PSS World Medical second quarter net sales decrease 11.7% to $496.2 million

Oct 28 2010

Second Quarter Highlights:

• The Company had five fewer sales days in the second quarter of fiscal year 2011 (63 sales days) compared with the second quarter of fiscal year 2010 (68 sales days)
• Consolidated net sales decline of 11.7%, with same day sales decline of 4.7%

• Physician Business net sales decline of 13.8%, with same-day sales decline of 1.2% excluding prior-year H1N1-related product sales
• Elder Care Business net sales decline of 6.6%, with same-day sales growth of 0.8%

• Sequential per-day revenue growth of 5.3% over fiscal 2011 first quarter

• Physician Business sequential per-day revenue growth of 6.6%
• Elder Care Business sequential per-day revenue growth of 2.2%

• Consolidated operating margin growth of 27 basis points to 7.1%

• Physician Business operating margin of 10.8%
• Elder Care Business operating margin of 5.8%

• Consolidated cash flow from operations of $11.6 million

PSS World Medical, Inc. (Nasdaq:PSSI) announced today its results for the fiscal 2011 second quarter ended October 1, 2010.

Gary A. Corless, President and Chief Executive Officer, commented, "Our second quarter performance reflects the team's focused execution of our business strategies in a period of economic challenge. Throughout the last two years of slower economic activity, we have continued to invest in solutions-based programs focused on improving the clinical and financial success of caregivers, while adding new customers to counter lower overall healthcare utilization. We remain committed to achieving our goal of $1.27- $1.31 earnings per diluted share for fiscal year 2011."

David M. Bronson, Executive Vice President and Chief Financial Officer, commented, "Despite the triple headwinds of lower physician office utilization, five less selling days, and the comparative effect of last year's H1N1-related revenue, the Company is continuing to expand its profit margins and generate cash without reducing headcount or services. In fact, we have continued to invest in technology and infrastructure projects that will drive future profitability gains. Our strong cash position allowed for the repurchase of two million shares this past quarter, as well as funding some modest acquisitions."

Net sales for the three months ended October 1, 2010, were $496.2 million, a decrease of 11.7% (4.7% same day sales decline), compared with net sales of $562.0 million for the three months ended October 2, 2009. Net sales for the three months ended October 1, 2010, for the Physician Business decreased by 13.8%, with same day sales decline of 7.0% (1.2% same day sales decline excluding H1N1-related product sales in last year's second quarter) while net sales for the Elder Care Business decreased by 6.6%, with same day sales growth of 0.8%. Income from operations for the three months ended October 1, 2010, was $35.4 million compared with income from operations for the three months ended October 2, 2009, of $38.6 million. Net income for the three months ended October 1, 2010, was $19.6 million, or $0.35 per diluted share, compared with net income for the three months ended October 2, 2009, of $21.7 million, or $0.37 per diluted share. The Company noted that it had five fewer sales days (63 sales days) in the second quarter of fiscal year 2011, ended October 1, 2010, compared with the number of sales days (68 sales days) in the second quarter of fiscal year 2010, ended October 2, 2009. The Company will have a total of five fewer sales days (253 sales days) in fiscal year 2011, ended April 1, 2011, compared with the number of sales days (258 sales days) in the fiscal year 2010, ended April, 2, 2010.

Net sales for the six months ended October 1, 2010, were $975.0 million, a decrease of 7.6% (4.0% same day sales decline), compared with net sales of $1,055.5 million for the six months ended October 2, 2009. Net sales for the six months ended October 1, 2010, for the Physician Business decreased by 9.5%, with same day sales decline of 5.9%, while net sales for the Elder Care Business decreased by 3.2%, with same day sales growth of 0.6%. Income from operations for the six months ended October 1, 2010, was $60.7 million compared with income from operations for the six months ended October 2, 2009, of $60.3 million. Net income for the six months ended October 1, 2010 decreased by 4.8% to $33.3 million, or $0.59 earnings per diluted share, compared with net income for the six months ended October 2, 2009, of $35.0 million, or $0.59 earnings per diluted share.