Exhibit 99.1
FOR IMMEDIATE RELEASE
July 23, 2012
Owens & Minor Releases 2nd Quarter 2012 Financial Results;
Company Plans to Acquire European Healthcare 3PL Business
RICHMOND, VA….Owens & Minor, Inc., (NYSE-OMI) today reported financial results for the second quarter ended June 30, 2012, including quarterly revenue of $2.19 billion, improved 2.5% from revenue of $2.13 billion for the second quarter of last year. For the second quarter of 2012, net income was $30.1 million, or $0.48 per diluted share, compared to $29.2 million, or $0.46 per diluted share, for the same period of 2011. Owens & Minor also announced that it has agreed to acquirethe Movianto Group (“Movianto”), the healthcare third-party logistics (3PL) business ofCelesio AG, effectively launching Owens & Minor into the European healthcare market.
“This quarter’s results highlight many of our traditional areas of strength, such as strong expense and asset management,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “As a team, we continue to work on improving our profitability and advancing our strategic initiatives. We are excited about the Movianto transaction, which will bring together two companies with very similar cultures. We look forward to welcoming the Movianto team to the Owens & Minor family.”
For the second quarter of 2012, operating earnings were $53.2 million, or 2.43% of revenues, improved when compared to operating earnings of $51.0 million, or 2.39% of revenues, for the same period last year. The improvement was driven primarily by lower expenses.
Year-to-Date Results
For the six months ended June 30, 2012, revenue was $4.40 billion, improved $148 million, or 3.5%, when compared to revenue of $4.26 billion for the first six months of 2011. Net income for the first half of 2012 was $59.5 million, or $0.94 per diluted share, improved $1.6 million when compared to net income of $57.9 million, or $0.91 per diluted share in the same period last year. Operating earnings for the year-to-date period were $105.0 million, or 2.39% of revenues, compared to operating earnings of $102.0 million, or 2.40% of revenues, for the same period of 2011.
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Asset Management
The balance of cash and cash equivalents was $225 million at June 30, 2012, increased by $89 million from December 31, 2011. For the first half of 2012, the company reported cash provided by operating activities of approximately $143 million compared to $40 million for the same period last year. Asset management metrics were positive with record low days sales outstanding (DSO) of 19.5 as of June 30, 2012, improved when compared to 20.6 days as of June 30, 2011. Inventory turns of 10.8 for the second quarter of 2012 were near all-time highs and were improved from inventory turns of 10.4 for the same period last year.
Owens & Minor Plans to Acquire the Movianto Group
Owens & Minor announced that it plans to enter the European healthcare market with a binding offer to purchase the majority of the Movianto Group, the healthcare third-party logistics (3PL) business of Celesio AG, for approximately €130 million ($158 million). The acquisition is subject to customary closing conditions, including satisfaction of certain local legal provisions. Movianto, a leading 3PL provider in Europe, currently serves customers globally from 23 logistics centers located in 11 European countries with approximately 1,800 teammates. As a logistics provider to pharmaceutical and medical device manufacturers, Movianto provides outsourcing services such as warehousing, transportation, and cold chain logistics, as well as value-added services such as order-to-cash, repackaging and relabeling of products. Movianto’s operational capabilities and services are highly complementary to OM HealthCare Logistics, Owens & Minor’s domestic healthcare 3PL service offering, enabling the combined entity to provide healthcare manufacturers in the U.S. and Europe with expanded global reach through a common logistics platform.
The acquisition is expected to close in the third quarter of 2012. While the acquisition will be dilutive to Owens & Minor’s earnings per share in 2012, partially as a result of expenses associated with the transaction, the company believes that it will be neutral to 2013 earnings per share and accretive thereafter.
“The intended acquisition of Movianto provides Owens & Minor not only with a premier European healthcare logistics franchise, but gives us a global platform to serve our customers. Movianto will enable us to significantly expand our existing third-party logistics presence and scale,” said Smith. “Our manufacturer partners have increasingly expressed interest in working with Owens & Minor on a global basis, and Movianto provides us an exceptional platform from which to serve them. Owens & Minor looks forward to working with the Movianto team to serve customers and create long-term value.”
2012 Outlook
The company will provide an update of its 2012 outlook during the management conference call scheduled for Tuesday, July 24, 2012, at 8:30 a.m. EDT. 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.
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Highlights
| | • | | Owens & Minor has signed agreements, effective July 20, 2012, to consolidate its delivery fleet with a single vendor, Penske Truck Leasing and Penske Logistics. These seven-year, $68 million lease and technology services agreements are expected to provide substantial net savings over the term of the arrangements. Recent advances in technologies for trucks, remote communications, and on-board monitoring are expected to increase cost savings and leverage. |
| | • | | Effective June 5, 2012, Owens & Minor entered into a new, five-year, $350 million revolving credit agreement. Under the new credit facility, Owens & Minor has the option to request two one-year extensions, as well as an increase in aggregate commitments by up to $150 million. |
| | • | | In June, thePremier healthcare alliance recognized Owens & Minor with the following awards: |
| | • | | ThePinnacle Award was given to Owens & Minor for the fourth consecutive year; the award honors suppliers that “support attainment of mutual goals, drive contract utilization and are committed to performance improvement.” |
| | • | | ThePremier Polaris Award was awarded solely to Owens & Minor this year; this is the fourth consecutive year that Owens & Minor has won this distinction. The Polaris Award is chosen by the Premier members and recognizes success in aligning contract performance with customer service expectations and for “delivering high relationship value and excellent customer service to member hospitals.” |
| | • | | Honorable Mention for thePremier Supplier Diversity Award was awarded to Owens & Minor for the second year in a row. |
Investors Conference Call & Supplemental Material
Conference Call: Owens & Minor will conduct a conference call for investors on Tuesday, July 24, 2012, at 8:30 a.m. EDT.Participants may access the call at 866-393-1604 with access code#99600805. Theinternational dial-in number is 224-357-2191 with access code #99600805. Awebcast of the call, along with supplemental information, will be available onwww.owens-minor.com under “Investor Relations.”Replay:A replay of the call will be available for three weeks by dialing 855-859-2056, using access code #99600805.
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.
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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.
| | |
| CONTACTS: | | Trudi Allcott, Director, Investor & Media Relations, 804-723-7555; |
| | Chuck Graves, Director, Finance & Investor Relations, 804-723-7556 |
Source:Owens & Minor, Inc.
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Owens & Minor, Inc.
Condensed Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
| | | | | | | | |
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| | |
Net revenue | | $ | 2,185,444 | | | $ | 2,131,448 | |
Cost of goods sold | | | 1,974,015 | | | | 1,915,382 | |
| | | | | | | | |
Gross margin | | | 211,429 | | | | 216,066 | |
Selling, general and administrative expenses | | | 150,288 | | | | 156,321 | |
Depreciation and amortization | | | 8,515 | | | | 8,249 | |
Other operating (income) loss, net | | | (551 | ) | | | 457 | |
| | | | | | | | |
Operating earnings | | | 53,177 | | | | 51,039 | |
Interest expense, net | | | 3,487 | | | | 3,020 | |
| | | | | | | | |
Income before income taxes | | | 49,690 | | | | 48,019 | |
Income tax provision | | | 19,577 | | | | 18,855 | |
| | | | | | | | |
Net income | | $ | 30,113 | | | $ | 29,164 | |
| | | | | | | | |
| | |
Net income per common share: | | | | | | | | |
Basic | | $ | 0.48 | | | $ | 0.46 | |
Diluted | | $ | 0.48 | | | $ | 0.46 | |
| | |
Weighted average shares - basic | | | 62,815 | | | | 63,007 | |
Weighted average shares - diluted | | | 62,895 | | | | 63,198 | |
| |
| | | Six Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| | |
Net revenue | | $ | 4,403,326 | | | $ | 4,255,263 | |
Cost of goods sold | | | 3,977,569 | | | | 3,828,422 | |
| | | | | | | | |
Gross margin | | | 425,757 | | | | 426,841 | |
Selling, general and administrative expenses | | | 305,860 | | | | 307,294 | |
Depreciation and amortization | | | 17,093 | | | | 17,016 | |
Other operating (income) loss, net | | | (2,245 | ) | | | 495 | |
| | | | | | | | |
Operating earnings | | | 105,049 | | | | 102,036 | |
Interest expense, net | | | 6,909 | | | | 6,737 | |
| | | | | | | | |
Income before income taxes | | | 98,140 | | | | 95,299 | |
Income tax provision | | | 38,667 | | | | 37,395 | |
| | | | | | | | |
Net income | | $ | 59,473 | | | $ | 57,904 | |
| | | | | | | | |
| | |
Net income per common share: | | | | | | | | |
Basic | | $ | 0.94 | | | $ | 0.91 | |
Diluted | | $ | 0.94 | | | $ | 0.91 | |
| | |
Weighted average shares - basic | | | 62,825 | | | | 62,808 | |
Weighted average shares - diluted | | | 62,914 | | | | 63,012 | |
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Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
| | | | | | | | |
| | | June 30,
2012 | | | December 31,
2011 | |
| | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 224,937 | | | $ | 135,938 | |
Accounts and notes receivable, net | | | 485,249 | | | | 506,758 | |
Merchandise inventories | | | 748,847 | | | | 806,366 | |
Other current assets | | | 72,346 | | | | 76,763 | |
| | | | | | | | |
Total current assets | | | 1,531,379 | | | | 1,525,825 | |
Property and equipment, net | | | 103,889 | | | | 108,061 | |
Goodwill, net | | | 248,498 | | | | 248,498 | |
Intangible assets, net | | | 21,018 | | | | 22,142 | |
Other assets, net | | | 50,640 | | | | 42,289 | |
| | | | | | | | |
Total assets | | $ | 1,955,424 | | | $ | 1,946,815 | |
| | | | | | | | |
Liabilities and equity | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 559,718 | | | $ | 575,793 | |
Accrued payroll and related liabilities | | | 17,738 | | | | 20,668 | |
Deferred income taxes | | | 37,879 | | | | 42,296 | |
Other accrued liabilities | | | 92,462 | | | | 93,608 | |
| | | | | | | | |
Total current liabilities | | | 707,797 | | | | 732,365 | |
Long-term debt, excluding current portion | | | 212,032 | | | | 212,681 | |
Deferred income taxes | | | 25,467 | | | | 21,894 | |
Other liabilities | | | 60,165 | | | | 60,658 | |
| | | | | | | | |
Total liabilities | | | 1,005,461 | | | | 1,027,598 | |
Total equity | | | 949,963 | | | | 919,217 | |
| | | | | | | | |
Total liabilities and equity | | $ | 1,955,424 | | | $ | 1,946,815 | |
| | | | | | | | |
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Owens & Minor, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| | | | | | | | |
| | | Six Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| | |
Operating activities: | | | | | | | | |
Net income | | $ | 59,473 | | | $ | 57,904 | |
Adjustments to reconcile net income to cash provided by operating activities of continuing operations: | | | | | | | | |
Depreciation and amortization | | | 17,093 | | | | 17,016 | |
Provision for LIFO reserve | | | 5,223 | | | | 11,265 | |
Share-based compensation expense | | | 4,126 | | | | 3,581 | |
Provision for losses on accounts and notes receivable | | | 270 | | | | 758 | |
Pension contributions | | | — | | | | (543 | ) |
Deferred income tax benefit | | | (1,146 | ) | | | (674 | ) |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts and notes receivable | | | 21,239 | | | | (33,606 | ) |
Merchandise inventories | | | 52,296 | | | | (42,762 | ) |
Accounts payable | | | (16,075 | ) | | | 50,033 | |
Net change in other assets and liabilities | | | 684 | | | | (23,321 | ) |
Other, net | | | (404 | ) | | | 114 | |
| | | | | | | | |
Cash provided by operating activities of continuing operations | | | 142,779 | | | | 39,765 | |
| | | | | | | | |
| | |
Investing activities: | | | | | | | | |
Additions to property and equipment | | | (5,460 | ) | | | (8,175 | ) |
Additions to computer software and intangible assets | | | (12,697 | ) | | | (5,573 | ) |
Proceeds from the sale of property and equipment | | | 115 | | | | 44 | |
| | | | | | | | |
Cash used for investing activities of continuing operations | | | (18,042 | ) | | | (13,704 | ) |
| | | | | | | | |
| | |
Financing activities: | | | | | | | | |
Cash dividends paid | | | (27,956 | ) | | | (25,496 | ) |
Repurchases of common stock | | | (7,500 | ) | | | (5,086 | ) |
Financing costs paid | | | (1,303 | ) | | | — | |
Excess tax benefits related to share-based compensation | | | 1,160 | | | | 1,761 | |
Proceeds from exercise of stock options | | | 3,761 | | | | 7,394 | |
Other, net | | | (3,900 | ) | | | (4,514 | ) |
| | | | | | | | |
Cash used for financing activities of continuing operations | | | (35,738 | ) | | | (25,941 | ) |
| | | | | | | | |
| | |
Discontinued operations: | | | | | | | | |
Operating cash flows | | | — | | | | (139 | ) |
| | | | | | | | |
Net cash used for discontinued operations | | | — | | | | (139 | ) |
| | | | | | | | |
| | |
Net increase in cash and cash equivalents | | | 88,999 | | | | (19 | ) |
| | |
Cash and cash equivalents at beginning of period | | | 135,938 | | | | 159,213 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 224,937 | | | $ | 159,194 | |
| | | | | | | | |
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Owens & Minor, Inc.
Financial Statistics (unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
(in thousands, except ratios and per share data) | | 6/30/2012 | | | 3/31/2012 | | | 12/31/2011 | | | 9/30/2011 | | | 6/30/2011 | |
| | | | | |
Operating results: | | | | | | | | | | | | | | | | | | | | |
Net revenue | | $ | 2,185,444 | | | $ | 2,217,882 | | | $ | 2,195,890 | | | $ | 2,176,759 | | | $ | 2,131,448 | |
| | | | | | | | | | | | | | | | | | | | |
Gross margin | | $ | 211,429 | | | $ | 214,328 | | | $ | 214,014 | | | $ | 216,682 | | | $ | 216,066 | |
Gross margin as a percent of revenue | | | 9.67 | % | | | 9.66 | % | | | 9.75 | % | | | 9.95 | % | | | 10.14 | % |
| | | | | | | | | | | | | | | | | | | | |
SG&A expenses | | $ | 150,288 | | | $ | 155,572 | | | $ | 150,538 | | | $ | 152,825 | | | $ | 156,321 | |
SG&A expenses as a percent of revenue | | | 6.88 | % | | | 7.01 | % | | | 6.86 | % | | | 7.02 | % | | | 7.33 | % |
| | | | | | | | | | | | | | | | | | | | |
Operating earnings(2) | | $ | 53,177 | | | $ | 51,872 | | | $ | 43,014 | | | $ | 58,465 | | | $ | 51,039 | |
Operating earnings as a percent of revenue(2) | | | 2.43 | % | | | 2.34 | % | | | 1.96 | % | | | 2.69 | % | | | 2.39 | % |
| | | | | | | | | | | | | | | | | | | | |
Net income(2) | | $ | 30,113 | | | $ | 29,360 | | | $ | 23,942 | | | $ | 33,352 | | | $ | 29,164 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net income per common share - basic(2) | | $ | 0.48 | | | $ | 0.46 | | | $ | 0.38 | | | $ | 0.53 | | | $ | 0.46 | |
| | | | | | | | | | | | | | | | | | | | |
Net income per common share - diluted(2) | | $ | 0.48 | | | $ | 0.46 | | | $ | 0.38 | | | $ | 0.53 | | | $ | 0.46 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Accounts receivable: | | | | | | | | | | | | | | | | | | | | |
Accounts and notes receivable, net | | $ | 485,249 | | | $ | 499,015 | | | $ | 506,758 | | | $ | 507,152 | | | $ | 504,509 | |
| | | | | | | | | | | | | | | | | | | | |
Days sales outstanding(1) | | | 19.5 | | | | 19.9 | | | | 20.7 | | | | 20.6 | | | | 20.6 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Inventory: | | | | | | | | | | | | | | | | | | | | |
Merchandise inventories | | $ | 748,847 | | | $ | 724,206 | | | $ | 806,366 | | | $ | 760,992 | | | $ | 751,613 | |
| | | | | | | | | | | | | | | | | | | | |
Average inventory turnover(1) | | | 10.8 | | | | 10.5 | | | | 10.0 | | | | 10.3 | | | | 10.4 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Financing: | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 224,937 | | | $ | 213,927 | | | $ | 135,938 | | | $ | 196,852 | | | $ | 159,194 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-bearing debt | | $ | 213,982 | | | $ | 214,184 | | | $ | 214,556 | | | $ | 215,037 | | | $ | 214,020 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Stock information: | | | | | | | | | | | | | | | | | | | | |
Cash dividends per common share | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | |
| | | | | | | | | | | | | | | | | | | | |
Stock price at quarter-end | | $ | 30.63 | | | $ | 30.41 | | | $ | 27.79 | | | $ | 28.48 | | | $ | 34.49 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Days sales outstanding (DSO) and average inventory turnover are based on three-months’ sales. |
| (2) | We incurred charges of $12.7 million associated with exit and realignment activities ($7.7 million after taxes, or $0.13 per common share) in the fourth quarter of 2011. |
