United Stationers Reports First Quarter 2013 Results

             United Stationers Reports First Quarter 2013 Results

PR Newswire

DEERFIELD, Ill., April 22, 2013

DEERFIELD, Ill., April 22, 2013 /PRNewswire/ -- United Stationers Inc.
(NASDAQ: USTR) reported results for the first quarter 2013.

First Quarter Financial Summary

  oNet sales of $1.25 billion were flat to the prior year's first quarter
    sales after adjusting for one less workday in the current year quarter.
  oDiluted earnings per share were $0.34. Adjusted earnings per share grew
    24% to $0.56^(1), compared with $0.45^(1) in the prior-year quarter.
  oFirst quarter gross margin was $188.5 million or 15.1% of sales, up 85
    basis points versus the prior-year quarter.
  oOperating expenses were $163.3 million. Adjusted operating expenses were
    $148.9 million^(1) or 11.9%^(1) of sales, up 66 basis points compared to
    the adjusted prior-year quarter results. 
  oOperating income was $25.2 million. Adjusted operating income was $39.7
    million^(1) or 3.2%^(1), up 19 basis points versus last year's adjusted
    first quarter operating income.
  oNet cash used in operating activities for the quarter totaled $13.4
    million versus net cash provided in operating activities of $27.9 million
    in the prior-year quarter.
  oShare repurchases totaled 0.2 million shares at a cost of $7.1 million
    during the current year quarter.
  oCash dividends of $5.6 million were paid during the current year quarter.

"We made progress on strategic initiatives, and delivered solid results in a
difficult demand environment," said Cody Phipps, president and chief executive
officer. "First quarter demand conditions were impacted by corporate and
government spending reductions, low inflation and continued weakness in the
economy as real jobs growth and small business confidence remain soft. O.K.I.
Supply was fully integrated into our industrial business during the quarter
and we drove additional cost reduction programs in several of our other core
businesses. Our financial results showed solid EPS growth and gross margin
expansion despite flat top-line sales. We continued to build the capabilities
needed to help our customers win in an increasingly digital and rapidly
evolving marketplace."

First Quarter Performance

Sales for the first quarter of 2013 were $1.25 billion, flat with the
prior-year quarter after adjusting for workdays. Strong growth was seen in
the industrial supplies and janitorial/breakroom categories with sales up
35.7% and 3.0%, respectively. These gains were offset by decreased sales in
the technology, office products and furniture categories of 5.9%, 6.5%, and
3.0%, respectively.

Gross margin for the quarter was $188.5 million or 15.1% of sales, compared
with $180.9 million or 14.2% of sales in the prior-year quarter. Gross margin
improved due to a more favorable product mix, margin improvement initiatives,
and higher purchase-related supplier allowances. War on Waste (WOW) cost
savings also contributed to the improvement in gross margin. Partially
offsetting these improvements in gross margin were lower inflation trends, net
of LIFO inventory impacts, and increased transportation costs.

First quarter 2013 operating expenses were $163.3 million. This included a
charge of $14.4 million for a workforce reduction and facility closures.
Excluding this item, first quarter 2013 adjusted operating expenses were
$148.9 million^(1) or 11.9%^(1) of sales, compared with last year's adjusted
$143.1 million^(1) or 11.3%^(1) of sales. Adjusted operating expenses for
2012 exclude a $6.2 million charge for a workforce reduction and facility
closures. Higher operating expenses were driven by incremental costs related
to the O.K.I. Supply Co. acquisition, and increased healthcare and workers
compensation costs. 

Operating income for the first quarter of 2013 was $25.2 million. Excluding
the charges noted above, first quarter 2013 adjusted operating income was
$39.7 million^(1) or 3.2%^(1) of sales, compared with $37.8 million^(1) or
3.0%^(1) of sales in the prior-year quarter.

Diluted earnings per share for the latest quarter were $0.34. Excluding the
charges noted above, first quarter 2013 adjusted earnings per share were
$0.56^(1), compared with $0.45^(1) in the prior-year period. The improvement
was the result of increased operating income, lower interest expense, and the
impact of share repurchases.

Cash Flow, Debt Trends and Share Repurchases

Net cash used by operating activities for the first three months of 2013 was
$13.4 million. Operating cash flow was negatively impacted by the timing of
payments for year end 2012 inventory investment buys. Cash flow used in
investing activities totaled $9.0 million in the latest quarter. Capital
spending for 2013 is expected to be approximately $35 million.

The company has approximately $1.0 billion of total committed debt capacity at
March 31, 2013 and has maintained debt-to-EBITDA leverage at the low end of
targeted levels. Outstanding debt at March 31, 2013 and 2012 was $537.0
million and $512.2 million, respectively. Debt-to-total capitalization at
March 31, 2013 was 41.6%, compared with 42.9% at March 31, 2012. During the
first quarter of 2013, the company paid $7.1 million to repurchase 0.2 million
shares and paid $5.6 million in cash dividends. The amount remaining under
Board share repurchase authorizations at April 19, 2013 was approximately
$43.8 million.

"Our balance sheet, liquidity and access to capital remains strong," said
Phipps. "We will maintain a balanced capital deployment approach of prudent
investments in growth, productivity enhancements, targeted acquisitions, and
returning capital to shareholders through cash dividends and share
repurchases. We continue to have ample funds to pursue our diversification


"While we have responded to a difficult economy by taking cost reduction
actions in the near-term, we have not lost sight of the importance of
investing in the capabilities that will drive our business in the future,"
Phipps stated. The first quarter cost actions are expected to result in
annual savings in excess of the related charge. These actions will right size
United's business and fund growth initiatives. "Looking forward, we continue
to be proactive in taking actions that will positively impact earnings,
notwithstanding the uncertain economy that we face. Our efforts remain
focused on enabling our supply chain partners to succeed in a rapidly changing
environment," concluded Phipps.

Conference Call

United Stationers will hold a conference call followed by a question and
answer session on Tuesday, April 23, 2013, at 10:00 a.m. CDT, to discuss first
quarter 2013 results. To participate, callers within the U.S. and Canada
should dial (877) 317-6789, and international callers should dial (412)
317-6789 approximately 10 minutes before the presentation. The passcode is
"10026667". To listen to the webcast, participants should visit the Investors
section of the company's website (link:
http://investors.unitedstationers.com), and click on the "Q1-13 Earnings
Release" button on the right side of the page, several minutes before the
event is broadcast. Interested parties can access an archived version of the
call, this news release, a financial slide presentation and other information
related to the call, also located on the Investors section of United
Stationers' website, about two hours after the call ends. You may also
download the native iOS United Stationers iPhone app by visiting the iTunes
store and searching for the United Stationers app, or you may view the app in
your internet browser by clicking here:
http://investors.unitedstationers.com/m/. The browser app can be viewed on
all supported smartphone devices including iPhone^®, Android™ and BlackBerry^®

Forward-Looking Statements

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.

Company Overview

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 65 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 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 within this news release related to financial results
are presented in accordance with U.S. Generally Accepted Accounting Principles

For Further Information Contact:

Cody Phipps
President and Chief Executive Officer
Fareed Khan
Senior Vice President and Chief Financial Officer
United Stationers Inc.
(847) 627-7000

-tables follow-

United Stationers Inc. and Subsidiaries

Condensed Consolidated Statements of Income


(in thousands, except per share data)
                                   For the Three Months Ended March 31,
                                   2013                   2012
Net sales                          $     1,250,485    $     1,271,647
Cost of goods sold                 1,061,960              1,090,718
Gross profit                       188,525                180,929
Operating expenses:
 Warehousing, marketing and
                                   163,284                149,337
 administrative charges
Operating income                   25,241                 31,592
Interest expense, net              3,113                  7,166
Income before income taxes         22,128                 24,426
Income tax expense                 8,254                  9,314
Net income                         $       13,874  $       15,112
Net income per common share -      $              $        
diluted                            0.34                  0.36
Weighted average number of
                                   40,628                 42,420
 common shares − diluted

United Stationers Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(dollars in thousands, except share data)
                                 (unaudited)                   (audited)
                                 March 31,                      As of
ASSETS                           2013           2012            Dec. 31, 2012
 Current assets:
 Cash and cash equivalents    $   20,522  $    11,198  $    30,919
 Accounts receivable, net     632,247        642,028         658,760
 Inventories                  726,217        672,274         767,206
 Other current assets         33,356         31,109          30,118
 Total current assets  1,412,342      1,356,609       1,487,003
 Property, plant and            139,345        126,931         143,523
equipment, net
 Intangible assets, net         65,497         55,020          67,192
 Goodwill                       357,907        328,061         357,226
 Other long-term assets         22,179         21,653          20,260
 Total assets          $ 1,997,270   $ 1,888,274    $ 2,075,204
 Current liabilities:
 Accounts payable             $   431,940  $   433,725   $   495,278
 Accrued liabilities          172,726        173,059         205,228
 Short-term debt              1,162          50,000          - -
 Total current         605,828        656,784         700,506
 Deferred income taxes          15,680         14,975          18,054
 Long-term debt                 535,885        462,150         524,376
 Other long-term liabilities    85,763         71,750          94,176
 Total liabilities     1,243,156      1,205,659       1,337,112
 Stockholders' equity:
 Common stock, $0.10 par
value; authorized −
100,000,000shares, issued −     7,444          7,444           7,444
74,435,628 shares in 2013 and
 Additional paid-in capital   405,039        405,588         404,196
 Treasury stock, at cost –
33,760,943 and33,323,963
shares at March 31, 2013 and     (957,124)      (940,564)       (963,220)
2012,respectively and
34,116,220 shares at December
31, 2012
 Retained earnings            1,351,631      1,262,791       1,343,437
 Accumulated other            (52,876)       (52,644)        (53,765)
comprehensive loss
 Total stockholders' equity     754,114        682,615         738,092
 Total liabilities and     $  1,997,270  $  1,888,274   $ 2,075,204
stockholders' equity

United Stationers Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows


(in thousands)
                                              For the Three Months

                                              Ended March 31,
                                              2013             2012
Cash Flows From Operating Activities:
 Net income                               $    13,874  $    15,112
 Adjustments to reconcile net income to
net cash (used in) provided by

 operating activities:
 Depreciation and amortization            9,475            8,607
 Share-based compensation                 2,420            1,926
 Loss (gain) on the disposition of        14               (49)
plant, property and equipment
 Amortization of capitalized financing    224              241
 Excess tax benefits related to           (1,477)          (464)
share-based compensation
 Deferred income taxes                    (2,079)          (1,944)
 Changes in operating assets and
 Decrease in accounts receivable, net 26,267           17,640
 Decrease in inventory                40,828           69,959
 (Increase) decrease in other assets  (3,999)          15,681
 Decrease in accounts payable         (77,404)         (63,520)
 Increase (decrease) in checks        14,201           (1,758)
 Decrease in accrued liabilities      (27,304)         (19,427)
 Decrease in other liabilities        (8,407)          (14,108)
 Net cash (used in) provided by   (13,367)         27,896
operating activities
Cash Flows From Investing Activities:
 Capital expenditures                     (9,096)          (4,479)
 Proceeds from the disposition of         86               84
property, plant and equipment
 Net cash used in investing       (9,010)          (4,395)
Cash Flows From Financing Activities:
 Net borrowings under debt arrangements   12,672           15,393
 Net proceeds (disbursements) from        10,840           (942)
share-based compensation arrangements
 Acquisition of treasury stock, at cost   (7,124)          (33,575)
 Payment of cash dividends                (5,571)          (5,436)
 Excess tax benefits related to           1,477            464
share-based compensation
 Payment of debt issuance costs           (345)            - -
 Net cash provided by (used in)   11,949           (24,096)
financing activities
 Effect of exchange rate changes on cash  31               10
and cash equivalents
 Net change in cash and cash equivalents  (10,397)         (585)
 Cash and cash equivalents, beginning of  30,919           11,783
 Cash and cash equivalents, end of        $    20,522   $    11,198

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)
                             2013                     2012
                                          %to                     %to
                             Amount                   Amount
                                          NetSales                NetSales
Net sales                    $ 1,250,485  100.0     % $ 1,271,647  100.00    %
Gross profit                 $ 188,525    15.08     % $ 180,929    14.23     %
Operating expenses           $ 163,284    13.06     % $ 149,337    11.74     %
Workforce reduction and      (14,432)     (1.15)%     (6,247)      (0.49%)
facility closure charge
Adjusted operating expenses  $ 148,852    11.91     % $ 143,090    11.25     %
Operating income             $ 25,241     2.02      % $ 31,592     2.49      %
Operating expense items      14,432       1.15      % 6,247        0.49      %
noted above
Adjusted operating income    $ 39,673     3.17      % $ 37,839     2.98      %
Net income                   $ 13,874                 $ 15,112
Operating expense items      8,948                    3,873
noted above, net of taxes
Adjusted net income          $ 22,822                 $ 18,985
Diluted earnings per share   $ 0.34                   $ 0.36
Per share operating expense  0.22                     0.09
items noted above
Adjusted diluted earnings    $ 0.56                   $ 0.45
per share
Adjusted diluted earnings
per share - growth rate      24.4%
over the prior year period
Weighted average number of
                             40,628                   42,420
common shares — diluted

Note: Adjusted Operating Expenses, Operating Income, Net Income and Earnings
Per Share in the first quarter of 2013 and 2012, respectively, exclude the
effects of a $14.4 million charge and $6.2 million charge, each related to
workforce reductions and facility closures. Generally Accepted Accounting
Principles require that the effects of this item be included in the Condensed
Consolidated Statements of Income. Management believes that excluding this
item is an appropriate comparison of its ongoing operating results to last
year. 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 Generally Accepted Accounting Principles.

SOURCE United Stationers Inc.

Website: http://www.unitedstationers.com
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