Owens & Minor Reports 1st Quarter 2015 Financial Results
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Consolidated quarterly revenue grew 6.0% to
$2.39 billion -
Adjusted net income per diluted share was
$0.44 for the quarter -
Operating cash flow for the quarter was
$169 million - International segment reported positive adjusted operating earnings for the quarter
Consolidated net revenue increased 6.0% to
"We are pleased with the solid results from the first quarter of this
year," said
Consolidated operating earnings for the first quarter of 2015 were
Asset Management
The balance of cash and cash equivalents was
Segment Results
Domestic segment revenues for the first quarter of 2015 were
For the first quarter of 2015, Domestic segment operating earnings were
For the International segment, revenues were
2015 Outlook
The company's financial guidance for 2015 remains unchanged, consistent
with the growth guidance originally provided at its
For 2015, the company is targeting adjusted net income per diluted share
of
The 2015 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, April 30, 2015 , 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 2015; webcasts of formal presentations will be posted on the company's corporate website:-
Bank of America Merrill Lynch 2015 Healthcare Conference;May 13 -Las Vegas -
2015
UBS Global Healthcare Conference ;May 19 -New York
-
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 | $ | 2,391,196 | $ | 2,256,380 | ||||
Cost of goods sold | 2,093,595 | 1,975,185 | ||||||
Gross margin | 297,601 | 281,195 | ||||||
Selling, general and administrative expenses | 233,825 | 225,610 | ||||||
Acquisition-related and exit and realignment charges | 9,916 | 3,262 | ||||||
Depreciation and amortization | 15,869 | 13,864 | ||||||
Other operating income, net | (2,984 | ) | (7,825 | ) | ||||
Operating earnings | 40,975 | 46,284 | ||||||
Interest expense, net | 6,880 | 3,246 | ||||||
Income before income taxes | 34,095 | 43,038 | ||||||
Income tax provision | 15,155 | 17,553 | ||||||
Net income | $ | 18,940 | $ | 25,485 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.30 | $ | 0.41 | ||||
Diluted | $ | 0.30 | $ | 0.41 | ||||
Condensed Consolidated Balance Sheets (unaudited) (in thousands) |
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Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 159,056 | $ | 56,772 | ||||
Accounts and notes receivable, net | 597,235 | 626,192 | ||||||
Merchandise inventories | 874,738 | 872,457 | ||||||
Other current assets | 233,318 | 315,285 | ||||||
Total current assets | 1,864,347 | 1,870,706 | ||||||
Property and equipment, net | 221,950 | 232,979 | ||||||
Goodwill, net | 419,453 | 423,276 | ||||||
Intangible assets, net | 102,122 | 108,593 | ||||||
Other assets, net | 91,638 | 99,852 | ||||||
Total assets | $ | 2,699,510 | $ | 2,735,406 | ||||
Liabilities and equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 693,699 | $ | 608,846 | ||||
Accrued payroll and related liabilities | 24,991 | 31,507 | ||||||
Deferred income taxes | 37,820 | 37,979 | ||||||
Other current liabilities | 273,104 | 326,223 | ||||||
Total current liabilities | 1,029,614 | 1,004,555 | ||||||
Long-term debt, excluding current portion | 574,606 | 608,551 | ||||||
Deferred income taxes | 63,321 | 63,901 | ||||||
Other liabilities | 63,696 | 67,561 | ||||||
Total liabilities | 1,731,237 | 1,744,568 | ||||||
Total equity | 968,273 | 990,838 | ||||||
Total liabilities and equity | $ | 2,699,510 | $ | 2,735,406 | ||||
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
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Three Months Ended |
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2015 | 2014 | |||||||
Operating activities: | ||||||||
Net income | $ | 18,940 | $ | 25,485 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 19,123 | 13,864 | ||||||
Share-based compensation expense | 2,597 | 2,642 | ||||||
Provision for losses on accounts and notes receivable | 220 | 54 | ||||||
Deferred income tax expense (benefit) | 510 | (822 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | 27,356 | 29,828 | ||||||
Merchandise inventories | (3,888 | ) | 3,707 | |||||
Accounts payable | 88,944 | 15,815 | ||||||
Net change in other assets and liabilities | 13,580 | 3,921 | ||||||
Other, net | 1,321 | (1,292 | ) | |||||
Cash provided by operating activities | 168,703 | 93,202 | ||||||
Investing activities: | ||||||||
Additions to property and equipment | (7,619 | ) | (7,299 | ) | ||||
Additions to computer software and intangible assets | (3,947 | ) | (6,930 | ) | ||||
Proceeds from sale of investment | — | 1,937 | ||||||
Proceeds from sale of property and equipment | 50 | 105 | ||||||
Cash used for investing activities | (11,516 | ) | (12,187 | ) | ||||
Financing activities: | ||||||||
Change in bank overdraft | 1,179 | 20,578 | ||||||
Repayment of revolving credit facility | (33,700 | ) | — | |||||
Cash dividends paid | (15,934 | ) | (15,785 | ) | ||||
Repurchases of common stock | — | (5,000 | ) | |||||
Excess tax benefits related to share-based compensation | 240 | 346 | ||||||
Proceeds from exercise of stock options | 125 | 937 | ||||||
Other, net | (2,324 | ) | (1,868 | ) | ||||
Cash used for financing activities | (50,414 | ) | (792 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (4,489 | ) | 245 | |||||
Net increase in cash and cash equivalents | 102,284 | 80,468 | ||||||
Cash and cash equivalents at beginning of period | 56,772 | 101,905 | ||||||
Cash and cash equivalents at end of period | $ | 159,056 | $ | 182,373 | ||||
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 | $ | 2,285,635 | $ | 2,353,321 | $ | 2,262,081 | $ | 2,187,535 | $ | 2,148,915 | ||||||||||
International | 105,561 | 138,496 | 124,045 | 118,323 | 107,465 | |||||||||||||||
Net revenue | $ | 2,391,196 | $ | 2,491,817 | $ | 2,386,126 | $ | 2,305,858 | $ | 2,256,380 | ||||||||||
Gross margin | $ | 297,601 | $ | 314,015 | $ | 292,483 | $ | 282,272 | $ | 281,195 | ||||||||||
Gross margin as a percent of revenue | 12.45 | % | 12.60 | % | 12.26 | % | 12.24 | % | 12.46 | % | ||||||||||
SG&A expenses | $ | 233,825 | $ | 244,152 | $ | 231,377 | $ | 225,838 | $ | 225,610 | ||||||||||
SG&A expenses as a percent of revenue | 9.78 | % | 9.80 | % | 9.70 | % | 9.79 | % | 10.00 | % | ||||||||||
Operating earnings, as reported (GAAP) | $ | 40,975 | $ | 40,773 | $ | 35,377 | $ | 37,101 | $ | 46,284 | ||||||||||
Acquisition-related charges (1) | 2,605 | 7,394 | 4,565 | 3,490 | 634 | |||||||||||||||
Exit and realignment charges (2) | 7,311 | 10,594 | 9,392 | 4,103 | 2,628 | |||||||||||||||
Fair value adjustments related to purchase accounting (3) | — | (3,706 | ) | — | — | — | ||||||||||||||
Other (4) | — | 3,907 | — | — | — | |||||||||||||||
Operating earnings, adjusted (Non-GAAP) | $ | 50,891 | $ | 58,962 | $ | 49,334 | $ | 44,694 | $ | 49,546 | ||||||||||
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | 2.13 | % | 2.37 | % | 2.07 | % | 1.94 | % | 2.20 | % | ||||||||||
Net income, as reported (GAAP) | $ | 18,940 | $ | 13,987 | $ | 7,155 | $ | 19,876 | $ | 25,485 | ||||||||||
Acquisition-related charges, after-tax (1) | 2,257 | 6,211 | 3,543 | 2,504 | 450 | |||||||||||||||
Exit and realignment charges, after-tax (2) | 6,335 | 11,477 | 6,754 | 2,591 | 1,772 | |||||||||||||||
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) | $ | 27,532 | $ | 30,879 | $ | 26,544 | $ | 24,971 | $ | 27,707 | ||||||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.30 | $ | 0.22 | $ | 0.11 | $ | 0.32 | $ | 0.41 | ||||||||||
Acquisition-related charges, after-tax (1) | 0.03 | 0.10 | 0.06 | 0.04 | 0.01 | |||||||||||||||
Exit and realignment charges, after-tax (2) | 0.11 | 0.18 | 0.11 | 0.04 | 0.02 | |||||||||||||||
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) | $ | 0.44 | $ | 0.49 | $ | 0.42 | $ | 0.40 | $ | 0.44 | ||||||||||
Financing: | ||||||||||||||||||||
Cash and cash equivalents | $ | 159,056 | $ | 56,772 | $ | 610,147 | $ | 92,027 | $ | 182,373 | ||||||||||
Total interest-bearing debt | $ | 579,505 | $ | 613,809 | $ | 766,283 | $ | 221,496 | $ | 217,261 | ||||||||||
Stock information: | ||||||||||||||||||||
Cash dividends per common share | $ | 0.2525 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | ||||||||||
Stock price at quarter-end | $ | 33.84 | $ | 35.11 | $ | 32.74 | $ | 33.98 | $ | 35.03 | ||||||||||
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 quarter ended
(2) Exit and realignment charges 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 | $ | 2,285,635 | 95.59 | % | $ | 2,148,915 | 95.24 | % | |||||
International | 105,561 | 4.41 | % | 107,465 | 4.76 | % | |||||||
Consolidated net revenue | $ | 2,391,196 | 100.00 | % | $ | 2,256,380 | 100.00 | % | |||||
% of segment | % of segment | ||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||
Domestic | $ | 50,512 | 2.21 | % | $ | 52,734 | 2.45 | % | |||||
International | 379 | 0.36 | % | (3,188 | ) | (2.97 | )% | ||||||
Acquisition-related and exit and realignment charges (1) | (9,916 | ) | N/A | (3,262 | ) | N/A | |||||||
Consolidated operating earnings | $ | 40,975 | 1.71 | % | $ | 46,284 | 2.05 | % | |||||
Depreciation and amortization: | |||||||||||||
Domestic | $ | 10,738 | $ | 8,975 | |||||||||
International | 5,431 | 4,889 | |||||||||||
Consolidated depreciation and amortization | $ | 16,169 | $ | 13,864 | |||||||||
Capital expenditures: (2) | |||||||||||||
Domestic | $ | 8,651 | $ | 10,175 | |||||||||
International | 2,915 | 4,054 | |||||||||||
Consolidated capital expenditures | $ | 11,566 | $ | 14,229 | |||||||||
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Total assets: | |||||||||||||
Domestic | $ | 2,101,477 | $ | 2,139,972 | |||||||||
International | 438,977 | 538,662 | |||||||||||
Segment assets | 2,540,454 | 2,678,634 | |||||||||||
Cash and cash equivalents | 159,056 | 56,772 | |||||||||||
Consolidated total assets | $ | 2,699,510 | $ | 2,735,406 | |||||||||
(1) The current quarter includes |
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(2) 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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2015 | 2014 | ||||||
Numerator: | |||||||
Net income | $ | 18,940 | $ | 25,485 | |||
Less: income allocated to unvested restricted shares | (161 | ) | (188 | ) | |||
Net income attributable to common shareholders - basic | 18,779 | 25,297 | |||||
Add: undistributed income attributable to unvested restricted shares -basic | 18 | 51 | |||||
Less: undistributed income attributable to unvested restricted shares -diluted | (18 | ) | (51 | ) | |||
Net income attributable to common shareholders - diluted | $ | 18,779 | $ | 25,297 | |||
Denominator: | |||||||
Weighted average shares outstanding — basic | 62,264 | 62,304 | |||||
Dilutive shares - stock options | 2 | 13 | |||||
Weighted average shares outstanding — diluted | 62,266 | 62,317 | |||||
Net income per share attributable to common shareholders: | |||||||
Basic | $ | 0.30 | $ | 0.41 | |||
Diluted | $ | 0.30 | $ | 0.41 |
truitt.allcott@owens-minor.com
or
chuck.graves@owens-minor.com
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