OMI
#I think when you take the negative 1.8% and back out acquisitions and some of the FX, we were about 3% year-over-year growth rate.
We did point out that, that did incorporate a pretty significant change of one customer from a buy-sell to a fee-for-services which fairly dramatically changes the orientation of both revenue and gross profit position.
So that did have some headwind related to our trend.
Overall, our European business, we continue to expect it to gross nicely year-over-year.
As we said in the fourth quarter and, I think, back at Investor Day, if we didn't get to an amicable relationship with a particular customer in the UK, that we'd probably have a little bit of cost associated with unwinding that.
But again we reiterated guidance so we're comfortable with being able to work through that.
Clearly that will have some impact to top-line growth, that will probably be more of a second half of the year impact as we wind that relationship down.
But we would expect to offset at least a significant portion of that as we continue to grow the business.
We feel comfortable that the UK business, as well as the rest of Europe, is on a positive track.
Sure.
Certainly change can provide opportunity and as these companies come together and get bigger, there is definitely a broadened array of opportunities that are available to both of us.
As you will note in all of those transactions, there are relatively aggressive, robust cost-savings expectations that those companies have put forth.
And we think that our value proposition plays very well into that.
We know the businesses well that we have served in the past and we can help new owners operationalize many of the concepts that they had as they were designing the list of cost strategies as part of a transaction So all in all, I think it's a great opportunity.
We have teams assigned to any of those transactions, all of those transactions, that are working with those customers as we speak.
We are excited about potential opportunities that exist.
Our guidance was clearly around a 38% to 39% range.
We were just on, adjusted basis ---+ just a hair under that, about 37.5% for the quarter.
With the acquisitions that we made last year and the continued change in profitability of our broader European based business we continue to be able to leverage our European platform favorably.
At this point, where we look out to the rest of the year, we think that 38% to 39% is probably the appropriate range as we sort of look to the full year.
I don't think we're doing anything out of the ordinary so we're not contemplating any inversions or anything unique like that.
It's kind of plain vanilla stuff, our usual leveraging of a lower tax jurisdiction.
And as we move to greater profitability outside the US, we're just getting the benefit of that.
Sure, <UNK>.
I think the search committee of our Board of Directors has been actively involved in candidate interviews.
I think they are very pleased with the progress of the search and the opportunities that they have seen.
So it's underway and any additional comments probably would be premature at this time.
Sure, <UNK>.
I think as we look out in the future, we continue to look at different ways to continue to expand the business.
Certainly the UK is not as homogenous market as the US is as well, so you have got to approach it in a slightly different fashion.
Today we do have a few provider customers in the UK that we provide some basic services to, so it's not as if we aren't doing that today as we look to the future.
I think there's a platform and a basis for us to do those things, although we don't have any plans today to directly invest into a particular provider platform in Europe.
Other than the fact that we terminated a relationship with our customer in the UK, we saw a fairly reasonable customer retention.
We've got a European [line] price increase going on with the vast majority of our customers.
We've had some good wins that continue to improve and sustain the growth rate.
But clearly, as with all businesses, we have had some minor losses.
This year, though I would characterize that we haven't had any significant or major losses in any particular market.
We've had a pretty good retention rate and we're seeing a lot of activity around a lot of what I characterize are multi-country customers looking to expand into other countries or other regions, which is all part of the leveraging of the platform in Europe.
So we continue to feel pretty good about where the European business is moving.
We have now almost had a full year of profitability and the European ---+ the continental side of it, as we continue to work through the UK challenges, but overall I think we're pleased with where we are at the end of the first quarter.
There's a fairly lean sales organization in Europe.
Again, it's a different sales organization than the one we have here.
It's more focused on the manufacturing side of the fence, selling 3PL services.
And, again, you have got more of a regional and local focus in some areas.
We have spent a particularly long period of time in how we want to position that organization, both last year and as we move into this year.
But I would say we manage a fairly lean organization that is looking both on a pan-European base to leverage our European and global customers as we align with some of our US manufacturing activities.
As well as continuing to service our local customers as well, so we incorporate a lot of key account and customer service managers, as well, into that organization.
It's still a two-thirds fee for service.
That's about where we are, and that would include ArcRoyal as ArcRoyal is providing services to the manufacturer.
And we don't break out our products and packaging segment so we'll have to leave a little mystery to that as we're going forward.
But, suffice it to say, it did contribute in the quarter and we continue to see very good activity in leveraging our packaging business across our manufacturing platform, both over in Europe, as well as here in the United States.
We don't give particular specific guidance around cash flow but if you look back over the last couple of years and you look at what, generally speaking, our cash flow has been ---+ it's always been, on average, on a rolling basis, about $150 million to $175 million.
So I think if you take that as sort of a proxy, I think that's a reasonable place, to where any given quarter, certainly last quarter highlighted it, you know, we've got some timing issues where we had some use of cash and otherwise.
But generally, if you go back and do sort of a rolling four quarters, you're going to probably see us oscillating around that $150 million to $175 million range.
I guess what I would do is go back to what we said at Investor Day and in the bridging schedule that we provided that talked about our acquisition, so this would be both Medical Action and ArcRoyal, net of the new financing that we did that <UNK> has referred to.
You know, we fundamentally were saying that it would contribute around 4% to 6% of the 10% targeted growth rate that we were looking at.
I think the other color we offered is that in the initial year of ownership, that had more to do with getting cost synergies and cost reduction as to anything else.
And then my final comment on this would be, and this was in part of the prepared remarks, that we're generally on schedule.
What we have targeted at this point in the year, we're slightly ahead on some of the timing of some of the cost reduction efforts we put in place.
That's a fair amount of color around the acquisitions.
Thank you, <UNK>.
Thank you Marcus.
Well that concludes our first quarter 2015 conference call.
And, again, thank you all for your interest in Owens & Minor.
Have a good day.
