United Stationers Reports Record Revenue And Earnings Per Share
DEERFIELD, Ill., Feb. 14, 2013
DEERFIELD, Ill., Feb. 14, 2013 /PRNewswire/ -- United Stationers Inc. (NASDAQ:
USTR) reported record revenue and earnings per share for both the fourth
quarter and year ended December 31, 2012. It also announced a workforce
reduction and facility closure program to reduce costs while allowing
continued investment in growth initiatives. The company intends to record a
pre-tax charge in the first quarter of 2013 for expenses related to this
Fourth Quarter Financial Summary
oDiluted earnings per share for the quarter were up 25% to $0.81.
oNet sales increased 3.6% from the prior-year period to $1.24 billion.
oGross margin reached $201.7 million, or 16.2% of sales.
oOperating expenses were $146.3 million, or 11.8% of sales.
oOperating income increased by 21% to $55.4 million or 4.4% of sales.
oNet income rose by 18% to $32.9 million.
oThe company completed the acquisition of O.K.I. Supply Co. (OKI) during
2012 Financial Summary
oDiluted earnings per share were $2.73, compared with $2.42 in 2011.
Adjusted earnings per share in 2012 grew 12% to $2.82^(1) from $2.51^(1).
oNet sales rose 1.9% from the prior year to $5.1 billion, after adjusting
for one fewer selling day in 2012.
oGross margin was $774.6 million or 15.2% of sales.
oOperating expenses were $573.7 million or 11.3% of sales. Adjusted
operating expenses were $567.4 million^(1) or 11.2%^(1) of sales. ^
oOperating income was $200.9 million or 4.0% of sales. Adjusted operating
income reached $207.2 million^(1) or 4.1%^(1) of sales.
oNet cash provided by operating activities totaled $189.8 million.
o2.5 million shares were repurchased at a cost of $69.9 million.
"Our fourth quarter results showed progress on many fronts," said Cody Phipps,
president and chief executive officer. "Benefiting from our recent
acquisition, United's industrial platformis expected to contribute 12% of
total revenues and is well positioned for future growth. Our other businesses
also continued to show sales and profit growth. This reflected the success
of our cost control and value-adding initiatives, and our continued focus on
building capabilities that help customers and suppliers capitalize on
opportunities in this evolving market. As a result, we generated record
revenue, EPS growth and strong cash flow."
Fourth Quarter Results
Net sales for the fourth quarter of 2012 were $1.24 billion, up 3.6% from the
prior-year period. For the latest three months, industrial supplies sales
grew 30.4%, the janitorial & breakroom category expanded 1.9%, office products
grew 1.2%, and furniture sales increased 3.9%. The technology category
declined 0.1%. Without the effect of the OKI acquisition, consolidated net
sales would have increased 1.8%.
Gross margin for the latest quarter was $201.7 million or 16.2% of sales,
compared with $173.7 million or 14.5% of sales in the prior year. Gross
margin was positively affected by strong execution on a number of fronts,
including higher inventory purchase-related supplier allowances, War on Waste
(WOW) cost savings and an improvement in overall margin components.
Operating expenses in the 2012 quarter were $146.3 million or 11.8% of sales,
compared to $127.8 million or 10.6% of sales in the prior-year period. The
latest quarter was unfavorably affected by higher employee-related expenses,
including variable management compensation, and higher depreciation and
amortization. These were partially offset by a reduction in bad debt.
Operating income in the latest three months was $55.4 million or 4.4% of
sales, versus $45.9 million or 3.8% of sales in the fourth quarter of 2011.
Net income for the fourth quarter of 2012 was $32.9 million versus $27.9
million the year prior. Year-over-year net income was negatively affected by
a higher effective tax rate in 2012.
Diluted earnings per share for the most recent quarter were $0.81 versus $0.65
in the prior-year period. Earnings per share growth was driven by increases
in operating income, the impact of share repurchases and a reduction in
interest expense. Earnings per share for the 2011 quarter included the
favorable impact of renegotiated acquisition related earn-outs.
Net sales for the latest year increased 1.9% to $5.1 billion, compared with
$5.0 billion in 2011. Excluding the effect of the OKI acquisition, net sales
Gross margin in 2012 was $774.6 million or 15.2% of sales, compared with
$740.1 million or 14.8% of sales in 2011. This increase was mainly due to
higher inventory purchase-related supplier allowances and WOW initiative
savings. These improvements were partially offset by competitive pricing
pressures and margin mix.
Operating expenses in 2012 totaled $573.7 million or 11.3% of sales. Adjusted
operating expenses in 2012 were $567.4 million^(1) or ^ 11.2%^(1) of sales,
excluding the previously reported $6.2 million pre-tax charge for the
distribution network optimization and targeted cost reduction program.
Adjusted operating expenses in 2011 were $536.4 million^(1) or 10.7%^(1) of
sales, which excluded $0.7 million for a partial reversal of a workforce
realignment charge, a $4.4 million equity compensation charge related to a
transition agreement with the company's former chief executive officer, as
well as a $1.6 million asset impairment charge related to an equity
investment. Higher employee-related expenses and increased depreciation and
amortization were partially offset by lower bad debt expense.
Operating income in 2012 was $200.9 million or 4.0% of sales, compared with
$198.3 million or 4.0% of sales in the prior year. Adjusted operating income
was $207.2 million^(1) or 4.1%^(1) of sales, compared with $203.6 million^(1)
or 4.1%^(1) of sales in 2011.
Net income was $111.8 million for 2012 versus $109.0 million a year ago.
Adjusted net income in 2012 was $115.7 million^(1) versus $112.9 million^(1)
Diluted earnings per share for the latest year were $2.73 versus $2.42 in
2011. Adjusted diluted earnings per share for 2012 rose 12% to $2.82^(1),
compared with $2.51^(1) in the prior year. The improvement came from higher
operating income, the impact of share repurchases, and lower interest
expense. Earnings per share for 2011 included the favorable impact of
renegotiated acquisition-related earn-outs.
Cash Flow and Debt
Net cash provided by operating activities for 2012 totaled $189.8 million
versus $130.4 million in 2011. The increase was mainly due to stronger
earnings combined with lower working capital needs. Cash flow used in
investing activities, including net capital expenditures and acquisitions,
totaled $107.3 million in 2012. Gross capital expenditures were $32.8 million
in 2012, compared to $28.0 million in 2011.
The company had approximately $985 million of total committed debt capacity at
December 31, 2012. Outstanding debt at year-end 2012 and 2011 was $524.4
million and $496.8 million, respectively. Debt-to-total capitalization
increased to 41.5% from 41.3% for the prior year. During 2012, the company
repurchased 2.5 million shares for $69.9 million, which was partially funded
by additional borrowings from debt facilities. The company also paid $21.3
million in dividends during the current year. The amount remaining under
Board share repurchase authorizations at December 31, 2012, was $55.1 million.
"Our balance sheet and cash flow are strong," said Phipps. "During 2012 and
early 2013, we took actions to secure new low-cost financing, continued
investing in our growth businesses and acquired OKI. We also increased our
dividend and returned capital to shareholders through share repurchases."
2013 Outlook and First Quarter Actions
"Despite the continued weak economy, United Stationers entered 2013 with solid
momentum," Phipps stated. "The changing market requires that we adapt and
evolve, and we are doing this proactively and from a position of strength. We
are optimizing our network of distribution centers and realigning resources to
support our growth businesses while keeping core operations strong.
"Our strategy is focused on delivering the capabilities that our business
partners need to succeed," he added. "By consistently improving this value,
we expect to continue to outperform in the markets in which we compete."
During the first quarter of 2013, the company plans to take a pre-tax charge
in the range of $9 million to $11 million for closing certain OKI facilities,
severance costs, and other related expenses. Its goal is to improve the
effectiveness and efficiency of operations. The pre-tax charges will be
recorded against operating expenses. Cash outflows will occur during 2013 and
2014. Annualized savings associated with these actions are expected to exceed
the costs of the charge, with most of the savings materializing in early
2014. Management plans to invest a portion of these savings in growth and
other strategic initiatives.
United Stationers will hold a conference call followed by a question and
answer session on Friday, February 15, 2013, at 10:00 a.m. CST, to discuss
fourth quarter and year-end 2012 results. To participate, callers within the
U.S. and Canada should dial (888) 771-4371 and international callers should
dial (847) 585-4405 approximately 10 minutes before the presentation. The
confirmation number is "33961424." To listen to the webcast, participants
should visit the Investor Information section of the company's website at
ir.unitedstationers.com several minutes before the event is broadcast and
follow the instructions provided to ensure that the necessary audio
application is downloaded and installed. This program is provided at no
charge to the user. In addition, interested parties can access an archived
version of the call, also located on the Investor Information section of
United Stationers' website, about two hours after the call ends. This news
release, along with a financial slide presentation and other information
relating to the call, also will be available on the website.
This news release contains forward-looking statements, including references to
goals, plans, strategies, objectives, projected costs or savings, anticipated
future performance, results or events and other statements that are not
strictly historical in nature. These statements are based on management's
current expectations, forecasts and assumptions. This means they involve a
number of risks and uncertainties that could cause actual results to differ
materially from those expressed or implied here. These risks and
uncertainties include, but are not limited to the following: prevailing
economic conditions and changes affecting the business products industry and
the general economy; United's ability to effectively manage its operations and
to implement growth, cost-reduction and margin-enhancement initiatives;
United's reliance on key customers, and the risks inherent in continuing or
increased customer concentration; United's reliance on key suppliers and the
supplier allowances and promotional incentives they offer; United's reliance
on independent resellers for a significant percentage of its net sales and,
therefore, the importance of the continued independence, viability and success
of these resellers; continuing or increasing competitive activity and pricing
pressures within existing or expanded product categories, including
competition from product manufacturers who sell directly to United's
customers; the impact of a loss of, or substantial decrease in, the
availability of products or service from key vendors at competitive prices;
United's ability to maintain its existing information technology systems and
the systems and eCommerce services that it provides to customers, and to
successfully procure, develop and implement new systems and services without
business disruption or other unanticipated difficulties or costs; the
creditworthiness of United's customers; United's ability to manage inventory
in order to maximize sales and supplier allowances while minimizing excess and
obsolete inventory; United's success in effectively identifying, consummating
and integrating acquisitions; the risks and expense associated with United's
obligations to maintain the security of private information provided by
United's customers; the costs and risks related to compliance with laws,
regulations and industry standards affecting United's business; the
availability of financing sources to meet United's business needs; United's
reliance on key management personnel, both in day-to-day operations and in
execution of new business initiatives; and the effects of hurricanes, acts of
terrorism and other natural or man-made disruptions.
Shareholders, potential investors and other readers are urged to consider
these risks and uncertainties in evaluating forward-looking statements and are
cautioned not to place undue reliance on the forward-looking statements. For
additional information about risks and uncertainties that could materially
affect United's results, please see the company's Securities and Exchange
Commission filings. The forward-looking information in this news release is
made as of this date only, and the company does not undertake to update any
forward-looking statement. Investors are advised to consult any further
disclosure by United regarding the matters discussed inthis releasein its
filings with the Securities and Exchange Commission and in other written
statements it makes from time to time. It is not possible to anticipate or
foresee all risks and uncertainties, and investors should not consider any
list of risks and uncertainties to be exhaustive or complete.
United Stationers Inc. is a leading wholesale distributor of business
products, with 2012 net sales of $5.1 billion. The company stocks a broad and
deep line of approximately 130,000 items on a national basis, including
technology products, traditional office products, janitorial and breakroom
supplies, office furniture, and industrial supplies. A network currently
comprised of 72 distribution centers allows it to deliver these products to
over 25,000 reseller customers. This network, combined with United's depth
and breadth of inventory, enables the company to ship most products overnight
to more than 90% of the U.S. and offer next-day delivery to major cities in
Mexico and Canada. For more information, visit www.unitedstationers.com.
United Stationers' common stock trades on the NASDAQ Global Select Market
under the symbol USTR.
^(1) This is non-GAAP information. A reconciliation of these items to the
most comparable GAAP measures is presented at the end of this news release.
Except as noted, all references to financial results are presented in
accordance with U.S. Generally Accepted Accounting Principles.
For Further Information Contact:
President and Chief Executive Officer
Fareed A. Khan
Sr. Vice President and Chief Financial Officer
United Stationers Inc.
- tables follow -
United Stationers Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
For the Three Months Ended For the Years Ended
December 31, December 31,
2012 2011 2012 2011
Net sales $ 1,244,074 $ 1,201,391 $ 5,080,106 $ 5,005,501
Cost of goods sold 1,042,416 1,027,674 4,305,502 4,265,422
Gross profit 201,658 173,717 774,604 740,079
andadministrative 146,304 127,835 573,693 541,752
Operating income 55,354 45,882 200,911 198,327
Interest expense 4,332 7,275 23,276 27,369
Other (income) expense -- (2,328) -- (1,918)
Income before income 51,022 40,935 177,635 172,876
Income tax expense 18,097 13,001 65,805 63,880
Net income $ 32,925 $ 27,934 $ 111,830 $ 108,996
Net income per share – $ 0.81 $ 0.65 $ 2.73 $ 2.42
Weighted average number
ofcommon shares − 40,406 43,010 40,991 45,014
United Stationers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands, except share data)
As of December 31,
Cash and cash equivalents $ 30,919 $ 11,783
Accounts receivable, net 658,760 659,215
Inventories 767,206 741,507
Other current assets 30,118 48,093
Total current assets 1,487,003 1,460,598
Property, plant and equipment, net 143,523 129,438
Goodwill 357,226 328,061
Intangible assets 67,192 56,285
Other long-term assets 20,260 20,500
Total assets $ 2,075,204 $ 1,994,882
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 495,278 $ 499,265
Accrued liabilities 205,228 193,572
Total current liabilities 700,506 692,837
Deferred income taxes 18,054 14,750
Long-term debt 524,376 496,757
Other long-term liabilities 94,176 85,859
Total liabilities 1,337,112 1,290,203
Common stock, $0.10 par value; authorized −
shares, issued – 74,435,628 shares in 2012 and
Additional paid-in capital 404,196 409,190
Treasury stock, at cost – 34,116,220 and
shares at December 31, 2012 and 2011,
Retained earnings 1,343,437 1,253,118
Accumulated other comprehensive loss (53,765) (56,406)
Total stockholders' equity 738,092 704,679
Total liabilities and stockholders' equity $ 2,075,204 $ 1,994,882
United Stationers Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31,
Cash Flows From Operating Activities:
Net income $ 111,830 $ 108,996
Adjustments to reconcile net income to
net cash provided by
Depreciation and amortization 36,077 34,053
Share-based compensation 8,746 15,734
Loss on the disposition of plant, 122 59
property and equipment
Impairment of equity investment -- 1,635
Amortization of capitalized financing 995 974
Excess tax benefits related to (648) (6,858)
Deferred income taxes (6,713) 20,914
Changes in operating assets and liabilities:
Decrease (increase) in accounts 21,820 (31,686)
Decrease (increase) in inventory 10,374 (58,376)
Decrease (increase) in other assets 21,105 (18,656)
Increase in accounts payable 16,264 89,195
Decrease in checks in-transit (32,008) (11,803)
Increase (decrease) in accrued 276 (1,228)
Increase (decrease) in other 1,574 (12,590)
Net cash provided by operating 189,814 130,363
Cash Flows From Investing Activities:
Capital expenditures (32,787) (27,981)
Proceeds from the disposition of property, 775 63
plant and equipment
Acquisition net of cash acquired (75,254) --
Net cash used in investing (107,266) (27,918)
Cash Flows From Financing Activities:
Net borrowings under debt arrangements 26,367 91,757
Repayment of debt -- (376,800)
Proceeds from the issuance of debt -- 340,000
Net proceeds from share-based 864 9,264
Acquisition of treasury stock, at cost (69,908) (162,674)
Payment of cash dividends (21,285) (17,517)
Excess tax benefits related to 648 6,858
Payment of debt fees and other (143) (2,817)
Net cash used in financing (63,457) (111,929)
Effect of exchange rate changes on cash 45 (34)
and cash equivalents
Net change in cash and cash equivalents 19,136 (9,518)
Cash and cash equivalents, beginning of 11,783 21,301
Cash and cash equivalents, end of period $ 30,919 $ 11,783
United Stationers Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Adjusted Operating Income, Net Income and Diluted Earnings Per Share
(in thousands, except per share data)
Sales $ 5,080,106 100.00% $ 5,005,501 100.00%
Gross profit $ 774,604 15.24% $ 740,079 14.78%
Operating expenses $ 573,693 11.28% $ 541,752 10.82%
Equity compensation – CEO -- -- (4,409) (0.09)%
Asset impairment charge -- -- (1,635) (0.03)%
Facility closures and 6,247 (0.12)% -- --
Early retirement / -- -- 723 0.01%
Adjusted operating expenses $ 567,446 11.16% $ 536,431 10.71%
Operating income $ 200,911 3.96% $ 198,327 3.96%
Operating expense item noted 6,247 0.12% 5,321 0.11%
Adjusted operating income $ 207,158 4.08% $ 203,648 4.07%
Net income $ 111,830 $ 108,996
Operating expense items noted 3,873 3,920
above, net of taxes
Adjusted net income $ 115,703 $ 112,916
Net income per share – $ 2.73 $ 2.42
Per share operating expense 0.09 0.09
items noted above
Adjusted net income per share $ 2.82 $ 2.51
Adjusted net income per share
– diluted growth
rate over the prior year 12%
Weighted average number of
common shares 40,991 45,014
Note: Adjusted Operating Expenses, Operating Income, Net Income and Earnings
Per Share for the year ended December 31, 2012, exclude the effects of a $6.2
million charge related to facility closures and severance cost, while 2011
excludes the effects of an equity compensation charge related to a transition
agreement with the former chief executive officer, a non-deductible asset
impairment charge, and a reversal of a prior-period charge for early
retirement / workforce realignment. GAAP require that the effects of these
items be included in the Condensed Consolidated Statements of Income.
Management believes that excluding these items is an appropriate comparison of
its ongoing operating results to last year, and that it is helpful to provide
readers of its financial statements with a reconciliation of these items to
its Condensed Consolidated Statements of Income reported in accordance with
SOURCE United Stationers Inc.
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