Henry Schein Reports Record First Quarter Results Adjusted EPS up 8.2% to $1.06

Company affirms 2013 financial guidance

MELVILLE, N.Y., May 7, 2013 /PRNewswire/ -- Henry Schein, Inc. (NASDAQ: HSIC), the world's largest provider of health care products and services to office-based dental, medical and animal health practitioners, today reported record financial results for the quarter ended March 30, 2013.

Net sales for the first quarter of 2013 were $2.3 billion, an increase of 9.3% compared with the first quarter of 2012.  This consisted of 9.2% growth in local currencies and a 0.1% gain related to foreign currency exchange.  In local currencies, internally generated sales increased 3.3% and acquisition growth was 5.9% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. for the first quarter of 2013 was $91.5 million or $1.03 per diluted share.  Excluding non-cash, one-time expenses related to refinancing the Butler Schein Animal Health debt of $6.2 million pre-tax or $0.03 per diluted share, net income attributable to Henry Schein, Inc. was $94.2 million or $1.06 per diluted share, an increase of 5.7% and 8.2%, respectively, compared with the first quarter of 2012 excluding restructuring costs.

"We are pleased to announce another record first-quarter performance, which puts us on the path to achieving our full-year earnings goal," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. "While the quarter's results reflect certain macroeconomic challenges in Europe, as well as some one-time technical factors, our bottom-line performance was in line with our expectations, reinforcing our confidence in the long-term outlook for the Company."

Global Dental sales of $1.2 billion increased 3.0%, consisting of 2.9% growth in local currencies and a 0.1% gain related to foreign currency exchange.  In local currencies, internally generated sales declined 0.3% and acquisition growth was 3.2%.  The 0.3% decline in internal growth in local currencies included 1.1% growth in North America and a 2.4% decline in International.

"North America Dental results were affected by strong fourth quarter 2012 equipment sales as we believe practitioners accelerated purchases to take advantage of certain U.S. tax opportunities.  International merchandise and equipment declines reflected a cautious spending environment in much of Europe and Australasia, and a more significant impact from the holiday timing, which resulted in one less selling day in certain European markets.  International equipment sales also were impacted by the biennial IDS trade show which occurred in late Q1 2013," commented Mr. Bergman.

Global Animal Health sales of $639.1 million increased 21.6%, including 21.7% growth in local currencies and a 0.1% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 6.8% and acquisition growth was 14.9%.  The 6.8% internal growth in local currencies included 14.9% growth in North America and a 1.5% decline in International.

"We continued to gain market share in our Global Animal Health business during the quarter, with results in North America marking our fifth consecutive quarter of double-digit growth," commented Mr. Bergman.  "International growth in local currencies of nearly 29% was driven by acquisitions, while internal growth declined slightly primarily due to macroeconomic factors and one less selling day in certain European countries."

Global Medical sales of $388.9 million increased 9.6%, including 9.5% growth in local currencies and a 0.1% gain from foreign currency exchange.  In local currencies, internally generated sales increased 8.3% and acquisition growth was 1.2%.  The 8.3% internal growth in local currencies included 9.0% growth in North America and a 3.3% decline in International.

"Internal growth in North America Medical represented the highest growth rate in nearly two years as we made further gains in domestic market share.  We experienced particularly strong sales growth in integrated delivery networks, urgent care settings and ambulatory surgery centers," remarked Mr. Bergman.

Global Technology and Value-Added Services sales of $74.7 million increased 18.7%, including 18.9% growth in local currencies and a 0.2% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 11.7% and acquisition growth was 7.2%.  The 11.7% internal growth in local currencies included 11.4% growth in North America and 14.3% International growth.

"Technology and Value-Added Services sales growth was strong both in North America and internationally with particular strength in recurring revenue streams for technology and financial services, as well as strong software sales," commented Mr. Bergman.

Stock Repurchase Plan

The Company announced that it repurchased approximately 840,000 shares of its common stock during the first quarter at an average price of $87.50 per share, or approximately $73.5 million.  The impact of the repurchase of shares on first quarter diluted EPS was immaterial.  At the close of the first quarter, Henry Schein had approximately $227 million authorized for future repurchases of its common stock.

2013 EPS Guidance

Henry Schein today affirmed 2013 financial guidance, as follows:

  • For 2013 the Company expects diluted EPS attributable to Henry Schein, Inc. to be $4.81 to $4.91, which represents growth of 8% to 11% compared with 2012 results excluding restructuring costs.
  • Guidance for 2013 diluted EPS attributable to Henry Schein, Inc. excludes a one-time, non-cash charge of $0.03 per diluted share related to the refinancing of Butler Schein Animal Health debt.
  • Guidance for 2013 diluted EPS attributable to Henry Schein, Inc. is for current continuing operations as well as completed or previously announced acquisitions, and does not include the impact of potential future acquisitions, if any.

First Quarter Conference Call Webcast

The 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 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 more than 15,500 Team Schein Members and serves more than 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 96,000 branded products and Henry Schein private-brand products in stock, as well as more than 110,000 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 25 countries.  The Company's sales reached a record $8.9 billion in 2012, and have grown at a compound annual rate of 17% 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 global 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 Ended






March 30,


March 31,






2013


2012












Net sales

$

2,293,511


$

2,099,019


Cost of sales


1,646,520



1,488,440




Gross profit


646,991



610,579


Operating expenses:








Selling, general and administrative


493,362



465,452



Restructuring costs


-



11,832




Operating income


153,629



133,295


Other income (expense):








Interest income


3,205



3,330



Interest expense (1)


(12,727)



(7,640)



Other, net


(370)



525




Income before taxes and equity in earnings of affiliates


143,737



129,510


Income taxes


(45,852)



(41,840)


Equity in earnings of affiliates


801



1,391


Net income


98,686



89,061



Less: Net income attributable to noncontrolling interests


(7,208)



(8,309)


Net income attributable to Henry Schein, Inc.

$

91,478


$

80,752












Earnings per share attributable to Henry Schein, Inc.:


















Basic

$

1.06


$

0.92



Diluted

$

1.03


$

0.89












Weighted-average common shares outstanding:








Basic


86,654



88,216



Diluted


88,792



90,666






(1)

Includes approximately $6.2 million of one-time expenses related to the refinancing of Butler Schein Animal Health debt.  These expenses reflect non-cash deferred financing costs and represent $.03 per diluted share.

 

 

 

HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)














March 30,


December 29,





2013


2012






(unaudited)




ASSETS






Current assets:







Cash and cash equivalents

$

90,562


$

122,080


Accounts receivable, net of reserves of $71,256 and $75,240


1,028,163



1,015,194


Inventories, net


1,136,043



1,203,507


Deferred income taxes


65,071



64,049


Prepaid expenses and other


265,576



299,547




Total current assets


2,585,415



2,704,377

Property and equipment, net


262,825



273,458

Goodwill


1,610,996



1,601,046

Other intangibles, net


453,502



462,182

Investments and other


292,948



292,934




Total assets

$

5,205,686


$

5,333,997










LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:







Accounts payable

$

609,028


$

787,658


Bank credit lines


50,073



27,166


Current maturities of long-term debt


1,908



17,992


Accrued expenses:








Payroll and related


154,845



207,381



Taxes


137,114



132,774



Other


289,601



299,738




Total current liabilities


1,242,569



1,472,709

Long-term debt


600,599



488,121

Deferred income taxes


199,768



196,814

Other liabilities


119,713



125,314




Total liabilities


2,162,649



2,282,958










Redeemable noncontrolling interests


463,363



435,175

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,








87,381,543 outstanding on March 30, 2013 and








87,850,671 outstanding on December 29, 2012


874



879


Additional paid-in capital


339,856



375,946


Retained earnings


2,223,037



2,183,905


Accumulated other comprehensive income


14,462



52,855



Total Henry Schein, Inc. stockholders' equity


2,578,229



2,613,585


Noncontrolling interests


1,445



2,279




Total stockholders' equity


2,579,674



2,615,864



Total liabilities, redeemable noncontrolling interests and stockholders' equity

$

5,205,686


$

5,333,997

 

 

























HENRY SCHEIN, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)


(unaudited)




















Three Months Ended








March 30,


March 31,








2013


2012














Cash flows from operating activities:









Net income


$

98,686


$

89,061



Adjustments to reconcile net income to net cash used in










operating activities:











Depreciation and amortization



32,393



30,420





Accelerated amortization of deferred financing costs



6,203



-





Stock-based compensation expense



5,310



8,754





Provision for losses on trade and other accounts receivable



840



1,144





Provision for (benefit from) deferred income taxes



6,371



(8,182)





Equity in earnings of affiliates



(801)



(1,391)





Distributions from equity affiliates



2,881



3,324





Other



3,291



2,901





Changes in operating assets and liabilities, net of acquisitions:












Accounts receivable



(25,392)



(57,433)






Inventories



54,011



(12,532)






Other current assets



14,003



12,404






Accounts payable and accrued expenses



(235,843)



(117,075)


Net cash used in operating activities



(38,047)



(48,605)














Cash flows from investing activities:









Purchases of fixed assets



(11,862)



(12,223)



Payments for equity investments and business










acquisitions, net of cash acquired



(32,359)



(18,980)



Proceeds from sales of available-for-sale securities



-



1,150



Other



(68)



(2,051)


Net cash used in investing activities



(44,289)



(32,104)














Cash flows from financing activities:









Proceeds from (repayments of) bank borrowings



22,827



(50,016)



Proceeds from issuance of long-term debt



328,000



100,000



Debt issuance costs



(236)



-



Principal payments for long-term debt



(232,905)



(10,650)



Proceeds from issuance of stock upon exercise of stock options



11,799



30,039



Payments for repurchases of common stock



(73,449)



(38,565)



Excess tax benefits related to stock-based compensation



3,364



8,548



Distributions to noncontrolling shareholders



(2,792)



(2,081)



Acquisitions of noncontrolling interests in subsidiaries



(535)



(6,366)


Net cash provided by financing activities



56,073



30,909














Net change in cash and cash equivalents



(26,263)



(49,800)


Effect of exchange rate changes on cash and cash equivalents



(5,255)



4,329


Cash and cash equivalents, beginning of period



122,080



147,284


Cash and cash equivalents, end of period


$

90,562


$

101,813


 

 

Exhibit A1 - Sales
















Henry Schein, Inc.

2013 First Quarter

Sales Summary

(in thousands)

(unaudited)

















Q1 2013 over Q1 2012









Global

Q1 2013


Q1 2012


Total Sales

Growth









   Dental

$

1,190,795


$

1,155,666


3.0%









   Animal Health


639,142



525,590


21.6%









   Medical


388,862



354,826


9.6%









Total Health Care Distribution


2,218,799



2,036,082


9.0%









Technology and value-added services


74,712



62,937


18.7%









Total Global

$

2,293,511


$

2,099,019


9.3%

















North America

Q1 2013


Q1 2012


Total Sales

Growth









   Dental

$

712,954


$

699,461


1.9%









   Animal Health


306,830



267,010


14.9%









   Medical


367,632



333,044


10.4%









Total Health Care Distribution


1,387,416



1,299,515


6.8%









Technology and value-added services


63,862



54,457


17.3%









Total North America

$

1,451,278


$

1,353,972


7.2%

















International

Q1 2013


Q1 2012


Total Sales

Growth









   Dental

$

477,841


$

456,205


4.7%









   Animal Health


332,312



258,580


28.5%









   Medical


21,230



21,782


-2.5%









Total Health Care Distribution


831,383



736,567


12.9%









Technology and value-added services


10,850



8,480


27.9%









Total International

$

842,233


$

745,047


13.0%

 

 

Exhibit A2 - QTD Sales Growth

















Henry Schein, Inc.

2013 First Quarter

Sales Growth Rate Summary

(unaudited)











Q1 2013 over Q1 2012

Global

Consolidated


Dental


Animal Health


Medical


Technology / VAS











Local Internal Sales Growth

3.3%


-0.3%


6.8%


8.3%


11.7%











Acquisitions

5.9%


3.2%


14.9%


1.2%


7.2%











Local Currency Sales Growth

9.2%


2.9%


21.7%


9.5%


18.9%











Foreign Currency Exchange

0.1%


0.1%


-0.1%


0.1%


-0.2%











     Total Sales Growth

9.3%


3.0%


21.6%


9.6%


18.7%





























































North America

Consolidated


Dental


Animal Health


Medical


Technology / VAS











Local Internal Sales Growth

6.2%


1.1%


14.9%


9.0%


11.4%











Acquisitions

1.0%


0.9%


0.0%


1.4%


5.9%











Local Currency Sales Growth

7.2%


2.0%


14.9%


10.4%


17.3%











Foreign Currency Exchange

0.0%


-0.1%


0.0%


0.0%


0.0%











     Total Sales Growth

7.2%


1.9%


14.9%


10.4%


17.3%





























































International

Consolidated


Dental


 Animal Health


Medical


Technology / VAS











Local Internal Sales Growth

-1.9%


-2.4%


-1.5%


-3.3%


14.3%











Acquisitions

14.7%


6.6%


30.3%


0.0%


14.8%











Local Currency Sales Growth

12.8%


4.2%


28.8%


-3.3%


29.1%











Foreign Currency Exchange

0.2%


0.5%


-0.3%


0.8%


-1.2%











     Total Sales Growth

13.0%


4.7%


28.5%


-2.5%


27.9%

 

 

 











Exhibit B




















Henry Schein, Inc.


2013 First Quarter


Reconciliation 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










%





2013



2012


Growth



From Net Income Attributable to Henry Schein, Inc.










Net Income attributable to Henry Schein, Inc.

$

91,478


$

80,752


13.3%



Diluted EPS from Net Income attributable to Henry










Schein, Inc.

$

1.03


$

0.89


15.7%













Non-GAAP Adjustments (after-tax)










Restructuring costs

$

-


$

8,301





Accelerated amortization of deferred financing costs


2,679



-





Net Income attributable to Henry Schein, Inc.

$

2,679


$

8,301





Diluted EPS from Net Income attributable to Henry Schein, Inc.

$

0.03


$

0.09















Adjusted Results From Net Income Attributable to Henry Schein, Inc.










Net Income attributable to Henry Schein, Inc.

$

94,157


$

89,053


5.7%



Diluted EPS from Net Income attributable to Henry










Schein, Inc.

$

1.06


$

0.98


8.2%



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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