omi-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-9810

_______________________________________________________

Owens & Minor, Inc.

(Exact name of Registrant as specified in its charter)

_______________________________________________________


Virginia			54-1701843
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

9120 Lockwood Boulevard	Mechanicsville	Virginia	23116
(Address of principal executive offices)			(Zip Code)

Post Office Box 27626, Richmond, Virginia			23261-7626
(Mailing address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code (804) 723-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $2 par value per share

OMI

New York Stock Exchange

_________________________________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Owens & Minor, Inc.’s common stock outstanding as of April 29, 2021, was 75,147,827 shares.

Table of Contents

Owens & Minor, Inc. and Subsidiaries

Index


Part I. Financial Information		Page

Item 1.	Financial Statements	3
	Consolidated Statements of Operations—Three Months Ended March 31, 2021 and 2020	3
	Consolidated Statements of Comprehensive Income (Loss)—Three Months Ended March 31, 2021 and 2020	4
	Consolidated Balance Sheets—March 31, 2021 and December 31, 2020	5
	Consolidated Statements of Cash Flows—Three Months Ended March 31, 2021 and 2020	6
	Consolidated Statements of Changes in Equity—Three Months Ended March 3 1 , 2021 and 2020	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
Part II. Other Information

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	27
Item 6.	Exhibits	27

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)


	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
Net revenue	$	2,326,534	$	2,122,693
Cost of goods sold	1,883,783		1,854,134
Gross margin	442,751		268,559
Distribution, selling and administrative expenses	292,701		254,048
Acquisition-related and exit and realignment charges	5,963		6,064
Other operating income, net	(2,605)		(2,309)
Operating income	146,692		10,756
Interest expense, net	13,672		23,342
Loss on extinguishment of debt	40,433		4,127
Other expense, net	569		719
Income (loss) from continuing operations before income taxes	92,018		(17,432)
Income tax provision (benefit)	22,429		(8,523)
Income (loss) from continuing operations, net of tax	69,589		(8,909)
Loss from discontinued operations, net of tax	—		(2,415)
Net income (loss)	$	69,589	$	(11,324)

Income (loss) from continuing operations per common share: basic and diluted	$	0.98	$	(0.15)
Loss from discontinued operations per common share: basic and diluted	—		(0.04)
Net income (loss) per common share: basic and diluted	$	0.98	$	(0.19)

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)


	Three Months Ended March 31,
(in thousands)	2021		2020
Net income (loss)	$	69,589	$	(11,324)
Other comprehensive income (loss), net of tax:
Currency translation adjustments	(12,262)		(28,178)
Change in unrecognized net periodic pension costs	121		170
Net gain (loss) on derivative instruments	20,044		(11,397)
Total other comprehensive income (loss), net of tax	7,903		(39,405)
Comprehensive income (loss)	$	77,492	$	(50,729)

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)


	March 31,		December 31,
(in thousands, except per share data)	2021		2020
Assets
Current assets
Cash and cash equivalents	$	54,455	$	83,058
Accounts receivable, net of allowances of $21,231 and $19,087	736,176		700,792
Merchandise inventories	1,322,897		1,233,751
Other current assets	93,208		118,264
Total current assets	2,206,736		2,135,865
Property and equipment, net of accumulated depreciation of $292,568 and $284,126	307,852		315,662
Operating lease assets	155,152		144,755
Goodwill	391,349		394,086
Intangible assets, net	232,009		243,351
Other assets, net	97,723		101,920
Total assets	$	3,390,821	$	3,335,639
Liabilities and equity
Current liabilities
Accounts payable	$	1,021,761	$	1,000,186
Accrued payroll and related liabilities	64,661		109,447
Other current liabilities	250,875		236,094
Total current liabilities	1,337,297		1,345,727
Long-term debt, excluding current portion	981,342		986,018
Operating lease liabilities, excluding current portion	130,565		119,932
Deferred income taxes	51,476		50,641
Other liabilities	103,880		121,267
Total liabilities	2,604,560		2,623,585
Commitments and contingencies
Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 75,100 shares and 73,472 shares	150,200		146,944
Paid-in capital	430,490		436,597
Retained earnings	236,177		167,022
Accumulated other comprehensive loss	(30,606)		(38,509)
Total equity	786,261		712,054
Total liabilities and equity	$	3,390,821	$	3,335,639

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


	Three Months Ended March 31,
(in thousands)	2021		2020
Operating activities:
Net income (loss)	$	69,589	$	(11,324)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization	22,900		23,913
Share-based compensation expense	5,182		3,941
Impairment charges	—		9,080
Loss on extinguishment of debt	40,433		4,127
Provision for losses on accounts receivable	8,462		5,213
Deferred income tax (benefit) expense	(5,865)		6,348
Changes in operating lease right-of-use assets and lease liabilities	448		(714)
Changes in operating assets and liabilities:
Accounts receivable	(45,919)		(7,942)
Merchandise inventories	(89,393)		39,340
Accounts payable	18,742		98,743
Net change in other assets and liabilities	(1,666)		(77,178)
Other, net	2,510		(93)
Cash provided by operating activities	25,423		93,454
Investing activities:
Additions to property and equipment	(5,048)		(4,771)
Additions to computer software	(1,575)		(942)
Proceeds from sale of property and equipment	4		33
Cash used for investing activities	(6,619)		(5,680)
Financing activities:
Proceeds from issuance of debt	574,900		150,000
Repayments under revolving credit facility	(96,500)		(6,200)
Repayments of debt	(523,140)		(166,798)
Financing costs paid	(11,700)		(5,785)
Cash dividends paid	(181)		(155)
Payment for termination of interest rate swaps	(15,434)		—
Other, net	(8,339)		(2,468)
Cash used for financing activities	(80,394)		(31,406)
Effect of exchange rate changes on cash and cash equivalents	(2,139)		(62)
Net (decrease) increase in cash, cash equivalents and restricted cash	(63,729)		56,306
Cash, cash equivalents and restricted cash at beginning of period	134,506		84,687
Cash, cash equivalents and restricted cash at end of period	$	70,777	$	140,993
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds	$	898	$	2,695
Interest paid	$	10,255	$	21,431

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(unaudited)


(in thousands, except per share data)	Common Shares Outstanding	Common Stock ($2 par value )		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance, December 31, 2019	62,843	$	125,686	$	251,401	$	137,774	$	(52,707)	$	462,154
Net loss						(11,324)				(11,324)
Other comprehensive loss								(39,405)		(39,405)
Dividends declared ($0.0025 per share)						(127)				(127)
Share-based compensation expense, exercises and other	42	84		4,956						5,040
Balance, March 31, 2020	62,885	$	125,770	$	256,357	$	126,323	$	(92,112)	$	416,338

Balance, December 31, 2020	73,472	$	146,944	$	436,597	$	167,022	$	(38,509)	$	712,054
Net income						69,589				69,589
Other comprehensive income								7,903		7,903
Dividends declared ($0.0025 per share)						(

SEC Form 10-Q filed by Owens & Minor, Inc.