EX-99.1 3 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

FOR IMMEDIATE RELEASE

July 27, 2009

Owens & Minor 2nd Quarter 2009 Revenue Tops $2 Billion with

Strong Operating Earnings & Cash Flow

Owens & Minor completes transition of acquired business during the quarter

RICHMOND, VA….Owens & Minor (NYSE-OMI) today reported financial results for the second quarter ended June 30, 2009, including record quarterly revenue of $2.01 billion, improved 13.7% when compared to revenue of $1.77 billion in the second quarter of 2008. Income from continuing operations for the quarter was $27.8 million, or $0.67 per diluted share, increased 13.6% when compared to income from continuing operations of $24.5 million, or $0.59 per diluted share, in the comparable period of 2008. Net income for the second quarter was $23.6 million, or $0.57 per diluted share, unchanged from last year’s second quarter.

Results for the second quarter and first six months of 2009 reflect the impact of transitioning the business acquired from The Burrows Company, as well as the January 2009 sale of certain assets of its direct-to-consumer diabetes supply (DTC) business, which is shown as discontinued operations for all periods presented. For the second quarter, the company recorded a loss from discontinued operations of $4.1 million, or $0.10 per diluted share, resulting primarily from pre-tax charges associated with exiting this business.

“Despite a tough economic climate this year, we have grown our business, improved operating profitability, and generated great cash flow,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “We are very pleased that our team turned in a very strong second quarter performance, even while transitioning the Burrows business and pursuing our strategic initiatives. With the completion of the Burrows transition, we are intent on improving margins as we focus these new customers on the advantages of our valued-added programs and services.”

 

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In the second quarter of 2009, the company reported gross margin of $197.7 million, or 9.82% of revenues, compared to $175.3 million, or 9.90% of revenues, in the second quarter last year. The increase in gross margin resulted from strong quarterly revenue growth and recognition of revenue related to customer contracts with performance targets. In the second quarter, after achieving contractual performance targets, the company recognized $2.7 million of previously deferred revenue, net of revenues deferred during the second quarter.

Year-to-Date Results

For the six months ended June 30, 2009, revenue was $3.96 billion, improved 13.3% from revenue of $3.50 billion in the same period last year. Income from continuing operations for the year-to-date was $50.1 million, or $1.20 per diluted share, increased 3.4% when compared to income from continuing operations of $48.5 million, or $1.17 per diluted share, in the comparable period of 2008. For the first six months of 2009, the company recorded a loss from discontinued operations of $12.5 million, or $0.30 per diluted share, resulting primarily from pre-tax charges associated with exiting the DTC business. As a result, net income for the first half of 2009 was $37.6 million, decreased 21.4% when compared to net income of $47.8 million in the same period last year, while net income per diluted share for the first six months of 2009 was $0.90, decreased 21.7% when compared to $1.15 per diluted share for the same period last year.

Asset Management

For the first six months of the year, operating cash flow from continuing operations was $123 million, compared to the prior year’s $76 million. Cash provided by discontinued operations was $75 million, including $63 million received from the sale of certain assets of the DTC business to Liberty Healthcare Group, Inc., a subsidiary of Medco Health Solutions, Inc. The company used cash to reduce long-term debt by $151 million to $208 million as of June 30, 2009. Days sales outstanding (DSO) was strong at 22.6 days compared to 23.2 at the end of the prior year’s quarter; inventory turns were 10.1 compared to turns of 10.4 in the second quarter last year.

2009 Outlook

“Our year-to-date results are consistent with where we thought we would be at this point in the year, and we are comfortable with our guidance for 2009, which remains unchanged,” said Smith. “When looking at the full year 2009, we are targeting revenue growth for the year in the upper end of a range of 8% to 12%, and income per diluted share from continuing operations in the upper end of a range of $2.55 to $2.70.”

The 2009 outlook is based on certain assumptions that are subject to the risk factors discussed in the company’s filings with the Securities & Exchange Commission.

Recent Highlights

 

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Owens & Minor won top honors in three award categories from Premier Inc., at Premier’s annual membership conference in June, including: the Premier 2009 Polaris Award for high supplier quality and customer service; the 2009 Premier Diversity Award for efforts to increase the diversity of suppliers; and the Premier 2009 Supplier Pinnacle Award for contract management excellence.

 

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•  

Effective June 29, 2009, Owens & Minor launched a newly designed Web site at www.owens-minor.com. The redesigned Web site features an expanded variety of features and functionality including information on products, services & solutions, Owens & Minor University, career opportunities, and investor relations. Owens & Minor uses its Web site as a channel of distribution for material company information, including news releases, investor presentations and financial information. This information is routinely posted and accessible under the Investor Relations section.

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 Securities & Exchange Commission. All of this information is available at www.owens-minor.com. 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.

Owens & Minor, Inc., (NYSE: OMI) a FORTUNE 500 company headquartered in Richmond, Virginia, is a leading distributor of national name-brand medical and surgical supplies and a healthcare supply-chain management company. Owens & Minor is also a member of the Russell 2000® Index, which measures the performance of the small-cap segment of the U.S. equity universe, as well as the S&P MidCap 400, which includes companies with a market capitalization of $750 million to $3.3 billion that meet certain financial standards. With a diverse product and service offering and distribution centers throughout the United States, the company serves hospitals, integrated healthcare systems, alternate care locations, group purchasing organizations, and the federal government. Owens & Minor provides technology and consulting programs that improve inventory management and streamline logistics across the entire medical supply chain—from origin of product to patient bedside. For news releases, or for more information about Owens & Minor, visit the company Web site at www.owens-minor.com.

Investors Conference Call & Supplemental Material

Conference Call: Owens & Minor will conduct a conference call for investors on Tuesday, July 28, 2009, at 9:00 a.m. Eastern Daylight Time. Participants may access the call at 877-748-0043 with access code #19295196. The international dial-in number is 706-758-5871 with access code #19295196. Webcast: A webcast of the call, along with supplemental information, will be available on www.owens-minor.com under “Investor Relations.” Replay: A replay of the call will be available for three weeks by dialing 800-642-1687, using access code #19295196.

 

CONTACTS:    Trudi Allcott, Director, Investor & Media Relations, 804-723-7555;
   Chuck Graves, Director, Finance & Investor Relations, 804-723-7556

 

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Owens & Minor, Inc.

Condensed Consolidated Statements of Income (unaudited)

(in thousands, except per share data)

 

     Three Months Ended June 30,  
     2009     2008  

Revenue

    $ 2,013,780      $ 1,771,230   

Cost of revenue

      1,816,081        1,595,888   
                

Gross margin

      197,699        175,342   

Selling, general and administrative expenses

      143,972        128,738   

Depreciation and amortization

      6,046        5,394   

Other operating income, net

      (1,265 )      (1,898 ) 
                

Operating earnings

      48,946        43,108   

Interest expense, net

      3,291        2,837   
                

Income before income taxes

      45,655        40,271   

Income tax provision

      17,880        15,811   
                

Income from continuing operations

      27,775        24,460   

Loss from discontinued operations, net of tax

      (4,127 )      (828 ) 
                

Net income

    $ 23,648      $ 23,632   
                

Income (loss) per share - basic:

     

Continuing operations

    $ 0.67      $ 0.60   

Discontinued operations

    $ (0.10 )    $ (0.02 ) 

Net income per share - basic

    $ 0.57      $ 0.58   

Income (loss) per share - diluted:

     

Continuing operations

    $ 0.67      $ 0.59   

Discontinued operations

    $ (0.10 )    $ (0.02 ) 

Net income per share - diluted

    $ 0.57      $ 0.57   

Weighted average shares - basic

      41,070        40,754   

Weighted average shares - diluted

      41,625        41,449   
     Six Months Ended June 30,  
     2009     2008  

Revenue

    $ 3,962,408      $ 3,498,531   

Cost of revenue

      3,581,076        3,152,976   
                

Gross margin

      381,332        345,555   

Selling, general and administrative expenses

      283,369        251,730   

Depreciation and amortization

      11,862        10,676   

Other operating income, net

      (2,725 )      (2,919 ) 
                

Operating earnings

      88,826        86,068   

Interest expense, net

      6,632        6,376   
                

Income before income taxes

      82,194        79,692   

Income tax provision

      32,061        31,192   
                

Income from continuing operations

      50,133        48,500   

Loss from discontinued operations, net of tax

      (12,509 )      (660 ) 
                

Net income

    $ 37,624      $ 47,840   
                

Income (loss) per share - basic:

     

Continuing operations

    $ 1.21      $ 1.18   

Discontinued operations

    $ (0.30 )    $ (0.01 ) 

Net income per share - basic

    $ 0.91      $ 1.17   

Income (loss) per share - diluted:

     

Continuing operations

    $ 1.20      $ 1.17   

Discontinued operations

    $ (0.30 )    $ (0.02 ) 

Net income per share - diluted

    $ 0.90      $ 1.15   

Weighted average shares - basic

      41,033        40,677   

Weighted average shares - diluted

      41,608        41,363   

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Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in thousands)

 

     June 30,
2009		     December 31,
2008		  

Assets

     

Current assets

     

Cash and cash equivalents

    $ 14,723      $ 7,886   

Accounts and notes receivable, net

      500,204        521,311   

Merchandise inventories

      696,955        679,069   

Other current assets

      71,500        71,329   

Current assets of discontinued operations

      —          32,199   
                

Total current assets

      1,283,382        1,311,794   

Property and equipment, net

      80,163        76,949   

Property held for sale

      13,470        15,730   

Goodwill, net

      252,412        252,412   

Intangible assets, net

      26,456        27,802   

Other assets, net

      32,887        29,145   

Other assets of discontinued operations

      —          62,358   
                

Total assets

    $ 1,688,770      $ 1,776,190   
                

Liabilities and shareholders’ equity

     

Current liabilities

     

Accounts payable

    $ 569,735      $ 513,026   

Accrued payroll and related liabilities

      22,681        40,018   

Other accrued liabilities

      106,098        103,429   

Current liabilities of discontinued operations

      4,074        11,038   
                

Total current liabilities

      702,588        667,511   

Long-term debt, excluding current portion

      208,326        359,237   

Other liabilities

      63,650        60,391   
                

Total liabilities

      974,564        1,087,139   
                

Shareholders’ equity

     

Common stock

      83,473        82,881   

Paid-in capital

      185,861        180,074   

Retained earnings

      456,686        438,192   

Accumulated other comprehensive loss

      (11,814 )      (12,096 ) 
                

Total shareholders’ equity

      714,206        689,051   
                

Total liabilities and shareholders’ equity

    $ 1,688,770      $ 1,776,190   
                

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Owens & Minor, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

     Six Months Ended
June 30,		  
     2009     2008  

Operating activities:

     

Net income

    $ 37,624      $ 47,840   

Adjustments to reconcile net income to cash provided by operating activities of continuing operations:

     

Loss from discontinued operations

      12,509        660   

Provision for LIFO reserve

      16,440        10,468   

Depreciation and amortization

      11,862        10,676   

Share-based compensation expense

      4,159        4,703   

Provision for losses on accounts and notes receivable

      2,052        1,724   

Changes in operating assets and liabilities:

     

Accounts and notes receivable

      19,055        (12,556 ) 

Merchandise inventories

      (34,326 )      (60,726 ) 

Accounts payable

      70,963        81,281   

Net change in other current assets and current liabilities

      (21,440 )      (10,037 ) 

Other, net

      4,515        1,491   
                

Cash provided by operating activities of continuing operations

      123,413        75,524   
                

Investing activities:

     

Additions to property and equipment

      (9,420 )      (3,595 ) 

Additions to computer software

      (7,311 )      (4,658 ) 

Cash received related to acquisition of business

      6,994        —     

Other, net

      —          8   
                

Cash used for investing activities of continuing operations

      (9,737 )      (8,245 ) 
                

Financing activities:

     

Net payments on revolving credit facility

      (150,578 )      (62,200 ) 

Cash dividends paid

      (19,130 )      (16,461 ) 

Increase (decrease) in drafts payable

      (14,254 )      4,759   

Proceeds from exercise of stock options

      2,170        7,226   

Excess tax benefits related to share-based compensation

      958        2,454   

Other, net

      (1,089 )      (1,226 ) 
                

Cash used for financing activities of continuing operations

      (181,923 )      (65,448 ) 
                

Discontinued operations:

     

Operating cash flows

      12,084        3,437   

Investing cash flows

      63,000        (1,406 ) 
                

Net cash provided by discontinued operations

      75,084        2,031   
                

Net increase in cash and cash equivalents

      6,837        3,862   

Cash and cash equivalents at beginning of period

      7,886        10,395   
                

Cash and cash equivalents at end of period

    $ 14,723      $ 14,257   
                

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Owens & Minor, Inc.

Financial Statistics (unaudited)

 

     Quarter Ended  

(in thousands, except ratios and per share data)

    6/30/2009     3/31/2009     12/31/2008     9/30/2008     6/30/2008  

Operating results:

           

Revenue

    $ 2,013,780      $ 1,948,628      $ 1,957,848      $ 1,786,858      $ 1,771,230   
                                        

Gross margin

    $ 197,699      $ 183,633      $ 192,956      $ 178,749      $ 175,342   

Gross margin as a percent of revenue

     9.82 %      9.42 %      9.86 %      10.00 %      9.90 % 
                                        

SG&A expense

    $ 143,972      $ 139,397      $ 141,015      $ 128,656      $ 128,738   

SG&A expense as a percent of revenue

      7.15 %      7.15 %      7.20 %      7.20 %      7.27 % 
                                        

Operating earnings

    $ 48,946      $ 39,880      $ 48,338      $ 46,319      $ 43,108   

Operating earnings as a percent of revenue

      2.43 %      2.05 %      2.47 %      2.59 %      2.43 % 
                                        

Income from continuing operations

    $ 27,775      $ 22,358      $ 27,409      $ 25,348      $ 24,460   

Loss from discontinued operations, net of tax

    $ (4,127 )    $ (8,382 )    $ (7,206 )    $ (64 )    $ (828 ) 

Net income

    $ 23,648      $ 13,976      $ 20,203      $ 25,284      $ 23,632   
                                        

Income (loss) per common share - basic:

           

Continuing operations

    $ 0.67      $ 0.54      $ 0.66      $ 0.62      $ 0.60   

Discontinued operations

    $ (0.10 )    $ (0.20 )    $ (0.17 )    $ (0.01 )    $ (0.02 ) 

Net income per share - basic

    $ 0.57      $ 0.34      $ 0.49      $ 0.61      $ 0.58   
                                        

Income (loss) per common share - diluted:

           

Continuing operations

    $ 0.67      $ 0.54      $ 0.66      $ 0.61      $ 0.59   

Discontinued operations

    $ (0.10 )    $ (0.20 )    $ (0.17 )    $ —        $ (0.02 ) 

Net income per share - diluted

    $ 0.57      $ 0.34      $ 0.49      $ 0.61      $ 0.57   
                                        

Accounts receivable:

           

Accounts and notes receivable, net(2)

   $ 500,204      $ 511,875      $ 521,311      $ 449,988      $ 452,248   
                                        

Days sales outstanding (1) (2)

      22.6        23.6        24.5        23.2        23.2   
                                        

Inventory:

           

Merchandise inventories (2)

    $ 696,955      $ 702,253      $ 679,069      $ 605,711      $ 628,179   
                                        

Average inventory turnover (1) (2)

      10.1        10.3        10.9        10.3        10.4   
                                        

Financing:

           

Long-term debt, excluding current portion

    $ 208,326      $ 212,596      $ 359,237      $ 208,832      $ 221,081   
                                        

Stock information:

           

Cash dividends per common share

    $ 0.23      $ 0.23      $ 0.20      $ 0.20      $ 0.20   
                                        

Stock price at quarter-end

    $ 43.82      $ 33.13      $ 37.65      $ 48.50      $ 45.69   
                                        

 

(1)

Days sales outstanding and average inventory turnover are based on three-months' sales.

(2)

Based on results from continuing operations.

Certain adjustments have been made to prior period amounts to conform to current year presentation.