PSS World Medical — Investor Day (June 2007)
31 slides from PSS World Medical's investor day presentation, Jun 5, 2007
Slide 1: PSS World Medical Investor Day Conference
PSS World Medical Investor Day Conference June 5, 2007 Jacksonville, Florida Exhibit 99.2
Slide 2: David M. Bronson, Executive Vice President and Chief Financial Officer
David M. Bronson Executive Vice President and Chief Financial Officer Investor Day Conference June 5, 2007 Jacksonville, Florida
Slide 3: Revenue Growth
Revenue Growth 1000 1200 1400 1600 1800 2000 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 $1,178 $1,350 $1,474 $1,619 ($ in millions) $1,742* $1,825 - $1,830 FY 08 Goal 10.3% PSSI FY 03 - FY 07 compound annual growth rate 3.7% compound annual growth rate U.S. Alternate site market segment FY03 – FY *Expected
Slide 4: Revenue Growth
Revenue Growth ($ in millions) Elder Care Business Revenues Physician Business Revenues FY 07 FY 08 FY 07 FY 08 $1,227 $1,285 - $1,288* $514 $539 - $541 *Mid point of FY 2008 Goals
Slide 5: Revenue Growth Drivers
Revenue Growth Drivers Physician • Accelerate growth of Select sales • Continue to grow Rx • Renewed growth of equipment • No participation in flu vaccine market Elder Care • Accelerate growth of Select sales • Grow Home Health revenues • Expand and improve sales & marketing teams
Slide 6: Gross Margin
Gross Margin FY 03 FY 04 FY 05 FY 06 FY 07 (in percent) 28.52% 28.55% 28.72% 28.86% 28.71%
Slide 7: Gross Margin Drivers
Gross Margin Drivers + Increased mix of Select Brand + Margin enhancement programs with brand manufacturers + Training and tools for sales reps – Continued competitive pressures – Increased utilization of GPO’s by providers – Globalization
Slide 8: Global Sourcing: Select Brand and Import vs Direct
12% 66% Direct Select % of Total Revenues Global Sourcing FY 2008 Goals Import vs Direct 34% Import & Suppliers
Slide 9: Operational Initiatives: Cost-To-Serve as % of Sales
Operational Initiatives Cost-To-Serve as % of Sales FY 05 FY 06 FY 07 FY 05 FY 06 FY 07 14.2 12.4 11.8 16.7 17.3 16.2 Physician Business Elder Care Business
Slide 10: Operational Initiatives
Operational Initiatives • Professional delivery program • Employee retention and incentives • Improved inventory accuracy • Warehouse management technology
Slide 11: Operating Income Growth: FY 2003 – FY 2007
Operating Income Growth: FY 2003 – FY 2007 FY 03 FY 04 FY 05 FY 06 FY 07 $25.9 $47.8 $61.6 $72.4 ($ in millions) $89.5 FY 2007 excludes $7.0 million write-down of influenza vaccine inventory 36% C.A.G.R.
Slide 12: Strategic Plan: Continued Operating Margin Expansion
Goal: 6% - 6.5% (run rate FY2008) Strategic Plan Continued Operating Margin Expansion FY 06 FY 07 FY 08 Total Costs As % of Revenue 96.0% 95.0% 94.0% Total Revenue ($ in Billions) $1.5 $2.0 Total Revenue Total Costs as % of Revenue 4.5% FY06 5.1% FY07* * Excludes $7.1 Million write-down of influenza
Slide 13: Operating Margin Growth: FY 2003 - FY 2008 Goal
Operating Margin Growth: FY 2003 - FY 2008 Goal FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 2.2% 3.5% 4.2% 4.5% 5.1% 5.5%-5.6% Actual Goal
Slide 14: Shared Services Initiatives
Shared Services Initiatives • “ETDBW” • Invest in Product Customer Intelligence (PCI) systems • Global sourcing infrastructure and execution • Develop management talent • Balanced investments in information technology • Working capital and risk management
Slide 15: Executive and Administration Leadership
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Slide 16: Product Customer Intelligence (PCI)
Product Customer Intelligence (PCI) Objective: Strategy Owner: PCI Executive Director Strategies/Contributions: Objective: Strategy Owner: David Remisiewicz Strategies/Contributions: Objective: Strategy Owner: PCI Executive Director Strategies/Contributions: Objective: JD Edwards based functionality
Slide 17: Global Sourcing
Global Sourcing Objective: Strategy Owner: Tom D'Innocenzi Strategies/Contributions: Objective: Objective: Strategy Owner: Tom D'Innocenzi Strategies/Contributions: Objective: Strategy Owner: Steve Martin Strategies/Contributions: Objective: Strategy Owner: Seve Martin Strategies/Contributions: Grow
Slide 18: Leadership Development
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Slide 19: Benchmark
WORLD MEDICAL” a O4 Benchmark 25%
Slide 20: Working Capital & Risk Management
Working Capital & Risk Management Objective: Strategy Owner: David Klarner Strategies/Contributions: Objective: Strategy Owner: John Willim Strategies/Contributions: Objective: Strategy Owner: David Klarner / Chad Appleby Strategies/Contributions: Objective: Strategy Owner: David Klarner Strategies/
Slide 21: EPS Growth
EPS Growth 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 $0.12 $0.42 $0.51 $0.66 Earning Per Diluted Share from continuing operations Excludes tax benefit of $5.6 million, or $0.09 per diluted share in FY 2005 $0.73 $0.86 - $0.88 FY 2008 Goal
Slide 22: Historical Earnings Progression By Quarter
Fiscal Year 2003 - 2007: Historical Earnings Progression By Quarter 10% 15% 20% 25% 30% 35% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr FY 2006 FY 2005 FY 2004 FY2005 excludes tax benefit of $5.6 million or $0.09 per diluted share FY 2003 FY 2007
Slide 23: Operating Cash Flow Growth
FY 05 FY 06 FY 07 FY 08 Operating Cash Flow Growth $36.3 $67.7 ($ in millions) $54.6 $16.6 $63 - $67 FY 08 Goal $59.8 $63.5 $65.0 Excludes NOL tax benefits of $3.7, $13.1, $19.7, and $18.3 million for FY 2007, FY2006, FY2005 and FY2004, respectively, which were primarily related to 2002 sale of the
Slide 24: Capital Spending
Capital Spending FY 2008 $20 - $22 Million • Maintenance Capital $6 - $7 Million • PCI Platform $4 - 5 Million • Strategic systems development $5 - $6 Million • Infrastructure & rollover $3 - $4 Million
Slide 25: Return on Committed Capital
Return on Committed Capital FY 04 FY 05 FY 06 FY 07 24.2% 24.6% 25.4% 26.5% 31.1% in Q4
Slide 26: Acquisition Strategy
Acquisition Strategy: FY 2008 • Target assets complementary to core business strategy - Fold-ins - Strategic • Size range $10mm-$50mm of revenues; potential for larger strategic assets • Accretive within 12 months • Funded with cash flows and bank debt • 1 - 2 each year, both businesses
Slide 27: Acquisition Strategy: Activus Healthcare Solutions
Acquisition Strategy: Activus Healthcare Solutions • A $22 million CA.-based physician market distributor • Adds 14 sales reps with 19-year avg. tenure • Presence in ambulatory surgery centers • Accretive within 12 months; dilutive by $0.01 in FY 2008
Slide 28: FY 2008: Financial Goals
FY 2008: Financial Goals • Consolidated revenue growth 7.5% - 8.5% (excluding FY 07 Influenza sales of $48.6 million) • Operating cash flow $63.0 - $67.0 million • Earnings per diluted share $0.86 - $0.88 • Consolidated operating margin growth 40 - 50 bps (from 5.1% in FY 07, which excludes influenz
Slide 29: PSSI
PSSI Investors have benefited from consistent execution of strategies and programs -20 10/10/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 Prices as of March 30, 2007, based on $100 investment PSSI HSIC PDCO MCK CAH % of Share Price Increase % 3/30/07
Slide 30: Growth Ethics Culture Execution
GROWTH ETHICS CULTURE EXECUTION GROWTH CUSTOMER PROFIT ETHICS CULTURE EXECUTION
Slide 31: Thank You
Thank You