Owens & Minor Reports Consolidated 4th Quarter & Full-Year 2012 Financial Results

  Owens & Minor Reports Consolidated 4th Quarter & Full-Year 2012 Financial
  Results

 OMI’s results were highlighted by strong asset management and operating cash
                                     flow

Business Wire

RICHMOND, Va. -- February 11, 2013

Owens & Minor, Inc. (NYSE-OMI)  today reported financial results for the
fourth quarter ended December 31, 2012, including consolidated quarterly
revenue of $2.32 billion, an increase of 5.9% when compared to revenue of
$2.20 billion in the fourth quarter of 2011. Movianto, a leading European
healthcare logistics provider acquired by Owens & Minor on August 31, 2012,
contributed $127.0 million to fourth quarter revenue. Consolidated net income
for the fourth quarter of 2012 was $24.9 million, or $0.39 per diluted share,
a slight increase when compared to net income of $23.9 million, or $0.38 per
diluted share, in the comparable period of 2011.

Adjusted consolidated net income (non-GAAP), which excludes pre-tax charges of
$1.7 million for acquisition-related and exit & realignment activities for the
fourth quarter of 2012, was $26.2 million, or $0.41 per diluted share. In
addition, pre-tax quarterly operating losses for Movianto, which comprises the
company’s International segment, were approximately $4.8 million, or $0.06 per
diluted share, resulting primarily from operating costs to support
underutilized capacity. Also, in the fourth quarter of 2012, the company
incurred legal expenses and loss contingencies of $2.0 million, or $0.02 per
diluted share, associated with California-specific litigation and compensation
and benefits requirements.

For the fourth quarter of 2012, consolidated operating earnings were $45.0
million, increased when compared to operating earnings of $43.0 million for
the same period last year. For the quarter, acquisition-related and exit &
realignment charges reduced quarterly consolidated operating earnings by $1.7
million. For purposes of comparison, fourth quarter 2011 financial results
included acquisition-related and exit & realignment costs of $12.8 million, or
$0.13 per diluted share.

“We made solid progress in 2012 on strategic investments that will support the
long-term success of our company in a rapidly changing healthcare
environment,” said Craig R. Smith, president & chief executive officer. “I was
pleased with the overall performance of our Domestic business in a tough
operating environment, as our asset management results were very strong,
expense control was impressive, and we generated $219 million in operating
cash flow. As we look ahead to 2013, we are focused on improving our
performance with Movianto by leveraging capacity and achieving expense
reductions in our European network. We are very enthusiastic about our future
and the growing demand for our healthcare logistics services.”

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 and exit & realignment charges, and
their most directly comparable GAAP financial measures.

2012 Annual Results

For the year ended December 31, 2012, consolidated revenue was $8.91 billion,
increased 3.2% from revenue of $8.63 billion in 2011. On a year-to-date basis,
Movianto contributed revenue of $176.7 million. Consolidated net income for
2012 was $109.0 million, or $1.72 per diluted share, compared to net income of
$115.2 million, or $1.81 per diluted share for 2011.

Adjusted earnings per diluted share (non-GAAP) declined to $1.85 in 2012
compared with $1.94 in 2011 due to a decrease in adjusted operating earnings
(non-GAAP) of $9.8 million. The Domestic segment operating earnings were
$212.3 million, a decrease of $4.4 million when compared to the prior year.
The International segment operating losses were $5.4 million.

The Domestic segment operating earnings comparability between periods was
adversely affected by legal expenses and loss contingencies of $2.0 million
associated with California-specific litigation and compensation and benefits
requirements, offset by income of $1.1 million from the settlement of a
class-action litigation. The net effect was a $0.9 million reduction in 2012
Domestic segment operating earnings. This compares to $2.2 million received
from settlement of an anti-trust class action lawsuit in 2011. The effect on
the comparison between 2012 and 2011 is a decline of $3.1 million.

Segment Results

Domestic segment revenue for the fourth quarter of 2012 was $2.20 billion,
essentially unchanged from revenue in the fourth quarter of the prior year.
For the full year 2012, Domestic segment revenue was $8.73 billion, an
increase of $103.6 million, or 1.2%, when compared to the prior year. Factors
affecting full-year Domestic segment revenue trends included a lower
comparative utilization of healthcare services, reduced product price
inflation, a lower comparative level of government purchasing, as well as
ongoing rationalization of certain of the company’s suppliers.

Domestic segment operating earnings for the fourth quarter of 2012 were $51.5
million, a decline of $4.3 million, when compared to operating earnings of
$55.8 million, in the same period of 2011. For 2012, Domestic segment
operating earnings were $212.3 million, or 2.43% of revenues, compared to
operating earnings of $216.7 million, or 2.51% of revenues, in the prior year.
For both the fourth quarter and the full-year 2012, operating earnings results
were affected by lower gross margin on sales to customers and the impact of
the previously discussed California-related accruals, partially offset by
slightly lower Domestic segment SG&A expenses.

As discussed above, the International segment contributed revenue of $127.0
million for the fourth quarter of 2012 and $176.7 million for the full year,
reflecting the four months of Movianto’s contributions since the business was
acquired by Owens & Minor. For the fourth quarter and the year, the
International segment had operating losses of $4.8 million and $5.4 million
respectively.

Asset Management

The balance of cash and cash equivalents at December 31, 2012, was
approximately $98 million, decreased from $136 million at December 31, 2011,
primarily as a result of the Movianto acquisition in 2012. For the full-year
2012, cash provided by operating activities was $219 million, compared
favorably to $68 million for the same period last year. The improvement was
largely due to the reduction of Domestic segment inventories and improvement
in Domestic segment days sales outstanding (DSO). Domestic inventory turns for
the fourth quarter were 10.5, compared to turns of 10.0 for the same period in
the prior year. Domestic DSO, as of December 31, 2012, was 19.1 days, a record
achievement for the company and a favorable comparison to 20.7 days for the
same period last year.

2013 Outlook

The company reiterated the following financial guidance for 2013, which was
originally issued at its November 2012 Investor Day:

For 2013, the company is targeting revenue growth of 2% to 4% and adjusted net
income per diluted share of $1.90 to $2.00 for the year, which excludes
acquisition-related and exit & realignment costs.

Highlights & Upcoming Investor Relations Events

  *The Owens & Minor board of directors has approved the payment of the first
    quarter 2013 cash dividend in the amount of $0.24 per share, a 9% increase
    over the prior quarter’s dividend. The cash dividend is payable on March
    29, 2013, to shareholders of record as of March 15, 2013. In 2012, the
    company paid nearly $56 million in dividends to shareholders and $15
    million in share repurchases, under a board authorized share repurchase
    program, for a total of $71 million in distributions to shareholders.
  *The board of directors of Owens & Minor, Inc. announced on January 31,
    2013, following the regularly scheduled board meeting, that G. Gilmer
    Minor, III, 72, who served as Chairman of the Board since 1994, will
    retire from the board at the conclusion of the company’s Annual
    Shareholders’ Meeting on April 26, 2013. As part of its succession plan,
    the board intends to appoint Craig R. Smith, 61, President & Chief
    Executive Officer of Owens & Minor, to also serve as Chairman of the
    Board, upon Minor’s retirement. Minor will assume the position of Chairman
    Emeritus.
  *Owens & Minor will participate in the Barclays Capital 2013 Global
    Healthcare Conference, on March 13, 2013 in Miami. A webcasts of the
    formal presentation will be available on www.owens-minor.com 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. Owens & Minor also offers global third-party logistics
services to pharmaceutical, life-science, and medical-device manufacturers
through its European business unit, Movianto, and through its U.S.-based
service, OM HealthCare Logistics. 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 manufacturers, and the federal
government. Owens & Minor also provides technology and consulting programs
that improve inventory management and streamline logistics across the entire
medical supply chain. For news releases, or for more information about Owens &
Minor, visit the company website at www.owens-minor.com.

Investors Conference Call & Supplemental Material

Conference Call: Owens & Minor will conduct a conference call for investors on
Tuesday, February 12, 2013, at 8:30 a.m. Eastern. The access code for the
conference call, international dial-in and replay is #93205109. Participants
may access the call at 866-393-1604.  The international dial-in number is
224-357-2191. Replay: A replay of the call will be available for one week by
dialing 855-859-2056. Webcast: A listen-only webcast of the call, along with
supplemental information, will be available on www.owens-minor.com under
“Investor Relations.”

Information on www.Owens-Minor.com

Owens & Minor uses its Web site, 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.

Owens & Minor, Inc.                                          
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)

                                                                   
                                              Three Months Ended December 31,
                                              2012                 2011
                                                                   
Net revenue                                 $ 2,324,924         $  2,195,890
Cost of goods sold                            2,054,150           1,981,876 
Gross margin                                  270,774              214,014
Selling, general and administrative           211,415              150,538
expenses
Acquisition-related and exit and              1,717                12,817
realignment charges
Depreciation and amortization                 12,420               8,656
Other operating expense (income), net         181                 (1,011    )
Operating earnings                            45,041               43,014
Interest expense, net                         3,422               3,519     
Income before income taxes                    41,619               39,495
Income tax provision                          16,685              15,553    
Net income                                  $ 24,934           $  23,942    
                                                                   
Net income per common share:
Basic                                       $ 0.40              $  0.38
Diluted                                     $ 0.39              $  0.38
                                                                   
                                                                   
                                                                   
                                              Twelve Months Ended December 31,
                                              2012                 2011
                                                                   
Net revenue                                 $ 8,908,145         $  8,627,912
Cost of goods sold                            7,983,491           7,770,375 
Gross margin                                  924,654              857,537
Selling, general and administrative           682,595              610,657
expenses
Acquisition-related and exit and              10,164               13,168
realignment charges
Depreciation and amortization                 39,604               34,135
Other operating income, net                   (4,462      )        (3,938    )
Operating earnings                            196,753              203,515
Interest expense, net                         13,397              13,682    
Income before income taxes                    183,356              189,833
Income tax provision                          74,353              74,635    
Net income                                  $ 109,003          $  115,198   
                                                                   
Net income per common share:
Basic                                       $ 1.72              $  1.82
Diluted                                     $ 1.72              $  1.81

Owens & Minor, Inc.                                           
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
                                                                  
                                                 December 31,     December 31,
                                               2012           2011
                                                                  
Assets
Current assets
Cash and cash equivalents                      $ 97,888         $ 135,938
Accounts and notes receivable, net               553,502          506,758
Merchandise inventories                          763,756          806,366
Other current assets                            213,748        76,763
Total current assets                             1,628,894        1,525,825
Property and equipment, net                      191,841          108,061
Goodwill, net                                    274,884          248,498
Intangible assets, net                           42,313           22,142
Other assets, net                               69,769         42,289
Total assets                                   $ 2,207,701     $ 1,946,815
Liabilities and equity
Current liabilities
Accounts payable                               $ 603,137        $ 575,793
Accrued payroll and related liabilities          25,468           20,668
Deferred income taxes                            40,758           42,296
Other current liabilities                       254,924        93,608
Total current liabilities                        924,287          732,365
Long-term debt, excluding current portion        215,383          212,681
Deferred income taxes                            30,921           21,894
Other liabilities                               63,454         60,658
Total liabilities                                1,234,045        1,027,598
Total equity                                    973,656        919,217
Total liabilities and equity                   $ 2,207,701     $ 1,946,815

Owens & Minor, Inc.                                              
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
                                                                     
                                             Twelve Months Ended December 31,
                                             2012                2011
                                                                     
Operating activities:
Net income                                    $  109,003           $ 115,198
Adjustments to reconcile net income to cash
provided by
operating activities of continuing
operations:
Depreciation and amortization                    39,604              34,135
Share-based compensation expense                 5,697               5,674
Provision for LIFO reserve                       4,194               13,700
Deferred income tax expense                      1,060               14,520
Provision for losses on accounts and notes       1,004               2,176
receivable
Pension contributions                            -                   (409    )
Changes in operating assets and liabilities:
Accounts and notes receivable                    27,161              (37,273 )
Merchandise inventories                          54,540              (99,950 )
Accounts payable                                 (18,694   )         44,058
Net change in other assets and liabilities       (4,490    )         (24,654 )
Other, net                                      (573      )       1,244   
Cash provided by operating activities of        218,506          68,419  
continuing operations
                                                                     
Investing activities:
Acquisition, net of cash acquired                (155,210  )         -
Additions to computer software and intangible    (29,131   )         (11,334 )
assets
Additions to property and equipment              (9,832    )         (24,981 )
Proceeds from the sale of property and          3,298            2,430   
equipment
Cash used for investing activities of           (190,875  )       (33,885 )
continuing operations
                                                                     
Financing activities:
Cash dividends paid                              (55,681   )         (50,909 )
Repurchases of common stock                      (15,000   )         (16,124 )
Financing costs paid                             (1,303    )         -
Proceeds from exercise of stock options          4,986               9,179
Excess tax benefits related to share-based       1,293               2,154
compensation
Proceeds from termination of interest rate       -                   4,005
swaps
Other, net                                      (2,710    )       (5,836  )
Cash used for financing activities of           (68,415   )       (57,531 )
continuing operations
                                                                     
Discontinued operations:
Operating cash flows                            -                (278    )
Net cash used for discontinued operations        -                   (278    )
                                                                     
Effect of exchange rate changes on cash and     2,734            -       
cash equivalents
                                                                     
Net decrease in cash and cash equivalents        (38,050   )         (23,275 )
Cash and cash equivalents at beginning of       135,938          159,213 
period
Cash and cash equivalents at end of period    $  97,888          $ 135,938 

Owens & Minor,                                                           
Inc.
Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited)
     
                                                                                
                                                                                
                Quarter Ended
(in thousands, except
ratios and per share   12/31/2012   9/30/2012   6/30/2012   3/31/2012   12/31/2011
data)
                                                                                
Consolidated
operating
results:
Net revenue       $ 2,324,924   $ 2,179,895  $ 2,185,444  $ 2,217,882  $ 2,195,890
                                                                                
Gross margin         $ 270,774      $ 228,123     $ 211,429     $ 214,328     $ 214,014
Gross margin as
a percent of        11.65%        10.46%       9.67%        9.66%        9.75%
revenue
                                                                                
SG&A expenses        $ 211,415      $ 165,320     $ 150,288     $ 155,572     $ 150,538
SG&A expenses as a   9.09%        7.58%       6.88%       7.01%       6.86%
percent of revenue
                                                                                
Operating
earnings, as         $ 45,041       $ 46,663      $ 53,177      $ 51,872      $ 43,014
reported (GAAP)
Acquisition-related
and exit and           1,717          7,831         617           -             12,817
realignment charges
Operating earnings,  $ 46,758       $ 54,494      $ 53,794      $ 51,872      $ 55,831
adjusted (Non-GAAP)
Operating earnings as
a percent of revenue,  2.01%        2.50%       2.46%       2.34%       2.54%
adjusted (Non-GAAP)
                                                                                
Net income, as       $ 24,934       $ 24,597      $ 30,113      $ 29,360      $ 23,942
reported (GAAP)
Acquisition-related
and exit and           1,237          6,588         375           -             7,780
realignment charges,
after-tax
Net income,
adjusted           $ 26,171      $ 31,185     $ 30,488     $ 29,360     $ 31,722
(Non-GAAP)
                                                                                
Net income per
diluted common       $ 0.39         $ 0.39        $ 0.48        $ 0.46        $ 0.38
share, as reported
(GAAP)
Acquisition-related
and exit and           0.02           0.10          -             -             0.13
realignment charges
Net income per
diluted common       $ 0.41        $ 0.49       $ 0.48       $ 0.46       $ 0.51
share, adjusted
(Non-GAAP)
                                                                                
Financing:
Cash and cash      $ 97,888      $ 79,667     $ 224,937    $ 213,927    $ 135,938
equivalents
Total
interest-bearing   $ 217,591     $ 216,924    $ 213,982    $ 214,184    $ 214,556
debt
                                                                                
Stock
information:
Cash dividends     $ 0.22        $ 0.22       $ 0.22       $ 0.22       $ 0.20
per common share
Stock price at     $ 28.51       $ 29.88      $ 30.63      $ 30.41      $ 27.79
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 December 31,                                   Twelve Months Ended December 31,
                        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          $ 2,197,932     94.54     %      $ 2,195,890     100.00   %       $ 8,731,484     98.02     %      $ 8,627,912     100.00   %
    International       126,992      5.46              N/A          N/A                176,661      1.98              N/A          N/A
       Consolidated   $ 2,324,924    100.00   %      $ 2,195,890    100.00   %       $ 8,908,145    100.00   %      $ 8,627,912    100.00   %
       net revenue
                                                                                                                                                  
                                                                                                                                                  
                                      % of segment                     % of segment                     % of segment                     % of segment
  Operating earnings                  net revenue                      net revenue                      net revenue                      net revenue
  (loss):
    Domestic          $ 51,546        2.35      %      $ 55,831        2.54     %       $ 212,335       2.43      %      $ 216,683       2.51     %
    International       (4,788    )   (3.77   ) %        N/A           N/A                (5,418    )   (3.07   ) %        N/A           N/A
    Acquisition-related
    and exit and        (1,717    )   N/A                (12,817   )   N/A                (10,164   )   N/A                (13,168   )   N/A
    realignment charges
       Consolidated
       operating      $ 45,041       1.94     %      $ 43,014       1.96     %       $ 196,753      2.21     %      $ 203,515      2.36     %
       earnings
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
  Depreciation and
  amortization:
    Domestic          $ 9,121                          $ 8,656                          $ 35,016                         $ 34,135
    International       3,299                           N/A                             4,588                           N/A       
       Consolidated
       depreciation   $ 12,420                        $ 8,656                         $ 39,604                        $ 34,135    
       and
       amortization
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
  Capital
  expenditures: ^(1)
    Domestic          $ 7,364                          $ 11,434                         $ 34,450                         $ 36,315
    International       3,775                           N/A                             4,513                           N/A       
       Consolidated
       capital        $ 11,139                        $ 11,434                        $ 38,963                        $ 36,315    
       expenditures
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                        December                         December
                        31,                              31,

                        2012                             2011
  Total assets:
    Domestic          $ 1,723,699                      $ 1,810,877
    International       386,114                         N/A       
       Segment assets   2,109,813                        1,810,877
       Cash and cash    97,888                          135,938   
       equivalents
                      $ 2,207,701                     $ 1,946,815 
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
  ^(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          Twelve Months Ended
                           December 31,                December 31,
                           2012         2011           2012          2011
Numerator:
Net income               $ 24,934     $ 23,942     $   109,003     $ 115,198
Less: income
allocated to               (173   )     (199   )       (749    )     (1,059  )
unvested restricted
shares
Net income
attributable to            24,761       23,743         108,254       114,139
common shareholders
- basic
Add: undistributed
income attributable to     61           80             292           480
unvested restricted
shares - basic
Less: undistributed
income attributable to     (61    )     (80    )       (292    )     (479    )
unvested restricted
shares - diluted
Net income
attributable to          $ 24,761    $ 23,743    $   108,254    $ 114,140 
common shareholders
- diluted
                                                                     
Denominator:
Weighted average
shares outstanding         62,671       62,655         62,765        62,756
— basic
Dilutive shares            67          129           79           168     
- stock options
Weighted average
shares outstanding         62,738      62,784        62,844       62,924  
— diluted
                                                                     
                                                                     
Net income per share
attributable to common
shareholders:
Basic                    $ 0.40       $ 0.38       $   1.72        $ 1.82
Diluted                  $ 0.39       $ 0.38       $   1.72        $ 1.81

Contact:

Owens & Minor, Inc.
Truitt 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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