Owens & Minor Reports Financial Results for 3rd Quarter 2013, Including 5.7% Growth in Revenues
Domestic segment revenues increased 2.1% in the third quarter of 2013
For the third quarter of 2013, net income was
"These results continue to support our belief that our strategy is
working despite a shifting healthcare landscape, and we continue to see
promise in the market and our ability to tap into new opportunities,"
said
Consolidated operating earnings for the third quarter of 2013 were
Year-to-Date Results
For the nine months ended
Consolidated operating earnings for the year-to-date period of 2013 were
Asset Management
The balance of cash and cash equivalents was approximately
Segment Results
Domestic segment revenues for the third quarter of 2013 were
For the third quarter of 2013, Domestic segment operating earnings were
The International segment contributed revenues of
2013 Outlook
For 2013, the company continues to target revenue growth of 2% to 4%,
but is now targeting adjusted net income per diluted share at the lower
end of the original guidance of
The 2013 outlook is based on certain assumptions that are subject to the
risk factors discussed in the company's filings with the
Highlights & Upcoming Events
-
The
Owens & Minor board of directors declared a fourth quarter 2013 dividend of$0.24 per diluted share. The dividend is payable onDecember 31, 2013 , to shareholders of record onDecember 16, 2013 . -
Owens & Minor signed a five-year agreement with HealthTrust, the group purchasing organization (GPO). The contract, which was effectiveOctober 1, 2013 , is scheduled to expire onSeptember 30, 2018 . -
Owens & Minor is scheduled to participate in the 2013Credit Suisse Healthcare Conference onNovember 13, 2013 inPhoenix . The presentation, which will be webcast, is scheduled for1:00 p.m. Mountain Time . -
Owens & Minor has scheduled its Annual Investor Day inNew York forWednesday, December 4, 2013 .Owens & Minor executives will provide an operational and strategic overview, as well as the company's financial outlook for 2014. The meeting is scheduled to begin at8:00 a.m. EST and is expected to conclude at approximately10:30 a.m. EST . A live, listen-only webcast of the briefing will be available on the company website at www.owens-minor.com under the Investor Relations Section.Professional Wall Street analysts and investors may register via http://investors.owens-minor.com/registration.cfm.
Investors' 3Q 2013 Conference Call & Supplemental Material
Owens & Minor's management team will conduct a conference call to
discuss the third quarter financial results on
Information on www.Owens-Minor.com
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
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Consolidated Statements of Income (unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Three Months Ended |
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2013 | 2012 | |||||||
Net revenue | $ | 2,304,599 | $ | 2,179,895 | ||||
Cost of goods sold | 2,031,270 | 1,951,772 | ||||||
Gross margin | 273,329 | 228,123 | ||||||
Selling, general and administrative expenses | 211,344 | 165,320 | ||||||
Acquisition-related and exit and realignment charges | 2,747 | 7,831 | ||||||
Depreciation and amortization | 12,441 | 10,090 | ||||||
Other operating income, net | (2,418 | ) | (1,781 | ) | ||||
Operating earnings | 49,215 | 46,663 | ||||||
Interest expense, net | 3,389 | 3,066 | ||||||
Income before income taxes | 45,826 | 43,597 | ||||||
Income tax provision | 17,856 | 19,000 | ||||||
Net income | $ | 27,970 | $ | 24,597 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.44 | $ | 0.39 | ||||
Diluted | $ | 0.44 | $ | 0.39 | ||||
Nine Months Ended |
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2013 | 2012 | |||||||
Net revenue | $ | 6,846,995 | $ | 6,583,221 | ||||
Cost of goods sold | 6,021,183 | 5,929,341 | ||||||
Gross margin | 825,812 | 653,880 | ||||||
Selling, general and administrative expenses | 641,613 | 471,179 | ||||||
Acquisition-related and exit and realignment charges | 5,395 | 8,448 | ||||||
Depreciation and amortization | 37,347 | 27,184 | ||||||
Other operating income, net | (5,693 | ) | (4,643 | ) | ||||
Operating earnings | 147,150 | 151,712 | ||||||
Interest expense, net | 9,835 | 9,975 | ||||||
Income before income taxes | 137,315 | 141,737 | ||||||
Income tax provision | 54,374 | 57,667 | ||||||
Net income | $ | 82,941 | $ | 84,070 | ||||
Net income per common share: | ||||||||
Basic | $ | 1.31 | $ | 1.33 | ||||
Diluted | $ | 1.31 | $ | 1.33 |
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Condensed Consolidated Balance Sheets (unaudited) | |||||
(in thousands) | |||||
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2013 | 2012 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 153,789 | $ | 97,888 | |
Accounts and notes receivable, net | 571,458 | 553,502 | |||
Merchandise inventories | 787,803 | 763,756 | |||
Other current assets | 246,242 | 213,748 | |||
Total current assets | 1,759,292 | 1,628,894 | |||
Property and equipment, net | 192,672 | 191,841 | |||
Goodwill, net | 274,896 | 274,884 | |||
Intangible assets, net | 40,519 | 42,313 | |||
Other assets, net | 80,287 | 69,769 | |||
Total assets | $ | 2,347,666 | $ | 2,207,701 | |
Liabilities and equity | |||||
Current liabilities | |||||
Accounts payable | $ | 689,554 | $ | 603,137 | |
Accrued payroll and related liabilities | 24,793 | 25,468 | |||
Deferred income taxes | 49,860 | 40,758 | |||
Other current liabilities | 276,697 | 254,924 | |||
Total current liabilities | 1,040,904 | 924,287 | |||
Long-term debt, excluding current portion | 214,416 | 215,383 | |||
Deferred income taxes | 30,185 | 30,921 | |||
Other liabilities | 55,841 | 63,454 | |||
Total liabilities | 1,341,346 | 1,234,045 | |||
Total equity | 1,006,320 | 973,656 | |||
Total liabilities and equity | $ | 2,347,666 | $ | 2,207,701 |
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Consolidated Statements of Cash Flows (unaudited) | |||||||
(in thousands) | |||||||
Nine Months Ended |
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2013 | 2012 | ||||||
Operating activities: | |||||||
Net income | $ | 82,941 | $ | 84,070 | |||
Adjustments to reconcile net income to cash provided by | |||||||
operating activities: | |||||||
Depreciation and amortization | 37,347 | 27,184 | |||||
Share-based compensation expense | 5,162 | 4,844 | |||||
Provision for losses on accounts and notes receivable | 179 | 414 | |||||
Deferred income tax expense | 8,424 | 1,098 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts and notes receivable | (20,703 | ) | (7,886 | ) | |||
Merchandise inventories | (23,690 | ) | 45,301 | ||||
Accounts payable | 93,950 | 32,467 | |||||
Net change in other assets and liabilities | (21,285 | ) | (16,355 | ) | |||
Other, net | (1,159 | ) | (773 | ) | |||
Cash provided by operating activities | 161,166 | 170,364 | |||||
Investing activities: | |||||||
Acquisition, net of cash acquired | - | (149,910 | ) | ||||
Additions to property and equipment | (25,144 | ) | (7,890 | ) | |||
Additions to computer software and intangible assets | (20,361 | ) | (19,934 | ) | |||
Proceeds from the sale of property and equipment | 2,020 | 3,237 | |||||
Cash used for investing activities | (43,485 | ) | (174,497 | ) | |||
Financing activities: | |||||||
Cash dividends paid | (45,587 | ) | (41,791 | ) | |||
Repurchases of common stock | (15,701 | ) | (11,250 | ) | |||
Financing costs paid | - | (1,303 | ) | ||||
Excess tax benefits related to share-based compensation | 733 | 1,223 | |||||
Proceeds from exercise of stock options | 4,821 | 4,114 | |||||
Other, net | (6,769 | ) | (4,444 | ) | |||
Cash used for financing activities | (62,503 | ) | (53,451 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 723 | 1,313 | |||||
Net increase (decrease) in cash and cash equivalents | 55,901 | (56,271 | ) | ||||
Cash and cash equivalents at beginning of period | 97,888 | 135,938 | |||||
Cash and cash equivalents at end of period | $ | 153,789 | $ | 79,667 |
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Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited) | |||||||||||||||||||
(in thousands, except ratios and per share data) | |||||||||||||||||||
Quarter Ended | |||||||||||||||||||
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Consolidated operating results: | |||||||||||||||||||
Net revenue | $ | 2,304,599 | $ | 2,266,687 | $ | 2,275,709 | $ | 2,324,924 | $ | 2,179,895 | |||||||||
Gross margin | $ | 273,329 | $ | 273,431 | $ | 279,052 | $ | 270,774 | $ | 228,123 | |||||||||
Gross margin as a percent of revenue | 11.86 | % | 12.06 | % | 12.26 | % | 11.65 | % | 10.46 | % | |||||||||
SG&A expenses | $ | 211,344 | $ | 212,548 | $ | 217,721 | $ | 211,415 | $ | 165,320 | |||||||||
SG&A expenses as a percent of revenue | 9.17 | % | 9.38 | % | 9.57 | % | 9.09 | % | 7.58 | % | |||||||||
Operating earnings, as reported (GAAP) | $ | 49,215 | $ | 50,050 | $ | 47,884 | $ | 45,041 | $ | 46,663 | |||||||||
Acquisition-related and exit and realignment charges | 2,747 | 638 | 2,010 | 1,717 | 7,831 | ||||||||||||||
Operating earnings, adjusted (Non-GAAP) | $ | 51,962 | $ | 50,688 | $ | 49,894 | $ | 46,758 | $ | 54,494 | |||||||||
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | 2.25 | % | 2.24 | % | 2.19 | % | 2.01 | % | 2.50 | % | |||||||||
Net income, as reported (GAAP) | $ | 27,970 | $ | 28,872 | $ | 26,098 | $ | 24,934 | $ | 24,597 | |||||||||
Acquisition-related and exit and realignment charges, after-tax | 1,899 | 412 | 1,521 | 1,237 | 6,588 | ||||||||||||||
Net income, adjusted (Non-GAAP) | $ | 29,869 | $ | 29,284 | $ | 27,619 | $ | 26,171 | $ | 31,185 | |||||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.44 | $ | 0.46 | $ | 0.41 | $ | 0.39 | $ | 0.39 | |||||||||
Acquisition-related and exit and realignment charges | 0.03 | - | 0.03 | 0.02 | 0.10 | ||||||||||||||
Net income per diluted common share, adjusted (Non-GAAP) | $ | 0.47 | $ | 0.46 | $ | 0.44 | $ | 0.41 | $ | 0.49 | |||||||||
Financing: | |||||||||||||||||||
Cash and cash equivalents | $ | 153,789 | $ | 207,826 | $ | 218,563 | $ | 97,888 | $ | 79,667 | |||||||||
Total interest-bearing debt | $ | 216,850 | $ | 216,994 | $ | 216,414 | $ | 217,591 | $ | 216,924 | |||||||||
Stock information: | |||||||||||||||||||
Cash dividends per common share | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.22 | $ | 0.22 | |||||||||
Stock price at quarter-end | $ | 34.59 | $ | 33.83 | $ | 32.56 | $ | 28.51 | $ | 29.88 | |||||||||
Use of Non-GAAP Measures |
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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 |
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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. |
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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. |
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Summary Segment Information (unaudited) | |||||||||||||||||||
(in thousands, except ratios) | |||||||||||||||||||
Three Months Ended |
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2013 | 2012 | ||||||||||||||||||
% of | % of | ||||||||||||||||||
consolidated | consolidated | ||||||||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||||||||
Net revenue: | |||||||||||||||||||
Domestic | $ | 2,175,663 | 94.41 | % | $ | 2,130,226 | 97.72 | % | |||||||||||
International | 128,936 | 5.59 | % | 49,669 | 2.28 | % | |||||||||||||
Consolidated net revenue | $ | 2,304,599 | 100.00 | % | $ | 2,179,895 | 100.00 | % | |||||||||||
% of segment | % of segment | ||||||||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||||||||
Domestic | $ | 51,213 | 2.35 | % | $ | 55,120 | 2.59 | % | |||||||||||
International | 749 | 0.58 | % | (626 | ) | (1.26 | ) | % | |||||||||||
Acquisition-related and exit and realignment charges | (2,747 | ) | N/A | % | (7,831 | ) | N/A | % | |||||||||||
Consolidated operating earnings | $ | 49,215 | 2.14 | % | $ | 46,663 | 2.14 | % | |||||||||||
Depreciation and amortization: | |||||||||||||||||||
Domestic | $ | 8,805 | $ | 8,801 | |||||||||||||||
International | 3,636 | 1,289 | |||||||||||||||||
Consolidated depreciation and amortization | $ | 12,441 | $ | 10,090 | |||||||||||||||
Capital expenditures: (1) | |||||||||||||||||||
Domestic | $ | 10,032 | $ | 8,929 | |||||||||||||||
International | 4,426 | 738 | |||||||||||||||||
Consolidated capital expenditures | $ | 14,458 | $ | 9,667 | |||||||||||||||
Nine Months Ended |
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2013 | 2012 | ||||||||||||||||||
% of | % of | ||||||||||||||||||
consolidated | consolidated | ||||||||||||||||||
Amount | net revenue | Amount | net revenue | ||||||||||||||||
Net revenue: | |||||||||||||||||||
Domestic | $ | 6,474,069 | 94.55 | % | $ | 6,533,552 | 99.25 | % | |||||||||||
International | 372,926 | 5.45 | % | 49,669 | 0.75 | % | |||||||||||||
Consolidated net revenue | $ | 6,846,995 | 100.00 | % | $ | 6,583,221 | 100.00 | % | |||||||||||
% of segment | % of segment | ||||||||||||||||||
Operating earnings (loss): | net revenue | net revenue | |||||||||||||||||
Domestic | $ | 155,364 | 2.40 | % | $ | 160,786 | 2.46 | % | |||||||||||
International | (2,819 | ) | (0.76 | ) | % | (626 | ) | (1.26 | ) | % | |||||||||
Acquisition-related and exit and realignment charges | (5,395 | ) | N/A | % | (8,448 | ) | N/A | % | |||||||||||
Consolidated operating earnings | $ | 147,150 | 2.15 | % | $ | 151,712 | 2.30 | % | |||||||||||
Depreciation and amortization: | |||||||||||||||||||
Domestic | $ | 26,775 | $ | 25,895 | |||||||||||||||
International | 10,572 | 1,289 | |||||||||||||||||
Consolidated depreciation and amortization | $ | 37,347 | $ | 27,184 | |||||||||||||||
Capital expenditures: (1) | |||||||||||||||||||
Domestic | $ | 34,506 | $ | 27,086 | |||||||||||||||
International | 10,999 | 738 | |||||||||||||||||
Consolidated capital expenditures | $ | 45,505 | $ | 27,824 | |||||||||||||||
2013 |
2012 |
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Total assets: | |||||||||||||||||||
Domestic | $ | 1,749,805 | $ | 1,723,699 | |||||||||||||||
International | 444,072 | 386,114 | |||||||||||||||||
Segment assets | 2,193,877 | 2,109,813 | |||||||||||||||||
Cash and cash equivalents | 153,789 | 97,888 | |||||||||||||||||
$ | 2,347,666 | $ | 2,207,701 | ||||||||||||||||
(1) Represents additions to property and equipment and additions to computer software and separately acquired intangible assets. |
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Net Income Per Common Share (unaudited) | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
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2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Numerator: | ||||||||||||||||||||
Net income | $ | 27,970 | $ | 24,597 | $ | 82,941 | $ | 84,070 | ||||||||||||
Less: income allocated to unvested restricted shares | (186 | ) | (153 | ) | (541 | ) | (574 | ) | ||||||||||||
Net income attributable to common shareholders - basic | 27,784 | 24,444 | 82,400 | 83,496 | ||||||||||||||||
Add: undistributed income attributable to unvested restricted shares - basic | 59 | 53 | 185 | 229 | ||||||||||||||||
Less: undistributed income attributable to unvested restricted shares - diluted | (59 | ) | (53 | ) | (185 | ) | (228 | ) | ||||||||||||
Net income attributable to common shareholders - diluted | $ | 27,784 | $ | 24,444 | $ | 82,400 | $ | 83,497 | ||||||||||||
Denominator: | ||||||||||||||||||||
Weighted average shares outstanding — basic | 62,605 | 62,763 | 62,678 | 62,806 | ||||||||||||||||
Dilutive shares - stock options | 26 | 78 | 41 | 84 | ||||||||||||||||
Weighted average shares outstanding — diluted | 62,631 | 62,841 | 62,719 | 62,890 | ||||||||||||||||
Net income per share attributable to common shareholders: | ||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.39 | $ | 1.31 | $ | 1.33 | ||||||||||||
Diluted | $ | 0.44 | $ | 0.39 | $ | 1.31 | $ | 1.33 |
truitt.allcott@owens-minor.com
chuck.graves@owens-minor.com
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