Exhibit 99.1
FOR IMMEDIATE RELEASE
October 24, 2011
Owens & Minor Reports Financial Results for 3rd Quarter 2011,
Including Record Quarterly Revenue and Improved Earnings
Owens & Minor to host Annual Investor Day on December 7, 2011 in New York
RICHMOND, VA….Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the third quarter ended September 30, 2011, including record quarterly revenue of $2.18 billion, improved 5.5% in comparison to revenue of $2.06 billion in the third quarter of 2010. Net income for the third quarter of 2011 was $33.4 million, or $0.53 per diluted share, an increase of nearly $2 million, or 5.9%, when compared to net income of $31.5 million, or $0.50 per diluted share, for the same period of 2010.
“During the third quarter, we worked very hard in a tough market to achieve solid results, including a strong top line and expense improvements,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “As we finish out the year, we will continue to invest in the building blocks of our future with the upcoming conversion of a large new multi-state customer group, solidifying our third-party logistics business, implementing cost reduction measures, and establishing our new joint venture for sourcing in China.”
Operating earnings for the third quarter of 2011 were $58.5 million, or 2.69% of revenues, improved slightly when compared to the prior-year third quarter. In a sequential comparison, third quarter operating earnings improved to 2.69% of revenues from 2.39% of revenues in the second quarter of 2011. The sequential improvement in operating earnings resulted primarily from a reduction in selling, general & administrative expenses (SG&A). As a percentage of revenues, SG&A for the third quarter of 2011 was 7.02%, compared favorably to SG&A of 7.33% of revenues in the second quarter of 2011.
Year-to-Date Results
For the nine months ended September 30, 2011, revenue was $6.43 billion, increased $380 million, or 6.3%, when compared to revenue of $6.05 billion for the same period of 2010. Net income for the first nine months of 2011 was $91.3 million, or $1.44 per diluted share, increased 2.8% in comparison to net income of $88.8 million, or $1.40 per diluted share, for the same period of 2010. For the first nine months of 2011, operating earnings were $160.5 million, or 2.50% of revenues, increased from operating earnings of $156.6 million, or 2.59% of revenues, for the same period last year.
Asset Management
The balance of cash and cash equivalents at September 30, 2011, was $196.9 million, increased from $159.2 million at December 31, 2010. Total interest-bearing debt as of September 30, 2011, was $215 million, increased slightly when compared to $211 million as of December 31, 2010. Days sales
outstanding (DSO) as of September 30, 2011, was 20.6, comparing favorably to DSO of 21.3 days at the end of the prior year’s third quarter. Inventory turns were 10.3 compared to turns of 10.2 for the same period last year.
2011 Outlook
The company will provide an update of its 2011 outlook during the management conference call scheduled for Tuesday, October 25, 2011. 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.
Upcoming Investor Relations Events
| • | 4th Quarter Investor Conferences: |
| • | 2011 Credit Suisse Healthcare Conference, November 9, 2011 – Phoenix |
| • | 2011 Lazard Healthcare Conference, November 16, 2011 – New York |
| • | On Wednesday, December 7, 2011, Owens & Minor will host its Annual Investor Day in New York. Owens & Minor’s President & Chief Executive Officer Craig R. Smith and Chief Financial Officer James L. Bierman are scheduled to speak at the event, providing an operational and strategic overview, as well as the company’s financial outlook for 2012. The meeting is scheduled to begin at 8:30 a.m. ET and conclude at approximately 10:30 a.m. ET. A live, listen-only webcast of the briefing can be accessed on the company website atwww.owens-minor.com under the Investor Relations Section. A webcast replay of the event will also be available on the company website. Prospective participants are encouraged to request information via email atInvestorDay@owens-minor.com. |
Investors’ Conference Call & Supplemental Material
Owens & Minor’s management team will conduct a conference call to discuss the third quarter financial results on Tuesday, October 25, 2011, at 8:30 a.m. EDT. The access code for the conference call, international dial-in, and replay is #17636028. 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 855-859-2056. A webcast of the call, along with supplemental information, will be available onwww.owens-minor.com under the Investor Relations section.
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) aFORTUNE 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 atwww.owens-minor.com.
CONTACTS:
Trudi Allcott, Director, Investor & Media Relations, 804-723-7555;truitt.allcott@owens-minor.com
Chuck Graves, Director, Finance & Investor Relations, 804-723-7556;chuck.graves@owens-minor.com
Source: Owens & Minor
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Page 4
Owens & Minor, Inc.
Condensed Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
| Three Months Ended September 30, | ||||||||
| 2011 | 2010 | |||||||
Net revenue | $ | 2,176,759 | $ | 2,063,879 | ||||
Cost of goods sold | 1,960,077 | 1,859,925 | ||||||
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Gross margin | 216,682 | 203,954 | ||||||
Selling, general and administrative expenses | 152,825 | 141,116 | ||||||
Pension expense | — | 453 | ||||||
Depreciation and amortization | 8,463 | 7,464 | ||||||
Other operating income, net | (3,071 | ) | (392 | ) | ||||
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Operating earnings | 58,465 | 55,313 | ||||||
Interest expense, net | 3,426 | 3,758 | ||||||
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Income before income taxes | 55,039 | 51,555 | ||||||
Income tax provision | 21,687 | 20,050 | ||||||
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Net income | $ | 33,352 | $ | 31,505 | ||||
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Net income per common share - basic | $ | 0.53 | $ | 0.50 | ||||
Net income per common share - diluted | $ | 0.53 | $ | 0.50 | ||||
Weighted average shares - basic | 62,802 | 62,395 | ||||||
Weighted average shares - diluted | 62,947 | 62,612 | ||||||
| Nine Months Ended September 30, | ||||||||
| 2011 | 2010 | |||||||
Net revenue | $ | 6,432,022 | $ | 6,053,442 | ||||
Cost of goods sold | 5,788,499 | 5,453,547 | ||||||
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Gross margin | 643,523 | 599,895 | ||||||
Selling, general and administrative expenses | 460,119 | 421,829 | ||||||
Pension expense | — | 1,793 | ||||||
Depreciation and amortization | 25,479 | 21,360 | ||||||
Other operating income, net | (2,576 | ) | (1,713 | ) | ||||
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Operating earnings | 160,501 | 156,626 | ||||||
Interest expense, net | 10,163 | 10,562 | ||||||
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Income before income taxes | 150,338 | 146,064 | ||||||
Income tax provision | 59,082 | 57,273 | ||||||
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Net income | $ | 91,256 | $ | 88,791 | ||||
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Net income per common share - basic | $ | 1.44 | $ | 1.41 | ||||
Net income per common share - diluted | $ | 1.44 | $ | 1.40 | ||||
Weighted average shares - basic | 62,801 | 62,278 | ||||||
Weighted average shares - diluted | 62,984 | 62,538 | ||||||
Page 5
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
| September 30, 2011 | December 31, 2010 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 196,852 | $ | 159,213 | ||||
Accounts and notes receivable, net | 507,152 | 471,661 | ||||||
Merchandise inventories | 760,992 | 720,116 | ||||||
Other current assets | 64,560 | 52,799 | ||||||
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Total current assets | 1,529,556 | 1,403,789 | ||||||
Property and equipment, net | 105,065 | 101,545 | ||||||
Goodwill, net | 247,271 | 247,271 | ||||||
Intangible assets, net | 22,802 | 24,825 | ||||||
Other assets, net | 44,920 | 44,609 | ||||||
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Total assets | $ | 1,949,614 | $ | 1,822,039 | ||||
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Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts and drafts payable | $ | 612,923 | $ | 531,735 | ||||
Accrued payroll and related liabilities | 15,302 | 20,588 | ||||||
Deferred income taxes | 31,852 | 39,082 | ||||||
Other accrued liabilities | 99,822 | 103,076 | ||||||
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Total current liabilities | 759,899 | 694,481 | ||||||
Long-term debt, excluding current portion | 213,111 | 209,096 | ||||||
Deferred income taxes | 20,477 | 12,107 | ||||||
Other liabilities | 49,148 | 48,837 | ||||||
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Total liabilities | 1,042,635 | 964,521 | ||||||
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Shareholders’ equity | ||||||||
Common stock | 126,848 | 126,867 | ||||||
Paid-in capital | 176,540 | 165,447 | ||||||
Retained earnings | 608,344 | 570,320 | ||||||
Accumulated other comprehensive loss | (4,753 | ) | (5,116 | ) | ||||
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Total shareholders’ equity | 906,979 | 857,518 | ||||||
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Total liabilities and shareholders’ equity | $ | 1,949,614 | $ | 1,822,039 | ||||
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Page 6
Owens & Minor, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| Nine Months Ended September 30, | ||||||||
| 2011 | 2010 | |||||||
Operating activities: | ||||||||
Net income | $ | 91,256 | $ | 88,791 | ||||
Adjustments to reconcile net income to cash provided by operating activities of continuing operations: | ||||||||
Depreciation and amortization | 25,479 | 21,360 | ||||||
Provision for LIFO reserve | 11,265 | 8,433 | ||||||
Share-based compensation expense | 4,335 | 5,452 | ||||||
Provision for losses on accounts and notes receivable | 1,107 | 1,673 | ||||||
Pension expense | — | 1,793 | ||||||
Deferred income tax expense | 908 | 4,119 | ||||||
Pension contributions | (543 | ) | (8,300 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | (36,598 | ) | (4,863 | ) | ||||
Merchandise inventories | (52,141 | ) | (51,840 | ) | ||||
Accounts payable | 2,988 | 147,596 | ||||||
Net change in other assets and liabilities | (18,465 | ) | 822 | |||||
Other, net | 335 | (545 | ) | |||||
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Cash provided by operating activities of continuing operations | 29,926 | 214,491 | ||||||
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Investing activities: | ||||||||
Additions to property and equipment | (16,846 | ) | (19,884 | ) | ||||
Additions to computer software and intangible assets | (8,035 | ) | (7,249 | ) | ||||
Proceeds from the sale of property and equipment | 46 | 2,422 | ||||||
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Cash used for investing activities of continuing operations | (24,835 | ) | (24,711 | ) | ||||
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Financing activities: | ||||||||
Increase (decrease) in drafts payable | 78,200 | (108,300 | ) | |||||
Proceeds from exercise of stock options | 7,937 | 5,736 | ||||||
Proceeds from termination of interest rate swaps | 4,005 | — | ||||||
Excess tax benefits related to share-based compensation | 1,977 | 1,815 | ||||||
Repurchases of common stock | (16,124 | ) | — | |||||
Cash dividends paid | (38,156 | ) | (33,520 | ) | ||||
Other, net | (5,127 | ) | (5,099 | ) | ||||
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Cash provided by (used for) financing activities of continuing operations | 32,712 | (139,368 | ) | |||||
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Discontinued operations: | ||||||||
Operating cash flows | (164 | ) | (1,478 | ) | ||||
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Net cash used for discontinued operations | (164 | ) | (1,478 | ) | ||||
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Net increase in cash and cash equivalents | 37,639 | 48,934 | ||||||
Cash and cash equivalents at beginning of period | 159,213 | 96,136 | ||||||
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Cash and cash equivalents at end of period | $ | 196,852 | $ | 145,070 | ||||
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Page 7
Owens & Minor, Inc.
Financial Statistics (unaudited)
| Quarter Ended | ||||||||||||||||||||
(in thousands, except ratios and per share data) | 9/30/2011 | 6/30/2011 | 3/31/2011 | 12/31/2010 | 9/30/2010 | |||||||||||||||
Operating results: | ||||||||||||||||||||
Net revenue | $ | 2,176,759 | $ | 2,131,448 | $ | 2,123,815 | $ | 2,070,166 | $ | 2,063,879 | ||||||||||
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Gross margin | $ | 216,682 | $ | 216,066 | $ | 210,775 | $ | 207,830 | $ | 203,954 | ||||||||||
Gross margin as a percent of revenue | 9.95 | % | 10.14 | % | 9.92 | % | 10.04 | % | 9.88 | % | ||||||||||
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SG&A expenses | $ | 152,825 | $ | 156,321 | $ | 150,973 | $ | 142,340 | $ | 141,116 | ||||||||||
SG&A expenses as a percent of revenue | 7.02 | % | 7.33 | % | 7.11 | % | 6.88 | % | 6.84 | % | ||||||||||
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Operating earnings | $ | 58,465 | $ | 51,039 | $ | 50,997 | $ | 39,310 | $ | 55,313 | ||||||||||
Operating earnings as a percent of revenue | 2.69 | % | 2.39 | % | 2.40 | % | 1.90 | % | 2.68 | % | ||||||||||
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Net income | $ | 33,352 | $ | 29,164 | $ | 28,740 | $ | 21,788 | $ | 31,505 | ||||||||||
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Net income per common share - basic | $ | 0.53 | $ | 0.46 | $ | 0.45 | $ | 0.35 | $ | 0.50 | ||||||||||
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Net income per common share - diluted | $ | 0.53 | $ | 0.46 | $ | 0.45 | $ | 0.34 | $ | 0.50 | ||||||||||
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Accounts receivable: | ||||||||||||||||||||
Accounts and notes receivable, net | $ | 507,152 | $ | 504,509 | $ | 520,688 | $ | 471,661 | $ | 501,270 | ||||||||||
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Days sales outstanding(1) | 20.6 | 20.6 | 21.1 | 19.6 | 21.3 | |||||||||||||||
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Inventory: | ||||||||||||||||||||
Merchandise inventories | $ | 760,992 | $ | 751,613 | $ | 729,546 | $ | 720,116 | $ | 733,296 | ||||||||||
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Average inventory turnover(1) | 10.3 | 10.4 | 10.7 | 10.2 | 10.2 | |||||||||||||||
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Financing: | ||||||||||||||||||||
Cash and cash equivalents | $ | 196,852 | $ | 159,194 | $ | 185,850 | $ | 159,213 | $ | 145,070 | ||||||||||
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Total interest-bearing debt | $ | 215,037 | $ | 214,020 | $ | 210,801 | $ | 210,906 | $ | 210,270 | ||||||||||
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Stock information: | ||||||||||||||||||||
Cash dividends per common share | $ | 0.200 | $ | 0.200 | $ | 0.200 | $ | 0.177 | $ | 0.177 | ||||||||||
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Stock price at quarter-end | $ | 28.48 | $ | 34.49 | $ | 32.48 | $ | 29.43 | $ | 28.46 | ||||||||||
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| (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 period presentation.