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| file | filename |
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| 8-K - FORM 8-K - ESSENDANT INC | d383248d8k.htm |
| EX-99.1 - PRESS RELEASE - ESSENDANT INC | d383248dex991.htm |
 1
United Stationers Inc.
Earnings Presentation
Second Quarter 2012
July 23, 2012
Exhibit 99.2 |
 2
Forward Looking Statements and
Non-GAAP Measures
July 23, 2012
This presentation 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
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 within this presentation to financial results are
presented in accordance with U.S. Generally Accepted Accounting Principles.
Certain prior-period amounts have been reclassified to conform to the current
presentation. |
 3
Q2 2012 Headlines
Sales increased 1.5% from Q2 2011 to $1.3 billion.
Earnings per diluted share were $0.66, compared to an adjusted Q2 2011
EPS of $0.59*.
Gross margin rate of 14.8% was up from 14.7% last year.
Operating expenses in Q2 2012 were $137.9 million, compared to an
adjusted $132.0 million* in the prior-year quarter, and were 10.8% of sales,
up from 10.5%* of sales in the prior-year quarter.
Operating income as a percent of sales was 3.9%, down from last year’s
adjusted 4.2%*.
Net income was $27.0 million, compared to an adjusted $27.5 million* in
Q2 2011.
During the quarter, the Company repurchased 0.7 million shares for $20.7
million and paid a cash dividend of $5.4 million to common shareholders.
July 23, 2012 |
 4
Second Quarter 2012 P&L
% to sales change
$
% to Sales
$
% to Sales
$ change
% change
Fav (Unfav)
$ Millions (except EPS)
QTD Q2 2012
QTD Q2 2012
QTD Q2 2011
QTD Q2 2011
Fav (Unfav)
Fav (Unfav)
basis points
Net Sales
1,275.7
$
1,256.6
$
19.1
$
1.5%
Gross Margin
188.2
14.76%
184.2
14.66%
4.0
2.2%
10
Operating Expense
137.9
10.82%
136.4
10.86%
(1.5)
(1.1%)
4
Operating Income
50.3
3.94%
47.8
3.80%
2.5
5.2%
14
Interest & Other
7.1
0.55%
6.7
0.53%
(0.4)
(5.5%)
(2)
Taxes
16.2
1.28%
16.3
1.30%
0.1
0.8%
2
Net Income
27.0
$
2.11%
24.8
$
1.98%
2.2
$
8.8%
13
Diluted Shares (000s)
40,887
46,340
Diluted EPS
0.66
$
0.54
$
0.12
$
22.2%
Adjusted to exclude non-operating items *
Adjusted Operating Expense
137.9
$
10.82%
132.0
$
10.51%
(5.9)
$
(4.5%)
(31)
Adjusted Operating Income
50.3
3.94%
52.2
4.15%
(1.9)
(3.6%)
(21)
Adjusted Net Income
27.0
2.12%
27.5
2.19%
(0.5)
(1.8%)
(7)
Adjusted Diluted EPS
0.66
$
0.59
$
0.07
$
11.9%
July 23, 2012 |
 5
YTD 2012 Headlines
Sales increased 2.1% from YTD June 2011 to $2.5 billion.
Adjusted earnings per diluted share were $1.11*, compared to an adjusted
YTD June 2011 EPS of $1.07*.
Gross margin rate of 14.5% was down from 14.7% last year.
Adjusted operating expenses YTD June 2012 were $281.0 million*,
compared to an adjusted $272.8 million* in the prior-year period, and were
11.0%* of sales, up from 10.9%* of sales in the prior-year period.
Adjusted operating income as a percent of sales was 3.5%*, down from last
year’s adjusted 3.8%*.
Adjusted net income was $46.0 million*, compared to an adjusted $49.6
million* in YTD June 2011.
Net cash provided by operating activities was $48.3 million YTD June
2012.
Debt was up $30.4 million from December 31, 2011 to $527.1 million.
During the year, the Company repurchased 1.8 million shares for $54.3
million and paid a cash dividend of $10.8 million to common shareholders.
July 23, 2012 |
 6
YTD 2012 P&L
% to sales change
$ Millions (except EPS)
$
% to Sales
$
% to Sales
$ change
% change
Unfav
YTD Q2 2012
YTD Q2 2012
YTD Q2 2011
YTD Q2 2011
Fav (Unfav)
Fav (Unfav)
basis points
Net Sales
2,547.4
$
2,494.1
$
53.3
$
2.1%
Gross Margin
369.2
14.49%
366.6
14.70%
2.6
0.7%
(21)
Operating Expense
287.3
11.28%
278.8
11.18%
(8.5)
(3.0%)
(10)
Operating Income
81.9
3.21%
87.8
3.52%
(5.9)
(6.7%)
(31)
Interest & Other
14.2
0.56%
13.4
0.54%
(0.8)
(6.0%)
(2)
Taxes
25.6
1.01%
29.1
1.17%
3.5
11.8%
16
Net Income
42.1
$
1.65%
45.3
$
1.82%
(3.2)
$
(7.2%)
(17)
Diluted Shares (000s)
41,626
46,470
Diluted EPS
1.01
$
0.97
$
0.04
$
4.1%
Adjusted to exclude non-operating items *
Adjusted Operating Expense
281.0
$
11.03%
272.8
$
10.94%
8.2
$
3.0%
(9)
Adjusted Operating Income
88.2
3.46%
93.9
3.76%
(5.7)
(6.1%)
(30)
Adjusted Net Income
46.0
1.81%
49.6
2.00%
(3.6)
(7.2%)
(19)
Adjusted Diluted EPS
1.11
$
1.07
$
0.04
$
3.7%
July 23, 2012 |
 7
Sales
by Product Category –
Q2 2012
July 23, 2012
Technology
32%
Office Products
27%
Janitorial/
Breakroom
26%
Furniture
7%
Industrial
8%
Q2 2012
growth (decline)
Sales
Sales
Sales
Sales
Sales
growth (decline)
growth (decline)
growth (decline)
growth (decline)
Q2 2012
Q1 2012
Q4 2011
Q3 2011
Q2 2011
Category
vs Q2 2011
vs Q1 2011
vs Q4 2010
vs Q3 2010
vs Q2 2010
Technology
(2.8%)
(6.2%)
(4.9%)
(0.5%)
(6.2%)
Office Products
(0.8%)
1.8%
(1.0%)
(0.6%)
4.9%
Janitorial/
Breakroom
5.8%
12.0%
10.8%
10.6%
11.5%
Industrial
13.2%
21.3%
23.4%
23.7%
20.5%
Furniture
0.3%
0.8%
(11.3%)
(9.7%)
(3.8%) |
 8
Sales by Channel –
Q2 2012
Sales growth
Sales growth
Sales growth
Sales growth
Sales growth
(decline)
(decline)
(decline)
(decline)
(decline)
Q2 2012
Q1 2012
Q4 2011
Q3 2011
Q2 2011
Channel
vs Q2 2011
vs Q1 2011
vs Q4 2010
vs Q3 2010
vs Q2 2010
Independent
& Other
3.6%
6.0%
4.6%
5.7%
4.4%
Nationals
(12.2%)
(14.9%)
(17.5%)
(12.1%)
(5.6%)
Independent
& Other
88%
Nationals
12%
Q2 2012
July 23, 2012 |
 9
Gross Margin
July 23, 2012
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Dollars
$182.4
$184.2
$199.7
$173.7
$180.9
$188.3
Rate
14.7%
14.7%
15.3%
14.5%
14.2%
14.8%
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
dollars in millions |
 10
Adjusted Operating Expense*
dollars in millions
Q1 11 *
Q2 11 *
Q3 11
Q4 11 *
Q1 12 *
Q2 12
Dollars
$140.7
$132.0
$135.1
$128.6
$143.1
$137.9
Rate
11.4%
10.5%
10.3%
10.7%
11.3%
10.8%
7.5%
10.0%
12.5%
15.0%
$-
$25.0
$50.0
$75.0
$100.0
$125.0
$150.0
July 23, 2012 |
 11
July 23, 2012
11
Adjusted Operating Income*
11
July 23, 2012
dollars in millions
Q1 11 *
Q2 11 *
Q3 11
Q4 11 *
Q1 12 *
Q2 12
Dollars
$41.6
$52.2
$64.6
$45.2
$37.8
$50.3
Rate
3.4%
4.2%
4.9%
3.8%
3.0%
3.9%
2.0%
3.0%
4.0%
5.0%
6.0%
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0 |
 12
Adjusted Earnings per Share*
Adjusted Earnings per Share*
shares in millions
Q1 11 *
Q2 11 *
Q3 11
Q4 11 *
Q1 12 *
Q2 12
EPS
$0.47
$0.59
$0.81
$0.64
$0.45
$0.66
Diluted Shares
46.656
46.340
44.202
43.010
42.420
40.887
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
July 23, 2012 |
 13
Working Capital Summary
July 23, 2012
$ Millions
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
6/30/2012
Accounts Receivable
648.1
$
669.5
$
699.2
$
659.2
$
642.0
$
655.0
$
Inventories (LIFO)
636.2
632.1
615.5
741.5
672.3
692.9
Accounts Payable
422.4
443.5
410.8
499.3
433.7
446.6
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Net Trade A/R DSO
41
41
42
42
40
40
Inventory Turns
6.4
6.8
7.1
6.1
6.2
6.4
A/P as % Inventory (LIFO)
66%
70%
67%
67%
65%
64%
A/P as % Inventory (FIFO)
58%
61%
58%
60%
56%
56% |
 14
Cash Flows
July 23, 2012
QTD
QTD
QTD
QTD
QTD
QTD
2012
$ Millions
Q1 11
Q2 11
Q3 11
Q4 11
2011
Q1 12
Q2 12
YTD
Net Income
20.4
$
24.9
$
35.8
$
27.9
$
109.0
$
15.1
$
27.0
$
42.1
$
Depreciation & Amortization
9.0
8.9
8.7
8.4
35.0
8.8
9.0
17.8
Share-based compensation
3.7
6.7
2.7
2.6
15.7
1.9
1.3
3.2
Writedown on impaired assets
1.6
-
-
-
1.6
-
-
-
Change in Accounts Receivable
(19.8)
(21.3)
(30.6)
40.0
(31.7)
17.6
(13.2)
4.4
Change in Inventory
48.2
4.3
15.2
(126.1)
(58.4)
70.0
(21.1)
48.9
Change in Accounts Payable
1.0
21.0
(33.1)
88.5
77.4
(65.3)
12.8
(52.5)
Change in Other Working Capital
(18.7)
(3.3)
21.7
(17.0)
(17.3)
(2.4)
5.4
3.0
Change in Working Capital
10.7
0.7
(26.8)
(14.6)
(30.0)
19.9
(16.1)
3.8
Other
(4.4)
(8.9)
5.8
6.6
(0.9)
(17.8)
(0.8)
(18.6)
Adjusted cash provided by operating
activities
41.0
32.3
26.2
30.9
130.4
27.9
20.4
48.3
Capital Expenditures
(9.8)
(6.4)
(4.6)
(7.2)
(28.0)
(4.5)
(5.8)
(10.3)
Proceeds from disposition of fixed assets
-
-
0.1
-
0.1
0.1
0.0
0.1
Net cash used for capital expenditures *
(9.8)
(6.4)
(4.5)
(7.2)
(27.9)
(4.4)
(5.8)
(10.2)
Free Cash Flow *
31.2
$
25.9
$
21.7
$
23.7
$
102.5
$
23.5
$
14.6
$
38.1
$
|
 15
Debt and Capitalization
July 23, 2012
$ Millions
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
6/30/2012
Debt
441.8
$
441.8
$
489.7
$
496.8
$
512.2
$
527.1
$
Equity
769.7
752.7
721.2
704.7
682.6
689.2
Total capitalization
1,211.5
$
1,194.5
$
1,210.9
$
1,201.5
$
1,194.8
$
1,216.3
$
Debt-to-total capitalization
36.5%
37.0%
40.4%
41.3%
42.9%
43.3% |