Patterson Companies, Inc. (NASDAQ:PDCO) Q1 2024 Earnings Call Transcript

Kevin Barry: Yes. Yes. So interest expense, we’d expect it to be maybe a little above what we carried here in Q1 for the rest of the next three quarters as we’ve kind of reforecast where we expect rates to go. And so really, if you look at it versus last year, there will still be a bit of a headwind here in Q2 and Q3, a little bit less in Q4.

Elizabeth Anderson: Okay, that’s helpful. And maybe on the longer-term side, what are the things that maybe come out in the last of years is that you seem to have a sort of different M&A strategy for the Animal Health business versus the Dental business. It seems like sort of more tuck-ins — or a more regular cadence of tuck-ins on the animal health side. Can you talk to us a little bit more about sort of maybe why that is? Why you’re seeing is this sort of availability of assets? Is it just something unique about that business versus some of the Dental, which is obviously just had more core benefit?

Don Zurbay: Yes. Okay. I think there — first of all, I would start off by saying in terms of our M&A strategy. We’re agnostic to some extent between Animal Health and Dental. We’re looking for the right opportunities that hit our metrics and that check the box on what we’re thinking about in terms of M&A. So I mean I would put this particular dynamic and kind of where we’ve been over the last few years, it’s just the timing of opportunities that come up and when we’re ready to do something and how they check the box. I don’t know that there’s anything particularly unique about animal health that would put us into a position where there’s some good tuck-in acquisitions versus Dental. But we’re doing a lot of work. There’s a lot of work going into all kinds of potential acquisitions.

I know we’ve been saying this, but we’re careful. We want to make sure we make the right investments. And so far, this is what we have. But again, I don’t think there’s anything unique about Animal Health and Dental. They are different businesses, but we’re looking for the right opportunities.

Elizabeth Anderson: Got it. More for me. Just how do you think about the private label opportunity? I know you sort of talked about that particular — is there something you can sort of like quantify there? And I know you said you’re adding more products than before, but how do we think about that as like a driver of margins in that business?

Don Zurbay: Well, I think what you’re going to see is private label becoming a more prominent part of our program. I mean, it’s slow, we’re not we’re not accelerating at any — at a significantly rapidly pace. So I mean we move carefully, but definitely, there’s a strategic objective to make that a bigger part of our business and our sales in both the Animal Health and Dental businesses.

Elizabeth Anderson: Got it. Thanks.

Operator: Your next question comes from the line of A.J. Rice from Credit Suisse. Your line is open.

A.J. Rice: Thanks. Hi, everybody. Obviously, you had really solid strong growth in consumables on the dental side and then your equipment sales down for all the reasons we talked about and to normalize that. I wonder, though, in the quarter, does that dynamic — is it enough on the product mix shift you saw to have an impact on the margin? Is that part of why the margins showed the improvement that they did in Dental?