Owens & Minor Reports 1st Quarter 2013 Financial Results Management to host conference call to discuss results on Wednesday, April 24, 2013, at 8:30 a.m. Bank of America Merrill Lynch 2013 Healthcare Conference 2013 UBS Global Healthcare Conference Jefferies Global Healthcare Conference 2013 34th Annual Goldman Sachs Global Healthcare Conference Business Wire RICHMOND, Va. -- April 23, 2013 Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the first quarter ended March 31, 2013, including consolidated quarterly revenues of $2.28 billion, an increase of 2.6%, when compared to revenues of $2.22 billion in the first quarter of 2012. Movianto, a leading European healthcare logistics provider acquired by Owens & Minor on August 31, 2012, contributed $121.0 million to first quarter revenues. For the first quarter of 2013, consolidated net income was $26.1 million, or $0.41 per diluted share, compared to $29.4 million, or $0.46 per diluted share, for the same period last year. For the quarter, adjusted consolidated net income (non-GAAP), which excludes pre-tax charges of $2.0 million for acquisition-related and exit & realignment activities, was $27.6 million, or $0.44 per diluted share, compared to $29.4 million, or $0.46 per diluted share, for the same period last year. “In looking at our quarterly results, we see that Owens & Minor is adapting to a changing healthcare market and is investing in areas that will provide us with opportunities for the future,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “We continue to invest in our Domestic business to ensure that we have the necessary flexibility to serve our customers in healthcare. Internationally, we are working intently to integrate Movianto, fill excess capacity in the network, and reduce the cost structure. As we work through the integration, we remain excited about the opportunities in Europe.” Adjusted consolidated operating earnings (non-GAAP) for the first quarter of 2013 were $49.9 million, or 2.19% of revenues, decreased $2.0 million, when compared to operating earnings of $51.9 million, or 2.34% of revenues, in the same period of 2012. The quarterly decline in consolidated operating earnings resulted primarily from an International segment operating loss of $3.0 million in the first quarter of 2013. For purposes of comparison, the first quarter 2012 results did not contain results from the company’s international operations. Segment Results Domestic segment revenues for the first quarter of 2013 were $2.15 billion, a decline of 2.8% when compared to the prior year’s first quarter revenue of $2.22 billion. On a per-sales-day basis, quarterly revenue declined by 1.3%. When compared to the prior year, the decline in first quarter Domestic segment revenues was partially due to rationalization of smaller, less profitable healthcare provider customers and suppliers. First quarter Domestic revenues were also affected by ongoing trends, including lower hospital utilization and reduced government purchases. For the first quarter of 2013, Domestic segment operating earnings were $52.9 million, or 2.46% of revenues, an increase of $1.0 million, when compared to operating earnings of $51.9 million, or 2.34% of revenues, in the same period of 2012. Domestic segment operating earnings benefitted from supplier price changes, partially offset by an increase in workers’ compensation and consulting expenses. The International segment contributed revenue of $121.0 million for the first quarter of 2013 and had a pre-tax operating loss of $3.0 million, which reduced consolidated net income per diluted share by $0.04. The quarterly operating loss resulted primarily from operating costs to support underutilized capacity. Asset Management The balance of cash and cash equivalents was $219 million at March 31, 2013, increased by $121 million from $98 million at December 31, 2012. For the first quarter of 2013, the company reported cash provided by operating activities of approximately $155 million compared to $102 million for the same period last year; results included a $98.2 million increase in accounts payable. Asset management metrics were strong with Domestic segment days sales outstanding (DSO) of 19.6 days as of March 31, 2013, compared to DSO of 19.9 days as of March 31, 2012. Domestic segment inventory turns were 10.6 for the first quarter of 2013, compared to inventory turns of 10.5 for the same period last year. 2013 Outlook The company reaffirmed its financial guidance for 2013, which remains unchanged since it was provided at the company’s 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 includes operating results from the Movianto acquisition, but excludes exit and realignment costs, as well as acquisition-related costs. The 2013 outlook is based on certain assumptions that are subject to the risk factors discussed in the company’s filings with the Securities & Exchange Commission. Upcoming Investor Events *The company will hold its Annual Shareholders Meeting on Friday, April 26, 2013, at its Home Office in Mechanicsville, Va., at 10:00 a.m. EDT. Event audio and presentations will be archived on www.owens-minor.com following the conclusion of the meeting. *Owens & Minor is scheduled to participate in a number of investor conferences in the second quarter of 2013; webcasts of the company’s presentations at the following investor events will be posted on the company’s corporate website: *Bank of America Merrill Lynch 2013 Healthcare Conference; May 15 – Las Vegas *2013 UBS Global Healthcare Conference; May 21 – New York *Jefferies 2013 Global Healthcare Conference; June 6 – New York *34^th Annual Goldman Sachs Global Healthcare Conference; June 12 – Rancho Palos Verdes Investors Conference Call & Supplemental Material Conference Call: Owens & Minor will conduct a conference call for investors on Wednesday, April 24, 2013, at 8:30 a.m. EDT. The access code for the conference call, international dial-in and replay is #35997867. 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 website 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 Investor Relations at www.owens-minor.com. 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. Owens & Minor, Inc. Consolidated Statements of Income (unaudited) (in thousands, except per share data) Three Months Ended March 31, 2013 2012 Net revenue $ 2,275,709 $ 2,217,882 Cost of goods sold 1,996,657 2,003,554 Gross margin 279,052 214,328 Selling, general and administrative 217,721 155,572 expenses Acquisition-related and exit and 2,010 - realignment charges Depreciation and amortization 12,629 8,578 Other operating income, net (1,192 ) (1,694 ) Operating earnings 47,884 51,872 Interest expense, net 3,199 3,422 Income before income taxes 44,685 48,450 Income tax provision 18,587 19,090 Net income $ 26,098 $ 29,360 Net income per common share: Basic $ 0.41 $ 0.46 Diluted $ 0.41 $ 0.46 Owens & Minor, Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands) March 31, December 31, 2013 2012 Assets Current assets Cash and cash equivalents $ 218,563 $ 97,888 Accounts and notes receivable, net 581,121 553,502 Merchandise inventories 743,247 763,756 Other current assets 205,342 213,748 Total current assets 1,748,273 1,628,894 Property and equipment, net 187,927 191,841 Goodwill, net 272,878 274,884 Intangible assets, net 39,645 42,313 Other assets, net 72,199 69,769 Total assets $ 2,320,922 $ 2,207,701 Liabilities and equity Current liabilities Accounts payable $ 693,616 $ 603,137 Accrued payroll and related liabilities 18,823 25,468 Deferred income taxes 41,455 40,758 Other current liabilities 282,974 254,924 Total current liabilities 1,036,868 924,287 Long-term debt, excluding current 214,243 215,383 portion Deferred income taxes 28,639 30,921 Other liabilities 63,622 63,454 Total liabilities 1,343,372 1,234,045 Total equity 977,550 973,656 Total liabilities and equity $ 2,320,922 $ 2,207,701 Owens & Minor, Inc. Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended March 31, 2013 2012 Operating activities: Net income $ 26,098 $ 29,360 Adjustments to reconcile net income to cash provided by operating activities of continuing operations: Depreciation and amortization 12,629 8,578 Share-based compensation expense 1,910 2,385 Provision for losses on accounts and notes 107 190 receivable Deferred income tax benefit (56 ) (1,465 ) Changes in operating assets and liabilities: Accounts and notes receivable (34,575 ) 7,553 Merchandise inventories 21,784 82,160 Accounts payable 98,198 (38,279 ) Net change in other assets and liabilities 28,981 11,609 Other, net (465 ) (194 ) Cash provided by operating activities of 154,611 101,897 continuing operations Investing activities: Additions to property and equipment (7,513 ) (4,536 ) Additions to computer software and (7,264 ) (3,840 ) intangible assets Proceeds from the sale of property and 44 99 equipment Cash used for investing activities of (14,733 ) (8,277 ) continuing operations Financing activities: Cash dividends paid (15,199 ) (14,001 ) Repurchases of common stock (2,282 ) (3,750 ) Excess tax benefits related to share-based 207 690 compensation Proceeds from exercise of stock options 1,792 3,371 Other, net (1,958 ) (1,941 ) Cash used for financing activities of (17,440 ) (15,631 ) continuing operations Effect of exchange rate changes on cash and (1,763 ) - cash equivalents Net increase in cash and cash equivalents 120,675 77,989 Cash and cash equivalents at beginning of 97,888 135,938 period Cash and cash equivalents at end of period $ 218,563 $ 213,927 Owens & Minor, Inc. Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited) Quarter Ended (in thousands, except ratios and per share 3/31/2013 12/31/2012 9/30/2012 6/30/2012 3/31/2012 data) Consolidated operating results: Net revenue $ 2,275,709 $ 2,324,924 $ 2,179,895 $ 2,185,444 $ 2,217,882 Gross margin $ 279,052 $ 270,774 $ 228,123 $ 211,429 $ 214,328 Gross margin as a percent of 12.26% 11.65% 10.46% 9.67% 9.66% revenue SG&A expenses $ 217,721 $ 211,415 $ 165,320 $ 150,288 $ 155,572 SG&A expenses as a 9.57% 9.09% 7.58% 6.88% 7.01% percent of revenue Operating earnings, as $ 47,884 $ 45,041 $ 46,663 $ 53,177 $ 51,872 reported (GAAP) Acquisition-related and exit and 2,010 1,717 7,831 617 - realignment charges Operating earnings, $ 49,894 $ 46,758 $ 54,494 $ 53,794 $ 51,872 adjusted (Non-GAAP) Operating earnings as a percent of revenue, 2.19% 2.01% 2.50% 2.46% 2.34% adjusted (Non-GAAP) Net income, as $ 26,098 $ 24,934 $ 24,597 $ 30,113 $ 29,360 reported (GAAP) Acquisition-related and exit and 1,521 1,237 6,588 375 - realignment charges, after-tax Net income, adjusted $ 27,619 $ 26,171 $ 31,185 $ 30,488 $ 29,360 (Non-GAAP) Net income per diluted common $ 0.41 $ 0.39 $ 0.39 $ 0.48 $ 0.46 share, as reported (GAAP) Acquisition-related and exit and 0.03 0.02 0.10 - - realignment charges Net income per diluted common $ 0.44 $ 0.41 $ 0.49 $ 0.48 $ 0.46 share, adjusted (Non-GAAP) Financing: Cash and cash $ 218,563 $ 97,888 $ 79,667 $ 224,937 $ 213,927 equivalents Total interest-bearing $ 216,414 $ 217,591 $ 216,924 $ 213,982 $ 214,184 debt Stock information: Cash dividends $ 0.24 $ 0.22 $ 0.22 $ 0.22 $ 0.22 per common share Stock price at $ 32.56 $ 28.51 $ 29.88 $ 30.63 $ 30.41 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 March 31, 2013 2012 % of % of consolidated consolidated Amount net revenue Amount net revenue Net revenue: Domestic $ 2,154,715 94.68 % $ 2,217,882 100.00 % International 120,994 5.32 N/A N/A Consolidated $ 2,275,709 100.00 % $ 2,217,882 100.00 % net revenue % of segment % of segment Operating earnings net revenue net revenue (loss): Domestic $ 52,907 2.46 % $ 51,872 2.34 % International (3,013 ) (2.49 ) % N/A N/A Acquisition-related and exit and (2,010 ) N/A - N/A realignment charges Consolidated operating $ 47,884 2.10 % $ 51,872 2.34 % earnings Depreciation and amortization: Domestic $ 9,082 $ 8,578 International 3,547 N/A Consolidated depreciation $ 12,629 $ 8,578 and amortization Capital expenditures: ^(1) Domestic $ 11,602 $ 8,376 International 3,175 N/A Consolidated capital $ 14,777 $ 8,376 expenditures March 31, December 31, 2013 2012 Total assets: Domestic $ 1,706,767 $ 1,723,699 International 395,592 386,114 Segment assets 2,102,359 2,109,813 Cash and cash 218,563 97,888 equivalents $ 2,320,922 $ 2,207,701 ^(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 March 31, 2013 2012 Numerator: Net income $ 26,098 $ 29,360 Less: income allocated to unvested (195 ) (234 ) restricted shares Net income attributable to common 25,903 29,126 shareholders - basic Add: undistributed income attributable to 58 96 unvested restricted shares - basic Less: undistributed income attributable to (58 ) (96 ) unvested restricted shares - diluted Net income attributable to common $ 25,903 $ 29,126 shareholders - diluted Denominator: Weighted average shares outstanding 62,687 62,802 — basic Dilutive shares - stock options 58 99 Weighted average shares outstanding 62,745 62,901 — diluted Net income per share attributable to common shareholders: Basic $ 0.41 $ 0.46 Diluted $ 0.41 $ 0.46 Contact: Owens & Minor, Inc. Truitt Allcott, 804-723-7555 Director, Investor & Media Relations email@example.com or Chuck Graves, 804-723-7556 Director, Finance & Investor Relations firstname.lastname@example.org
Owens & Minor Reports 1st Quarter 2013 Financial Results
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