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OMI Owens & Minor

Participants
Chandrika Nigam Director, Investor Relations
Ed Pesicka President and CEO
Andy Long Executive Vice President and CFO
Michael Cherny Bank of America
Kevin Caliendo UBS
Jailendra Singh Credit Suisse
Jonathan Yong Barclays
Daniel Grosslight Citi
Michael Minchak JP Morgan
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Owens & Minor Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advise that today’s conference is being recorded. now Director, hand Investor would to conference I Nigam, Chandrika Relations. Instructions] like the to over [Operator Ms. Nigam, you may begin.

Chandrika Nigam

year Thank you, Minor’s earnings full & to welcome call. XXXX Operator. Hello, fourth everyone. quarter And Owens and

that today call operational our and the from fourth all liability certain Reform efforts for the full to the statements, risks statements on Litigation COVID-XX uncertainties. and than other comments forward-looking will focused and statements These of are results quarter our on XXXX, established Securities of XXXX, by pandemic be forward-looking Safe included note made supplemental year statements Harbor the Relations the of for like financial intended our ongoing on are which to statements outlook All for regarding call outlook this anticipated to and Our Private Act our slides statements on are in call to today, your attention this and qualify historical section. to which release. are performance. forward-looking our also of on include today’s I’d call facts, Investor statements related website subject XXXX. XXXX posted financial the are press made in to Please

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

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

by measures certain reference release information our today, and our Additionally, the these Financial President President we would measures to over Ed to I in non-GAAP Long, Executive now Chief included Today Vice Chief turn will will and reconciliations annual our Form about Ed? financial Andy Pesicka, and press to joined am Executive financial our Officer. XX-K. discussion are GAAP the in measures start I on like comparable and who Officer; report Ed, and things off. our call most and

Ed Pesicka

extremely of effort our on Minor position delivering focus reinforced their This clinicians in you the Thank the this thank like the proud for would to advance as our relentless to you, trusted today. by continue and & care has on teammates, I frontline for Owens customers. to I of those morning, during partner their the also on like mission that serving call Chandrika. Good everyone, industry start our to monumental focus pandemic. I’d customers healthcare. the thank face and us workers and in thanking empowering unrelenting of healthcare our all joining XXXX am a in by effort and need as

infrastructure of a which the included align was high successful calls, the output of major year. the with and year expanded and with and addition, as Starting well during commitments earnings a extremely quarter, of two and quarterly current the execution two, customer investments, on am the on remind improvements, strong operational let me I Global efficiencies. another report enhancing full our record operating the improvements a be At and focus result operational with implementation shared during and focus one, past the we to of to divine our The the initiatives customers. of you and we a as infrastructure previous performance quarter level, investments a previously our increasing close In growth; pleased in strong today experience Product key here discussed year. out profitable long-term with segment, manufacturing items;

improvements largest of range Americas. installation a our Here primarily fabric, we in with of subcategories, our isolation our related our are oversight. production year those full investments our facilities; our with operational of our we our NXX U.S.-based with and maximize just production and surgical new a optimize to technology, and And our factories, our let we regulatory healthcare manufactured then strengthen improvements. enabled and our facility; are are with the delivered PPE. investments in capacity; with technologies. the with in manufactured We three, quality manufacturing healthcare of of to without and added expand in manufacturing our One, continue in Along process PPE production the position lines, processes, North examples and and of lines patterns, categories network we few two, shared manufacture one four, the remind in operational products of output improvements These during the these These centers, previously us nonwoven gown operational fabric to improvements our they through teammates past to vertically-integrated you Carolina with data and the Global the unit investments distribution and world’s Two, manufacturer operational home planning Global infrastructure to business. the as lines. our continue hospital, me is offerings teammates, in enhanced needed our Lexington, home, distribution position in utilizing and these processes Solutions data our supporting One, full measure improve BXC while The the our We our investments controllable with QX we low warehouse to increase and the to the and our we overall our value what improved our process commitment chain, the operational and healthcare strengthen segment continue both across and well BXB optimize year of we service the And we and our to Products through investments our experience. of metrics. customers network as the lastly, results driven enhancing system. our to expanded dedication as Three, management of of service our and in customer to improved services launching our operational delivering entire products combination teammates along algorithms. in segment. our XXXX QSight management our operational efficiency. by myOM. the customer our these of improvements, were The compelling offering and Global inventory infrastructure Solution

approximately prior the net from than of increase XXX% to segment, Let now manufactured by the Two, items to share, nearly related by an a to levels. maintaining beginning Seven, XXXX. X% adjusted result launched me from margins operating QX, quarter. the year, per year. in of in few improvements. we Six compared debt technology. operating grew basis or and fourth revenue the versus XXX quarter manufactured Global we expanded million. and points record Product from sequentially we reduce QX follow-on we QX, to earnings income $XXX in million infrastructure, adjusted we lastly, owned sequentially operating an capital fourth share while in versus to with the achieved of cash make as QX X our industry of quarter a solid results. the grew to specifically executed Minor by with equity nearly year. we and QX billion our Global and by & of more $XX factories an prior service over Five, our segments, of $XXX we produced flow facilities. that working successfully One, Three, continue investments upside specifically QX adjusted increase of XXX% the XX% in revenue American offering realized we units since of the Solution we PPE related and levels fourth the validate income leading increased Four, materials generated in we And Owens service million Eight,

you our in performance remarkable quarter tell, fourth As the is entire track strong year. of It extension XXXX. was fact during to can record of an the close a

and basis XXX some of Two, than from gross to the million $X.XX recording it the past $XXX every over of we’ve paid be points. EPS down $XXX $X.XX. XXXX, cash making noted, cash the our the operating cash Three, seven highlights we gross earnings we are debt we positive should the with it more of million also flow. seven that quarter year, making and XXXX, Six, quarters expansion. of year-over-year we a capital consecutive every quarter year, margin have Four, positive adjusted the million trend quarters. expansion expanding as increased expansion of gross achieve more than increased of working in full during Five, doubled by One, year-over-year margin it consecutive generated margin $XXX to of result in by continue seven reduced flow operating debt gross by quarters flow operating Here margin year-over-year improvements. from we XXX% XXXX. for full year the of

of Next, five chain. I’m with puts for during performance EPS across in Americas billion delivered unique we quarter us nearly a a growth on profitable of with Board. of provides to Look, adjusted XXXX, our It COVID-XX fight, And us Owens network results every strong on delivered the value the milestone owned the incredible in the our year-over-year basis. is finally, position making EPS & which entire along the long-term ability constant in XX currency we growth support operated stellar distribution adjusted it with consecutive strong year-over-year a growth. reached currency Minor our extremely XXXX, signifies differentiates in constant and units PPE year. quarters with basis and operating that a facilities, the This pleased

year future financial will of operational focus shift improvements the Minor. now investments, XXXX on strength. of will that me and areas the to and Owens and be the Let shape & areas focus These

with me financial Let strength. begin

made implemented our significantly sustainable XXXX, improvements growth. During and balance for we deleveraged operational sheet, investments

XXXX expect sheet continued enabling profit of We balance and actions, be of extension deleveraging the these to improvement. an

the have achieved for a latitude now As business in make greater to result XXXX, future of growth. investments in we our deleveraging

investments. to on moving So

investments will organic and on We inorganic on both growth. focus

disciplined and Our investment continue to we will infrastructure, remain technology strategy on operational improvements. focus and will

one, two, prevention investments categories product the our services on and out improvement PPE categories four, data product PPE infection our and growth and and our of consist expansions. technology, verticals five, to complete surgical expansion and subcategories, prevention three, utilize portfolio the product build expansion team. expanded growth that investments, new portfolio further subcategories, portfolio, organic customer of of, infection we primarily into to continuous expansion portfolio our focus enhance offerings inorganic product experience, within will outside our Related portfolio six, our our market our provide and Our surgical will end enhanced enterprise-wide utilizing be customers, and to harnessing and

operational me Let improvements. now discuss

two execution of system utilized actions system improvement, alignment management continuous an formalization Owens performance. standard over to and continuous years the two, distribution One, utilized customer We our enterprise-wide implement levels, improvement of discipline technology which be to business strategic significantly of is on finally, & following. is output enhanced improve have achievements; will to will systems, in Owens key efficiency, our of on deliver past manufacturing new is increase that providing for an and business experience, program our be develop improved priorities and which implementation output business and step levels, that delivering the the evaluated; strong measured the and record to begun the next metrics Minor medical the is focused while to and service which Minor initiatives. & based the financial our definable management, and consisting The

now outlook. Let our with XXXX close me

for XXXX into demand First, from carry expect to strong we related to manufactured the the momentum our QX PPE.

continue expect positioned in growing of home the demand throughout the expect we fastest finally, healthcare for to business, increase improve in healthcare we continued procedures our is And well year. segments. one which Secondly, market elective to

the the robust It with had our of discussion XXXX. execution Andy serve over come, have we we operational our XXXX we strong and combined proud XXXX, range that we entire successful our strategy, in are is to continue momentum pleased our us expect enabling business, based earnings thus investments and to output strategic quarter approach the the a into fueled for years this to customers. earlier, Andy? needs now to across the Continuing clear our discussed increased Owens to turn the to improved efficiency Minor have foundation of I expect better that state Accordingly, And teammates to immensely I of dedication and & $X.XX. Thank for am fourth and I’m on As accomplishments call address adjusted you. per value as with well-positioned proposition. $X a financial our of of to be results. I’ll share this strong healthcare of and

Andy Long

I’ll revenue our discuss everyone. full I growth the year review I quarter Minor. this Later and and as our we than as Today I’m XXXX. morning financial be morning, quarterly results, will quarter performance. been Ed, and of earnings highlights regarding good drivers next. year income to Owens finish extraordinary annual has in financial better will key pleased very an well strong expected and here Clearly, for Thank for you, fourth to a for in with good a elaborate in the & expectations of XXXX share my these share. in increases remarks, exceptional each the per fourth operating on fashion, details and what

overall in year an margin distribution business well improvement basis line compared points Product efficiency. was but For the trail our Elective of sales XXX was as to of demand, the than in as prior margin by continuing greater represents growth from $X.X business. quarter, our Gross segments, higher fourth driven a stabilization across result driven well for pre-pandemic to medical $X.X X% XX.X%, an over sales as prior year. billion, by growth better were operating PPE expected improved and levels. the billion revenue and Global was quarter sales both healthcare of PPE as procedures continue This home and of the as segment

fourth in in year, full $XX the was $XX productivity down points topline of growth in lines the as the the and $XXX selling administrative or ongoing XXX of million of was of to For fourth the Distribution, of expense year. million gross investments the business million XXXX up margin than expenses Interest higher was a quarter current in basis result quarter quarter prior $X period million across XX% versus and all net same gains. XX.X%.

was expense improvements receivable utilization by $XX interest accounts year, reduction and along rates lower the with debt, result of million. lower These or our full securitization the in XX% of For program. base continued are

EPS in for company the and productivity from five-fold gains was customers, $XX million fourth and income along very execution serving demand the share income or the basis, Adjusted growth full PPE, or with a was high compared our Our On strong across operations for year. million net million very GAAP to year. strong to $X.XX adjusted a was $XX quarter $XX results. per bottomline prior the share home healthcare in $X.XX, continuing in quarter a $X.XX led increase and the for about

increase to $XXX income an was full the $X.XX, of For in the $X.XX adjusted operations year, from from continuing adjusted EPS million, which XXXX. significant a equates

the full currency impact Foreign was on quarter it EPS for XXXX, $X.XX year fourth $X.XX for favorable. favorable was and

through impact an was for quarter year. the volume $XXX in the sales, electric quarter was fourth the of healthcare home Higher initiatives, slight increase our year. operating in by year. and was of to productivity contributed than prior driven year’s segment. the impact prior in slightly PPE medical Products Products up procedures negative income million increase last COVID-XX, last ramped of growth due discuss revenue $XX the $XXX was versus in negative a quarter in billion growth business, performance. was the net procedures. Solutions the sold PPE increase by lower Global for back distribution, throughout improve compared improvement segment, compared of million revenue product which in and I’ll growth of $XXX particularly Global partially fourth million our in results, in the through COVID-XX the and higher of fourth of the was quarter home last Next, the by to income levels compared the billion, highlights by In segment revenue $X.XX by strong The for coupled revenue growth our expansions muted gains more $X.XX the offset the as products, all Operating half The our typical in very Global XX%, of with $XX million, in production impact quarter. was offset mix pandemic. versus million, costs segment PPE year, four-fold drive operating Despite capacity bottomline fixed the growth to to fourth healthcare, year. nice favorable efficiency in productivity million, this helps on leverage elective seasonal $XX year to we

Foreign year-over-year on million. by was currency impact favorable a $X.X basis

the times to the of and to the the investment built $XX customers. our flow seasonal primary cash of working of prior capital sheet was million continuity $XXX million the operating for flow, Moving cash disciplined than ensure generated structure. this despite a quarter, The now achieved which our full cash the In generated cash X in were year. supply more inventory balance management Increased capital operating of in area. and we and strong drivers flow year progress was flow, for we profitability

We flow expect in cash continue strong be to XXXX. to

financing accomplished During we focused several XXXX, from enhances issue assets upsized securitization we program lower an finally, our on fully strategy. We down XXXX sheet. an $XXX milestones sale million And divested use debt. financial new accounts to $XXX debt. cash, the provide strategically of that million netting to proceeds We financial into receivable in flexibility. in course with our and to remain for pay Movianto further strengthen additional the the retired reducing entered cost our our notes core to We equity offering our our balance

was the debt or XX% As billion reflecting $XXX a at result, $X.XX a XXst, during million significant total year. December of reduction

our and our X exit is is As in EBITDA. we shape around times balance to good sheet leverage XXXX, down very

continue while for reinvest to in businesses Going further leverage forward, intend our we growth. sheet, balance future to the we

deploying during did down the debt business ample In to loans. January, to generated a remainder course work our foundation strong maintaining the of of execute paid helped has strategy. we while in our off create the pay growth early by liquidity XXXX, by we The cash fact, to A Term

Our credit that rewarded was further with to We success upgrade recently foundation by in Moody’s. another strengthen XXXX. plan

we the guidance year, XXXX our per Turning to per morning, share. of adjusted this $X EPS for range guidance the for share to announced earlier in $X.XX

capacity by we the assumptions as in we guidance much revenue color the I’d range $X.X expansions provide To-date, factors. and possible PPE-related like great changes benefit through and focused expected our increasing practices believe of very to to The incremental as Also, from to topline, the continue remains driven Given on the several uncertainty productivity you post-COVID and existing is went complexity remains driving Starting billion in we a the with high deal range. and for developing to healthcare I throughput to PPE throughout serve, will the demand you that XXXX. in to and efficiency runway into with will be $X.X which markets industry. XXXX, be expect operating remain walk we protocols of as billion, capacity. due through

healthcare home year. and existing procedures of capture patient elective the number from investments repeat the projection. second component drive as growth BXB returning to our we shutdowns be revenue customers revenue New It’s to understand XXXX. critically there offerings payoff. BXC final procedures levels and our in growth pre-pandemic will the QX not assume in a as business important half of of elective We will the from growth Also, towards saw inspiring benefit of in improving of will

produce market. increases own on facilities. During is user in through for be and are our prices the XXXX we reflected particularly translating we glove noted cost revenue impact. portion end should the their into higher are for XXXX, and extraordinary true This have cost To-date, of don’t the increases continuing passed gloves line successfully which producers these in to significant from

includes million. forecast the revenue million $XXX XXXX Our $XXX pass-through in range of for glove cost a to

administrative The resulting there to is as to of selling just Gross in is gross the higher margin as be revenue trend continue expense minimal expected be scale. the XX.X% rate we Distribution, this than breadth to I pass-through will of increases, our expected impacted and margin range lift. from described. XXXX, XX.X% in expand However, bottomline cost be last impact will rate year. and negatively by to glove

fueling services partially with efforts. debt, and along follow enhance self-funded Our customer in infrastructure, technology With ongoing interest experience, a this be increase volume the will should is suit. to and lower expense productivity ongoing substantially investments with our

reduce in plan of to drive and the times. our times continue be leverage X X to will to We range

is to expense for As between a result, year. $XX and interest be $XX million expected the million

on incremental full a average Our of year which based X.X an XX.X October. our includes million, impact the of guidance share is diluted offering equity count based on million issuing shares from

market the market continue sight, about on in demand PPE in of are projection our current dynamics trend to talk XXXX. me supply frame our the to expected imbalances the of line XXXX. Based XXXX Let for

Looking PPE from ahead, we multiyear expect are that to duration. in contracts benefit supply

important in understand heading historic the fourth that post-pandemic will levels. dynamics confident usage, to that below above in XXXX. quarter expected calendarization increasingly demand PPE also The land place our drive peak clearly results for earnings We’re into helped the pandemic but strong remain It’s very XXXX.

Given typical this momentum, pattern QX, see not we throughout carrying earnings of expect do to the the into year.

the needs deliver customer I’d a to thanking for of changing performance Thank to have improving strong dedication year teammates showcase of section over performance their XXXX. one turn our back begin the SEC call for Specifically, challenges. operator positioned session. we have the expect to back with for to that, the year consistently supplemental the assumptions Form as filed by with like half track you. global at I’ll summarized posted our that ability and we today I XXXX where and to Q&A record X-K the Relations Operator? in be Investor in with these key that future. And unprecedented the really I modeling adapt look resilience, to during back on as the of more see note well earlier XXXX, also Well, of our close website. earnings full results, results Please slides on and to line our been QX financial

Operator

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

Michael Cherny

congratulations I on views a the tremendous that. about and these dive to a little some the across and of color to PPE year think in in morning. want on for how Board. bit and particular Good Thanks you all quarter

through parse start I level of there portfolio think that how factor new I could traditional? new through on Is both not both for of product dynamic through how what sense or to to can that you verticals. you us particular side some think on But and you call. those And have and and terms when well of few any that non-PPE made of to magnitude of the can PPE XXXX should a comments of how that mentioned the expanding want on see across your we expansions be new demand think that the give to if maybe the as visibility products, some guidance? on levels your in market in as above mentioned you to

Ed Pesicka

the This Thanks Yeah. Ed, is for Sure. the comment. Thanks for Mike. question. Thanks.

start me frame out and thinking really Let how about we’re it.

good right First to now related some fluid. the PPE, sight be momentum of And levels that. why going of we and related back to and into of we don’t the demand to pre-pandemic time. reasons that think strong the also. for as QX, to see a some with that the roll the momentum Then half it’s really QX somewhat continuing about you here’s back year we expect But into on foremost, the PPE in saw line have we QX quite

And way a prevention. just done about think it’s being the infection on now they’ve adopted First a if that, healthcare focus foremost, tremendous business is year. nearly in the and for have in and been been hospitals. the it’s that It’s you protocols adopted

continue the So of utilization that. how PPE going is pandemic the we beyond to that feel is about

a we really what the half the see in believe time. back that to of or stockpiling. even an criteria even is government whether it’s stockpiling states, hospitals extended or on around stock. want setting There federal going states, for a from are that’s beyond the period continue they We safety continuing of locals Next, and opportunity lot themselves of

brands I that were about in was authorization. were talking As for during were traditionally already pandemic, products think -- stockpiling, that we Halyard to there and medical to of the in that products. to or may Mike, were there, American I been it. stockpiling, start our Longer about convert use expiration the brands think, an to -- have of approved that of those There’s there medical stockpile brand There what’s there’s that replace grade and made over stockpile of as put height term opportunity that stuff I’m great not like customers, into purchased. as those emergency also they the products products a about our

opportunity So on standpoint. it’s an that

other it, worked resiliency chain with for too, supply we our about become with have customers, we partners The continuity customers. suppliers way think our is, critical and our and

footprint. have portfolio, focused at that, think, the to me. verticals, added we today. about unique our the new Owens & think we’ve them. for product is longer have we we for Mike, with of Minor, really, we’ve way term that new on It’s making today because other So all worked of there’s to production sure contracts, Right them That’s the thing probably PPE -- we’ve look to the dedicated as to And lines, then manufacturing I that continues runway. extend now on the U.S. you

markets growing for and it provide that can we international of there’s outside to There’s us So existing the taking to portfolio use opportunities industrial for. the expand, PPE markets U.S. continue that that

fabric our out to about then healthcare get use we’re very So to similar ‘XX make opportunity that’s you take modeling, the we ‘XX, starting products. is that verticals. fabric the And in about those into and that mass, thinking many additional really other thing, used really the late as thinking

expansions. into part So of that ‘XX ‘XX thinking of vertical and integration continue about on those -- types the that can expand. continue late really again, And to into

they year, think an different single And one, So factors. stop That that’s were And prices. when sense the that start I’ll disposable of a there how when reusing Mike, it versus we’re it you But reuse were masks increasing a new they amount NXX. selling have well when made of take use. reusing then them, demand. to is, as may the made of you there great reuse thinking opportunity think about for about significantly NXX, look that about the to those prohibitive because PPE one when process and because at the on NXX, stopped historical really an the focus as as all add hospitals, cost NXX re-sanitizing through I’ll last authorization one. prices may to was above thing at usage becomes buying be last

other that not in. the Here’s really thing we

sell down. see going So we into post-pandemic, I of can That’s not what consumer PPE use today.

again, obviously, the healthcare, selling expanded We’re industrial primarily markets. or beyond into we and business-to-business healthcare potentially into as then,

that helps about out frame hopefully we’re thinking So how this.

Michael Cherny

question. No. great That on my try a one. overly my lot rambling to concise second with was be more I’ll of details Yeah.

You give the kickoff from them of just what a improvements customers type maximize some get as to and of your cost are process feel you also and of improvements, sense opportunity? you -- already service how that you on business starting pursue us how mentioned of some these that the feedback can customer the the that

Ed Pesicka

Yeah.

way in XXXX believe process. years are will So the last add and of we’ve the we the operational making ‘XX the and two doing sustainable and all of improvements this made, it more of we QX really but of been XXXX, Because and continuing repeatable Mike, not believe just beyond. formalization, fourth is quarter what value a we through

and may examples right the had making the but sounds improvement. of great right at at on now to the so shipping -- our two continuous XX.X%, the of areas, above right that’s we look accuracy, simple, some products the customer, we’ve box this and because this So sound going sure focus that around

our delivery, time. example routes, as making great is optimizing sure the of Another time that on as well we’re picking

delivery. we’re XX% time plus at on now So

and working output. teammates that example facilities How drive you, do organization, our the can who lines. the driving best, effort on the operating equipment and our operating who floor, efficiency through entire across look more understand seen an we share production And I’ll with it’s within theoretical another the the on on pandemic. efficiencies during has based ability numbers we been the drive It’s focused You with help to that own manufacturer of don’t double shop the operational our manufacturing. tremendous share we’ve get specifically, output and output efficiency at while

had profit that improve and of give the more our helped time efficiencies and we on delivery, to is within the experience own business. operating during drive improvement the continuing those to things of produce or -- improve our customer all improve pandemic customers, ability products also to because experience accuracy the All

are a continue going So will we’ve those done it of couple what forward. types and three events examples those of with

Michael Cherny

Thanks Great. so much.

Operator

show you. comes Please Kevin ahead. Thank next UBS. go of I line Caliendo from our from the question

Kevin Caliendo

thanks and my taking Thanks for question.

know a half and think and think I trying point? into lot earnings little growth a there’s much it operating of in earnings, growth first is mean, base? to sort sort investors this the at target year? second was is, has of a at have goal lot Minor, I -- run prospects? long-term we about bolus of talks in release that is us the the of drivers of this of the ‘XX we’re As that bit Owens ‘XX, mean, grow can ‘XX, we & Is for I this just these the of press company and that sort question sort ‘XX, a of ‘XX of of could the XXXX your half about one understand rate the what peak how be you exiting a sort here, off this or possible

Ed Pesicka

Yeah.

time absolutely to period for year-over-year the going is with next, why and intention important continue absolutely, PPE you that’s really have. first really growth of is the I it share of thought protocols that’s through around and we we Kevin, that’s the in and all, opportunities Why extended year the and expectation. think was this beyond And to profitable the think, I PPE.

also with ability in to them. one of manufacturing of is you, that we have strengths them what think a explained label on just our us different our actually the and on portion our manufacture don’t focused to We of good addition products. I makes is, source

healthcare today. other other process the that on on then products So historically been does PPE it’s but needs talked probably that Minor frankly, late XXXX healthcare process and myopic is expanding primarily somewhat, And would has categories in have that a his good verticals, a that into clearly that that is and our about Owens manufactured that it we products. word portion take footprint into is of facility time, that. ‘XX and and again & with manufacturing defined which focus be I why And our into -- in

focus going markets, that whether industrial growing markets, lose having frankly, and retail, But that commitment. serve to brands, that’s to our like too. whether and lose in that’s to other internationally, not Halyard going not for We’re we’re great brands there’s opportunities other that

expectation plan. that’s to ‘XX, with that long-term of basis we’re Day focus and share demand the about into of and products how sustainable we the how that’s ‘XX see with our growth lot start when the around continuing. more strategic in thinking that I’ll So drive long-term investments and the various you’ll us. a and talk Investor and ‘XX our some really can and in That’s packaging, XX, And innovation is May, to markets you, about

Kevin Caliendo

results, great. the were was to to anything this going or Solutions what if of don’t obviously margin? above the lost Solution want that, and the wondering XQ rate us but much that’s helping terms customer fantastic meaningfully in is run was expertise there sort street That’s margins I on get leverage and the either sell-through specific of on How I’m in for side wins PP&E if new your forward. in Solutions

Ed Pesicka

Yeah.

So, would And the pleased our here’s business. excited Global really what’s and in teammates that. Solutions I driving I’m what say, did extremely

factors. different couple a there’s So

implemented continued We the PPE had about sequentially it, -- continued through drove things you to we’ve it’s in improve. a of new And think XXXX. standpoint, long how wins to new wins amount since new our several know if growth there are to we Obviously, say elective a I been First, net growth. positive own wins. The from procedure that improve. able been was throughput channel that. had don’t we and net

that we’re and drove talk & business improvements, and take XXXX. through improvements XXXX using that you the system in talked were about our and Owens that’s formalizing. That operational operational You now Minor we I --

sustainable. those improvements be operational to We expect

leverage In we get addition on to products volume we’re that, more the we business able is operational able trucks. that relatively to can simple. our It’s the addition in a We fixed put -- cost leverage put to cost more fixed improvements. distribution through, the can business. The

a drove why and that that to of that the are continue. factors those lot we expect So, that

Byram home that’s healthcare in that and thing growing that, to addition business years. well that. direct is of extremely different business. that segments one and a In a same it’s with has healthcare -- in industry And executing segment the segment, home the patient for has segments, also our fastest the last It’s several

operational that improvements business. We’re very driving effective, in

growth from has segments does our ability the business. also. the market impact one nice in XX% collect to also well in driving -- collect. that of that its thing Again, We’re fastest collect Americans and the business growing them of insured and is that ability to It

the operating revenue to our income are saw Solutions increase we in in those We QX. a sequentially we our and -- from Global So doubled X% margin income in our growth quarter. operating reasons -- fourth doubled why year-over-year in really QX the margin XX% operating sequentially

that get it’s ability leverage, driven well costs as and continuing we the to fixed with into ability our the topline improvements operational growth that as combined So to drive future. -- see

Kevin Caliendo

so Thanks Great, much. Ed.

Operator

Singh Thank question Suisse. go from Jailendra Credit ahead next our comes you. of Please I line from show the

Jailendra Singh

taking for Thanks you. Thank up. questions Yeah.

in from ramps guidance potential PPE already vaccination opportunity you as it about in in campaign captured Should supplies or outlook? participating Just up? does as benefit XXXX any the your a think your for or ‘XX or your the results this we wondering XQ vaccination ancillary include is guys or rollout of

Ed Pesicka

-- vials in Yeah. the as coming products vaccines it’s and the -- vaccinated. PPE But there being so bulk that’s vaccine of the rollout, most There’s lot traditional of a syringes with the in the are themselves. for kits traditional people the not used are

not but for in, material year. have or significant some we -- not there’s amount full So a the of that it’s baked

Jailendra Singh

then, guidance about high of kind there think And range, talk end assumptions your at more the your are EPS looking maybe in about there low of end when bit a what prices? curious little we and ranges we underlying Okay. end, should the underlying about Is it assumptions your end? driven some end aware be around of, here? the the and variations by just the two Are variations on commodity other high low

Ed Pesicka

EPS the not revenue me important. the So because address first let let me answer but think and range, I start range, that’s

gloves. increases cost on significant imbalance in have on demand We There’s we a and seen increases gloves. have cost seen supply gloves

with have customers. worked We our

we much factories we in we costs, on completely have have costs manufacturer some portion on because them own are have ability pass We those lower made our been only our transparent going that the for. and a and to to of are pass good of in gloves

on price earnings make just as virtually our can our -- trying through. So no there profit off that will has this of the an around impact could goes impact respect there of and cost and best is we’re them it’s to give everything possible passing per purely really on there that we with up, customers increase. because not glove price prices an go a It’s and impact up. be increases this And share,

We’re through. those pass going to

going So the we’re assumptions kind impact and thinking to and about the that’s impact and let Andy an low in about percentage high talk margin overall, on necessarily of that on and major the have buckets EPS. margin have or not end, can I’ll rates EPS? how on revenue a major

Andy Long

Jailendra. Hi,

share that PPE us and per of up the shape So going terms would guidance that bring ability the capacity quickly, efficiencies outputs, other to expect see to kind range factors of forward. earnings generate we our our on that in ramp PPE be to helping ability of

it’s throughout those as seen of we’ve the that output as Just XXXX rate the production rate well. continuation and efficiencies is of of of and it’s

think shaped guidance. on and procedures probably it’s guidance that smaller So a our To elective some extent, the like big that’s driver. we’ve on given thoughts I the other how

not pent-up the also the and procedures if gone the to year, up our the those back could in year XXXX us that second in potentially make higher procedures for were to occur. that the range, of were the pre-pandemic levels in half into to we certainly an in guidance, end in As first element of push but included and There’s those demand potential that that’s of the to from expect trail as move year, to the half second elective about procedures levels. still coming elective we talked the we historic of of half

Jailendra Singh

Okay. Thanks lot. a

Operator

Please I ahead. you. line go our of show Thank from comes from Valiquette question Steve Barclays. next the

Jonathan Yong

It’s for the on on Congrats results and the quarter. Steve. year Hi. Jonathan for Yong the

the Just on comment…

Ed Pesicka

Thanks, Jonathan.

Jonathan Yong

product is the your to. in Just what kind are from your of relation manufacturer, where looking products I to you it but customers products expansion looking expansion, et the to customer where vertical on you the commentary side, and new cetera? is understand needing to more

Ed Pesicka

categories various continue said, that a subcategories, that. really it’s the are manufacturing sure to X, can those. Without add that at us, our value that a and of Y come We’ll be But ways. and the core us capabilities and company as into to it’s Yeah. and specifics really company continue look We’ll are. do be about going haven’t strengths where -- or core and we are to going is it to categories our within to on make products going capabilities product to to out we way in it’s as Z, think that

Jonathan Yong

understand healthcare push given just further verticals. wondering facilities? PPE to expansion or the do it other on kind really that and those on for is But assume on Thanks. your even just then of within Okay. side, we’re the about production that? capacity side the Fair two shifting but kind PPE next enough. And be within bigger healthcare. increased produce is capacity, PPE in PPE to it you like peak quarters will Because other call product more the that lines the the significantly need those I of over I

Ed Pesicka

Yeah.

related facilities have gloves So, and people way fabric only capacity And of really own with are have our our to we’ve those of to technology it. gloves adding or over in I one portion shortfall we used own and to year generally the And a patterns, in manufacturers the think in the you -- think the we that we is, various has way in think, been we factories I statement capacity guess, most PPE the it, own I we contract and portion and last PPE, and this ourselves like have our about we earlier, The is -- gloves about have it. think about categories. of the categories, stated about outsourced as make gloves. added of Jonathan easiest we broad the think for

be demand determined So long issue. gloves to going long-term a going what is, it’s to -- is we’ve a for the be

always that, opportunity to addition there’s bring In in more the to source.

make because So that’s companies of are aggressively are them do that category gloves it industry. the few that and we quickly, on companies have one expanding, are -- we for owned where magnitude expanding can we’re it’s that we one that American we believe and the scale specifically and

demand that what we to So an based see where on working continuing see we into area with customers aggressively continuing, and expand their the that that’s future we’re going on commitments. and

having to contract some are products which that, ability factories more manufactured in In if more addition the control being versus our those necessary, to the manufacturing. currently of of with manufacturing process,

categories. how by we It’s varying about that’s it. think So,

to the too broad only & that about the based manufacturer, broad make thing the few really of the we’re other categories. is, all one The or the think Owens Minor,

NXX, make some make masks, raw gowns. We make make some We rest. We gloves. make of companies material. Some We make the all make the those.

back pricing. imbalance demand current So, we’re selling by supply not spot we’re as comes well down, positioned anywhere because very even near

impacted business. other most about are is, We’re to will likely the we this continuing that the that be equilibrium, that with as first. below pricing at to then thing standpoint, spot pricing, to think you prices extremely pre-pandemic And balance sell our were got substantially those buyer those spot demand supply gets effective market at from close ones buy high get

added we’ve going even that, means which efficiencies on can improvements be and we operational forward. competitive operational more Now,

So get the in us PPE, need crucial. comes made we’re U.S. lot them either Ocean. continuity produce in on we or that’s difference to to come to They gloves, a on and the truck high can across the capacity U.S. the have in and is resiliency is put Americas made chain going it -- the to between and respirators. a with and think that be anywhere made American masks, continue demand going still going and to gowns, because why with We U.S. the of to don’t for to a fabric supply fabric Pacific there product boat across drapes, supply is the them with And a get finished

So so and is tightening can again they supply of empower we serving continued there’s for be mission advance to back customers help can provide resiliency the why healthcare. we to of can we to chain believe supply our going that’s because the which that, demand really provide, them our

Jonathan Yong

so Great. much. Thanks

Operator

of comes Sachs. go from Thank you. the from show Goldman question Please I our Jones ahead. line next Robert

Unidentified Analyst

Rob Hey. for question. taking This this Kevin Thanks is for on the [ph] morning.

contract that federal increase know have in talked XQ. government you up with believe guys stockpile. to I So the your the previously wraps about national I

And guys about in Just potential of us any contracts? be expecting on to the government thinking should work then types how contribution us you XX? give the you’re opportunity in could sense we more future on the with from the these

Ed Pesicka

Yeah.

insight in I makes So what help subcategories PPE manufacturer contact -- and large scale, we’re think, what we’re we’re categories of again, obviously, constant different with administration. seeing. broad of us Really the to PPE. the entire in And trying the provide is

category and constantly So is with we each is each them. And different. unique category are working

we to times to of those PPE actually the continue and happen asked, there them the been sure fill with where is fill been QX. getting think use them users can make continue stockpile end we’ve we that to NXX -- through them some there’s are the have -- are to We that that continue we of end work working out that will -- will to with to going and and they

to on there that our down, slows our that. other I think, expectation NXX Again, is, of our outside demand when for So, realize products. that’s have and is you still

to with going work U.S. to Government continue on we’re So, the this.

to really administration country. our with independence them we’re help doing. work to going PPE is the We’re other and/or And to to with partner for with for stockpiling pleased what continue solutions

Unidentified Analyst

comments And up Got follow to earlier. it. some then, yeah, just one That’s helpful. of the

a weighted guidance little bit this know So year. more I is first half

net some talking levels be you’re Kevin And ‘XX. sequential of income growing I know slowdown could towards So ‘XX to the and about still earlier, potential half. then in question like off response back

back just in I’m obviously, expecting two, some the if growth for next but half, those year. curious square sequential could so, slowdown still And you

Just any give detail helpful? you moving can be would on there Thanks. pieces the

Ed Pesicka

opportunities carrying we had back we said, elective of year. levels sight QX. and as the those procedures. We we’re the procedures. year, quarter. plan planning now, We I into half line earlier, then the for a on sight, And QX elective like really momentum there’s the on below Again, is you first see in clearly be second the that continuing take see Right of Yeah. good half we of really from to the line this pandemic stated of into

seeing that. We’re

certain was even seeing procedures there areas where hot where spots more. We’re slowdown elective

It’s lot we heck why reminder, PPE just elective that QX also. your procedures. use procedures classic lot don’t PPE that’s Those a a elective procedures also. use And of of So on heck think of a again, COVID. of as not of a because

in the have expectation Those a hit And some I net comparables better expansions also positive continues above new across to and on of year time So new we half then first talked comment the net also the I’ve year. that’s the come that are XXXX year why opportunities then we net impact think in ‘XX. also that growth the about. first we next And we opportunity -- continue the made Last to this new positive see, provides going wins had were And to wins. through has the wins. was year. is

think we I strong beyond that right our there it’s is a expense while touched expectation We continue things we that help -- ability remarks be sure grow. drive there’s the in that see to both we of we reinvest down not strong. us on business balance the going sheet. opportunities our So It’s see before. where continue about sheet, to year, improvement. about interest created -- lot our prepared because our that, I and is make created we out be ‘XX And to was other help to missed year thing the to had deleveraging opportunities now this And EPS it’s and to of drive of to can want deleveraging don’t expect -- our a strong Andy haven’t for it the balance in

a future joined. opportunity we the year the as Owens have current to factors out we other with we ago are overall some created that services, and fill think strategy a tremendous two of & has or those products. see So years drastically and were That ago Minor about us where I when long-term changed deleveraging for from opportunities demand for

Unidentified Analyst

helpful. guys. Thanks, it. Got Super

Operator

Daniel Grosslight you. Please from show of next from our Thank question Citi. go ahead. I comes the line

Daniel Grosslight

congrats on quarter and the guys. Thanks

Ed Pesicka

Hi.

Daniel Grosslight

to that U.S. that a access manufacturing bunch PPE states. instituting as changing at one a PPE Have want focus seen own their on competitive -- had bit It there’s they’re I the big expand supply the bringing states. system hospital build announced out there legislation of side more And the you back a within to to dynamic and supply the capabilities? JV companies throwing the to little now on of imbalance. demand money PPE the chain PPE at -- supply supply out

Ed Pesicka

Yeah.

Government. think we’ve hospitals, simple we is in constantly, whether categories it’s broad I case. again, obviously, PPE. it’s manufacture we the of approach contact the taken mean, -- with GPOs, for I that And U.S. the we’re

up We’re lines, to semi-dedicated to customers production or working lines coming off specific them our whether customers. provide it’s lock dedicated production our to of with product ability

long-term about ventures, think make out create commitments mask, surgical gowns. years, think category you And to we of and again, isolation product and it NXX, having can a portfolios of the joint do that product. broad have think to is, sure doing been go about about instead of beauty have supply So it the for we we’ve or you they

through that Fabric most go product. You of too. manufacturing we’re

final have manufacturing. to we consistency from a broader material raw to or ability risk the So mitigate

we’re how customers. how about with that’s we’re it thinking and that’s So working our

other we is investments, that, cautious they’re do make thing very sure making The on as sustainable. been we’ve

we we decisions what way to demand is, those the look look try the pre-pandemic of have going and/or about demand and think capacity, levels And to long-term for sure But have we years add is the -- we pricing current future that make long-term long-term it make protocols. production. We to make demand what’s for and/or and think We don’t ability pricing. on to sure to is come, all don’t teammates want we because again, at be at. we as The below supply. -- add fall to we going employment we

it’s the So whether takes it’s we’ve and sense. manufacture, Because, with it’s and we U.S. ways again, GPOs, in look government whether we hospitals, at different what have makes creative. it to we conversations make these understand been the We whether products what here

Daniel Grosslight

that health it. those the you That’s about and encouraging. Can on Any net net talk traditionally Yeah. very new announced. like you And Got wins then That’s differences wins systems versus… just the you helpful. -- acute those very sell side? into new are

Ed Pesicka

No.

Daniel Grosslight

previous customers? …

Ed Pesicka

No. It’s primarily…

Daniel Grosslight

And then…

Ed Pesicka

I’m sorry. I will answer…

Daniel Grosslight

Go Yeah. ahead.

Ed Pesicka

customer traditional type? It’s what primarily are. That’s customer those primarily -- our

Daniel Grosslight

Got you.

play more Okay. going do that see sales out that into XXXX things in things And or as you any does up And year open dynamics? the more to changes how this cycle bid? and RFPs

Ed Pesicka

delayed see last year some more of out, the RFPs were pandemic. going On we and that did more because

out cycle. that going some the be and are you’ll will know are we have So of think normal out those to then or I

You to going cycle. they’re a is contract to or have about that five-year three-year give terms, normal think take,

So I think few you’ll a see more.

see a that You’ll in little of more XXXX.

of think that’s demand doing people really pent-up off of I So held when because on some the it.

there and opportunity also to were an RFPs now of I more impacted we opportunity customers during differently rightfully, think pandemic. the may for because have how customers so because that want the think be

in is, some and we in RFPs answer really people them because XXXX short would XXXX, the be more delaying that’s because question there XXXX and sorry, to they So in of XXXX. I’m for yes, expect pandemic and be impacted unique to. may were the the think our change solutions make pandemic, also looking to want a didn’t or they during because by customers new of I of

Daniel Grosslight

Yeah. All Got guys. it. right. Thanks,

Operator

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

Michael Minchak

the Thanks question congratulations for on and results. the taking strong

of increase the the just ranges. XX% increase It’s pass-through, would take below XX.X% range delivered midpoint year longer cost that you over the should that’s -- some So of trend about the over the quarter. margins, you gross out the glove margin just if fourth of I guess, it guidance first am how of be an at we fiscal margin you we be projection expected the the the gross course if the XXXX, talk drive looks can what upper driving term? are like but expansion in I and over on dynamics the wondering in about sort forecast to that and that thinking how ability to the

Andy Long

take question. Mike, Sure, Happy to is this Andy. that

I that that I our margins, So, three as important next an gross rate And think picked we there’s see look really up at year. drivers really are you’ve gross on key impacting point. margin

on thing. right? did the up one, right first picked exact So You’ve you the

the pricing. for price glove pricing taken impact glove glove normalized to You’ve -- out

kind the Global growth we’re of So that is, in consider that, the continue has gross the then with PPE, That our drive good third as to would other dampening will And leverage manufacturing continue margins. factor segment I fixed other Solution that margins continue the and is expect the we ramp to to on factors we costs in up expecting margins. efficiencies pressure lower segment. upward and

dampen historical sales line will that still of improvement rate in while So performance. with it it’s accretive,

those mid- three our continuous the it’s I long-term, key drivers. you to as improvement look, are think, So And efforts.

as factor we that also will think I well. into

Michael Minchak

a housekeeping question. Got it. helpful. quick And just then That’s

the an for I wondering into quarter, think XXXX? just $X.XX in what’s favorable from FX fourth the guidance you talked about built impact

Andy Long

Sure.

in XXXX For weakening EPS an the estimate is would of headwind, we’ve on seen quarter the U.S. so of in the dollar. what XXXX by fourth approximate rates in And I the that currency December terms -- with impact, our forecast that $X.XX were at FX driven based activity place basically as XX, that being time. XXXX,

Michael Minchak

taking you Appreciate questions. it. the Got

Operator

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

Ed Pesicka

So, you, Operator. thank

joining this start the me on Let call for by thanking morning. everyone

we’ve and March joined and with the is As our to all across extremely everything have sure to doing made back, extremely customers them. I be to the years so the on making two really support Minor and we’re delighted Xth, to worked our since important it’ll goes can advance teammates Owens support our reflect that mission being relentlessly that and pleased & that will to we they progress here I and I’m share That world healthcare mission empower me. we’re that can I

recognize quarters. But provide to that over I made tremendous was to we do a continue lights XXXX, of continue to to us previous and not as the record XXXX year yet I’m proud value. we’ve our is, all XXXX that we’re in the about as amount still mission think eight So in think a live there’s I if and done accomplishments for and well

I’m for who’s contributors will finance. excited backgrounds Angagaw, of as be two And Board Klemash believe that to XXXX before be our joining transformational forward well new well Steve to going and I They both Minor the Board as strong with members, I close, Board we So they’re both to joining Directors. then really of last working I look Directors as the bring really And and and us, about great & to future. great, Aster as them. growth, Owens of us really want into members really as welcome of

we again, that, leave going we’re Investor more to XXXX about as look for a May a will I we to a on then company. our everybody Day next the with at forward the least talking where little reminder, will during So And provides of quarter. insight day. in as

So again thanks day. a great and have

Operator

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

disconnect. day. Good may You now all