3%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 Henry Schein, Inc.|
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