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Owens & Minor Reports Consolidated Financial Results for 3rd Quarter 2012, Including Results from the Movianto Acquisition



  Owens & Minor Reports Consolidated Financial Results for 3rd Quarter 2012,
  Including Results from the Movianto Acquisition

  * Owens & Minor to host Annual Investor Day on November 29, 2012 in New York
  * Company completes acquisition of the Movianto Group, a leading European
    3PL provider

Business Wire

RICHMOND, Va. -- October 29, 2012

Owens & Minor, Inc. (NYSE-OMI)  today reported financial results for the third
quarter ended September 30, 2012, including consolidated quarterly revenue of
$2.18 billion, unchanged when compared to revenue in the third quarter of
2011. The company’s August 31, 2012, acquisition of the Movianto Group
(Movianto) from Celesio AG contributed $49.7 million to revenue for the
quarter, representing one month’s revenue. Consolidated net income for the
third quarter of 2012 was $24.6 million, or $0.39 per diluted share, compared
to $33.4 million, or $0.53 per share, in the same period of 2011. Pre-tax
costs associated with the Movianto acquisition were approximately $7.8 million
for the third quarter of 2012, which reduced quarterly net income per diluted
share by approximately $0.10.

“With the third party logistics capabilities of the Movianto acquisition and
our core U.S. hospital distribution and supply chain services business, Owens
& Minor now has global reach with a solid platform for providing third party
logistics and other supply chain services,” said Craig R. Smith, president &
chief executive officer of Owens & Minor. “We believe this acquisition will
improve the capacity of our company to serve healthcare providers and
manufacturers with efficiency and innovation in a rapidly changing industry.
We see emerging opportunity in healthcare and a widening path for Owens &
Minor, as we position ourselves for the future.”

Adjusted consolidated operating earnings for the third quarter of 2012, which
exclude $7.8 million of costs associated with the Movianto acquisition, were
$54.5 million, or 2.50% of revenues, a decrease of $4.3 million, when compared
to $58.8 million, or 2.70% of revenues, in the prior-year third quarter.
Included with the press release financial tables are reconciliations of the
differences between the non-GAAP financial measures presented in this news
release, which exclude acquisition-related expenses, and their most directly
comparable GAAP financial measures.

Year-to-Date Results

For the nine months ended September 30, 2012, consolidated revenue was $6.58
billion, increased $151.2 million, or 2.4%, when compared to revenue of $6.43
billion for the same period of 2011. On a year-to-date basis, Movianto
contributed revenues of $49.7 million. Consolidated net income for the first
nine months of 2012 was $84.1 million, or $1.33 per diluted share, a decrease
of $7.2 million when compared to net income of $91.3 million, or $1.44 per
diluted share, for the same period of 2011. On a year-to-date basis, costs
associated with the Movianto acquisition were approximately $8.4 million,
which reduced net income by approximately $0.11 per diluted share.

For the first nine months of 2012, adjusted consolidated operating earnings,
excluding Movianto acquisition-related costs, were $160.2 million, or 2.43% of
revenues, essentially unchanged, when compared to operating earnings of $160.9
million, or 2.50% of revenues, for the same period last year.

“As we reflect on the third quarter 2012 results, we are targeting the fourth
quarter 2012 adjusted operating results to be similar to those reported this
quarter,” said James L. Bierman, executive vice president & chief operating
officer of Owens & Minor. “As our outlook further evolves, we will provide
additional details at our annual Investor Day.”

Segment Discussion

As a result of the August 31, 2012 acquisition of Movianto, Owens & Minor will
now report Movianto as a separate International business segment. Prior to the
acquisition, Owens & Minor had one reportable business segment, which now
comprises the Domestic business segment. Accordingly, the Domestic business
segment includes traditional distribution, OM HealthCare Logistics, and other
supply-chain management services, such as OM Solutions^SM, which provide
solutions to healthcare providers and suppliers of medical and surgical
products in the United States. Additional information on segment results is
provided in the accompanying financial tables.

Domestic Segment

In the third quarter of 2012, Domestic revenues were $2.13 billion, a decrease
of $46.5 million compared to the same quarter of 2011. The decline resulted
from a combination of factors, including: one less sales day in the quarter,
lower comparative utilization of healthcare services coupled with reduced
product price inflation, and a lower level of government purchasing, as well
as ongoing rationalization of the company’s supplier base.

Operating earnings for the Domestic segment for the third quarter of 2012 were
$55.1 million compared to $58.8 million in the same period of 2011, a decrease
of $3.7 million. The quarterly decrease in Domestic operating earnings is
attributable to lower Domestic segment revenues and gross margin, partially
offset by a $6.6 million improvement in SG&A expenses, when compared to the
third quarter of 2011. As a percentage of revenues, Domestic operating
earnings were 2.59% for the third quarter of 2012, representing a
quarter-over-quarter decline of 11 basis points when compared to the same
period of 2011, but also representing a 13 basis-point sequential improvement
when compared to the second quarter of 2012.

International Segment

Revenues in the International segment were $49.7 million for the third quarter
of 2012, reflecting one month’s contribution to the third quarter results,
which were not included in results in the same quarter one year ago.

For the third quarter of 2012, the International segment had an operating loss
of less than $1 million.

Movianto Update

After completing the acquisition of Movianto, a leading European healthcare
third-party logistics (3PL) business, Owens & Minor immediately launched the
transition process. These activities include transitioning corporate functions
previously handled by Movianto’s parent company.

With the acquisition, Owens & Minor secured a third-party-logistics (3PL)
platform that currently serves approximately 600 pharmaceutical and medical
device manufacturer customers globally from 23 logistics centers in 11
European countries with approximately 1,800 teammates. Movianto provides a
range of 3PL services including, warehousing, transportation, and cold chain
logistics, as well as value-added services such as order-to-cash, repackaging
and relabeling of products. Movianto’s operational capabilities and services
are highly complementary to those of OM HealthCare Logistics, Owens & Minor’s
domestic healthcare 3PL service, and the combination will enable Owens & Minor
to offer healthcare manufacturers in the U.S. and Europe expanded global
reach.

Asset Management

The balance of cash and cash equivalents at September 30, 2012, was $79.7
million, decreased from $135.9 million at December 31, 2011. The acquisition
of Movianto used cash of approximately $150 million, net of cash acquired.
Total interest-bearing debt as of September 30, 2012, was $217 million,
compared to $215 million as of December 31, 2011. Domestic days sales
outstanding (DSO) as of September 30, 2012, was 20.7, compared to DSO of 20.6
days at the end of the prior year’s third quarter. Domestic inventory turns
were 10.2 compared to turns of 10.3 for the same period last year.

Highlights & Upcoming Events

  * The Owens & Minor board of directors declared a fourth quarter 2012
    dividend of $0.22 per diluted share. The dividend is payable on December
    31, 2012, to shareholders of record on December 14, 2012. Owens & Minor
    views dividends as an important component of total return to shareholders.
  * Effective October 18, 2012, the Owens & Minor board of directors has named
    Martha Marsh, retired president & chief executive officer of Stanford
    Hospital and Clinics, to serve on the company’s board of directors. Marsh
    brings more than 30 years of experience as a hospital executive to the
    Owens & Minor board.
  * Owens & Minor is scheduled to participate in the 2012 Credit Suisse
    Healthcare Conference on November 15, 2012 in Phoenix. The presentation is
    scheduled for 11:00 a.m. Mountain Time.
  * Owens & Minor has scheduled its Annual Investor Day in New York for
    Thursday, November 29, 2012. Owens & Minor executives will provide an
    operational and strategic overview, as well as the company’s financial
    outlook for 2013. The meeting is scheduled to begin at 8:00 a.m. EST and
    conclude at approximately 10:30 a.m. EST. A live, listen-only webcast of
    the briefing can be accessed on the company website at www.owens-minor.com
    under the Investor Relations Section. Professional Wall Street analysts
    and investors may register via
    http://investors.owens-minor.com/registration.cfm.

Investors’ 3Q 2012 Conference Call & Supplemental Material

Owens & Minor’s management team will conduct a conference call to discuss the
third quarter financial results on Tuesday, October 30, 2012, at 8:30 a.m.
EDT. The access code for the conference call, international dial-in, and
replay is #37884301. Participants may access the call at 866-393-1604. The
international dial-in number is 224-357-2191. A replay of the call will be
available for one week by dialing 855-859-2056. A webcast of the call, along
with supplemental information, will be available on www.owens-minor.com under
the Investor Relations section.

Information on www.Owens-Minor.com

Owens & Minor uses its website, www.owens-minor.com, as a channel of
distribution for material company information, including news releases,
investor presentations and financial information. This information is
routinely posted and accessible under the Investor Relations section.

Safe Harbor Statement

Except for historical information, the matters discussed in this press release
may constitute forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those projected.
These risk factors are discussed in reports filed by the company with the
Securities & Exchange Commission. All of this information is available at
www.owens-minor.com. The company assumes no obligation, and expressly
disclaims any such obligation, to update or alter information, whether as a
result of new information, future events, or otherwise.

Owens & Minor, Inc., (NYSE: OMI) a FORTUNE 500 company headquartered in
Richmond, Virginia, is a leading national distributor of name-brand medical
and surgical supplies and a healthcare supply-chain management company. Owens
& Minor also offers global third-party logistics services to pharmaceutical
and medical device manufacturers through its European business unit, Movianto,
and through its U.S.-based service, OM HealthCare Logistics. Owens & Minor is
also a member of the Russell 2000^® Index, which measures the performance of
the small-cap segment of the U.S. equity universe, as well as the S&P MidCap
400, which includes companies with a market capitalization of $1 billion to
$4.4 billion that meet certain financial standards. With a diverse product and
service offering and distribution centers throughout the United States, the
company serves hospitals, integrated healthcare systems, alternate site
locations, group purchasing organizations, healthcare suppliers and the
federal government. Owens & Minor provides technology and consulting programs
that improve inventory management and streamline logistics across the entire
medical supply chain from origin of product to patient bedside. For news
releases, or for more information about Owens & Minor, visit the company
website at www.owens-minor.com.

                                                            
Owens & Minor, Inc.
Condensed Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
 
                                                                    
                                              Three Months Ended September 30,
                                              2012                 2011
                                                                    
Net revenue                                 $ 2,179,895        $   2,176,759
Cost of goods sold                            1,951,772            1,960,077
Gross margin                                  228,123              216,682
Selling, general and administrative           165,320              152,825
expenses
Acquisition-related and exit and              7,831                351
realignment charges
Depreciation and amortization                 10,090               8,463
Other operating income, net                   (1,781)              (3,422)
Operating earnings                            46,663               58,465
Interest expense, net                         3,066                3,426
Income before income taxes                    43,597               55,039
Income tax provision                          19,000               21,687
Net income                                  $ 24,597           $   33,352
                                                                    
Net income per common share:
Basic                                       $ 0.39             $   0.53
Diluted                                     $ 0.39             $   0.53
                                                                    
                                                                    
                                                                    
                                              Nine Months Ended September 30,
                                              2012                 2011
                                                                    
Net revenue                                 $ 6,583,221        $   6,432,022
Cost of goods sold                            5,929,341            5,788,499
Gross margin                                  653,880              643,523
Selling, general and administrative           471,179              460,119
expenses
Acquisition-related and exit and              8,448                351
realignment charges
Depreciation and amortization                 27,184               25,479
Other operating income, net                   (4,643)              (2,927)
Operating earnings                            151,712              160,501
Interest expense, net                         9,975                10,163
Income before income taxes                    141,737              150,338
Income tax provision                          57,667               59,082
Net income                                  $ 84,070           $   91,256
                                                                    
Net income per common share:
Basic                                       $ 1.33             $   1.44
Diluted                                     $ 1.33             $   1.44
                                                                    

                                                               
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
                                                                   
                                                September 30,     December 31,
                                                2012              2011
                                                                   
Assets
Current assets
Cash and cash equivalents                     $ 79,667          $ 135,938
Accounts and notes receivable, net              582,994           506,758
Merchandise inventories                         776,898           806,366
Other current assets                            211,967           76,763
Total current assets                            1,651,526         1,525,825
Property and equipment, net                     176,035           108,061
Goodwill, net                                   285,363           248,498
Intangible assets, net                          44,540            22,142
Other assets, net                               64,285            42,289
Total assets                                  $ 2,221,749       $ 1,946,815
Liabilities and equity
Current liabilities
Accounts payable                              $ 642,123         $ 575,793
Accrued payroll and related liabilities         18,033            20,668
Deferred income taxes                           36,982            42,296
Other current liabilities                       252,131           93,608
Total current liabilities                       949,269           732,365
Long-term debt, excluding current portion       214,795           212,681
Deferred income taxes                           31,311            21,894
Other liabilities                               66,312            60,658
Total liabilities                               1,261,687         1,027,598
Total equity                                    960,062           919,217
Total liabilities and equity                  $ 2,221,749       $ 1,946,815
                                                                   

                                                                
Owens & Minor, Inc.
Condensed Consolidated Statements of Cash
Flows (unaudited)
(in thousands)
                                                                      
                                               Nine Months Ended September 30,
                                                   2012              2011
                                                                      
Operating activities:
Net income                                     $   84,070         $  91,256
Adjustments to reconcile net income to cash
provided by
operating activities of continuing operations:
Depreciation and amortization                      27,184            25,479
Provision for LIFO reserve                         5,223             11,265
Share-based compensation expense                   4,844             4,335
Deferred income tax expense                        1,098             908
Provision for losses on accounts and notes         414               1,107
receivable
Pension contributions                              -                 (543)
Changes in operating assets and liabilities:
Accounts and notes receivable                      (7,886)           (36,598)
Merchandise inventories                            40,078            (52,141)
Accounts payable                                   32,467            81,188
Net change in other assets and liabilities         (16,355)          (18,465)
Other, net                                         (773)             335
Cash provided by operating activities of           170,364           108,126
continuing operations
                                                                      
Investing activities:
Acquisition, net of cash acquired                  (149,910)         -
Additions to computer software and intangible      (19,934)          (8,035)
assets
Additions to property and equipment                (7,890)           (16,846)
Proceeds from the sale of property and             3,237             46
equipment
Cash used for investing activities of              (174,497)         (24,835)
continuing operations
                                                                      
Financing activities:
Cash dividends paid                                (41,791)          (38,156)
Repurchases of common stock                        (11,250)          (16,124)
Financing costs paid                               (1,303)           -
Proceeds from termination of interest rate         -                 4,005
swap
Excess tax benefits related to share-based         1,223             1,977
compensation
Proceeds from exercise of stock options            4,114             7,937
Other, net                                         (4,444)           (5,127)
Cash used for financing activities of              (53,451)          (45,488)
continuing operations
                                                                      
Discontinued operations:
Operating cash flows                               -                 (164)
Net cash used for discontinued operations          -                 (164)
                                                                      
Effect of exchange rate changes on cash and        1,313             -
cash equivalents
                                                                      
Net (decrease) increase in cash and cash           (56,271)          37,639
equivalents
Cash and cash equivalents at beginning of          135,938           159,213
period
Cash and cash equivalents at end of period     $   79,667         $  196,852
                                                                      

                                                                                 
Owens & Minor,
Inc.
Financial Statistics
and GAAP/Non-GAAP
Reconciliations
(unaudited)
       
                                                                                     
                                                                                     
                           Quarter Ended
(in thousands, except
ratios and per share       9/30/2012     6/30/2012     3/31/2012     12/31/2011     9/30/2011
data)
                                                                                     
Consolidated
operating
results:
Net revenue              $ 2,179,895   $ 2,185,444   $ 2,217,882   $ 2,195,890    $ 2,176,759
                                                                                     
Gross margin             $ 228,123     $ 211,429     $ 214,328     $ 214,014      $ 216,682
Gross margin as
a percent of               10.46%        9.67%         9.66%         9.75%          9.95%
revenue
                                                                                     
SG&A expenses            $ 165,320     $ 150,288     $ 155,572     $ 150,538      $ 152,825
SG&A expenses as a         7.58%         6.88%         7.01%         6.86%          7.02%
percent of revenue
                                                                                     
Operating
earnings, as             $ 46,663      $ 53,177      $ 51,872      $ 43,014       $ 58,465
reported (GAAP)
Acquisition-related
and exit and               7,831         617           -             12,708         351
realignment charges
Operating earnings,      $ 54,494      $ 53,794      $ 51,872      $ 55,722       $ 58,816
adjusted (Non-GAAP)
Operating earnings as
a percent of revenue,      2.50%         2.46%         2.34%         2.54%          2.70%
adjusted (Non-GAAP)
                                                                                     
Net income, as           $ 24,597      $ 30,113      $ 29,360      $ 23,942       $ 33,352
reported (GAAP)
Acquisition-related
and exit and               6,588         375           -             7,714          213
realignment charges,
after-tax
Net income,
adjusted                 $ 31,185      $ 30,488      $ 29,360      $ 31,656       $ 33,565
(Non-GAAP)
                                                                                     
Net income per diluted
common share, as         $ 0.39        $ 0.48        $ 0.46        $ 0.38         $ 0.53
reported (GAAP)
Acquisition-related
and exit and               0.10          -             -             0.13           -
realignment charges
Net income per diluted
common share, adjusted   $ 0.49        $ 0.48        $ 0.46        $ 0.51         $ 0.53
(Non-GAAP)
                                                                                     
Financing:
Cash and cash            $ 79,667      $ 224,937     $ 213,927     $ 135,938      $ 196,852
equivalents
Total
interest-bearing         $ 216,924     $ 213,982     $ 214,184     $ 214,556      $ 215,037
debt
                                                                                     
Stock
information:
Cash dividends           $ 0.22        $ 0.22        $ 0.22        $ 0.20         $ 0.20
per common share
Stock price at           $ 29.88       $ 30.63       $ 30.41       $ 27.79        $ 28.48
quarter-end
                                                                                     

 
Use of Non-GAAP Measures
 
This earnings release contains financial measures that are not calculated in
accordance with U.S. generally accepted accounting principles ("GAAP"). In
general, the measures exclude items and charges that (i) management does not
believe reflect Owens & Minor, Inc.'s (the "Company") core business and relate
more to strategic, multi-year corporate activities; or (ii) relate to
activities or actions that may have occurred over multiple or in prior periods
without predictable trends. Management uses these non-GAAP financial measures
internally to evaluate the Company's performance, evaluate the balance sheet,
engage in financial and operational planning and determine incentive
compensation.
Management provides these non-GAAP financial measures to investors as
supplemental metrics to assist readers in assessing the effects of items and
events on its financial and operating results and in comparing the Company's
performance to that of its competitors. However, the non-GAAP financial
measures used by the Company may be calculated differently from, and therefore
may not be comparable to, similarly titled measures used by other companies.
The non-GAAP financial measures disclosed by the Company should not be
considered a substitute for, or superior to, financial measures calculated in
accordance with GAAP, and the financial results calculated in accordance with
GAAP and reconciliations to those financial statements set forth above should
be carefully evaluated.
 

                                                                                                                                       
Owens & Minor, Inc.
Summary Segment Information
(unaudited)
(in thousands,
except ratios)
       
                                                                                                                                                      
                                                                                                                                                      
                           Three Months Ended September 30,                              Nine Months Ended September 30,
                           2012                           2011                           2012                             2011
                                       % of                           % of                             % of                             % of
                                       consolidated                   consolidated                     consolidated                     consolidated
                           Amount      net revenue        Amount      net revenue        Amount        net revenue        Amount        net revenue   
  Net revenue:
    Domestic             $ 2,130,226   97.72        %   $ 2,176,759   100.00       %   $ 6,533,552     99.25        %   $ 6,432,022     100.00       %
    International          49,669      2.28         %     N/A         N/A                49,669        0.75         %     N/A           N/A
      Consolidated       $ 2,179,895   100.00       %   $ 2,176,759   100.00       %   $ 6,583,221     100.00       %   $ 6,432,022     100.00       %
      net revenue
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                      
  Operating earnings
  (loss):
    Domestic             $ 55,120      2.53         %   $ 58,816      2.70         %   $ 160,786       2.44         %   $ 160,852       2.50         %
    International          (626)       (0.03)       %     N/A         N/A                (626)         (0.01)             N/A           N/A
    Acquisition-related and exit and                                                                   -
    realignment            (7,831)     (0.36)       %     (351)       (0.01)       %     (8,448)       (0.13)       %     (351)         -            %
    charges
      Consolidated
      operating          $ 46,663      2.14         %   $ 58,465      2.69         %   $ 151,712       2.30         %   $ 160,501       2.50         %
      earnings
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                      
  Depreciation and
  amortization:
    Domestic             $ 8,801                        $ 8,463                        $ 25,895                         $ 25,479
    International          1,289                          N/A                            1,289                            N/A
      Consolidated
      depreciation       $ 10,090                       $ 8,463                        $ 27,184                         $ 25,479
      and
      amortization
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                      
  Capital
  expenditures: ^(1)
    Domestic             $ 8,929                        $ 11,133                       $ 27,086                         $ 24,881
    International          738                            N/A                            738                              N/A
      Consolidated
      capital            $ 9,667                        $ 11,133                       $ 27,824                         $ 24,881
      expenditures
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                      
                           September                      December
                           30,                            31,
                           2012                           2011
  Total assets:
    Domestic             $ 1,732,460                    $ 1,810,877
    International          409,622                        N/A
      Segment assets       2,142,082                      1,810,877
      Cash and cash        79,667                         135,938
      equivalents
        Consolidated     $ 2,221,749                    $ 1,946,815
        total assets
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                      
  ^(1) Represents additions to property and equipment and additions to computer software and separately acquired
  intangible assets.
                                                                                                                                                      

                                                         
Owens & Minor, Inc.
Net Income Per Common Share
(unaudited)
(in thousands, except per
share data)
 
                                                                        
                                                                        
                                                                        
                                                                        
                                   Three Months Ended       Nine Months Ended
                                   September 30,            September 30,
                                   2012       2011          2012       2011
Numerator:
Net income                       $ 24,597  $  33,352      $ 84,070  $  91,256
Less: income allocated to          (153)      (252)         (574)      (856)
unvested restricted shares
Net income attributable to         24,444     33,100        83,496     90,400
common shareholders - basic
Add: undistributed income
attributable to unvested           53         136           229        397
restricted shares - basic
Less: undistributed income
attributable to unvested           (53)       (135)         (228)      (396)
restricted shares - diluted
Net income attributable to       $ 24,444  $  33,101      $ 83,497  $  90,401
common shareholders - diluted
                                                                        
Denominator:
Weighted average shares            62,763     62,802        62,806     62,801
outstanding — basic
Dilutive shares - stock            78         145           84         183
options
Weighted average shares            62,841     62,947        62,890     62,984
outstanding — diluted
                                                                        
                                                                        
Net income per share
attributable to common
shareholders:
Basic                            $ 0.39    $  0.53        $ 1.33    $  1.44
Diluted                          $ 0.39    $  0.53        $ 1.33    $  1.44

Contact:

Owens & Minor, Inc.
Trudi Allcott, 804-723-7555
Director, Investor & Media Relations
truitt.allcott@owens-minor.com
or
Chuck Graves, 804-723-7556
Director, Finance & Investor Relations
chuck.graves@owens-minor.com
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