Henry Schein Reports Record Fourth Quarter Results
EPS up 9.6% to $1.26
MELVILLE, N.Y., Feb. 13, 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 December 29, 2012.
The Company is on a 52/53 week fiscal year ending on the last Saturday in December, and 2011 had an extra selling week compared with 2012. That extra selling week occurred in the fourth quarter of 2011. In order to facilitate a more meaningful analysis, the Company has estimated the impact of the extra week on sales growth and is providing internal sales growth in local currencies excluding that extra week.
Net sales for the fourth quarter of 2012 were $2.4 billion, an increase of 2.9% compared with the fourth quarter of 2011. This consisted of internal growth in local currencies of 6.0%, acquisition growth of 5.0% and decreases related to foreign currency exchange and the extra week of 0.6% and 7.5% respectively.
Net income attributable to Henry Schein, Inc. for the fourth quarter of 2012 was $112.5 million or $1.26 per diluted share, an increase of 7.4% and 9.6%, respectively, compared with the fourth quarter of 2011.
"Once again we believe we gained market share during the quarter in each of our business groups, driven by strong domestic results across the board and despite some challenges in certain overseas markets. Profitability also was strong with growth in diluted EPS of approximately 10%, and we are pleased to be affirming EPS guidance for 2013," commented Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein.
Global Dental sales of $1.3 billion declined 2.4%, and included internal growth in local currencies of 3.6%, acquisition growth of 2.6% and decreases related to foreign currency exchange and the extra week of 0.9% and 7.7% respectively. Internal growth in local currencies of 3.6% included 7.0% growth in North America and a decline in International growth of 1.5%.
"We are delighted to report continued strength in North America Dental equipment with growth of 21.9% and overall growth in North America Dental of 7.0%. While International Dental merchandise internal growth in local currencies was a healthy 2.2%, a decline in equipment sales of 9.2% reflects a cautious spending environment in much of Europe, particularly in Germany and the Netherlands, as well as in Australia," commented Mr. Bergman. "In Germany, we believe that equipment sales were negatively impacted by the timing of the upcoming IDS show in Cologne." The company noted that all quoted sales growth rates are adjusted to exclude the impact of the extra week in 2011.
Global Animal Health sales of $611.2 million increased 16.1%, and included internal growth in local currencies of 10.6%, acquisition growth of 13.7% and decreases related to foreign currency exchange and the extra week of 0.3% and 7.9% respectively. Internal growth in local currencies of 10.6% included 18.4% growth in North America and 3.1% International growth.
"We continued to gain market share in our Global Animal Health business during the fourth quarter with accelerated internal growth in North America, excluding the extra week, compared with the preceding quarter," commented Mr. Bergman. "Internal growth in local currencies in our International Animal Health business remained healthy, yet slowed somewhat primarily due to macroeconomic factors."
Global Medical sales of $402.4 million increased 1.1%, and included internal growth in local currencies of 6.9%, acquisition growth of 1.4% and decreases related to foreign currency exchange and the extra week of 0.3% and 6.9% respectively. Internal growth in local currencies of 6.9% included 7.2% growth in North America and 2.9% International growth.
"We are very pleased with the results from our Global Medical business, with growth in North America significantly higher than in the third quarter and International Medical returning to positive internal growth in local currencies, both excluding the impact of the extra week. We sold approximately 1.4 million doses of influenza vaccine during the quarter, as expected, and sold approximately 8.3 million doses for the full year," remarked Mr. Bergman.
Global Technology and Value-Added Services sales of $81.4 million increased 15.0%, and included internal growth in local currencies of 13.5%, acquisition growth of 6.5%, an increase related to foreign currency exchange of 0.2% and a decrease due to the extra week of 5.2%. Internal growth in local currencies of 13.5% included 15.7% growth in North America and a decline in International growth of 1.0%.
"Technology and Value-Added Services sales growth accelerated during the quarter in North America, which represented nearly 90% of the group's revenues, and included particular strength in recurring revenue streams on both the technology and financial services. Our European technology business was impacted by continued macroeconomic issues," commented Mr. Bergman.
Stock Repurchase Plan
The Company announced that it repurchased approximately 1.1 million shares of its common stock during the fourth quarter at an average price of $79.50 per share, or approximately $84.2 million. The impact of the repurchase of shares on fourth quarter diluted EPS was immaterial. At the close of the fourth quarter, Henry Schein had $300 million authorized for future repurchases of its common stock.
2012 Annual Results
For 2012 net sales of $8.9 billion increased 4.8% compared with 2011. This consisted of internal growth in local currencies of 5.1%, acquisition growth of 3.1% and decreases related to foreign currency exchange and the extra week of 1.9% and 1.5% respectively.
Net income attributable to Henry Schein, Inc. for 2012 was $388.1 million or $4.32 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 2012 was $398.6 million or $4.44 per diluted share, an increase of 8.4% and 11.8%, respectively, compared with 2011 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
Debt Refinancing
During 2013 the Company intends to refinance the debt of approximately $220 million related to the Butler Schein Animal Health transaction. The refinancing is expected to reduce interest expense and to be accretive to EPS by $0.02 to $0.03 on an annualized basis. The Company expects the refinancing to occur at the end of the first quarter of 2013. As part of that refinancing, the Company expects to incur a one-time, non-cash charge of approximately $0.04 to $0.05 per diluted share.
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 the one-time, non-cash charge of approximately $0.04 to $0.05 per diluted share related to the refinancing of Butler Schein Animal Health debt, as discussed above.
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.
Fourth Quarter Conference Call Webcast
The Company will hold a conference call to discuss fourth quarter financial results today, beginning at 10:00 a.m. Eastern time.