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PSS World Medical Reports Results for Fiscal 2008 Third Quarter
Fiscal 2008 Third Quarter Highlights:
Consolidated net sales growth of 1.5% (9.4% excluding last fiscal year's flu sales)
Physician Business net sales declined by 0.8% (10.4% growth excluding last fiscal year's flu sales)
Elder Care Business net sales growth of 7.3%
Consolidated earnings per diluted share increased 38% to $0.22 (net loss on flu of $0.03 per diluted share included in last fiscal year's third quarter)
Operating margin of 7.3% for Physician Business and 4.7% for Elder Care Business
Consolidated cash flow from operations of $13.3 million
Repurchased approximately 700,000 shares for $13.1 million
Agreement finalized with the State of Florida with approximately $1.4 million of additional pedigree-related costs in the third quarter
JACKSONVILLE, Fla., Jan 23, 2008 (BUSINESS WIRE) -- PSS World Medical, Inc. (NASDAQ GS:PSSI) announced today its results for the fiscal 2008 third quarter and nine months ended December 28, 2007.
David A. Smith, Chairman and Chief Executive Officer, commented, "Both businesses grew at two times their respective markets' growth rate with solid operating results and profit growth. Our business model continues to drive increased operating efficiencies, more than offsetting an environment of rising costs. Our customer programs and solutions continue to improve cash flow and efficiency, alleviating the pressures on customer income. We are excited to begin improving pharmaceutical-related services for our Florida-based customers over the next 90-120 days.
"We expect to have a strong finish to this fiscal year, the final year of our three-year strategic plan, and accomplish our goal of $0.81-$0.85 earnings per diluted share for fiscal year 2008. The Company is now in the planning phase for the fiscal years 2009-2011 strategic plan, and we look forward to sharing these plans on May 22 at our annual Investor Day."
Net sales for the three months ended December 28, 2007, were $465.2 million, an increase of 1.5% (9.4% excluding last fiscal year's flu sales), compared with net sales of $458.4 million for the three months ended December 29, 2006. Net sales for the three months ended December 28, 2007, for the Physician Business decreased by 0.8% (10.4% growth excluding last fiscal year's flu sales), while net sales for the Elder Care Business increased by 7.3%. Income from operations for the three months ended December 28, 2007, was $24.1 million compared with income from operations for the three months ended December 29, 2006, of $17.9 million. Net income for the three months ended December 28, 2007, was $14.2 million, or $0.22 per diluted share, compared with net income for the three months ended December 29, 2006, of $11.1 million, or $0.16 per diluted share.
Net sales for the nine months ended December 28, 2007, were $1.4 billion, an increase of 4.9% (9.0% excluding last fiscal year's flu sales), compared with net sales of $1.3 billion for the nine months ended December 29, 2006. Net sales for the nine months ended December 28, 2007, for the Physician Business increased by 4.2% (10.1% excluding last fiscal year's flu sales), while net sales for the Elder Care Business increased by 6.5%. Income from operations for the nine months ended December 28, 2007, was $63.1 million compared with income from operations for the nine months ended December 29, 2006, of $58.2 million. Net income for the nine months ended December 28, 2007, was $37.3 million, or $0.56 per diluted share, compared with net income for the nine months ended December 29, 2006, of $34.8 million, or $0.50 per diluted share.
David M. Bronson, Executive Vice President and Chief Financial Officer, commented, "We continue to see positive traction in our key business strategies, with solid growth in pharmaceutical, equipment and private label sales. Operating margins continued to improve in both businesses, even with increased costs in the quarter related to pedigree compliance. Despite strong revenue growth, we continued to generate cash from operations, which allowed the continuation of our share repurchase program. Over the last three quarters, share repurchases have been an accretive use of capital, adding about $0.01 to our reported earnings per diluted share."
Separately, the Company noted that it has resolved outstanding issues with the Florida Department of Health regarding compliance with new state pharmaceutical pedigree regulations. In fiscal year 2008, costs associated with pedigree law compliance and settlement with the Florida Department of Health were $2.7 million, or $0.03 per diluted share, for the first quarter; $2.1 million, or $0.02 per diluted share, for the second quarter; and $1.4 million, or $0.01 per diluted share, in the third quarter.
The agreement resolves issues regarding interpretation of procedures for documenting the ordering, receipt, storage and shipping of certain products covered by Florida drug pedigree legislation. Products covered by this action include prescription pharmaceutical products used by physicians in their practices, such as vaccines, ointments and creams, anesthetics and topicals used in office procedures. The Company expects to resume sales and shipments of these products from its Florida distribution operations over the next 90-120 days. The Company also reiterated its commitment to full compliance with the spirit and intent of pedigree legislation and will continue to work with state regulators to ensure compliance with these new regulations.
The Company has today filed with the SEC a Form 8-K that includes a copy of this press release and its related Fiscal 2008 Third Quarter Financial Workbook, which contains GAAP and non-GAAP financial measures, and is available on the Company's website, www.pssworldmedical.com.
A listen-only simulcast as well as a 90-day online replay of PSS World Medical's fiscal 2008 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 24, 2008, 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 for the consolidated company; the expected operational cash flow in fiscal year 2008; and the Company's expectation that it will continue to be in compliance with Florida pedigree regulations and other states' pedigree regulations. 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. 28, Dec. 29, Dec. 28, Dec. 29,
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $ 465.2 $ 458.4 $1,362.0 $1,298.6
Cost of goods sold 330.2 335.2 966.8 931.6
--------- --------- --------- ---------
Gross profit 135.0 123.2 395.2 367.0
General and administrative
expenses 79.4 75.2 240.3 222.3
Selling expenses 31.5 30.1 91.8 86.5
--------- --------- --------- ---------
Income from operations 24.1 17.9 63.1 58.2
--------- --------- --------- ---------
Other (expense) income:
Interest expense (1.8) (1.3) (4.7) (4.1)
Interest and investment
income - 0.4 0.7 0.8
Other income 0.9 0.5 1.9 1.4
--------- --------- --------- ---------
(0.9) (0.4) (2.1) (1.9)
--------- --------- --------- ---------
Income before provision for
income taxes 23.2 17.5 61.0 56.3
Provision for income taxes 9.0 6.4 23.7 21.5
--------- --------- --------- ---------
Net income $ 14.2 $ 11.1 $ 37.3 $ 34.8
========= ========= ========= =========
Earnings per share - basic $ 0.22 $ 0.17 $ 0.57 $ 0.52
========= ========= ========= =========
Earnings per share - diluted $ 0.22 $ 0.16 $ 0.56 $ 0.50
========= ========= ========= =========
Weighted average shares (in
thousands):
Basic 63,999 67,054 65,533 67,272
Diluted 65,756 69,458 67,195 69,294
PSS WORLD MEDICAL, INC.
Condensed Consolidated Balance Sheets
(In millions, except per share and share data)
Dec. 28, March 30,
2007 2007
----------- -----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 15.0 $ 46.7
Accounts receivable, net 224.3 222.8
Inventories 214.3 174.1
Deferred tax assets, net 9.2 8.8
Prepaid expenses and other 31.6 34.4
----------- -----------
Total current assets 494.4 486.8
Property and equipment, net 89.9 88.6
Other Assets:
Goodwill and intangibles, net 138.5 137.1
Investment in available-for-sale securities 50.2 -
Other 68.6 62.5
----------- -----------
Total assets $ 841.6 $ 775.0
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 161.7 $ 131.3
Accrued expenses 34.4 37.2
Revolving line of credit and current
portion of long-term debt 33.7 2.2
Other 15.8 11.5
----------- -----------
Total current liabilities 245.6 182.2
Long-term debt, excluding current portion 150.8 150.7
Other noncurrent liabilities 67.2 61.2
----------- -----------
Total liabilities 463.6 394.1
----------- -----------
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, 64,664,200 and
67,179,475 shares issued and outstanding
at December 28, 2007, and March 30, 2007,
respectively 0.6 0.7
Additional paid-in capital 243.9 300.0
Retained earnings 117.3 80.2
Accumulated other comprehensive income 16.2 -
----------- -----------
Total shareholders' equity 378.0 380.9
----------- -----------
Total liabilities and shareholders'
equity $ 841.6 $ 775.0
=========== ===========
PSS WORLD MEDICAL, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)
Three Months Ended Nine Months Ended
------------------- -------------------
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2007 2006 2007 2006
--------- --------- --------- ---------
Cash Flows from Operating
Activities:
Net income $ 14.2 $ 11.1 $ 37.3 $ 34.8
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 4.7 4.2 14.0 12.5
(Benefit) provision for
deferred income taxes 0.9 (3.7) (1.4) 4.1
Amortization of
intangible assets 1.4 1.5 4.2 4.4
Provision for doubtful
accounts 1.7 2.4 3.5 3.4
Non-cash compensation
expense 1.2 0.7 3.1 1.5
Amortization of debt
issuance costs 0.4 0.4 1.1 1.1
Provision for deferred
compensation (0.5) 0.9 1.2 1.7
Changes in operating assets
and liabilities, net of
effects from business
combination:
Accounts receivable, net 6.3 3.4 (1.9) (14.0)
Inventories (26.2) (14.1) (37.9) (12.7)
Prepaid expenses and
other current assets (6.5) 7.2 (0.9) (1.2)
Other assets 0.5 (1.7) (8.4) (1.4)
Accounts payable 11.9 16.6 25.8 23.1
Accrued expenses and
other liabilities 3.3 (1.9) 6.0 3.6
--------- --------- --------- ---------
Net cash provided by
operating activities 13.3 27.0 45.7 60.9
--------- --------- --------- ---------
Cash Flows from Investing
Activities:
Payments for business
combinations, net of cash
acquired - (2.4) (15.1) (2.5)
Payments for investment in
available-for-sale
securities - - (24.1) -
Capital expenditures (4.2) (2.8) (13.8) (10.6)
Proceeds from note
receivable - - 2.7 -
Payments on non-
solicitation agreements - (0.2) - (1.0)
Other (0.1) - (0.1) -
--------- --------- --------- ---------
Net cash used in
investing activities (4.3) (5.4) (50.4) (14.1)
--------- --------- --------- ---------
Cash Flows from Financing
Activities:
Net proceeds from revolving
line of credit 1.2 - 32.6 -
Proceeds from exercise of
stock options 0.6 2.4 2.3 7.3
Excess tax benefits from
share-based compensation
arrangements 0.5 0.6 1.2 3.2
Proceeds from borrowings - 0.5 - 1.5
Purchase of common stock (13.1) (15.2) (62.5) (27.4)
Payment under capital lease
obligations (0.2) (0.2) (0.6) (0.4)
Other - (0.5) - -
--------- --------- --------- ---------
Net cash used in
financing activities (11.0) (12.4) (27.0) (15.8)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents (2.0) 9.2 (31.7) 31.0
Cash and cash equivalents,
beginning of period 17.0 45.7 46.7 23.9
--------- --------- --------- ---------
Cash and cash equivalents, end
of period $ 15.0 $ 54.9 $ 15.0 $ 54.9
========= ========= ========= =========
PSS WORLD MEDICAL, INC.
Net Sales Adjustment for Influenza Vaccine Sales
Proforma Net Sales
(In millions)
For the Three For the Nine
Months Ended Months Ended
------------------------ ------------------------
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2007 2006 Growth 2007 2006 Growth
-------- -------- ------ -------- -------- ------
Consolidated:
Net sales $ 465.2 $ 458.4 1.5% $1,362.0 $1,298.6 4.9%
Influenza vaccine
sales - 33.3 - 48.7
-------- -------- -------- --------
Net sales adjusted
for influenza
vaccine sales $ 465.2 $ 425.1 9.4% $1,362.0 $1,249.9 9.0%
======== ======== ======== ========
Physician Business:
Net sales $ 326.5 $ 329.2 (0.8%) $ 952.9 $ 914.4 4.2%
Influenza vaccine
sales - 33.3 - 48.7
-------- -------- -------- --------
Net sales adjusted
for influenza
vaccine sales $ 326.5 $ 295.9 10.4% $ 952.9 $ 865.7 10.1%
======== ======== ======== ========
(NASDAQ GS:PSSI) - E
SOURCE: PSS World Medical, Inc.
PSS World Medical, Inc.For investors:Robert C. Weiner, 904-332-3287Vice President, Investor RelationsorFor media:Brian C. Kosoy, 904-332-4175Public Relations
Copyright Business Wire 2008
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