EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

FOR IMMEDIATE RELEASE

July 25, 2011

Owens & Minor Releases 2nd Quarter 2011 Financial Results;

Company Reports 5.5% Quarterly Revenue Growth

OMI refines financial guidance for 2011

RICHMOND, VA….Owens & Minor, Inc., (NYSE-OMI) today reported financial results for the second quarter ended June 30, 2011, including quarterly revenue of $2.13 billion, improved 5.5% from revenue of $2.02 billion for the second quarter last year. For the second quarter of 2011, net income was $29.2 million, or $0.46 per diluted share, compared to $29.5 million, or $0.46 per diluted share for the same period of 2010.

“Our second quarter was characterized by solid revenue growth, as we experienced a continuation of stronger purchasing trends from our healthcare customers,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “Armed with prestigious customer awards for service and operational excellence, as well as the CIO 100 award for operational and strategic excellence in information technology, we look forward to providing our innovative and exceptional service to the market as we finish out the year.”

Operating earnings for the second quarter of 2011 were $51.0 million, or 2.39% of revenues, a slight decline when compared to operating earnings of $52.2 million, or 2.58% of revenues, in the second quarter last year. The change in quarterly operating earnings was driven primarily by increased selling, general & administrative expenses (SG&A) resulting from serving business growth.

Year-to-Date Results

For the six months ended June 30, 2011, revenue was $4.26 billion, an improvement of nearly $266 million, or 6.7%, when compared to revenue of $3.99 billion for the first six months of 2010. Net income for the first half of 2011 was $57.9 million, or $0.91 per diluted share, improved $0.6 million, when compared to net income of $57.3 million, or $0.91 per diluted share, in the same period last year. Operating earnings for the year-to-date period were $102.0 million, or 2.40% of revenues, an increase of less than $1 million when compared to operating earnings of $101.3 million, or 2.54% of revenues for the same period in the prior year.

 

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Asset Management

The balance of cash and cash equivalents was $159.2 million at June 30, 2011, unchanged from December 31, 2010. For the first six months of 2011, cash used for operating activities was $34.5 million, compared to cash provided by operating activities of $183.1 million for the same period last year. Total interest-bearing debt as of June 30, 2011, was $214 million, increased slightly when compared to $211 million as of December 31, 2010. Days sales outstanding (DSO) were 20.6 days, compared to 19.8 days at the end of the prior year’s second quarter. Inventory turns were 10.4, compared to turns of 10.6 for the same period last year.

2011 Outlook

After considering year-to-date 2011 financial and operational results, the company refined its financial guidance for the full year.

“Based on our performance in the first six months of 2011, we are increasing our targeted revenue growth for 2011 to a range of 4% to 6% when compared to 2010, and we believe that net income per diluted share for the full year will be near the lower end of the original range provided of $1.95 to $2.10,” said Smith.

The 2011 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

 

•  

Owens & Minor and Amsino Medical Group (Amsino), a privately held healthcare products developer and manufacturer, have entered into an agreement to establish a joint venture designed to provide sourcing services for Owens & Minor’s private label offering. In an agreement dated July 24, 2011, Owens & Minor, as the majority partner, will provide initial start-up capital to establish the newly formed entity. Responsibilities of the joint venture will include manufacturer identification and qualification, regulatory compliance, quality assurance, and logistics and shipping management. Owens & Minor believes that with this further expansion of its private label sourcing capabilities, it will improve service, quality and value for its private-label product customers. Amsino has provided high-value medical products to the U.S. and global markets since 1993, and has facilities in China. Consummation of the agreement is subject to certain conditions.

 

•  

During the second quarter, Owens & Minor was named as a recipient of the 2011 CIO 100 award. The 24th annual award program, produced each year by CIO magazine, recognizes organizations around the world that exemplify the highest level of operational and strategic excellence in information technology. The theme of this year’s CIO 100 was “innovation for business growth.”

 

•  

In June 2011, Owens & Minor was honored by the Premier healthcare alliance with two distinctions, the Polaris Award for quality service, high focus on customer relationships and exceptional customer service, and the Pinnacle Award, which is awarded by the Premier membership for outstanding management of contracts and for providing clinical and financial value to members of Premier. Owens & Minor is the first Premier provider to win these two awards in three consecutive years.

 

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•  

During the third quarter, Owens & Minor intends to participate in the following investor conferences:

 

  •  

Robert W. Baird 2011 Healthcare Conference – September 8, 2011, New York

 

  •  

Stifel, Nicolaus & Company Healthcare Conference – September 8, 2011, Boston

Investors’ Conference Call & Supplemental Material

Owens & Minor management will conduct a conference call to discuss the second quarter financial results on Tuesday, July 26, 2011, at 8:30 a.m. EDT. The access code for the conference call, international dial-in, and replay is #79573958. Participants may access the call at 877-748-0043. The international dial-in number is 706-758-5871. A replay of the call will be available for three weeks by dialing 800-642-1687. A webcast of the call, along with supplemental information, will be available on www.owens-minor.com under “Investor Relations.”

Information on www.Owens-Minor.com

Owens & Minor uses its website, www.owens-minor.com, 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 national distributor of 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 $1 billion to $4.4 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 site 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 website at www.owens-minor.com.

CONTACTS: Trudi Allcott, Director, Investor & Media Relations, 804-723-7555;

Chuck Graves, Director, Finance & Investor Relations, 804-723-7556

Source: Owens & Minor

 

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Owens & Minor, Inc.

Condensed Consolidated Statements of Income (unaudited)

(in thousands, except per share data)

 

     Three Months Ended
June 30,		  
     2011      2010  

Net revenue

    $ 2,131,448       $ 2,019,893   

Cost of goods sold

      1,915,382         1,820,953   
                 

Gross margin

      216,066         198,940   

Selling, general and administrative expenses

      156,321         139,641   

Pension expense

      —           699   

Depreciation and amortization

      8,249         7,107   

Other operating expense (income), net

      457         (669 ) 
                 

Operating earnings

      51,039         52,162   

Interest expense, net

      3,020         3,505   
                 

Income before income taxes

      48,019         48,657   

Income tax provision

      18,855         19,188   
                 

Net income

    $ 29,164       $ 29,469   
                 

Net income per common share - basic

    $ 0.46       $ 0.47   

Net income per common share - diluted

    $ 0.46       $ 0.46   

Weighted average shares - basic

      63,007         62,334   

Weighted average shares - diluted

      63,198         62,606   
     Six Months Ended
June 30,		  
     2011      2010  

Net revenue

    $ 4,255,263       $ 3,989,563   

Cost of goods sold

      3,828,422         3,593,622   
                 

Gross margin

      426,841         395,941   

Selling, general and administrative expenses

      307,294         280,713   

Pension expense

      —           1,340   

Depreciation and amortization

      17,016         13,896   

Other operating expense (income), net

      495         (1,321 ) 
                 

Operating earnings

      102,036         101,313   

Interest expense, net

      6,737         6,804   
                 

Income before income taxes

      95,299         94,509   

Income tax provision

      37,395         37,223   
                 

Net income

    $ 57,904       $ 57,286   
                 

Net income per common share - basic

    $ 0.91       $ 0.91   

Net income per common share - diluted

    $ 0.91       $ 0.91   

Weighted average shares - basic

      62,808         62,213   

Weighted average shares - diluted

      63,012         62,500   

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Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in thousands)

 

     June 30,
2011		     December 31,
2010		  

Assets

     

Current assets

     

Cash and cash equivalents

    $ 159,194      $ 159,213   

Accounts and notes receivable, net

      504,509        471,661   

Merchandise inventories

      751,613        720,116   

Other current assets

      70,600        52,799   
                

Total current assets

      1,485,916        1,403,789   

Property and equipment, net

      100,807        101,545   

Goodwill, net

      247,271        247,271   

Intangible assets, net

      23,575        24,825   

Other assets, net

      48,301        44,609   
                

Total assets

    $ 1,905,870      $ 1,822,039   
                

Liabilities and shareholders’ equity

     

Current liabilities

     

Accounts and drafts payable

    $ 581,768      $ 531,735   

Accrued payroll and related liabilities

      18,626        20,588   

Deferred income taxes

      34,810        39,082   

Other accrued liabilities

      97,829        103,076   
                

Total current liabilities

      733,033        694,481   

Long-term debt, excluding current portion

      212,137        209,096   

Deferred income taxes

      15,860        12,107   

Other liabilities

      49,061        48,837   
                

Total liabilities

      1,010,091        964,521   
                

Shareholders’ equity

     

Common stock

      127,539        126,867   

Paid-in capital

      175,169        165,447   

Retained earnings

      597,945        570,320   

Accumulated other comprehensive loss

      (4,874 )      (5,116 ) 
                

Total shareholders’ equity

      895,779        857,518   
                

Total liabilities and shareholders’ equity

    $ 1,905,870      $ 1,822,039   
                

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Owens & Minor, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

     Six Months Ended
June 30,		  
     2011     2010  

Operating activities:

     

Net income

    $ 57,904      $ 57,286   

Adjustments to reconcile net income to cash (used for) provided by operating activities of continuing operations:

     

Provision for LIFO reserve

      11,265        8,433   

Depreciation and amortization

      17,016        13,896   

Share-based compensation expense

      3,581        4,633   

Provision for losses on accounts and notes receivable

      758        1,450   

Pension expense

      —          1,340   

Pension contributions

      (543 )      (8,300 ) 

Deferred income tax (benefit) expense

      (674 )      4,201   

Changes in operating assets and liabilities:

     

Accounts and notes receivable

      (33,606 )      28,604   

Merchandise inventories

      (42,762 )      (30,622 ) 

Accounts payable

      (24,267 )      113,988   

Net change in other assets and liabilities

      (23,321 )      (10,900 ) 

Other, net

      114        (921 ) 
                

Cash (used for) provided by operating activities of continuing operations

      (34,535 )      183,088   
                

Investing activities:

     

Additions to property and equipment

      (8,175 )      (15,488 ) 

Additions to computer software and intangible assets

      (5,573 )      (4,811 ) 

Proceeds from the sale of property and equipment

      44        1,612   
                

Cash used for investing activities of continuing operations

      (13,704 )      (18,687 ) 
                

Financing activities:

     

Increase (decrease) in drafts payable

      74,300        (82,350 ) 

Proceeds from exercise of stock options

      7,394        5,602   

Excess tax benefits related to share-based compensation

      1,761        1,735   

Other, net

      (4,514 )      (4,622 ) 

Repurchases of common stock

      (5,086 )      —     

Cash dividends paid

      (25,496 )      (22,324 ) 
                

Cash provided by (used for) financing activities of continuing operations

      48,359        (101,959 ) 
                

Discontinued operations:

     

Operating cash flows

      (139 )      (940 ) 
                

Net cash used for discontinued operations

      (139 )      (940 ) 
                

Net (decrease) increase in cash and cash equivalents

      (19 )      61,502   

Cash and cash equivalents at beginning of period

      159,213        96,136   
                

Cash and cash equivalents at end of period

    $ 159,194      $ 157,638   
                

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Owens & Minor, Inc.

Financial Statistics (unaudited)

 

     Quarter Ended  

(in thousands, except ratios and per share data)

   6/30/2011     3/31/2011     12/31/2010     9/30/2010     6/30/2010  

Operating results:

           

Net revenue

    $ 2,131,448      $ 2,123,815      $ 2,070,166      $ 2,063,879      $ 2,019,893   
                                        

Gross margin

    $ 216,066      $ 210,775      $ 207,830      $ 203,954      $ 198,940   

Gross margin as a percent of revenue

     10.14 %      9.92 %      10.04 %      9.88 %      9.85 % 
                                        

SG&A expenses

    $ 156,321      $ 150,973      $ 142,340      $ 141,116      $ 139,641   

SG&A expenses as a percent of revenue

      7.33 %      7.11 %      6.88 %      6.84 %      6.91 % 
                                        

Operating earnings

    $ 51,039      $ 50,997      $ 39,310      $ 55,313      $ 52,162   

Operating earnings as a percent of revenue

      2.39 %      2.40 %      1.90 %      2.68 %      2.58 % 
                                        

Net income

    $ 29,164      $ 28,740      $ 21,788      $ 31,505      $ 29,469   
                                        

Net income per common share - basic

    $ 0.46      $ 0.45      $ 0.35      $ 0.50      $ 0.47   
                                        

Net income per common share - diluted

    $ 0.46      $ 0.45      $ 0.34      $ 0.50      $ 0.46   
                                        

Accounts receivable:

           

Accounts and notes receivable, net

   $ 504,509      $ 520,688      $ 471,661      $ 501,270      $ 468,026   
                                        

Days sales outstanding (1)

      20.6        21.1        19.6        21.3        19.8   
                                        

Inventory:

           

Merchandise inventories

    $ 751,613      $ 729,546      $ 720,116      $ 733,296      $ 712,078   
                                        

Average inventory turnover (1)

      10.4        10.7        10.2        10.2        10.6   
                                        

Financing:

           

Cash and cash equivalents

    $ 159,194      $ 185,850      $ 159,213      $ 145,070      $ 157,638   
                                        

Total interest-bearing debt

    $ 214,020      $ 210,801      $ 210,906      $ 210,270      $ 209,416   
                                        

Stock information:

           

Cash dividends per common share

    $ 0.200      $ 0.200      $ 0.177      $ 0.177      $ 0.177   
                                        

Stock price at quarter-end

    $ 34.49      $ 32.48      $ 29.43      $ 28.46      $ 28.38   
                                        

 

(1)

Days sales outstanding (DSO) and average inventory turnover are based on three-months’ sales.

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