Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ESSENDANT INC | d299755d8k.htm |
| EX-99.1 - PRESS RELEASE, DATED FEBRUARY 13, 2012 - ESSENDANT INC | d299755dex991.htm |
 February 14, 2012
1
United Stationers Inc.
Earnings Presentation
Fourth Quarter 2011
TO BE FILED IN
CONJUNCTION WITH
PRESS RELEASE
Exhibit 99.2 |
 February 14, 2012
2
Forward Looking Statements and
Non-GAAP Measures
This presentation contains forward-looking statements, including references to goals, plans,
strategies, objectives, 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 business, credit and other 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 variability in customer and
end-user demand patterns on United’s product sales mix and, in turn, on profit
margins; the impact of a loss of, or substantial decrease in, the availability of products or service
from key suppliers at competitive prices; the availability of financing sources to meet United’s
business needs; United’s ability to manage inventory in order to maximize sales and
supplier allowances while minimizing excess and obsolete inventory; United’s ability to maintain its
existing information technology and e-commerce systems and to successfully procure and implement
new systems without business disruption or other unanticipated difficulties or costs;
United’s ability to effectively identify, consummate and integrate acquisitions; 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
presentation 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 in this release in 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.
* This is non-GAAP information. A reconciliation of these items to the most comparable GAAP
measures is presented on the company’s Website (www.unitedstationers.com) under the
Investor Information section. Except as noted, all references to financial results within this
presentation are presented in accordance with U.S. Generally Accepted Accounting Principles.
|
 February 14, 2012
3
Q4 2011 Headlines
Sales increased 1.3% from Q4 2010 to $1.2 billion.
Adjusted earnings per diluted share were $0.64*, up 10%* from an
adjusted Q4 2010 EPS of $0.58*.
Gross margin rate of 14.5% was down from 16.0% last year.
Adjusted operating expenses in Q4 2011 were $128.6 million*, compared
to an adjusted $137.0 million* in the prior-year quarter, and were 10.7%* of
sales, down from 11.5%* of sales in the prior-year quarter.
Adjusted operating income as a percent of sales was 3.8%*, down from last
year’s adjusted 4.4%*.
Adjusted net income decreased 1%* to $27.5 million from an adjusted
$27.7 million* in Q4 2010.
Net cash provided by operating activities was $30.9 million in Q4 2011.
Debt was up $55.0 million from the prior-year end.
During the quarter, the Company repurchased 0.8 million shares for $25.0
million and paid a cash dividend of $5.5 million to common shareholders.
|
 February 14, 2012
4
Fourth Quarter 2011 P&L
% to sales change
$
% to Sales
$
% to Sales
$ change
% change
Fav (Unfav)
$ Millions (except EPS)
QTD Q4 2011
QTD Q4 2011
QTD Q4 2010
QTD Q4 2010
Fav (Unfav)
Fav (Unfav)
basis points
Net Sales
1,201.4
$
1,186.5
$
14.9
$
1.3%
Workday Adjusted Sales Growth
1.3%
Gross Margin
173.7
14.46%
189.6
15.98%
(15.9)
(8.4%)
(152)
Operating Expense
127.8
10.64%
131.4
11.08%
3.6
2.7%
44
Operating Income
45.9
3.82%
58.2
4.90%
(12.3)
(21.1%)
(108)
Interest & Other
5.0
0.42%
7.5
0.63%
2.5
33.3%
21
Taxes
13.0
1.09%
19.6
1.66%
6.6
33.7%
57
Net Income
27.9
$
2.32%
31.1
$
2.62%
(3.2)
$
(10.3%)
(30)
Diluted Shares (000s)
43,010
47,456
Diluted EPS
0.65
$
0.65
$
-
$
0.0%
Adjusted to exclude non-operating items *
Adjusted Operating Income
45.2
$
3.76%
52.6
$
4.43%
(7.4)
$
(14.0%)
(68)
Adjusted Net Income
27.5
2.29%
27.7
2.34%
(0.2)
(0.7%)
(5)
Adjusted Diluted EPS
0.64
$
0.58
$
0.06
$
10.3% |
 February 14, 2012
5
YTD 2011 Headlines
Sales increased 3.6%, from YTD 2011 to $5.0 billion.
Adjusted earnings per diluted share were $2.51*, up 15%* from YTD 2010
EPS of $2.19*.
Gross margin rate of 14.8% was down from 15.1% last year.
Adjusted
operating
expenses
in
YTD
2011
were
$536.4
million*,
up
from
$532.4 million* in the prior-year period, and were 10.7%* of sales versus
11.0%* in the prior-year period.
Adjusted operating income as a percent of sales was flat with the prior year
at 4.1%* of sales.
Adjusted
net
income
increased
7%*
to
$112.9
million*
from
$105.6
million*
in YTD 2010.
Net
cash
provided
by
operating
activities
was
$130.4
million
YTD
2011
compared to $114.8 million YTD 2010.
Through YTD December 31, 2011, the Company repurchased 5.1 million
shares for $162.7 million, paid cash dividends of $17.5 million to common
shareholders, and declared another $0.13 per share dividend.
|
 February 14, 2012
6
Year-to-Date 2011 P&L
% to sales change
$ Millions (except EPS)
$
% to Sales
$
% to Sales
$ change
% change
Fav (Unfav)
YTD Q4 2011
YTD Q4 2011
YTD Q4 2010
YTD Q4 2010
Fav (Unfav)
Fav (Unfav)
basis points
Net Sales
5,005.5
$
4,832.2
$
173.3
$
3.6%
Workday Adjusted Sales Growth
3.2%
Gross Margin
740.1
14.78%
730.6
15.12%
9.5
1.3%
(33)
Operating Expense
541.8
10.82%
520.8
10.78%
(21.0)
(4.0%)
(5)
Operating Income
198.3
3.96%
209.8
4.34%
(11.5)
(5.5%)
(38)
Interest & Other
25.4
0.51%
26.8
0.55%
1.4
5.2%
4
Taxes
63.9
1.28%
70.2
1.46%
6.3
9.0%
18
Net Income
109.0
$
2.17%
112.8
$
2.33%
(3.8)
$
(3.4%)
(16)
Diluted Shares (000s)
45,014
48,286
Diluted EPS
2.42
$
2.34
$
0.08
$
3.4%
Adjusted to exclude non-operating items*
Adjusted Operating Income
203.6
$
4.07%
198.2
$
4.10%
5.4
$
2.7%
(3)
Adjusted Net Income
112.9
2.26%
105.6
2.19%
7.3
6.9%
7
Adjusted Diluted EPS
2.51
$
2.19
$
0.32
$
14.7% |
 February 14, 2012
7
Sales
by Product Category –
Q4 2011
•
Technology sales declined due to the loss of business to direct sourcing in the
national accounts channel and lower purchases by resellers within the
Independent Dealer Channel. This sales decline was partially offset by
growth in New Channels and from other targeted initiatives. •
Office Products sales were down slightly versus last year with decreases in the
Independent Dealer Channel and National Accounts partially offset by growth
from other targeted initiatives. •
Janitorial/Breakroom reflects growth and market share gains in the independent
dealer channel and strong relationships with leading eTailers.
•
Industrial sales growth was due to the Company’s ability to continue to
efficiently execute its strategy to expand market coverage and grow
wholesale penetration in the category. •
Furniture
sales
were
impacted
by
the
loss
of
business to direct sourcing in the national accounts channel.
Sales
Sales
growth (decline)
growth (decline)
Q4 2011
Q3 2011
Category
vs Q4 2010
vs Q3 2010
Technology
(4.8%)
(0.6%)
Office Products
(1.0%)
(0.6%)
Janitorial/
Breakroom
10.8%
10.6%
Industrial
23.4%
23.7%
Furniture
(11.7%)
(9.8%)
Sales
Sales
Sales
growth (decline)
growth (decline)
growth (decline)
Q2 2011
Q1 2011
Q4 2010
vs Q2 2010
vs Q1 2010
vs Q4 2009
(5.8%)
3.6%
(2.8%)
4.4%
3.4%
0.4%
11.5%
7.5%
(1.7%)
20.5%
26.1%
25.2%
(3.9%)
(0.9%)
0.9%
Technology
34%
Office Products
27%
Janitorial/
Breakroom
26%
Furniture
6%
Industrial
7%
Q4 2011 |
 February 14, 2012
8
Sales by Channel –
Q4 2011
•
Independent/Other channel sales growth was attributable to over 20% growth in
Industrial, strong growth in Janitorial/Breakroom, and continued success
with growth initiatives. •
National Accounts sales decline was mainly due to a shift to more direct purchases
from manufacturers, primarily in furniture and certain technology
products. Sales growth
Sales growth
Sales growth
Sales growth
Sales growth
(decline)
(decline)
(decline)
(decline)
(decline)
Q4 2011
Q3 2011
Q2 2011
Q1 2011
Q4 2010
Channel
vs Q4 2010
vs Q3 2010
vs Q2 2010
vs Q1 2010
vs Q4 2009
Independent
& Other
4.6%
5.7%
4.4%
6.2%
1.2%
Nationals
(17.5%)
(12.1%)
(5.6%)
1.8%
(4.3%)
Independent
& Other
87%
Nationals
13%
Q4 2011 |
 February 14, 2012
9
Gross Margin
•
Margins declined in Q4 2011 versus Q4 2010 due to lower margin mix, continued
competitive pricing pressures, lower inventory purchase-related
supplier allowances, and higher diesel fuel costs partially offset by
“War on Waste” (WOW) savings.
dollars in millions
Q1 10
Q2 10
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Dollars
$166.9
$179.2
$194.8
$189.5
$182.4
$184.2
$199.7
$173.7
Rate
14.5%
14.7%
15.3%
16.0%
14.7%
14.7%
15.3%
14.5%
10.0%
12.5%
15.0%
17.5%
20.0%
$-
$25.0
$50.0
$75.0
$100.0
$125.0
$150.0
$175.0
$200.0 |
 February 14, 2012
10
Adjusted Operating Expense*
•
Adjusted operating expense dollars decreased in Q4 2011 versus the prior-year
quarter mainly due to lower
variable
compensation
costs
and
the
reversal
of
a
vacation
liability
in
Q4
2011
which
was
expensed in previous quarters in 2011 as employees earned paid time off.
•
As
a
percent
to
sales,
adjusted
operating
expenses
were
84
basis
points
favorable
versus
the
prior
year.
dollars in millions
Q1 10
Q2 10 *
Q3 10 *
Q4 10 *
Q1 11 *
Q2 11 *
Q3 11
Q4 11 *
Dollars
$131.1
$131.7
$132.6
$137.0
$140.8
$132.0
$135.1
$128.6
Rate
11.4%
10.8%
10.4%
11.5%
11.4%
10.5%
10.3%
10.7%
7.5%
10.0%
12.5%
15.0%
$-
$25.0
$50.0
$75.0
$100.0
$125.0
$150.0 |
 February 14, 2012
11
Adjusted Operating Income*
dollars in millions
Q1 10
Q2 10 *
Q3 10 *
Q4 10 *
Q1 11 *
Q2 11 *
Q3 11
Q4 11 *
Dollars
$35.8
$47.6
$62.2
$52.6
$41.6
$52.2
$64.6
$45.2
Rate
3.1%
3.9%
4.9%
4.4%
3.4%
4.2%
4.9%
3.8%
2.0%
3.0%
4.0%
5.0%
6.0%
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0 |
 February 14, 2012
12
Adjusted Earnings per Share*
•
Adjusted EPS in Q4 2011 included a $2.3 million or $0.05 per share benefit from the
negotiation of a lower liability for certain earn-outs and deferred
payments involved in a 2010 acquisition, a $1.4 million or $0.03 per share
benefit related to a reduction in income tax valuation allowances, and an
approximate $0.06 per share contribution related to share repurchase
activity. shares in millions
Q1 10
Q2 10 *
Q3 10 *
Q4 10 *
Q1 11 *
Q2 11 *
Q3 11
Q4 11 *
EPS
$0.37
$0.51
$0.72
$0.58
$0.47
$0.59
$0.81
$0.64
Diluted Shares
49.640
49.272
47.548
47.456
46.656
46.340
44.202
43.010
0.000
1.000
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90 |
 February 14, 2012
13
Working Capital Summary
•
Receivables were up 5% versus Q4 2010.
•
Net trade A/R DSO increased from Q4 2010 as the economic environment remains
challenging for certain customers.
•
Inventories were up 8% versus Q4 2010 as inventories were being built to support
growth strategies heading into 2012 and for investment buys.
•
Turnover remained consistent with this time last year at 6.1 turns.
•
Payables leverage ratios were up from Q4 2010 and in line with typical
levels. $ Millions
3/31/2010
6/30/2010
9/30/2010
12/31/2010
3/31/2011
6/30/2011
9/30/2011
12/31/2011
Accounts Receivable
606.2
$
642.6
$
655.1
$
628.1
$
648.1
$
669.5
$
699.2
$
659.2
$
Inventories (LIFO)
610.1
639.2
617.4
684.1
636.2
632.1
615.5
741.5
Accounts Payable
433.8
443.9
424.9
421.6
422.4
443.5
410.8
499.3
Q1 10
Q2 10
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Net Trade A/R DSO
43
42
41
41
42
41
42
43
Inventory Turns
6.6
6.7
6.8
6.1
6.4
6.8
7.1
6.1
A/P as % Inventory (LIFO)
71%
69%
69%
62%
66%
70%
67%
67%
A/P as % Inventory (FIFO)
63%
61%
61%
55%
58%
61%
58%
60% |
 February 14, 2012
14
Cash Flows
•
Year over year cash flow was positively affected by lower working capital
requirements. QTD
QTD
QTD
QTD
2010
QTD
QTD
QTD
QTD
2011
$ Millions
Q1 10
Q2 10
Q3 10
Q4 10
Total Year
Q1 11
Q2 11
Q3 11
Q4 11
YTD
Net Income
18.2
$
27.0
$
36.5
$
31.1
$
112.8
$
20.4
$
24.9
$
35.8
$
27.9
$
109.0
$
Depreciation & Amortization
9.4
9.4
9.4
9.4
37.6
9.0
8.9
8.7
8.4
35.0
Share-based compensation
3.3
3.5
3.7
3.6
14.1
3.7
6.7
2.7
2.6
15.7
Writedown on impaired assets
-
-
-
-
-
1.6
-
-
-
1.6
Change in Accounts Receivable
35.9
(36.7)
(12.3)
27.0
13.9
(19.8)
(21.3)
(30.6)
40.0
(31.7)
Change in Inventory
(18.1)
(29.4)
21.9
(66.5)
(92.1)
48.2
4.3
15.2
(126.1)
(58.4)
Change in Accounts Payable
42.5
9.9
(18.9)
(3.3)
30.2
1.0
21.0
(33.1)
88.5
77.4
Change in Other Working Capital
(4.1)
1.0
12.8
(6.6)
3.1
(18.7)
(3.3)
21.7
(17.0)
(17.3)
Change in Working Capital
56.2
(55.2)
3.5
(49.4)
(44.9)
10.7
0.7
(26.8)
(14.6)
(30.0)
Other
(4.2)
(12.9)
6.6
5.7
(4.8)
(4.4)
(8.9)
5.8
6.6
(0.9)
Adjusted cash provided by (used in)
operating activities
82.9
(28.2)
59.7
0.4
114.8
41.0
32.3
26.2
30.9
130.4
Capital Expenditures
(5.7)
(5.0)
(7.3)
(9.3)
(27.3)
(9.8)
(6.4)
(4.6)
(7.2)
(28.0)
Proceeds from disposition of fixed assets
-
-
0.1
-
0.1
-
-
0.1
-
0.1
Net cash used for capital expenditures *
(5.7)
(5.0)
(7.2)
(9.3)
(27.2)
(9.8)
(6.4)
(4.5)
(7.2)
(27.9)
Free Cash Flow *
77.2
$
(33.2)
$
52.5
$
(8.9)
$
87.6
$
31.2
$
25.9
$
21.7
$
23.7
$
102.5
$ |
 February 14, 2012
15
Debt and Capitalization
•
Operating cash flow continues to be used for investments in growth initiatives,
share repurchases, and quarterly dividends.
•
Total debt was up $55 million from Q4 2010. In September, the Company completed a
five-year $700 million Revolving Credit Facility. This facility
replaces the Company’s $425 million revolver and $200 million term
loan. The Revolving Credit Facility will be used for strategic growth initiatives,
working capital needs and other general corporate purposes.
•
Share
repurchases
totaled
5.1
million
shares,
or
$162.7
million,
in
2011.
$ Millions
3/31/2010
6/30/2010
9/30/2010
12/31/2010
3/31/2011
6/30/2011
9/30/2011
12/31/2011
Debt
441.8
$
453.4
$
441.8
$
441.8
$
441.8
$
441.8
$
489.7
$
496.8
$
Equity
730.5
710.6
733.1
759.6
769.7
752.7
721.2
704.7
Total capitalization
1,172.3
$
1,164.0
$
1,174.9
$
1,201.4
$
1,211.5
$
1,194.5
$
1,210.9
$
1,201.4
$
Debt-to-total capitalization
37.7%
39.0%
37.6%
36.8%
36.5%
37.0%
40.4%
41.3% |