PSS WORLD MEDICAL INC 
By PSS World Medical, Inc. (NASDAQ GS:PSSI):
Fiscal 2007 Third Quarter Highlights:
-
Consolidated net sales growth of 8.2%
- Physician Business net sales growth of 13.6%
- Elder Care Business net sales decreased by 3.4%
-
Company records ($0.07) impact from oversupply of influenza vaccine:
- ($0.06) per diluted share due to write-down of vaccine inventory
- ($0.01) per diluted share from lower-than-expected vaccine sales
- Consolidated operating cash flow of $27.0 million, growth of 70.9%
- Repurchased approximately 748,000 common shares at an average price per share of $20.30
PSS World Medical, Inc. announced today its results for the fiscal 2007 third quarter and nine months ended December 29, 2006.
David A. Smith, President and Chief Executive Officer, commented, ?Our team delivered a very good quarter for both customers and shareholders. Our customer solution programs continue to drive above-market revenue growth, and we continue to leverage that growth in our operating results, generating both profit and cash flow above our expectations.?
Net sales for the three months ended December 29, 2006, were $458.6 million, an increase of 8.2%, compared with net sales of $423.8 million for the three months ended December 30, 2005. Net sales for the three months ended December 29, 2006, for the Physician Business increased by 13.6%, while net sales for the Elder Care Business decreased by 3.4%. Income from operations for the three months ended December 29, 2006 was $17.9 million compared with income from operations for the three months ended December 30, 2005, of $20.6 million. Net income for the three months ended December 29, 2006, was $11.1 million, or $0.16 per diluted share, compared with net income for the three months ended December 30, 2005, of $12.4 million, or $0.19 per diluted share.
Results for the third quarter of fiscal year 2007 included a write-down of influenza vaccine, resulting from cancellation of customer orders due to an oversupply of vaccine in the market and, to date, a mild flu season. As a result, the Company recorded a $0.07 per diluted share impact, including $0.06 per diluted share due to the write-down of vaccine inventory and $0.01 per diluted share from lower-than-expected vaccine sales.
Net sales for the nine months ended December 29, 2006, were $1.3 billion, an increase of 8.6%, compared with net sales of $1.2 billion for the nine months ended December 30, 2005. Net sales for the nine months ended December 29, 2006, for the Physician Business increased by 15.0%, while net sales for the Elder Care Business decreased by 4.1%. Income from operations for the nine months ended December 29, 2006, increased by 12.5% to $58.2 million compared with income from operations for the nine months ended December 30, 2005, of $51.7 million. Net income for the nine months ended December 29, 2006, increased by 11.2% to $34.8 million, or $0.50 per diluted share, compared with net income for the nine months ended December 30, 2005, of $31.3 million, or $0.47 per diluted share.
The Company also noted that it expects the industry oversupply to continue into next year, and therefore will not participate in the influenza vaccine market during its fiscal year 2008. The Company previously had expected revenue and earnings related to selling influenza vaccine in its fiscal year 2008 to be $60 million and $0.06 per diluted share, respectively.
Mr. Smith concluded, ?We will evaluate future opportunities to participate in this part of the industry by pursuing a strategy that balances the needs of customers with the risks inherent in the flu supply market.?
David M. Bronson, Executive Vice President and Chief Financial Officer, commented, ?Despite continued investment in globally sourced inventory, the Company reported another strong quarter of cash flow from operations, leading us to raise our goal for the full year to $65 - $68 million. Approximately $15 million of cash was returned to shareholders through share repurchases during the quarter of about 748,000 shares. We are generating solid leverage on our infrastructure resulting in capital expenditures slightly below our expectations for this year.?
A listen-only simulcast as well as a 90-day online replay of PSS World Medical's fiscal 2007 third quarter conference call can be found in the Investor Relations/Financial Information sections of the Company's websites, www.pssworldmedical.com or www.pssd.com, respectively, under the heading ?Events and Presentations,? or at www.opencompany.info , on January 25, 2007, beginning at 8:30 a.m. Eastern time.
PSS World Medical, Inc. is a national distributor of medical products to physicians and elder care providers through its two business units. Since its inception in 1983, PSS has become a leader in the two market segments that it serves with a focused market approach to customer services, a consultative sales force, strategic acquisitions, strong arrangements with product manufacturers and a unique culture of performance.
Additional financial information pertaining to PSS World Medical financial results may be found by visiting the Investor Relations/Financial Information sections of the Company's websites, www.pssworldmedical.com, or www.pssd.com, respectively, under the heading ?Events and Presentations.? If you should need assistance accessing the information, please call Investor Relations at 904-332-3000.
All statements in this release that are not historical facts, including, but not limited to, statements regarding anticipated growth in revenue, gross and operating margins, and earnings, statements regarding the Company's current business strategy, the Company's ability to complete and integrate acquired businesses and generate acceptable rates of return, the Company's projected sources and uses of cash, and the Company's plans for future development and operations, are based upon current expectations. Specifically, forward-looking statements in this Press Release include, without limitation, the Company's expected results in GAAP EPS, revenue, operating incomes and operating margins for continuing operations for both the consolidated company and for each of its businesses in fiscal years 2007 - 2009; the expected operational cash flow in fiscal years 2007- 2009; the ability to sustain revenue growth and expected growth rates of the marketing programs in its Physician and Elder Care Businesses; expected flu vaccine sales and profitability during fiscal years 2007, 2008 and 2009; expected pharmaceutical product sales in Florida and all other of the 50 U.S. states in fiscal years 2007- 2009; and expected sales growth from durable medical equipment, housekeeping, revenues derived from home care, hospice and assisted living customers, for revenue, operating income, operating margin, cash flow from operations and earnings per share for fiscal years 2007, 2008 and 2009, as well as other expectations of growth and financial and operational performance. These statements are forward ?looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors that could cause results to differ materially are the following: pricing and customer credit quality pressures; the loss of any of our distributorship agreements and our reliance on relationships with our suppliers and vendors; our reliance on a limited number of chain business elder care customers; the availability of sufficient capital to finance the Company's business plans on terms satisfactory to the Company; lower revenue and earnings that may result from competition; the ability of the Company to adequately defend or reach a settlement on outstanding litigation matters and investigations involving the Company or its management; changes in labor, equipment and capital costs; changes in legislation and regulations affecting the Company's business, such as the Medicare cliffs, changes in malpractice insurance rates and tort reform; future acquisitions or strategic partnerships; general business, competitive and economic factors and conditions; and other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission. Many of these factors are outside the control of the Company. The Company wishes to caution readers not to place undue reliance on any such forward ?looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. The Company also wishes to caution readers that it undertakes no duty or is under no obligation to update or revise any forward-looking statements.
PSS WORLD MEDICAL, INC. Unaudited Condensed Consolidated Statements of Operations (In millions, except per share and share data) | |||||||
| Three Months Ended | Nine Months Ended | ||||||
Dec. 29, | Dec. 30, | Dec. 29, | Dec. 30, | ||||
| 2006 | 2005 | 2006 | 2005 | ||||
| Net sales | $458.6 | $423.8 | $1,299.2 | $1,196.7 | |||
| Cost of goods sold | 335.4 | 303.7 | 932.2 | 853.8 | |||
| Gross profit | 123.2 | 120.1 | 367.0 | 342.9 | |||
| General and administrative expenses | 75.2 | 72.0 | 222.3 | 211.7 | |||
| Selling expenses | 30.1 | 27.5 | 86.5 | 79.5 | |||
| Income from operations | 17.9 | 20.6 | 58.2 | 51.7 | |||
| Other (expense) income: | |||||||
| Interest expense | (1.3) | (1.6) | (4.1) | (4.4) | |||
| Interest and investment income | 0.4 | 0.1 | 0.8 | 0.3 | |||
| Other income | 0.5 | 0.4 | 1.4 | 2.6 | |||
| (0.4) | (1.1) | (1.9) | (1.5) | ||||
| Income before provision for income taxes | 17.5 | 19.5 | 56.3 | 50.2 | |||
| Provision for income taxes | 6.4 | 7.1 | 21.5 | 18.9 | |||
| Net income | $11.1 | $12.4 | $34.8 | $31.3 | |||
| Earnings per share - basic | $0.17 | $0.19 | $0.52 | $0.48 | |||
| Earnings per share - diluted | $0.16 | $0.19 | $0.50 | $0.47 | |||
| Weighted average shares (in thousands): | |||||||
| Basic | 67,054 | 65,779 | 67,272 | 65,344 | |||
| Diluted | 69,458 | 66,931 | 69,294 | 66,469 | |||
PSS WORLD MEDICAL, INC. Condensed Consolidated Balance Sheets (In millions, except per share and share data) | |||
Dec. 29, | March 31, | ||
| 2006 | 2006 | ||
(Unaudited) | |||
| ASSETS | |||
| Current Assets: | |||
| Cash and cash equivalents | $ 54.9 | $ 23.9 | |
| Accounts receivable, net | 219.8 | 209.0 | |
| Inventories | 186.2 | 173.4 | |
| Deferred tax assets, net | 7.4 | 13.0 | |
| Prepaid expenses and other | 37.3 | 33.8 | |
| Total current assets | 505.6 | 453.1 | |
| Property and equipment, net | 85.9 | 87.7 | |
| Other Assets: | |||
| Goodwill and intangibles, net | 138.2 | 139.9 | |
| Other | 58.0 | 56.3 | |
| Total assets | $ 787.7 | $ 737.0 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current Liabilities: | |||
| Accounts payable | $ 162.3 | $ 139.3 | |
| Accrued expenses | 31.7 | 34.5 | |
| Current portion of long-term debt | 152.2 | 0.5 | |
| Other current liabilities | 10.7 | 13.6 | |
| Total current liabilities | 356.9 | 187.9 | |
| Long-term debt, excluding current portion | 0.5 | 150.9 | |
| Other noncurrent liabilities | 62.3 | 49.4 | |
| Total liabilities | 419.7 | 388.2 | |
| Shareholders' Equity: | |||
Preferred stock, $0.01 par value; 1,000,000 shares authorized, no shares issued and outstanding | - | - | |
Common stock, $0.01 par value; 150,000,000 shares authorized, 67,151,236 and 67,476,682 shares issued and outstanding at December 29, 2006, and March 31, 2006, respectively | 0.7 | 0.7 | |
| Additional paid-in capital | 302.8 | 318.4 | |
| Retained earnings | 64.5 | 29.7 | |
| Total shareholders' equity | 368.0 | 348.8 | |
| Total liabilities and shareholders' equity | $ 787.7 | $ 737.0 | |
PSS WORLD MEDICAL, INC. Unaudited Condensed Consolidated Statements of Cash Flows (In millions) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
Dec. 29, | Dec. 30, | Dec. 29, | Dec. 30, | |||||||||||||||||||||||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||||||||||||||||||||
| Net income | $ 11.1 | $ 12.4 | $ 34.8 | $ 31.3 | ||||||||||||||||||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||||||||||||||||
| Depreciation | 4.2 | 3.7 | 12.5 | 10.5 | ||||||||||||||||||||||||||||||||||
| Provision for deferred income taxes | (3.7) | 7.1 | 4.1 | 18.9 | ||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 1.5 | 1.7 | 4.4 | 4.4 | ||||||||||||||||||||||||||||||||||
| Provision for doubtful accounts | 2.4 | 1.2 | 3.4 | 5.0 | ||||||||||||||||||||||||||||||||||
| Provision for influenza inventory write-down | 7.1 | - | 7.1 | - | ||||||||||||||||||||||||||||||||||
| Noncash compensation expense | 0.7 | 0.6 | 1.5 | 1.2 | ||||||||||||||||||||||||||||||||||
| Provision for deferred compensation | 0.9 | 0.1 | 1.7 | 0.8 | ||||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | 0.4 | 0.4 | 1.1 | 1.1 | ||||||||||||||||||||||||||||||||||
| Loss on sale of property and equipment | - | 0.1 | - | 0.3 | ||||||||||||||||||||||||||||||||||
| Reversal of provision for notes receivable | - | - | - | (3.2) | ||||||||||||||||||||||||||||||||||
| Other | - | (0.2) | - | (2.4) | ||||||||||||||||||||||||||||||||||
Changes in operating assets and liabilities, net of effects from business combination: | ||||||||||||||||||||||||||||||||||||||
| Accounts receivable, net | 3.4 | 4.6 | (14.0) | 6.1 | ||||||||||||||||||||||||||||||||||
| Inventories, net | (21.2) | (28.3) | (19.8) | (29.3) | ||||||||||||||||||||||||||||||||||
| Prepaid expenses and other current assets | 7.2 | (3.8) | (1.2) | (4.4) | ||||||||||||||||||||||||||||||||||
| Other assets | (1.7) | (6.2) | (1.4) | (13.4) | ||||||||||||||||||||||||||||||||||
| Accounts payable | 16.6 | 20.0 | 23.1 | 28.0 | ||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | (1.9) | 2.4 | 3.6 | (3.4) | ||||||||||||||||||||||||||||||||||
| Net cash provided by operating activities | 27.0 | 15.8 | 60.9 | 51.5 | ||||||||||||||||||||||||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||||||||||||||||||||||||
| Capital expenditures | (2.8) | (3.3) | (10.6) | Share
© Business Wire - 2007
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