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OMI Owens & Minor

Participants
Chandrika Nigam Director, Investor Relations
Ed Pesicka President and Chief Executive Officer
Andy Long Executive Vice President and Chief Financial Officer
Michael Cherny Bank of America
Kevin Caliendo UBS
Eric Coldwell Baird
Jailendra Singh Credit Suisse
Steven Valiquette Barclays
Robert Jones Goldman Sachs
Michael Minchak JP Morgan
Call transcript
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Operator

Good day ladies and gentlemen. At this time all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this call may be recorded. I would now like to introduce your host of today's conference, Miss. Relations. Investor Director, Nigam, Chandrika Miss. Nigam, you begin. may

Chandrika Nigam

Thank & Minor operator. Hello Call. everyone, Owens the to welcome Third and you, Quarter Earnings XXXX

call Our to risks made regarding facts, to of this quarter today's note Private on XXXX. today forward-looking results call subject pandemic included and forward-looking are response are comments anticipated in focused established Harbor for and are COVID-XX of on all statements uncertainties. include made on financial historical the operational and financial the that are of outlook on qualify are remainder from call to statements and These will the Please for year, which today, XXXX, certain press intended performance. Securities by our of be Safe Act third this statements forward-looking Litigation other release. our Reform statements our the ongoing statements, for statements than the the the All of liability statements which

Forward-looking are are statements based statements available current expectations such information time call and this at the made on management's made. represent on

Forward-looking obligation section Form Factors Annual to or Stock statements. XX-K forward-looking may of law Report our expressly or explained results statements uncertainties the York its disclaims differ unknown Risk and including risks its rules predicted, to of results from some as XX-Q. the statements. forward-looking the and cause The any materially Except these any company implied any filings, Exchange, on actual of factors other by involve the required quarterly assumed New in known the on in SEC and numerous that risks, listing has report uncertainties update or Form and intent company by

efforts on press reconciliations Ed on things will joined our And certain COVID-XX the our the discussion and those to financial call our who Executive Andy our will Pesicka, are we Chief Officer, discuss the in would President into of and an and provide the Chief ongoing on additional I Form I frontlines comparable for the information and in am off. will the our Vice like by third our of Additionally, Executive Today for to Officer, about XX-Q. included report most the GAAP now President quarter Long, these Financial Ed? quarter commentary outlook results to the over insight in measures release, pandemic. help and measures quarterly will who turn Ed, and non-GAAP financial financial start our to year. on reference provide measures our who remainder today, update

Ed Pesicka

network. broad best to finally experience, mission customers supplier chain This performance serve levels empower our with our customer advance enabling the to highest approach facilities owned our starts with provide healthcare. and customers distribution fulfill manufacturing operated us an enhanced external at by with call The base, our combined our performance everyone. driven to chain our Thank ability report to another exceptional value you, been on I'm of different. for makes be joining this strong us the dedicated strength the It supported pleased quarter us support which Chandrika. Good has here evening, our by today today. you The thank and complete And robust and and us integrated operate allows quarter. operating and value to our America's teammates. of extremely our is to

well third results the investing performance In was past on for delivered strategy months, stand as plus. on organization While our as quarter it past strong, has accelerating productivity third and business repositioned year improvements. alone. have during customer, the we in doesn't by the quarter operational delivering and the the This performance in the focusing XX compelling the significantly

the demonstrate start examples from few strong a me by that QX sharing Let performance.

working investments Fifth, improvements. we increased in has the in $XXX Fourth, continue capital XXX% and XXX adjusted earnings year. offering, we the First, than closed. points debt adjusted million we basis to achieved margin equity quarter technology. quarter. per six, Three, service expanded make we XXXX. we infrastructure, result versus net reduced of share as operating XX we operating compared third generated by Two, to income flow million increase follow-on by and million launched since And XXX a prior in an the of in total which more cash

QX revenue XXX maintained Specifically we to QX. profitability segment, solutions service returned levels. global industry related from to segment The million the grew and our we sequentially to leading

approximately levels, a record milestone XX of levels manufacture which global finally, our of the in PPE. profit Next, products we to billion record Owens this COVID materials year. produced And segment, of billion units of or of American our owned we manufactured were beginning related fight, facilities, done in nearly and delivered with all PPE reached being achieved X Minor & units since that factories we with the

continuation quarter is our demonstrated strong a performance. While this of of strong, record the was just third track

Here Two, positive quarter. consecutive consistency. quarters. the generated are the sixth six We down million paid operating achieve debt of year-to-date year-over-year in million the last quarter. we expansion sixth margin flow $XXX One, cash few a for consecutive and we by examples by our for $XXX gross again

in another earmarked debts. on to to $XXX that have addition specifically cash hand In additional pay that, down we is million

a operational with to across are and entire improved today $X. business, of future thus reconfirming output and financial operational efficiency Andy strengths. full as to XXXX the have guidance a we constant foundation fourth are of a of EPS enabling XXXX of adjusted investments with combined year additional growth remainder I adjusted pleased digit provide increased consecutive adjusted $X.XX about address raise fueled in us healthcare. year-over-year remarks. And talk focus are will and on the and Continuing delivered current in we well to Next, the our future is a range strategy, growth will And EPS It double of we we customers. prepared basis. better strategic XXXX. his Owens serve robust to our currency this approach Minor. that financial EPS focus investments, of quarter positioned finally, clear our that areas will of our & now to continued areas improvements, a color These shape are needs execution the

with our investments. Let's begin

Our disciplined and strategy has investment been the will and focus to technology into continue effectiveness operational infrastructure, on future.

global Let start our investments me in with segments. products

investments, through our During manufacturing to with the third capital our partnerships quarter, improvements, long-term expand and we continue customers. output operational

just we a the are investments. manufacturing facilities. these few NXX our based of US new of completed Here in installation production line examples One,

And broad our across the isolation PPE and be to continue future. a North to fabric leader gown to us expand invest Next, in It should we the continue imbalance we production nonwoven continuum the manufacturing our in to continue facility. based products. to Lexington, PPE that These of America's surgical investments manufacturing enable capacity. locations in Carolina continue demand in be supply we also noted into of the PPE expect our

unit enhanced improved of BXC Again, with starts the global business. offering we and improved investments home teammates, services system. value in with inventory Moving our regulatory processes, solutions differentiate warehouse which investments our low QSight's our where through healthcare patents, products, control, manufactured segment, in with measure in of now our customers quality chain. We our infrastructure with products Minor data our algorithms. with our America's, offerings and our These affair. across Owens are this & factories, BXB with our with technology, are in that to our supporting our and process and expanded We management the myOM in our our most our planning

get think into know them the you the seamlessly through health the our how We and distribution of hands I get manufacture products care channels. providers picture. to

As we on industry, you as call the as demands to and for regulations landscape healthcare. and are PPE usage return as a meet in the changing more the healthcare can in more patients rely care position also increased tell, home of of patients and to strong protocols

Let do improve me discuss have improvements. operational experience now more the customer and and we it quarters, In efficiently. significantly the past several to operational landscape deliver transformed

by are focusing We operational improvement. doing continuous this and effectiveness on

invested process me to technological in One, few centers. increase improvements you accuracies Let a our within give we distribution examples.

to planning supply Next, our suppliers demand we and continue manage efficiency. using with better data to partner chain

our we our skilled on of continue we doing so can to workforce. emphasize retain While the safety these, teammates

approach are continuous that we will of core enhancing our the business at to ensure organizational be improvement Finally, our system culture.

All of industry our at with the us remain forefront these service will leading levels. allow to

let's position. talk our Finally, financial about

profile As in financial noted the beginning my today, is comments our strong. of

initiatives combined on we We created digit operating threefold have our Based our expect achievements investment. results, EPS midpoint improvement are we record companywide guidance and through, of track in commitments. deleveraging a a our over improved is long-term operating investing the walked The balance growth increased to sheet delivering from our efficiency I've performance you on on outlook of continue based double in represents future. XXXX. and The with the XXXX

Here positive are for a few momentum. continued expected reasons the

to expect the to healthcare With demand to is changes in believe high. we for here protocols, requirements, stay. higher we win new First, demand markets stockpiling PPE for remain PPE continue

invest demand. continue and service our up help production a ramp to we result As this to

elective And of care in pre-pandemic levels, home markets. to our Secondly, are continue one healthcare finally, we fastest distribution procedures as recover our increase our able towards demand business service an to health see customers. continues to growing infrastructure the to leverage in

not past of immensely proud But Thank yet. done discussion several results. solid And you. over over now just turn had we're I'm I we financial accomplishments discussed, I'll a As the our third for recognize Andy quarter. the to our call Andy? quarters. And we of

Andy Long

results expected you, then the quarterly And good our expectations better Thank review our discuss I'll key XXXX. performance. third the of Today everyone. for evening assumptions and of quarter drivers financial And rest than our I'll Ed. and

equity to issuance third about are And balance sheet. report we're excited strong deleveraging quarter. continued We our a pleased and of the recent

is during adapt a our to and performance QX testament execute ability challenging to Our times.

to per financial and my revised several position us challenging to XXXX. improved of income of full business our last today, confidence Earlier the digit year increased which financial growth ability announced despite details has double guidance. we consistently in raising in demonstrated our remarks, cover we our the I'll in our been $X that a share continued deliver the guidance, environment. enhance with net expectation the gave quarters, to Over adjusted have factors $X.XX results Later

in solutions. within and extent in compared to partially of with driven with primarily the from in Let's offset by beginning reductions was QX sales pandemic of sales our XXXX was top impact non-renewals existing customers the $X.X with procedures. the This COVID-XX This billion $X.X business prior quarter past highlights lines our billion, performance revenue home was line. of greater change coupled Net to for in the the global by PPE account healthcare growth from lesser related a year. third elective by the start

flows, from illustrating compared expense Distribution, segment to expansion, continue million XX million an lower we the Although achieved. XXX cash the third of administrative as selling higher pre-pandemic offset was of XXXX Margin XXX partially increased the expected, quarter cost $XX productivity prior sixth quarter trail revenue of $X in impact better level debt elective our products of of basis was of expense procedures was year of and gross the million business in third levels by improvement improving ongoing leverage evidenced portion Interest million the of XX.X%, a represents the improved increasing sales margin capital. levels. year, is of of the as productivity and the as continued prior of over quarter third Gross and than and in in to global a due greater result than operating performance. to came investments year-over-year quarter a we've operating result consecutive fixed working lower margin gains. efficiencies, the primarily This the quarter points

income foreign adjusted period was and last operational In of prior in share base continuing same impact represents currency securitization to The execution increase continuing reduction per $XX our versus million quarter resulting impact and a increase for combined resulted accounts contributed and The rates of for over million operations $X.XX, to EPS a addition, the in was year. which of for strong favorable. an the in $X.XX interest utilization from the performance sequentially versus quarter quarter GAAP program compared and have was quarter expense. of the receivable year. The fourfold income operations $X.XX, improvement $XX the from lower $X.XX of year-over-year and the improvements QX. XXX%

customer revenue $XX solutions attributable third Global for the compared driven volumes in this grew about global incremental cost our put business. help QX income quarter. period operating our volume. of Now, increase offset decline QX. Revenue base. by of levels let by pandemic solutions of me procedures, from improved to impact million mid of to partially against in as of results on third last million $XX income solutions by from to improved the review quarter Sequentially, home healthcare X% in billion, that stable previously to the segment income X.X $XX global the a global compared for from To year. had quarter lower the in XX% revenue another of to by due business COVID-XX year, medical distribution $XXX posted segment pre-COVID X the in impact for non-renewals second operating prior The billion the in perspective, the by million the procedures. elective the in XXXX mentioned for XXs solutions revenue quarter solid the comes million or increased change growth and elective was the Relative has same largely to

Now turning of global XXX products segment, the last the quarter impact compared products procedures. increased of growth year, the elective by to million global $XXX million revenue lower to was sales in net PPE of by revenue and million. Sequentially, third driven XXX

favorable operating discipline, increase expanded, new increased year. cost, elective Global is which favorable $XX higher up. PPE The began last to reported procedures ramp improved over expense, product products, million, million attributable to operating and initiatives, production America's exchange. productivity of As revenue capacity by PPE $XX mix, of leverage, and products foreign based income

revised efficiency, should for factors continue and at operate our for are XXXX of We these of continue and the in remainder high the levels projections very year. reflected to

operating and management. XXX cash improved capital million flow In our year-to-date and turn focus XXX generated working capital on cash sheet basis of the and result profitability consolidated to Let's flow, a balance the as quarter, structure. million of a stringent third we

factors number ahead weigh to Looking of flow. cash expect a to QX we on

This net used for second provide of the seasons, service. changes million spend XX, will highest First, in from dilution requirements carrying $XXX profitable the a this proceeds ensure was offering environment. September Also, impact level CapEx These our We've of by annual with the compared additional elective the traditional reduction previous million a quarter. we resulted quarter customer to a and million, demonstrate a and October growth experience of higher of and sequential debt flu a we invest anticipate the in next meet EPS increase in declines in of levels The strategy inventory expectation negatively are year. higher earlier billion slight strengthen very at we the holiday representing business to long raise X.X in expected an shares, X. fourth offering of our above financial These inventory the preparation procedures and our help $XX netting prepared to guidance. sheet early dynamic on forecast. that in successful will actions further of is issuance our Recently, fourth continued reduce to in billion since the balance already with revised which equity our the closing step to to the commitment $X.X term in for year-end. is ensure to debt to XXXX. $XXX quarter, customers help on level executed impact reflected $X.XX equity our Total

redemption to end plus notice held completed year. restricted our these notes. end utilize In for other $XXX addition, to plan have notes as the recently to available we issued of retire a the of by September, be We cash funds XXXX outstanding million

positioned across very well continue balance our And strategy sheet, enhanced. growth our Our strengthen are to to to execute businesses. well as continuing we by our leverage is invest financially we profile

some let remainder outlook color Finally, me of provide on XXXX. our for the

our growth raise. XXXX. mentioned represents year over threefold current guidance remarks, I improvement our net a digit dilution upwards of a inclusive earlier expect to the in full our recent of in results, As share, XXXX $X from $X.XX guidance range EPS my double continue we equity to we revised midpoint income of and adjusted The to per

through that into walk me revised assumptions Let developing guidance. the the went

the of America's our rest all, year XXXX. we will to for remain the products programs strong. capacity and of the remain expansion First PPE expect demand manufacturing on schedule And based into for

demand quarter. pre-COVID quarter both home in is The strong earliest. the see of returned environment elective to volumes will the mid these the continue. revenue XX% our And in not QX XXXX. contributing pre-COVID to for expected captive ability procedures area influence expectation expect American also in We QX, We to North outlook level this faster levels the associated PPE remain centric supply our in elective for levels. performance with performance raw a us in strong elective segments digit in to business than growth confidence fourth do of at on going healthcare for middle double that our at experienced procedures our achieving earnings Furthermore, our the distribution through procedures chain performance. over forward, gives to expect across XXXX levels. input increased recovery QX the the along material until our with continues In leverage to of to nation we our

sustainable for previously and on section many SEC with note relations on We the been reasons have supplemental the to increasingly today, XXXX demand PPE have modeling our indications cited. are the X-K strong filed we of posted seeing assumptions website. for investor full that the form Please slides updated of year earlier key

operational We the for improvements will are and moving roadmap years that come. to provide financial forward sustainable with

to our on of customers. everything at Thank Owens that, focus the While back clinicians turn to We remains the call do. priority, put a profile over with & operator And Minor's we begin to to top I'll financial session. center the caregivers commitment you. be and our Q&A improving serving continues core the our Operator?

Operator

show you, Please from of America. Instructions] of go first our [Operator Cherny sir. ahead. line question Bank from the Michael Thank I comes

Michael Cherny

what does Good about overall demand evening, made customers? you're within markets, PPE. and another nice if your beyond just seeing? traditional comment congratulations the results. of in for dig up further Can that - signs how expansion on demand signs And event you're catch about thinking there versus are that thanks a go for I in want the in possible, become you supply little a the your legacy into color you to and just a sustained those

Ed Pesicka

Sure.

ways continue there's actually or helped couple that at spot additional product. is, through customers different what buys see this the we look think times, have for we a we I at our today can exceeds one, manufacturing. orders supply And our own we demand to still with

So we by and PPE and see different categories. supply demand balance do that the to continue it varies

think as is a to continuing are I that protocols the of things. different I be is to place, new well are think maintained that protocols causing maintain couple new those of adherence that in as what's the One separation.

years medical there. of there's these products road down pandemic, be And of we're what's that, requirements, it's out our to height or expiry its to now that longer are the at not start that purchased may safety think necessarily that the to to whether that. have it's an conversations that state and through during have to then local whether medical obviously will see out grade stockpiling we're see the to having addition healthcare term, starting if more eventually two about grade, replace I continuing customers with want stock, whether stockpile. it additional of start replaced for PPE In also have to product some demand that's we're networks seeing they We're traditional

continue other second the where for our to into is care markets There's with us there traditional of expand go outside your to question to to part space. think other PPE opportunities? our I acute of are

where addition we gap to that to on have on hard were In the US. in focused frankly there's close really because pressed not international markets the we trying

why that we're as And that to expect shift to then - that's that. today our and what why continue seeing to continue with the ability we that's into shifts and adjust So future.

Michael Cherny

one guess to I I Ed question other then love would into. And Thanks. dive

of rightfully of lot When start can do time to about the more prospects undertaken? operational to enhancements seeing start improvements a And you're the operational get feel full talking You business. importantly, some understanding organization's customers so when spent that of a guess, across I the the really that?

Ed Pesicka

improvements, Yeah, talk we think multiple about ways. so in I when it I talk operation about

institutionalizing it the we're organization. one, within So now

year doing I last the been it, hoc. and a we've more ad For would half, say

while ways we One I manufacturing. amount lines product effectiveness, same number additional of that's on number think it. there's of And of is operational think and/or seen increase the get And fixed effectiveness traditional production How facilities. offer bringing the costs And leverage on different we've fixed and with for tremendous additional with the to and operational cost? your do the classic of our a improvement manufacturing, output our done output. facilities headcount, increase about of output the you so equipment. output, same couple headcount, that we've significant our

even picks do med to you If medical efficiently? of really business, same in business, it's door, it's the How grow business, healthcare of the out and get lot that a identifying, your you fixed is on which The do the amount how and you your products operational more in specifically through home the look understanding how do - operations? cost it's distribution, story, really as additional do you channel the distribution going at reality or throughput leverage, and drives our get business, that you our in businesses the our increase opportunity in our improvement.

on effectiveness about office within at continuing efficiency classic that's drive to distribution. same it well back our the our whether thought distribution, home So your that's the is time. lastly, office in both in whether And work or healthcare, back medical way that's then manufacturing, as in the as we've

Michael Cherny

Perfect, thanks.

Operator

you. Thank

the of UBS. from ahead. from Please line Kevin comes go question Caliendo next Our

Kevin Caliendo

sort and the it little it for of beginning is versus be where it year year Can talk a bit today of how thanks about how call. about the Hi, billions you talked my about forward? of model just to where pieces sort units, at of your think a to was going might about think the where of that number wondering taking You capacity, I'm Like how PPE should or now? it? shipped, capacity we the from it,

Ed Pesicka

talked have we've we we Yeah, we X substantial well, from. of is What openly haven't gone from done whether I about added Y, what think to amount or capacity. went we've

really Then So increases, XX%, of teammates, tuned able nonwoven as done. and all while or and the things we there's we And several in that of tranches I've to been production. we've types we've existing thing those fabric, XXxX. took past capacity existing And added was of or to say, XX%, did aggressively I could optimize added saw, within amount One, and XX% people in talked feel run added so be we've the first we've way of work in our lines different we on the we've facilities. fabric doing our lines the SMS done should capacity equipment, or substantial products. those that to then PPE

output. So we have had production and increases substantial in

that We haven't disclosed is. what number

I way up, you was of in second productivity. additional the well think the that QX ramp step continuation kind the up of ramp the additional could as and the QX as the is about kind of of that first lines was step is of QX think

looking specific So answer, while I it's number. a not you're for know the

also. to here early the QX but what of into and number, in that that We QX big do and in can expect XXXX QX you able the to with we've haven't kind that continuing been think disclosed jump continuation of I

Kevin Caliendo

margins sustainability the - because investors analysts, even the forward, the Well, that the has we have not question of there the where the the ramp I think. margin demand, but bullish all of or of necessarily I the going on sustainability surprised and margins most is guess direction

mean, it can these are what amount your end customer customer, mean, have like spot fill do pricing, where thinking I keep a where from Where capacity you versus all margins today. you're of is factors that And more yourself. you still are traditional the to the print you pricing, mix, of it expansion you there of years, can the to think government going is those? is or sounds that it the I is it possible we So the really year do go? demand optimally think two if in user

Ed Pesicka

there cost take extremely it a need for to cost isn't what but efficiently And longer we strong the to believe it me portion leverage we're wrong, that have expansion, of Don't they opportunity ability there's doing the fill aggressive output. running pretty our disciplined it on long-term of that business quickly expand. margin because disciplined. more this it's one adding is on price, addition to because right. manufacturing continue believe raw we're doing really when get have to commitments capacity to that plus the to also we're market we're But running so on is And to fixed make a with and things almost the teammates, factories, doing customers necessarily because of That's a technology is a factories you're term. material our small our get you our in have your can of plus variable the needs, and you working balance

may levels. will able levels to - again, have if have ever output, So competitive to which leverage back that very level continue you're to does come fixed think the get that it But that high competitive, that don't get be you're you you cost, it of eventually competitive. positioned way making to we pre-COVID sure

that good getting leverage. So fixed effectively, our by the really extremely costs business of growth a running is portion

the we're way long So term. for positioned that

continue we've the increase us how again, is to ability to believe our first don't as today. of we to thought operations output out I and about part and we're equipment as in, have And that's output for coming labor get it. to well our I continues, expansion, fine same additional with and hours that happen done So machinery the the continues tuning to think demand that

Kevin Caliendo

Thanks.

Operator

you. Thank

Our Coldwell next line question from Eric from go of comes Please the Baird. ahead.

Eric Coldwell

Thank you. Good at do them time. evening. three I'll a one I have

the should the on timing notes? 'XX pay the of million Can cash First you down XXX tell me hand simple. again of be one to

Andy Long

Yes.

So Eric. this is this Andy, is

we the towards did additional held, in And our balance we've then we again, can you through So to as of to thanks successful Movianto QX, debt And applied as applied QX, use received production. other assets. some that equity have that cash X, exactly has offering, you'll well you're settling expect in business, as been question. is receive say, right, current so proceeds already sheet Kevin, on operating that that cash for $XXX million October restricted on add that, on the debt reduction. cash. we so we that to on Yeah, that cash the from cash XXX to exited over left generated our the see just too proceeds with net I'll be million what's future

Eric Coldwell

just to clear. be sorry, I'm

press the in pay So you've quarters. the the sounds already six talk you done over offering. It like the XXX down XXX about release, from equity

then on. XQ XXX add that's So another there's those. for And

Andy Long

Yes, correct. Yeah.

we available So yes, between, to us, But had yeah, that almost $X.XX of it's week million. October. as in first

Ed Pesicka

And down. has is XXX debt used And quarter. the the to the go XXX paid which the in XXX Plus fourth been is additional - then future has been XXX used remainder, to

Eric Coldwell

good. Okay,

base, rebuild in year. kind customer know, through been goal think company this is you signs about development? when attrition Second the one, some its business solutions, working of I distribution and and are one to you've new customer conversations the inherited for conversations global early What customer core

Ed Pesicka

I'll Ed, is one. this and that pick Sure

first improvement drastic continuing the to been, the last really, think six first and in process. in our quarters I was build this service starting it's step year, ago So is thing

focused a now drive to as what ultimately efficiencies, level And of so be to take helped. new we can really here's Second during that pandemic, continuing all well the to has levels. continue competitive as to be way operating and maintain above well our to where were our maintain able products that distribution customers historical continue able network, and conversation. we that to products delivering It's service used

have is, that which it the get but customer, really the So opened comes we what even service and the of to to you joined, thing you talked point very has I if don't up when basics the with about conversation. don't back that great conversation, to first

at global solutions that the growth ability as by saw this customers. was growing existing We So to well growing in customers, driven we businesses as in our conversations. continue of newer have shared strong quarter

business combined Now, our procedures our expected things all points validate well, our in well well our we've been able to of what as to pandemic. that than with data we helped slight increase service with all as as the during of are healthcare what that, as customers a home performing do those elective

pipeline, a customers. customers, we conversations potential So have great as - right we now as existing we're robust with well have having

Eric Coldwell

might impact And a how for I'll shortage, leave at you global one, Last How am curious is Great. exam nitrile are you? it I there that. it positioned that? glove

Ed Pesicka

So way for we're here's positioned the that.

again, portion good own Asia, technology. our that We have Southeast common our our manufacture of our people, a They factories in factories. - with our are our gloves with we our in process, with

for market. in is our and using And gloves. manufacturing strong, we that the the control And portion about the parties, with do the strong that we long-term those take again, of process commitments about but of have parties. or time it's could way process. those dipping use our because have XX nature glove So portion over, of whether XX a unique third to I'll a gloves, works expansion phrase. unique of we ours, - do of is buy to technology There third they're the not months, A shortfall thing with just make the from

that that up and ourselves others, we portion factories end different position our little So a we're the because bit gloves good selling own we a customers. of providing our do make with our to for own than people

Eric Coldwell

Is in some relationships lot to where be need you you renewed with We've are a might third you cost a those the that increases increases, heard comfortable face - on if might especially where parties, marketplace. that or passing increase of market have where about that customer. price to that

Ed Pesicka

We to cost to them is are comfortable on, conversation. easy pass we we we've But that It's we that that on if have an never have I cost are taken passing increase. on get if the think cost do approach increases, - we just passing on that and on. pass

opportunity our it it We've how significant to transparent approach them. profit gouge cares with to We using customers taken here to to increase is cost not customers the and or a an translates are try of on as our expand pretty that.

Eric Coldwell

good. on Thanks, Very a Congrats guys. good report.

Ed Pesicka

Thank you.

Operator

you. Thank

of Please the Singh Suisse. from Our Jailendra question line Credit comes next from go ahead.

Jailendra Singh

everyone. thanks Hi,

pressure the around QX electric the much based by procedures products be on solutions thus any that QX these trying writing far So all assuming Trying to remain was to on procedures so your indeed with mean you will compared mean, to I in see on we in understand do think assumption? in procedures. country, have global if comment how I guys that your across electives, to flat elective impact levels. positive around cases And sensitivity outlook, that respect business? seen those I like, have you any been pressure your Is what cases, QX? you driving to offset understand, elective have comfort global

Ed Pesicka

I'll the are Yeah, let seeing. what we've elective and Andy go seen and ahead. start procedures, we we'll what cover this

Andy Long

think to That's of where of we've kind right, kind we going. we're summarize been, so where

the terms or into the of percentage low of levels. quarter elective pre-COVID came XXs procedures we in QX a So of came compared in out to

move in did XXXX. you before we expect part see finish we we return maybe levels is overachievement early point point the historical if that do And to did a the into QX, to the estimate was reason forward the potentially our As said see quarter quarter. the of improvement we mid those in for as as best we in to that QX, flat that mid-year levels and XXs. look this And remain say is and at you even XXXX to the - through will

have of portion do is our most affect products their a to has elective product also global solution mind terms keep that of segments, performance You're also correct global notably that that the in segment tied will portfolio we but that in absolutely procedures.

So more but any movement pronounced affect elective the solution or procedures global segment. up in down will product in both lines,

Ed Pesicka

part only is the add of on elective other depends thing with procedures, it geography. And the I'll

up parts procedures have we've been of where And increased. should difficult may have the the impact? that's COVID seen happens tightened to or impact has sense. elective and where the broad where would of difficult US right be spikes it a a that wave I less one actually some to reduced. What the the now, second there US We seen of COVID other what continue And that's forecast forecast. That's is and have think an thing is happen that factor parts

Jailendra Singh

Okay, assumed to your competitive and change and then Just growth other outlook, the your trying increased what landscape wondering other competitive in competition follow products you seen if comments sell the digit EPS any Have your PPE double existing customer? you vendors? up in earlier. there's that is landscape from on there's assuming are vendors to an PPE

Ed Pesicka

we distributors, of we're but Again, anything, PPE day the competing other is like so business, with our manufacturers, US, to compete day. every whether competitors across just a every other portion it's have

So see to continue we competition.

things there's I to enabled our great for provide which think one a value great service customer. And a customer that's us has our created for been that's I think different, us that to make substantially and us. differentiation thing

Jailendra Singh

right, thanks. All

Operator

you. Thank

ahead. Our from go of Steven line Barclays. Please comes next the question Valiquette from

Steven Valiquette

Good thanks. everyone. afternoon, Great,

the results congrats my as well. on offer me Let

healthcare current of staying distributors prevalence are prices marketplace seems be some PPE, But as in prices talking elevated. state where write we're the all piece PPE this. there are pretty to trying of in market, guess because of So regarding data down, together I coming are points talking imbalances some providers mixed to the overall about actually PPE others downs inventory taking about the some still

going PPE you're overall basket occurring demand Any I'm about? supply discuss color down I only a be guess that in little where on areas And within state has a sort where So new just notable prices able shortages up? curious, this overall you're imbalance now other that private are Thanks. staying maybe of are talking That perhaps keeps the are areas maybe would recently, bit. where helpful. still come they're any that the seeing to PPE of imbalance just

Ed Pesicka

Sure.

think part a I question. it's of couple

try So parts. to let me take different the

little the think We a some that of talk acute in in broader really from areas which healthcare, a a is the seen pricing. centers. what I to More customers we us, So slowdown our demand haven't on that sense, care, service, we the us. primarily we've ambulatory about healthcare, seen surgery in from home

down. XX market times higher six, seen in or was than we've that sale price. And there I'll I have We the our seven early At historical that five, call them price. buys, say our because times even summer seen were to spot NXXs related times buys there out spot come them

business as levels. pricing sell at built my pre-pandemic able profitable be be So that goes to a back to to comment as earlier, we're produce, and

our a So through it good times seen while into by they've down, prices and at take pre-pandemic at –during think I plus come were the that's price. where XX spot XXx, height in and summer pandemic, others have the NXXs, pricing still seeing example, was said the early even XXx we the prices the fall, market historical of of

it legacy it's down has say. those prices, if come So above I still substantially would

of potentially the be and physician's be. be then equilibrium, what broad disconnect part, getting office on spaces. in depends early as segment hearing it or some that's you think where may that about. other close answered may healthcare may And that There to you So I that's I talked where market

for the buy stock. buy that care seen are as as acute as the still haven't stockpile for usage trying We that in in safety broad government to well well as or

Steven Valiquette

got it. Okay,

Ed Pesicka

helps. Hopefully I think. that

Steven Valiquette

other here, is month definitely. a Yeah, this question just appearance offerings first quick a since One announced your about the that public follow on ago. you up equity since deal

how if the us amount cetera. Just give balance can on size the that more of you debt little et curious just relative on maybe to you color of sheet, chose offering a the

to as deal you size thinking hear that, about about the you curious more of do. wanted to were Just Thanks.

Ed Pesicka

and to off address Andy let I'll Sure. it. start

Andy Long

address to happy Steve, Yeah. that.

so to the was with decision balance the the So you million, in multiple $XXX we and million seemed great was game a made that net times there equity timeframe, $XXX we preparation, to decision of time June knowing as we the the sheet and out shoe, up but out that our shelf, that And on made probably, million equity nice gross like XXX and upsize not million to raise went launched wanted and to trading a $XXX options the just to our was had a were in as of open. exercise transaction. strengthen oversubscribed. also when worked just and we to appropriate that about response. a And XXX, recall, only as that very in put volumes offering, plans go an equity forward result, we And sizing based green size. capitalization market offering, which the whatnot But initial keep

Steven Valiquette

it. Okay, got

you. Thank Okay.

Operator

you. Thank

comes of Sachs. question the next ahead. from from Please Jones Our go Robert line Goldman

Robert Jones

forward? just around And there's that pricing go as do can been think the you think as that pricing. normalize think portfolio think means there. some questions. quite imbalances Yeah. would might come relative of for have some you view levels. back you some these pricing OMI I'm pre-pandemic of down, you elevated in the just comment naturally pricing pricing to then cases a curious, PPE focus but to spot be what going still lot mentioned about for I headroom across Thanks a the I that Great. And to there's the like it the sounds dynamics actually Ed,

the how portfolio, you out quarter, next So thinking on but you PPE look as help just not level you're pricing can year. to about if us next maybe across just set curious

Ed Pesicka

weren't pricing going our to possibly of pricing provide going based think describe customer Yeah, relationship. way serving and to the probably we pricing as going our We long to customers pricing, our we make adjust our of the fairly. - to product we as going we because not importance could provide to approaches to really –we the treat continue adjust market pricing. to in on were historical wanted spot at that our to wanted I were sure We were

think, So makes that's different also. I us, what

masks machinery. our that you think in those thing is for made portion the material take masks, in that I is North fact that us the good makes different our of factories Lexington, a with other Carolina, the

control material level raw of the So have over some also also. we

fairly. going factors get look at disciplined And and so and to we've markets our can customers we in of XXXX, necessarily have spot all didn't into think much those how about you this versus pricing future of treating is together the continued why into even

Robert Jones

you'd for the digit I No, growth. that next not you're year, guidance know official share far a giving year, about cadence maybe thinking helpful. as willing we reasons, bit that's obvious it's just guess, out think other I than as be that Obviously, double been as EPS to to next just of looking growth the Anything uneven. this EPS year? 'XX about you're how

EAPS up across Just curious how quarters? you're as seeing far set as four the 'XX

Ed Pesicka

So just Andy comments. maybe a cover I'll let I'll little the bit then ask and upfront

Andy Long

as - been general think first is a the of there's all, first think quarter of seasonality this think that the I would you I softest. Yeah, XXXX. across has how factors couple about move of we the And business. Historically,

Just look to XXXX, back even our XXXX. in results

the end as that procedures. elective seasonal see as You fourth And seasonality historically, got of the softness. quarter then has flu as year been quarter you've strongest potential well of terms in

of capacity, stronger where quarter assuming of then at I the in shutdown say in think a And XXXX XXXX. constant we we not Of would were may PPE than other course, the QX. this consideration to XXXX stronger entering take the QX saw production And I XXXX in certainly. our us terms that of but year, into much is apply thing comparable the to that non-repeat

of year. those expect drivers earnings I the of of in terms can some So cadence are think main next what you

Ed Pesicka

you. great. Thank Appreciate that. Okay,

Operator

ahead. go show I our JP question from of comes Minchak Michael you. next Please Thank from the Morgan. line

Michael Minchak

couple and debt that congratulations down. Thanks Great. the previous to on the relates questions for a questions paid results. just on the taking of following Maybe up the

will using of what the the you've So be set beginning the versus leverage year. aside offering Movianto, from from proceeds done substantially the equity and

you of target in your there for leverage? do When to longer-term do if of maybe targets discuss terms wondering talk ratio? sort once that and Just get there then the allocation your get capital priorities you to you about expect leverage

Andy Long

happy so to is Mike absolutely, Yeah, Yeah. This take Andy. that.

additional at on were the the $X.X a million in first quarter, And the profit, post billion I in so again, the we've as had debt. may operating offering including the that that's QX mentioned, Movianto plus of really sale from operating But right. as net fourth proceeds that's So the of left generate week, from not or equity QX a over we equity any event. we end at event, QX, what not that's another XXX earnings about

So towards we've to well XXX got certainly reduction. excess debt apply of in million

your certainly target that I of for the that I I of what earnings range. times increased In paid term terms would given range? debt of the lower growth. to leverage a then is there's and the to ratio looking towards allocation. we'll I debt process prospects. leverage And or got robust look in - that four opportunities paid would guess at And think grow go last I capital that be profitable that to range end we've that question to the investments And down a the would achievable that's prefer in is think be capital allocation. opportunities three part business evaluate point. And whether for say at long-term down very longer additional And develop good to us. will

Ed Pesicka

Mike, the debt making thing for pay growth. long-term this are think about one is I'll we profitable is, investing one down, Ed. we additional thing, that sure and are we add as that

make our actually this We to to proper quarter, level I of in continue to ties we XXXX. our going you that, continue And was inventory sure investing also the to into year-end And fourth previous we know, customers. the a fact looking to question are asked little the and buys have the about are inventory. service do in to that

what the start that to products we serve necessary So way, our XXXX, in we out customers. when have

when So and and it to continue inventory are in comes of procedures of well make PPE service the of cash customer use to sure fast in gate them. out to in positioned of increase QX we're out to invest pre-invest if elective demands going outside come - we some the XXXX, to that as

Michael Minchak

areas Got products know PP&E? opportunity vaccine quick to do the really any incremental dissipates. or maybe see I'll up wrap chain it to vaccines potential COVID-XX But whether in coming I ancillary sales an really benefit of market. one just where distribution one cold that's everyone's area not more the with helpful. And with here you other mind is potential

Ed Pesicka

those to I for in other US, it's dual It'd XXX there's if I a be million to mask lot - of a going be vaccines. said, the lot a call of like be the for dose needed PPE a that's going and mean, Yeah, it treatment. gloves, of lot people

storage, cold being do above used don't there's a demand there tremendous we be I while So ancillary - are going to currently today. products think what's for

Michael Minchak

color. it, Got appreciate the

Operator

This this back turn the session to concludes Mr. you. today. our for At closing I'd remarks. call over Q&A Thank like Ed to and President time, for Pesicka, CEO

Ed Pesicka

can that of going next the they that we I think healthcare. you. continue Thank way to and to forward And I will momentum, the Thank everyone third strong you. customers, Well, I'm pleased quarter our on could you enable accomplished thank been And call. without None have focusing teammates joining mission of on to so our extremely everyone had. our advance the strong for act talking have clear to forward that expectations quarter. us it's the look end the we at of

Operator

concludes today's Thank you this call. Ladies for gentlemen, and conference participating.

now may You disconnect.