MELVILLE, N.Y., Aug. 2, 2012 /PRNewswire/ -- Henry Schein, Inc. (NASDAQ: HSIC), the world's largest provider of healthcare products and services to office-based dental, medical and animal health practitioners, today reported record financial results for the quarter ended June 30, 2012.
Net sales for the second quarter of 2012 were $2.2 billion, an increase of 3.3% compared with the second quarter of 2011. This consists of 6.5% growth in local currencies and a 3.2% decline related to foreign currency exchange. In local currencies, internally generated sales increased 4.6% and acquisition growth was 1.9% (see Exhibit A for details of sales growth).
Net income attributable to Henry Schein, Inc. for the second quarter of 2012 was $98.1 million or $1.08 per diluted share. Excluding restructuring costs of $3.4 million pre-tax or $0.03 per diluted share, net income attributable to Henry Schein, Inc. for the second quarter of 2012 was $100.3 million or $1.11 per diluted share, an increase of 6.2% and 9.9%, respectively, compared with the second quarter of 2011 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
"While we are pleased with the performance of each of our business units during the quarter, our financial results were adversely affected by foreign currency exchange, general economic conditions and a difficult prior-year comparison related to increased sales from the biennial IDS trade show last year. Despite these factors we are pleased to affirm our financial guidance for 2012," commented Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein. "In recent weeks we completed a number of strategic acquisitions in our Global Dental, Animal Health and Medical businesses that further our strategic priority of global growth in important market segments and new geographies. Through these transactions we are able to reach more practitioners with more products and services than ever before."
Global Dental sales of $1.2 billion declined 1.3%, consisting of 2.6% growth in local currencies and a 3.9% decline related to foreign currency exchange. In local currencies, internally generated sales increased 2.1% and acquisition growth was 0.5%. The 2.1% internal growth in local currencies included 3.2% growth in North America and 0.5% International growth.
"North America Dental growth is highlighted by the strongest equipment sales growth in eight quarters. We believe that we continued to gain market share in our global dental business," commented Mr. Bergman. "Dental specialty markets are important components of our growth strategy, and we recently strengthened our global orthodontics business with the acquisition of Ortho Technology. We also acquired Accord, which establishes our presence in Thailand and can serve as an anchor for further expansion into Southeast Asia."
Global Animal Health sales of $586.3 million increased 11.4%, including 14.9% growth in local currencies and a 3.5% decline related to foreign currency exchange. In local currencies, internally generated sales increased 8.7% and acquisition growth was 6.2%. The 8.7% internal growth in local currencies included 14.2% growth in North America and 3.4% International growth.
"Our Animal Health business continued to make impressive gains in market share, in particular in North America," commented Mr. Bergman. "During the second quarter we completed our acquisition of AUV Veterinary Services. This transaction brings us a leading presence in the Netherlands and Belgium, and advances our Pan-European strategy of providing animal health practitioners across the continent with the products and services needed to operate more efficient practices and deliver high-quality care."
Global Medical sales of $361.1 million increased 5.9%, including 6.6% growth in local currencies, all internally generated, and a 0.7% decline related to foreign currency exchange. The 6.6% internal growth in local currencies included 7.2% growth in North America and a 2.2% decline in International.
"More than 90% of our global Medical sales are from North America, and our continued impressive growth in that region was largely due to increased penetration of integrated delivery networks, larger group practices and ambulatory surgery centers, as well as solid growth in sales of pharmaceutical products and medical equipment," remarked Mr. Bergman. "Our acquisition of Modern Laboratory Services last month reflects our commitment to the clinical laboratory market and strengthens our position in the Western U.S., which is an area of exciting growth for us."
Global Technology and Value-Added Services sales of $68.2 million increased 9.8%, including 10.6% growth in local currencies and a 0.8% decline related to foreign currency exchange. In local currencies, internally generated sales increased 8.6% and acquisition growth was 2.0%. The 8.6% internal growth in local currencies included 9.0% growth in North America and 6.2% International growth.
"Solid Technology and Value-Added Services internal sales were bolstered by strategic acquisitions. More than 85% of revenue from this business is derived from North America, and quarterly results included particular strength in recurring revenue streams on both the technology and financial services sides of the business," explained Mr. Bergman.
Stock Repurchase Plan
The Company announced that it repurchased approximately 1.6 million shares of its common stock during the second quarter at an average price of $75.09 per share, or approximately $118.3 million. The impact of the repurchase of shares on second quarter diluted EPS was less than $0.01. At the close of the second quarter, Henry Schein had $143.1 million authorized for future repurchases of its common stock.
For the first half of 2012, net sales of $4.3 billion increased 5.4% compared with the first half of 2011. This increase includes 7.4% growth in local currencies and a 2.0% decline related to foreign currency exchange. In local currencies, internally generated sales increased 6.2% and acquisition growth was 1.2%.
Net income attributable to Henry Schein, Inc. for the first half of 2012 was $178.8 million or $1.98 per diluted share. Excluding restructuring costs of $15.2 million pre-tax or $0.12 per diluted share, net income attributable to Henry Schein, Inc. for the first half of 2012 was $189.4 million or $2.09 per diluted share, an increase of 10.8% and 14.2%, respectively, compared with the first half of 2011 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
2012 EPS Guidance
Henry Schein today affirmed 2012 financial guidance, as follows:
Second Quarter Conference Call Webcast
The Company will hold a conference call to discuss second 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 Schein, Inc.
Henry Schein, Inc. is the world's largest provider of health care products and services to office-based dental, medical and animal health practitioners. The Company also serves dental laboratories, government and institutional health care clinics, and other alternate care sites. A Fortune 500® Company and a member of the NASDAQ 100® Index, Henry Schein employs nearly 15,000 Team Schein Members and serves approximately 775,000 customers.
The Company offers a comprehensive selection of products and services, including value-added solutions for operating efficient practices and delivering high-quality care. Henry Schein operates through a centralized and automated distribution network, with a 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. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services.
Headquartered in Melville, N.Y., Henry Schein has operations or affiliates in 26 countries. The Company's sales reached a record $8.5 billion in 2011, and have grown at a compound annual rate of 18 percent since Henry Schein became a public company in 1995. For more information, visit the Henry Schein Web site at www.henryschein.com.
Cautionary Note Regarding Forward-Looking Statements
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: effects of a highly competitive market; our dependence on third parties for the manufacture and supply of our products; our dependence upon sales personnel, customers, suppliers and manufacturers; our dependence on our senior management; fluctuations in quarterly earnings; risks from expansion of customer purchasing power and multi-tiered costing structures; possible increases in the cost of shipping our products or other service issues with our third-party shippers; general global macro-economic conditions; disruptions in financial markets; possible volatility of the market price of our common stock; changes in the health care industry; implementation of health care laws; failure to comply with regulatory requirements and data privacy laws; risks associated with our international operations; transitional challenges associated with acquisitions and joint ventures, including the failure to achieve anticipated synergies; financial risks associated with acquisitions and joint ventures; litigation risks; the dependence on our continued product development, technical support and successful marketing in the technology segment; risks from rapid technological change; risks from disruption to our information systems; 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 EndedSix Months EndedJune 30,June 25,June 30,June 25,2012201120122011Net sales$2,201,452$
4,078,401Cost of sales1,577,0571,518,4163,065,4972,900,355Gross profit624,395612,2241,234,9741,178,046Operating expenses: Selling, general and administrative466,333461,009931,785902,531 Restructuring costs3,360-15,192-Operating income154,702151,215287,997275,515Other income (expense): Interest income3,6094,1926,9398,125 Interest expense(7,711)(7,902)(15,351)(15,987) Other, net8307581,3551,081Income before taxes and equity in earningsof affiliates151,430148,263280,940268,734Income taxes(47,201)(47,340)(89,041)(86,493)Equity in earnings of affiliates3,0734,1334,4645,786Net income107,302105,056196,363188,027 Less: Net income attributable to noncontrollinginterests(9,216)(10,581)(17,525)(17,057)Net income attributable to Henry Schein, Inc.$98,086$
170,970Earnings per share attributable to Henry Schein, Inc.:Basic$1.11$
1.83Weighted-average common shares outstanding:Basic88,49090,76688,16190,710Diluted90,55393,44690,43193,330 HENRY SCHEIN, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data)June 30,December 31,20122011(unaudited)ASSETSCurrent assets:Cash and cash equivalents $87,896$
147,284Accounts receivable, net of reserves of $63,988 and $65,853 972,292888,248Inventories, net 976,996947,849Deferred income taxes 60,69354,970Prepaid expenses and other 233,267234,157Total current assets2,331,1442,272,508Property and equipment, net 255,715262,088Goodwill 1,523,4461,497,108Other intangibles, net 425,038409,612Investments and other 299,913298,828Total assets $4,835,256$
4,740,144LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable $619,936$
621,468Bank credit lines 83,45455,014Current maturities of long-term debt 17,12922,819Accrued expenses:Payroll and related 179,186191,173Taxes 126,703121,234Other 257,046259,932Total current liabilities 1,283,4541,271,640Long-term debt 434,417363,524Deferred income taxes 185,247188,739Other liabilities 82,98080,568Total liabilities 1,986,0981,904,471Redeemable noncontrolling interests359,114402,050Commitments 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,88,904,637 outstanding on June 30, 2012 and 89,928,082 outstanding on December 31, 2011 889899Additional paid-in capital 398,819401,262Retained earnings 2,076,0602,007,477Accumulated other comprehensive income12,88022,584Total Henry Schein, Inc. stockholders' equity2,488,6482,432,222Noncontrolling interests1,3961,401Total stockholders' equity 2,490,0442,433,623Total liabilities, redeemable noncontrolling interests and stockholders' equity $4,835,256$
4,740,144 HENRY SCHEIN, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)Three Months EndedSix Months EndedJune 30,June 25,June 30,June 25,2012201120122011Cash flows from operating activities:Net income$107,302$
188,027Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 30,96929,12161,38957,469Stock-based compensation expense 11,2959,61520,04917,960Provision for losses on trade and otheraccounts receivable 1,4939942,6372,722Provision for (benefit from) deferred incometaxes 467(3,493)(7,715)(10,265)Equity in earnings of affiliates (3,073)(4,133)(4,464)(5,786)Distributions from equity affiliates2,6837316,0071,180Other 958(39)3,8592,242Changes in operating assets and liabilities,net of acquisitions:Accounts receivable (1,896)(20,892)(59,329)(9,902)Inventories 1,19210,846(11,340)3,902Other current assets (20,482)(9,969)(8,078)(11,100)Accounts payable and accrued expenses 47,59020,161(69,485)(49,977)Net cash provided by operating activities 178,498137,998129,893186,472Cash flows from investing activities:Purchases of fixed assets (9,149)(10,306)(21,372)(20,764)Payments for equity investments and businessacquisitions, net of cash acquired (101,368)(10,022)(120,348)(143,636)Proceeds from sales of available-for-sale securities 2,875504,0252,150Other (2,334)1,382(4,385)1,897Net cash used in investing activities (109,976)(18,896)(142,080)(160,353)Cash flows from financing activities:Proceeds from (repayments of) bank borrowings 76,400(47,989)26,3847,671Proceeds from issuance of long-term debt 50101100,0503,101Debt issuance costs (213)(2,745)(213)(2,847)Principal payments for long-term debt (24,725)(22,390)(35,375)(23,916)Proceeds from issuance of stock upon exerciseof stock options 10,6769,12440,71527,938Payments for repurchases of common stock(118,326)(5,000)(156,891)(32,098)Excess tax benefits related to stock-basedcompensation 1,5031,05510,0516,852Distributions to noncontrolling shareholders(6,514)(5,355)(8,595)(6,417)Acquisition of noncontrolling interests in subsidiaries(13,647)(3,000)(20,013)(3,366)Other ---(90)Net cash used in financing activities (74,796)(76,199)(43,887)(23,172)Net change in cash and cash equivalents (6,274)42,903(56,074)2,947Effect of exchange rate changes on cash andcash equivalents (7,643)2,174(3,314)8,494Cash and cash equivalents, beginning of period 101,813116,712147,284150,348Cash and cash equivalents, end of period $87,896$
161,789Note: Certain prior period amounts have been reclassified to conform to the current period presentation. Exhibit A - QTDHenry Schein, Inc.2012 Second QuarterSales Growth Rate Summary(unaudited)Q2 2012 over Q2 2011GlobalConsolidatedDentalAnimal HealthMedicalTechnology /
VASLocal Internal Sales Growth4.6%2.1%8.7%6.6%8.6%Acquisitions1.9%0.5%6.2%0.0%2.0%Local Currency Sales Growth6.5%2.6%14.9%6.6%10.6%Foreign Currency Exchange-3.2%-3.9%-3.5%-0.7%-0.8%Total Sales Growth3.3%-1.3%11.4%5.9%9.8%Technology /
VASNorth AmericaConsolidatedDentalAnimal HealthMedicalLocal Internal Sales Growth6.5%3.2%14.2%7.2%9.0%Acquisitions0.3%0.6%0.0%0.0%0.0%.Local Currency Sales Growth6.8%3.8%14.2%7.2%9.0%Foreign Currency Exchange-0.3%-0.5%0.0%0.0%-0.2%Total Sales Growth6.5%3.3%14.2%7.2%8.8%Technology /
VASInternationalConsolidatedDental Animal HealthMedicalLocal Internal Sales Growth1.5%0.5%3.4%-2.2%6.2%Acquisitions4.5%0.3%12.2%0.0%14.9%Local Currency Sales Growth6.0%0.8%15.6%-2.2%21.1%Foreign Currency Exchange-8.2%-8.8%-7.0%-9.5%-5.1%Total Sales Growth-2.2%-8.0%8.6%-11.7%16.0% Exhibit A - YTDHenry Schein, Inc.2012 Second Quarter Year to DateSales Growth Rate Summary(unaudited)Q2 2012 YTD over Q2 2011 YTDGlobalConsolidatedDentalAnimal HealthMedicalTechnology /
VASLocal Internal Sales Growth6.2%4.1%11.5%5.1%8.8%Acquisitions1.2%0.4%3.6%0.3%3.1%Local Currency Sales Growth7.4%4.5%15.1%5.4%11.9%Foreign Currency Exchange-2.0%-2.5%-1.9%-0.4%-0.5%Total Sales Growth5.4%2.0%13.2%5.0%11.4%Technology /
VASNorth AmericaConsolidatedDentalAnimal HealthMedicalLocal Internal Sales Growth6.5%3.8%14.9%5.2%9.4%Acquisitions0.4%0.5%0.0%0.4%2.3%.Local Currency Sales Growth6.9%4.3%14.9%5.6%11.7%Foreign Currency Exchange-0.2%-0.4%0.0%0.0%-0.1%Total Sales Growth6.7%3.9%14.9%5.6%11.6%Technology /
VASInternationalConsolidatedDental Animal HealthMedicalLocal Internal Sales Growth5.6%4.5%8.1%2.5%5.2%Acquisitions2.8%0.4%7.2%0.0%7.5%Local Currency Sales Growth8.4%4.9%15.3%2.5%12.7%Foreign Currency Exchange-5.2%-5.9%-3.8%-6.6%-2.7%Total Sales Growth3.2%-1.0%11.5%-4.1%10.0% Exhibit BHenry Schein, Inc.
2012 Second Quarter and YTDReconciliation 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)Second QuarterYTD20122011%Growth20122011%GrowthFrom Net Income Attributable to Henry Schein, Inc.Net Income attributable to Henry Schein, Inc.$ 98,086$ 94,4753.8%$ 178,838$ 170,9704.6%Diluted EPS from Net Income attributable to Henry Schein, Inc.$
.838.2%Non-GAAP Adjustments (after-tax)Restructuring costs $
-Net Income attributable to Henry Schein, Inc.$
2,236$$ 10,537$Diluted EPS from Net Income attributable to Henry Schein, Inc.$
.00Adjusted Results From Net Income Attributable to Henry Schein, Inc.Net Income attributable to Henry Schein, Inc.$ 100,322$ 94,4756.2%$ 189,375$ 170,97010.8%Diluted EPS from Net Income attributable to Henry Schein, Inc.$
.8314.2%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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