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PSS World Medical, Inc. (PSSI)

Q2 2009 Earnings Call

October 23, 2008 8:30 am ET

Executives

Robert Weiner - Vice President, Investor Relations

David Smith - Chairman and Chief Executive Officer

David Bronson - Executive Vice President and Chief Financial Officer

Analysts

Lisa Gill - JP Morgan

Robert Willoughby - Bank of America Securities

Larry Marsh - Barclays Capital

John Kreger - Robert W. Baird

Randall Stanicky - Goldman Sachs

John Ransom - Raymond James

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the PSS World Medical Second Quarter Fiscal Year 2009 Conference Call. During the presentation all participants will be in a listen-only mode. [Operator instructions]. As a reminder, this conference is being recorded Thursday, October 23, 2008.

I would like now to turn the conference over to Rob Weiner, Vice President, Investor Relations. Please go ahead, sir.

Robert Weiner - Vice President, Investor Relations

Thanks, John. Good morning everyone. Thank you for joining our fiscal year 2009 second quarter call. Today on the call, our speakers are David Smith, Chairman and CEO; and David Bronson, Executive Vice President and CFO.

We issued our second quarter press release last evening. The release and our accompanying financial workbook for fiscal year 2009 second quarter call are available on our website at www.pssworldmedical.com. The financial workbook contains GAAP and non-GAAP financial measures that provide greater detail into our businesses. Please also pay attention sales day schedule in the workbook particularly as it relates our third and fourth quarters of this year.

Now, I’ll read the forward-looking statement. During this call, we may make a number of forward-looking statements regarding revenue, gross margin, operating expenses, operating margins, earnings per share, and other matters that are not historical facts. These statements involve a number of risk and uncertainties that could cause actual results to differ materially from what is expressed or forecasted. For a list and description of certain of these risks and uncertainties, we refer you to the forward-looking statement disclosures in today’s press release, and to the other information provided in our most recent Form 10-K and other SEC filings, copies of which are available from the SEC from the Investor Relations section of our Web site or from us in Investor Relations.

The company wishes to caution listeners of this call and its replay not to place undue reliance on any such forward-looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1995, and as such speak only as of the date made. The company also wishes to caution listeners that it undertakes no duty or is under no obligation to update or revise any forward-looking statements.

Let me also remind you that we may reference certain non-GAAP financial measures in an effort to provide additional information to investors. All non-GAAP measures have been reconciled to the related GAAP measures in accordance with the SEC rules. You will find the reconciliation charts at the end of our financial workbook and in Form 8-K submitted to the SEC.

Our management team will be on the road next week, meeting with investors on Monday, Tuesday, and Wednesday in New York and Boston. On November 10 and 11, we will be in Denver, and on the November 12, we will be at the Credit Suisse Healthcare conference in Phoenix. One last trip of the year in Denver, we will be in the Midwest -- I mean in December, sorry -- we will be in the Midwest and Baltimore December 1 through to 4.

For our call today, we will follow our formal remarks by a Q&A session, prompted by the operator. We will limit the call to no more than an hour in duration. I am now pleased to turn the call over to David Smith, PSS World Medical’s Chairman of the Board and Chief Executive Officer.

David Smith - Chairman and Chief Executive Officer

Good morning and thank you for joining us. I want start with a familiar Chinese proverb. This proverb is both a curse and a blessing. It reads “May you live in interesting times.” Everyone has witnessed the curse of interesting times in the last few months. On the other hand, the blessing I believe is connected to the fate, or hard work, or both, to accumulate benefit from changes in interesting times. The reason I mentioned the proverb is that I believe we are blessed by both, fate in our industry and customer position, and the right amount of sweat equity and investment in strategies that drive customer solutions and operational efficiencies.

Yes, we anticipated tougher economic conditions. Even while we are paying very close attention to the world around us, the bottom line is I’ve never felt better about our business, our people, our programs and our future.

During our Investor Day, we laid out the strategies and programs for our current three-year plan. We believe our customer would continue to face economic stress, so we focused our revenue strategies on unique customer solutions, increasing sales force bandwidth and expanding our Select brand product lines. This quarter continues to verify the plan and our program’s connection to the customers’ needs.

I will start with the Physician Business revenue highlights. The Physician Business continues to grow at two times market and exceed their profit plan. The only negative news was the loss of revenue and profit for the Gulf Coast hurricanes. The Physician Business sales force and management team also took a week in September for their national sales meeting to launch our newest innovative customer solutions. It was a fantastic meeting, and it was a first for us, which was unusual, where each strategy and program was launched by a customer to our people.

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