Owens & Minor Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Stansel - JPMorgan Chase & Co. - Analyst : Just want to dig in on the tariff side of this. Can you talk about the discussions you're having with your customers and how they are or not planning around this, potentially changing behavior or approaching their sourcing? Thank you.

Question: John Stansel - JPMorgan Chase & Co. - Analyst : Great. And then just quickly on FX. Obviously, a headwind, it sounds like in the first quarter, the dollar has moved around a fair amount in March, April. I guess, you reaffirmed FX, I think, as of the end of last year. Just how should we think about the impact kind of progressing through the remainder of the year versus your expectations? Thanks.

Question: Kevin Caliendo - UBS Group AG - Analyst : First one, I just want to understand a little bit on the guidance. The Rotech financing is in place, but it doesn't look like the interest expense has changed. So is that like how are you accounting for that in the guidance? Or are you just not going to -- is the financing set up such that it won't really start to pay until the deal closes? And so you'll update the guidance then. I just want to understand how that dynamic works.

Question: Kevin Caliendo - UBS Group AG - Analyst : Yeah. No, that's helpful. I know that, that came in more -- maybe at a higher rate than you had expected. Are any of your assumptions around Rotech accretion changed in any way, shape, or form? Or how should we think about that? It's not in people's models or most people's models yet, but I'm just wondering how you're thinking about it? Or are you going to just plan to update us when the deal closes? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:00PM, OMI.N - Q1 2025 Owens & Minor Inc Earnings Call

Question: Kevin Caliendo - UBS Group AG - Analyst : Okay. And just one last one on free cash flow, sorry if I'm hogging the phone here a little bit. But in the last quarter, you gave kind of a cash flow bridge, right? EBITDA with CapEx of around $260 million, and the interest expense guidance, which remains the same. So one thing, I guess, that's different now is obviously the working capital looks a lot different than maybe you had anticipated. The last commentary you made to us publicly was that there would be like $100 million to $150 million of of cash flow available depending on working cap. Do you still anticipate, given what you did with inventory that the free cash flow this year would be meaningful or $100 million or more? Is that still in play?

Question: Eric Coldwell - Robert W. Baird & Co. Incorporated - Analyst : I have a few. I'm curious if you could share with us the incremental tariffs that you actually realized in Q1 from those that were all in effect and those that went into effect January 1. What was the impact on the quarter itself? Obviously, some of the pricing decisions hadn't gone into effect at that point on your side.

Question: Eric Coldwell - Robert W. Baird & Co. Incorporated - Analyst : Okay. Good. And then the second quarter here, the quarter that we're in, I'm curious just from easing standpoint with the models, you were just asked about the Rotech debt and when the financing comes in. And it sounds like maybe there could be a slight mismatch on timing on the term, the coming in, in May. But there's also the tariff increases and you're talking about pricing that starts to go into effect, I believe, in early June. So is there a bit of a gap here for a couple of months before your pricing efforts take effect? And if so, what is the potential impact of tariffs here in the second quarter? Or would you be on still a bit of a delay because of the timing of when inventory flows? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:00PM, OMI.N - Q1 2025 Owens & Minor Inc Earnings Call

Question: Eric Coldwell - Robert W. Baird & Co. Incorporated - Analyst : Got it. And then -- what happens in the scenario? I completely understand what you're saying, and most others are saying in terms of having to pass the pricing on to a large or entire extent. Some of your competitors may not pass all of the pricing on. They may use that as a bit of a competitive advantage or take advantage of a tough situation for clients and use that to gain share. Some manufacturers have said they're not going to raise prices or not going to raise them fully. And then some manufacturers have also said they're going to spread tariffs across all products and so not go SKU by SKU, country by country. So there could be some mismatch in the pricing on specific products. If you're, for example, taking 145% on a certain China product, but competitor might be taking a lesser amount on that particular product. So we also have a hospital and maybe more health systems that have said they're just not going to take price increases. I mean Vanderbilt's been pretty clear on this. So what happens if a customer says, no, do you just lose the sale? Or you bend a bit? I'm just curious what happens in these situations where maybe the pushback is great.

Question: Eric Coldwell - Robert W. Baird & Co. Incorporated - Analyst : And then the last one for me. Rotech, the -- Jon mentioned the debt was about 50 bps higher than originally forecast that that process since you first announced the deal has been going on for nearly a year now. As you've reported in your various debt and financing presentations. As you reported over time, Rotech's financials actually did deteriorate a bit revenue and margin profile came in I'm curious now that a year has passed, is the acquisition target performing at the levels you built into your original base case of neutral in year one and $0.15 accretive in year two? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:00PM, OMI.N - Q1 2025 Owens & Minor Inc Earnings Call