Owens & Minor Releases 2nd Quarter 2014 Financial Results
-
Consolidated quarterly revenue was
$2.31 billion , an increase of 3.1% -
Adjusted net income per diluted share was
$0.40 for the quarter -
Owens & Minor announced plans to acquireMedical Action Industries Inc. during 2Q 2014
For the quarter ended
Consolidated operating earnings for the second quarter of 2014 were
"While second quarter results were impacted by many of the same trends
that we saw earlier in the year, we are confident that the deliberate
actions we are taking to on-board new customers and realign our
platforms and teams in the U.S. and
Acquisition Update
During the second quarter,
The acquisition of Medical Action is expected to be accretive to Owens &
Minor's adjusted net income (non-GAAP) in 2015, including anticipated
partial synergies in the first full year of ownership.
"This strategic acquisition, a highly complementary business, opens up a
new growth area for our company by allowing us to produce custom
procedure trays and minor procedure kits for our provider and
manufacturer customers," said
2014 Year-to-Date Results
For the six months ended
Consolidated operating earnings for the year-to-date period of 2014 were
Asset Management
The balance of cash and cash equivalents was
Segment Results
Domestic segment revenues for the second quarter of 2014 were
For the second quarter of 2014, Domestic segment operating earnings were
The International segment contributed revenue of
2014 Outlook
Based on operating and financial results for the first half of 2014 and expectations for the remainder of the year, the company revised its financial guidance for the year as follows:
For 2014, the company now expects revenue growth to exceed 2% and
adjusted net income per diluted share to be within a range of
The 2014 outlook is based on certain assumptions that are subject to the
risk factors discussed in the company's filings with the
Investor Events
-
R.W. Baird 2014 Healthcare Conference,New York -September 3, 2014 -
2014
Morgan Stanley Global Healthcare Conference ,New York -September 8-10, 2014 -
2014
Credit Suisse Healthcare Conference ,Phoenix -November 11-13 , 2014
Investors Conference Call & Supplemental Material
Conference Call:
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 and realignment charges, and their most directly comparable GAAP financial measures.
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
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.
Consolidated Statements of Income (unaudited) (in thousands, except per share data) |
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Three Months Ended |
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2014 | 2013 | |||||||
Net revenue | $ | 2,305,858 | $ | 2,236,077 | ||||
Cost of goods sold | 2,023,586 | 1,962,646 | ||||||
Gross margin | 282,272 | 273,431 | ||||||
Selling, general and administrative expenses | 225,838 | 212,548 | ||||||
Acquisition-related and exit and realignment charges | 7,593 | 638 | ||||||
Depreciation and amortization | 13,892 | 12,276 | ||||||
Other operating income, net | (2,152 | ) | (2,081 | ) | ||||
Operating earnings | 37,101 | 50,050 | ||||||
Interest expense, net | 3,342 | 3,248 | ||||||
Income before income taxes | 33,759 | 46,802 | ||||||
Income tax provision | 13,883 | 17,930 | ||||||
Net income | $ | 19,876 | $ | 28,872 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.32 | $ | 0.46 | ||||
Diluted | $ | 0.32 | $ | 0.46 |
Six Months Ended |
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2014 | 2013 | |||||||
Net revenue | $ | 4,562,239 | $ | 4,482,461 | ||||
Cost of goods sold | 3,998,771 | 3,929,979 | ||||||
Gross margin | 563,468 | 552,482 | ||||||
Selling, general and administrative expenses | 451,448 | 430,269 | ||||||
Acquisition-related and exit and realignment charges | 10,855 | 2,648 | ||||||
Depreciation and amortization | 27,756 | 24,905 | ||||||
Other operating income, net | (9,978 | ) | (3,274 | ) | ||||
Operating earnings | 83,387 | 97,934 | ||||||
Interest expense, net | 6,589 | 6,446 | ||||||
Income before income taxes | 76,798 | 91,488 | ||||||
Income tax provision | 31,436 | 36,518 | ||||||
Net income | $ | 45,362 | $ | 54,970 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.72 | $ | 0.87 | ||||
Diluted | $ | 0.72 | $ | 0.87 |
Condensed Consolidated Balance Sheets (unaudited) (in thousands) |
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Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 92,027 | $ | 101,905 | |||
Accounts and notes receivable, net | 545,179 | 572,854 | |||||
Merchandise inventories | 820,882 | 771,663 | |||||
Other current assets | 287,844 | 279,510 | |||||
Total current assets | 1,745,932 | 1,725,932 | |||||
Property and equipment, net | 207,140 | 191,961 | |||||
Goodwill, net | 275,975 | 275,439 | |||||
Intangible assets, net | 38,679 | 40,406 | |||||
Other assets, net | 96,085 | 90,304 | |||||
Total assets | $ | 2,363,811 | $ | 2,324,042 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 698,648 | $ | 643,872 | |||
Accrued payroll and related liabilities | 29,691 | 23,296 | |||||
Deferred income taxes | 38,951 | 41,613 | |||||
Other current liabilities | 251,015 | 280,398 | |||||
Total current liabilities | 1,018,305 | 989,179 | |||||
Long-term debt, excluding current portion | 219,098 | 213,815 | |||||
Deferred income taxes | 42,080 | 43,727 | |||||
Other liabilities | 52,943 | 52,278 | |||||
Total liabilities | 1,332,426 | 1,298,999 | |||||
Total equity | 1,031,385 | 1,025,043 | |||||
Total liabilities and equity | $ | 2,363,811 | $ | 2,324,042 |
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
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Six Months Ended |
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2014 | 2013 | |||||||
Operating activities: | ||||||||
Net income | $ | 45,362 | $ | 54,970 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 27,756 | 24,905 | ||||||
Share-based compensation expense | 4,190 | 3,449 | ||||||
Provision for losses on accounts and notes receivable | 334 | 315 | ||||||
Deferred income tax (benefit) expense | (5,151 | ) | 5,777 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | 28,477 | 1,789 | ||||||
Merchandise inventories | (48,575 | ) | (31,176 | ) | ||||
Accounts payable | 54,922 | 191,406 | ||||||
Net change in other assets and liabilities | (32,765 | ) | (69,462 | ) | ||||
Other, net | (1,078 | ) | (2,794 | ) | ||||
Cash provided by operating activities | 73,472 | 179,179 | ||||||
Investing activities: | ||||||||
Additions to property and equipment | (25,657 | ) | (16,221 | ) | ||||
Additions to computer software and intangible assets | (13,166 | ) | (14,826 | ) | ||||
Proceeds from sale of investment | 1,937 | — | ||||||
Proceeds from sale of property and equipment | 45 | 68 | ||||||
Cash used for investing activities | (36,841 | ) | (30,979 | ) | ||||
Financing activities: | ||||||||
Cash dividends paid | (31,564 | ) | (30,411 | ) | ||||
Repurchases of common stock | (9,448 | ) | (8,297 | ) | ||||
Excess tax benefits related to share-based compensation | 444 | 550 | ||||||
Proceeds from exercise of stock options | 1,180 | 4,195 | ||||||
Purchase of noncontrolling interest | (1,500 | ) | — | |||||
Other, net | (4,441 | ) | (5,167 | ) | ||||
Cash used for financing activities | (45,329 | ) | (39,130 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (1,180 | ) | 868 | |||||
Net increase (decrease) in cash and cash equivalents | (9,878 | ) | 109,938 | |||||
Cash and cash equivalents at beginning of period | 101,905 | 97,888 | ||||||
Cash and cash equivalents at end of period | $ | 92,027 | $ | 207,826 |
Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited) (in thousands, except per share data) |
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Quarter Ended | ||||||||||||||||||||
(in thousands, except ratios and per share data) |
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Consolidated operating results: | ||||||||||||||||||||
Domestic | $ | 2,187,535 | $ | 2,148,915 | $ | 2,213,949 | $ | 2,175,663 | $ | 2,143,691 | ||||||||||
International | 118,323 | 107,465 | 104,575 | 94,884 | 92,386 | |||||||||||||||
Net revenue | $ | 2,305,858 | $ | 2,256,380 | $ | 2,318,524 | $ | 2,270,547 | $ | 2,236,077 | ||||||||||
Gross margin | $ | 282,272 | $ | 281,195 | $ | 291,263 | $ | 273,329 | $ | 273,431 | ||||||||||
Gross margin as a percent of revenue | 12.24 | % | 12.46 | % | 12.56 | % | 12.04 | % | 12.23 | % | ||||||||||
SG&A expenses | $ | 225,838 | $ | 225,610 | $ | 222,043 | $ | 211,344 | $ | 212,548 | ||||||||||
SG&A expenses as a percent of revenue | 9.79 | % | 10.00 | % | 9.58 | % | 9.31 | % | 9.51 | % | ||||||||||
Operating earnings, as reported (GAAP) | $ | 37,101 | $ | 46,284 | $ | 50,934 | $ | 49,215 | $ | 50,050 | ||||||||||
Acquisition-related and exit and realignment charges | 7,593 | 3,262 | 7,049 | 2,747 | 638 | |||||||||||||||
Operating earnings, adjusted (Non-GAAP) | $ | 44,694 | $ | 49,546 | $ | 57,983 | $ | 51,962 | $ | 50,688 | ||||||||||
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | 1.94 | % | 2.20 | % | 2.50 | % | 2.29 | % | 2.27 | % | ||||||||||
Net income, as reported (GAAP) | $ | 19,876 | $ | 25,485 | $ | 27,942 | $ | 27,970 | $ | 28,872 | ||||||||||
Acquisition-related and exit and realignment charges, after-tax | 5,095 | 2,222 | 5,024 | 1,899 | 412 | |||||||||||||||
Net income, adjusted (Non-GAAP) | $ | 24,971 | $ | 27,707 | $ | 32,966 | $ | 29,869 | $ | 29,284 | ||||||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.32 | $ | 0.41 | $ | 0.44 | $ | 0.44 | $ | 0.46 | ||||||||||
Acquisition-related and exit and realignment charges | 0.08 | 0.03 | 0.08 | 0.03 | — | |||||||||||||||
Net income per diluted common share, adjusted (Non-GAAP) | $ | 0.40 | $ | 0.44 | $ | 0.52 | $ | 0.47 | $ | 0.46 | ||||||||||
Financing: | ||||||||||||||||||||
Cash and cash equivalents | $ | 92,027 | $ | 182,373 | $ | 101,905 | $ | 153,789 | $ | 207,826 | ||||||||||
Total interest-bearing debt | $ | 221,496 | $ | 217,261 | $ | 216,243 | $ | 216,850 | $ | 216,994 | ||||||||||
Stock information: | ||||||||||||||||||||
Cash dividends per common share | $ | 0.25 | $ | 0.25 | $ | 0.24 | $ | 0.24 | $ | 0.24 | ||||||||||
Stock price at quarter-end | $ | 33.98 | $ | 35.03 | $ | 36.56 | $ | 34.59 | $ | 33.83 |
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
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.
Summary Segment Information (unaudited) (in thousands) |
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Three Months Ended |
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2014 | 2013 | ||||||||||||
% of | % of | ||||||||||||
consolidated | consolidated | ||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||
Net revenue: | |||||||||||||
Domestic | $ | 2,187,535 | 94.87 | % | $ | 2,143,691 | 95.87 | % | |||||
International | 118,323 | 5.13 | % | 92,386 | 4.13 | % | |||||||
Consolidated net revenue | $ | 2,305,858 | 100.00 | % | $ | 2,236,077 | 100.00 | % | |||||
% of segment | % of segment | ||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||
Domestic | $ | 48,317 | 2.21 | % | $ | 51,245 | 2.39 | % | |||||
International | (3,623 | ) | (3.06 |
)% |
(557 | ) | (0.60 | )% | |||||
Acquisition-related and exit and realignment charges | (7,593 | ) | N/A | (638 | ) | N/A | |||||||
Consolidated operating earnings | $ | 37,101 | 1.61 | % | $ | 50,050 | 2.24 | % | |||||
Depreciation and amortization: | |||||||||||||
Domestic | $ | 8,812 | $ | 8,887 | |||||||||
International | 5,080 | 3,389 | |||||||||||
Consolidated depreciation and amortization | $ | 13,892 | $ | 12,276 | |||||||||
Capital expenditures: (1) | |||||||||||||
Domestic | $ | 18,858 | $ | 12,872 | |||||||||
International | 5,737 | 3,398 | |||||||||||
Consolidated capital expenditures | $ | 24,595 | $ | 16,270 | |||||||||
(1) Represents additions to property and equipment and additions to computer software and separately acquired intangible assets. |
Summary Segment Information (unaudited) (in thousands) |
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Six Months Ended |
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2014 | 2013 | ||||||||||||
% of | % of | ||||||||||||
consolidated | consolidated | ||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||
Net revenue: | |||||||||||||
Domestic | $ | 4,336,451 | 95.05 | % | $ | 4,298,406 | 95.89 | % | |||||
International | 225,788 | 4.95 | % | 184,055 | 4.11 | % | |||||||
Consolidated net revenue | $ | 4,562,239 | 100.00 | % | $ | 4,482,461 | 100.00 | % | |||||
% of segment | % of segment | ||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||
Domestic | $ | 101,053 | 2.33 | % | $ | 104,151 | 2.42 | % | |||||
International | (6,811 | ) | (3.02 |
)% |
(3,569 | ) | (1.94 | )% | |||||
Acquisition-related and exit and realignment charges | (10,855 | ) | N/A | (2,648 | ) | N/A | |||||||
Consolidated operating earnings | $ | 83,387 | 1.83 | % | $ | 97,934 | 2.18 | % | |||||
Depreciation and amortization: | |||||||||||||
Domestic | $ | 17,787 | $ | 17,969 | |||||||||
International | 9,969 | 6,936 | |||||||||||
Consolidated depreciation and amortization | $ | 27,756 | $ | 24,905 | |||||||||
Capital expenditures: (1) | |||||||||||||
Domestic | $ | 29,033 | $ | 24,474 | |||||||||
International | 9,790 | 6,573 | |||||||||||
Consolidated capital expenditures | $ | 38,823 | $ | 31,047 | |||||||||
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Total assets: | |||||||||||||
Domestic | $ | 1,787,026 | $ | 1,747,572 | |||||||||
International | 484,758 | 474,565 | |||||||||||
Segment assets | 2,271,784 | 2,222,137 | |||||||||||
Cash and cash equivalents | 92,027 | 101,905 | |||||||||||
Consolidated total assets | $ | 2,363,811 | $ | 2,324,042 |
Net Income Per Common Share (unaudited) (in thousands, except per share data) |
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Three Months Ended |
Six Months Ended |
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2014 | 2013 | 2014 | 2013 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 19,876 | $ | 28,872 | $ | 45,362 | $ | 54,970 | |||||||
Less: income allocated to unvested restricted shares | (159 | ) | (156 | ) | (345 | ) | (351 | ) | |||||||
Net income attributable to common shareholders - basic | 19,717 | 28,716 | 45,017 | 54,619 | |||||||||||
Add: undistributed income attributable to unvested restricted shares -basic | 19 | 64 | 68 | 122 | |||||||||||
Less: undistributed income attributable to unvested restricted shares -diluted | (19 | ) | (64 | ) | (68 | ) | (122 | ) | |||||||
Net income attributable to common shareholders - diluted | $ | 19,717 | $ | 28,716 | $ | 45,017 | $ | 54,619 | |||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding — basic | 62,311 | 62,707 | 62,271 | 62,695 | |||||||||||
Dilutive shares - stock options | 5 | 45 | 9 | 51 | |||||||||||
Weighted average shares outstanding — diluted | 62,316 | 62,752 | 62,280 | 62,746 | |||||||||||
Net income per share attributable to common shareholders: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.46 | $ | 0.72 | $ | 0.87 | |||||||
Diluted | $ | 0.32 | $ | 0.46 | $ | 0.72 | $ | 0.87 |
truitt.allcott@owens-minor.com
or
chuck.graves@owens-minor.com
Source:
News Provided by Acquire Media