Exhibit 99.1
FOR IMMEDIATE RELEASE
February 17, 2015
Owens & Minor Reports 4th Quarter & Full-Year 2014
Financial Results
RICHMOND, VA….Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the fourth quarter and full-year ended December 31, 2014, including the following highlights:
| • | | Consolidated revenue grew 7.5% for the fourth quarter and 4.1% for the year |
| • | | Adjusted consolidated net income was $0.49 per diluted share for the fourth quarter and $1.76 per diluted share for 2014 |
| • | | Owens & Minor completed two acquisitions in the fourth quarter, complementing its surgical kitting capabilities and unitized delivery services in the U.S. and Europe |
For the quarter ended December 31, 2014, the company reported consolidated quarterly revenues of $2.49 billion, an increase of 7.5% when compared to the fourth quarter of 2013. Excluding the impact of $46.9 million in revenue from the two acquisitions completed in the fourth quarter of 2014, consolidated quarterly revenues grew 5.5%. Quarterly net income was $14.0 million, or $0.22 per diluted share. For the fourth quarter, adjusted net income (non-GAAP) was $30.9 million, or $0.49 per diluted share. A table providing a reconciliation of reported results to adjusted (non-GAAP) measures is included below.
“Revenue growth in the fourth quarter and for the year exceeded our original expectations, which we view as an endorsement of our approach to serving the healthcare market,” said James L. Bierman, President & Chief Executive Officer of Owens & Minor. “During the fourth quarter we completed the acquisitions of two surgical kitting companies, one in the U.S. and one in Europe. The integrations of these two acquisitions are well underway. With all that we accomplished in 2014, we believe we have set the stage for 2015.”
Consolidated operating earnings for the fourth quarter of 2014, were $40.8 million, a decline of $10.1 million when compared to operating earnings for the same period last year. Adjusted consolidated operating earnings (non-GAAP) for the fourth quarter of 2014 were $59.0 million, or 2.37% of revenues, increased slightly in comparison to last year’s fourth quarter results.
2014 Annual Results
For the year ended December 31, 2014, consolidated revenues were $9.44 billion, an increase of $369 million, or 4.1%, when compared to 2013 revenues. Excluding the impact of $46.9 million in revenue from the two acquired companies, consolidated revenues grew 3.5% for the year. Net income for 2014 was $66.5 million, or $1.06 per diluted share. For the year, adjusted net income (non-GAAP), was $110 million, or $1.76 per diluted share.
Consolidated operating earnings for 2014 were $159.5 million, or 1.69% of revenues, compared to operating earnings of $198.1 million, or 2.18% of revenues, for the same period of 2013. Operating earnings for the full year include a $5.3 million recovery from the settlement of a direct purchaser, anti-trust class-action lawsuit related to the purchases of medical devices and a gain from the sale of an investment. These gains were mostly offset by increased legal fees related to ongoing litigation. Adjusted consolidated operating earnings (non-GAAP) for the full year were $203 million, or 2.15% of revenues.
1
For the full year, the tax rate increased to 47.4% as a result of the impact of foreign taxes and certain non-deductible acquisition-related costs.
Acquisition Update
Owens & Minor completed the acquisitions of Medical Action Industries, a U.S.-based surgical kitting company, and ArcRoyal, a privately-held surgical kitting company based in Ireland, on October 1 and November 1, 2014, respectively. These two acquisitions expand Owens & Minor’s capabilities in the assembly of surgical and procedure kits, packs and trays in the U.S. and European healthcare markets. Cross functional teams from Owens & Minor and the two acquired companies are working toward integrating the new businesses and achieving synergies in operations, processes and sourcing.
Balance Sheet Recapitalization Update
In the third quarter of 2014, Owens & Minor issued $275 million of 3.875% Senior Notes due 2021 and $275 million of 4.375% Senior Notes due 2024. As a result of the recapitalization, the company incurred a $14.9 million pre-tax loss on the early retirement of its 2016 Senior Notes. During the fourth quarter of 2014, Owens & Minor used proceeds of approximately $446 million to purchase the outstanding shares of Medical Action Industries on October 1, 2014, and to fund the early retirement of the company’s 2016 Senior Notes on October 16, 2014.
Asset Management
The balance of cash and cash equivalents was $56.8 million at December 31, 2014. For the year, the company used $3.8 million of cash for operating activities, compared to cash provided by operating activities of $141 million in the same period last year. The decline in operating cash flow was driven primarily by the timing of payments and increased net working capital needs resulting from strong sales growth. Asset management metrics as of the end of the year included consolidated days sales outstanding (DSO) of 22.1 and consolidated inventory turns of 10.1.
Segment Results
Domestic segment revenues for the fourth quarter of 2014 were $2.35 billion, improved $139 million, or 6.3%, from revenue of $2.21 billion in last year’s fourth quarter. For the full year 2014, Domestic segment revenue increased $264 million to $8.95 billion, when compared to the prior year. Excluding the impact of revenues from the Medical Action acquisition of $40 million, revenue grew 4.5% for the quarter and 2.6% for the year. The Domestic segment achieved improved revenue growth in each successive quarter in 2014, primarily as a result of growth among the company’s larger customer accounts.
For the fourth quarter of 2014, Domestic segment operating earnings were $57.4 million, an increase of nearly $1 million, when compared to the same period of 2013. The increase in Domestic segment quarterly operating earnings, when compared to the prior year, resulted primarily from strong revenue growth. For the full year, Domestic segment operating earnings were $209.3 million, representing 2.34% of segment revenues.
For the International segment, quarterly revenues increased 32.4% to $139 million and were $488 million for the full year. Excluding the impact of $6.9 million in revenues from the ArcRoyal acquisition, International revenues improved 25.8% for the quarter and 25.5% for the year. For the fourth quarter of 2014, the International segment had operating earnings of $1.5 million. For the full-year 2014, the International segment reported operating losses of $6.7 million. Operating losses for the year resulted primarily from factors previously discussed by the company, including the loss of certain customers and the onboarding of a large new customer in the United Kingdom early in 2014.
2
2015 Outlook
The company provided updated financial guidance for 2015, consistent with the growth guidance originally provided at its December 2014 Investor Day.
For 2015, the company is targeting adjusted net income per diluted share of $1.90 to $1.95.
Reiterating his comments from the company’s Investor Day in December 2014, Bierman said: “We have made a series of significant strategic moves enabling us to realign our organization, enter the European healthcare market, acquire expanded capabilities, and transform our platform into a flexible, dynamic network. Consequently, I have challenged the Owens & Minor leadership team to build upon this foundation with the goal of achieving annualized earnings growth of 10% over the next three years.”
Upcoming Investor Relations Events
Owens & Minor will participate in the following investor conference in the first quarter of 2015; a webcast of the presentation will be available onwww.owens-minor.com.
| | • | | Barclays Capital 2015 Global Healthcare Conference; March 11, Miami |
Investors Conference Call & Supplemental Material
Conference Call: Owens & Minor’s management team will conduct a conference call for investors on Wednesday, February 18, 2015, at 8:30 a.m. EST. The access code for this event is #73383431. The dial-in number for the live conference call is 866-393-1604; the international dial-in number is 224-357-2191; and a replay of the call will be available for one week by calling 855-859-2056. A webcast of the event, along with supplemental financial information, will be available onwww.owens-minor.com under the Investor Relations section.
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.
Included with the press release financial tables are reconciliations of the differences between the non-GAAP financial measures presented in this news release, which exclude acquisition-related and exit and realignment charges, and their most directly comparable GAAP financial measures.
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) is a leading healthcare logistics company dedicated toConnecting the World of Medical Products to the Point of CareTM by providing vital supply chain services to healthcare providers and manufacturers of healthcare products. Owens & Minor provides logistics services across the spectrum of medical products from disposable medical supplies to devices and implants. With logistics platforms strategically located in the United States and Europe, Owens & Minor
3
serves markets where three quarters of global healthcare spending occurs. Owens & Minor’s customers span the healthcare market from independent hospitals to large integrated healthcare networks, as well as group purchasing organizations, healthcare products manufacturers, and the federal government. A FORTUNE 500 company, Owens & Minor is headquartered in Richmond, Virginia, and has annualized revenues exceeding $9 billion. For more information about Owens & Minor, visit the company website atowens-minor.com.
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
SOURCE: Owens & Minor
4
Owens & Minor, Inc.
Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
| | | | | | | | |
| | | Three Months Ended December 31, | |
| | | 2014 | | | 2013 | |
Net revenue | | $ | 2,491,817 | | | $ | 2,318,524 | |
Cost of goods sold | | | 2,177,802 | | | | 2,027,261 | |
| | | | | | | | |
Gross margin | | | 314,015 | | | | 291,263 | |
Selling, general and administrative expenses | | | 244,152 | | | | 222,043 | |
Acquisition-related and exit and realignment charges | | | 17,988 | | | | 7,049 | |
Depreciation and amortization | | | 15,528 | | | | 13,239 | |
Other operating expense (income), net | | | (4,426 | ) | | | (2,002 | ) |
| | | | | | | | |
Operating earnings | | | 40,773 | | | | 50,934 | |
Interest expense, net | | | 7,270 | | | | 3,263 | |
| | | | | | | | |
Income before income taxes | | | 33,503 | | | | 47,671 | |
Income tax provision | | | 19,516 | | | | 19,729 | |
| | | | | | | | |
Net income | | $ | 13,987 | | | $ | 27,942 | |
| | | | | | | | |
| | |
Net income per common share: | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.44 | |
Diluted | | $ | 0.22 | | | $ | 0.44 | |
| |
| | | Twelve Months Ended December 31, | |
| | | 2014 | | | 2013 | |
Net revenue | | $ | 9,440,182 | | | $ | 9,071,532 | |
Cost of goods sold | | | 8,270,216 | | | | 7,954,457 | |
| | | | | | | | |
Gross margin | | | 1,169,966 | | | | 1,117,075 | |
Selling, general and administrative expenses | | | 926,977 | | | | 863,656 | |
Acquisition-related and exit and realignment charges | | | 42,801 | | | | 12,444 | |
Depreciation and amortization | | | 57,125 | | | | 50,586 | |
Other operating expense (income), net | | | (16,473 | ) | | | (7,694 | ) |
| | | | | | | | |
Operating earnings | | | 159,536 | | | | 198,083 | |
Loss on early retirement of debt | | | 14,890 | | | | — | |
Interest expense, net | | | 18,163 | | | | 13,098 | |
| | | | | | | | |
Income before income taxes | | | 126,483 | | | | 184,985 | |
Income tax provision | | | 59,980 | | | | 74,103 | |
| | | | | | | | |
Net income | | $ | 66,503 | | | $ | 110,882 | |
| | | | | | | | |
| | |
Net income per common share: | | | | | | | | |
Basic | | $ | 1.06 | | | $ | 1.76 | |
Diluted | | $ | 1.06 | | | $ | 1.76 | |
Page 5
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
| | | | | | | | |
| | | December 31,
2014 | | | December 31,
2013 | |
| | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 56,772 | | | $ | 101,905 | |
Accounts and notes receivable, net | | | 626,192 | | | | 572,854 | |
Merchandise inventories | | | 872,457 | | | | 771,663 | |
Other current assets | | | 315,285 | | | | 279,510 | |
| | | | | | | | |
Total current assets | | | 1,870,706 | | | | 1,725,932 | |
Property and equipment, net | | | 232,979 | | | | 191,961 | |
Goodwill, net | | | 423,276 | | | | 275,439 | |
Intangible assets, net | | | 108,593 | | | | 40,406 | |
Other assets, net | | | 99,852 | | | | 90,304 | |
| | | | | | | | |
Total assets | | $ | 2,735,406 | | | $ | 2,324,042 | |
| | | | | | | | |
Liabilities and equity | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 608,846 | | | $ | 643,872 | |
Accrued payroll and related liabilities | | | 31,507 | | | | 23,296 | |
Deferred income taxes | | | 37,979 | | | | 41,613 | |
Other current liabilities | | | 326,223 | | | | 281,427 | |
| | | | | | | | |
Total current liabilities | | | 1,004,555 | | | | 990,208 | |
Long-term debt, excluding current portion | | | 608,551 | | | | 212,786 | |
Deferred income taxes | | | 63,901 | | | | 43,727 | |
Other liabilities | | | 67,561 | | | | 52,278 | |
| | | | | | | | |
Total liabilities | | | 1,744,568 | | | | 1,298,999 | |
Total equity | | | 990,838 | | | | 1,025,043 | |
| | | | | | | | |
Total liabilities and equity | | $ | 2,735,406 | | | $ | 2,324,042 | |
| | | | | | | | |
Page 6
Owens & Minor, Inc.
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| | | | | | | | |
| | | Twelve Months Ended December 31, | |
| | | 2014 | | | 2013 | |
| | |
Operating activities: | | | | | | | | |
Net income | | $ | 66,503 | | | $ | 110,882 | |
| | |
Adjustments to reconcile net income to cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 63,407 | | | | 50,586 | |
Loss on early retirement of debt | | | 14,890 | | | | — | |
Share-based compensation expense | | | 8,207 | | | | 6,381 | |
Deferred income tax (benefit) expense | | | (3,385 | ) | | | 3,713 | |
Provision for losses on accounts and notes receivable | | | 448 | | | | 787 | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts and notes receivable | | | (17,803 | ) | | | (38,645 | ) |
Merchandise inventories | | | (57,329 | ) | | | (7,064 | ) |
Accounts payable | | | (52,148 | ) | | | 47,374 | |
Net change in other assets and liabilities | | | (25,828 | ) | | | (32,337 | ) |
Other, net | | | (723 | ) | | | (1,123 | ) |
| | | | | | | | |
Cash (used for) provided by operating activities | | | (3,761 | ) | | | 140,554 | |
| | | | | | | | |
| | |
Investing activities: | | | | | | | | |
Acquisitions, net of cash acquired | | | (248,536 | ) | | | — | |
Additions to computer software and intangible assets | | | (22,384 | ) | | | (32,010 | ) |
Additions to property and equipment | | | (48,424 | ) | | | (28,119 | ) |
Proceeds from the sale of investment | | | 1,937 | | | | — | |
Proceeds from the sale of property and equipment | | | 156 | | | | 3,051 | |
| | | | | | | | |
Cash used for investing activities | | | (317,251 | ) | | | (57,078 | ) |
| | | | | | | | |
| | |
Financing activities: | | | | | | | | |
Proceeds from issuance of debt | | | 547,693 | | | | — | |
Proceeds from revolver | | | 33,700 | | | | —�� | |
Repayment of debt | | | (217,352 | ) | | | — | |
Cash dividends paid | | | (63,104 | ) | | | (60,731 | ) |
Repurchases of common stock | | | (9,934 | ) | | | (18,876 | ) |
Financing costs paid | | | (5,391 | ) | | | — | |
Proceeds from exercise of stock options | | | 1,180 | | | | 5,352 | |
Excess tax benefits related to share-based compensation | | | 582 | | | | 898 | |
Purchase of noncontrolling interest | | | (1,500 | ) | | | — | |
Other, net | | | (7,314 | ) | | | (8,623 | ) |
| | | | | | | | |
Cash provided by (used for) financing activities | | | 278,560 | | | | (81,980 | ) |
| | | | | | | | |
| | |
Effect of exchange rate changes on cash and cash equivalents | | | (2,681 | ) | | | 2,521 | |
| | | | | | | | |
| | |
Net increase (decrease) in cash and cash equivalents | | | (45,133 | ) | | | 4,017 | |
Cash and cash equivalents at beginning of period | | | 101,905 | | | | 97,888 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 56,772 | | | $ | 101,905 | |
| | | | | | | | |
Page 7
Owens & Minor, Inc.
Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited)
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
(in thousands, except ratios and per share data) | | 12/31/2014 | | | 9/30/2014 | | | 6/30/2014 | | | 3/31/2014 | | | 12/31/2013 | |
| | | | | |
Consolidated operating results: | | | | | | | | | | | | | | | | | | | | |
Domestic | | $ | 2,353,321 | | | $ | 2,262,081 | | | $ | 2,187,535 | | | $ | 2,148,915 | | | $ | 2,213,949 | |
International | | | 138,496 | | | | 124,045 | | | | 118.323 | | | | 107,465 | | | | 104,575 | |
| | | | | | | | | | | | | | | | | | | | |
Net revenue | | $ | 2,491,817 | | | $ | 2,386,126 | | | $ | 2,305,858 | | | $ | 2,256,380 | | | $ | 2,318,524 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Gross margin | | $ | 314,015 | | | $ | 292,483 | | | $ | 282,272 | | | $ | 281,195 | | | $ | 291,263 | |
Gross margin as a percent of revenue | | | 12.60 | % | | | 12.26 | % | | | 12.24 | % | | | 12.46 | % | | | 12.56 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
SG&A expenses | | $ | 244,152 | | | $ | 231,377 | | | $ | 225,838 | | | $ | 225,610 | | | $ | 222,043 | |
SG&A expenses as a percent of revenue | | | 9.80 | % | | | 9.70 | % | | | 9.79 | % | | | 10.00 | % | | | 9.58 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Operating earnings, as reported (GAAP) | | $ | 40,773 | | | $ | 35,377 | | | $ | 37,101 | | | $ | 46,284 | | | $ | 50,934 | |
Acquisition-related charges(1) | | | 7,394 | | | | 4,565 | | | | 3,490 | | | | 634 | | | | 1,970 | |
Exit and realignment charges(2) | | | 10,594 | | | | 9,392 | | | | 4,103 | | | | 2,628 | | | | 5,079 | |
Fair value adjustments related to purchase accounting(3) | | | (3,706 | ) | | | — | | | | — | | | | — | | | | — | |
Other(4) | | | 3,907 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Operating earnings, adjusted (Non-GAAP) | | $ | 58,962 | | | $ | 49,334 | | | $ | 44,694 | | | $ | 49,546 | | | $ | 57,983 | |
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | | | 2.37 | % | | | 2.07 | % | | | 1.94 | % | | | 2.20 | % | | | 2.50 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net income, as reported (GAAP) | | $ | 13,987 | | | $ | 7,155 | | | $ | 19,876 | | | $ | 25,485 | | | $ | 27,942 | |
Acquisition-related charges, after-tax(1) | | | 6,211 | | | | 3,543 | | | | 2,504 | | | | 450 | | | | 1,912 | |
Exit and realignment charges, after-tax(2) | | | 11,477 | | | | 6,754 | | | | 2,591 | | | | 1,772 | | | | 3,112 | |
Fair value adjustments related to purchase accounting, after-tax(3) | | | (4,703 | ) | | | — | | | | — | | | | — | | | | — | |
Other, after-tax (4) | | | 3,907 | | | | — | | | | — | | | | — | | | | — | |
Loss on early retirement of debt, after-tax (5) | | | — | | | | 9,092 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net income, adjusted (Non-GAAP) | | $ | 30,879 | | | $ | 26,544 | | | $ | 24,971 | | | $ | 27,707 | | | $ | 32,966 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net income per diluted common share, as reported (GAAP) | | $ | 0.22 | | | $ | 0.11 | | | $ | 0.32 | | | $ | 0.41 | | | $ | 0.44 | |
Acquisition-related charges, after-tax(1) | | | 0.10 | | | | 0.06 | | | | 0.04 | | | | 0.01 | | | | 0.03 | |
Exit and realignment charges, after-tax(2) | | | 0.18 | | | | 0.11 | | | | 0.04 | | | | 0.02 | | | | 0.05 | |
Fair value adjustments related to purchase accounting, after-tax(3) | | | (0.07 | ) | | | — | | | | — | | | | — | | | | — | |
Other, after-tax(4) | | | 0.06 | | | | — | | | | — | | | | — | | | | — | |
Loss on early retirement of debt, after tax (5) | | | — | | | | 0.14 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net income per diluted common share, adjusted (Non-GAAP) | | $ | 0.49 | | | $ | 0.42 | | | $ | 0.40 | | | $ | 0.44 | | | $ | 0.52 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Financing: | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 56,772 | | | $ | 610,147 | | | $ | 92,027 | | | $ | 182,373 | | | $ | 101,905 | |
Total interest-bearing debt | | $ | 613,809 | | | $ | 766,283 | | | $ | 221,496 | | | $ | 217,261 | | | $ | 216,243 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Stock information: | | | | | | | | | | | | | | | | | | | | |
Cash dividends per common share | | $ | 0.25 | | | $ | 0.25 | | | $ | 0.25 | | | $ | 0.25 | | | $ | 0.24 | |
| | | | | | | | | | | | | | | | | | | | |
Stock price at quarter-end | | $ | 35.11 | | | $ | 32.74 | | | $ | 33.98 | | | $ | 35.03 | | | $ | 36.56 | |
| | | | | | | | | | | | | | | | | | | | |
Page 8
Owens & Minor, Inc.
Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited)
The following items have been excluded in our non-GAAP financial measures:
| (1) | Acquisition-related charges in the current year consist primarily of costs incurred to perform due diligence and analysis related to the Medical Action and Arc Royal acquisitions, costs to complete the transactions, and costs to begin the integration of the acquired operations (including certain severance and contractual payments to former management) as well as certain costs in Movianto to resolve issues and claims with the former owner. |
| (2) | Exit and realignment charges in the current year were associated with optimizing our operations and include the closure and consolidation of certain distribution and logistics centers, administrative offices and warehouses in the United States and Europe. These charges also include other costs associated with our strategic organizational realignment which include management changes, certain professional fees, and costs to streamline administrative functions and processes. |
| (3) | The fourth quarter of 2014 includes a gain of $6.7 million (pretax) recorded in other operating income, net from a fair value adjustment to contingent consideration related to the Movianto acquisition purchase price, offset by the incremental charge to cost of goods sold of $3.0 million (pretax) from purchase accounting impacts related to the sale of acquired inventory that was written up to fair value in connection with the current year acquisitions. |
| (4) | The fourth quarter includes a loss in other operating income, net related to an accrual for the estimated settlement amount of a breach of contract claim in the United Kingdom for $3.9 million (pretax). |
| (5) | In 2014, we repaid our 2016 Notes and recorded a net loss on the early retirement of $14.9 million (pretax), which includes the redemption premium offset by the recognition of a gain on previously settled interest rate swaps. |
These charges have been tax effected in the preceding table by determining the income tax rate depending on the amount of charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.
Use of Non-GAAP Measures
This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.’s (the “Company”) core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company’s performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation. Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company’s performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.
Page 9
Owens & Minor, Inc.
Summary Segment Information (unaudited)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | | Twelve Months Ended December 31, | |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
| | | Amount | | | % of
consolidated
net revenue | | | Amount | | | % of
consolidated
net revenue | | | Amount | | | % of
consolidated
net revenue | | | Amount | | | % of
consolidated
net revenue | |
Net revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Domestic | | $ | 2,353,321 | | | | 94.44 | % | | $ | 2,213,949 | | | | 95.49 | % | | $ | 8,951,852 | | | | 94.83 | % | | $ | 8,688,018 | | | | 95.77 | % |
International | | | 138,496 | | | | 5.56 | % | | | 104,575 | | | | 4.51 | % | | | 488,330 | | | | 5.17 | % | | | 383,514 | | | | 4.23 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated net revenue | | $ | 2,491,817 | | | | 100.00 | % | | $ | 2,318,524 | | | | 100.00 | % | | $ | 9,440,182 | | | | 100.00 | % | | $ | 9,071,532 | | | | 100.00 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | | | | % of
segment
net revenue | | | | | | % of
segment
net revenue | | | | | | % of
segment
net revenue | | | | | | % of
segment
net revenue | |
Operating earnings(loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Domestic | | $ | 57,428 | | | | 2.44 | % | | $ | 56,568 | | | | 2.56 | % | | $ | 209,277 | | | | 2.34 | % | | $ | 211,932 | | | | 2.44 | % |
International | | | 1,534 | | | | 1.11 | % | | | 1,415 | | | | 1.35 | % | | | (6,740 | ) | | | (1.38 | )% | | | (1,405 | ) | | | (0.37 | )% |
Acquisition-related and exit and realignment charges(1) | | | (17,988 | ) | | | N/A | | | | (7,049 | ) | | | N/A | | | | (42,801 | ) | | | N/A | | | | (12,444 | ) | | | N/A | |
Fair value adjustments related to purchase accounting | | | 3,706 | | | | N/A | | | | — | | | | N/A | | | | 3,706 | | | | N/A | | | | — | | | | N/A | |
Other | | | (3,907 | ) | | | N/A | | | | — | | | | N/A | | | | (3,907 | ) | | | N/A | | | | — | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated operating earnings | | $ | 40,773 | | | | 1.64 | % | | $ | 50,934 | | | | 2.20 | % | | $ | 159,535 | | | | 1.69 | % | | $ | 198,083 | | | | 2.18 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Depreciation and amortization: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Domestic | | $ | 10,420 | | | | | | | $ | 9,033 | | | | | | | $ | 37,193 | | | | | | | $ | 35,808 | | | | | |
International | | | 5,406 | | | | | | | | 4,206 | | | | | | | | 20,230 | | | | | | | | 14,778 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated depreciation and amortization | | $ | 15,826 | | | | | | | $ | 13,239 | | | | | | | $ | 57,423 | | | | | | | $ | 50,586 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Capital expenditures:(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Domestic | | $ | 12,419 | | | | | | | $ | 8,295 | | | | | | | $ | 52,529 | | | | | | | $ | 42,802 | | | | | |
International | | | 4,232 | | | | | | | | 6,328 | | | | | | | | 18,279 | | | | | | | | 17,327 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated capital expenditures | | $ | 16,651 | | | | | | | $ | 14,623 | | | | | | | $ | 70,808 | | | | | | | $ | 60,129 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | December 31,
2014 | | | | | | December 31,
2013 | | | | | | | | | | | | | | | | |
Total assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Domestic | | $ | 2,208,663 | | | | | | | $ | 1,747,572 | | | | | | | | | | | | | | | | | | | | | |
International | | | 469,971 | | | | | | | | 474,565 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment assets | | | 2,678,634 | | | | | | | | 2,222,137 | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | | 56,772 | | | | | | | | 101,905 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated total assets | | $ | 2,735,406 | | | | | | | $ | 2,324,042 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | The fourth quarter and year ended December 31, 2014 includes $3.3 million and $6.0 million, respectively of accelerated amortization related to an information system that is being replaced. |
| (2) | Represents additions to property and equipment and additions to computer software and separately acquired intangible assets. |
Page 10
Owens & Minor, Inc.
Net Income Per Common Share (unaudited)
(in thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
Numerator: | | | | | | | | | | | | | | | | |
Net income | | $ | 13,987 | | | $ | 27,942 | | | $ | 66,503 | | | $ | 110,882 | |
Less: income allocated to unvested restricted shares | | | (141 | ) | | | (193 | ) | | | (597 | ) | | | (738 | ) |
| | | | | | | | | | | | | | | | |
Net income attributable to common shareholders - basic | | | 13,846 | | | | 27,749 | | | | 65,906 | | | | 110,144 | |
Add: undistributed income attributable to unvested restricted shares -basic | | | — | | | | 67 | | | | 18 | | | | 257 | |
Less: undistributed income attributable to unvested restricted shares -diluted | | | — | | | | (67 | ) | | | (18 | ) | | | (257 | ) |
| | | | | | | | | | | | | | | | |
Net income attributable to common shareholders - diluted | | $ | 13,846 | | | $ | 27,749 | | | $ | 65,906 | | | $ | 110,144 | |
| | | | | | | | | | | | | | | | |
| | | | |
Denominator: | | | | | | | | | | | | | | | | |
Weighted average shares outstanding — basic | | | 62,193 | | | | 62,446 | | | | 62,220 | | | | 62,625 | |
Dilutive shares - stock options | | | 4 | | | | 21 | | | | 6 | | | | 36 | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding — diluted | | | 62,197 | | | | 62,467 | | | | 62,226 | | | | 62,661 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income per share attributable to common shareholders: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.44 | | | $ | 1.06 | | | $ | 1.76 | |
Diluted | | $ | 0.22 | | | $ | 0.44 | | | $ | 1.06 | | | $ | 1.76 | |
Page 11
