Patterson Companies (PDCO) 2 Dec 202021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Patterson Companies Second Quarter Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, John Wright, Vice President, Investor Relations. you. Thank sir. ahead, go Please

you, operator. participating earnings thank for everyone, call. Good Patterson Companies morning, in quarter and fiscal you Thank XXXX conference second

Joining management, After a Executive of the your and Patterson’s Patterson’s questions. second Financial open review me quarter the XXXX Walchirk; to by Chief Zurbay. Mark will and Chief Don Officer, fiscal today are we Officer, President call

those in subject made Securities to material. our let from other me differ risks you Exchange actual in remind statements, materially and during in the with comments this encourage begin, indicated certain this forward-looking and cause conference we These are detail Before discussed review nature uncertainties. that in filings and certain and XX-K could factors, Commission. forward-looking are call you Form which our We to results such to

release date to reported operating before net be for the The undertakes this income financial conference tax table of Relations taxes, revise no broadcast, XXXX. obligation the income, namely including any call, morning’s Also, reconciliation provided are this and In debt we income, date this impact these of to website based note update effects addition, the live time-sensitive diluted as adjusted statements and reference of adjust accelerated call. accurate integration of deal section press second our items. reflect amortization, income the found legal at can we in Patterson Patterson conference costs, our events quarter the gain the along the the measures, circumstances slide in X, attributable income expense, of after results will or our related presentation only rates net GAAP business shares in fiscal of estimates. Companies, Companies, tax and to company’s a of upon markets attributable comments internal or the for with reserve investment share Please analysis information restructuring that Patterson call costs, that expenses, related and XXXX. an earnings content and attributed market is December about Inc., to forward-looking to Inc. is of Investor serve, pattersoncompanies.com. contains The growth per

are is week. this discuss to flow a substitute measure, defined and The not release, in results. for reconciliation and Time represent reported a replay This found available can exclude also cash will internal will as adjusted non-GAAP results term at GAAP our foreign of which for sales be noon the adjusted earnings morning’s Central sales starting intended We release. use our non-GAAP free measures period of in today net a for to These the our be call press and being recorded impact be is one to of currency.

I’d to Now, hand to Walchirk. call the Mark like over

Thank you, conference quarter second fiscal John, and welcome earnings XXXX call. everyone to Patterson’s

of fiscal First Patterson your evolving all that the strong second staying achieved XXXX. off, and happy Thanksgiving the I very performance a quarter hope and amidst healthy and safe is coronavirus families had everyone in trends. you

very the and momentum Even platform. results across of the resilience sales focused continued a our challenges from amidst Our at and level. reflect continued the high excellence our and execution team customers, business due our operational our pandemic, to drive investments to our performed the COVID-XX

customers with and relationships deepening proposition trusted providing while to our our and leveraging are We our our manufacturing partners. also guidance expertise differentiated value

quarter. key into Before on the from of we several the touch highlights me dive let details, the

internal internal X% basis, a This grew of growth on X%. Health. First, sales year-over-year Animal in XX% and in sales included Dental

basis points year-over-year operating X.X%. to margin adjusted Second, we grew XXX our by

on strengthened top earnings focus representing the a prior our has momentum over year and period. on balance increase of adjusted our further sheet per financial our an continued maintained position. Third, And we Fourth, importantly, bottom XX% share, we delivered the customers, $X.XX of guide of health overall line and and part protecting and response to help doing our the the ensuring our our principles safety the our COVID-XX of reduce and pandemic, the throughout business virus that helped spread communities. for continuity have in support core our employees,

to As across through remain unfortunately effectively they rising are we help to the adhering us navigate these confident will principles, period. this cases world, to committed and and continue safely

three discipline, quarter working operational effective proposition, making months. and management, while consistent Our excellence, focused our have product over customer of taken targeted reflect all great improvement, build the deepen the to mixed investments during our simply outstanding to not value the results culture, and and They deliver approach past years are execution, this drive we capital experience. team's improved work instead an the several expense sales our past

in Our our momentum in opportunities commitment strengthen foundational our wide markets. core these to improving build enterprise businesses, enabled balance has Patterson outperform stabilize to elements sheet, and end on and capitalize to our

well-positioned comprehensive procedures, deeper the safely increase from strong the quarter. and ability for industry sales value-added all have patients during we has the control infection Patterson widespread as as and ramped reopened earlier customers continued than internal at our facing Dental that with comfortable market is practices from market for recovery for support combined after operating are tremendous practices. deliver services. a us patients increased protocols, with to the creating dental sales implemented. closures broader they to strong partner made visiting sales and returned share. our our to a technology believe this This faster Unfortunately, Dental products service market the expected. up communication decision When customers consumables, mentioned as in down and their execution, offices our Patterson's and practice been provided their screening equipment, Patterson's a demand We're teams of equipment, us of onset support serve increased customers into management maintain safe each support Dental With and customer The the and will driving as provider for patient bit Further, pandemic as reflects market recovery and navigated customers categories, are the fully of pandemic. outperform our that to new and range all allowed consumables, a our drivers value-added we that tools hearing throughout sales performance our service driven growth and again, our the the re-opened I services. value-added our I In value stakeholders. segment, of drill three enhanced We in their software, stronger critical XX% second environment. now earlier, our by performance key overview, and back of this shutdown, dentistry they enhanced segments our the recovery to

year-over-year consistent months consumables Dental growth fiscal Our quarter. across nearly XX% And three was growth internal in second noting consumables delivered of all category. of the it fairly is business of sales our sales that worth our

As products. the growth approximately of the by control second expected, sales this are they onset [gowns], infection products, disinfectants more driven quarter, sales masks, face a consumables the key year-over-year and today essential contributor shields, that in increased in fiscal including In growth gloves, than infection pandemic. our of was increased practices was two-thirds control of XX% of of dental were prior to

we dental the expectations the permanent believe for shift there forward. COVID-XX after of been widespread a going in control even has However, safe distribution anticipated practices measures a for infection and vaccine, effective

their While embrace long-term for their may demand levels we patients as over expect pre-pandemic products and remain of new infection time, the this above from moderate dentists well the over current to control levels normal standard care. new demand

beyond extended More infection of year-over-year consumables control increased our importantly, sales in category the the products. growth sales

control In products. growth driving our and digit We the increased sales approximately we've customer believe the is growth fact, control to if consumables non-infection in contribution exclude products, sales Patterson's from loyalty delivered market and advantage gains infection field this healthy which our continued you support enrollment we in year-over-year X% products of share is rewards program. non-infection growth teams, due made sales investments in control mid-single

growth to repair, benefits it and and their more for Our with Advantage made equipment customers in Program has other our in service and own easier invest practice affordable rewards. support,

in quarter, of going the achieved products. growth technology our the of expectation in from infection our long-term private positioning programs combined portfolio our sales confidence the customer for with During categories. increasing also expanding core and the gains we in and X% strength our double-digit business forward digital of demand for consumables see and equipment engagement control Internal category. products us to led consumables gives and by in demand the over elevated retention label continued our of grew The second profitable equipment highly quarter

with last a the given these are that beginning year. in pleased equipment with We October difficult especially period same comparison very we began results,

innovative primarily our fiscal sales of overall quarter in a sales. success growth last our by driven CAD/CAM equipment year the delivered performance for comparison That in second strong following the during XX% of third drove balance As we products. CAD/CAM the was also this year-over-year category and category. strong introduction several performance through in the fiscal reminder, growth year execution, year, which new more XXXX, in efforts challenging The create fourth particularly last the will a quarters, of of the

creative quarter their adapted the new the education their in environment. we initiatives, second and have events. committed and dental businesses. product in our office of results online of and practices, in with to online partners and new demonstrate continues today's delivering customers equivalent collaborate to the Due ways However, and strategies, find prominent choice training, in our investing market to be Patterson and that financing our and media to believe future pandemic, technology remain the integration partner manufacturing modern social to launches

technology Patterson's before equipment well sale. and after well continues know, in initial expertise the you starts dental As and integration

customers a our unique an value investments, throughout proposition. believe important which driver competitive entire support overall the we technology distinct of of We ability have and our is lifecycle equipment to advantage, their the and

and in encouraged safe patients and their challenges, We this of that practices. the serious enthusiastically calendar their environment dental XXXX. market dentists resiliency the proactively Facing to are new ensuring very in have feel operating in by adapted recovery

this operational customers part we'll and to success. strong principles, continue our We value execution, leveraging our be are environment, to proud operational differentiated drive a succeed helping and core to of practice on excellence, help focus our proposition in

Health. Animal Turning now to

Companion sales XX% business. Our segment second Animal growth our led Animal internal the of X% growth total by nearly in internal of strong sales generated quarter, Health during

top realized product well Our the new Companion in market innovation. underscore spending, and Animal from underlying of the ownership strength increased results pet line as as pet

and that market have a face to sales ensuring increased Our of technologies, Animal succeed their products of incredible done access to prescription medications, Health help the services customers demand. in have and job array an practices teams their broad

support multiple touch through and customers with sales inside work reps field teams points. our every day Our collaboratively

with aligned our leverage also goals and We partners to preferred chain. to supply continue and deep with objectives strategic respective the our across are manufacturing plans business value relationships develop drive that

Looking the ahead, ownership the growth rate. current to occurred continue over has unlikely past we two the believe is pet of rates that at quarters

forward, to these the enhancing growth grow Companion term. Companion for with customers while believe our rates growth may than at stabilize, over rate a prior going we Animal Animal at faster the the market However, the will opportunity business our long center veterinary pandemic, the overall

Production by positively internal On the shift noting run on impacted to COVID-XX. fall yards the performance from the of quarter basis, prior second X% that going the disruption is in movement Animal market sales and to worth earlier recover continued the factor side, year. a feed caused positive cattle the the as in second year-over-year our turned One quarter

volume moved some a the fiscal quarter. quarter second As sales our into from third result,

fiscal results pleased the Animal create benefit are may more these the from production comparison earlier quarter. line challenging market, but timing improving a third in Production expect run our fall We top during with the

last reminder, outbreaks. shutdown quarter's associated swine on chain in the of call, packing due discussed challenges to a As with the plants we supply market COVID-XX

and have While level. processing inventory catch are not yet to able they at and pork packing been beef operating the producer currently up capacity with plants near

effectively production of being enhanced impact chain to facilities, disruption ready address the parts earlier particularly the closely while the to pandemic in continuing pandemic continues any the plants in significant year. safeguards support held operate, were We market working and operations, in packing in our more with in As plants that are they place are customers related further the U.S. market. believe backlog to packing impacts of any than their better animals have spread we supply where swine many equipped

Production in for Animal variability indispensable We dynamics. the customers. partner Animal to will and with as Companion pleased results the expected full segment confident our an are in trusted service support both our Health are and our some value And market production proposition and position despite we Patterson continue

Before response on briefly would turning like it over to Don, COVID-XX. to ongoing I touch to our

continue the and mitigation possible, the points efforts. and in reducing cleanings earlier, home at protocols, close COVID safety of working with including follow mask measures checks, we wearing In mentioned deep our contact to our rise our to need keeping our cases safety vigilant and health proactive from COVID to I stay in As risk principals, operations our comprehensive where temperature facilities.

facilities rates should specific we essential services. and plans operations so to ensure also continue we have can open with place they our our the fully their to working our ensure continue industry our operational, to customers partners operations directly of closely While can COVID-XX. be impacted to vital due help customers We're safety to remain and all provide our support in

evolves. support and call that, situation And results. our our As over now we throughout Don customers dive the for turn this the into a is to deeper financial have with to Patterson to I'll continue as our teams pandemic, prepared

Mark, Patterson quarter adjusted XXXX for you, reporting billion, approximately Consolidated sales year in to ago. effects the which same increased period Thank an a sales, versus our good Companies currency X.X X.X%, last quarter compared the Internal X.X% second morning everyone. were and the of increase second translation, year. are for of fiscal

the these we mentioned, our directly believe investments outstanding we've business, made can our this As attributed focus results. Mark the people our and quarter results deliver in to of commitment and be to

by fiscal margin. year of costs Our were gross higher the calendar XX.X%, versus under quarter down which related impacted And Animal margin lower gross the XXXX. delivery gross business points to second the the side dollars, Dental to margins XX the second Health also quarter was slightly on COVID-XX. contributed adjusted of was Animal Production basis rebate business

quarters. favorable continue a consider to operating our net reduced of factors percentage just that margins future expense Adjusted of be QX full expenses stated, the P&L will work and in back in our gross ended XXX we Well, expense for those Last into salary by occurred to to impact long-term. value from represents second However, prior our points consolidated somewhat discussed sales operating year. X.X%, over from volumes. we expenses quarter In period second proposition we ongoing service discipline, fiscal the support the the coming hours in nature, basis a we've structure temporary XXX improvement leveraging for same margin sales cost as higher on believe strength XX.X%, furloughs, that basis. the our was benefit these the over as the with continued adjusted quarter, has were which to related basis quarter, point and and in savings year-over-year reductions, and

sales our as our of number expense impact improvement recall, of for along mix year-over-year added the for drive with margin of leveraging operating each adjusted in result the volume. improved you the past of a posting higher and As quarters, has improvements seven quarters consolidated the segment efforts operational to of discipline

margin year-over-year our about encouraged improvement be to for continue We another quarter.

primarily expenses, is XXXX one or the or compares basis $X.XX second diluted Adjusted quarter XX.X and reported reserve fiscal Companies to million attributable in This diluted of the net XX.X diluted amortization, debt-related benefit the net attributable deal expense year represents compared accelerated was quarter XXX of XX% share. year. Patterson increase share. This a execution, and which $X.XX costs, per second points, of was XX.X%, share per the This over in for Inc. XX.X and Companies net rate ago. Reported quarter the business or sales tax Patterson the strong second XXXX to increase. prior compares operating year-over-year million to $X.XX and to in cost per income our to or second continued million quarter, is a year totaled loss $X.XX mix, million the $X.XX income decrease the adjusted XX.X which integration improved of to of a excludes restructuring prior fiscal Our of the attributed or second quarter discipline. for quarter legal second

were both sales Now quarter On of consumable Patterson Internal growth and X.X% control Dental categories. with quarter up the versus our our the equipment consumables segments to XX.X% strong in increased year strong business supplies increased XXXX, second quarter base category. products and starting XXXX. that of business. fiscal for infection core internal XX.X%, of in our period business let's Dental the a fiscal dental of by turn second sales led same equipment same our basis, growth the with to In second compared in sales ago, digital equipment

will and comparison For against third that we equipment modeling up year-over-year fourth strong XXXX. purposes, fiscal coming mind very X.X% fiscal in And were year. and margins the quarter, second sales basis improvement, a finally, prior and be internal value-added in we compared XXX operating coming in services of had a XX.X% quarters XXXX keep for sales the the of difficult Dental Adjusted software quarter. in the in second increased fiscal point to

the experience from we COVID-XX as operating as we the the and volume, continued to sales fiscal second While increased benefited related freight related increased delivery in leverage costs well discipline. quarter, expense did also to expense

Now, let’s Health our move on to segment. Animal

the improved our Companion same within period period basis margins compared operating ago. Animal as fiscal points, for During earned a second by XX slightly offset Increased sales business in prior sales lower were due Production the expenses to with and pets, pet primarily our the quarter Animal performance the in year business. our margins lower point-of-sale calendar were compared second less lower along one operating internal decrease margins, up our quarter, and our to increased Animal X.X% gross a in adoptions business to Adjusted X.X%, year were segment in execution year-to-date of quarter quarter, the rebates attention second Health same to Animal of the year drove ago. our versus Health strong fiscal the

Now, items. at balance flow let’s look and several sheet cash

cash used activities. During six months XXXX, XXX in we operating the first million from of fiscal

to collected free which deferred cash first six flow, price XXXX flow, are investing the XX to of fiscal section purchase quarter is for statement. the have COVID-XX the payable receivables of million. calculated managed our activities in XXX the as the XXXX. decrease also decreased year which and of We beginning understand accounts and of is To first cash a of levels carefully elevated million, which flow of within these explained the the due year-over-year cash months our at Free compared the million year, cash release, to of we our included primarily table press two XXXX. second total amounts during use XXXX, fiscal in during the The during due is XXX the quarters of normalized two fully fiscal fiscal fiscal cash as of we

capital to allocation. Turning

of We million of strategy continued On quarterly Patterson shareholders. declared to to XXXX, to execute fiscal which third the on our shareholders. paid the week during year-to-date cash return of has a In we of the quarter basis, in returned quarter our fiscal $X.XX per diluted $XX to then second a cash dividend share, XXXX. first our was cash dividends

as continue the dividend the shareholders on return business. our of we in meaningful to continues to plans focusing returning shareholders. component performance current And Board yield provides Our dividend view improved as a important to drive our an to our value baseline

we the on to business operations, providing XXXX. this on Mark. comments time. its the the I fiscal not XXXX surrounding over potential conclude pandemic COVID-XX to are guidance impact now, turn some back will Due fiscal uncertainty outlook our for call Let me financial continued with And at and

Don. Thanks,

about in in As confident end of creation we position value am enthusiastic look Patterson’s our long-term and our each markets I potential. ahead,

the and being the in over team fundamental manage strategy the right right market to potential on positive opportunities end also while capitalize to the have the well prepared of in long-term, our place dynamics. through markets We near-term changes

to and our through near-term looking we the While future about and focus supporting driving excited opportunities are the centered customers the ahead remains execution on that exist. pandemic, also our

value created investments position ongoing position future have which balance flexibility, consider to our accelerate in strategic that strong financial creation. actions Our will us strengthen puts a to improved and growth sheet

our the take open express the times. of to questions. them how confident stepped of we hard I’m also will success. proud succeed. team Operator, the these members wrap of to part I’m our prepared take moment Patterson up Are want key want has to passion team. up, privilege resiliency acknowledge Don ingredients I and be Patterson] the and It’s please gratitude a incredibly one customers Before and to is focus to and our, X,XXX partners for I That thank and of customers a and tremendous past work, I line. support serve [We concludes our help and to my spirit remarks the them business their nine plus to our challenging our do your our to these to glad months during

your Instructions] first Your comes from open. Blair. Please William question Kreger ahead, [Operator line is John from go

the Hey, anything thank next terms guys, the, we quarters, Don, you thinking had in you of second you called fiscal out for couple great be quarter? you of the the the over of comparisons should else know, the guys in progress tougher about sustainability questions. that

No.

built the quarter think the in third know, outstanding biggest sales equipment wanted last know, you your the and tough had you to we I make you in fourth year we into sure was that models just, comp. that thing, the

EBIT, Okay, in X.X% you the sustainable of some cost great, you as that's do specifically, layer the temporary cuts? and think

John. Yeah,

guidance. can not you much we're trying you giving So, discipline hopefully know, really just on too some appreciate, to maintain

that, know, our continue improve help impacts label are keep point or at sales as structure quarters, to us being that if margin over our you cost that should look sustain forward. over margin think as discipline, so you I think factors initiatives, drove things I we the these expense higher you we seven would volume, mix, the segment operating though, to all sustainable the private know, moving improvement last leveraging

practices Dental? U.S., we either see as volumes? declining Okay, thanks. particularly more, you any Thanks. one in in then cases the seeing And a close what go impact you seeing see bit Are up or quite are

I'll this John, one. for is take maybe Mark, question. Thanks the that Yeah

we expect really, shut offices, key not dental point, know, certainly this of broad to You couple of seen and we do a any down for have not reasons. I think,

You ensure safe know, taken you to are the of that being know, the oral second, going and it's the to element a safety the And staff. patient health. overall the dentist, And we strongly dentist believe really is important. believe is all to that first, we go to that very obviously health due precautions to help in patients such key critically

out we obviously in while some some which type could know local you modest can taken, the on cases, in looking uptick of to recent have difficult our of making happen a, predict momentum. is due building exactly been So, it's know, tell seen our may any you we've continuing and you state in very forward coming potential effect down be We're have while you and and what's that team that current shut progress the months going I you broad think, to know, hearing the anticipating I it's, environment. and we're certainly perhaps geographies. know not actions to focused

you. Thank

America. Your next from question Please of go Cherny from comes ahead. Bank Michael

Your open. is line

the you a of further as with as all that for quarter. basically, regards a about Patterson's want, boxes actions think diving since the the the that cost the into the Some Mark, redundancy checking five the questions taken little about, Thanks strong three organization performance, the you of nice has terms potential. margin so operating much how Congratulations started, know, next modernization question. the are to you far on think you you on expenses in growth you of and John's pathway years one of along to the Maybe bit really efforts? do you think

the all, continued many call, portfolio, segment, of Yeah, out out equipment us about and our discipline, for continuing show operational our capabilities. execute our expand services technology value excellence, on Michael, continue private progress Well, building our building to proposition drive, that execution, thank expense, software sales label opportunity against first to to things talked and we've there's the think you. I of

have there's also, going I you to that pleased continue know, with ways very as the So, of think about forward. of very near further And, accelerate do. down heads a think the believe to to business. we indicated, also that a a we think position but and proposition continue the now, lot still the I I line, progress opportunity pandemic, we've We're certainly, but given we we're term you in made, and lot know, we're our in on we're our and focused progress, build expand the growth, obviously continued down strengthen can the value implications scale, the progress looking to thinking

again, making. we're so, the progress very about feel we good And

to strategic targeted work to growth progress. have our We opportunity opportunities accelerate and more think do continue for that investments. going And through we to us also there's forward and

opportunities to have our at that events You mentioned. us, say to also you just I'd look add of comments, think pandemic know, Mike, last that differently, I add could mix things – different to I new I Mark's might the that the cost in think the nine structure given Mark with that months

of some ago? been new selling market positioned the to most think winning that offering that bit may on have in through current customers gain more they or in ladder then winning the how go about X% the were found particular, referenced may, share maybe you if Have diving as couple what program, And I old well little just you versus appealing years you uptake as one the the a gain, customers share growth that consumables more back? Thanks. or ex-PPE, on you what a the you're you're the had advantage do you on in

that coming shared our fantastic several distinct work momentum really in during to service And we entire accelerating and product Look, think I you. equipment our from I productivity, actually have between field continuing as our support momentum think think tremendous finish, a is our our made collaborative a momentum, team investments creating team about Thank years. proposition. is Support and had value pretty our we strong in infrastructure, And and gains around job service a the and think, execution, past this the indicated, a start we're certainly market. advantage that the I sales – the National doing the portfolio, pandemic. growth are talked just We technology, period we've over again, local of support is pretty has challenging the the just our really Center, I branch lifecycle been here. But has that we technicians. done obviously, into

We continue it. invest to in

motivated I overall I pleased, think with our team. see obviously value from continue also focused the I really performance. the engaged an it. a, customers and think to we and And have And am

I think number been it's talking now. I that and, the we're So, know, many quarters we've factors, a executing against about for of Michael, really things just you think

you. Thank Okay.

Your from next Please go Jeff Johnson from Baird. question comes ahead.

Your line open. is

morning, Good you. Thank guys.

consumables how of XX% more the for kind if than ADA what that some So clearly seems that core just something] to accounting pretty be or you somewhere that know, numbers, are flat volume do kind that How the, to like ballpark? bridge X% that on if point even growth are industry, let's gains in across declines? the you question that up of to volumes or that share there, flattish Mark, in growth, XX%, know, getting gains that, ex, I'm maybe down of how on consumable but of or bridge you with [X, consumables sure there do follow You you the you want little data? number just I believe X those know, you after say, ex-share a

Jeff we're again, key here the market and Look, I we the outperforming is, Jeff. think believe Yeah, gaining share. thanks.

Based our a external point And to really some patient internal that's out And slightly of of different that's triangulate trying sources. think are believe the two different we're there. levels data I is, one. we certainly, actually demand sources number so, point than data, higher we on obviously all are reporting. data And access data the

in You layer then control usage the products. infection greater of

think I mix hygiene visits. visits the of higher versus acuity

field service earlier adding things to of And seeing. the we And, all what seeing into, I execution our a into spoke and play quarters, and terms all and you're Michael, at with our think that just investments focus past I looking all strategic teams. general I factors think organizations. conscious at many focused sales from that maintain onset field retain but the the over those the tied results think sales the you coming decision our to up know, from frankly, fully made are we're of very on in net-net, of pandemic they're in we performance here, a and those service

tough That's commentary helpful, thank you year. respecting of especially last out know, and of cop the you Don, coming on DS you World had CAD/CAM, kind

COVID concerns all obviously offset to that. is dentistry in there increased to at least same the know, anecdotally, seems some and given be, You that interest day

hearing hurdle channel is what you'll and seeing the next demand have in perspective? general about a you to are hearing in you're term So kind outlook CAD/CAM couple what generally, general? comps are understanding thing quarters, the for one longer demand about just the of CAD/CAM Thanks. Again, that what in but maybe

Maybe I'll color. add jump Don any in can and

drivers of those support in driving our good lifecycle and innovative product kind can their continuing us we And more and customers gives marketplace. well. know, even terms as demand within mentioned, future we ability to know, actually You where continue being think Jeff, products. practice that feel practices. execution new your We new the but you and we lot this about future, COVID their a and in full innovative we of environment, in invest the and launched the about the of for And products certainly you something of terms to know, single We comment, provide that CAD/CAM dentistry, their you as to investments we our tremendous I very confidence certainly see believe specific sales a and demand organization, in dental predict, practices. see we are important, the in hard believe, visit of know,

we're know, proposition is customers So, for on you us. We focused see a believe very competitive distinct helping our our advantage value lifecycle lifecycle, complete value. that

the so long-term certainly dental from very technology innovation and we're And new market. opportunity the in bullish on

you. Thank

Your go next question Suisse. comes from Credit Please Erin ahead. Wright from

Your line is open.

the basis seeing this monthly parse the exit can speak was? that sure Animal Dental and what a saw I you what excluding control that product, monthly matter, that Hey you guess but and kind across Health you on that were to infection run quarter, of you can out, thanks. rate Not throughout for both if cadence

Erin. thanks Yeah,

across that just the going just the that private supply for the the considerable And quarter. be tailwind consumables also we've our I infection continue marketing happened for for strong of We chain we think pleased care. in we that's dynamics be from demand in you we're driving us we're And that tell segment of long-term, on that the three expect feel we're will you, momentum our that as moderate field indicate, momentum that And our very segment. know, look, great collaborative we the levels. teams. in pretty consistent of given to effort infection I there. label categories. months we're pleased well-positioned facing fact to, pleased the a November. we seen also the Many slightly we've we're been the with the to between the standard with actually kind sales as control our the very with products indicate of call, results new obviously were the do control into we But envision given a products shared current

excuse second really line there. you companion in well. November, of relates know, then quarter to, the And in the us well. our good In trends positive in as it I business, tailwinds know, fiscal kind some seeing, our as we're as saw we trend particular, solid for me you So, that – think, November in

When dynamics continue the [indiscernible] wrap Okay, you margins? margins and lower great, you the can you And speak will quarters? some in then rebate also detail thanks. of some dynamics? the the to can that the animal of impacting health unfavorable coming And

those rebate I of program. on production most Yeah your challenging programs Erin, that are think the side,

of with January know, production the, just what in a just, program, the space. year given dealing and challenges the improving sentiment to market the needing now is we're X those So, new you there just with know, you get and of dealing right the with in is to kind in what we're earlier that

really On the down companion a keep know, space with continuing side, slightly. there we was some slight suppliers. margin through, our point dynamic nothing that that of pressure sale you were with that's new. in And margin. just That's working Margins

while, it's we for you same battling be label know, a private that a have but etcetera, think managing think of we, other through to through all thing we're the I we that. way the going initiatives,

And I add quick just one – just would I’d comment Aaron, there.

those our I here speaking outlined, throughout think that Animal working understand with access our regard impact with that to the that Companion but to just and segment manufacturer value really supply the impact provide some the with business, look, of all to dynamics customers chain, the and of move we in focus preferred strategically our the particular our the is across partners, Don have manufacturers we and manufacturer hospital share.

into of put actually specific we've plans fact, our seen manufacturers. others. seen place joint our business We've In preferred the growth we with where growth outpace growth

critical good So, drive the both to and supply and know, those we're we for in and And can focus to chain. marketing margins preferred companies. confident going play we're work to you value the bring efforts we very where partners continue role joint our customers, sales with in our closely

Excellent. Thank you.

Glen Santangelo from next Guggenheim question Your from Securities. comes

Your open. line is

into If just your comments context the you I Thanks. you of side. technology heard to some equipment both, reconcile equipment I my question. to on on mentioned I didn't trying you but sort think And sort put I just number with anything that organic X% the consumables, February, versus know, hear the made. in of into On the you continued you about core I over I'm said of, Yeah. equipment mentioned digits know, of, of the trying just November, you that both of I equipment. double the want Hey, to Mark, that quarter. of follow thought heard side. you Thanks I'm digital the are that for commentary correctly, taking sort and up And

have And just thanks. call. overall you indicated, we’re get category, as know, your in I kind specifically in year. CAD/CAM. this Don other our of of And that what question. you on in pleased to with our core Glen categories growth year, as we the, specifically outlined strong can the as the well we equipment last maybe given know, equipment from real just equipment the comment Yeah, actually obviously And QX we really And to in XQ do out, called

general, indicated, as aware our in have bit date. I a pleased time. very on comp of I we know, think, with know, look, these be calls, a if you said, that. tough we're performance know, lumpy, you equipment, obviously You you year we we're to will, our do as little and I over in volume can of say we've times And number equipment certainly, think obviously But would a QX,

very of performance a play we you again, think, great that equipment marketplace. strong backlog teams in seeing believe Our half. we know, the a head And, we into have as and distinct the I And what is our funnel there. advantage here have. that out competitive we're with pleased back We're

I if where more to is you point. on what think consumables, I trying the understand Maybe in can we’re is, this question core X% just the one at ask growth know, the market

and normalization visits there a higher quarter. the you plus, you there generated mentioned this pent-up I'm and of tailwind more], you you acuity said know, was [you're prepared there think, inventory but know, some numbers that you're some some to during may small was guessing happened I outperforming sort be, also the you industry, that demand quarter, those

can you the is this normalization sense, us or factor you a So, of give still inventory trailing know, and, a it market did in you sort is just play the year-over-year quarter? factor flat results know,

of all, demand. look, know, significant Yeah, there's feel not, I from like you first pent-up impact would any here

service than of frankly, our from and strong so recovery three ago. performance would you very I segment, driving we as sales far and think And, I market team. strong think really a know, faster months a result that or what, have has you we the about execution broader been in we're the anticipated know indicated, six Dental

key the And so, think factors. really I are those

yes, X%. consumables our non-infection growth infection control indicated, as we control product know, from approximately strong grew benefited You categories and products, but

how predict know, you And consumables for difficult our team exactly things out so really given very indicator we're are big in very know, with this we're it's consumables focus I us to our continue performing continuing is is going and that well to it's on against the fact I the of to focused And performance, been that and, just are the to trends plans, think but we're our seeing, that environment, by we a us. very we're drive play and you encouraged here, And category. for area. look, think that good a executing pleased

Okay, thank you.

Your from next from go Caliendo question ahead. Kevin UBS. Please comes

is line Your open.

investments to around strategic for sounds going thanks Hi, bit tone] a a me. different comment and Made my forward? the taking little call. [The like

last much looking to there wondering, Just the opportunity? is Where partnerships? maybe to have being than you Where financially the start place looking? company of Whether it's better a externally? more is or company grow aggressive? You're years over in M&A is couple the been obviously sort

Yeah, Kevin thanks.

I think called you know, you it well.

to think those position value, shareholders, help types centering they investments and but I of customers. growth strategic a also consider accelerate today our can on in for we're for, our better how create certainly obviously, our not really only

accretive the we long-term our drive, the better expand ahead. can to look there's opportunities do areas you know, accelerating Are advantage How existing advantage with would a we opportunity product shareholder you we, proposition? that as know, continue right there How provide some opportunities. market and opportunities? that scale in have, adjacencies we mentioned and think And a will to we perhaps we our know, specifically, you invest us? where in margin value. that those to I and do of make enhancing that sense all take in some distinct do we you capabilities? so, value we as of And growth, more we exist Again, businesses? of driving customers growth value how again, adjacencies win How our strengthen believe our those position We're or create know, of goal build our to further a to you for know, that earlier, do the

how some you us of right we're in that areas want down can looking here. over again, eye shareholder thinking also drive about are ball impression the those we're taking the the of obviously, level, high give on off to But at. what's front And at we're I we road our value the time. and don't looking to So, that continue

I'm reminder, the to helpful. give out margin, in just, That's growth between What's animal? margin we figure situation Then as the delta try us you just, and operating especially here can a difference Companion one between if than meaningful is margins? way there of the margins, other? and a two, so goes one Production the the Is in terms impacted or the faster other

relatively within No. space, consistent. Health say I would it's Animal

a interest So, about. to or there's know, not think need component you necessarily product segment mix that you

Thank helpful. Okay, guys. you. Thanks, that's

G.Research. Your go Please Kedra ahead. next question from comes from Kevin

Your line is open.

Thanks for back taking flow. bring it the I questions. cash want to to

the six how like balance may receivables a cash You payables towards thinking flow, we headwind should past of over those the about have seems mentioned, months of shift also bit the been a year? the trends for be fiscal

balance. Yeah, I think think Kevin, in you we're back know, I

those we you pretty at year, fiscal beginning managing of As know, had we level accounts the that normalized. of payable, payable we high the accounts have mentioned, were

should I know, of as So, think, look the as growing at now with you cash forward. position kind business you where free we move a flow in we're

think guys guys eliminating mentioned I dividend then, stood And growth? when opposite time. think you question, it. start perhaps about the at we're And returning when to the came Mark the possibly to Obviously, have I by the which is, do dividend end cash. know, there Great. about you strategic of the you know that use questions opportunities, and potential on, the you the dividend at were of first

Well, Don well. in can weigh as here certainly

things shareholders. we to part expect as remarks, opportunities, to certainly, view of continues to point. view that's continue returning our look those and evolve, importance our of a prepared in our board we our in dividend. And indicated to dividend believe continue I the we Obviously, but think the at at very strongly that we'll this cash as our as continue of point we important

I pandemic capital feel the example. an think here, from good opportunity you into I know, capital you deploy think at you Mark as as know, like we allocation, there's that M&A to as the, space look mentioned, we emerge into you know,

be different. looking before know, you that something looking be at at so, we'll And we’d probably

thanks. Great,

Please from comes question next Your ahead. Jon Block from go Stifel.

open. Your is line

sales OpEx I one quarter. guys sort really was guess, for nice is a unable costs, of sort sales parts XX.X% a and push you a consistently of of of to to have an up. XX.X Hi, reduce Mark. level? quarter? of XX.X% Thanks. where new You normalized as line? ability to was in it want pandemic, what the I'm two call top sales there start follow Don, the [calling guys, with The you. I'll for pre-COVID. the Maybe then a throughout you know, this one Don, And And without] of permanently I just percent curious, got versus, of is around percent questions, business just here, find OpEx impairing I and last just a was know, or XX%,

know, the we particularly we you I you to we're very we know, test last forward, that I going to our think the Yeah, know, so good we've couple And, so. move question. put think, as been you a bit. quarters. mean, But, disciplined on expenses, over

know, I off also a position leverage think felt to good that, like structure was seeing you you're in we higher volume. cost our sales

and us But, opportunities as that, at or benefiting has I in we're can look us. given sustainable And out. so, think to expense from that's reductions know, you that making I the expense now you help those that pandemic some new mentioned things our components know, playing that of earlier, structure

been It's incredible helpful. it. see. job. Got It's Great to

past of Dental of and calendar XQ months talk or you next know, couple hygiene, they to in certainly up you people got to then for year. for flooded over office if Mark, think, you, XQ I want, a to shift vaccine I the for I hygiene, catch lot see back in the the

you And to know, back it next so, of potential I you the thoughts, for know, that have any Thanks it's of do October, pocket the predict, And air about a for but, into the your your to in I'm difficult hey, or call come in, office industry they year? get air concerns talk do just vaccine, curious year? guys. running July, you there's the calendar early beginning next September, pocket think time

of I patients the to I know, pandemic think indicated, a the it. you you offices is as protocols difficult have safety as think, right, measures – thank situation to place again, really well, their with ensure critical all the and difficult Jon, because the the steps safety predict. that Like we've right and into taken really to and our customers, staff you. really dental their which dental Yeah, component But is predict, the to health to put strong said,

pocket believe absolutely essential know, we to specific And I'm in air would predict so, you to terms We what the believe oral not is health health. very of patient of in part an sure overall go dentist. the there. it's safe We

so decided, progress, see bit patient the to demand that's as is a indicator situation suggest the And, that's and dentist as the some and would demand distribution used across than vaccine vaccine, to and a up effective continue they're And continue some think a patient things to And back I you higher the soon But of and portion I key safe think ease to be widespread data. our that things for we of that. going think, is I data of what range going wide I look, as population we're yet. seeing you know, and think of not the a open in external population. again, improves know, a

market for a Dental think, nice opportunity I forward. we'll in see going growth the

the on progress. congrats and Mark Thanks

Thank you.

Bednar next from comes question Piper Please from go Jason Sandler. ahead. Your

Your line is open.

some Thanks for quarter Mark, nice dental I on internal echo were I questions. you taking mean, guys. some a contrasting go morning, back your the good on and of made congrats prior wanted would external data. and I comments just couple here. you and to Yes, comparing to questions a

any here in you the have last of weeks. is it October a of] mean, all November to of seen Some referenced? you data But I activity data external the the several here in internal showing from over [moderation monitoring that activity

say, Well, directly if any, question. answer your I very would to they're modest,

not think off last at situation know, of XXXX, and and and think, we periods actions very people this dentist, a with to months, have the the as evolving any broader, any a back see safe know, into Again, know, you state look head to predict do keeping be expect an as go earlier go the that, on pent-up slight state know But again, close but I know, we due XXX%, be downturn indicator, recovery if could see industry that indicated, be of dentist. could that'll know, we a is local local than what's may happened some I you while well, the frankly, you comfortable important as, kind at a currently, as bit. you know, look, you as sharp to actions the And, weekly perhaps the result of Dental we some, to to could virus mean, a the moderation I the may watch the demand basis. that potential wide the difficult perhaps. here, look, of know, you demand slight very again, discussion, that, moderation nine leveled distribution offices, taken obviously broad point. feeling and a to advancement you and taken know, of daily the you over vaccine, to And of you shutdown potential we're you you there kind it's, across trends the the be quick you here. on,

wondering you me. believe I questions form in Mark, you Okay, scheduled it to of expire that level similar contract confidence speak I year, it's renewing update second end at calendar yeah, for share exists? an the mean, currently and your fair. as anything And helpful. that's if should Dental maybe can we contract is regarding that here a of Heartland contract the had. there's when to the hear Maybe in

Yeah, Jason.

negotiations as or don't timing of look, customer agreements. we before, on So comment we've said specific

forward. value great and to practices we have supported privilege look they're going believe Heartland our on country. and a to their with And with provide relationship to continuing a consider forward we Heartland build Heartland across and We the relationship We we practices support Heartland. it to tremendous

we're our and So, continued again, to pleased with very forward with looking growth our relationship relationship and Heartland.

Understood. Mark. Okay. Thanks

Nathan ahead. from go comes Sachs. Rich question Please from last Your Goldman

open. Your line is

look morning, go segment me just Good few I thanks to have and years, north Dental the in. fitting we if question. back of bigger XX%. wanted picture I margins, those were, for to a margins you back know, a guess Thanks.

you’ve the pandemic. quarter. too, you're levels savings those it during OpEx when as of that now to to kind the of to you've some opportunistic, the You know, of back been realized comes sounds latest It be like able

when know, outlook you know, continue you the business we sustainable, digit to is about the double especially margin guess, you here, I this think type you forward? So, going segment a as do for like, feel operating grow

Yeah, thanks, Nathan.

view, know, to to could But absolute think those double I I say into discipline. what be improving, would that. I'm you leveraging territory. our can looking margins that, side pretty digit And items seeing back you're disciplined see you as been in we're you and dental mentioned, on give, I support sustainable statements guidance know, on the think not know, the you are, So, And the forward going just [sales too, type is I or, you impact know, we gotten that, have that. good that, have with here. you that know, trying expense help too] really again, type

the in differences that Okay, etcetera, the the And you practices, coming terms that's of there? share across just kind about where of gains segments follow maybe in helpful. just various consumables, between back then larger talk from? you you're gains seeing And a serve share individual of maybe could are the quick going in you DSOs, up look to customer when kind performance that

thanks. Nathan Yeah,

the really base in know, in the customer is you momentum gains industry. You across our entire think going I performance know, our across, a look,

put So, DSO of private on focus DSOs, regional practices, increased DSOs. National segment. the lot a We've

that their sales and teams We market continue requirements. strong customers and the that support unique we'll opportunities, invest those invest growth we And, and to there. DSO in know, obviously represents support to continue you the view

you balance So that the happening generating customer really, we're with pleased we base. board. the the, see that, know, that we broad momentum through And we're the growth believe and across our

for time. Great, the thanks

you. Thank

for Mark the turn back over Walchirk We're would like I to of closing call for questions. time out any to remarks.

on interest your I third hosting all quarter again for families and very and safe our forward thank holiday we Thanks everyone appreciate hope happy and stay Companies. Great, you. your to fiscal Patterson you XXXX you a We Thanks have your in season. look then, time today, call. Until much.

this and concludes participation. conference your today's Ladies gentlemen, for call. Thank you

may now disconnect. You