EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

FOR IMMEDIATE RELEASE

February 8, 2010

Owens & Minor Reports Strong 2009 Financial Results

O&M demonstrates improvement in 4th quarter 2009 revenue & operating earnings

RICHMOND, VA….Owens & Minor (NYSE-OMI) today reported financial results for the fourth quarter ended December 31, 2009, including quarterly revenue of $2.04 billion, increased 4.2% when compared to revenue of $1.96 billion in the fourth quarter of 2008. Income from continuing operations for the quarter improved 16.9% to $32.0 million, or $0.76 per diluted share, compared to $27.4 million, or $0.66 per diluted share, for the same period last year. Net income for the fourth quarter increased 60.1% to $32.3 million, or $0.77 per diluted share, when compared to net income of $20.2 million, or $0.49 per diluted share, in the fourth quarter of 2008.

“Thanks to the hard work and dedication of everyone on our team, we ended 2009 with improvement in nearly every key measurement when compared to last year’s fourth quarter,” said Craig R. Smith, president & chief executive officer of Owens & Minor. “Throughout 2009, our teammates turned in a strong performance in managing through a major acquisition, on-boarding a significant amount of new business, completing our mainframe migration project, and installing automation equipment and voice-pick technology in many of our distribution centers. Together, we accomplished all of this without losing our collective focus on serving our customers, achieving operational excellence and advancing our strategic initiatives.”

2009 Full Year Results

For the year ended December 31, 2009, revenue was $8.04 billion, increased 11.0% from revenue of $7.24 billion in 2008. Income from continuing operations for the full year was $116.9 million, or $2.79 per diluted share, increased 15.4% compared to $101.3 million, or $2.44 per diluted share, in 2008. For 2009, net income increased 12.1% to $104.7 million, or $2.50 per diluted share, when compared to net income of $93.3 million, or $2.25 per diluted share, for the same period last year.

“We are very pleased that our annual results, even when excluding the positive impact of the credit for the third quarter LIFO provision and considering the challenging business environment in 2009, are well within the guidance ranges we provided for 2009,” said Smith.

Results from discontinued operations reflect the January 2009 sale of certain assets of the company’s direct-to-consumer diabetes supply (DTC) business and losses resulting primarily from pre-tax charges associated with exiting the business. The loss from discontinued operations in 2009

 

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was $12.2 million, or $0.29 per diluted share, compared to a loss in 2008 of $7.9 million, or $0.19 per diluted share. Results for 2009 and 2008 also reflect the impact of the October 2008 acquisition of certain assets and liabilities of The Burrows Company and the resulting transition of the business to Owens & Minor during 2009.

Asset Management

For the year, operating cash flow from continuing operations was $165.3 million, an increase when compared to $62.9 million last year. Cash provided by discontinued operations for the same period was $73.3 million, including $63.0 million received in January 2009 from the sale of certain assets of the DTC business. As of the end of 2009, long-term debt was approximately $208 million, compared to long-term debt of approximately $359 million at the end of 2008. Days sales outstanding (DSO) were very favorable at 21.4 days, improved when compared to DSO of 24.5 days last year. Inventory turns were 10.6, compared to turns of 10.9 for the same period last year.

2010 Outlook

“Based on historical trends, we believe that we will pick up momentum during the course of 2010, as we gain leverage from our strategic investments and begin realizing further improvements in operating margin,” said Smith. “For the year, we are targeting revenue growth in a range of 4% to 6% compared to 2009, and income per diluted share in a range of $2.90 to $3.05.”

The 2010 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 Owens & Minor board of directors on February 8, 2010, approved a 15% increase in the first quarter 2010 dividend. The first quarter 2010 dividend of $0.265 per share is payable on March 31, 2010, to shareholders of record as of March 15, 2010.

 

•  

Owens & Minor will participate in the UBS 20th Annual Global Healthcare Services Conference in New York. Owens & Minor is scheduled to present to investors on Wednesday, February 10, 2010, at 8:30 a.m. EST. A webcast of the event will be available on the company’s website at www.owens-minor.com.

 

•  

Owens & Minor is participating in Haiti relief efforts on a variety of fronts, including donations of medical supplies and products to a wide range of relief organizations. Through its contracts with the U.S. Department of Defense, Owens & Minor has supplied various military units with vital medical and surgical supplies. Finally, Owens & Minor is making a donation to the American Red Cross and is matching its teammates’ donations to that organization.

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.

 

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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 distributor of national 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 $750 million to $3.3 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 care locations, group purchasing organizations, 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 Web site at www.owens-minor.com.

Investors Conference Call & Supplemental Material

Conference Call: Owens & Minor will conduct a conference call for investors on Tuesday, February 9, 2009, at 8:30 a.m. ET. Participants may access the call at 877-748-0043 with access code #51942770. The international dial-in number is 706-758-5871 with access code #51942770. Webcast: Replay: A replay of the call will be available for three weeks by dialing 800-642-1687, using access code #51942770.

A listen-only webcast of the call, along with supplemental information, will be available on www.owens-minor.com under “Investor Relations.” Owens & Minor uses its Web site 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.

CONTACTS:

Trudi 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

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Owens & Minor, Inc.

Condensed Consolidated Statements of Income (unaudited)

(in thousands, except per share data)

 

     Three Months Ended December 31,  
     2009     2008  

Revenue

    $ 2,040,424      $ 1,957,848   

Cost of revenue

      1,839,183        1,764,892   
                

Gross margin

      201,241        192,956   

Selling, general and administrative expenses

      140,089        141,015   

Depreciation and amortization

      6,682        5,612   

Other operating income, net

      (1,287 )      (2,009 ) 
                

Operating earnings

      55,757        48,338   

Interest expense, net

      3,194        3,339   
                

Income before income taxes

      52,563        44,999   

Income tax provision

      20,524        17,590   
                

Income from continuing operations

      32,039        27,409   

Income (loss) from discontinued operations, net of tax

      308        (7,206 ) 
                

Net income

    $ 32,347      $ 20,203   
                

Income (loss) per common share - basic:

     

Continuing operations

    $ 0.77      $ 0.66   

Discontinued operations

    $ 0.01      $ (0.17 ) 

Net income per share - basic

    $ 0.78      $ 0.49   

Income (loss) per common share - diluted:

     

Continuing operations

    $ 0.76      $ 0.66   

Discontinued operations

    $ 0.01      $ (0.17 ) 

Net income per share - diluted

    $ 0.77      $ 0.49   

Weighted average shares - basic

      41,301        40,930   

Weighted average shares - diluted

      41,525        41,224   
     Year Ended December 31,  
     2009     2008  

Revenue

    $ 8,037,624      $ 7,243,237   

Cost of revenue

      7,250,709        6,525,977   
                

Gross margin

      786,915        717,260   

Selling, general and administrative expenses

      565,620        521,401   

Depreciation and amortization

      25,265        21,955   

Other operating income, net

      (5,245 )      (6,821 ) 
                

Operating earnings

      201,275        180,725   

Interest expense, net

      13,028        15,999   
                

Income before income taxes

      188,247        164,726   

Income tax provision

      71,388        63,469   
                

Income from continuing operations

      116,859        101,257   

Loss from discontinued operations, net of tax

      (12,201 )      (7,930 ) 
                

Net income

    $ 104,658      $ 93,327   
                

Income (loss) per common share - basic:

     

Continuing operations

    $ 2.81      $ 2.46   

Discontinued operations

    $ (0.29 )    $ (0.19 ) 

Net income per share - basic

    $ 2.52      $ 2.27   

Income (loss) per common share - diluted:

     

Continuing operations

    $ 2.79      $ 2.44   

Discontinued operations

    $ (0.29 )    $ (0.19 ) 

Net income per share - diluted

    $ 2.50      $ 2.25   

Weighted average shares - basic

      41,144        40,793   

Weighted average shares - diluted

      41,389        41,174   

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Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in thousands)

 

     December 31,
2009		     December 31,
2008		  

Assets

     

Current assets

     

Cash and cash equivalents

    $ 96,136      $ 7,886   

Accounts and notes receivable, net

      498,080        521,311   

Merchandise inventories

      689,889        679,069   

Other current assets

      57,962        71,329   

Current assets of discontinued operations

      —          32,199   
                

Total current assets

      1,342,067        1,311,794   

Property and equipment, net

      84,965        76,949   

Goodwill, net

      247,271        252,412   

Intangible assets, net

      27,809        27,802   

Other assets, net

      44,976        44,875   

Other assets of discontinued operations

      —          62,358   
                

Total assets

    $ 1,747,088      $ 1,776,190   
                

Liabilities and shareholders’ equity

     

Current liabilities

     

Accounts payable

    $ 546,989      $ 513,026   

Accrued payroll and related liabilities

      34,885        40,018   

Other accrued liabilities

      116,303        103,429   

Current liabilities of discontinued operations

      1,939        11,038   
                

Total current liabilities

      700,116        667,511   

Long-term debt, excluding current portion

      208,418        359,237   

Other liabilities

      69,375        60,391   
                

Total liabilities

      977,909        1,087,139   
                

Shareholders’ equity

     

Common stock

      83,827        82,881   

Paid-in capital

      193,905        180,074   

Retained earnings

      504,480        438,192   

Accumulated other comprehensive loss

      (13,033 )      (12,096 ) 
                

Total shareholders’ equity

      769,179        689,051   
                

Total liabilities and shareholders’ equity

    $ 1,747,088      $ 1,776,190   
                

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Owens & Minor, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

     Year Ended December 31,  
     2009     2008  

Operating activities:

     

Net income

    $ 104,658      $ 93,327   

Adjustments to reconcile net income to cash provided by operating activities of continuing operations:

     

Loss from discontinued operations

      12,201        7,930   

Depreciation and amortization

      25,265        21,955   

Deferred income tax provision

      10,869        17,618   

Share-based compensation expense

      7,035        7,563   

Provision for losses on accounts and notes receivable

      3,976        4,274   

Provision for LIFO reserve

      2,708        13,172   

Loss on interest rate swaps

      —          3,141   

Changes in operating assets and liabilities:

     

Accounts and notes receivable

      19,255        (48,464 ) 

Merchandise inventories

      (13,528 )      (56,156 ) 

Accounts payable

      (18,755 )      (13,584 ) 

Net change in other current assets and current liabilities

      12,722        9,833   

Other, net

      (1,086 )      2,269   
                

Cash provided by operating activities of continuing operations

      165,320        62,878   
                

Investing activities:

     

Additions to property and equipment

      (19,746 )      (17,669 ) 

Additions to computer software

      (12,543 )      (9,281 ) 

Net cash received (paid) related to acquisition of business

      6,994        (96,790 ) 

Proceeds from the sale of property and equipment

      4,080        409   
                

Cash used for investing activities of continuing operations

      (21,215 )      (123,331 ) 
                

Financing activities:

     

Net (payments) borrowings on revolving credit facility

      (150,578 )      73,670   

Cash dividends paid

      (38,370 )      (33,048 ) 

Increase in drafts payable

      52,718        11,316   

Proceeds from exercise of stock options

      6,593        8,968   

Excess tax benefits related to share-based compensation

      2,570        3,421   

Proceeds from termination of interest rate swaps

      —          3,795   

Other, net

      (2,045 )      (2,859 ) 
                

Cash (used for) provided by financing activities of continuing operations

      (129,112 )      65,263   
                

Discontinued operations:

     

Operating cash flows

      10,257        (7,115 ) 

Investing cash flows

      63,000        (204 ) 
                

Net cash provided by (used for) discontinued operations

      73,257        (7,319 ) 
                

Net increase (decrease) in cash and cash equivalents

      88,250        (2,509 ) 

Cash and cash equivalents at beginning of period

      7,886        10,395   
                

Cash and cash equivalents at end of period

    $ 96,136      $ 7,886   
                

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Owens & Minor, Inc.

Financial Statistics (unaudited)

 

     Quarter Ended  

(in thousands, except ratios and per share data)

    12/31/2009     9/30/2009     6/30/2009     3/31/2009     12/31/2008  

Operating results:

           

Revenue

    $ 2,040,424      $ 2,034,792      $ 2,013,780      $ 1,948,628      $ 1,957,848   
                                        

Gross margin

    $ 201,241      $ 204,342      $ 197,699      $ 183,633      $ 192,956   

Gross margin as a percent of revenue

     9.86 %      10.04 %      9.82 %      9.42 %      9.86 % 
                                        

SG&A expense

    $ 140,089      $ 142,162      $ 143,972      $ 139,397      $ 141,015   

SG&A expense as a percent of revenue

      6.87 %      6.99 %      7.15 %      7.15 %      7.20 % 
                                        

Operating earnings

    $ 55,757      $ 56,692      $ 48,946      $ 39,880      $ 48,338   

Operating earnings as a percent of revenue

      2.73 %      2.79 %      2.43 %      2.05 %      2.47 % 
                                        

Income from continuing operations

    $ 32,039      $ 34,687      $ 27,775      $ 22,358      $ 27,409   

Income (loss) from discontinued operations, net of tax

    $ 308      $ —        $ (4,127 )    $ (8,382 )    $ (7,206 ) 

Net income

    $ 32,347      $ 34,687      $ 23,648      $ 13,976      $ 20,203   
                                        

Income (loss) per common share - basic:

           

Continuing operations

    $ 0.77      $ 0.83      $ 0.67      $ 0.54      $ 0.66   

Discontinued operations

    $ 0.01      $ —        $ (0.10 )    $ (0.20 )    $ (0.17 ) 

Net income per share - basic

    $ 0.78      $ 0.83      $ 0.57      $ 0.34      $ 0.49   
                                        

Income (loss) per common share - diluted:

           

Continuing operations

    $ 0.76      $ 0.83      $ 0.67      $ 0.54      $ 0.66   

Discontinued operations

    $ 0.01      $ —        $ (0.10 )    $ (0.20 )    $ (0.17 ) 

Net income per share - diluted

    $ 0.77      $ 0.83      $ 0.57      $ 0.34      $ 0.49   
                                        

Accounts receivable:

           

Accounts and notes receivable, net (2) 

    $ 498,080      $ 509,497      $ 500,204      $ 511,875      $ 521,311   
                                        

Days sales outstanding (1) (2)

      21.4        23.0        22.6        23.6        24.5   
                                        

Inventory:

           

Merchandise inventories (2)

    $ 689,889      $ 679,459      $ 696,955      $ 702,253      $ 679,069   
                                        

Average inventory turnover (1) (2)

      10.6        10.5        10.4        10.3        10.9   
                                        

Financing:

           

Long-term debt, excluding current portion

    $ 208,418      $ 207,999      $ 208,326      $ 212,596      $ 359,237   
                                        

Stock information:

           

Cash dividends per common share

    $ 0.23      $ 0.23      $ 0.23      $ 0.23      $ 0.20   
                                        

Stock price at quarter-end

    $ 42.93      $ 45.25      $ 43.82      $ 33.13      $ 37.65   
                                        

 

(1)

Days sales outstanding (DSO) and average inventory turnover are based on three-months’ sales.

(2)

Based on results from continuing operations.

Certain adjustments have been made to prior period amounts to conform to current year presentation.