|
|
|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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)
|
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
|
|
|
|
|
|
Page
|
||
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
||
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 6.
|
|
|
Three Months Ended March 31,
|
|
||||||
(in thousands, except per share data)
|
|
2020
|
|
2019
|
|
||||
Net revenue
|
|
$
|
2,122,693
|
|
|
$
|
2,350,840
|
|
|
Cost of goods sold
|
|
1,854,134
|
|
|
2,074,219
|
|
|
||
Gross margin
|
|
268,559
|
|
|
276,621
|
|
|
||
Distribution, selling and administrative expenses
|
|
254,048
|
|
|
255,112
|
|
|
||
Acquisition-related and exit and realignment charges
|
|
6,064
|
|
|
4,863
|
|
|
||
Other operating (income) expense, net
|
|
(2,309
|
)
|
|
42
|
|
|
||
Operating income
|
|
10,756
|
|
|
16,604
|
|
|
||
Interest expense, net
|
|
23,342
|
|
|
25,458
|
|
|
||
Other expense, net
|
|
4,846
|
|
|
2,734
|
|
|
||
Loss from continuing operations before income taxes
|
|
(17,432
|
)
|
|
(11,588
|
)
|
|
||
Income tax benefit
|
|
(8,523
|
)
|
|
(670
|
)
|
|
||
Loss from continuing operations, net of tax
|
|
(8,909
|
)
|
|
(10,918
|
)
|
|
||
Loss from discontinued operations, net of tax
|
|
(2,415
|
)
|
|
(3,178
|
)
|
|
||
Net loss
|
|
$
|
(11,324
|
)
|
|
$
|
(14,096
|
)
|
|
|
|
|
|
|
|
||||
Loss from continuing operations per common share: basic and diluted
|
|
$
|
(0.15
|
)
|
|
$
|
(0.18
|
)
|
|
Loss from discontinued operations per common share: basic and diluted
|
|
(0.04
|
)
|
|
(0.05
|
)
|
|
||
Net loss per common share: basic and diluted
|
|
$
|
(0.19
|
)
|
|
$
|
(0.23
|
)
|
|
|
|
Three Months Ended March 31,
|
|
||||||
(in thousands)
|
|
2020
|
|
2019
|
|
||||
Net loss
|
|
$
|
(11,324
|
)
|
|
$
|
(14,096
|
)
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
||||
Currency translation adjustments (net of income tax of $0 in 2020 and 2019)
|
|
(28,178
|
)
|
|
(4,207
|
)
|
|
||
Change in unrecognized net periodic pension costs (net of income tax of $44 in 2020 and $69 in 2019)
|
|
170
|
|
|
197
|
|
|
||
Net unrealized loss on derivative instruments and other (net of income tax benefit of $4,302 in 2020 and $658 in 2019)
|
|
(11,397
|
)
|
|
(2,413
|
)
|
|
||
Other comprehensive loss
|
|
(39,405
|
)
|
|
(6,423
|
)
|
|
||
Comprehensive loss
|
|
$
|
(50,729
|
)
|
|
$
|
(20,519
|
)
|
|
|
March 31,
|
|
December 31,
|
||||
(in thousands, except per share data)
|
2020
|
|
2019
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
92,315
|
|
|
$
|
67,030
|
|
Accounts receivable, net of allowances of $23,971 and $21,015
|
667,607
|
|
|
674,706
|
|
||
Merchandise inventories
|
1,108,844
|
|
|
1,146,192
|
|
||
Other current assets
|
151,635
|
|
|
79,372
|
|
||
Current assets of discontinued operations
|
499,410
|
|
|
439,983
|
|
||
Total current assets
|
2,519,811
|
|
|
2,407,283
|
|
||
Property and equipment, net of accumulated depreciation of $254,054 and $245,718
|
301,335
|
|
|
315,427
|
|
||
Operating lease assets
|
133,738
|
|
|
142,219
|
|
||
Goodwill
|
388,000
|
|
|
393,181
|
|
||
Intangible assets, net
|
271,513
|
|
|
285,018
|
|
||
Other assets, net
|
100,473
|
|
|
99,956
|
|
||
Total assets
|
$
|
3,714,870
|
|
|
$
|
3,643,084
|
|
Liabilities and equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
891,542
|
|
|
$
|
808,035
|
|
Accrued payroll and related liabilities
|
44,722
|
|
|
53,584
|
|
||
Other current liabilities
|
229,824
|
|
|
231,029
|
|
||
Current liabilities of discontinued operations
|
383,586
|
|
|
323,511
|
|
||
Total current liabilities
|
1,549,674
|
|
|
1,416,159
|
|
||
Long-term debt, excluding current portion
|
1,484,340
|
|
|
1,508,415
|
|
||
Operating lease liabilities, excluding current portion
|
109,381
|
|
|
117,080
|
|
||
Deferred income taxes
|
42,962
|
|
|
40,550
|
|
||
Other liabilities
|
112,175
|
|
|
98,726
|
|
||
Total liabilities
|
3,298,532
|
|
|
3,180,930
|
|
||
Commitments and contingencies
|
|
|
|
||||
Equity
|
|
|
|
||||
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 62,885 shares and 62,843 shares
|
125,770
|
|
|
125,686
|
|
||
Paid-in capital
|
256,357
|
|
|
251,401
|
|
||
Retained earnings
|
126,323
|
|
|
137,774
|
|
||
Accumulated other comprehensive loss
|
(92,112
|
)
|
|
(52,707
|
)
|
||
Total equity
|
416,338
|
|
|
462,154
|
|
||
Total liabilities and equity
|
$
|
3,714,870
|
|
|
$
|
3,643,084
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(11,324
|
)
|
|
$
|
(14,096
|
)
|
Adjustments to reconcile net loss to cash provided by (used for) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
23,913
|
|
|
28,720
|
|
||
Share-based compensation expense
|
3,941
|
|
|
4,505
|
|
||
Impairment charges
|
9,080
|
|
|
—
|
|
||
Provision for losses on accounts receivable
|
5,213
|
|
|
3,619
|
|
||
Deferred income tax expense (benefit)
|
6,348
|
|
|
(8,613
|
)
|
||
Changes in operating lease right-of-use assets and lease liabilities
|
(714
|
)
|
|
(190
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(7,942
|
)
|
|
(22,573
|
)
|
||
Merchandise inventories
|
39,340
|
|
|
80,194
|
|
||
Accounts payable
|
98,743
|
|
|
(120,480
|
)
|
||
Net change in other assets and liabilities
|
(77,178
|
)
|
|
(15,668
|
)
|
||
Other, net
|
4,034
|
|
|
3,678
|
|
||
Cash provided by (used for) operating activities
|
93,454
|
|
|
(60,904
|
)
|
||
Investing activities:
|
|
|
|
||||
Additions to property and equipment
|
(4,771
|
)
|
|
(11,674
|
)
|
||
Additions to computer software
|
(942
|
)
|
|
(2,605
|
)
|
||
Proceeds from sale of property and equipment
|
33
|
|
|
271
|
|
||
Cash used for investing activities
|
(5,680
|
)
|
|
(14,008
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from issuance of debt
|
150,000
|
|
|
—
|
|
||
(Repayments) borrowings under revolving credit facility
|
(6,200
|
)
|
|
72,100
|
|
||
Repayments of debt
|
(166,798
|
)
|
|
(12,394
|
)
|
||
Financing costs paid
|
(5,785
|
)
|
|
(4,313
|
)
|
||
Cash dividends paid
|
(155
|
)
|
|
(4,764
|
)
|
||
Other, net
|
(2,468
|
)
|
|
(1,124
|
)
|
||
Cash (used for) provided by financing activities
|
(31,406
|
)
|
|
49,505
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(62
|
)
|
|
(2,721
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
56,306
|
|
|
(28,128
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
84,687
|
|
|
103,367
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
140,993
|
|
|
$
|
75,239
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Income taxes paid (received), net of refunds
|
$
|
2,695
|
|
|
$
|
(12,388
|
)
|
Interest paid
|
$
|
21,431
|
|
|
$
|
24,504
|
|
(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, 2018
|
62,294
|
|
|
$
|
124,588
|
|
|
$
|
238,773
|
|
|
$
|
200,670
|
|
|
$
|
(45,612
|
)
|
|
$
|
518,419
|
|
Net loss
|
|
|
|
|
|
|
(14,096
|
)
|
|
|
|
(14,096
|
)
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(6,423
|
)
|
|
(6,423
|
)
|
|||||||||
Dividends declared ($0.0025 per share)
|
|
|
|
|
|
|
(119
|
)
|
|
|
|
(119
|
)
|
|||||||||
Share-based compensation expense, exercises and other
|
642
|
|
|
1,284
|
|
|
2,774
|
|
|
|
|
|
|
|
4,058
|
|
||||||
Balance, March 31, 2019
|
62,936
|
|
|
$
|
125,872
|
|
|
$
|
241,547
|
|
|
$
|
186,455
|
|
|
$
|
(52,035
|
)
|
|
$
|
501,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
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
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Cash and cash equivalents
|
$
|
92,315
|
|
|
$
|
67,030
|
|
Restricted cash included in Other assets, net
|
16,315
|
|
|
16,261
|
|
||
Cash of discontinued operations
|
32,363
|
|
|
1,396
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
140,993
|
|
|
$
|
84,687
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2020
|
|
2019
|
|
||||
Net revenue
|
$
|
122,342
|
|
|
$
|
110,548
|
|
|
Cost of goods sold
|
32,106
|
|
|
28,745
|
|
|
||
Gross margin
|
90,236
|
|
|
81,803
|
|
|
||
Distribution, selling, and administrative expenses
|
80,953
|
|
|
83,044
|
|
|
||
Asset impairment charges
|
9,080
|
|
|
—
|
|
|
||
Acquisition-related and exit and realignment charges
|
271
|
|
|
126
|
|
|
||
Other operating income, net
|
(461
|
)
|
|
(186
|
)
|
|
||
Operating income (loss)
|
393
|
|
|
(1,181
|
)
|
|
||
Interest expense, net
|
1,720
|
|
|
1,640
|
|
|
||
Loss from discontinued operations before income taxes
|
(1,327
|
)
|
|
(2,821
|
)
|
|
||
Income tax provision from discontinued operations
|
1,088
|
|
|
357
|
|
|
||
Loss from discontinued operations, net of tax
|
$
|
(2,415
|
)
|
|
$
|
(3,178
|
)
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
||||
Assets of discontinued operations
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
32,363
|
|
|
$
|
1,396
|
|
|
Accounts receivable, net
|
78,193
|
|
|
78,643
|
|
|
||
Merchandise inventories
|
12,979
|
|
|
16,058
|
|
|
||
Other current assets
|
227,070
|
|
|
188,853
|
|
|
||
Current assets of discontinued operations
|
350,605
|
|
|
284,950
|
|
|
||
Property and equipment, net
|
70,730
|
|
|
70,976
|
|
|
||
Intangible assets, net
|
7,010
|
|
|
6,579
|
|
|
||
Other assets, net
|
27,248
|
|
|
22,165
|
|
|
||
Operating lease assets
|
84,202
|
|
|
87,425
|
|
|
||
Valuation allowance on disposal group classified as held for sale
|
(40,385
|
)
|
|
(32,112
|
)
|
|
||
Total assets of discontinued operations
|
$
|
499,410
|
|
|
$
|
439,983
|
|
|
Liabilities of discontinued operations
|
|
|
|
|
||||
Accounts payable
|
$
|
68,058
|
|
|
$
|
53,981
|
|
|
Other current liabilities
|
191,728
|
|
|
182,980
|
|
|
||
Current liabilities of discontinued operations
|
259,786
|
|
|
236,961
|
|
|
||
Long-term debt, excluding current portion
|
2,781
|
|
|
5,523
|
|
|
||
Operating lease liabilities, excluding current portion
|
69,820
|
|
|
76,270
|
|
|
||
Other liabilities
|
51,199
|
|
|
4,757
|
|
|
||
Total liabilities of discontinued operations
|
$
|
383,586
|
|
|
$
|
323,511
|
|
|
|
March 31, 2020
|
|
March 31, 2019
|
|
||||
Operating Activities:
|
|
|
|
|
||||
Depreciation and amortization
|
$
|
—
|
|
|
$
|
5,613
|
|
|
Asset impairment charges
|
9,080
|
|
|
—
|
|
|
||
Investing Activities:
|
|
|
|
|
||||
Capital expenditures
|
1,664
|
|
|
8,035
|
|
|
|
Global Solutions
|
|
Global Products
|
|
Consolidated
|
||||||
Carrying amount of goodwill, December 31, 2019
|
$
|
283,905
|
|
|
$
|
109,276
|
|
|
$
|
393,181
|
|
Currency translation adjustments
|
—
|
|
|
(5,181
|
)
|
|
(5,181
|
)
|
|||
Carrying amount of goodwill, March 31, 2020
|
$
|
283,905
|
|
|
$
|
104,095
|
|
|
$
|
388,000
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Customer
Relationships |
|
Tradenames
|
|
Other
Intangibles |
|
Customer
Relationships |
|
Tradenames
|
|
Other
Intangibles |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gross intangible assets
|
$
|
266,595
|
|
|
$
|
90,000
|
|
|
$
|
43,227
|
|
|
$
|
270,693
|
|
|
$
|
90,000
|
|
|
$
|
43,055
|
|
Accumulated amortization
|
(97,366
|
)
|
|
(18,611
|
)
|
|
(12,332
|
)
|
|
(92,947
|
)
|
|
(16,520
|
)
|
|
(9,263
|
)
|
||||||
Net intangible assets
|
$
|
169,229
|
|
|
$
|
71,389
|
|
|
$
|
30,895
|
|
|
$
|
177,746
|
|
|
$
|
73,480
|
|
|
$
|
33,792
|
|
Weighted average useful life
|
10 years
|
|
|
11 years
|
|
|
8 years
|
|
|
10 years
|
|
|
11 years
|
|
|
8 years
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2020
|
|
2019
|
|
||||
Global Solutions segment
|
$
|
1,829
|
|
|
$
|
566
|
|
|
Global Products segment
|
—
|
|
|
138
|
|
|
||
Total exit and realignment charges
|
$
|
1,829
|
|
|
$
|
704
|
|
|
|
|
Total (1)
|
||
Accrued exit and realignment costs, December 31, 2019
|
|
$
|
8,162
|
|
Provision for exit and realignment activities:
|
|
|
|
|
Severance
|
|
1,391
|
|
|
Information system restructuring costs
|
|
183
|
|
|
Other
|
|
255
|
|
|
Change in estimate
|
|
—
|
|
|
Cash payments
|
|
(5,799
|
)
|
|
Accrued exit and realignment costs, March 31, 2020
|
|
$
|
4,192
|
|
|
|
|
||
Accrued exit and realignment costs, December 31, 2018
|
|
$
|
7,477
|
|
Provision for exit and realignment activities:
|
|
|
||
Severance
|
|
360
|
|
|
Information system restructuring costs
|
|
261
|
|
|
Other
|
|
83
|
|
|
Change in estimate
|
|
—
|
|
|
Cash payments
|
|
(2,206
|
)
|
|
Accrued exit and realignment costs, March 31, 2019
|
|
$
|
5,975
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Carrying Amount
|
|
Estimated Fair Value
|
||||||||
3.875% Senior Notes, due September 2021
|
$
|
231,764
|
|
|
$
|
223,367
|
|
|
$
|
236,234
|
|
|
$
|
229,356
|
|
4.375% Senior Notes, due December 2024
|
274,041
|
|
|
184,140
|
|
|
273,978
|
|
|
212,086
|
|
||||
Term A Loans, due July 2022
|
217,924
|
|
|
221,906
|
|
|
377,420
|
|
|
383,050
|
|
||||
Term B Loan, due April 2025
|
479,332
|
|
|
340,751
|
|
|
480,337
|
|
|
442,217
|
|
||||
Revolver
|
171,700
|
|
|
171,700
|
|
|
177,900
|
|
|
177,900
|
|
||||
Accounts Receivable Securitization Program
|
147,209
|
|
|
150,000
|
|
|
—
|
|
|
—
|
|
||||
Finance leases and other
|
13,557
|
|
|
13,557
|
|
|
13,783
|
|
|
13,783
|
|
||||
Total debt
|
1,535,527
|
|
|
1,305,421
|
|
|
1,559,652
|
|
|
1,458,392
|
|
||||
Less current maturities
|
(51,187
|
)
|
|
(51,187
|
)
|
|
(51,237
|
)
|
|
(51,237
|
)
|
||||
Long-term debt
|
$
|
1,484,340
|
|
|
$
|
1,254,234
|
|
|
$
|
1,508,415
|
|
|
$
|
1,407,155
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Service cost
|
$
|
351
|
|
|
$
|
329
|
|
Interest cost
|
494
|
|
|
600
|
|
||
Recognized net actuarial loss
|
214
|
|
|
260
|
|
||
Net periodic benefit cost
|
$
|
1,059
|
|
|
$
|
1,189
|
|
|
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||
|
Notional Amount
|
|
Maturity Date
|
|
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
450,000
|
|
|
May 2022 and May 2025
|
|
Other assets, net
|
|
$
|
—
|
|
|
Other liabilities
|
|
$
|
33,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Economic (non-designated) hedges
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
21,000
|
|
|
April 2020
|
|
Other assets, net
|
|
$
|
280
|
|
|
Other liabilities
|
|
$
|
—
|
|
|
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||
|
Notional Amount
|
|
Maturity Date
|
|
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
450,000
|
|
|
May 2022 and May 2025
|
|
Other assets, net
|
|
$
|
—
|
|
|
Other liabilities
|
|
$
|
17,436
|
|
|
Amount of Gain/(Loss) Recognized in Other Comprehensive Loss
|
Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
|
Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded
|
Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
|
||||||
Interest rate swaps
|
$
|
(16,958
|
)
|
Interest expense, net
|
$
|
(23,342
|
)
|
$
|
(1,259
|
)
|
|
Three Months Ended March 31,
|
|
||||||
(in thousands, except per share data)
|
2020
|
|
2019
|
|
||||
Weighted average shares outstanding - basic and diluted
|
60,571
|
|
|
60,376
|
|
|
||
|
|
|
|
|
||||
Loss from continuing operations
|
$
|
(8,909
|
)
|
|
$
|
(10,918
|
)
|
|
Basic and diluted per share
|
$
|
(0.15
|
)
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
||
Loss from discontinued operations
|
$
|
(2,415
|
)
|
|
$
|
(3,178
|
)
|
|
Basic and diluted per share
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
||
Net loss
|
$
|
(11,324
|
)
|
|
$
|
(14,096
|
)
|
|
Basic and diluted per share
|
$
|
(0.19
|
)
|
|
$
|
(0.23
|
)
|
|
|
Retirement Plans
|
|
Currency
Translation
Adjustments
|
|
Derivatives and Other
|
|
Total
|
||||||||
Accumulated other comprehensive loss, December 31, 2019
|
$
|
(14,691
|
)
|
|
$
|
(25,301
|
)
|
|
$
|
(12,715
|
)
|
|
$
|
(52,707
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(28,178
|
)
|
|
(16,958
|
)
|
|
(45,136
|
)
|
||||
Income tax
|
—
|
|
|
—
|
|
|
4,646
|
|
|
4,646
|
|
||||
Other comprehensive loss before reclassifications, net of tax
|
—
|
|
|
(28,178
|
)
|
|
(12,312
|
)
|
|
(40,490
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
214
|
|
|
—
|
|
|
1,259
|
|
|
1,473
|
|
||||
Income tax
|
(44
|
)
|
|
—
|
|
|
(344
|
)
|
|
(388
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
170
|
|
|
—
|
|
|
915
|
|
|
1,085
|
|
||||
Other comprehensive income (loss)
|
170
|
|
|
(28,178
|
)
|
|
(11,397
|
)
|
|
(39,405
|
)
|
||||
Accumulated other comprehensive loss, March 31, 2020
|
$
|
(14,521
|
)
|
|
$
|
(53,479
|
)
|
|
$
|
(24,112
|
)
|
|
$
|
(92,112
|
)
|
|
Retirement Plans
|
|
Currency
Translation
Adjustments
|
|
Derivatives and Other
|
|
Total
|
||||||||
Accumulated other comprehensive loss, December 31, 2018
|
$
|
(8,146
|
)
|
|
$
|
(32,551
|
)
|
|
$
|
(4,915
|
)
|
|
$
|
(45,612
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(4,207
|
)
|
|
(3,649
|
)
|
|
(7,856
|
)
|
||||
Income tax
|
—
|
|
|
—
|
|
|
808
|
|
|
808
|
|
||||
Other comprehensive loss before reclassifications, net of tax
|
—
|
|
|
(4,207
|
)
|
|
(2,841
|
)
|
|
(7,048
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
266
|
|
|
—
|
|
|
578
|
|
|
844
|
|
||||
Income tax
|
(69
|
)
|
|
—
|
|
|
(150
|
)
|
|
(219
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
197
|
|
|
—
|
|
|
428
|
|
|
625
|
|
||||
Other comprehensive income (loss)
|
197
|
|
|
(4,207
|
)
|
|
(2,413
|
)
|
|
(6,423
|
)
|
||||
Accumulated other comprehensive loss, March 31, 2019
|
$
|
(7,949
|
)
|
|
$
|
(36,758
|
)
|
|
$
|
(7,328
|
)
|
|
$
|
(52,035
|
)
|
|
Three Months Ended March 31,
|
|
||||||
|
2020
|
|
2019
|
|
||||
Net revenue:
|
|
|
|
|
||||
Segment net revenue
|
|
|
|
|
||||
Global Solutions
|
$
|
1,847,593
|
|
|
$
|
2,123,599
|
|
|
Global Products
|
391,192
|
|
|
347,085
|
|
|
||
Total segment net revenue
|
2,238,785
|
|
|
2,470,684
|
|
|
||
Inter-segment revenue
|
|
|
|
|
||||
Global Products
|
(116,092
|
)
|
|
(119,844
|
)
|
|
||
Total inter-segment revenue
|
(116,092
|
)
|
|
(119,844
|
)
|
|
||
Consolidated net revenue
|
$
|
2,122,693
|
|
|
$
|
2,350,840
|
|
|
|
|
|
|
|
||||
Operating income:
|
|
|
|
|
||||
Global Solutions
|
$
|
7,691
|
|
|
$
|
21,642
|
|
|
Global Products
|
18,571
|
|
|
7,724
|
|
|
||
Inter-segment eliminations
|
1,169
|
|
|
1,746
|
|
|
||
Intangible amortization
|
(10,611
|
)
|
|
(10,026
|
)
|
|
||
Acquisition-related and exit and realignment charges
|
(6,064
|
)
|
|
(4,863
|
)
|
|
||
Other (1)
|
—
|
|
|
381
|
|
|
||
Consolidated operating income
|
$
|
10,756
|
|
|
$
|
16,604
|
|
|
|
|
|
|
|
||||
Depreciation and amortization:
|
|
|
|
|
||||
Global Solutions
|
$
|
10,636
|
|
|
$
|
10,500
|
|
|
Global Products
|
13,277
|
|
|
12,607
|
|
|
||
Discontinued operations
|
—
|
|
|
5,613
|
|
|
||
Consolidated depreciation and amortization
|
$
|
23,913
|
|
|
$
|
28,720
|
|
|
|
|
|
|
|
||||
Capital expenditures:
|
|
|
|
|
||||
Global Solutions
|
$
|
1,032
|
|
|
$
|
3,341
|
|
|
Global Products
|
3,017
|
|
|
2,903
|
|
|
||
Discontinued operations
|
1,664
|
|
|
8,035
|
|
|
||
Consolidated capital expenditures
|
$
|
5,713
|
|
|
$
|
14,279
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Total assets:
|
|
|
|
||||
Global Solutions
|
$
|
2,168,358
|
|
|
$
|
2,205,134
|
|
Global Products
|
954,787
|
|
|
930,937
|
|
||
Segment assets
|
3,123,145
|
|
|
3,136,071
|
|
||
Discontinued operations
|
499,410
|
|
|
439,983
|
|
||
Cash and cash equivalents
|
92,315
|
|
|
67,030
|
|
||
Consolidated total assets
|
$
|
3,714,870
|
|
|
$
|
3,643,084
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2020
|
|
2019
|
|
||||
Net revenue:
|
|
|
|
|
||||
United States
|
$
|
2,033,454
|
|
|
$
|
2,303,913
|
|
|
International
|
89,239
|
|
|
46,927
|
|
|
||
Consolidated net revenue
|
$
|
2,122,693
|
|
|
$
|
2,350,840
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
$
|
|
%
|
|||||||
Global Solutions
|
$
|
1,847,593
|
|
|
$
|
2,123,599
|
|
|
$
|
(276,006
|
)
|
|
(13.0
|
)%
|
Global Products
|
391,192
|
|
|
347,085
|
|
|
44,107
|
|
|
12.7
|
%
|
|||
Inter-segment
|
(116,092
|
)
|
|
(119,844
|
)
|
|
3,752
|
|
|
3.1
|
%
|
|||
Net revenue
|
$
|
2,122,693
|
|
|
$
|
2,350,840
|
|
|
$
|
(228,147
|
)
|
|
(9.7
|
)%
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
$
|
|
%
|
||||||
Cost of goods sold
|
$
|
1,854,134
|
|
|
2,074,219
|
|
|
$
|
(220,085
|
)
|
|
(10.6
|
)%
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
$
|
|
%
|
|||||||
Gross margin
|
$
|
268,559
|
|
|
$
|
276,621
|
|
|
$
|
(8,062
|
)
|
|
(2.9
|
)%
|
As a % of net revenue
|
12.65
|
%
|
|
11.77
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
$
|
|
%
|
|||||||
Distribution, selling and administrative expenses
|
$
|
254,048
|
|
|
$
|
255,112
|
|
|
$
|
(1,064
|
)
|
|
(0.4
|
)%
|
As a % of net revenue
|
11.97
|
%
|
|
10.85
|
%
|
|
|
|
|
|||||
Acquisition-related and exit and realignment charges
|
$
|
6,064
|
|
|
$
|
4,863
|
|
|
$
|
1,201
|
|
|
24.7
|
%
|
Other operating (income) expense, net
|
$
|
(2,309
|
)
|
|
$
|
42
|
|
|
$
|
(2,351
|
)
|
|
(5,597.6
|
)%
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
$
|
|
%
|
|||||||
Interest expense, net
|
$
|
23,342
|
|
|
$
|
25,458
|
|
|
$
|
(2,116
|
)
|
|
(8.3
|
)%
|
Effective interest rate
|
7.17
|
%
|
|
6.30
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
$
|
|
%
|
|||||||
Other expense, net
|
$
|
4,846
|
|
|
$
|
2,734
|
|
|
$
|
2,112
|
|
|
77.2
|
%
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
$
|
|
%
|
|||||||
Income tax benefit
|
$
|
(8,523
|
)
|
|
$
|
(670
|
)
|
|
$
|
(7,853
|
)
|
|
(1,172.1
|
)%
|
Effective tax rate
|
48.9
|
%
|
|
5.8
|
%
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
Change
|
|||||||||
(Dollars in thousands)
|
|
|
$
|
|
%
|
|||||||||
Cash and cash equivalents
|
$
|
92,315
|
|
|
$
|
67,030
|
|
|
$
|
25,285
|
|
|
37.7
|
%
|
Accounts receivable, net of allowances
|
$
|
667,607
|
|
|
$
|
674,706
|
|
|
$
|
(7,099
|
)
|
|
(1.1
|
)%
|
Consolidated DSO (1)
|
27.5
|
|
|
27.1
|
|
|
|
|
|
|||||
Merchandise inventories
|
$
|
1,108,844
|
|
|
$
|
1,146,192
|
|
|
$
|
(37,348
|
)
|
|
(3.3
|
)%
|
Consolidated inventory turnover (2)
|
6.6
|
|
|
6.6
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
891,542
|
|
|
$
|
808,035
|
|
|
$
|
83,507
|
|
|
10.3
|
%
|
(Dollars in thousands)
|
2020
|
|
2019
|
||||
Net cash provided by (used for):
|
|
|
|
||||
Operating activities
|
$
|
93,454
|
|
|
$
|
(60,904
|
)
|
Investing activities
|
(5,680
|
)
|
|
(14,008
|
)
|
||
Financing activities
|
(31,406
|
)
|
|
49,505
|
|
||
Effect of exchange rate changes
|
(62
|
)
|
|
(2,721
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
56,306
|
|
|
$
|
(28,128
|
)
|
•
|
our ability to achieve revenue and operating income goals may be affected by: COVID-19 related factors, risks and challenges, including among others, the length of time that the pandemic continues, a decrease in revenue ultimately resulting in less cash flow, longer duration in receivables collection, the need to expedite payments to important suppliers may grow, shifts in demand away from certain products we manufacture and distribute, reduced workforces which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates, or temporary production and distribution center and office closures due to reduced workforces or government mandates, potential resulting labor negotiations or disputes, changes in the types and numbers of businesses that compete with us, including non-traditional competitors, and the aggressiveness of that competition, and trends in elective surgeries and other healthcare spending not directly associated with COVID-19;
|
•
|
our ability to successfully close the sale of our European logistics business, Movianto, to EHDH Holding Group (EHDH);
|
•
|
competitive pressures in the marketplace, including intense pricing pressure;
|
•
|
our ability to retain existing and attract new customers in a market characterized by significant customer consolidation and intense cost-containment initiatives;
|
•
|
our dependence on sales to certain customers or the loss or material reduction in purchases by key customers;
|
•
|
our dependence on distribution of product of certain suppliers;
|
•
|
our ability to successfully identify, manage or integrate acquisitions;
|
•
|
our ability to successfully manage our international operations, including risks associated with changes in international trade regulations, foreign currency volatility, changes in regulatory conditions, deteriorating economic conditions, adverse tax consequences, and other risks of operating in international markets;
|
•
|
uncertainties related to and our ability to adapt to changes in government regulations, including healthcare laws and regulations;
|
•
|
risks arising from possible violations of legal, regulatory or licensing requirements of the markets in which we operate;
|
•
|
uncertainties related to general economic, regulatory and business conditions;
|
•
|
our ability to successfully implement our strategic initiatives;
|
•
|
the availability of and modifications to existing supplier funding programs and our ability to meet the terms to qualify for certain of these programs;
|
•
|
the effect of price volatility in the commodities markets, including fuel price fluctuations, on our operating costs and supplier product prices;
|
•
|
our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product;
|
•
|
the ability of customers and suppliers to meet financial commitments due to us;
|
•
|
changes in manufacturer preferences between direct sales and wholesale distribution;
|
•
|
changing trends in customer profiles and ordering patterns and our ability to meet customer demand for additional value-added services;
|
•
|
our ability to manage operating expenses and improve operational efficiencies in response to changing customer profiles;
|
•
|
our ability to meet performance targets specified by customer contracts under contractual commitments;
|
•
|
availability of and our ability to access special inventory buying opportunities;
|
•
|
the ability of business partners and financial institutions to perform their contractual responsibilities;
|
•
|
our ability to continue to obtain financing, obtain financing at reasonable rates and to manage financing costs and interest rate risk, and our ability to refinance, extend or repay our substantial indebtedness;
|
•
|
the risk that information systems are interrupted or damaged or fail for any extended period of time, that new information systems are not successfully implemented or integrated, or that there is a data security breach in our information systems;
|
•
|
the risk that a decline in business volume or profitability could result in an impairment of goodwill or other long-lived assets;
|
•
|
our ability to timely or adequately respond to technological advances in the medical supply industry;
|
•
|
the costs associated with and outcome of outstanding and any future litigation, including product and professional liability claims;
|
•
|
adverse changes in U.S. and foreign tax laws and the outcome of outstanding tax contingencies and legislative and tax proposals;
|
•
|
our ability to successfully implement the expense reduction and productivity and efficiency increasing initiatives;
|
•
|
our ability to continue to comply with the terms and conditions of Byram Healthcare’s Corporate Integrity Agreement;
|
•
|
the potentially adverse impact of the United Kingdom’s withdrawal from the European Union; and
|
•
|
other factors detailed from time to time in the reports we file with the SEC.
|
•
|
Actions by the United States government or other foreign government could affect our business. These actions include purchasing products that we make or sell, imposing new product standards or allowing the use of alternative products, instituting regulatory requirements to purchase only locally manufactured products, exercising control over manufacturing or distribution operations, taking trade actions including the imposition or removal of tariffs or import / export controls, subsidizing the supply of products, or other actions;
|
•
|
Quarantine decisions by public or private entities may influence our ability to operate or our ability to ship or receive products. For example, if shipping companies cease or reduce land or sea freight channels, raw material and finished good deliveries may be slowed or stopped;
|
•
|
Our customers may change their payment patterns or lose their ability to pay invoices, which could have a material adverse impact on our cash flow;
|
•
|
Our suppliers may increase pricing or impose new purchasing requirements, such as minimum purchase quantities or pay-in-advance payment terms, which could have a material adverse impact on our cash flow;
|
•
|
Raw materials or finished goods that we require for our operations may not be available, or pricing for such items may increase beyond the willingness of our customers to pay;
|
•
|
New competitors may enter our market, including both small and large scale suppliers;
|
•
|
COVID-19 illness among our workers in manufacturing or distribution operations could impact our operations or compel the closure of one or more facilities for an unknown period of time. Labor relations in our facilities related to COVID-19 could also negatively impact our operations;
|
•
|
We may invest in additional manufacturing capacity for which demand slows in the future, which could have a material adverse impact on our cash flow; and
|
•
|
Technology infrastructure failures could materially inhibit our operations that currently include a substantial portion of remote work. For example, voice or data line failures resulting from natural, manmade or cyber-attack could impair our ability to operate.
|
(a)
|
Exhibits
|
|
|
|
Owens & Minor, Inc.
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
May 6, 2020
|
|
/s/ Edward A. Pesicka
|
|
|
|
Edward A. Pesicka
|
|
|
|
President & Chief Executive Officer
|
|
|
|
|
Date:
|
May 6, 2020
|
|
/s/ Andrew G. Long
|
|
|
|
Andrew G. Long
|
|
|
|
Executive Vice President & Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 of Owens & Minor, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 6, 2020
|
/s/ Edward A. Pesicka
|
|
Edward A. Pesicka
|
|
President & Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, of Owens & Minor, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 6, 2020
|
/s/ Andrew G. Long
|
|
Andrew G. Long
|
|
Executive Vice President & Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Edward A. Pesicka
|
Edward A. Pesicka
|
President & Chief Executive Officer
|
Owens & Minor, Inc.
|
May 6, 2020
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Andrew G. Long
|
Andrew G. Long
|
Executive Vice President & Chief Financial Officer
|
Owens & Minor, Inc.
|
May 6, 2020
|
|