Patterson Companies, Inc. (NASDAQ:PDCO) Q2 2023 Earnings Call Transcript

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Brandon Vazquez: Hi, good morning, everyone. Thanks for taking the question. I just wanted to focus a little bit on the macro comments that were being made earlier. And maybe you can talk a little bit, there’s been some noise just around, potentially like a deterioration of the consumer, as we go into the final month here of the year. So kind of curious, maybe if you think about, like, on a month-to-month basis and even a month, what you’ve seen since the close of the second quarter. It sounded like things had been stable, have you been? Just wanted to confirm that’s been the case, especially as we go beyond the second quarter. And you haven’t really seen maybe a worsening macro environment compared to the beginning of the quarter?

Don Zurbay: Well, we wouldn’t be — we wouldn’t really comment too much on intra quarter trends or month-to-month trends. I mean, I think I would say that just at a macro level, we kind of view our markets as I mentioned, as particularly in the dental side as stable. The companion side, like I said, we were seeing vet visits down, but spend per visit up. And we’re dealing with the Draxxin impact on production, but that’s a resilient stable market where we have the benefit of having a diversified portfolio that has really served us well over time.

Brandon Vazquez: Okay. And then on similar — on the macro headwinds, but maybe a different angle kind of looking geographically, are you guys seeing any notable differences in kind of end market strength? I know there’s — there seems to be a lot of concerns, especially around like Europe that maybe higher energy prices there might lead to a more difficult kind of end market for a lot of names. So anything like that you guys would call out are factoring into guidance that we should be keeping in mind? Thanks.

Kevin Barry: This is Kevin. Yes, our international footprint is relatively small compared to North American footprint. We have a really nice business in the U.K that performed well this quarter. Obviously, there’s an FX headwind on the sales line, but constant currency basis is showing good growth. And so we feel like our position there is pretty strong. We’re obviously watching it closely for those dynamics you said. But within our portfolio in North America as the majority of our business and like Don said, we feel good about the stability of the markets here and how we’re executing them.

Don Zurbay: We have time for one more question.

Operator: Certainly. Your last question comes from the line of Elizabeth Anderson from Evercore ISI. Your line is open.

Unidentified Analyst: Hi, this is on for Elizabeth. So something we’ve been trying to sort through on the equipment side is that we’re hearing about weakness in the category from some of the factors right now. But both you and some of your peers are characterizing strength in the segment. Can you just help us sort through that? Are there any channel dynamics you might be neglecting to consider or what is driving that disconnect between dental equipment commentary between the distributors and the manufacturers? Thanks.

Don Zurbay: Yes, I think, honestly, what we’re seeing is just what we said, which is we’re — we had a strong equipment quarter. There’s continued solid, good demand. The pipeline continues to be replenished. And it’s — I think it’s always been a little hard to sort out and reconcile the timing of things that happen at the manufacturers versus the distributors, just given when shipments take place, how the supply chain works. What we’re seeing and it’s hard to really argue given our results is that equipments strong, the demand strong and that’s our — that’s kind of our world and what we’re seeing.

Unidentified Analyst: Got it. Thank you.

John Wright: Okay. Thank you for your time today and your interest in Patterson Companies. We wish you and your families a wonderful holiday season. Happy New Year and we’ll talk to you next quarter. Thanks.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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