Patterson Companies Reports Fiscal 2021 Fourth-Quarter and Year End Operating Results

Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of $1.56 billion (see attached Sales Summary for further details) in its fiscal fourth quarter ended April 24, 2021, an increase of 21.4 percent compared to the same period last year. Internal sales, which are adjusted for the effects of currency translation and changes in product selling relationships, increased 23.5 percent.

Reported net income attributable to Patterson Companies, Inc. for the fourth quarter of fiscal 2021 was $28.8 million, or $0.30 per diluted share, compared to a reported net loss attributable to Patterson Companies, Inc. of $608.6 million, or $6.44 per diluted share, in the fourth quarter of fiscal 2020. Adjusted net income¹ attributable to Patterson Companies, Inc., which excludes deal amortization, integration and business restructuring expenses, an investment loss and goodwill impairment totaled $36.6 million for the fourth quarter of fiscal 2021, or $0.38 per diluted share, compared to $41.1 million in the same quarter of fiscal 2020, or $0.43 per diluted share. The reported net income and adjusted net income attributable to Patterson Companies, Inc. for the fourth quarter of fiscal 2021 included the after-tax impact of Covid-related inventory adjustments and a LIFO adjustment, both within our Dental segment, of approximately $18.2 million or $0.19 per diluted share.

“Patterson delivered strong performance during our 2021 fiscal year as we navigated the historic challenges posed by the Covid-19 pandemic to support our customers across our end markets,” said Mark Walchirk, President and CEO of Patterson Companies. “We grew our full-year adjusted EPS by 23 percent over the prior year through driving strong top line growth, operational excellence and disciplined expense management.”

“I am incredibly proud of our entire Patterson team for living our values and supporting our customers and business partners through the challenges of this past year. Looking ahead, we expect business conditions in our end markets to continue improving, and we remain focused on delivering top line growth and margin improvement. Additionally, our strengthened balance sheet provides us with the flexibility to consider strategic investments that will help accelerate growth and value creation for our shareholders.”

Patterson Dental

Reported net sales in our Dental segment for the fourth quarter of fiscal 2021, which represented approximately 40 percent of total company sales, were $616.0 million compared to $409.6 million in the fourth quarter of last year. Internal sales increased 49.1 percent compared to the fiscal 2020 fourth quarter, including 53.1 percent growth in consumables and 63.0 percent growth in equipment and software.

Patterson Animal Health

Reported net sales in our Animal Health segment for the fourth quarter of fiscal 2021, which comprised approximately 60 percent of the company’s total sales, were $939.3 million compared to $853.2 million in the fourth quarter of last year. Internal sales for the segment increased 13.8 percent from the fiscal 2020 fourth quarter with companion animal posting internal sales growth of 29.6 percent compared to the same period one year ago.

Full-Year Fiscal 2021 Results

Consolidated reported net sales for fiscal 2021 totaled $5.91 billion, a 7.7 percent year-over-year increase. Internal sales for fiscal 2021 increased 8.2 percent compared to fiscal 2020. Reported net income attributable to Patterson Companies, Inc. in fiscal 2021 was $156.0 million, or $1.61 per diluted share, compared to a net loss attributable to Patterson Companies, Inc, of $588.4 million, or $6.25 per diluted share in fiscal 2020. Adjusted net income¹ attributable to Patterson Companies, Inc., which excludes deal amortization, integration and business restructuring expenses, legal reserve costs, accelerated debt-related costs, investment (gain) loss and goodwill impairment, totaled $185.0 million, or $1.91 per diluted share. This compares to $147.6 million, or $1.55 per diluted share in fiscal 2020, representing a 23.2 percent increase year-over-year.

Balance Sheet and Capital Allocation

During the full year of fiscal 2021, Patterson Companies used $730.5 million of cash from operating activities and collected deferred purchase price receivables of $834.0 million, netting $103.5 million in cash, compared to a total of $297.4 million during the full year of fiscal 2020. The previous year period contained a trade accounts receivable facility amount of $29.0 million. Free cash flow¹ (see definition below and attached free cash flow table) generated during fiscal 2021 was $77.7 million, which was $148.9 million lower than fiscal 2020 primarily due to an increased level of working capital during fiscal 2021.

In the fourth quarter of fiscal 2021, Patterson Companies declared a quarterly cash dividend of $0.26 per share. For the full year of fiscal 2021, Patterson returned $75.2 million in cash dividends to shareholders.

Fiscal 2022 Guidance

• Patterson Companies today announced its fiscal 2022 earnings guidance, which is provided on both a GAAP and non-GAAP adjusted¹ basis:
• GAAP earnings are expected to be in the range of $1.61 to $1.76 per diluted share.
• Non-GAAP adjusted earnings¹ are expected to be in the range of $1.90 to $2.05 per diluted share.
• Our non-GAAP adjusted earnings¹ guidance excludes the after-tax impact of:
  • Deal amortization expenses of approximately $28.2 million ($0.29 per diluted share).

Our guidance is for current operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions, dispositions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions will improve over those experienced in fiscal 2021 and not revert back to the pandemic environment of early fiscal 2021.

¹Non-GAAP Financial Measures

The Reconciliation of GAAP to non-GAAP Measures table appearing behind the accompanying financial information is provided to adjust reported GAAP measures, namely operating income (loss), income (loss) before taxes, income tax expense (benefit), net income (loss), net income (loss) attributable to Patterson Companies, Inc. and diluted earnings (loss) per share attributable to Patterson Companies, Inc., for the impact of deal amortization, integration and business restructuring expenses, legal reserve costs, accelerated debt-related costs, discrete tax matters, investment (gain) loss and goodwill impairment, along with the related tax effects of these items.

The term “free cash flow” used in this release is defined as net cash used in operating activities less capital expenditures less the one-time benefit from the initiation of our trade accounts receivables facilities plus the collection of deferred purchase price receivables.

In addition, the term “internal sales” used in this release represents net sales adjusted to exclude the impact of foreign currency and changes in product selling relationships. Foreign currency impact represents the difference in results that is attributable to fluctuations in currency exchange rates the company uses to convert results for all foreign entities where the functional currency is not the U.S. dollar. The company calculates the impact as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period's currency exchange rates. The company believes the disclosure of net sales changes in constant currency provides useful supplementary information to investors in light of significant fluctuations in currency rates.

Management believes that these non-GAAP measures may provide a helpful representation of the company's fourth-quarter and full year performance and enable comparison of financial results between periods where certain items may vary independent of business performance. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

Fourth-Quarter Conference Call and Replay

Patterson Companies’ fiscal 2021 fourth-quarter conference call will start at 8:30 a.m. Eastern today. Investors can listen to a live webcast of the conference call at www.pattersoncompanies.com. The conference call will be archived on the Patterson Companies website. A replay of the fiscal 2021 fourth quarter conference call can be heard for one week at 800-585-8367 and by providing the Conference ID 2782998 when prompted.

About Patterson Companies Inc.

Patterson Companies Inc. (Nasdaq: PDCO) connects dental and animal health customers in North America and the U.K. to the latest products, technologies, services and innovative business solutions that enable operational and professional success. Our comprehensive portfolio, distribution network and supply chain is equaled only by our dedicated, knowledgeable people who deliver unrivalled expertise and unmatched customer service and support.

Learn more: pattersoncompanies.com

This press release contains, and our officers and representatives may from time to time make, certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, and the objectives and expectations of management. Forward-looking statements often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could” or “may.” Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements.

Any number of factors could affect our actual results and cause such results to differ materially from those contemplated by any forward-looking statements, including, but not limited to, the following: the effects of the highly competitive dental and animal health supply markets in which we compete; the COVID-19 pandemic and measures taken in response thereto; general economic conditions, including political and economic uncertainty; risks from disruption to our information systems; our ability to comply with restrictive covenants in our amended credit agreement; our dependence on relationships with sales representatives, service technicians and customers; our ability to realize the long-term strategic benefits of our acquisition of Animal Health International; potential disruption of distribution capabilities, including service issues with third-party shippers; our ability to provide our sales force and customers with the latest technology; our dependence on suppliers for the manufacture and supply of the products we sell; material changes in our purchasing relationship with suppliers; the risk that private label sales could adversely affect our relationships with suppliers; our dependence on positive perceptions of Patterson’s reputation; risks inherent in acquiring other businesses; the risk that our acquired technology or developed technology might not be successful in maintaining or gaining customers; litigation risks, including new or unanticipated litigation developments and new or unanticipated regulatory investigations; changes in consumer preferences; regulatory restrictions; the cyclicality of the livestock market; the outbreak of an infectious disease within the production animal or companion animal population; pressure from animal rights groups; adverse changes in supplier rebates; fluctuations in quarterly financial results; volatility in the price of our stock; risks from the expansion of customer purchasing power; increases in over-the-counter sales of companion animal products; the risks inherent in international operations, including currency fluctuations; the effects of health care reform; failure to comply with regulatory requirements and data privacy laws; cyberattacks or other privacy or data security breaches; the risk of the products we sell becoming obsolete or containing undetected errors; volatility in the financial markets; our dependence on our senior management; our dependence on leadership development and succession planning; disruptions from our enterprise resource planning system; risks associated with shareholder activism; the risk of being required to record impairment charges; the risk of audit by tax authorities; risks associated with interest rate fluctuations; and the risk that our governing documents and Minnesota law may discourage takeovers and business combinations. 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, accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results.

You should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, (“Risk Factors”) in our most recent Form 10-K, as amended and supplemented by our Quarterly Report on Form 10-Q for the quarterly period ended October 24, 2020, and information which may be contained in our other filings with the U.S. Securities and Exchange Commission, or SEC, when reviewing any forward-looking statement. Investors should understand it is impossible to predict or identify all such factors or risks. As such, you should not consider the foregoing list, or the risks identified in our SEC filings, to be a complete discussion of all potential risks or uncertainties.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to release publicly any revisions to any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
			Three Months Ended								Twelve Months Ended
			April 24, 2021				April 25, 2020				April 24, 2021				April 25, 2020
Net sales			$	1,561,793			$	1,286,461			$	5,912,066			$	5,490,011
Gross profit			304,405				294,032				1,203,130				1,197,410
Operating expenses			267,057				233,440				992,523				1,094,474
Goodwill impairment			—				675,055				—				675,055
Operating income (loss)			37,348				(614,463)				210,607				(572,119)
Other income (expense):
Other income (expense), net			4,028				(10,994)				13,608				23,499
Interest expense			(5,680)				(7,467)				(24,284)				(41,787)
Income (loss) before taxes			35,696				(632,924)				199,931				(590,407)
Income tax expense (benefit)			7,182				(24,127)				44,822				(1,040)
Net income (loss)			28,514				(608,797)				155,109				(589,367)
Net loss attributable to noncontrolling interests			(241)				(211)				(872)				(921)
Net income (loss) attributable to Patterson Companies, Inc.			$	28,755			$	(608,586)			$	155,981			$	(588,446)
Earnings (loss) per share attributable to Patterson Companies, Inc.:
Basic			$	0.30			$	(6.44)			$	1.63			$	(6.25)
Diluted			$	0.30			$	(6.44)			$	1.61			$	(6.25)
Weighted average shares:
Basic			95,977				94,462				95,599				94,154
Diluted			97,393				94,462				96,664				94,154
Dividends declared per common share			$	0.26			$	0.26			$	1.04			$	1.04

PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
			April 24, 2021				April 25, 2020
ASSETS
Current assets:
Cash and cash equivalents			$	143,244			$	77,944
Receivables, net			449,235				416,523
Inventory			736,778				812,194
Prepaid expenses and other current assets			286,672				236,104
Total current assets			1,615,929				1,542,765
Property and equipment, net			219,438				303,725
Operating lease right-of-use assets, net			77,217				79,021
Goodwill and identifiable intangibles, net			419,576				452,229
Long-term receivables, net and other			419,351				337,610
Total assets			$	2,751,511			$	2,715,350
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	609,264			$	862,093
Other accrued liabilities			294,400				182,099
Operating lease liabilities			32,252				30,706
Current maturities of long-term debt			100,750				—
Borrowings on revolving credit			53,000				—
Total current liabilities			1,089,666				1,074,898
Long-term debt			487,545				587,766
Non-current operating lease liabilities			48,318				49,854
Other non-current liabilities			161,311				166,388
Total liabilities			1,786,840				1,878,906
Stockholders' equity			964,671				836,444
Total liabilities and stockholders' equity			$	2,751,511			$	2,715,350

PATTERSON COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
			Twelve Months Ended
			April 24, 2021				April 25, 2020
Operating activities:
Net income (loss)			$	155,109			$	(589,367)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			78,896				82,182
Investment gain			—				(34,334)
Goodwill impairment			—				675,055
Non-cash employee compensation			30,488				37,354
Accelerated amortization of debt issuance costs on early retirement of debt			—				8,984
Non-cash losses (gains) and other, net			1,318				—
Change in assets and liabilities:
Receivables			(916,694)				(540,065)
Inventory			91,193				(59,258)
Accounts payable			(268,338)				219,613
Accrued liabilities			85,849				25,474
Long term receivables			(5,801)				(7,156)
Other changes from operating activities, net			17,461				(62,026)
Net cash used in operating activities			(730,519)				(243,544)
Investing activities:
Additions to property and equipment			(25,788)				(41,809)
Collection of deferred purchase price receivables			833,958				540,944
Other investing activities			2,493				—
Net cash provided by investing activities			810,663				499,135
Financing activities:
Dividends paid			(75,183)				(100,442)
Proceeds from issuance of long-term debt, net			—				296,700
Payments on long-term debt			—				(460,840)
Draw on revolving credit			53,000				—
Other financing activities			(462)				(6,647)
Net cash used in financing activities			(22,645)				(271,229)
Effect of exchange rate changes on cash			7,801				(2,064)
Net change in cash and cash equivalents			65,300				(17,702)
Cash and cash equivalents at beginning of period			77,944				95,646
Cash and cash equivalents at end of period			$	143,244			$	77,944

PATTERSON COMPANIES, INC. SALES SUMMARY (Dollars in thousands) (Unaudited)
			April 24, 2021				April 25, 20201				Total Sales Growth			Foreign Exchange Impact			Other2			Internal Sales Growth
Three Months Ended
Consolidated net sales
Consumable			$	1,262,772			$	1,061,273			19.0	%		1.6	%		(4.3)	%		21.7	%
Equipment and software			206,190				127,738				61.4			1.6			—			59.8
Value-added services and other			92,831				97,450				(4.7)			0.6			—			(5.3)
Total			$	1,561,793			$	1,286,461			21.4	%		1.5	%		(3.6)	%		23.5	%
Dental
Consumable			$	357,248			$	231,551			54.3	%		1.2	%		—	%		53.1	%
Equipment and software			182,938				110,927				64.9			1.9			—			63.0
Value-added services and other			75,846				67,116				13.0			0.5			—			12.5
Total			$	616,032			$	409,594			50.4	%		1.3	%		—	%		49.1	%
Animal Health
Consumable			$	905,524			$	829,722			9.1	%		1.7	%		(5.5)	%		12.9	%
Equipment and software			23,252				16,811				38.3			—			—			38.3
Value-added services and other			10,541				6,708				57.1			3.4			—			53.7
Total			$	939,317			$	853,241			10.1	%		1.7	%		(5.4)	%		13.8	%
Corporate
Value-added services and other			$	6,444			$	23,626			(72.7)	%		—	%		—	%		(72.7)	%
Total			$	6,444			$	23,626			(72.7)	%		—	%		—	%		(72.7)	%

¹ Certain sales were reclassified between categories to conform to the current period presentation.
² Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and twelve months ended April 24, 2021.

PATTERSON COMPANIES, INC. SALES SUMMARY (Dollars in thousands) (Unaudited)
			April 24, 2021						April 25, 20201						Total Sales Growth					Foreign Exchange Impact					Other2						Internal Sales Growth
Twelve Months Ended
Consolidated net sales
Consumable			$	4,748,441				$		4,374,829				8.5			%		0.6			%		(1.3)			%			9.2		%
Equipment and software			822,267					749,390						9.7					0.3					—						9.4
Value-added services and other			341,358					365,792						(6.7)					0.2					—						(6.9)
Total			$	5,912,066				$		5,490,011				7.7			%		0.5			%		(1.0)			%			8.2		%
Dental
Consumable			$	1,314,261				$		1,141,189				15.2			%		0.3			%		—			%			14.9		%
Equipment and software			731,132					677,677						7.9					0.3					—						7.6
Value-added services and other			281,628					283,056						(0.5)					0.1					—						(0.6)
Total			$	2,327,021				$		2,101,922				10.7			%		0.3			%		—			%			10.4		%
Animal Health
Consumable			$	3,434,180				$		3,233,640				6.2			%		0.7			%		(1.7)			%			7.2		%
Equipment and software			91,135					71,713						27.1					—					—						27.1
Value-added services and other			34,679					30,900						12.2					1.5					—						10.7
Total			$	3,559,994				$		3,336,253				6.7			%		0.7			%		(1.7)			%			7.7		%
Corporate
Value-added services and other			$	25,051				$		51,836				(51.7)			%		—			%		—			%			(51.7)		%
Total			$	25,051				$		51,836				(51.7)			%		—			%		—			%			(51.7)		%

¹ Certain sales were reclassified between categories to conform to the current period presentation.
² Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three and twelve months ended April 24, 2021.

PATTERSON COMPANIES, INC. OPERATING INCOME (LOSS) BY SEGMENT (In thousands) (Unaudited)
			Three Months Ended								Twelve Months Ended
			April 24, 2021				April 25, 2020				April 24, 2021				April 25, 2020
Operating income (loss)
Dental			$	29,227			$	32,846			$	201,244			$	168,304
Animal Health			32,518				(645,979)				88,123				(594,743)
Corporate			(24,397)				(1,330)				(78,760)				(145,680)
Total			$	37,348			$	(614,463)			$	210,607			$	(572,119)

PATTERSON COMPANIES, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Dollars in thousands, except per share amounts) (Unaudited)
For the three months ended April 24, 2021		GAAP				Deal amortization				Integration and business restructuring expenses				Legal reserve costs				Accelerated debt-related costs				Investment (gain) loss				Goodwill impairment				Non-GAAP
Operating income (loss)		$	37,348			$	9,261			$	1,090			$	—			$	—			$	—			$	—			$	47,699
Other expense, net		(1,652)				—				—				—				—				—				—				(1,652)
Income (loss) before taxes		35,696				9,261				1,090				—				—				—				—				46,047
Income tax expense (benefit)		7,182				2,196				273				—				—				—				—				9,651
Net income (loss)		28,514				7,065				817				—				—				—				—				36,396
Net loss attributable to noncontrolling interests		(241)				—				—				—				—				—				—				(241)
Net income (loss) attributable to Patterson Companies, Inc.		$	28,755			$	7,065			$	817			$	—			$	—			$	—			$	—			$	36,637
Weighted average shares*		97,393																												97,393
Diluted earnings (loss) per share attributable to Patterson Companies, Inc.**		$	0.30			$	0.07			$	0.01			$	—			$	—			$	—			$	—			$	0.38
Operating income (loss) as a % of sales		2.4		%																										3.1		%
Effective tax rate		20.1		%																										21.0		%
For the three months ended April 25, 2020		GAAP				Deal amortization				Integration and business restructuring expenses				Legal reserve costs				Accelerated debt-related costs				Investment (gain) loss				Goodwill impairment				Non-GAAP
Operating income (loss)		$	(614,463)			$	9,252			$	2,000			$	—			$	—			$	—			$	675,055			$	71,844
Other expense, net		(18,461)				—				—				—				—				623				—				(17,838)
Income (loss) before taxes		(632,924)				9,252				2,000				—				—				623				675,055				54,006
Income tax expense (benefit)		(24,127)				2,201				500				—				—				156				34,428				13,158
Net income (loss)		(608,797)				7,051				1,500				—				—				467				640,627				40,848
Net loss attributable to noncontrolling interests		(211)				—				—				—				—				—				—				(211)
Net income (loss) attributable to Patterson Companies, Inc.		$	(608,586)			$	7,051			$	1,500			$	—			$	—			$	467			$	640,627			$	41,059
Weighted average shares*		94,462																												95,394
Diluted earnings (loss) per share attributable to Patterson Companies, Inc.**		$	(6.44)			$	0.07			$	0.02			$	—			$	—			$	—			$	6.72			$	0.43
Operating income (loss) as a % of sales		(47.8)		%																										5.6		%
Effective tax rate		3.8		%																										24.4		%

* When we present GAAP or non-GAAP net loss attributable to Patterson Companies, Inc., incremental shares related to dilutive securities are not included in the diluted EPS calculation because they would have an anti-dilutive impact on EPS. When we present GAAP or non-GAAP net income attributable to Patterson Companies, Inc., incremental shares related to dilutive securities are included in the diluted EPS calculation.

** May not sum due to rounding and difference in weighted average shares used to calculate diluted earnings (loss) per share.

PATTERSON COMPANIES, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Dollars in thousands, except per share amounts) (Unaudited)
For the twelve months ended April 24, 2021		GAAP				Deal amortization				Integration and business restructuring expenses				Legal reserve costs				Accelerated debt-related costs				Investment (gain) loss				Goodwill impairment				Non-GAAP
Operating income (loss)		$	210,607			$	37,002			$	1,090			$	—			$	—			$	—			$	—			$	248,699
Other expense, net		(10,676)				—				—				—				—				—				—				(10,676)
Income (loss) before taxes		199,931				37,002				1,090				—				—				—				—				238,023
Income tax expense (benefit)		44,822				8,792				273				—				—				—				—				53,887
Net income (loss)		155,109				28,210				817				—				—				—				—				184,136
Net loss attributable to noncontrolling interests		(872)				—				—				—				—				—				—				(872)
Net income (loss) attributable to Patterson Companies, Inc.		$	155,981			$	28,210			$	817			$	—			$	—			$	—			$	—			$	185,008
Weighted average shares*		96,664																												96,664
Diluted earnings (loss) per share attributable to Patterson Companies, Inc.**		$	1.61			$	0.29			$	0.01			$	—			$	—			$	—			$	—			$	1.91
Operating income (loss) as a % of sales		3.6		%																										4.2		%
Effective tax rate		22.4		%																										22.6		%
For the twelve months ended April 25, 2020		GAAP				Deal amortization				Integration and business restructuring expenses				Legal reserve costs ‡				Accelerated debt-related costs				Investment (gain) loss				Goodwill impairment				Non-GAAP
Operating income (loss)		$	(572,119)			$	37,010			$	15,461			$	81,254			$	—			$	—			$	675,055			$	236,661
Other expense, net		(18,288)				—				—				—				9,943				(33,711)				—				(42,056)
Income (loss) before taxes		(590,407)				37,010				15,461				81,254				9,943				(33,711)				675,055				194,605
Income tax expense (benefit)		(1,040)				8,802				3,870				7,113				2,486				(7,728)				34,428				47,931
Net income (loss)		(589,367)				28,208				11,591				74,141				7,457				(25,983)				640,627				146,674
Net loss attributable to noncontrolling interests		(921)				—				—				—				—				—				—				(921)
Net income (loss) attributable to Patterson Companies, Inc.		$	(588,446)			$	28,208			$	11,591			$	74,141			$	7,457			$	(25,983)			$	640,627			$	147,595
Weighted average shares*		94,154																												95,059
Diluted earnings (loss) per share attributable to Patterson Companies, Inc.**		$	(6.25)			$	0.30			$	0.12			$	0.78			$	0.08			$	(0.27)			$	6.74			$	1.55
Operating income (loss) as a % of sales		(10.4)		%																										4.3		%
Effective tax rate		0.2		%																										24.6		%

‡ Includes costs and expenses incurred in the first quarter of fiscal 2020 of $17,666 related to the settlement of litigation with SourceOne Dental, Inc., costs and expenses incurred in the second quarter of fiscal 2020 of $58,300 related to the then-probable settlement of litigation with the U.S. Attorney's Office for the Western District of Virginia and $5,288 related to other legal proceedings.

* When we present GAAP or non-GAAP net loss attributable to Patterson Companies, Inc., incremental shares related to dilutive securities are not included in the diluted EPS calculation because they would have an anti-dilutive impact on EPS. When we present GAAP or non-GAAP net income attributable to Patterson Companies, Inc., incremental shares related to dilutive securities are included in the diluted EPS calculation.

** May not sum due to rounding and difference in weighted average shares used to calculate diluted earnings (loss) per share.

PATTERSON COMPANIES, INC. FREE CASH FLOW (In thousands) (Unaudited)
			Twelve Months Ended
			April 24, 2021				April 25, 2020
Net cash used in operating activities			$	(730,519)			$	(243,544)
Additions to property and equipment			(25,788)				(41,809)
Collection of deferred purchase price receivables			833,958				540,944
Impact of trade account receivables facility			—				(29,000)
Free cash flow			$	77,651			$	226,591

 

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