Owens & Minor, Inc.

Good day and thank you for standing by. Welcome to the Owens & Miner Second Quarter 2023 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jackie Marcus, Investor Relations. Please go ahead.

Thank you, Operator. Hello, everyone, and welcome to the Owens & Miner Second Quarter 2023 Earnings Call. Our comments on the call will be focused on the financial results for the second quarter of 2023, as well as our updated outlook for 2023, both of which are included in today's press release. The press release along with the supplemental slides are posted on the investor relations section of our website. Please note that during this call, we will make forward-looking statements. The matters addressed in these statements are subject to risks and uncertainties. which could cause actual results to differ materially from those projected or implied here today. Please refer to our SEC filings for a full description of these risks and uncertainties, including the risk factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q. In our discussion today, we will reference certain non-GAAP financial measures, and information about these measures and reconciliations to the most comparable GAAP financial measures are included in our press release. Today, I'm joined by Ed Pasica, President and Chief Executive Officer, and Alex Bruni, Executive Vice President and Chief Financial Officer. I will now turn the call over to Ed.

Thank you, Jackie, and good morning, everyone, and thank you for joining us on the call today. The second quarter showed a continuation of positive momentum in many areas, including exceptionally strong cash flow, meaningful improvement in net debt, mid single digit organic growth in our medical distribution division and continued double digit growth in our patient direct segments. However, we continue to see a slow recovery in our global products division as demand for our higher margin SNIP products remain constrained. One of the objectives for 2023 is to significantly reduce debt to provide flexibility for the business. Our performance in Q2 has put us well on the way to achieving this objective. Strong execution and focus by the overall organization, combined with the operating model realignment program, has led to over $300 million in operating cash flow in the quarter, driven by the reduction of working capital, net proceeds from AR sales, and the disciplined capital deployments. After celebrating the one-year anniversary of the acquisition of Apri at the end of the first quarter, Q2 marks the first quarter with a year-over-year comparison of the patient direct segment. After a year of double-digit pro forma growth in each of the previous four quarters, I am pleased to report that the segment continued to produce double-digit revenue growth with top-line performance fueled by strong growth in most of our major product categories. In addition, we delivered year-over-year operating margin expansion of 25 basis points in the quarter. It is clear that the powerful brands of Byram and Apri are working well together with a broad offering to serve the patient in the home. We remain bullish on the outlook for the patient direct segment for the remainder of the year, as well as the long term, as demand for chronic condition healthcare in the home continues to increase. Moving on to our products and healthcare services segment. The results in this segment were mixed. In our medical distribution division, we saw year-over-year revenue growth accelerate to over 5% driven by growth at our existing customers and the implementation of new wins partially offset by the residual impact of previous losses. In addition, it should be noted that same store sales excluding PPE showed growth of 10%. However, as we recognize the positive momentum in our medical distribution division, it is prudent to recognize headwinds we face elsewhere. specifically in our global products division, as demand for our higher margin PPE products declined year over year. When combined with our fixed manufacturing costs, this means we must work much harder to control costs. With elevated supply levels and lower demand for PPE, we are remaining cautious on the balance of the year given these trends. We are working hard to navigate these uncertainties, recognizing what we can and cannot control, and managing our business as closely as possible. One of the key elements to minimizing this headwind is our operating model realignment program. With our operating model realignment program well underway, we have already implemented cost-saving efforts while enhancing the processes to drive operational excellence, as well as diligently reviewing each segment's opportunity for growth. First, within our sourcing and demand management workstream, the team has made significant strides to date with positive results already. Redesigning our organizational structure will allow us to invest and build teams in areas central to our growth opportunities in the coming quarters. Third, our focus on network rationalization and operational excellence will be critical in the ongoing management of our products and healthcare services segment, particularly if the broad demand challenges continue in the coming quarters. And finally, we are having important conversations with customers and partners to improve our commercial excellence and product profitability. Everyone recognizes the difficult nature of an inflationary environment, but at the same time, our customers have come to rely on our proprietary and distributed products as critical components of patient care. We are on a clear path to achieve the $30 million target for contribution to adjusted operating income in 2023 from this program, with the vast majority of the benefits in the coming months. Many of the actions have already taken place, and we are confident in the value provided by the operating model realignment program for the remainder of the year. When I look at the back half of the year, I like the opportunities presented by the operating model realignment program, the continued strength of our patient direct segment, and the revenue growth in our medical distribution division. However, the previously mentioned caution around the outlook of SNIP products has resulted in us slightly adjusting our full year expectations. Finally, The team and I hope you will join us for our 2023 Investor Day in early December in Boston, at which we will share our vision for the future of Owens & Miner. I will now turn the call over to our Chief Financial Officer, Alex Bruni, to discuss our second quarter financial performance and our guidance for the full year.