EX-99.1 2 dex991.htm PRESS RELEASE ISSUED BY THE COMPANY ON APRIL 19, 2006 Press Release issued by the Company on April 19, 2006

Exhibit 99.1

FOR IMMEDIATE RELEASE

April 19, 2006

Owens & Minor Reports Revenue of $1.26 Billion

and EPS of $0.41 for 1st Quarter 2006

The company refinanced $200 million of debt early in the 2nd quarter

Richmond, VA….Owens & Minor (NYSE-OMI) reported today that first-quarter revenue improved 5.7% to $1.26 billion for the quarter ended March 31, 2006, compared to revenue of $1.19 billion in the first quarter of 2005. Net income for the quarter was $16.5 million, up 3.7%, compared to net income of $15.9 million in the first quarter last year. Diluted earnings per share (EPS) for the first quarter 2006 were $0.41, improved from diluted EPS of $0.40 in the previous year’s first quarter. Pre-tax earnings for the quarter were negatively affected by approximately $1.3 million, resulting from the expensing of equity-based compensation associated with the implementation of a new accounting standard and one-time costs from the company’s relocation to its new headquarters.

“Our first quarter results are on target with our plan and reflect strong overall performance with productivity gains in our field operations and solid asset management,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “We are pleased with our first quarter and are well-positioned for the year.”

Subsequent to the end of the quarter, on April 7, 2006, the company closed its offering of $200 million in 6.35% Senior Notes due 2016. The proceeds, together with available cash, were used to purchase the company’s then-outstanding $200 million of 8 1/2% Senior Subordinated Notes due 2011. In second quarter 2006, the company expects to report a one-time charge of an estimated $11.5 million for expenses related to the early retirement of debt.

Other First Quarter 2006 Results

For the first quarter 2006, operating earnings were $30.4 million, or 2.4% of revenue, compared to operating earnings of $29.6 million, or 2.5% of revenue in the first quarter of 2005. Gross margin was 10.8% of revenue in the first quarter, improved from 10.5% in the prior year quarter. Selling, general & administrative expense (SG&A) was 8.0% of revenue, compared to 7.9% in the first quarter of 2005. SG&A results reflect the expensing of equity-based compensation and

 

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most of the one-time expenses associated with the company’s move to its new headquarters. Gross margin and SG&A results were affected by contributions from the company’s direct-to-consumer effort, which has a higher gross margin and expense profile than the acute-care distribution business.

Asset Management

The company reported continuing strong asset management, resulting in operating cash flow of $21.6 million for the first quarter of 2006. Days sales outstanding as of March 31, 2006 were 25.5, compared to 24.4 in the prior year quarter. Inventory turns for the quarter were 10.3, unchanged compared to the first quarter one year ago.

2006 Outlook

The company anticipates that it will report revenue growth in the 6 to 8% range, and diluted EPS in a range of $1.75 to $1.80, excluding an estimated $11.5 million, one-time, second-quarter charge resulting from expenses related to the company’s early retirement of debt.

Recent Highlights

Owens & Minor Receives Investment Grade Rating from Fitch Ratings

Owens & Minor received an investment grade rating of “BBB-” from Fitch Ratings for its offering of $200 million in Senior Notes due 2016. Owens & Minor was assigned an investment grade rating of “BBB-” from Standard & Poor’s for these notes, consistent with its existing corporate credit rating, along with a rating of “Ba2” from Moody’s.

Owens & Minor Completes Offering of $200 million of 6.35% Senior Notes due 2016

Subsequent to the end of the quarter on April 7, 2006, Owens & Minor completed a public offering of $200 million of 6.35% Senior Notes due 2016. The company used the proceeds, as well as available cash, to fund its tender offer for its then-outstanding $200 million 8 1/2% Senior Subordinated Notes due 2011.

Safe Harbor Statement

Except for the historical information contained herein, the matters discussed in this press release, and particularly in the above “outlook” section, may constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These include the rate at which new business can be converted to the company, intense competitive pressures within the industry, the success of the company’s strategic initiatives, changes in customer order patterns, pricing pressures, changes in government funding to hospitals and other healthcare providers, loss of major customers, Medicare reimbursement rates and other factors discussed from time to time in the reports filed by the company with the Securities and Exchange Commission. The company assumes no obligation to update information contained in this release.

 

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Owens & Minor, Inc., (NYSE: OMI) a FORTUNE 500 company headquartered in Richmond, Virginia, is the leading distributor of national name-brand medical and surgical supplies and a healthcare supply chain management company. With a diverse product and service offering and distribution centers throughout the United States, the company serves hospitals, integrated healthcare systems, alternate care locations, group purchasing organizations, the federal government and consumers. Owens & Minor provides technology and consulting programs that enable healthcare providers to maximize efficiency and cost-effectiveness in materials purchasing, improve inventory management and streamline logistics across the entire medical supply chain--from origin of product to patient bedside. The company also has established itself as a leader in the development and use of technology. For news releases, or for more information about Owens & Minor, visit the company Web site at www.owens-minor.com.

Conference Call Details

Owens & Minor will conduct a conference call on Thursday, April 20, 2006 at 8:30 a.m. Eastern Time to discuss first quarter 2006 financial results. The phone number for the Owens & Minor conference call is 800-901-5241 with passcode “Owens & Minor.” The call will also be available by replay for five days by calling 888-286-8010, with access code: 29735579. The call will also be webcast for 21 days through www.owens-minor.com under the Investor Relations section.

CONTACTS: Jeffrey Kaczka, Senior Vice President, Chief Financial Officer, 804-723-7500; Richard F. Bozard, Vice President, Treasurer, 804-723-7502; or Trudi Allcott, Director, Investor Communications, 804-723-7555.

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Page Four

Owens & Minor, Inc.

Consolidated Statements of Income (unaudited)

(in thousands, except ratios and per share data)

 

     Three Months Ended March 31,  
     2006     % of revenue     2005     % of revenue     % Fav(Unfav)  

Revenue

   $ 1,261,999     100.0 %   $ 1,193,600     100.0 %   5.7 %

Cost of revenue

     1,125,809     89.2       1,067,762     89.5     (5.4 )
                              

Gross margin

     136,190     10.8       125,838     10.5     8.2  

Selling, general and administrative expenses

     101,056     8.0       93,952     7.9     (7.6 )

Depreciation and amortization

     5,628     0.4       3,447     0.3     (63.3 )

Other operating income and expense, net

     (920 )   (0.1 )     (1,111 )   (0.1 )   (17.2 )
                              

Operating earnings

     30,426     2.4       29,550     2.5     3.0  

Interest expense, net

     3,057     0.2       3,325     0.3     8.1  
                              

Income before income taxes

     27,369     2.2       26,225     2.2     4.4  

Income tax provision

     10,866     0.9       10,306     0.9     (5.4 )
                              

Net income

   $ 16,503     1.3 %   $ 15,919     1.3 %   3.7 %
                              

Net income per common share - basic

   $ 0.42       $ 0.40      

Net income per common share - diluted

   $ 0.41       $ 0.40      

Weighted average shares - basic

     39,732         39,327      

Weighted average shares - diluted

     40,253         39,863      


Page Five

Owens & Minor, Inc.

Consolidated Balance Sheets (unaudited)

(in thousands)

 

     March 31,
2006
    December 31,
2005
 

Assets

    

Current assets

    

Cash and cash equivalents

   $ 72,715     $ 71,897  

Accounts and notes receivable, net

     378,066       353,102  

Merchandise inventories

     444,722       439,887  

Other current assets

     30,104       29,666  
                

Total current assets

     925,607       894,552  

Property and equipment, net

     56,035       51,942  

Goodwill, net

     242,626       242,620  

Intangible assets, net

     19,075       18,383  

Other assets, net

     32,058       32,353  
                

Total assets

   $ 1,275,401     $ 1,239,850  
                

Current liabilities

    

Accounts payable

   $ 403,903     $ 387,833  

Accrued payroll and related liabilities

     11,018       12,701  

Other accrued liabilities

     95,238       88,334  
                

Total current liabilities

     510,159       488,868  

Long-term debt

     203,009       204,418  

Other liabilities

     35,001       34,566  
                

Total liabilities

     748,169       727,852  
                

Shareholders’ equity

    

Common stock

     80,169       79,781  

Paid-in capital

     137,493       133,653  

Retained earnings

     317,853       307,353  

Accumulated other comprehensive loss

     (8,283 )     (8,789 )
                

Total shareholders’ equity

     527,232       511,998  
                

Total liabilities and shareholders’ equity

   $ 1,275,401     $ 1,239,850  
                


Page Six

Owens & Minor, Inc.

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

     Three Months Ended
March 31,
 
     2006     2005  

Operating activities

    

Net income

   $ 16,503     $ 15,919  

Adjustments to reconcile net income to cash provided by operating activities:

    

Depreciation and amortization

     5,628       3,447  

Provision for LIFO reserve

     4,590       5,100  

Stock-based compensation expense

     1,003       453  

Provision for losses on accounts and notes receivable

     1,664       1,061  

Deferred direct response advertising costs

     (1,987 )     (826 )

Changes in operating assets and liabilities:

    

Accounts and notes receivable

     (26,628 )     7,116  

Merchandise inventories

     (9,425 )     27,540  

Accounts payable

     27,570       58,534  

Net change in other current assets and current liabilities

     2,641       3,272  

Other, net

     78       1,411  
                

Cash provided by operating activities

     21,637       123,027  
                

Investing activities

    

Additions to property and equipment

     (5,131 )     (5,338 )

Additions to computer software

     (1,312 )     (825 )

Acquisition of intangible assets

     (2,090 )     —    

Net cash paid for acquisitions of businesses

     (64 )     (57,920 )

Other, net

     3       1  
                

Cash used for investing activities

     (8,594 )     (64,082 )
                

Financing activities

    

Cash dividends paid

     (6,003 )     (5,157 )

Proceeds from exercise of stock options

     2,619       942  

Excess tax benefits related to stock-based compensation

     1,165       —    

Increase in drafts payable

     (11,500 )     (36,246 )

Other, net

     1,494       (46 )
                

Cash used for financing activities

     (12,225 )     (40,507 )
                

Net increase in cash and cash equivalents

     818       18,438  

Cash and cash equivalents at beginning of period

     71,897       55,796  
                

Cash and cash equivalents at end of period

   $ 72,715     $ 74,234  
                


Page Seven

Owens & Minor, Inc.

Financial Statistics (unaudited)

 

     Quarter Ended  

(in thousands, except ratios and per share data)

   3/31/2006     12/31/2005     9/30/2005     6/30/2005     3/31/2005  

Operating results:

          

Revenue

   $ 1,261,999     $ 1,215,949     $ 1,201,971     $ 1,210,894     $ 1,193,600  
                                        

Gross margin

   $ 136,190     $ 130,781     $ 130,725     $ 128,768     $ 125,838  

Gross margin as a percent of revenue

     10.8 %     10.8 %     10.9 %     10.6 %     10.5 %
                                        

SG&A expense

   $ 101,056     $ 95,086     $ 95,393     $ 96,075     $ 93,952  

SG&A expense as a percent of revenue

     8.0 %     7.8 %     7.9 %     7.9 %     7.9 %
                                        

Operating earnings

   $ 30,426     $ 28,305     $ 31,071     $ 28,506     $ 29,550  

Operating earnings as a percent of revenue

     2.4 %     2.3 %     2.6 %     2.4 %     2.5 %
                                        

Net income

   $ 16,503     $ 15,738     $ 16,790     $ 15,973     $ 15,919  
                                        

Net income per common share - basic

   $ 0.42     $ 0.40     $ 0.42     $ 0.40     $ 0.40  
                                        

Net income per common share - diluted

   $ 0.41     $ 0.39     $ 0.42     $ 0.40     $ 0.40  
                                        

Accounts receivable:

          

Accounts and notes receivable, net

   $ 378,066     $ 353,102     $ 351,129     $ 345,155     $ 345,601  
                                        

Days sales outstanding

     25.5       26.3       26.0       24.8       24.4  
                                        

Inventory:

          

Merchandise inventories

   $ 444,722     $ 439,887     $ 418,489     $ 403,213     $ 403,919  
                                        

Average inventory turnover

     10.3       10.0       10.3       10.7       10.3  
                                        

Financing:

          

Long-term debt

   $ 203,009     $ 204,418     $ 205,197     $ 206,357     $ 205,537  
                                        

Stock information:

          

Cash dividends per common share

   $ 0.15     $ 0.13     $ 0.13     $ 0.13     $ 0.13  
                                        

Stock price at quarter-end

   $ 32.77     $ 27.53     $ 29.35     $ 32.35     $ 27.15