United Stationers Reports Record Second Quarter 2013 Earnings Per Share

   United Stationers Reports Record Second Quarter 2013 Earnings Per Share

PR Newswire

DEERFIELD, Ill., July 22, 2013

DEERFIELD, Ill., July 22, 2013 /PRNewswire/ -- United Stationers Inc. (NASDAQ:
USTR) reported strong second quarter 2013 earnings.

Second Quarter Financial Summary

  oDiluted earnings per share grew by 30% to $0.86 versus $0.66 in the
    prior-year quarter.
  oNet sales were $1.3 billion, flat with the prior year.
  oSecond quarter gross margin was $201.9 million or 15.8% of sales, compared
    with $188.3 million or 14.8% of sales in the prior-year quarter.
  oOperating expenses were $143.0 million or 11.2% of sales, compared with
    $137.9 million or 10.8% of sales in the prior-year quarter.
  oOperating income was up 17% to $58.9 million or 4.6% of sales, versus
    $50.3 million or 3.9% of sales in the prior-year quarter.
  oNet income increased by 28% to $34.7 million compared with $27.0 million
    in the prior-year quarter.
  oNet cash provided by operating activities for the three months ended June
    30, 2013 totaled $58.7 million versus $20.4 million in the prior-year
    period. Share repurchases totaled $32.7 million for approximately 1.0
    million shares during the three months ended June 30, 2013.

"We are pleased to report another quarter of strong results," said Cody
Phipps, president and chief executive officer. "Our strategic initiatives are
working, we are in a strong financial position, and we continue to make
excellent progress in developing talent and strengthening our purpose-driven
culture. The OKI Supply acquisition, our recent restructuring actions,
investments in growth businesses and ongoing cost actions were important
factors in enabling us to deliver solid net income and EPS growth. We
accomplished this in a soft demand environment while we continued to focus on
the fundamentals that ensure long-term success."

Second Quarter Performance

Sales of $1.3 billion for the second quarter were flat to the prior year
quarter. Strong growth was seen in the industrial supplies category with sales
up 31.5%, which benefited from the acquisition of OKI Supply in the fourth
quarter of 2012. Janitorial/breakroom sales for the second quarter grew
2.6%. Sales for office products, technology, and furniture categories were
down 4.0%, 6.3% and 5.0%, respectively reflecting a soft demand environment. 

Gross margin for the quarter was $201.9 million or 15.8% of sales, compared
with $188.3 million or 14.8% of sales in the year-ago 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.

Second quarter 2013 operating expenses were $143.0 million or 11.2% of sales
compared with $137.9 million or 10.8% of sales, in the second quarter of
2012. These results reflected investments in growth businesses, the OKI
acquisition, and variable management compensation partially offset by savings
from our restructuring programs and ongoing cost savings initiatives. 

Operating income for the quarter ended June 30, 2013 grew by 17% to $58.9
million or 4.6% of sales, versus $50.3 million or 3.9% of sales in the second
quarter of 2012.

Diluted earnings per share for the latest quarter were up 30% to $0.86,
compared with $0.66 in the prior-year period. Earnings per share in the 2013
quarter were favorably affected by increased operating income and lower
interest expense. 

Six-Month Performance

Sales in the first half of 2013 were $2.5 billion, flat compared with the
prior-year period. This was led by a 33.5% increase in industrial supplies
and a 2.8% increase in janitorial/breakroom after adjusting for workdays.
Office products were down by 5.2%, furniture sales were down 4.1% and
technology sales declined 6.1%.

Gross margin for the first half of 2013 was $390.5 million or 15.5% of sales,
compared to $369.2 million or 14.5% of sales in the same prior-year period.
The primary drivers of this increase were a shift to a higher margin mix,
ongoing margin improvement initiatives, and higher purchase-related supplier
allowances.

Operating expenses in 2013 were $306.3 million or 12.1% of sales, compared
with $287.3 million or 11.3% of sales. Included in these results are a $14.4
million first quarter 2013 charge and a $6.2 million first quarter 2012
charge, both associated with workforce reduction and facility closure
programs. Excluding these items, operating expenses in 2013 were $291.9^(1)
or 11.6%^(1) of sales, compared with the prior year of $281.0 million^(1) or
11.0%^(1) of sales.

Operating income for the first half of 2013 was $84.2 million or 3.3% of
sales, compared with $81.9 million or 3.2% of sales in the prior year period.
Excluding the items mentioned above, operating income through the first six
months of 2013 was $98.6^(1) million or 3.9%^(1) of sales, compared with $88.2
million^(1) or 3.5%^(1) of sales in the same period last year.

Diluted earnings per share for the first half of 2013 were $1.20 versus $1.01
in the first half of 2012. Excluding the items mentioned above, diluted
earnings per share for the first half of 2013 were up 28% to $1.42^(1),
compared with $1.11^(1) in the prior-year period.

Cash Flow, Debt Trends and Share Repurchases

Net cash provided by operating activities for the six months ended June 30,
2013 was $45.3 million, compared with $48.3 million in the same period last
year. Cash flow used in investing activities totaled $13.5 million in 2013,
compared with $10.2 million in the same period last year. Capital spending
for 2013 is expected to be approximately $35 million.

The company currently has approximately $1.0 billion of total committed debt
capacity and $518.5 million outstanding at June 30, 2013. Debt-to-total
capitalization declined to 40.5% at June 30, 2013 from 43.3% at June 30,
2012. During the latest six months, the company paid $39.8 million to acquire
approximately 1.2 million shares and paid cash dividends of $11.2 million to
common shareholders.

Outlook

"We continue to strengthen our core businesses while diversifying our
portfolio into categories that are highly relevant to our customers while
leveraging our capabilities and supply chain infrastructure," stated Phipps.
"A soft demand environment will necessitate a strong focus on the fundamentals
and close management of our cost structure in the near term as we invest in
the future. We expect the benefits from the OKI acquisition and our
restructuring actions to continue into the second half of the year. We will
keep our businesses healthy and profitable while we enhance shareholder value
through earnings growth, accretive acquisitions, dividends and share
repurchases."

Conference Call

United Stationers will hold a conference call followed by a question and
answer session on Tuesday, July 23, 2013, at 10:00 a.m. CDT, to discuss second
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
"10029341." 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 "Q2-13 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 Apple's App
Store and searching for the United Stationers app, or you may view the app in
your internet browser by clicking on this URL:
http://investors.unitedstationers.com/m/. The browser app can be viewed on
all supported smartphone devices including iPhone^®, Android^TM and
BlackBerry^® devices.

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 64 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 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
or
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

(unaudited)

(in thousands, except per share data)
                          For the Three Months Ended  For the Six Months Ended
                          June 30,                    June 30,
                          2013           2012         2013         2012
Net sales                 $  1,274,494   $ 1,275,710  $ 2,524,979  $ 2,547,357
Cost of goods sold        1,072,558      1,087,451    2,134,518    2,178,169
Gross profit              201,936        188,259      390,461      369,188
Operating expenses:
 Warehousing,
marketing                 143,009        137,935      306,293      287,272
andadministrative
expenses
Operating income          58,927         50,324       84,168       81,916
Interest expense, net     2,856          7,070        5,969        14,236
Income before income      56,071         43,254       78,199       67,680
taxes
Income tax expense        21,401         16,225       29,655       25,539
Net income                $  34,670      $ 27,029     $ 48,544     $ 42,141
Net income per common     $  0.86        $    0.66    $    1.20    $    1.01
share − diluted
Weighted average number
ofcommon shares −        40,328         40,887       40,475       41,626
diluted



United Stationers Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(dollars in thousands, except share data)
                                   (unaudited)               (audited)
                                   As of June 30,            As of
                                   2013         2012         Dec. 31, 2012
ASSETS
 Current assets:
 Cash and cash equivalents      $ 21,117     $ 14,559     $    30,919
 Accounts receivable, net       662,195      655,018      658,760
 Inventories                    732,202      692,939      767,206
 Other current assets           26,014       30,857       30,118
 Total current assets    1,441,528    1,393,373    1,487,003
 Property, plant and equipment,   139,098      124,583      143,523
net
 Goodwill                       358,427      328,061      357,226
 Intangible assets, net         64,713       53,756       67,192
 Other long-term assets           26,598       21,958       20,260
 Total assets            $ 2,030,364  $ 1,921,731  $    2,075,204
LIABILITIES AND STOCKHOLDERS'
EQUITY
 Current liabilities:
 Accounts payable               $ 475,207    $ 446,644    $    495,278
 Accrued liabilities            176,394      171,920      205,228
 Short-term debt                1,200        50,000       --
 Total current           652,801      668,564      700,506
liabilities
 Deferred income taxes            16,693       14,203       18,054
 Long-term debt                   517,285      477,140      524,376
 Other long-term liabilities      83,059       72,613       94,176
 Total liabilities       1,269,838    1,232,520    1,337,112
 Stockholders' equity:
 Common stock, $0.10 par
value; authorized – 100,000,000    7,444        7,444        7,444
shares, issued – 74,435,628
shares in 2013 and 2012
 Additional paid-in capital     408,419      405,461      404,196
 Treasury stock, at cost –
34,605,362 and 33,890,478 shares
at June 30, 2013 and 2012,         (986,949)    (957,029)    (963,220)
respectively and 34,116,220
shares at December 31, 2012
 Retained earnings              1,380,727    1,284,538    1,343,437
 Accumulated other              (49,115)     (51,203)     (53,765)
comprehensive loss
 Total stockholders' equity       760,526      689,211      738,092
 Total liabilities and       $ 2,030,364  $ 1,921,731  $    2,075,204
stockholders' equity



United Stationers Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)
                                             For the Six Months Ended June 30,
                                             2013               2012
Cash Flows From Operating Activities:
 Net income                              $    48,544        $    42,141
 Adjustments to reconcile net income to
net cash provided by
 operating activities:
 Depreciation and amortization           19,381             17,338
 Share-based compensation                5,538              3,165
 (Gain) loss on the disposition of       (219)              49
plant, property and equipment
 Amortization of capitalized financing   446                498
costs
 Excess tax benefits related to          (1,545)            (159)
share-based compensation
 Deferred income taxes                   (7,195)            (3,474)
Changes in operating assets and
liabilities, excluding the effects of
acquisitions:
 (Increase) decrease in accounts     (4,036)            4,425
receivable, net
 Decrease in inventory               31,604             48,924
 Decrease in other assets            997                15,455
 Decrease in accounts payable        (36,236)           (32,178)
 Increase (decrease) in checks       16,094             (20,324)
in-transit
 Decrease in accrued liabilities     (20,757)           (14,283)
 Decrease in other liabilities       (7,366)            (13,244)
 Net cash provided by operating  45,250             48,333
activities
Cash Flows From Investing Activities:
 Capital expenditures                    (17,044)           (10,342)
 Proceeds from the disposition of        3,522              103
property, plant and equipment
 Net cash used in investing      (13,522)           (10,239)
activities
Cash Flows From Financing Activities:
 Net (repayments) borrowings under debt  (5,891)            30,384
arrangements
 Net proceeds (disbursements) from      14,366             (583)
share-based compensationarrangements
 Acquisition of treasury stock, at cost  (39,810)           (54,311)
 Payment of cash dividends               (11,220)           (10,848)
 Excess tax benefits related to          1,545              159
share-based compensation
 Payment of debt issuance costs          (410)              (121)
 Net cash used in financing      (41,420)           (35,320)
activities
 Effect of exchange rate changes on      (110)              2
cash and cash equivalents
 Net change in cash and cash             (9,802)            2,776
equivalents
 Cash and cash equivalents, beginning    30,919             11,783
of period
 Cash and cash equivalents, end of       $    21,117        $    14,559
period



United Stationers Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

Adjusted Operating Income, Net Income, and Diluted Earnings Per Share

(unaudited)

(in thousands, except per share data)
                            FortheSixMonthsEndedJune 30,
                            2013                      2012
                                          %to                     %to
                            Amount                    Amount
                                          NetSales                NetSales
Net sales                   $ 2,524,979   100.00    % $ 2,547,357  100.00    %
Gross profit                $ 390,461     15.46     % $ 369,188    14.49     %
Operating expenses          $ 306,293     12.13     % $ 287,272    11.28     %
 Worforce reduction and     (14,432)    (0.57)        (6,247)    (0.25)
facility closure charge
Adjusted operating          $ 291,861     11.56     % $ 281,025    11.03     %
expenses
Operating income            $ 84,168      3.33      % $ 81,916     3.21      %
Operating expense items     14,432        0.57        6,247        0.25
noted above
Adjusted operating income   $ 98,600      3.90      % $ 88,163     3.46      %
Net income                  $ 48, 544                 $ 42,141
Operating expense items     8,948                     3,873
noted above, net of taxes
Adjusted net income         $ 57,492                  $ 46,014
Diluted earnings per share  $ 1.20                    $ 1.01
Per share operating         0.22                      0.10
expense items noted above
Adjusted diluted earnings   $ 1.42                    $ 1.11
per share
Adjusted diluted earnings
per share — growth rate     28          %
over the prior year period
Weighted average number of  40,475                    41,626
common shares — diluted



Note: Adjusted Operating Expenses, Operating Income, Net Income and Earnings
Per Share for the six months ended June 30, 2013 and June 20, 2012, exclude
the effects of a $14.4 million charge and $6.2 million charge, each related to
workforce reductions and facility closures, respectively. Generally Accepted
Accounting Principles 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. 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