Exhibit 99.1
FOR IMMEDIATE RELEASE
February 6, 2012
Owens & Minor Reports 4th Quarter & Full-Year 2011 Financial Results; Annual Revenue Growth Exceeds 6%
RICHMOND, VA….Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the fourth quarter ended December 31, 2011, including quarterly revenue of $2.20 billion, an increase of 6.1% when compared to revenue of $2.07 billion in the fourth quarter of 2010. Net income for the fourth quarter of 2011 was $23.9 million, or $0.38 per diluted share, compared to $21.8 million, or $0.34 per diluted share, in the comparable period of 2010.
Financial results for the fourth quarter of 2011 included previously discussed exit and realignment costs of $12.7 million, or $0.13 per diluted share. For purposes of comparison, fourth quarter 2010 financial results included a pension settlement charge of $19.6 million, or $0.19 per diluted share, resulting from the company’s termination of its defined benefit pension plan.
In the fourth quarter of 2011, operating earnings were $43.0 million, or 1.96% of revenues, an improvement compared to $39.3 million, or 1.90% of revenues, in the fourth quarter of 2010. Excluding the impact of the fourth quarter 2011 exit and realignment costs and the fourth quarter 2010 pension settlement charge, quarterly operating earnings would have been 2.54% and 2.84% of revenues, respectively.
2011 Annual Results
For the year ended December 31, 2011, revenue was $8.63 billion, increased 6.2% from revenue of $8.12 billion in 2010. Net income for 2011 was $115.2 million, or $1.81 per diluted share, improved when compared to $110.6 million, or $1.75 per diluted share, for 2010. Excluding the negative impact of the fourth quarter 2011 exit and realignment costs of $12.7 million, net income would have been $1.94 per diluted share. For purposes of comparison, net income per diluted share for 2010, excluding the pension settlement charge of $19.6 million, also would have been $1.94. For 2011, operating earnings were $203.5 million, or 2.36% of revenues, compared to operating earnings of $195.9 million, or 2.41% of revenues, for the same period last year. Excluding the impact of the exit and realignment costs in 2011 and the pension settlement charge in 2010, operating margin would have been 2.51% and 2.65% of revenues, respectively.
“The six-percent revenue growth we reported for the year reflects the dedication of our teammates and the relationships they have fostered with our customers,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “Despite challenging conditions in the U.S. economy and in healthcare in 2011, we remained focused on serving our customers, improving the supply chain, and developing new markets for our company. The entire team at Owens & Minor demonstrated strength and resilience all year, and all of us are looking forward to 2012 with energy and enthusiasm.”
1
Asset Management
The balance of cash and cash equivalents at December 31, 2011, was $135.9 million, decreased by $23.3 million from $159.2 million at December 31, 2010. For the year, cash provided by operating activities was $68.4 million compared to $143.2 million for the same period last year. Cash from operating activities in 2011 was affected by a build-up of inventory related to new customer conversions. Inventory turns were 10.0 compared to turns of 10.2 for the same period last year. Days sales outstanding (DSO), as of December 31, 2011, was 20.7, increased when compared to DSO of 19.6 days at the end of the prior year’s fourth quarter.
Shareholder Distributions
The Owens & Minor board of directors has approved the payment of the first quarter 2012 cash dividend in the amount of $0.22 per share, a 10% increase over the prior quarter’s dividend. The cash dividend is payable on March 30, 2012, to shareholders of record as of March 15, 2012.
A share repurchase program of up to $50 million of the company’s outstanding common stock, authorized by the company’s board of directors in 2011, remains in effect and is to be executed at the discretion of management over a three-year period, expiring in February 2014. The program is intended to offset shares issued in conjunction with the company’s stock incentive plan and may be suspended or discontinued at any time. Under the program, Owens & Minor repurchased $16 million of the company’s common stock in 2011.
2012 Outlook
At its annual Investor Day last December, the company provided the following financial guidance for 2012:
“For 2012, we are targeting revenue growth in a range of 3% to 5%, when compared to 2011, and we are targeting net income per diluted share to increase 5% to 10%, when compared to 2011, excluding the fourth quarter 2011 exit and realignment costs,” said Smith.
The 2012 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
Owens & Minor will participate in four investor conferences in the first quarter of 2012. Webcasts of the formal presentations will be available onwww.owens-minor.com under the Investor Relations section.
| | • | | Leerink Swann 2012 Healthcare Conference, February 16 – New York |
| | • | | Citi 2012 Global Healthcare Conference, February 28 – New York |
| | • | | RBC Capital Markets 2012 Healthcare Conference, February 29 – New York |
| | • | | Barclays Capital 2012 Global Healthcare Conference, March 14 – Miami |
2
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 atwww.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, healthcare suppliers, 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.
Investors Conference Call & Supplemental Material
Conference Call: Owens & Minor will conduct a conference call for investors on Tuesday, February 7, 2012, at 8:30 a.m. Eastern.Participants may access the call at 877-748-0043 with access code #44641430. Theinternational dial-in number is 706-758-5871 with access code #44641430.Replay:A replay of the call will be available for three weeks by dialing 855-859-2056, using access code #44641430. Webcast: A listen-only webcast of the call, along with supplemental information, will be available onwww.owens-minor.com under “Investor Relations.”
Information on www.Owens-Minor.com
Owens & Minor uses its Web site,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.
CONTACTS:
Truitt 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
3
Owens & Minor, Inc.
Condensed Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
| | | | | | | | |
| | | Three Months Ended
December 31, | |
| | | 2011 | | | 2010 | |
| | |
Net revenue | | $ | 2,195,890 | | | $ | 2,070,166 | |
Cost of goods sold | | | 1,981,876 | | | | 1,862,336 | |
| | | | | | | | |
Gross margin | | | 214,014 | | | | 207,830 | |
Selling, general and administrative expenses | | | 150,538 | | | | 142,340 | |
Exit and realignment charges | | | 12,708 | | | | — | |
Pension expense | | | — | | | | 19,573 | |
Depreciation and amortization | | | 8,656 | | | | 7,788 | |
Other operating income, net | | | (902 | ) | | | (1,181 | ) |
| | | | | | | | |
Operating earnings | | | 43,014 | | | | 39,310 | |
Interest expense, net | | | 3,519 | | | | 3,761 | |
| | | | | | | | |
Income before income taxes | | | 39,495 | | | | 35,549 | |
Income tax provision | | | 15,553 | | | | 13,761 | |
| | | | | | | | |
Net income | | $ | 23,942 | | | $ | 21,788 | |
| | | | | | | | |
| | |
Net income per common share - basic | | $ | 0.38 | | | $ | 0.35 | |
Net income per common share - diluted | | $ | 0.38 | | | $ | 0.34 | |
| | |
Weighted average shares - basic | | | 62,655 | | | | 62,430 | |
Weighted average shares - diluted | | | 62,784 | | | | 62,656 | |
| |
| | | Twelve Months Ended
December 31, | |
| | | 2011 | | | 2010 | |
| | |
Net revenue | | $ | 8,627,912 | | | $ | 8,123,608 | |
Cost of goods sold | | | 7,770,375 | | | | 7,315,883 | |
| | | | | | | | |
Gross margin | | | 857,537 | | | | 807,725 | |
Selling, general and administrative expenses | | | 610,657 | | | | 564,169 | |
Exit and realignment charges | | | 12,708 | | | | — | |
Pension expense | | | — | | | | 21,366 | |
Depreciation and amortization | | | 34,135 | | | | 29,148 | |
Other operating income, net | | | (3,478 | ) | | | (2,894 | ) |
| | | | | | | | |
Operating earnings | | | 203,515 | | | | 195,936 | |
Interest expense, net | | | 13,682 | | | | 14,323 | |
| | | | | | | | |
Income before income taxes | | | 189,833 | | | | 181,613 | |
Income tax provision | | | 74,635 | | | | 71,034 | |
| | | | | | | | |
Net income | | $ | 115,198 | | | $ | 110,579 | |
| | | | | | | | |
| | |
Net income per common share - basic | | $ | 1.82 | | | $ | 1.76 | |
Net income per common share - diluted | | $ | 1.81 | | | $ | 1.75 | |
| | |
Weighted average shares - basic | | | 62,756 | | | | 62,315 | |
Weighted average shares - diluted | | | 62,924 | | | | 62,563 | |
Page 4
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
| | | | | | | | |
| | | December 31,
2011 | | | December 31,
2010 | |
| | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 135,938 | | | $ | 159,213 | |
Accounts and notes receivable, net | | | 506,758 | | | | 471,661 | |
Merchandise inventories | | | 806,366 | | | | 720,116 | |
Other current assets | | | 76,763 | | | | 52,799 | |
| | | | | | | | |
Total current assets | | | 1,525,825 | | | | 1,403,789 | |
Property and equipment, net | | | 108,061 | | | | 101,545 | |
Goodwill, net | | | 248,498 | | | | 247,271 | |
Intangible assets, net | | | 22,142 | | | | 24,825 | |
Other assets, net | | | 42,289 | | | | 44,609 | |
| | | | | | | | |
Total assets | | $ | 1,946,815 | | | $ | 1,822,039 | |
| | | | | | | | |
Liabilities and shareholders’ equity | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 575,793 | | | $ | 531,735 | |
Accrued payroll and related liabilities | | | 20,668 | | | | 20,588 | |
Deferred income taxes | | | 42,296 | | | | 39,082 | |
Other accrued liabilities | | | 93,608 | | | | 103,076 | |
| | | | | | | | |
Total current liabilities | | | 732,365 | | | | 694,481 | |
Long-term debt, excluding current portion | | | 212,681 | | | | 209,096 | |
Deferred income taxes | | | 21,894 | | | | 12,107 | |
Other liabilities | | | 60,658 | | | | 48,837 | |
| | | | | | | | |
Total liabilities | | | 1,027,598 | | | | 964,521 | |
Total shareholders’ equity | | | 919,217 | | | | 857,518 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 1,946,815 | | | $ | 1,822,039 | |
| | | | | | | | |
Page 5
Owens & Minor, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| | | | | | | | |
| | | Twelve Months Ended
December 31, | |
| | | 2011 | | | 2010 | |
| | |
Operating activities: | | | | | | | | |
Net income | | $ | 115,198 | | | $ | 110,579 | |
Adjustments to reconcile net income to cash provided by operating activities of continuing operations: | | | | | | | | |
Depreciation and amortization | | | 34,135 | | | | 29,148 | |
Deferred income tax expense (benefit) | | | 14,520 | | | | (94 | ) |
Provision for LIFO reserve | | | 13,700 | | | | 11,088 | |
Share-based compensation expense | | | 5,674 | | | | 6,358 | |
Provision for losses on accounts and notes receivable | | | 2,176 | | | | 1,808 | |
Pension expense | | | — | | | | 21,366 | |
Pension contributions | | | (409 | ) | | | (13,850 | ) |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts and notes receivable | | | (37,273 | ) | | | 24,611 | |
Merchandise inventories | | | (99,950 | ) | | | (41,315 | ) |
Accounts payable | | | 44,058 | | | | (15,254 | ) |
Net change in other assets and liabilities | | | (24,654 | ) | | | 9,334 | |
Other, net | | | 1,244 | | | | (596 | ) |
| | | | | | | | |
Cash provided by operating activities of continuing operations | | | 68,419 | | | | 143,183 | |
| | | | | | | | |
| | |
Investing activities: | | | | | | | | |
Additions to property and equipment | | | (24,981 | ) | | | (31,221 | ) |
Additions to computer software and intangible assets | | | (11,334 | ) | | | (10,128 | ) |
Proceeds from the sale of property and equipment | | | 2,430 | | | | 3,926 | |
| | | | | | | | |
Cash used for investing activities of continuing operations | | | (33,885 | ) | | | (37,423 | ) |
| | | | | | | | |
| | |
Financing activities: | | | | | | | | |
Cash dividends paid | | | (50,909 | ) | | | (44,780 | ) |
Repurchases of common stock | | | (16,124 | ) | | | — | |
Excess tax benefits related to share-based compensation | | | 2,154 | | | | 2,091 | |
Proceeds from termination of interest rate swaps | | | 4,005 | | | | — | |
Proceeds from exercise of stock options | | | 9,179 | | | | 7,234 | |
Other, net | | | (5,836 | ) | | | (5,568 | ) |
| | | | | | | | |
Cash used for financing activities of continuing operations | | | (57,531 | ) | | | (41,023 | ) |
| | | | | | | | |
| | |
Discontinued operations: | | | | | | | | |
Operating cash flows | | | (278 | ) | | | (1,660 | ) |
| | | | | | | | |
Net cash used for discontinued operations | | | (278 | ) | | | (1,660 | ) |
| | | | | | | | |
| | |
Net (decrease) increase in cash and cash equivalents | | | (23,275 | ) | | | 63,077 | |
Cash and cash equivalents at beginning of period | | | 159,213 | | | | 96,136 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 135,938 | | | $ | 159,213 | |
| | | | | | | | |
Page 6
Owens & Minor, Inc.
Financial Statistics (unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
(in thousands, except ratios and per share data) | | 12/31/2011 | | | 9/30/2011 | | | 6/30/2011 | | | 3/31/2011 | | | 12/31/2010 | |
| | | | | |
Operating results: | | | | | | | | | | | | | | | | | | | | |
Net revenue | | $ | 2,195,890 | | | $ | 2,176,759 | | | $ | 2,131,448 | | | $ | 2,123,815 | | | $ | 2,070,166 | |
| | | | | | | | | | | | | | | | | | | | |
Gross margin | | $ | 214,014 | | | $ | 216,682 | | | $ | 216,066 | | | $ | 210,775 | | | $ | 207,830 | |
Gross margin as a percent of revenue | | | 9.75 | % | | | 9.95 | % | | | 10.14 | % | | | 9.92 | % | | | 10.04 | % |
| | | | | | | | | | | | | | | | | | | | |
SG&A expenses | | $ | 150,538 | | | $ | 152,825 | | | $ | 156,321 | | | $ | 150,973 | | | $ | 142,340 | |
SG&A expenses as a percent of revenue | | | 6.86 | % | | | 7.02 | % | | | 7.33 | % | | | 7.11 | % | | | 6.88 | % |
| | | | | | | | | | | | | | | | | | | | |
Operating earnings | | $ | 43,014 | | | $ | 58,465 | | | $ | 51,039 | | | $ | 50,997 | | | $ | 39,310 | |
Operating earnings as a percent of revenue | | | 1.96 | % | | | 2.69 | % | | | 2.39 | % | | | 2.40 | % | | | 1.90 | % |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 23,942 | | | $ | 33,352 | | | $ | 29,164 | | | $ | 28,740 | | | $ | 21,788 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net income per common share - basic | | $ | 0.38 | | | $ | 0.53 | | | $ | 0.46 | | | $ | 0.45 | | | $ | 0.35 | |
| | | | | | | | | | | | | | | | | | | | |
Net income per common share - diluted | | $ | 0.38 | | | $ | 0.53 | | | $ | 0.46 | | | $ | 0.45 | | | $ | 0.34 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Accounts receivable: | | | | | | | | | | | | | | | | | | | | |
Accounts and notes receivable, net | | $ | 506,758 | | | $ | 507,152 | | | $ | 504,509 | | | $ | 520,688 | | | $ | 471,661 | |
| | | | | | | | | | | | | | | | | | | | |
Days sales outstanding(1) | | | 20.7 | | | | 20.6 | | | | 20.6 | | | | 21.1 | | | | 19.6 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Inventory: | | | | | | | | | | | | | | | | | | | | |
Merchandise inventories | | $ | 806,366 | | | $ | 760,992 | | | $ | 751,613 | | | $ | 729,546 | | | $ | 720,116 | |
| | | | | | | | | | | | | | | | | | | | |
Average inventory turnover(1) | | | 10.0 | | | | 10.3 | | | | 10.4 | | | | 10.7 | | | | 10.2 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Financing: | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 135,938 | | | $ | 196,852 | | | $ | 159,194 | | | $ | 185,850 | | | $ | 159,213 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-bearing debt | | $ | 214,556 | | | $ | 215,037 | | | $ | 214,020 | | | $ | 210,801 | | | $ | 210,906 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Stock information: | | | | | | | | | | | | | | | | | | | | |
Cash dividends per common share | | $ | 0.200 | | | $ | 0.200 | | | $ | 0.200 | | | $ | 0.200 | | | $ | 0.177 | |
| | | | | | | | | | | | | | | | | | | | |
Stock price at quarter-end | | $ | 27.79 | | | $ | 28.48 | | | $ | 34.49 | | | $ | 32.48 | | | $ | 29.43 | |
| | | | | | | | | | | | | | | | | | | | |
| (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.
Page 7
