PowerPoint PresentationFOR GROWTH
William Blair Growth Conference June 15, 2016 Scott P. Anderson Chairman, President & CEO, Patterson Companies
Safe Harbor Statement
This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond the Company’s ability to control. Any statements made in this presentation about the Company’s future financial conditions, results of operations, expectations, plans, or prospects constitute forward-looking statements. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," “projects,” “should,” "targets" and/or similar expressions. These forward-looking statements are based on the Company’s current estimates and assumptions and, as such, involve uncertainty and risk. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those contemplated by the forward-looking statements because of a number of factors, including the factors described in Item 1A of the Company’s most recent Annual Report on Form 10-K, which factors are incorporated herein by reference. Any forward- looking statement in this presentation speaks only as of the date in which it is made. Except to the extent required under the federal securities laws, the Company does not intend to update or revise the forward-looking statements.
Positioned for Profitable Growth
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Purpose Connecting expertise to
inspired ideas, products & services
Creating a relevant, memorable difference in the lives of our clients & their customers
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53% of Revenues
~ 40% US Production Animal market share ~ 25% US Companion Animal market share ~ 40% UK Animal Health market share
47% of Revenues
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Spend
(both segments)
Little back office
Price may not be #1
purchase driver
Small Vet Clinics
Small Livestock Producers
Large Dental Groups
Large Livestock Producers
Large Vet Clinics
Private Practice Dentists
(both segments)
Key Strategic Partnerships Technology
Excellence in Logistics • 2.6 million square feet at 79 facilities • 23,000 orders and 43,000 packages
shipped daily • 99.99% accuracy • 96% of customer base serviced with
one-day ground • Approximately every other UPS truck
has a Patterson package inside • 500 fleet and LTL deliveries daily • Investing to drive additional
improvements & capabilities
FY17 2Q COMPLETED
Key Accomplishments • Built infrastructure to support transformation • Deployed new industry leading websites • Enhanced tools for CRM • Pilot and system refinements in 7 locations • Implementation begins Fall 2016
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56%
33%
11%
Exciting Time for Patterson Dental • Large, stable market with promising demographic trends
• Digital technology transforming dental practices – as technology expands, we become more valuable through:
– Innovative digital technology offerings – Industry’s most extensive digital training
capabilities – Unmatched integrated technical service & support
infrastructure
• Dental practice design transforming to address the needs of today’s consumer
• Restoration and permanent extension of Section 179 tax benefits for capital investments
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Best in Class North America Technology, Sales & Support
• 1,200+ territory reps • 100+ CEREC specialists • 200+ equipment specialists • 400+ support people at Patterson
Technology Center • 900+ service techs • 30 training facilities • 125+ implementation specialists • 300+ certified clinical trainers
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• Expand leadership in digital technology platforms • Optimize TechEdge service infrastructure • Implement NGS initiative to leverage market
opportunities • Grow through organic expansion & acquisitions
Strategic Priorities
Patterson Animal Health Today
$2.9B ANNUAL REVENUE FISCAL 2016 A leading distributor of products, services and technologies to both the production and companion animal health markets in North America and the U.K.
48% 52%
Production Animal
Companion Animal
Revenue Mix
15 years ago
• 50+ manufacturers
• Only two distributors have national coverage in both companion & production
Tomorrow
• Companion & production animal markets under one name is NEXT LEVEL of consolidation
• Distributors providing value- added services are more efficient & offer a cost-effective way to serve the market
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Broad coverage in all species
Market leader in beef, dairy, swine & dealer markets across multiple product categories
Strong long-term relationships with diversified customer base
Deep product portfolio & value-added services
Significant revenue & operating synergies
2015 Patterson Animal Health Market Share by Species (Production & Companion)
2015 Patterson Animal Health Market Share by Product (Production & Companion)
40% 44%
Overall share
43%
50% 25% 0%
up from $41B in 2007 (APPA)
$59B
Pet Expenditures
U.S. households that own a pet, compared to 56% in 1988
(APPA)
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68
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• Global production animal health market projected CAGR of 5% • 100% expansion in animal protein production needed to support trends
Today 2050
strategy
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Financial Platform Strengths • Strong cash flow enables key investments • Poised to accelerate return on invested capital (ROIC) • Multi-pronged capital allocation strategy • Conservative, well-capitalized balance sheet • Financial flexibility
Sustained Sales and Diluted EPS Growth (Continuing Operations)
2,380 2,382 2,454 2,524
Free Cash Flow
over next 5 years
0
50
100
150
200
250
300
350
400
11 12 13 14 15 16 17(E) 18(E) 19(E) 20(E) 21(E)FY
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Capital Allocation Priorities
1. Investing for growth – organic and acquisition opportunities 2. Growing the dividend 3. Repurchasing shares
$M
In millions of $
FY16 Highlights
• Consolidated sales from continuing operations rose to $5.4B, up 40% vs. LY.
• Adjusted net income from continuing operations increased to $241M, up 28%.
• Earnings per diluted share up 30% to $2.47. • Operating margin improvement in both
segments. • Acquisition synergies solidly on track.
Fiscal 2017 Guidance As of 5/26/16
Guidance Assumptions • Stable North American & International markets
• Excludes impact of additional share repurchases
• Excludes new acquisitions
• Excludes transaction-related costs, integration and business restructuring expenses & deal amortization
• Includes a $25 million step up in operating expense associated with ERP implementation
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1.00
1.50
2.00
2.50
$1.89
$2.47
$1.75
$1.62
$
5-Year Financial Objectives
Aggressive, Yet Realistic Organic Targets
100%
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Excellence in Logistics
Dental – Focused on Growth
Slide Number 16
Highly Compelling Growth Catalysts
Highly Compelling Growth Catalysts