Owens & Minor, Inc. : Owens & Minor Releases 1st Quarter 2012 Financial Results
04/23/2012| 05:10pm US/Eastern
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Strong asset management results in $100 million in operating cash flow
Owens & Minor, Inc. (NYSE:OMI) today reported financial results for the
first quarter ended March 31, 2012, including quarterly revenue of $2.22
billion, an increase of 4.4%, when compared to revenue of $2.12 billion
in the first quarter of last year. For the first quarter of 2012, netincome
was $29.4 million, or $0.46 per diluted share, compared to $28.7
million, or $0.45 per diluted share, for the same period last year.
"During the first quarter of 2012, we saw solid revenue growth and
strong improvement in asset management and cash flows," said Craig R.
Smith, president & chief executive officer of Owens & Minor. "Looking to
the year ahead, our priorities include optimization of our large new
account relationships, continued expense control, cash generation and
achievement of milestones in our strategic initiatives."
Operating earnings for the first quarter of 2012 were $51.9 million, or
2.34% of revenues, increased 1.7% when compared to operating earnings of
$51.0 million, or 2.40% of revenues, in the same period of 2011. The
increase resulted primarily from a $3.6 million increase in gross
margin, offset by additional expenses necessary to serve business growth.
Asset Management
The balance of cash and cash equivalents was $214 million at March 31,
2012, increased by $78 million from $136 million at December 31, 2011.
For the first quarter of 2012, the company reported cash provided by
operating activities of approximately $102 million compared to $45
million for the same period last year. Asset management metrics were
strong with days sales outstanding (DSO) of 19.9 as of March 31, 2012,
improved when compared to 21.1 days as of March 31, 2011. Inventory
turns were 10.5, compared to inventory turns of 10.7 for the same period
last year, and improved sequentially from turns of 10.0 for the fourth
quarter of 2011, as the company worked successfully to decrease levels
of inventory previously built to accommodate conversions of large new
customer accounts during the fourth quarter of 2011 and the first
quarter of 2012.
2012 Outlook
The company reaffirmed its financial guidance for 2012, which remains
unchanged since it was provided at the company's December 2011 Investor
Day.
"For 2012, we are targeting revenue growth in a range of 3% to 5%, when
compared to 2011, and we are targeting net income per diluted share to
increase 5% to 10%, when compared to 2011, excluding the fourth quarter
2011 exit and realignment costs," said Smith.
The 2012 outlook is based on certain assumptions that are subject to the
risk factors discussed in the company's filings with the Securities &
Exchange Commission.
Highlights
The company will hold its Annual Shareholders Meeting on Friday, April
27, 2012, at its Home Office in Mechanicsville, Va., at 10:00 a.m.
EDT. Event audio and presentations will be archived on www.owens-minor.com
following the conclusion of the meeting.
Owens & Minor is scheduled to participate in the following investor
conferences during the second quarter:
Bank of America Merrill Lynch 2012 Healthcare Conference; May 15 -
Las Vegas
5th Annual UBS Healthcare Supply Channel 1x1
Conference; May 21 - Boston
33rd Annual Goldman Sachs Global Healthcare Conference;
June 5 - Rancho Palos Verdes
Jefferies 2012 Global Healthcare Conference; June 4 - New York
Investors Conference Call & Supplemental
Material
Conference Call: Owens & Minor will conduct a conference call for
investors on Tuesday, April 24, 2012, at 8:30 a.m. EDT. Participants
may access the call at 866-393-1604 with access code #69709020.
The international dial-in number is 224-357-2191 with access code #69709020.
A webcast of the call, along with supplemental information,
will be available on www.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
#69709020.
Owens & Minor uses its website 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 Investor Relations at www.owens-minor.com.
Safe Harbor Statement
Except for historical information, the matters discussed in this press
release may constitute forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from
those projected. These risk factors are discussed in reports filed by
the company with the Securities & Exchange Commission. All of this
information is available at www.owens-minor.com.
The company assumes no obligation, and expressly disclaims any such
obligation, to update or alter information, whether as a result of new
information, future events, or otherwise.
Owens & Minor, Inc., (NYSE: OMI)
a FORTUNE 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 at www.owens-minor.com.
Owens & Minor, Inc.
Condensed Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
Three Months Ended March 31,
2012
2011
Net revenue
$
2,217,882
$
2,123,815
Cost of goods sold
2,003,554
1,913,040
Gross margin
214,328
210,775
Selling, general and administrative expenses
155,572
150,973
Depreciation and amortization
8,578
8,767
Other operating (income) loss, net
(1,694
)
38
Operating earnings
51,872
50,997
Interest expense, net
3,422
3,717
Income before income taxes
48,450
47,280
Income tax provision
19,090
18,540
Net income
$
29,360
$
28,740
Net income per common share:
Basic
$
0.46
$
0.45
Diluted
$
0.46
$
0.45
Weighted average shares - basic
62,802
62,641
Weighted average shares - diluted
62,901
62,861
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
March 31,
December 31,
2012
2011
Assets
Current assets
Cash and cash equivalents
$
213,927
$
135,938
Accounts and notes receivable, net
499,015
506,758
Merchandise inventories
724,206
806,366
Other current assets
66,647
76,763
Total current assets
1,503,795
1,525,825
Property and equipment, net
107,705
108,061
Goodwill, net
248,498
248,498
Intangible assets, net
21,547
22,142
Other assets, net
43,265
42,289
Total assets
$
1,924,810
$
1,946,815
Liabilities and equity
Current liabilities
Accounts payable
$
537,514
$
575,793
Accrued payroll and related liabilities
10,471
20,668
Deferred income taxes
39,437
42,296
Other accrued liabilities
104,856
93,608
Total current liabilities
692,278
732,365
Long-term debt, excluding current portion
212,285
212,681
Deferred income taxes
23,505
21,894
Other liabilities
60,816
60,658
Total liabilities
988,884
1,027,598
Total equity
935,926
919,217
Total liabilities and equity
$
1,924,810
$
1,946,815
Owens & Minor, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Three Months Ended March 31,
2012
2011
Operating activities:
Net income
$
29,360
$
28,740
Adjustments to reconcile net income to cash provided by
operating activities of continuing operations:
Depreciation and amortization
8,578
8,767
Provision for LIFO reserve
5,223
11,265
Share-based compensation expense
2,385
3,021
Provision for losses on accounts and notes receivable
190
359
Deferred income tax benefit
(1,465
)
(1,830
)
Changes in operating assets and liabilities:
Accounts and notes receivable
7,553
(49,386
)
Merchandise inventories
76,937
(20,695
)
Accounts payable
(38,279
)
72,742
Net change in other assets and liabilities
11,609
(8,639
)
Other, net
(194
)
175
Cash provided by operating activities of continuing operations
101,897
44,519
Investing activities:
Additions to property and equipment
(4,536
)
(4,128
)
Additions to computer software and intangible assets
(3,840
)
(3,010
)
Proceeds from the sale of property and equipment
99
41
Cash used for investing activities of continuing operations
(8,277
)
(7,097
)
Financing activities:
Cash dividends paid
(14,001
)
(12,786
)
Repurchases of common stock
(3,750
)
-
Excess tax benefits related to share-based compensation
690
874
Proceeds from exercise of stock options
3,371
3,594
Other, net
(1,941
)
(2,366
)
Cash used for financing activities of continuing operations
(15,631
)
(10,684
)
Discontinued operations:
Operating cash flows
-
(101
)
Net cash used for discontinued operations
-
(101
)
Net increase in cash and cash equivalents
77,989
26,637
Cash and cash equivalents at beginning of period
135,938
159,213
Cash and cash equivalents at end of period
$
213,927
$
185,850
Owens & Minor, Inc.
Financial Statistics (unaudited)
Quarter Ended
(in thousands, except ratios and per share data)
3/31/2012
12/31/2011
9/30/2011
6/30/2011
3/31/2011
Operating results:
Net revenue
$
2,217,882
$
2,195,890
$
2,176,759
$
2,131,448
$
2,123,815
Gross margin
$
214,328
$
214,014
$
216,682
$
216,066
$
210,775
Gross margin as a percent of revenue
9.66
%
9.75
%
9.95
%
10.14
%
9.92
%
SG&A expenses
$
155,572
$
150,538
$
152,825
$
156,321
$
150,973
SG&A expenses as a percent of revenue
7.01
%
6.86
%
7.02
%
7.33
%
7.11
%
Operating earnings(2)
$
51,872
$
43,014
$
58,465
$
51,039
$
50,997
Operating earnings as a percent of revenue(2)
2.34
%
1.96
%
2.69
%
2.39
%
2.40
%
Net income(2)
$
29,360
$
23,942
$
33,352
$
29,164
$
28,740
Net income per common share - basic(2)
$
0.46
$
0.38
$
0.53
$
0.46
$
0.45
Net income per common share - diluted(2)
$
0.46
$
0.38
$
0.53
$
0.46
$
0.45
Accounts receivable:
Accounts and notes receivable, net
$
499,015
$
506,758
$
507,152
$
504,509
$
520,688
Days sales outstanding(1)
19.9
20.7
20.6
20.6
21.1
Inventory:
Merchandise inventories
$
724,206
$
806,366
$
760,992
$
751,613
$
729,546
Average inventory turnover(1)
10.5
10.0
10.3
10.4
10.7
Financing:
Cash and cash equivalents
$
213,927
$
135,938
$
196,852
$
159,194
$
185,850
Total interest-bearing debt
$
214,184
$
214,556
$
215,037
$
214,020
$
210,801
Stock information:
Cash dividends per common share
$
0.22
$
0.20
$
0.20
$
0.20
$
0.20
Stock price at quarter-end
$
30.41
$
27.79
$
28.48
$
34.49
$
32.48
(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.
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