Owens & Minor Releases 2nd Quarter 2012 Financial Results; Company Plans to Acquire European Healthcare 3PL Business
"This quarter's results highlight many of our traditional areas of
strength, such as strong expense and asset management," said Craig R.
Smith, president & chief executive officer of
For the second quarter of 2012, operating earnings were
Year-to-Date Results
For the six months ended
Asset Management
The balance of cash and cash equivalents was
Owens & Minor Plans to Acquire the
The acquisition is expected to close in the third quarter of 2012. While the acquisition will be dilutive to Owens & Minor's earnings per share in 2012, partially as a result of expenses associated with the transaction, the company believes that it will be neutral to 2013 earnings per share and accretive thereafter.
"The intended acquisition of Movianto provides
2012 Outlook
The company will provide an update of its 2012 outlook during the
management conference call scheduled for
Highlights
-
Owens & Minor has signed agreements, effectiveJuly 20, 2012 , to consolidate its delivery fleet with a single vendor,Penske Truck Leasing and Penske Logistics. These seven-year,$68 million lease and technology services agreements are expected to provide substantial net savings over the term of the arrangements. Recent advances in technologies for trucks, remote communications, and on-board monitoring are expected to increase cost savings and leverage. -
Effective
June 5, 2012 ,Owens & Minor entered into a new, five-year,$350 million revolving credit agreement. Under the new credit facility,Owens & Minor has the option to request two one-year extensions, as well as an increase in aggregate commitments by up to$150 million .
-
In June, the Premier
healthcare alliance recognized
Owens & Minor with the following awards:-
The Pinnacle Award was given to
Owens & Minor for the fourth consecutive year; the award honors suppliers that "support attainment of mutual goals, drive contract utilization and are committed to performance improvement." -
The Premier Polaris Award was awarded
solely to
Owens & Minor this year; this is the fourth consecutive year thatOwens & Minor has won this distinction. The Polaris Award is chosen by the Premier members and recognizes success in aligning contract performance with customer service expectations and for "delivering high relationship value and excellent customer service to member hospitals." -
Honorable Mention for the Premier Supplier
Diversity Award was awarded to
Owens & Minor for the second year in a row.
-
The Pinnacle Award was given to
Investors Conference Call & Supplemental Material
Conference Call:
Information on 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
|
||||||
Condensed Consolidated Statements of Income (unaudited) | ||||||
(in thousands, except per share data) | ||||||
Three Months Ended June 30, | ||||||
2012 | 2011 | |||||
Net revenue | $ | 2,185,444 | $ | 2,131,448 | ||
Cost of goods sold | 1,974,015 | 1,915,382 | ||||
Gross margin | 211,429 | 216,066 | ||||
Selling, general and administrative expenses | 150,288 | 156,321 | ||||
Depreciation and amortization | 8,515 | 8,249 | ||||
Other operating (income) loss, net | (551) | 457 | ||||
Operating earnings | 53,177 | 51,039 | ||||
Interest expense, net | 3,487 | 3,020 | ||||
Income before income taxes | 49,690 | 48,019 | ||||
Income tax provision | 19,577 | 18,855 | ||||
Net income | $ | 30,113 | $ | 29,164 | ||
Net income per common share: | ||||||
Basic | $ | 0.48 | $ | 0.46 | ||
Diluted | $ | 0.48 | $ | 0.46 | ||
Weighted average shares - basic | 62,815 | 63,007 | ||||
Weighted average shares - diluted | 62,895 | 63,198 | ||||
Six Months Ended June 30, | ||||||
2012 | 2011 | |||||
Net revenue | $ | 4,403,326 | $ | 4,255,263 | ||
Cost of goods sold | 3,977,569 | 3,828,422 | ||||
Gross margin | 425,757 | 426,841 | ||||
Selling, general and administrative expenses | 305,860 | 307,294 | ||||
Depreciation and amortization | 17,093 | 17,016 | ||||
Other operating (income) loss, net | (2,245) | 495 | ||||
Operating earnings | 105,049 | 102,036 | ||||
Interest expense, net | 6,909 | 6,737 | ||||
Income before income taxes | 98,140 | 95,299 | ||||
Income tax provision | 38,667 | 37,395 | ||||
Net income | $ | 59,473 | $ | 57,904 | ||
Net income per common share: | ||||||
Basic | $ | 0.94 | $ | 0.91 | ||
Diluted | $ | 0.94 | $ | 0.91 | ||
Weighted average shares - basic | 62,825 | 62,808 | ||||
Weighted average shares - diluted | 62,914 | 63,012 | ||||
|
|||||
Condensed Consolidated Balance Sheets (unaudited) | |||||
(in thousands) | |||||
|
|
||||
2012 | 2011 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 224,937 | $ | 135,938 | |
Accounts and notes receivable, net | 485,249 | 506,758 | |||
Merchandise inventories | 748,847 | 806,366 | |||
Other current assets | 72,346 | 76,763 | |||
Total current assets | 1,531,379 | 1,525,825 | |||
Property and equipment, net | 103,889 | 108,061 | |||
Goodwill, net | 248,498 | 248,498 | |||
Intangible assets, net | 21,018 | 22,142 | |||
Other assets, net | 50,640 | 42,289 | |||
Total assets | $ | 1,955,424 | $ | 1,946,815 | |
Liabilities and equity | |||||
Current liabilities | |||||
Accounts payable | $ | 559,718 | $ | 575,793 | |
Accrued payroll and related liabilities | 17,738 | 20,668 | |||
Deferred income taxes | 37,879 | 42,296 | |||
Other accrued liabilities | 92,462 | 93,608 | |||
Total current liabilities | 707,797 | 732,365 | |||
Long-term debt, excluding current portion | 212,032 | 212,681 | |||
Deferred income taxes | 25,467 | 21,894 | |||
Other liabilities | 60,165 | 60,658 | |||
Total liabilities | 1,005,461 | 1,027,598 | |||
Total equity | 949,963 | 919,217 | |||
Total liabilities and equity | $ | 1,955,424 | $ | 1,946,815 | |
|
|||||
Condensed Consolidated Statements of Cash Flows (unaudited) | |||||
(in thousands) | |||||
Six Months Ended |
|||||
2012 | 2011 | ||||
Operating activities: | |||||
Net income | $ | 59,473 | $ | 57,904 | |
Adjustments to reconcile net income to cash provided by | |||||
operating activities of continuing operations: | |||||
Depreciation and amortization | 17,093 | 17,016 | |||
Provision for LIFO reserve | 5,223 | 11,265 | |||
Share-based compensation expense | 4,126 | 3,581 | |||
Provision for losses on accounts and notes receivable | 270 | 758 | |||
Pension contributions | - | (543) | |||
Deferred income tax benefit | (1,146) | (674) | |||
Changes in operating assets and liabilities: | |||||
Accounts and notes receivable | 21,239 | (33,606) | |||
Merchandise inventories | 52,296 | (42,762) | |||
Accounts payable | (16,075) | 50,033 | |||
Net change in other assets and liabilities | 684 | (23,321) | |||
Other, net | (404) | 114 | |||
Cash provided by operating activities of continuing operations | 142,779 | 39,765 | |||
Investing activities: | |||||
Additions to property and equipment | (5,460) | (8,175) | |||
Additions to computer software and intangible assets | (12,697) | (5,573) | |||
Proceeds from the sale of property and equipment | 115 | 44 | |||
Cash used for investing activities of continuing operations | (18,042) | (13,704) | |||
Financing activities: | |||||
Cash dividends paid | (27,956) | (25,496) | |||
Repurchases of common stock | (7,500) | (5,086) | |||
Financing costs paid | (1,303) | - | |||
Excess tax benefits related to share-based compensation | 1,160 | 1,761 | |||
Proceeds from exercise of stock options | 3,761 | 7,394 | |||
Other, net | (3,900) | (4,514) | |||
Cash used for financing activities of continuing operations | (35,738) | (25,941) | |||
Discontinued operations: | |||||
Operating cash flows | - | (139) | |||
Net cash used for discontinued operations | - | (139) | |||
Net increase in cash and cash equivalents | 88,999 | (19) | |||
Cash and cash equivalents at beginning of period | 135,938 | 159,213 | |||
Cash and cash equivalents at end of period | $ | 224,937 | $ | 159,194 | |
|
|||||||||||||||||||||||
Financial Statistics (unaudited) | |||||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||||
(in thousands, except ratios and per share data) |
|
|
|
|
|
||||||||||||||||||
Operating results: | |||||||||||||||||||||||
Net revenue | $ | 2,185,444 | $ | 2,217,882 | $ | 2,195,890 | $ | 2,176,759 | $ | 2,131,448 | |||||||||||||
Gross margin | $ | 211,429 | $ | 214,328 | $ | 214,014 | $ | 216,682 | $ | 216,066 | |||||||||||||
Gross margin as a percent of revenue | 9.67% | 9.66% | 9.75% | 9.95% | 10.14% | ||||||||||||||||||
SG&A expenses | $ | 150,288 | $ | 155,572 | $ | 150,538 | $ | 152,825 | $ | 156,321 | |||||||||||||
SG&A expenses as a percent of revenue | 6.88% | 7.01% | 6.86% | 7.02% | 7.33% | ||||||||||||||||||
Operating earnings(2) | $ | 53,177 | $ | 51,872 | $ | 43,014 | $ | 58,465 | $ | 51,039 | |||||||||||||
Operating earnings as a percent of revenue(2) | 2.43% | 2.34% | 1.96% | 2.69% | 2.39% | ||||||||||||||||||
Net income(2) | $ | 30,113 | $ | 29,360 | $ | 23,942 | $ | 33,352 | $ | 29,164 | |||||||||||||
Net income per common share - basic(2) | $ | 0.48 | $ | 0.46 | $ | 0.38 | $ | 0.53 | $ | 0.46 | |||||||||||||
Net income per common share - diluted(2) | $ | 0.48 | $ | 0.46 | $ | 0.38 | $ | 0.53 | $ | 0.46 | |||||||||||||
Accounts receivable: | |||||||||||||||||||||||
Accounts and notes receivable, net | $ | 485,249 | $ | 499,015 | $ | 506,758 | $ | 507,152 | $ | 504,509 | |||||||||||||
Days sales outstanding(1) | 19.5 | 19.9 | 20.7 | 20.6 | 20.6 | ||||||||||||||||||
Inventory: | |||||||||||||||||||||||
Merchandise inventories | $ | 748,847 | $ | 724,206 | $ | 806,366 | $ | 760,992 | $ | 751,613 | |||||||||||||
Average inventory turnover(1) | 10.8 | 10.5 | 10.0 | 10.3 | 10.4 | ||||||||||||||||||
Financing: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 224,937 | $ | 213,927 | $ | 135,938 | $ | 196,852 | $ | 159,194 | |||||||||||||
Total interest-bearing debt | $ | 213,982 | $ | 214,184 | $ | 214,556 | $ | 215,037 | $ | 214,020 | |||||||||||||
Stock information: | |||||||||||||||||||||||
Cash dividends per common share | $ | 0.22 | $ | 0.22 | $ | 0.20 | $ | 0.20 | $ | 0.20 | |||||||||||||
Stock price at quarter-end | $ | 30.63 | $ | 30.41 | $ | 27.79 | $ | 28.48 | $ | 34.49 | |||||||||||||
(1) Days sales outstanding (DSO) and average inventory turnover are based on three-months' sales. | |||||||||||||||||||||||
(2) We incurred charges of
taxes, or |
Director,
Investor & Media Relations
or
Director,
Finance & Investor Relations
Source:
News Provided by Acquire Media