Owens & Minor Releases 3rd Quarter 2016 Financial Results
-
Consolidated quarterly revenues were
$2.42 billion -
Quarterly operating earnings were
$53.6 million , while adjusted operating earnings (non-GAAP) were$56.3 million for the quarter -
Quarterly diluted EPS was
$0.48 , while adjusted quarterly diluted EPS (non-GAAP) was$0.51
Consolidated operating earnings for the third quarter of 2016 were
"I'm pleased with our execution focus. Our teams achieved solid results
for the quarter and successfully managed through the exit of a large
customer," said
2016 Year-to-Date Results
For the nine months ended
Consolidated operating earnings for the first nine months of 2016 were
Asset Management
The balance of cash and cash equivalents was
Segment Results
Domestic segment revenues for the third quarter of 2016 were
The International segment contributed revenues of
Clinical & Procedural Solutions (CPS) revenues for the third quarter of
2016 were
"With increasing customer cost pressures and competitive dynamics in
healthcare, we anticipate that we will experience increased margin
pressures in the fourth quarter and next year," said
2016 Outlook
The company affirmed its financial guidance for 2016 of adjusted
earnings per diluted share in the range of
Investor Events
-
Jefferies London Healthcare Conference -London ,November 17, 2016 -
35th Annual
J.P. Morgan Healthcare Conference -San Francisco ,January 9-12, 2017 -
Owens & Minor Investor Day -
New York ,February 2017 - date and details TBA
"Looking ahead, we intend to host our annual investor day in
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
This release is intended to be disclosure through methods reasonably
designed to provide broad, non-exclusionary distribution to the public
in compliance with the
Consolidated Statements of Income (unaudited) (in thousands, except per share data)
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Three Months Ended |
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2016 | 2015 | |||||||||||
Net revenue | $ | 2,415,601 | $ | 2,471,669 | ||||||||
Cost of goods sold | 2,119,326 | 2,165,315 | ||||||||||
Gross margin | 296,275 | 306,354 | ||||||||||
Distribution, selling and administrative expenses | 241,305 | 246,959 | ||||||||||
Acquisition-related and exit and realignment charges | 2,739 | 6,134 | ||||||||||
Other operating income, net | (1,337 | ) | (311 | ) | ||||||||
Operating earnings | 53,568 | 53,572 | ||||||||||
Interest expense, net | 6,770 | 6,744 | ||||||||||
Income before income taxes | 46,798 | 46,828 | ||||||||||
Income tax provision | 16,967 | 18,652 | ||||||||||
Net income | $ | 29,831 | $ | 28,176 | ||||||||
Net income per common share: | ||||||||||||
Basic | $ | 0.48 | $ | 0.45 | ||||||||
Diluted | $ | 0.48 | $ | 0.45 | ||||||||
Nine Months Ended |
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2016 | 2015 | |||||||||||
Net revenue | $ | 7,355,069 | $ | 7,285,032 | ||||||||
Cost of goods sold | 6,462,739 | 6,382,740 | ||||||||||
Gross margin | 892,330 | 902,292 | ||||||||||
Distribution, selling and administrative expenses | 726,944 | 743,611 | ||||||||||
Acquisition-related and exit and realignment charges | 19,974 | 21,757 | ||||||||||
Other operating income, net | (5,179 | ) | (5,484 | ) | ||||||||
Operating earnings | 150,591 | 142,408 | ||||||||||
Interest expense, net | 20,324 | 20,305 | ||||||||||
Income before income taxes | 130,267 | 122,103 | ||||||||||
Income tax provision | 48,585 | 50,761 | ||||||||||
Net income | $ | 81,682 | $ | 71,342 | ||||||||
Net income per common share: | ||||||||||||
Basic | $ | 1.32 | $ | 1.14 | ||||||||
Diluted | $ | 1.32 | $ | 1.14 | ||||||||
Condensed Consolidated Balance Sheets (unaudited) (in thousands) |
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Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 213,096 | $ | 161,020 | |||||||
Accounts and notes receivable, net | 579,031 | 587,935 | |||||||||
Merchandise inventories | 944,897 | 940,775 | |||||||||
Other current assets | 283,753 | 284,970 | |||||||||
Total current assets | 2,020,777 | 1,974,700 | |||||||||
Property and equipment, net | 198,780 | 208,930 | |||||||||
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418,095 | 419,619 | |||||||||
Intangible assets, net | 86,982 | 95,250 | |||||||||
Other assets, net | 69,998 | 75,277 | |||||||||
Total assets | $ | 2,794,632 | $ | 2,773,776 | |||||||
Liabilities and equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 768,570 | $ | 710,609 | |||||||
Accrued payroll and related liabilities | 41,424 | 45,907 | |||||||||
Other current liabilities | 283,831 | 307,073 | |||||||||
Total current liabilities | 1,093,825 | 1,063,589 | |||||||||
Long-term debt, excluding current portion | 566,474 | 568,495 | |||||||||
Deferred income taxes | 83,553 | 86,326 | |||||||||
Other liabilities | 64,097 | 62,776 | |||||||||
Total liabilities | 1,807,949 | 1,781,186 | |||||||||
Total equity | 986,683 | 992,590 | |||||||||
Total liabilities and equity | $ | 2,794,632 | $ | 2,773,776 | |||||||
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
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Nine Months Ended |
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2016 | 2015 | |||||||||||
Operating activities: | ||||||||||||
Net income | $ | 81,682 | $ | 71,342 | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 42,182 | 51,871 | ||||||||||
Share-based compensation expense | 8,934 | 7,611 | ||||||||||
Provision for losses on accounts and notes receivable | (216 | ) | (182 | ) | ||||||||
Deferred income tax (benefit) expense | (3,233 | ) | 3,643 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts and notes receivable | 5,023 | (13,758 | ) | |||||||||
Merchandise inventories | (5,066 | ) | (25,339 | ) | ||||||||
Accounts payable | 58,742 | 83,434 | ||||||||||
Net change in other assets and liabilities | (44,903 | ) | 25,890 | |||||||||
Other, net | 686 | 1,526 | ||||||||||
Cash provided by operating activities | 143,831 | 206,038 | ||||||||||
Investing activities: | ||||||||||||
Additions to property and equipment | (13,682 | ) | (15,321 | ) | ||||||||
Additions to computer software and intangible assets | (7,081 | ) | (16,876 | ) | ||||||||
Proceeds from sale of property and equipment | 4,497 | 119 | ||||||||||
Cash used for investing activities | (16,266 | ) | (32,078 | ) | ||||||||
Financing activities: | ||||||||||||
Change in bank overdraft | 21,753 | — | ||||||||||
Repayment of revolving credit facility | — | (33,700 | ) | |||||||||
Cash dividends paid | (47,802 | ) | (47,780 | ) | ||||||||
Repurchases of common stock | (48,654 | ) | (15,821 | ) | ||||||||
Excess tax benefits related to share-based compensation | 680 | 521 | ||||||||||
Other, net | (8,118 | ) | (6,296 | ) | ||||||||
Cash used for financing activities | (82,141 | ) | (103,076 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 6,652 | (2,411 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | 52,076 | 68,473 | ||||||||||
Cash and cash equivalents at beginning of period | 161,020 | 56,772 | ||||||||||
Cash and cash equivalents at end of period | $ | 213,096 | $ | 125,245 | ||||||||
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: | ||||||||||||||||||||||||||||||
Net revenue | $ | 2,415,601 | $ | 2,483,676 | $ | 2,455,793 | $ | 2,487,914 | $ | 2,471,669 | ||||||||||||||||||||
Gross margin | $ | 296,275 | $ | 299,420 | $ | 296,636 | $ | 312,282 | $ | 306,354 | ||||||||||||||||||||
Gross margin as a percent of revenue | 12.27 | % | 12.06 | % | 12.08 | % | 12.55 | % | 12.39 | % | ||||||||||||||||||||
Distribution, selling & admin expenses | $ | 241,305 | $ | 242,914 | $ | 242,725 | $ | 250,172 | $ | 246,959 | ||||||||||||||||||||
Distribution, selling & admin expenses as a percent of revenue | 9.99 | % | 9.78 | % | 9.88 | % | 10.06 | % | 9.99 | % | ||||||||||||||||||||
Operating earnings, as reported (GAAP) | $ | 53,568 | $ | 52,054 | $ | 44,970 | $ | 57,953 | $ | 53,572 | ||||||||||||||||||||
Acquisition-related charges (1) | 597 | 730 | (399 | ) | 4,048 | 1,335 | ||||||||||||||||||||||||
Exit and realignment charges (2) | 2,142 | 6,022 | 10,882 | 2,599 | 4,799 | |||||||||||||||||||||||||
Other (3) | — | — | — | (1,500 | ) | — | ||||||||||||||||||||||||
Operating earnings, adjusted (Non-GAAP) | $ | 56,307 | $ | 58,806 | $ | 55,453 | $ | 63,100 | $ | 59,706 | ||||||||||||||||||||
Operating earnings as a percent of revenue, as reported (GAAP) | 2.22 | % | 2.10 | % | 1.83 | % | 2.33 | % | 2.17 | % | ||||||||||||||||||||
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | 2.33 | % | 2.37 | % | 2.26 | % | 2.54 | % | 2.42 | % | ||||||||||||||||||||
Net income, as reported (GAAP) | $ | 29,831 | $ | 27,716 | $ | 24,135 | $ | 32,068 | $ | 28,176 | ||||||||||||||||||||
Acquisition-related charges (1) | 597 | 730 | (399 | ) | 4,048 | 1,335 | ||||||||||||||||||||||||
Income tax expense (benefit) (4) | (221 | ) | (164 | ) | 152 | 77 | (236 | ) | ||||||||||||||||||||||
Exit and realignment charges (2) | 2,142 | 6,022 | 10,882 | 2,599 | 4,799 | |||||||||||||||||||||||||
Income tax expense (benefit) (4) | (794 | ) | (2,081 | ) | (3,506 | ) | (2,163 | ) | (519 | ) | ||||||||||||||||||||
Other (3) | — | — | — | (1,500 | ) | — | ||||||||||||||||||||||||
Income tax expense (benefit) (4) | — | — | — | — | — | |||||||||||||||||||||||||
Net income, adjusted (Non-GAAP) | $ | 31,555 | $ | 32,223 | $ | 31,264 | $ | 35,129 | $ | 33,555 | ||||||||||||||||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.48 | $ | 0.45 | $ | 0.39 | $ | 0.51 | $ | 0.45 | ||||||||||||||||||||
Acquisition-related charges (1) | 0.01 | 0.01 | — | 0.07 | 0.02 | |||||||||||||||||||||||||
Exit and realignment charges (2) | 0.02 | 0.06 | 0.11 | — | 0.07 | |||||||||||||||||||||||||
Other (3) | — | — | — | (0.02 | ) | — | ||||||||||||||||||||||||
Net income per diluted common share, adjusted (Non-GAAP) | $ | 0.51 | $ | 0.52 | $ | 0.50 | $ | 0.56 | $ | 0.54 | ||||||||||||||||||||
Financing: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 213,096 | $ | 138,951 | $ | 190,323 | $ | 161,020 | $ | 125,245 | ||||||||||||||||||||
Total interest-bearing debt | $ | 570,263 | $ | 571,143 | $ | 572,318 | $ | 573,522 | $ | 574,304 | ||||||||||||||||||||
Stock information: | ||||||||||||||||||||||||||||||
Cash dividends per common share | $ | 0.255 | $ | 0.255 | $ | 0.255 | $ | 0.2525 | $ | 0.2525 | ||||||||||||||||||||
Stock price at quarter-end | $ | 34.73 | $ | 37.38 | $ | 40.42 | $ | 35.98 | $ | 31.94 | ||||||||||||||||||||
Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited)
The following items in the current quarter have been excluded in our non-GAAP financial measures:
(1) Acquisition-related charges in the second and third
quarter of 2016 primarily relate to costs incurred to settle certain
obligations and address other on-going matters associated with the
acquisitions of
(2) Charges in 2016 were associated with severance activities
(including our voluntary employee separation program in the first
quarter of 2016), and other costs associated with our strategic
organizational realignment which include certain professional fees and
costs to streamline administrative functions and processes in
(3) The fourth quarter of 2015 included a partial recovery of
(4)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
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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2016 | 2015 | ||||||||||||||||||||
% of | % of | ||||||||||||||||||||
consolidated | consolidated | ||||||||||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||||||||||
Net revenue: | |||||||||||||||||||||
Segment net revenue | |||||||||||||||||||||
Domestic | $ | 2,287,233 | 94.69 | % | $ | 2,321,301 | 93.92 | % | |||||||||||||
International | 83,751 | 3.47 | % | 92,777 | 3.75 | % | |||||||||||||||
CPS | 132,705 | 5.49 | % | 143,866 | 5.82 | % | |||||||||||||||
Total segment net revenue | 2,503,689 | 2,557,944 | |||||||||||||||||||
Inter-segment revenue | |||||||||||||||||||||
CPS | (88,088 | ) |
(3.65) |
% |
(86,275 | ) |
(3.49) |
% |
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Total inter-segment revenue | (88,088 | ) | (86,275 | ) | |||||||||||||||||
Consolidated net revenue | $ | 2,415,601 | 100.00 | % | $ | 2,471,669 | 100.00 | % | |||||||||||||
% of segment | % of segment | ||||||||||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||||||||||
Domestic | $ | 41,034 | 1.79 | % | $ | 41,979 | 1.81 | % | |||||||||||||
International | 1,382 | 1.65 | % | 1,649 | 1.78 | % | |||||||||||||||
CPS | 14,340 | 10.81 | % | 16,604 | 11.54 | % | |||||||||||||||
Inter-segment eliminations | (449 | ) | (526 | ) | |||||||||||||||||
Acquisition-related and exit and realignment charges (1) | (2,739 | ) | (6,134 | ) | |||||||||||||||||
Consolidated operating earnings | $ | 53,568 | 2.22 | % | $ | 53,572 | 2.17 | % | |||||||||||||
Depreciation and amortization: | |||||||||||||||||||||
Domestic | $ | 7,360 | $ | 8,621 | |||||||||||||||||
International | 4,259 | 4,792 | |||||||||||||||||||
CPS | 2,218 | 2,034 | |||||||||||||||||||
Consolidated depreciation and amortization | $ | 13,837 | $ | 15,447 | |||||||||||||||||
Capital expenditures: | |||||||||||||||||||||
Domestic | $ | 3,071 | $ | 2,041 | |||||||||||||||||
International | 3,223 | 7,235 | |||||||||||||||||||
CPS | 1,009 | 96 | |||||||||||||||||||
Consolidated capital expenditures | $ | 7,303 | $ | 9,372 | |||||||||||||||||
Summary Segment Information (unaudited) (in thousands) |
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Nine Months Ended |
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2016 | 2015 | ||||||||||||||||||||
% of | % of | ||||||||||||||||||||
consolidated | consolidated | ||||||||||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||||||||||
Net revenue: | |||||||||||||||||||||
Segment net revenue | |||||||||||||||||||||
Domestic | $ | 6,954,687 | 94.56 | % | $ | 6,850,731 | 94.04 | % | |||||||||||||
International | 255,861 | 3.48 | % | 281,144 | 3.86 | % | |||||||||||||||
CPS | 409,022 | 5.56 | % | 409,225 | 5.62 | % | |||||||||||||||
Total segment net revenue | 7,619,570 | 7,541,100 | |||||||||||||||||||
Inter-segment revenue | |||||||||||||||||||||
CPS | (264,501 | ) |
(3.60) |
% |
(256,068 | ) |
(3.51) |
% |
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Total inter-segment revenue | (264,501 | ) | (256,068 | ) | |||||||||||||||||
Consolidated net revenue | $ | 7,355,069 | 100.00 | % | $ | 7,285,032 | 100.00 | % | |||||||||||||
% of segment | % of segment | ||||||||||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||||||||||
Domestic | $ | 126,202 | 1.81 | % | $ | 118,478 | 1.73 | % | |||||||||||||
International | 3,402 | 1.33 | % | 2,492 | 0.89 | % | |||||||||||||||
CPS | 41,866 | 10.24 | % | 43,636 | 10.66 | % | |||||||||||||||
Inter-segment eliminations | (905 | ) | (441 | ) | |||||||||||||||||
Acquisition-related and exit and realignment charges (1) | (19,974 | ) | (21,757 | ) | |||||||||||||||||
Consolidated operating earnings | $ | 150,591 | 2.05 | % | $ | 142,408 | 1.95 | % | |||||||||||||
Depreciation and amortization: | |||||||||||||||||||||
Domestic | $ | 22,399 | $ | 26,592 | |||||||||||||||||
International | 13,125 | 14,430 | |||||||||||||||||||
CPS | 6,658 | 6,375 | |||||||||||||||||||
Consolidated depreciation and amortization | $ | 42,182 | $ | 47,397 | |||||||||||||||||
Capital expenditures: | |||||||||||||||||||||
Domestic | $ | 10,274 | $ | 13,399 | |||||||||||||||||
International | 8,053 | 18,025 | |||||||||||||||||||
CPS | 2,436 | 773 | |||||||||||||||||||
Consolidated capital expenditures | $ | 20,763 | $ | 32,197 | |||||||||||||||||
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Total assets: | |||||||||||||||||||||
Domestic | $ | 1,677,898 | $ | 1,728,345 | |||||||||||||||||
International | 460,616 | 464,003 | |||||||||||||||||||
CPS | 443,022 | 420,408 | |||||||||||||||||||
Segment assets | 2,581,536 | 2,612,756 | |||||||||||||||||||
Cash and cash equivalents | 213,096 | 161,020 | |||||||||||||||||||
Consolidated total assets | $ | 2,794,632 | $ | 2,773,776 | |||||||||||||||||
(1) The three and nine months ended |
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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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2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income | $ | 29,831 | $ | 28,176 | $ | 81,682 | $ | 71,342 | |||||||||||||||
Less: income allocated to unvested restricted shares | (291 | ) | (262 | ) | (855 | ) | (620 | ) | |||||||||||||||
Net income attributable to common shareholders - basic | 29,540 | 27,914 | 80,827 | 70,722 | |||||||||||||||||||
Add: undistributed income attributable to unvested restricted shares - basic | 80 | 67 | 216 | 129 | |||||||||||||||||||
Less: undistributed income attributable to unvested restricted shares - diluted | (80 | ) | (67 | ) | (216 | ) | (129 | ) | |||||||||||||||
Net income attributable to common shareholders - diluted | $ | 29,540 | $ | 27,914 | $ | 80,827 | $ | 70,722 | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average shares outstanding — basic | 61,015 | 61,998 | 61,405 | 62,204 | |||||||||||||||||||
Dilutive shares - stock options | — | — | — | 1 | |||||||||||||||||||
Weighted average shares outstanding — diluted | 61,015 | 61,998 | 61,405 | 62,205 | |||||||||||||||||||
Net income per share attributable to common shareholders: | |||||||||||||||||||||||
Basic | $ | 0.48 | $ | 0.45 | $ | 1.32 | $ | 1.14 | |||||||||||||||
Diluted | $ | 0.48 | $ | 0.45 | $ | 1.32 | $ | 1.14 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20161101006875/en/
804-723-7555
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