OMI - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Owens & Minor Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now speaker hand today, would to conference I first your to Instructions] like the to over [Operator Mr. Alex Jost of Investor Relations.

begin. may You

Alex Jost

Thank welcome and quarter XXXX Hello, & call. Operator. earnings fourth year and to Minor full you, Owens everyone

Vice Ed? along and materially in Executive over to included are focused our The measures President by outlook Long, and Relations included description Officer to section the to Our results the the of report on a financial of information matters Please implied. call report XX-K. annual Financial for Please Investor our are GAAP call Pesicka, results and and measures including Form reports with certain XXXX the and the XXXX, for now our quarterly from Chief will my this annual to the will Ed as could pleasure press on XXXX, today, are Executive Chief of factors and XX-K XX-Q. comparable reconciliations reference refer financial about our differ Form our these we full on risk quarter and all our on in we make uncertainties on year of President our are comments Ed. subject full in and non-GAAP fourth filings those our of Form well The the slides discussion section Officer. press risks website. statements. most measures turn and release call joined projected that for Today, release. It’s In note financial risks the actual posted on and these Andy the uncertainties I’m forward-looking or the during release today’s be SEC press the as supplemental to statements will which our on cause addressed to

Ed Pesicka

today. I’d the starts in XXXX for Alex. teammates. a with XXXX. our like Owens joining high morning, was us you of setting to all level performance call And everyone. record for thank exceptional Good it recap with year start And a you, Thank on Minor’s company. our &

have The to teammates our with that improvement with our and and long-term on is company is profitable is growth. out customers to successful record investment growth. the along the for of close resulted Owens blueprint empower ideal culture blueprint, positioning furthering of our & a our continued business with in on Minor provide Owens our that continuous execution disciplined Owens Minor quarter, Our to right to another starts advance year, profitable & our This long-term humble business principles to business focused based which the Minor mission leverage system values. then a the combined our strategy has & of investments guiding and our making healthcare, blueprint

our and thank a to congratulations done. teammates, job So well you for

from provides example that Americas technology distribution our right touch, balance flexibility to based the Minor value way the chain. unique leverage of goods. our along our between of is home. the our this, Based profitable believe home. raw then patient this with Overall, finishes on patient manufacturing healthcare moves Minor solutions presented Owens business into profitable customers our integrated a If recall value scalable chain the to strength & at positions company May, in value and hospital strategy Day through with presented serve drive sustainable of XXXX strategically finished & with to and & starts long-term Owens that to strength based our Minor with channel as our to us with growth. materials chain drive serve on ability Owens to to in broad-based the we our the and It system the we growth. provides you great business direct long-term We robust, the Investor that the ability all the an our scalable a and

proud XXXX. and with achieved to three, growth, debt that announce business. our continue start full on XXXX I’m and revenue guidance in one, Two, in let’s delivered So we, to reinvesting and pay record XXXX, EBITDA. strong the year EPS our while showed down

pricing is you we a global I chain a other filled headwinds. what inflationary with anomalies the market year record don’t However, want even challenges, to that had in miss pressure, supply and fact

through items these combined business impacted unique industry, with headwinds. to our model execution is these it While us our manage our enabled that

to long-term profitable levers distinct our the results be continue the all the platform that We Again, starts it financial while strong appropriate quarter. model vertically strengthening competitive continue business our to with integrated that growth. to And maximize service, advantage. provides deliver in fourth a apparent pull us for with

and XXXX our bulk significant when In Americas for the meet leverage. supply fixed couldn’t. manufacture cost flexibility our footprint customers which Our owned capacity short, manufacturing our needs driven success by to ability of to products resilient against these self allows others the proprietary pressures our provides chain was of products

provides also that not ESG better adjust to more advance The our of A proprietary lay current into situation, we provide visibility that which limited our areas and accountability important customers solutions product constituents. to in that commodity smartcard performance and XXXX, with and our metrics chain we smartcard our metrics just the tracker we better was efficiencies which great launch but visibility on customers. is greater not focus reported During achievements our and as this did serve but market inaugural supply provides issues the investments provides expanded customers categories backlog and and to information, the published our drive supplier stands supports for supplier our updates made In XXXX, ESG substitutions. company for in our their include, possible of products, enables on our and example existing technology report several to focus. the visibility and product worked provide

and $XX dedicated The momentum & this empowering from at with Owens into by and company, is will at the of through in expected, focused is support and is continued as communities When inclusion. which and on the healthcare environment operates forward launched to looking our entire serve and numerous the we & I XXXX in hospital Foundation to closing has healthcare, diversity Apria growing $X.X over transaction annually. the providing well to complementary strengthen in Byram which home and patient entities the integration impacting combined company’s organizations healthcare our has enable journey and Minor to business, to for addition, market highly these billion, us the plan In announce better fragmented underway. valued X% the to will our team welcoming in services closing is our progressing history. the equipment represent the to XXX-year Apria recently home. is ability a XXXX. leading acquisition which, upon half Owens home of Minor definitive agreement first enabled to of and acquire our The largest healthcare am the Apria provider integrated billion

both offset distribution. of me S&IP let led fourth sales. macroeconomic and direct a patient our business capture model us continuing Now, to major and all just allowed products integrated share global by few our PPE pressures, while our vertically to Two, medical from quarter. grew businesses highlights One,

operating position. are that utilizing debt continuous and expanding our our technology, will area, manufacturing up in improved year-over-year fact, deep leverage a to course, balance investments dive through on a improvement. of is one capacity, three, to Andy basis. I our moment, In both infrastructure, strengthening capture want on in continue do And sheet Well, we a discuss

Minor, Let our take Less about me three you when in seven leverage Owens net ratio was ago, back it times. seven years Again, joined time. & was than I times.

is times. accomplished to to this cash our should name and for reduction, capital in due noted It the few. just disciplined deployment free XXXX, of X.X that to strength infrastructure, company’s this short Now ratio the a leverage still expansion, only capacity years while profile. of were We at our teammates, significant business our end we to flow able later, making be accomplish technology investments three approach our and just net

approach to four our close net Apria, maximize to free we our the And continue will will of continue times strength our the increase disciplined in and to we after will business. appropriate pay debt company’s So we leverage same will to make while of take investments the cash around pending down flow.

Our overall in Andy in by more will discussed detail current few balance a moments. sheet be

our moving I our current previously adjusted of XXXX to the million, from of $X range both the to any of XXXX Apria. to from EPS, $XXX of contributions exclude reiterating to which and EBITDA way guidance of issued range believe Accordingly, acquisition on $X.XX $XXX Now XXXX, XXXX that million are the in pending our in for of regardless of adjusted year we full another are macroeconomic we conditions. year, well the successful

steps future, now the finish growth discussion extremely commitments So proud a delivered for Andy? our and of financial more to of expectations over Owens record about and strong the in year closing, our stakeholders on even for to & to we and I’ll help all took results major I’m our a turn our of Minor. XXXX. future ensure to Andy call our excited

Andy Long

and Today our key for everyone. full in year. and for expectations results our and then assumptions I’ll our the I’ll fourth good and quarter Ed discuss financial drivers you Thank And for review morning, the XXXX. performance

pleased strategy and tirelessly works of broader our despite mentioned, quarterly on business issues. to macro results terms am able in guidance our team that both we on the year, were Ed for As executing deliver to continue cadence. our I the overall

compass enter last we very record year. the fourth were able we quarter As were strongest we generating we XXXX. XXXX while But a of year knew as we a quarter, deliver to the very was tough I’m momentum great setting of facing happy entered QX

our reviewing financial Let’s start by performance.

QX million reduction this quarter. year, overcome which challenges was on pass-through fewer and or due pass-through versus and and previously quarter negative X.X% our third combined COVID had of glove important by business indicated from It X.X% our driven in positive continued $XXX $X.X elevated growth to impact billion two prior note a fewer was system an to for Our total headwind costs trend glove It’s fourth on the ability that date chain. down This costs. placed Sequentially, revenue our patient the had as one approximately of the strength in of revenue growth. year year. a healthcare versus last of billion approximately selling to was supply the direct selling $X.X days to has resulted continuing that compared

being performance However, to only revenue $XX good fourth sequentially. led million business quarter down

improvement sequential expect year, yielding For glove a quarter perspective, out total in as points was the to gross played XX.X% $X.X fourth From a XX full of calendarzation related the pass-through, revenue billion of we cost billion, $X.X XXXX. the the to third This margin compared a basis of the to XX.X%. quarter. versus up it gross was margin impact in

levels was was pandemic. cost margin lower impacted quarter the have prior with headwinds did pass-through PPE of in not fourth which than favorably this midst by and record However, of year gross the of glove XX.X% sales the associated

Looking gross ahead, in year full we expect the with improve quarter approximately to from gross expected to be the XX%. to XX.X% continue margin fourth XXXX margin

year higher XXXX XX.X%, than full approximately XXXX. which points was margin basis gross Our XX was

fourth Our productivity in distribution, offset $XXX reduction ongoing certain the versus prior and the due of gains million selling expenses quarter million $XXX.X was investments and year. The was to business. timing administrative in partially by expense

for lower $XX.X debt was the debt of year to rates periods $XX.X XXXX. year. million XX.X%. levels quarter Fourth year. billion lower the And S&A expense interest the a Both full expense $X.X expense million, prior interest the prior to full in the in billion in well of reflect was resulting our as as million, refinancing March $XX.X year decrease compared $X compared interest from For was

the from Our XXX% $X.XX. from share, adjusted of operations and million, and a year $X.XX XXXX. in per $XXX.X quarter continuing $X.XX prior adjusted year GAAP was the quarter to $XX.X or for million Meanwhile, in full the was $X.XX $XX or compared net income income $X.XX was for share, million was fourth the up EPS

EPS segment and to revenue to a for for quarter $X.XX year the For income from up the fourth our XXXX with the foreign EPS on quarter $X.XX a million compared of X% adjusted full $X.XX year, global currency $X it was fourth solutions billion, prior was unfavorable. was On was record the adjusted basis, in XX% operations year-over-year. XXXX. unfavorable, $X.XX Versus full continuing $XXX impact year,

costs, the year’s fourth prior prior a and primarily representing The the For solutions revenue compared million year, which productivity full was X% due XXXX higher was improvements. $X.X the largely billion for $X.X delivery in $XX.X compared to the transportation million quarter inflation, in quarter. versus partially was to operating Global to form increase. by year decline of was $XX.X billion income offset in

For compared later operating in result to growth more our partially year. $XX.X of than improving given efficiencies, doubled last $XX.X income to the leveraging year, strong a million revenue increase solutions our pressures costs the full operating our global inflationary offset year. was and The million by fixed

Turning to products. global

impact in was $X.X was $XX.X XXXX last revenue a fourth capacity comp income full to XX%. QX $X.X year’s glove mix million as to I for million, products into that was the X.X% of top the greater lift million year transportation related and costs increase lower prices line call, revenue communicated carry pass-through, quarter peak year to the QX glove XX% utilization, product levels. and compared This to higher cost operating to the for as $XXX.X sales, productivity of revenue during year-over-year. of the was $XXX net quarter, Our of year the impact commodity of X.X% in full back half to earnings as cost for approximately fixed $XXX.X result fourth to offset to On recognize the timing a These million comes partially in up considerable basis billion we compared In the realized full million margin last quarter last representing a were was PPE million. very as year the compared the was by in million Overall, improvement glove rising initiatives, important favorable of an pandemic tougher growth million, QX was year-over-year sequentially leverage. pass-through the compared quarter from for year unfavorable approximately income $XXX in utilization full saw pass-through, year. strong our $XX.X items costs. segment to an of XXXX. XX%. the It’s Adjusting in end. cost rate Global and $XXX.X X.X% margins was year’s Operating we favorable in momentum increased growth from profit to and last expect

on QX, impact million quarter foreign for year. the income was million CapEx $XX.X million unfavorable year. the revenue Finally, year-over-year for $X.X currency in operating the and $X unfavorable the was on in $X.X million impact unfavorable The unfavorable

balance the now capital to Moving and structure. flow, cash sheet

debt and a operating Total year, result of of For earnings, was along we times. times year, million at the of as finished capital the in million full target generated net now working below our in $XXX.X the which the half million of strong cash the is the and two of flow nearly four leverage second stabilization years. with Net our year, $XXX.X $XX the as end level X.X of three to year. debt lowest was for

growth executed three in Our organic opportunities. progress our over we invest as have years we while in continue reducing balanced last debt been the to has capital deployment, approach to achieved

for transition the acquisition the that year, projections pending to all exclude the Apria. impact I As of note discuss for XXXX of our guidance

We on expect estimated in in year million $X.X passed and nitrile be the revenue the purchase of $X.X to reflects billion. for gloves, to by lower customer. This billion of $XXX prices to sourced revenue to costs being externally lower range the an $XXX drop million projection driven commodity full

our growth NXX this we slides partially of volumes is up the posted This to growth our and pass-through combination December, X that by and retail of further which expectation and revenue this to changes, patient illustration of year. new government revenue the X% program, reflects can After morning cost the is international about portfolio in the our into number the of completion and You This schedule for penetration PPE throughout products XXXX the guidance dynamic. direct, refer year-over-year. stockpile up offset markets. industrial, glove our wrapped website ease will expanding federal for an slide the of launch normalizing on overall our continued in

We due protocols base wins industry, customer baseline due continue healthcare expansion level two above to new new and pre-pandemic our to in PPE meaningfully to the to last levels the over expect the years. of be new fully

stay that procedures flat assume will also We year-over-year. elected

the margin which course XXXX interest million rate of excludes gross assumptions million expense include $XX Additional related XX% $XX and financing rate of in for tax a range XX%, approximately to effective of XX%. to to of the Apria

able adjusted manage Our year It’s exiting us share strong full This range our $X based of as assumes $X.XX FX up effectively we half XXXX momentum and of a on XX approximately that XXXX noting XX, diluted XXXX. guidance to average also is of of count pressures. first net income to XXXX assumption December for continue per a includes of share solid for that million. inflationary be will worth an sets to rate

we be $XXX of adjusted to Please key with XXXX relations the range summarized a website. Finally, X-K the to assumptions aware $XXX on the this Form for earlier posted our to EBITDA million have these supplemental excludes are filed SEC of in section today, expect of be benefit Again, been and million. modeling that slides investor Apria acquisition. on the

products As reminder, new segments reporting direct. and begin report results. patient when Those first under a segments, we healthcare our we’ll quarter and services new our two

few regarding acquisition. Apria the items pending Now a

will to first continue transaction in of half the expect We close the that XXXX.

driven growth this Although identify provide we updates as synergy cost finalized. gets is will opportunities continue acquisition, a primarily to this and

tax provide at be we $XXX benefits. in to the billion We details to financing closes. EBITDA subject transaction XXXX, once contribute terms, price to in the annualized of addition, of and excess should modestly $X.X accredited expect a final greater allocation, adjusted continue to least potential acquisition purchase revenue of deal In review annualized and intend The million.

they differently we than teammates the during pleased organization of the of chain the reflect end the pandemic our the deliver on through envisioned very XXXX, to levels service how across year of crisis year. global year. played these beginning find an highest providers and also our the supply to industry ways guidance be continues to to inflation of issued we its The that end, on of what responded of when obstacles proud the commitments. another the year. their and dedication I to part I’m at out didn’t the very events providing As and accelerated began, healthcare challenging I’m to

success, to and made progress on Q&A we welcoming this us achieving on that long-term I’ll point, ahead we excited sharing session. path the important our new As forward the our I’m look to begin to these you the on our the turn year of call about as back our build future with in we’ve and the look forward investments vision. continue I At Apria with the initiatives operator to teams. Operator? over I the to

Operator

of you, America. Cherny first Michael comes Our sir. Please Instructions] from Bank Thank [Operator go line from the ahead. question of

Michael Cherny

want mentioned on through long-term a that’s And world but this the strong is gross the this trajectory post-COVID you and not in to in guidance on the and future that Good only you gross think how margins whatever especially morning. PPE, Congratulations margin beyond think a dive a reiterate XX% level the little year is have. as obviously new XXXX, are normal given through into to we sustainable? baked bit guidance. into year’s a I

Andy Long

Andy. This Yes. is Mike. morning, Good

the we assumptions volatility that moving absolute margin be XXXX. So XXXX reflect of reaffirm to just established And XX%. I able quarterly really the the think had to things. we to value One we’re that two in is great past it’s early in But address guidance XXXX. not that,

think right QX. nice us in us I we gets volatility So to trajectory were from that in to have behind where the pass-through, costs the due XX.X% it’s glove

I I with moving products, reasonable much total that So see specifically kind margins the segment. XXXX just QX, do we more really overall strong rate XX%, is a think we’re momentum you’ll not volatility think in in XXXX. company, and forward. in quarter-by-quarter increase of we’ve go And going into in less I long-term and that got in as that think forward but And

Michael Cherny

start given it the pass-through? what had will the you when I the you the around year. pass-through just that complexity in bit then and done your and on had like, based into diving pieces One, two, glove see Two pieces moving further, this we side normalized And guess be that should moving a it. and to question, you are XXXX product glove margins pass-through on glove Got time part especially guess.

Andy Long

we so behind very will Yes, question part Mike volatile XXXX one that us. is, I think of saw that the in swings quarterly be

So, I a very large swing. do quarter-to-quarter not expect

us. cost closely more So movements of another and movements that I than saying is way will It’s in behind joined think that’s that they largely were price XXXX. be

Michael Cherny

Thank Got you. it.

Operator

UBS. from see I ahead. comes our Caliendo from Kevin you. next the line Thank of question go Please

Kevin Caliendo

you. Thank

How cadence growing terms Should second and Michael’s of EBIT normal terms is about should Just about on and to a how outline little an look like XXXX a half in cadence revenues, then? think we sort you the year guideline for expand that on quarterly into that more XXXX first a of question normal the and it think the bit. half talking of progresses traditional of cadence more progression. just beyond for you’re new in

Andy Long

Good It’s morning, Andy Kevin. again.

on have cadence this don’t we pre-pandemic. one experienced is start XXXX going I’ll to that the just say, think typical and I So

our was on of quarter high note, ended year then procedures fourth quarter end and the and with we typically in flu fourth a first the historically, really the peaked So as elective weakest on based quarter quarter.

being to I the very seasonality momentum compared So out for I fourth we playing for strong exiting into cadence. see do first specifically, first the pre-pandemic for have And see this I see don’t carrying half quarter. that typical quarter a year very the business. Again is and XXXX unusual the which unusual strong that

see do the first being strong. half I So

Ed Pesicka

through. add starting is, a in elective thing buildup on to come see we’re that half that And of procedures. see The the other to first February still I’ll we here

do talking from So demand. the have our I elective ramp procedures pent lot in are to February of know they up a customers, starting up. to

said, year year you impact that where the flush year, be the the traditional to going XXXX. beginning through that’s half more like of year Andy earlier in will than have of less the in versus and in a back And some another

Kevin Caliendo

the yours much that guess peers side? I macro have and I off of more color on We that know much on do XX you say is But much visibility is the Is customer a XX%. usage. going We have helpful? in question is, on manufacturing it years? mask helpful. months, months, how X that’s lot hear see specific specific. demand demand investors how the product Alright, X would you the Any some product into have be contract X months, forward? side do visibility what I think slowdown

Ed Pesicka

have do on We Yes. long of that’s visibility lot a term reasons. and for

we the customers. I pandemic, foremost and into committed with many, contracts, continue of to first think our year, this contracts and even many long-term sign during

it if fourth I our still partially been quarter pandemic, we at just relative to addition able down during much it were we’ve do than our and that, you they strong comes protocols sales, the in at to others, where what what product the in down fact to think we to look In to see potentially saw comes really performance levels actually the performance pre-pandemic. that higher

to that authorization, quality use are get in looking medical continue grade of products. quality products customers We for their emergency rid to products, see

that For reasons, there. those all continuing we see out

into markets. new on focus some by last little PPE thing, putting I expansion year them over did the a bit products want to we The of taking and the other those

the again, US example customers, focusing growth, factories, we’re We focused even or our different XXXX of in the product seeing a ability when of gloves to pandemic putting allowed the and specifically height retail in that think in market. retail for XXXX, to our on making us to is taking export we go that great the serving the packaging, were into the same internationally, gloves, the start them and when So weren’t we’re the on US. long-term about on we pop in made grow

So as that opportunity our seeing in business. a products we’re growth

into. that and products specialty we’ve addition to that, specialty In gloves it taking expanded using and products our

comes and into protocols. demand lot different we product. products for new a see of we our into contracts expansion agreements those have So factors markets, strength we than to impacting higher to customers. down It down in why as well as of many It high the continue have the of comes It past with to categories, comes it. down to continued new our

In same part is fact that that, those procedures. products, addition try S&IP what model needed we the to were in many elective of our products as also and are that of PPE elective in to the used I procedures, used think in pandemic

to redirected and to either addition In that of some make or is procedures drapes, that accelerate. material as used raw traditional wrap, wraps that’s for we things PPE, the drapes use, other elective we going be into and and

that we’re the or to market XXXX. the have reasons see quarter going lot also a are conditions. strength in continuing visibility through we And those into of in So market out longer a have why term others it’s why we such and maybe strong fourth relative to

Andy Long

to again looking And further global QX QX to Kevin, at sequentially, mind. just keep the revenue products it point this performance Andy, one just on is was in

days actually worth is in in two And again, is reporting global QX day a XXX again, in cost glove about each the million. selling we’re revenue. for adjust XXX what to forget fewer was don’t million. QX decline global products was million. But The pass-through $XX costs So in pass-through

there So rate around sequential pull to for adjust the got underlying rate quarter. X% growth you this to when and get a and headwinds two out as underlying the fourth those true to you’ve great

Kevin Caliendo

guys. info. really all That’s Thanks helpful really,

Operator

line comes our from Singh ahead. Credit the from Please go of Suisse. I Jailendra you. next Thank question see

Jailendra Singh

pass-through. Thank I good Actually, everyone. you. gloves want And morning, to cost get clarification some

the as Want make impact you guidance in know profitability it’s in of I still for XXXX impact with match you revenue that You you that kind revenue net neutral XXXX. to was to sure $XXX million And $XXX had said include year? million then cost. expected when it for

should but year? about of revenue we So expect QX similar throughout impact QX, the think how from EBIT the view? cadence impact, like point no we Should very QX, QX, that

Andy Long

It’s Andy. Jailendra. Sure

issue in million a of you’re the pass-through, glove year-over-year. QX year we data that that products terms the Top $XXX of strong move throw our so line again going very it’s X.X% the between into cadence, probably on got XXXX. And ended momentum But think issue going continuing off see So slightly right. that of favorable. talked as just a have, global about that the say QX. point. I but calenderization timing particularly material And is again, not was to impact the XXXX, think guidance the of XXXX to that’s in impact small on next I margin just a we absolutely terms the QX quarterly cost I in momentum margin and And XXXX would cadence it’s year. of that have the effects we impact right cost momentum as again, year. timing enough margin the I the you’ve glove the pass-through. don’t any that in And how overshadowing in as of to in see improving from far into X.X% I timing I for

XXXX saw more quarterly margins stable in than in XXXX. what we relatively So

Jailendra Singh

might lower give terms those you near in your investor versus of And what underlying at reflected shared of last like, you maybe unchanged XXXX the And of to flash change a outlook, the back? individual trying captured bit rain can part mentioned is is then that if have day my that two were the part end year. practice understand around higher just which year your Andy what out question you Was some color redemptions second end, this some the assumptions items there. what about swing your on for little on items changed some guidance, is expectations, what in the XXXX?

Andy Long

take to happy Jailendra that. Yes

on what refresher guidance, and quick changed. has and a XXXX what’s gone what’s maybe the our same just into So

And drivers. the just revenue QX. online it’s the quickly It’s ticking So real comes debt, through portfolio includes for the the end expansion. capacity of that example, that at glove

on strong top continued retail internationally our in expansion top of expansion that’s immediate continued So markets growth filling be patient like and its direct. adjacent with to patient gloves the It’s direct, growth, line growth unchanged. and continued industrial growth into its line,

we’ve been in in flat half that’s year-over-year the In terms line assumed of where second electives XXXX. electives, of are and with we’ve

the end our to volumes. continue continue, did We’ve prepared does and program of in come said, assumed We come remarks would that was in it assumption that to as we’ve an assumed and end easing I December. Federal not that in stockpile my PPE an NXX,

be factors those government be volumes experiences assumptions procedures, If terms could some could if be upside. talked PPE last through PPE also win swing new upside. three to that were demand again, about that would contracts, pent to were supply revenue, And I if that on come up In upside. of steady, in we hold elective that

inflationary were that’s we that margins the experience bit we see our anyone change a to guidance starting May of Investor before because, terms announced a was when from where little Day in largely XXXX in back In pressures. we we was the of where again, had

put worsen. in an going So element And overall, we Labor these have as in baked in high. we we’ve to guidance. hold that’s that’s assume order remain not are the key here of we And our well actions to transportation to to drivers going inflation. mitigate inflation, assume inflation,

So we’ve for alternate freight those continued to efficiency and actions in strength transportation in proactive commodity sources efforts pass-through, pricing, our headwinds. continuous like identifying mitigate sourcing, and improvements help got

Jailendra Singh

a Great. Right. lot. Thanks

Operator

question our [Operator Please Instructions] ahead. Eric comes you. of see from Coldwell next line I Baird. from go the Thank

Eric Coldwell

to legacy capture seem I online this customer accounts little done you. on business, core Thank year. bit year. get retention last color with coming you I few distribution acute Good know the to better job morning. you a a was a have and hoping share had of

You update what environment? then gave could we I that the wins. on in was an current follow hoping you. I have a you’re And some up. Thank numbers around net seeing get

Ed Pesicka

XXXX. is strong first reality retentions in customer me had a year the retention. customer let Eric, we really And talk in about Sure,

We’re pleased wins. would call with high have Think the had. about wins. reality retention rate regrettable is, also of in churn the we a strong we We in XXXX. year did I what had no customer And

Our pipeline be to continues strong.

quality We continue to focus customers. on high

the announcement. in support did public had in provide focus And that the West that to well chain. state deal announcement where can as think others as University University, a that signed what Virginia a of we vicinity. Virginia, we value is a our and example I with the great rest We of on recent most continue of long-term We West we to customers value,

add lot center besides a to a new of new going offerings can We’re distribution. different provide facility or there a that

at with our it’s that work look chain ability value and closely to So entire to that continue customers.

accounts And are. great sure, we we’re the disciplined I we where are make and sure think to was as continue to make responsible we’re new extremely to serve say we on a just get we same of be But how sense, the of Eric, a higher successful return examples couple a expansion. and are customers I in the efficiencies related overall, to recent and that those year that. But accounts to to to that. going serve look cost example would can do I win think going WD be was going we’re most have those to we of drive full XXXX

Eric Coldwell

Ed comments on the environment, pipeline? any color RFP the updated

Ed Pesicka

is Eric. The Yes. different. The RFP pipeline, is environment strong, still

things. obviously, have You different you looking in for types have customers different industry, any our of in industry,

done I think our critical. those we at what And team provide. has customers become better that’s on value honing that in much

And I great also don’t chain that becoming our and think in more gotten supply more supply that continuity products important. process, source those it’s provide important we and more we’ve of been we that manufacture and has strong ability is been the has seen to in receptivity. resiliency RFP and

better we’re about Those what just decisions helpful. constituents. their the quicker little open transparent to give customers which bit has our and that our marketplace been today. talked we our that is smartcard, a serve I transparency seeing can think add to a I are value is the make market about in been dynamics, has customers

Eric Coldwell

manufacturing new I capacity, production you on one, your QX curious Last me. I’m late any out the if glove coming additional of at or impact if quarter? the all in any through on could and second thoughts that it impact at in how year in the particular, ramp the model the it XQ said updates timing. facility, might scale The know, will if for will gates, full be

Ed Pesicka

have like third quarter. first It’s and production additional added the of quarter that different expansion, just planned what to -- second facility through the the have Eric, we new new we facility no And expansion, ramping starting any ramped the NXX. the it’s end than of lines new at end facility, it like make when through and anything. we and each

you the to You over get to put the producing, lines them output and in, fine time optimal to tune on continue those. then you them have to get

will So and QX. into of QX line and we’ll get during the off that product QX end ramp the

Eric Coldwell

Good on outlook. guys. job. Congrats Thanks the

Ed Pesicka

you. Thank

Operator

no the questions I’d call for Mr. to like time, President At the in queue. showing I’m you. and Pesicka, Thank CEO further this back over turn to Ed remarks. closing

Ed Pesicka

that or I’m XXXX. look everyone I’m on So continued job momentum today. in patient our done space. of future, the we value that our with with we into at as extremely like close while once first home call we an of in joining we’re the the along and healthcare continue Apria, really for with to made that exceptional about even going the on XXXX, pending I’m we in to continue direct growth healthy strengthen made XXXX. chain progress that do the thanks what to acquisition it has pleased pleased to team all, we we’re But more that The bringing progress excited

financial support the as customers progress again, to this forward we all and And that also to provided can’t XXXX, our look updating already as I & for in at a we’re forward great right into we two us like their support I commitment everyone. We’re to XXXX. growth. to effort as last thank all go the in them into to continue I’d spring accomplished the decisions well them you nearly great later over Owens as making Everyone future. have company several long-term teammates the the months as the the drive the they they’ve for years our work profitable thank thank and to call on on Minor

Operator

call. conference participating. today’s concludes This Thank for you

now disconnect. may You

Owens & Minor (OMI) 23 Feb 222021 Q4 Earnings call transcript