Owens & Minor Releases 3rd Quarter 2015 Financial Results
- Consolidated quarterly revenue grew 3.6% vs. the prior year
-
Adjusted net income per diluted share was
$0.54 for the third quarter -
Year-to-date operating cash flow was
$206 million -
O&M reiterated 2015 guidance of adjusted annual EPS in a range of
$1.85 to$1.95
Consolidated operating earnings for the third quarter of 2015 were
"Our teams turned in a solid operating performance for the quarter, and
I am pleased with the commitment and dedication demonstrated throughout
our organization," said
2015 Year-to-Date Results
For the nine months ended
Consolidated operating earnings for the year-to-date period of 2015
improved
Asset Management
The balance of cash and cash equivalents was
Segment Results
Domestic segment revenues for the third quarter of 2015 were
For the third quarter of 2015, Domestic segment operating earnings
improved
The International segment contributed revenues of
The International segment reported operating earnings of
"We are pleased with the continued operational and financial improvement
in our International segment," said
2015 Outlook
The company continues to target adjusted net income per diluted share
for the year in a range of
The 2015 outlook is based on certain assumptions that are subject to the
risk factors discussed in the company's filings with the
Investor Events
-
Credit Suisse 2015 Healthcare Conference -
Phoenix ,November 10 th -
Jefferies Global Healthcare Conference -London ,November 18 th -
2015 Owens & Minor Investor Day -
New York ,December 4 th
2015 Investor Day
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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2015 | 2014 | |||||||
Net revenue | $ | 2,471,669 | $ | 2,386,126 | ||||
Cost of goods sold | 2,165,315 | 2,093,643 | ||||||
Gross margin | 306,354 | 292,483 | ||||||
Selling, general and administrative expenses | 231,847 | 231,377 | ||||||
Acquisition-related and exit and realignment charges | 6,134 | 13,957 | ||||||
Depreciation and amortization | 15,112 | 13,841 | ||||||
Other operating income, net | (311 | ) | (2,069 | ) | ||||
Operating earnings | 53,572 | 35,377 | ||||||
Interest expense, net | 6,744 | 4,304 | ||||||
Loss on early retirement of debt | — | 14,890 | ||||||
Income before income taxes | 46,828 | 16,183 | ||||||
Income tax provision | 18,652 | 9,028 | ||||||
Net income | $ | 28,176 | $ | 7,155 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.45 | $ | 0.11 | ||||
Diluted | $ | 0.45 | $ | 0.11 | ||||
Nine Months Ended |
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2015 | 2014 | |||||||
Net revenue | $ | 7,285,032 | $ | 6,948,365 | ||||
Cost of goods sold | 6,382,740 | 6,092,413 | ||||||
Gross margin | 902,292 | 855,952 | ||||||
Selling, general and administrative expenses | 697,170 | 682,825 | ||||||
Acquisition-related and exit and realignment charges | 21,757 | 24,813 | ||||||
Depreciation and amortization | 46,441 | 41,597 | ||||||
Other operating income, net | (5,484 | ) | (12,046 | ) | ||||
Operating earnings | 142,408 | 118,763 | ||||||
Interest expense, net | 20,305 | 10,893 | ||||||
Loss on early retirement of debt | — | 14,890 | ||||||
Income before income taxes | 122,103 | 92,980 | ||||||
Income tax provision | 50,761 | 40,464 | ||||||
Net income | $ | 71,342 | $ | 52,516 | ||||
Net income per common share: | ||||||||
Basic | $ | 1.14 | $ | 0.84 | ||||
Diluted | $ | 1.14 | $ | 0.84 | ||||
Condensed Consolidated Balance Sheets (unaudited) (in thousands) |
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Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 125,245 | $ | 56,772 | |||
Accounts and notes receivable, net | 640,653 | 626,192 | |||||
Merchandise inventories | 896,722 | 872,457 | |||||
Other current assets | 265,758 | 315,285 | |||||
Total current assets | 1,928,378 | 1,870,706 | |||||
Property and equipment, net | 214,561 | 232,979 | |||||
|
420,772 | 423,276 | |||||
Intangible assets, net | 98,084 | 108,593 | |||||
Other assets, net | 89,865 | 99,852 | |||||
Total assets | $ | 2,751,660 | $ | 2,735,406 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 690,134 | $ | 608,846 | |||
Accrued payroll and related liabilities | 38,834 | 31,507 | |||||
Deferred income taxes | 41,763 | 37,979 | |||||
Other accrued liabilities | 296,898 | 326,223 | |||||
Total current liabilities | 1,067,629 | 1,004,555 | |||||
Long-term debt, excluding current portion | 574,033 | 608,551 | |||||
Deferred income taxes | 61,037 | 63,901 | |||||
Other liabilities | 62,860 | 67,561 | |||||
Total liabilities | 1,765,559 | 1,744,568 | |||||
Total equity | 986,101 | 990,838 | |||||
Total liabilities and equity | $ | 2,751,660 | $ | 2,735,406 | |||
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
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Nine Months Ended |
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2015 | 2014 | |||||||
Operating activities: | ||||||||
Net income | $ | 71,342 | $ | 52,516 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 51,871 | 41,597 | ||||||
Loss on early retirement of debt | — | 14,890 | ||||||
Share-based compensation expense | 7,611 | 6,136 | ||||||
Provision for losses on accounts and notes receivable | (182 | ) | (356 | ) | ||||
Deferred income tax (benefit) expense | 3,643 | (7,387 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | (13,758 | ) | (21,456 | ) | ||||
Merchandise inventories | (25,339 | ) | (63,883 | ) | ||||
Accounts payable | 83,434 | 54,634 | ||||||
Net change in other assets and liabilities | 25,890 | 3,131 | ||||||
Other, net | 1,526 | 1,322 | ||||||
Cash provided by operating activities | 206,038 | 81,144 | ||||||
Investing activities: | ||||||||
Additions to property and equipment | (15,321 | ) | (36,169 | ) | ||||
Additions to computer software and intangible assets | (16,876 | ) | (17,988 | ) | ||||
Proceeds from sale of investment | — | 1,937 | ||||||
Proceeds from sale of property and equipment | 119 | 151 | ||||||
Cash used for investing activities | (32,078 | ) | (52,069 | ) | ||||
Financing activities: | ||||||||
Long-term debt borrowings | — | 547,693 | ||||||
Repayment of revolving credit facility | (33,700 | ) | — | |||||
Cash dividends paid | (47,780 | ) | (47,335 | ) | ||||
Repurchases of common stock | (15,821 | ) | (9,934 | ) | ||||
Excess tax benefits related to share-based compensation | 521 | 514 | ||||||
Proceeds from exercise of stock options | — | 1,180 | ||||||
Purchase of noncontrolling interest | — | (1,500 | ) | |||||
Debt issuance costs | — | (4,178 | ) | |||||
Other, net | (6,296 | ) | (5,671 | ) | ||||
Cash provided by (used for) financing activities | (103,076 | ) | 480,769 | |||||
Effect of exchange rate changes on cash and cash equivalents | (2,411 | ) | (1,602 | ) | ||||
Net increase in cash and cash equivalents | 68,473 | 508,242 | ||||||
Cash and cash equivalents at beginning of period | 56,772 | 101,905 | ||||||
Cash and cash equivalents at end of period | $ | 125,245 | $ | 610,147 | ||||
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 | $ | 2,368,008 | $ | 2,317,661 | $ | 2,285,635 | $ | 2,353,321 | $ | 2,262,081 | ||||||||||
International | 103,661 | 104,506 | 105,561 | 138,496 | 124,045 | |||||||||||||||
Net revenue | $ | 2,471,669 | $ | 2,422,167 | $ | 2,391,196 | $ | 2,491,817 | $ | 2,386,126 | ||||||||||
Gross margin | $ | 306,354 | $ | 298,337 | $ | 297,601 | $ | 314,015 | $ | 292,483 | ||||||||||
Gross margin as a percent of revenue | 12.39 | % | 12.32 | % | 12.45 | % | 12.60 | % | 12.26 | % | ||||||||||
SG&A expenses | $ | 231,847 | $ | 231,498 | $ | 233,825 | $ | 244,152 | $ | 231,377 | ||||||||||
SG&A expenses as a percent of revenue | 9.38 | % | 9.56 | % | 9.78 | % | 9.80 | % | 9.70 | % | ||||||||||
Operating earnings, as reported (GAAP) | $ | 53,572 | $ | 47,860 | $ | 40,975 | $ | 40,773 | $ | 35,377 | ||||||||||
Acquisition-related charges (1) | 1,335 | 1,786 | 2,605 | 7,394 | 4,565 | |||||||||||||||
Exit and realignment charges (2) | 4,799 | 3,921 | 7,311 | 10,594 | 9,392 | |||||||||||||||
Fair value adjustments related to purchase accounting (3) | — | — | — | (3,706 | ) | — | ||||||||||||||
Other (4) | — | — | — | 3,907 | — | |||||||||||||||
Operating earnings, adjusted (Non-GAAP) | $ | 59,706 | $ | 53,567 | $ | 50,891 | $ | 58,962 | $ | 49,334 | ||||||||||
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | 2.42 | % | 2.21 | % | 2.13 | % | 2.37 | % | 2.07 | % | ||||||||||
Net income, as reported (GAAP) | $ | 28,176 | $ | 24,226 | $ | 18,940 | $ | 13,987 | $ | 7,155 | ||||||||||
Acquisition-related charges, after-tax (1) | 1,099 | 1,349 | 2,257 | 6,211 | 3,543 | |||||||||||||||
Exit and realignment charges, after-tax (2) | 4,280 | 3,520 | 6,335 | 11,477 | 6,754 | |||||||||||||||
Fair value adjustments related to purchase accounting, after-tax (3) | — | — | — | (4,703 | ) | — | ||||||||||||||
Other, after-tax (4) | — | — | — | 3,907 | — | |||||||||||||||
Loss on early retirement of debt, after-tax (5) | — | — | — | — | 9,092 | |||||||||||||||
Net income, adjusted (Non-GAAP) | $ | 33,555 | $ | 29,095 | $ | 27,532 | $ | 30,879 | $ | 26,544 | ||||||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.45 | $ | 0.39 | $ | 0.30 | $ | 0.22 | $ | 0.11 | ||||||||||
Acquisition-related charges, after-tax (1) | 0.02 | 0.02 | 0.03 | 0.10 | 0.06 | |||||||||||||||
Exit and realignment charges, after-tax (2) | 0.07 | 0.05 | 0.11 | 0.18 | 0.11 | |||||||||||||||
Fair value adjustments related to purchase accounting, after-tax (3) | — | — | — | (0.07 | ) | — | ||||||||||||||
Other, after-tax (4) | — | — | — | 0.06 | — | |||||||||||||||
Loss on early retirement of debt, after tax (5) | — | — | — | — | 0.14 | |||||||||||||||
Net income per diluted common share, adjusted (Non-GAAP) | $ | 0.54 | $ | 0.46 | $ | 0.44 | $ | 0.49 | $ | 0.42 | ||||||||||
Financing: | ||||||||||||||||||||
Cash and cash equivalents | $ | 125,245 | $ | 200,969 | $ | 159,056 | $ | 56,772 | $ | 610,147 | ||||||||||
Total interest-bearing debt | $ | 578,512 | $ | 579,415 | $ | 579,505 | $ | 613,809 | $ | 766,283 | ||||||||||
Stock information: | ||||||||||||||||||||
Cash dividends per common share | $ | 0.2525 | $ | 0.2525 | $ | 0.2525 | $ | 0.25 | $ | 0.25 | ||||||||||
Stock price at quarter-end | $ | 31.94 | $ | 34.00 | $ | 33.84 | $ | 35.11 | $ | 32.74 | ||||||||||
Financial Statistics and
GAAP/Non-GAAP Reconciliations (unaudited)
(in thousands,
except per share data)
The following items in the current quarter have been excluded in our non-GAAP financial measures:
(1) Acquisition-related charges in the first three quarters
of 2015 consist primarily of costs to continue the integration of
Medical Action and
(2) Exit and realignment charges in 2015 and 2014 were
associated with optimizing our operations and include the consolidation
of distribution and logistics centers and closure of offsite warehouses
in
(3) The fourth quarter of 2014 included a gain of
(4) The fourth quarter of 2014 included a loss in other
operating income, net related to an accrual for the settlement amount of
a contract claim in the
(5) In 2014, we repaid our 2016 Notes and recorded a net loss
on the early retirement of
These charges have been tax effected in the preceding table by determining the income tax rate depending on the amount of charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.
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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2015 | 2014 | ||||||||||||
% of | % of | ||||||||||||
consolidated | consolidated | ||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||
Net revenue: | |||||||||||||
Domestic | $ | 2,368,008 | 95.81 | % | $ | 2,262,081 | 94.80 | % | |||||
International | 103,661 | 4.19 | % | 124,045 | 5.20 | % | |||||||
Consolidated net revenue | $ | 2,471,669 | 100.00 | % | $ | 2,386,126 | 100.00 | % | |||||
% of segment | % of segment | ||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||
Domestic | $ | 58,002 | 2.45 | % | $ | 50,797 | 2.25 | % | |||||
International | 1,704 | 1.64 | % | (1,463 | ) | (1.18 | )% | ||||||
Acquisition-related and exit and realignment charges (1) | (6,134 | ) |
N/A |
(13,957 | ) |
N/A |
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Consolidated operating earnings | $ | 53,572 | 2.17 | % | $ | 35,377 | 1.48 | % | |||||
Depreciation and amortization: | |||||||||||||
Domestic | $ | 10,197 | $ | 8,986 | |||||||||
International | 5,250 | 4,855 | |||||||||||
Consolidated depreciation and amortization | $ | 15,447 | $ | 13,841 | |||||||||
Capital expenditures: (2) | |||||||||||||
Domestic | $ | 2,137 | $ | 11,077 | |||||||||
International | 7,235 | 4,257 | |||||||||||
Consolidated capital expenditures | $ | 9,372 | $ | 15,334 | |||||||||
Summary Segment Information (unaudited) (in thousands) |
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Nine Months Ended |
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2015 | 2014 | ||||||||||||
% of | % of | ||||||||||||
consolidated | consolidated | ||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||
Net revenue: | |||||||||||||
Domestic | $ | 6,971,304 | 95.69 | % | $ | 6,598,531 | 94.97 | % | |||||
International | 313,728 | 4.31 | % | 349,834 | 5.03 | % | |||||||
Consolidated net revenue | $ | 7,285,032 | 100.00 | % | $ | 6,948,365 | 100.00 | % | |||||
% of segment | % of segment | ||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||
Domestic | $ | 160,904 | 2.31 | % | $ | 151,849 | 2.30 | % | |||||
International | 3,261 | 1.04 | % | (8,273 | ) | (2.36 | )% | ||||||
Acquisition-related and exit and realignment charges (1) | (21,757 | ) |
N/A |
(24,813 | ) |
N/A |
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Consolidated operating earnings | $ | 142,408 | 1.95 | % | $ | 118,763 | 1.71 | % | |||||
Depreciation and amortization: | |||||||||||||
Domestic | $ | 31,439 | $ | 26,772 | |||||||||
International | 15,958 | 14,825 | |||||||||||
Consolidated depreciation and amortization | $ | 47,397 | $ | 41,597 | |||||||||
Capital expenditures: (2) | |||||||||||||
Domestic | $ | 14,172 | $ | 40,110 | |||||||||
International | 18,025 | 14,047 | |||||||||||
Consolidated capital expenditures | $ | 32,197 | $ | 54,157 | |||||||||
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Total assets: | |||||||||||||
Domestic | $ | 2,135,572 | $ | 2,139,972 | |||||||||
International | 490,843 | 538,662 | |||||||||||
Segment assets | 2,626,415 | 2,678,634 | |||||||||||
Cash and cash equivalents | 125,245 | 56,772 | |||||||||||
Consolidated total assets | $ | 2,751,660 | $ | 2,735,406 | |||||||||
(1) The three and nine months ended |
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(2) Represents additions to property and equipment and additions to computer software and separately acquired identifiable intangible assets. | |||||||||||||
Net Income Per Common Share (unaudited) (in thousands, except per share data) |
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Three Months Ended |
Nine Months Ended |
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income | $ | 28,176 | $ | 7,155 | $ | 71,342 | $ | 52,516 | |||||||||
Less: income allocated to unvested restricted shares | (262 | ) | (150 | ) | (620 | ) | (453 | ) | |||||||||
Net income attributable to common shareholders - basic | 27,914 | 7,005 | 70,722 | 52,063 | |||||||||||||
Add: undistributed income attributable to unvested restricted shares -basic | 67 | — | 129 | 26 | |||||||||||||
Less: undistributed income attributable to unvested restricted shares -diluted | (67 | ) | — | (129 | ) | (26 | ) | ||||||||||
Net income attributable to common shareholders - diluted | $ | 27,914 | $ | 7,005 | $ | 70,722 | $ | 52,063 | |||||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding — basic | 61,998 | 62,175 | 62,204 | 62,238 | |||||||||||||
Dilutive shares - stock options | — | 4 | 1 | 7 | |||||||||||||
Weighted average shares outstanding — diluted | 61,998 | 62,179 | 62,205 | 62,245 | |||||||||||||
Net income per share attributable to common shareholders: | |||||||||||||||||
Basic | $ | 0.45 | $ | 0.11 | $ | 1.14 | $ | 0.84 | |||||||||
Diluted | $ | 0.45 | $ | 0.11 | $ | 1.14 | $ | 0.84 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20151027007014/en/
Investor &
Media Relations
804-723-7555
truitt.allcott@owens-minor.com
or
Finance & Investor Relations
804-723-7556
chuck.graves@owens-minor.com
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