Second Quarter Highlights:
* Consolidated net sales growth of 14.3%, with same day sales
growth of 5.9%
-- Physician Business net sales growth of 16.6%, with same day
sales growth of 8.0%
-- Elder Care Business net sales growth of 9.0%, with same day
sales growth of 1.0%
* Consolidated operating margin growth of 191 basis points to 6.9%
-- Physician Business operating margin growth of 302 basis
points to 10.7%
-- Elder Care Business operating margin growth of 152 basis
points to 7.1%
* Consolidated income from operations growth of 58.3% to $38.6
million
* Consolidated earnings per diluted share growth of 79.9% to $0.37
* Consolidated cash flow from operations of $8.7 million
* Company notes the following events in the second quarter:
-- Physician business product sales related to H1N1/Swine flu of
approximately $23 million
-- Corporate general and administrative expenses increased by
$3.9 million, pre-tax, as a result of changes in performance
estimates for short-term and long-term incentive plans
JACKSONVILLE, Fla., Oct. 28, 2009 (GLOBE NEWSWIRE) -- PSS World Medical, Inc. (Nasdaq:PSSI) announced today its results for the fiscal 2010 second quarter ended October 2, 2009.
David A. Smith, Chairman and Chief Executive Officer, commented, "Fundamental customer economic conditions have held steady. We believe we have the right strategies and programs for this environment. Our team continues to execute lean initiatives that reduce costs and improve efficiencies in concert with a highly energized campaign to reach new customers and strengthen existing customers with unique and timely solutions.
"We are extremely proud of our team's performance. Based on their performance to date, we are raising our earnings goal for this fiscal year by $0.09 per diluted share, at the midpoint of the range. We are confident of our ability to achieve our growth plans for the remainder of fiscal year 2010."
Net sales for the three months ended October 2, 2009, were $562.0 million, an increase of 14.3% (5.9% same day sales growth), compared with net sales of $491.6 million for the three months ended September 26, 2008. Net sales for the three months ended October 2, 2009, for the Physician Business increased by 16.6%, with same day sales growth of 8.0% (1.8% same day sales growth excluding H1N1-related product sales) and increased by 9.0%, with same days sales growth of 1.0%, for the Elder Care Business. Income from operations for the three months ended October 2, 2009, was $38.6 million compared with income from operations for the three months ended September 26, 2008, of $24.4 million. Net income for the three months ended October 2, 2009, was $21.7 million, or $0.37 per diluted share, compared with net income for the three months ended September 26, 2008, of $12.4 million, or $0.20 per diluted share. The Company noted that it had five additional sales days (68 sales days) in the fiscal year 2010 second quarter, ended October 2, 2009, compared with the number of sales days (63 sales days) in the fiscal year 2009 second quarter, ended September 26, 2008. The Company will have five fewer sales days (61 sales days) in the third quarter of fiscal year 2010, ended January 1, 2010, compared with the number of sales days (66 sales days) in the third quarter of fiscal year 2009, ended January 2, 2009.
Net sales for the six months ended October 2, 2009, were $1,055.5 million, an increase of 9.5%, compared with net sales of $963.8 million for the six months ended September 26, 2008. Net sales for the six months ended October 2, 2009, for the Physician Business increased by 10.1%, and increased by 8.1% for the Elder Care Business. Income from operations for the six months ended October 2, 2009, was $60.3 million compared with income from operations for the six months ended September 26, 2008, of $42.4 million. Net income for the six months ended October 2, 2009, was $35.0 million, or $0.59 per diluted share, compared with net income for the six months ended September 26, 2008, of $21.7 million, or $0.35 per diluted share.
David M. Bronson, Executive Vice President and Chief Financial Officer, commented, "Successful execution of our core business strategies drove record profitability in the quarter and continued to differentiate our performance. The five extra selling days certainly helped to leverage our fixed costs, but net income per billing day still grew by 63%.
"We made, and are continuing to make, a large investment in inventory of H1N1 flu-related products in order to service our customers and help them effectively deal with this pandemic. This investment contributed approximately $2.9 million of operating income during the quarter and has had a positive impact on our record-level return on committed capital. As a result, we are increasing our fiscal year 2010 goal for operating cash flow to $96 - $102 million."
The Company noted the adoption, on March 30, 2009, of ASC 470-20, Debt-Debt with Conversion and Other Option (formerly FSP APB 14-1, Accounting for Convertible Debt Instruments that may be settled in Cash Upon Conversion), which increased non-cash interest expense by $1.2 million, after-tax ($1.9 million pre-tax), or approximately $0.02 per diluted share in the second quarter of fiscal year 2010. In accordance with guidelines established by this pronouncement, the Company has restated prior fiscal year 2009 results for comparability. The effect of the restatement was to increase non-cash interest expense for the second quarter of fiscal year 2009, by $1.5 million, after-tax ($2.5 million pre-tax), or approximately $0.03 per diluted share. Non-cash interest expense for the six months ended October 2, 2009, was $2.3 million, after-tax ($3.7 million pre-tax), or approximately $0.04 per diluted share, compared with non-cash interest expense for the six months ended September 26, 2008, of $2.5 million, after-tax ($4.0 million pre-tax), or approximately $0.04 per diluted share.
A listen-only simulcast as well as a 90-day online replay of PSS World Medical's fiscal year 2010 second 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 October 29, 2009, beginning at 8:30 a.m. Eastern time.
The Company has today filed with the SEC a Form 8-K that includes a copy of this press release and its related Fiscal Year 2010 Second Quarter Financial Workbook, which contains GAAP and non-GAAP financial measures, and is available on the Company's website, www.pssworldmedical.com. 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.
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.
Certain statements in this release are "forward-looking statements" made pursuant to the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as "expect," "may," "will," "should," "believe," "plan," "anticipate," and "estimate" among others. These statements involve a number of risks and uncertainties, many of which are outside the control of the Company. Actual results may differ materially from those identified in the forward-looking statements. Among the factors that could cause results to differ materially are the following: fluctuating demand for our products and services; the weakening of national and global economic conditions, including our and our customers' ability to obtain financing; the introduction of new products and services offered by us and our competitors; uncertainty of the impact of the new presidential administration's health care policies; proper functioning of our data processing and information technology systems; our ability to successfully execute our global sourcing strategy; pricing pressures on large national and regional accounts and GPOs; customer credit quality and our ability to collect our accounts receivable, particularly in states with significant budget deficits; our ability to compete with other medical supply companies and direct manufacturers; multi-tiered cost structures where certain institutions can obtain more favorable prices for medical products than us; our ability to maintain relationships with our suppliers and customers; our ability to retain sales reps and key management; our ability to execute our growth strategy; increased operating costs, including fuel prices; risks involved in maintaining a large amount of inventory; our indebtedness may limit our ability to obtain additional financing or react to market conditions; we face litigation and product liability exposure; weather-related events such as hurricanes may disrupt our and our customers' business; we may be deemed to infringe other persons intellectual property; our business is subject to numerous federal, state and foreign laws and regulations, including state pedigree laws and regulations; 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. PSS assumes no obligation to update the information in this release except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
PSS WORLD MEDICAL, INC.
Unaudited Condensed Consolidated Statement of Operations
(in millions, except per share and share data)
Three Months Ended Six Months Ended
------------------- -------------------
Oct. 2, Sept. 26, Oct. 2, Sept. 26,
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 562.0 $ 491.6 $ 1,055.5 $ 963.8
Cost of goods sold 389.4 344.3 737.0 677.6
--------- --------- --------- ---------
Gross profit 172.6 147.3 318.5 286.2
General and administrative
expenses 97.2 90.7 188.8 180.3
Selling expenses 36.8 32.2 69.4 63.5
--------- --------- --------- ---------
Income from operations 38.6 24.4 60.3 42.4
--------- --------- --------- ---------
Other (expense) income:
Interest expense (4.5) (5.3) (8.8) (8.5)
Interest income 0.1 0.8 0.2 1.0
Other income 0.5 0.6 4.5 1.1
--------- --------- --------- ---------
(3.9) (3.9) (4.1) (6.4)
--------- --------- --------- ---------
Income before provision for
income taxes 34.7 20.5 56.2 36.0
Provision for income taxes 13.0 8.1 21.2 14.3
--------- --------- --------- ---------
Net income $ 21.7 $ 12.4 $ 35.0 $ 21.7
========= ========= ========= =========
Earnings per share - basic $ 0.37 $ 0.21 $ 0.60 $ 0.36
========= ========= ========= =========
Earnings per share - diluted $ 0.37 $ 0.20 $ 0.59 $ 0.35
========= ========= ========= =========
Weighted average shares (in
thousands):
Basic 58,566 59,941 58,477 60,472
Diluted 59,390 60,921 59,172 61,322
PSS WORLD MEDICAL, INC.
Unaudited Consolidated Balance Sheets
(in millions except share data)
Oct. 2, March 27,
2009 2009
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 130.1 $ 82.0
Investment in available for sale securities -- 10.6
Accounts receivable, net 258.0 230.4
Inventories 212.8 207.6
Prepaid expenses 4.3 3.2
Other current assets 32.1 28.7
-------- --------
Total current assets 637.3 562.5
Property and equipment, net 105.5 101.2
Other Assets:
Goodwill 115.3 112.8
Intangibles, net 21.6 23.0
Other 73.8 59.1
-------- --------
Total assets $ 953.5 $ 858.6
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 157.0 $ 127.3
Accrued expenses 43.2 52.7
Revolving line of credit and current portion of
long-term debt 51.0 50.9
Other 13.6 8.0
-------- --------
Total current liabilities 264.8 238.9
Long-term debt, excluding current portion 184.5 181.0
Other noncurrent liabilities 80.0 60.7
-------- --------
Total liabilities 529.3 480.6
-------- --------
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, 59,652,676 and 59,316,697 shares
issued and outstanding at October 2, 2009 and
March 27, 2009, respectively 0.6 0.6
Additional paid-in capital 213.4 200.2
Retained earnings 210.6 175.6
Accumulated other comprehensive income (0.4) 1.6
-------- --------
Total shareholders' equity 424.2 378.0
-------- --------
Total liabilities and shareholders' equity $ 953.5 $ 858.6
======== ========
PSS WORLD MEDICAL, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
Three Months Ended Six Months Ended
------------------ ------------------
Oct. 2, Sept. 26, Oct. 2, Sept. 26,
2009 2008 2009 2008
-------- -------- -------- --------
Cash Flows From Operating
Activities:
Net income $ 21.7 $ 12.3 $ 35.0 $ 21.7
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation 5.3 4.9 10.5 9.7
Provision for deferred
income taxes 1.2 (2.0) 1.3 (0.4)
Noncash compensation expense 4.3 1.8 10.4 3.4
Amortization of intangible
assets 1.2 1.6 2.4 2.9
Provision for doubtful
accounts 1.3 0.8 2.5 2.6
Provision for deferred
compensation 0.4 0.3 0.8 0.9
Amortization of debt
discount and issuance costs 2.4 3.0 4.6 4.9
Loss on sales of property
and equipment -- -- 0.1 --
Gain on sale of available
for sale securities -- -- (3.6) --
Changes in operating assets
and liabilities, net of
effects from business
combinations:
Accounts receivable, net (28.7) (13.9) (29.8) (5.4)
Inventories (16.1) (6.6) (4.2) (8.1)
Prepaid expenses and other
current assets (19.8) 2.7 (24.9) 2.9
Other assets (2.8) (2.9) (3.2) (4.1)
Accounts payable 22.5 20.9 28.8 13.1
Accrued expenses & other
liabilities 15.8 15.8 22.9 8.4
-------- -------- -------- --------
Net cash provided by
operating activities 8.7 38.7 53.6 52.5
-------- -------- -------- --------
Cash Flows From Investing
Activities:
Capital expenditures (7.2) (6.8) (14.9) (12.7)
Payments for business
acquisitions, net of cash
acquired (1.8) (0.1) (3.9) (2.7)
Proceeds from sale of
available for sale
securities -- -- 10.7 21.0
Other 0.1 (0.1) -- (0.2)
-------- -------- -------- --------
Net cash (used in)
provided by investing
activities (8.9) (7.0) (8.1) 5.4
-------- -------- -------- --------
Cash Flows From Financing
Activities:
Proceeds from issuance of
convertible debt -- 230.0 -- 230.0
Proceeds from issuance of
warrants -- 25.4 -- 25.4
Proceeds from exercise of
stock options 0.7 3.2 2.4 5.6
Excess tax benefits from
share-based compensation
arrangements 0.6 1.1 1.1 1.5
Payment for purchase of hedge
on convertible note -- (54.1) -- (54.1)
Purchase of common stock (0.4) (35.6) (0.4) (35.6)
Net payments on the revolving
line of credit -- -- -- (20.0)
Payment for debt issue costs -- (5.1) -- (5.1)
Payments under capital lease
obligations (0.2) (0.3) (0.5) (0.6)
-------- -------- -------- --------
Net cash provided by
financing activities 0.7 164.6 2.6 147.1
-------- -------- -------- --------
Net increase in cash and cash
equivalents 0.5 196.3 48.1 205.0
Cash and cash equivalents,
beginning of period 129.6 29.8 82.0 21.1
-------- -------- -------- --------
Cash and cash equivalents, end
of period $ 130.1 $ 226.1 $ 130.1 $ 226.1
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