Henry Schein Reports Record Second Quarter Results

              Henry Schein Reports Record Second Quarter Results  EPS up 9.8% to $1.35  Raises lower end of 2014 financial guidance range  PR Newswire  MELVILLE, N.Y., Aug. 4, 2014  MELVILLE, N.Y., Aug. 4, 2014 /PRNewswire/ --Henry Schein, Inc. (NASDAQ: HSIC), the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners, today reported record financial results for the quarter ended June 28, 2014.  Net sales for the second quarter of 2014 were $2.6 billion, an increase of 9.3% compared with the second quarter of 2013. This consisted of 7.9% growth in local currencies and 1.4% growth related to foreign currency exchange. In local currencies, internally generated sales increased 4.3% and acquisition growth was 3.6% (see Exhibit A for details of sales growth).  Net income attributable to Henry Schein, Inc. for the second quarter of 2014 was $116.2 million, or $1.35 per diluted share, an increase of 7.2% and 9.8%, respectively, compared with the second quarter of 2013.  "Sales growth was solid during the second quarter with internal sales growth in local currencies the highest we have reported in the past year and a half. Domestic sales rebounded from the effects of severe winter weather in the preceding quarter," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. "We are also pleased to be raising thelower endof our 2014 financial guidance range."  Dental sales of $1.4 billion increased 8.6%, consisting of 7.5% growth in local currencies and 1.1% growth related to foreign currency exchange. In local currencies, internally generated sales increased 2.6% and acquisition growth was 4.9%. The 2.6% internal growth in local currencies included 4.3% growth in North America while International sales were flat.  "We gained market share in our Dental group with growth in North America exceeding 8% and International growth above 9%. North America internal Dental merchandise sales growth was bolstered by strategic acquisitions, and equipment sales and service revenue growth was nearly 11% in local currencies. International Dental growth also reflects strategic acquisitions, while internal equipment sales and service revenue in local currencies declined from a strong prior-year comparison that included the biennial IDS in Germany," commented Mr. Bergman. "Through strategic dental transactions during the quarter, we expanded our reach in France and entered Brazil, our first operation in South America."  Animal Health sales of $754.5 million increased 13.2%, consisting of 10.7% growth in local currencies and 2.5% growth related to foreign currency exchange. In local currencies, internally generated sales increased 7.3% and acquisition growth was 3.4%. The 7.3% internal growth in local currencies included 7.9% growth in North America and 6.8% growth in International.  "We also gained market share in our Animal Health group with internal sales growth in local currencies at its highest level in six quarters. International internal Animal Health sales growth in local currencies was at a multi-year record,"commented Mr. Bergman. "We also significantly strengthened our position in the U.S. equine-products market with the acquisition of a majority ownership position in SmartPak, which was completed early in the third quarter."  Medical sales of $403.3 million increased 4.0%, including 3.7% growth in local currencies and 0.3% growth related to foreign currency exchange.  "Medical sales growth in North America, which represents 95% of the group's total, accelerated sharply from the preceding quarter as we recovered from the impact of weather and made progress with our strategic focus on large group practices and integrated delivery networks. Pre-bookings of seasonal influenza vaccines are running in-line with the prior year," remarked Mr. Bergman.  Technology and Value-Added Services sales of $89.1 million increased 14.2%, including 13.2% growth in local currencies and 1.0% growth related to foreign currency exchange. In local currencies, internally generated sales increased 9.3% and acquisition growth was 3.9%.  "Technology and Value-Added Services sales growth also accelerated in North America compared with the preceding quarter to its highest growth rate in more than a year, with particular strength in software sales and value-added services," commented Mr. Bergman. "We continue to be pleased with our performance internationally in this category, with double-digit internal sales growth in local currencies for the past six quarters."  Stock Repurchase Plan The Company announced that it repurchased approximately 654,000 shares of its common stock during the second quarter at an average price of $116.43 per share, or approximately $76.1 million. The impact of the repurchase of shares on second quarter diluted EPS was immaterial. At the close of the second quarter, Henry Schein had approximately $148 million authorized for future repurchases of its common stock.  Year-to-Date Results Net sales for the first half of 2014 were $5.0 billion, an increase of 7.7% compared with the first half of 2013. This consisted of 6.8% growth in local currencies and 0.9% growth related to foreign currency exchange. In local currencies, internally generated sales increased 3.6% and acquisition growth was 3.2%.  Net income attributable to Henry Schein, Inc. for the first half of 2014 was $218.3 million or $2.53 per diluted share, an increase of 7.8% and 10.0%, respectively, compared with the first half of 2013 excluding a non-cash, one-time expense related to debt refinancing.  2014 EPS Guidance Henry Schein today raised thelower endof its 2014 financial guidance range, as follows:    oFor 2014, the Company expects diluted EPS attributable to Henry Schein,     Inc. to be $5.33 to $5.39. This represents growth of 8% to 9% compared     with 2013 results excluding certain one-time items, and compares with     previous guidance for 2014 diluted EPS to be $5.29 to $5.39.   oGuidance for 2014 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.  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 website 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, animal health and medical 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 17,000 Team Schein Members and serves more than 800,000 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 27 countries. The Company's sales reached a record $9.6 billion in 2013, and have grown at a compound annual rate of approximately 16percentsince Henry Schein became a public company in 1995. For more information, visit the Henry Schein website 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 macroeconomic 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 challenges associated with the emergence of potential increased competition by third party online commerce sites; 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        Six Months Ended                              June 28,     June 29,     June 28,     June 29,                              2014         2013         2014         2013 Net sales                  $ 2,615,406  $ 2,391,810  $ 5,045,565  $ 4,685,321 Cost of sales                1,886,934    1,721,954    3,620,380    3,368,474  Gross profit           728,472      669,856      1,425,185    1,316,847 Operating expenses:  Selling, general and      547,628      493,791      1,087,073    987,153 administrative  Operating income       180,844      176,065      338,112      329,694 Other income (expense):  Interest income           3,416        3,303        6,871        6,508  Interest expense          (5,670)      (4,890)      (10,928)     (17,617)  Other, net                1,032        (34)         4,612        (404)  Income before taxes and equity in earnings  of affiliates       179,622      174,444      338,667      318,181 Income taxes                 (55,322)     (54,775)     (104,945)    (100,627) Equity in earnings of        2,817        1,766        3,523        2,567 affiliates Net income                   127,117      121,435      237,245      220,121  Less: Net income attributable to              (10,881)     (13,005)     (18,910)     (20,213) noncontrolling interests Net income attributable    $ 116,236    $ 108,430    $ 218,335    $ 199,908 to Henry Schein, Inc. Earnings per share attributable to Henry Schein, Inc.:  Basic                   $ 1.37       $ 1.26       $ 2.58       $ 2.31  Diluted                 $ 1.35       $ 1.23       $ 2.53       $ 2.27 Weighted-average common shares outstanding:  Basic                     84,620       86,370       84,716       86,483  Diluted                   85,980       87,968       86,189       88,205      HENRY SCHEIN, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data)                                                      June 28,     December 28,                                                      2014         2013                                                      (unaudited) ASSETS Current assets:  Cash and cash equivalents                           $ 89,698     $  188,616  Accounts receivable, net of reserves of $81,932       1,188,143     1,055,216  and $78,298  Inventories, net                                      1,257,235     1,250,403  Deferred income taxes                                 66,431        63,865  Prepaid expenses and other                            310,496       276,565               Total current assets                     2,912,003     2,834,665 Property and equipment, net                            292,972       275,888 Goodwill                                               1,832,377     1,635,005 Other intangibles, net                                 594,358       417,133 Investments and other                                  360,044       461,945               Total assets                           $ 5,991,754  $  5,624,636 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:  Accounts payable                                    $ 755,999    $  824,495  Bank credit lines                                     83,671        29,508  Current maturities of long-term debt                  6,302         5,441  Accrued expenses:    Payroll and related                                 208,886       216,629    Taxes                                               158,363       145,161    Other                                               330,680       329,429               Total current liabilities                1,543,901     1,550,663 Long-term debt                                         665,909       450,233 Deferred income taxes                                  278,456       198,674 Other liabilities                                      152,029       139,526               Total liabilities                        2,640,295     2,339,096 Redeemable noncontrolling interests                    497,927       497,539 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,    85,022,123 outstanding on June 28, 2014 and    85,622,452 outstanding on December 28, 2013         850           856  Additional paid-in capital                            265,469       318,225  Retained earnings                                     2,505,721     2,398,267  Accumulated other comprehensive income                78,703        67,849    Total Henry Schein, Inc. stockholders' equity       2,850,743     2,785,197  Noncontrolling interests                              2,789         2,804               Total stockholders' equity               2,853,532     2,788,001    Total liabilities, redeemable noncontrolling      $ 5,991,754  $  5,624,636    interests and stockholders' equity      HENRY SCHEIN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)                             Three Months Ended        Six Months Ended                             June 28,     June 29,     June 28,     June 29,                             2014         2013         2014         2013 Cash flows from operating activities:  Net income                 $ 127,117    $ 121,435    $ 237,245    $ 220,121  Adjustments to reconcile  net income to net cash   provided by operating   activities:    Depreciation and           37,353       31,843       73,489       64,236    amortization    Accelerated    amortization of            -            -            -            6,203    deferred financing    costs    Stock-based                10,542       11,422       19,505       16,732    compensation expense    Provision for losses on    trade and other         accounts              1,092        1,314        2,415        2,154         receivable    Provision for (benefit    from) deferred income      (9,735)      9,179        6,009        15,550    taxes    Equity in earnings of      (2,817)      (1,766)      (3,523)      (2,567)    affiliates    Distributions from         3,368        3,569        5,340        6,450    equity affiliates    Other                      13,480       2,076        15,453       5,367    Changes in operating    assets and liabilities,     net of acquisitions:         Accounts              (56,597)     (19,763)     (86,199)     (45,155)         receivable         Inventories           6,991        28,026       48,550       82,037         Other current         195          (26,927)     (23,251)     (12,924)         assets         Accounts payable         and accrued           68,243       114,390      (151,050)    (121,453)         expenses Net cash provided by          199,232      274,798      143,983      236,751 operating activities Cash flows from investing activities:  Purchases of fixed assets    (19,492)     (10,072)     (37,976)     (21,934)  Payments for equity  investments and business   acquisitions, net of        (78,178)     (1,349)      (222,857)    (33,708)   cash acquired  Other                        (2,566)      (5,003)      (6,497)      (5,071) Net cash used in investing    (100,236)    (16,424)     (267,330)    (60,713) activities Cash flows from financing activities:  Proceeds from (repayments    (61,529)     (34,467)     53,239       (11,640)  of) bank borrowings  Proceeds from issuance of    124,400      155,781      314,787      483,781  long-term debt  Debt issuance costs          -            (1,083)      -            (1,319)  Principal payments for       (100,470)    (305,095)    (100,866)    (538,000)  long-term debt  Proceeds from issuance of  stock upon exercise   of stock options            4,827        7,653        21,277       19,452  Payments for repurchases     (76,137)     (78,062)     (151,443)    (151,511)  of common stock  Excess tax benefits  related to stock-based   compensation                1,229        1,964        4,579        5,328  Distributions to  noncontrolling               (13,926)     (10,216)     (17,689)     (13,008)  shareholders  Acquisitions of  noncontrolling interests  in   subsidiaries                (18,759)     (5,219)      (102,552)    (5,754) Net cash provided by (used    (140,365)    (268,744)    21,332       (212,671) in) financing activities Effect of exchange rate changes on cash and  cash equivalents             1,952        (1,353)      3,097        (6,608) Net change in cash and        (39,417)     (11,723)     (98,918)     (43,241) cash equivalents Cash and cash equivalents,    129,115      90,562       188,616      122,080 beginning of period Cash and cash equivalents,  $ 89,698     $ 78,839     $ 89,698     $ 78,839 end of period      Exhibit A - QTD Sales Henry Schein, Inc. 2014 Second Quarter Sales Summary (in thousands) (unaudited) Q2 2014 over Q2 2013                                         Total   Foreign   Local     Acquisition  Local Global        Q2 2014      Q2 2013      Sales   Exchange  Currency  Growth       Internal                                         Growth  Growth    Growth                 Growth  Dental     $ 1,368,481  $ 1,259,581  8.6%    1.1%      7.5%      4.9%         2.6%  Animal       754,549      666,297    13.2%   2.5%      10.7%     3.4%         7.3% Health  Medical      403,257      387,887    4.0%    0.3%      3.7%      0.0%         3.7% Total Health Care            2,526,287    2,313,765  9.2%    1.4%      7.8%      3.6%         4.2% Distribution Technology and             89,119       78,045     14.2%   1.0%      13.2%     3.9%         9.3% value-added services Total Global  $ 2,615,406  $ 2,391,810  9.3%    1.4%      7.9%      3.6%         4.3%                                         Total   Foreign   Local     Acquisition  Local North America Q2 2014      Q2 2013      Sales   Exchange  Currency  Growth       Internal                                         Growth  Growth    Growth                 Growth  Dental     $ 833,055    $ 768,800    8.4%    -0.7%     9.1%      4.8%         4.3%  Animal       351,523      325,821    7.9%    0.0%      7.9%      0.0%         7.9% Health  Medical      381,811      367,312    3.9%    0.0%      3.9%      0.0%         3.9% Total Health Care            1,566,389    1,461,933  7.1%    -0.4%     7.5%      2.5%         5.0% Distribution Technology and             72,145       66,675     8.2%    -0.3%     8.5%      0.0%         8.5% value-added services Total North   $ 1,638,534  $ 1,528,608  7.2%    -0.4%     7.6%      2.4%         5.2% America                                         Total   Foreign   Local     Acquisition  Local International Q2 2014      Q2 2013      Sales   Exchange  Currency  Growth       Internal                                         Growth  Growth    Growth                 Growth  Dental     $ 535,426    $ 490,781    9.1%    4.2%      4.9%      4.9%         0.0%  Animal       403,026      340,476    18.4%   5.0%      13.4%     6.6%         6.8% Health  Medical      21,446       20,575     4.2%    5.6%      -1.4%     0.0%         -1.4% Total Health Care            959,898      851,832    12.7%   4.6%      8.1%      5.4%         2.7% Distribution Technology and             16,974       11,370     49.3%   8.4%      40.9%     26.5%        14.4% value-added services Total         $ 976,872    $ 863,202    13.2%   4.6%      8.6%      5.8%         2.8% International      Exhibit A - YTD Sales Henry Schein, Inc. 2014 Second Quarter Year to Date Sales Summary (in thousands) (unaudited) Q2 2014 YTD over Q2 2013 YTD                                         Total   Foreign   Local     Acquisition  Local Global        Q2 2014 YTD  Q2 2013 YTD  Sales   Exchange  Currency  Growth       Internal                                         Growth  Growth    Growth                 Growth  Dental     $ 2,665,409  $ 2,450,376  8.8%    0.8%      8.0%      4.9%         3.1%  Animal       1,409,037    1,305,439  7.9%    1.4%      6.5%      1.8%         4.7% Health  Medical      800,671      776,749    3.1%    0.3%      2.8%      0.0%         2.8% Total Health Care            4,875,117    4,532,564  7.6%    0.9%      6.7%      3.2%         3.5% Distribution Technology and             170,448      152,757    11.6%   0.7%      10.9%     3.1%         7.8% value-added services Total Global  $ 5,045,565  $ 4,685,321  7.7%    0.9%      6.8%      3.2%         3.6%                                         Total   Foreign   Local     Acquisition  Local North America Q2 2014 YTD  Q2 2013 YTD  Sales   Exchange  Currency  Growth       Internal                                         Growth  Growth    Growth                 Growth  Dental     $ 1,602,651  $ 1,481,754  8.2%    -0.8%     9.0%      5.0%         4.0%  Animal       657,172      632,651    3.9%    0.0%      3.9%      0.0%         3.9% Health  Medical      756,929      734,944    3.0%    0.0%      3.0%      0.0%         3.0% Total Health Care            3,016,752    2,849,349  5.9%    -0.4%     6.3%      2.6%         3.7% Distribution Technology and             139,029      130,537    6.5%    -0.3%     6.8%      0.1%         6.7% value-added services Total North   $ 3,155,781  $ 2,979,886  5.9%    -0.4%     6.3%      2.5%         3.8% America                                         Total   Foreign   Local     Acquisition  Local International Q2 2014 YTD  Q2 2013 YTD  Sales   Exchange  Currency  Growth       Internal                                         Growth  Growth    Growth                 Growth  Dental     $ 1,062,758  $ 968,622    9.7%    3.2%      6.5%      4.9%         1.6%  Animal       751,865      672,788    11.8%   2.9%      8.9%      3.4%         5.5% Health  Medical      43,742       41,805     4.6%    4.8%      -0.2%     0.0%         -0.2% Total Health Care            1,858,365    1,683,215  10.4%   3.1%      7.3%      4.1%         3.2% Distribution Technology and             31,419       22,220     41.4%   6.2%      35.2%     20.9%        14.3% value-added services Total         $ 1,889,784  $ 1,705,435  10.8%   3.1%      7.7%      4.4%         3.3% International      Exhibit B Henry Schein, Inc. 2014 Second Quarter and YTD Reconciliation of reported GAAP net income and diluted EPS attributable to Henry Schein, Inc. to non-GAAP net income and diluted EPS attributable to Henry Schein, Inc. (in thousands, except per share data) (unaudited)                   Second Quarter                  YTD                                       %                               %                   2014       2013     Growth      2014       2013     Growth Net Income attributable to $ 116,236  $ 108,430  7.2    %  $ 218,335  $ 199,908  9.2    % Henry Schein, Inc. Diluted EPS attributable to $ 1.35     $ 1.23     9.8    %  $ 2.53     $ 2.27     11.5   % Henry Schein, Inc. Non-GAAP Adjustments (after-tax) Accelerated amortization of deferred  financing     $ -        $ -                  $ -        $ 2,679 costs (1) Total non-GAAP adjustments to Net Income attributable to Henry Schein,   $ -        $ -                  $ -        $ 2,679 Inc. Total non-GAAP adjustments to diluted EPS attributable to Henry Schein,   $ -        $ -                  $ -        $ 0.03 Inc. Non-GAAP Net Income attributable to Henry Schein,   $ 116,236  $ 108,430  7.2    %  $ 218,335  $ 202,587  7.8    % Inc. Non-GAAP diluted EPS attributable to Henry Schein,   $ 1.35     $ 1.23     9.8    %  $ 2.53     $ 2.30     10.0   % Inc.  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. (1)           Represents non-cash, one-time expenses related to the debt               refinancing of Henry Schein Animal Health.      SOURCE Henry Schein, Inc.  Website: http://www.henryschein.com Contact: Investors: Steven Paladino, Executive Vice President and Chief Financial Officer, steven.paladino@henryschein.com, (631) 843-5500 or Carolynne Borders, Vice President, Investor Relations, carolynne.borders@henryschein.com, (631) 390-8105; Media: Susan Vassallo, Vice President, Corporate Communications, susan.vassallo@henryschein.com, (631) 843-5562  
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