Owens & Minor Reports 1st Quarter 2014 Financial Results
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Consolidated quarterly revenue was
$2.26 billion -
Adjusted net income per diluted share was
$0.44 for the quarter -
Operating cash flow for the quarter was
$93.2 million - Asset management metrics were strong for the quarter, continuing a long-standing trend
For the quarter ended
Consolidated operating earnings for the first quarter of 2014 were
"Our strategic focus remains squarely on developing opportunities for
the future and investing in our business to ensure that we capture
promising opportunities for growth," said
Asset Management
The balance of cash and cash equivalents was
Segment Results
Domestic segment revenues for the first quarter of 2014 were
For the first quarter of 2014, Domestic segment operating earnings were
For the International segment, revenues were
"During the first quarter, we initiated the next step of our longer term
international strategy and assigned an experienced
2014 Outlook
The company reiterated the following financial guidance for 2014, which
was originally issued at its
For 2014, the company is targeting revenue growth of up to 2% and
adjusted net income per diluted share of
The 2014 outlook is based on certain assumptions that are subject to the
risk factors discussed in the company's filings with the
Upcoming Investor Events
-
The company will hold its Annual Shareholders Meeting on
Thursday, May 1, 2014 , at its Home Office inMechanicsville, Va. , at10:00 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 2014; webcasts of the company's formal presentations will be posted on the company's corporate website:-
Bank of America Merrill Lynch 2014 Healthcare Conference;May 14 -Las Vegas -
2014
UBS Global Healthcare Conference ;May 19 -New York -
Jefferies 2014 Global Healthcare Conference;
June 4 -New York -
Goldman Sachs 35th Annual Global Healthcare Conference;
June 10 -Rancho Palos Verdes, CA
-
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 | $ | 2,256,380 | $ | 2,246,384 | ||||
Cost of goods sold | 1,975,185 | 1,967,332 | ||||||
Gross margin | 281,195 | 279,052 | ||||||
Selling, general and administrative expenses | 225,610 | 217,721 | ||||||
Acquisition-related and exit and realignment charges | 3,262 | 2,010 | ||||||
Depreciation and amortization | 13,864 | 12,629 | ||||||
Other operating income, net | (7,825 | ) | (1,192 | ) | ||||
Operating earnings | 46,284 | 47,884 | ||||||
Interest expense, net | 3,246 | 3,199 | ||||||
Income before income taxes | 43,038 | 44,685 | ||||||
Income tax provision | 17,553 | 18,587 | ||||||
Net income | $ | 25,485 | $ | 26,098 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.41 | $ | 0.41 | ||||
Diluted | $ | 0.41 | $ | 0.41 |
Condensed Consolidated Balance Sheets (unaudited) (in thousands) |
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Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 182,373 | $ | 101,905 | |||
Accounts and notes receivable, net | 543,214 | 572,854 | |||||
Merchandise inventories | 768,148 | 771,663 | |||||
Other current assets | 275,179 | 279,510 | |||||
Total current assets | 1,768,914 | 1,725,932 | |||||
Property and equipment, net | 192,245 | 191,961 | |||||
Goodwill, net | 275,562 | 275,439 | |||||
Intangible assets, net | 39,437 | 40,406 | |||||
Other assets, net | 93,042 | 90,304 | |||||
Total assets | $ | 2,369,200 | $ | 2,324,042 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 659,550 | $ | 643,872 | |||
Accrued payroll and related liabilities | 21,741 | 23,296 | |||||
Deferred income taxes | 41,975 | 41,613 | |||||
Other current liabilities | 302,244 | 280,398 | |||||
Total current liabilities | 1,025,510 | 989,179 | |||||
Long-term debt, excluding current portion | 214,826 | 213,815 | |||||
Deferred income taxes | 42,779 | 43,727 | |||||
Other liabilities | 52,918 | 52,278 | |||||
Total liabilities | 1,336,033 | 1,298,999 | |||||
Total equity | 1,033,167 | 1,025,043 | |||||
Total liabilities and equity | $ | 2,369,200 | $ | 2,324,042 |
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
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Three Months Ended |
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2014 | 2013 | |||||||
Operating activities: | ||||||||
Net income | $ | 25,485 | $ | 26,098 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 13,864 | 12,629 | ||||||
Share-based compensation expense | 2,642 | 1,910 | ||||||
Provision for losses on accounts and notes receivable | 54 | 107 | ||||||
Deferred income tax benefit | (822 | ) | (56 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | 29,828 | (34,575 | ) | |||||
Merchandise inventories | 3,707 | 21,784 | ||||||
Accounts payable | 15,815 | 98,198 | ||||||
Net change in other assets and liabilities | 3,921 | 28,981 | ||||||
Other, net | (1,292 | ) | (465 | ) | ||||
Cash provided by operating activities | 93,202 | 154,611 | ||||||
Investing activities: | ||||||||
Additions to property and equipment | (7,299 | ) | (7,513 | ) | ||||
Additions to computer software and intangible assets | (6,930 | ) | (7,264 | ) | ||||
Proceeds from sale of investment | 1,937 | — | ||||||
Proceeds from sale of property and equipment | 105 | 44 | ||||||
Cash used for investing activities | (12,187 | ) | (14,733 | ) | ||||
Financing activities: | ||||||||
Change in bank overdraft | 20,578 | — | ||||||
Cash dividends paid | (15,785 | ) | (15,199 | ) | ||||
Repurchases of common stock | (5,000 | ) | (2,282 | ) | ||||
Excess tax benefits related to share-based compensation | 346 | 207 | ||||||
Proceeds from exercise of stock options | 937 | 1,792 | ||||||
Other, net | (1,868 | ) | (1,958 | ) | ||||
Cash used for financing activities | (792 | ) | (17,440 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 245 | (1,763 | ) | |||||
Net increase in cash and cash equivalents | 80,468 | 120,675 | ||||||
Cash and cash equivalents at beginning of period | 101,905 | 97,888 | ||||||
Cash and cash equivalents at end of period | $ | 182,373 | $ | 218,563 |
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 | $ | 2,148,915 | $ | 2,213,949 | $ | 2,175,663 | $ | 2,143,691 | $ | 2,154,715 | ||||||||||
International | 107,465 | 104,575 | 94,884 | 92,386 | 91,669 | |||||||||||||||
Net revenue | $ | 2,256,380 | $ | 2,318,524 | $ | 2,270,547 | $ | 2,236,077 | $ | 2,246,384 | ||||||||||
Gross margin | $ | 281,195 | $ | 291,263 | $ | 273,329 | $ | 273,431 | $ | 279,052 | ||||||||||
Gross margin as a percent of revenue | 12.46 | % | 12.56 | % | 12.04 | % | 12.23 | % | 12.42 | % | ||||||||||
SG&A expenses | $ | 225,610 | $ | 222,043 | $ | 211,344 | $ | 212,548 | $ | 217,721 | ||||||||||
SG&A expenses as a percent of revenue | 10.00 | % | 9.58 | % | 9.31 | % | 9.51 | % | 9.69 | % | ||||||||||
Operating earnings, as reported (GAAP) | $ | 46,284 | $ | 50,934 | $ | 49,215 | $ | 50,050 | $ | 47,884 | ||||||||||
Acquisition-related and exit and realignment charges | 3,262 | 7,049 | 2,747 | 638 | 2,010 | |||||||||||||||
Operating earnings, adjusted (Non-GAAP) | $ | 49,546 | $ | 57,983 | $ | 51,962 | $ | 50,688 | $ | 49,894 | ||||||||||
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | 2.20 | % | 2.50 | % | 2.29 | % | 2.27 | % | 2.22 | % | ||||||||||
Net income, as reported (GAAP) | $ | 25,485 | $ | 27,942 | $ | 27,970 | $ | 28,872 | $ | 26,098 | ||||||||||
Acquisition-related and exit and realignment charges, after-tax | 2,222 | 5,024 | 1,899 | 412 | 1,521 | |||||||||||||||
Net income, adjusted (Non-GAAP) | $ | 27,707 | $ | 32,966 | $ | 29,869 | $ | 29,284 | $ | 27,619 | ||||||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.41 | $ | 0.44 | $ | 0.44 | $ | 0.46 | $ | 0.41 | ||||||||||
Acquisition-related and exit and realignment charges | 0.03 | 0.08 | 0.03 | — | 0.03 | |||||||||||||||
Net income per diluted common share, adjusted (Non-GAAP) | $ | 0.44 | $ | 0.52 | $ | 0.47 | $ | 0.46 | $ | 0.44 | ||||||||||
Financing: | ||||||||||||||||||||
Cash and cash equivalents | $ | 182,373 | $ | 101,905 | $ | 153,789 | $ | 207,826 | $ | 218,563 | ||||||||||
Total interest-bearing debt | $ | 217,261 | $ | 216,243 | $ | 216,850 | $ | 216,994 | $ | 216,414 | ||||||||||
Stock information: | ||||||||||||||||||||
Cash dividends per common share | $ | 0.25 | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.24 | ||||||||||
Stock price at quarter-end | $ | 35.03 | $ | 36.56 | $ | 34.59 | $ | 33.83 | $ | 32.56 |
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 | $ | 2,148,915 | 95.24 | % | $ | 2,154,715 | 95.92 | % | |||||
International | 107,465 | 4.76 | % | 91,669 | 4.08 | % | |||||||
Consolidated net revenue | $ | 2,256,380 | 100.00 | % | $ | 2,246,384 | 100.00 | % | |||||
% of segment | % of segment | ||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||
Domestic | $ | 52,734 | 2.45 | % | $ | 52,907 | 2.46 | % | |||||
International | (3,188 | ) | (2.97 | )% | (3,013 | ) | (3.29 | )% | |||||
Acquisition-related and exit and realignment charges | (3,262 | ) | N/A | (2,010 | ) | N/A | |||||||
Consolidated operating earnings | $ | 46,284 | 2.05 | % | $ | 47,884 | 2.13 | % | |||||
Depreciation and amortization: | |||||||||||||
Domestic | $ | 8,975 | $ | 9,082 | |||||||||
International | 4,889 | 3,547 | |||||||||||
Consolidated depreciation and amortization | $ | 13,864 | $ | 12,629 | |||||||||
Capital expenditures: (1) | |||||||||||||
Domestic | $ | 10,175 | $ | 11,602 | |||||||||
International | 4,054 | 3,175 | |||||||||||
Consolidated capital expenditures | $ | 14,229 | $ | 14,777 | |||||||||
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Total assets: | |||||||||||||
Domestic | $ | 1,712,214 | $ | 1,747,572 | |||||||||
International | 474,613 | 474,565 | |||||||||||
Segment assets | 2,186,827 | 2,222,137 | |||||||||||
Cash and cash equivalents | 182,373 | 101,905 | |||||||||||
Consolidated total assets | $ | 2,369,200 | $ | 2,324,042 | |||||||||
(1) Represents additions to property and equipment and additions to computer software and separately acquired intangible assets. |
Net Income Per Common Share (unaudited) (in thousands, except per share data) |
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Three Months Ended |
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2014 | 2013 | ||||||
Numerator: | |||||||
Net income | $ | 25,485 | $ | 26,098 | |||
Less: income allocated to unvested restricted shares | (188 | ) | (195 | ) | |||
Net income attributable to common shareholders - basic | 25,297 | 25,903 | |||||
Add: undistributed income attributable to unvested restricted shares -basic | 51 | 58 | |||||
Less: undistributed income attributable to unvested restricted shares -diluted | (51 | ) | (58 | ) | |||
Net income attributable to common shareholders - diluted | $ | 25,297 | $ | 25,903 | |||
Denominator: | |||||||
Weighted average shares outstanding — basic | 62,304 | 62,687 | |||||
Dilutive shares - stock options | 13 | 58 | |||||
Weighted average shares outstanding — diluted | 62,317 | 62,745 | |||||
Net income per share attributable to common shareholders: | |||||||
Basic | $ | 0.41 | $ | 0.41 | |||
Diluted | $ | 0.41 | $ | 0.41 |
804-723-7555
truitt.allcott@owens-minor.com
or
804-723-7556
chuck.graves@owens-minor.com
Source:
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