DEERFIELD, Ill., April 22, 2015 /PRNewswire/ -- United
Stationers Inc. (NASDAQ: USTR), a leading supplier of workplace
essentials, today announced financial results for the first quarter
ended March 31, 2015.
Overview
- Sales increased 6.2% to $1.33
billion when compared to the first quarter of last year
driven by prior year acquisitions.
- Gross margin was $204.4 million,
or 15.3 percent of sales, up from 14.9 percent in the prior year
quarter.
- Operating expenses were $198.4
million, including $30.5
million related to the previously announced repositioning
actions. Adjusted operating expenses(1) were
$167.9 million, or 12.6 percent of
sales, up from $148.8 million or 11.9
percent of sales in the prior year quarter.
- Net loss per share was $0.10 in
the current quarter, including $0.62
per share related to repositioning actions. Adjusted earnings per
share were $0.52(1)
compared to earnings per share of $0.55 in the prior year quarter.
- Cash flow provided by operating activities was $62.7 million, up from $1.5 million in the prior year.
"Our results reflect solid execution of our strategy despite a
decline in our core industrial business from weakness in the energy
sector," said Cody Phipps, president
and chief executive officer. "This quarter we took decisive
actions to maximize future operating results and deliver enhanced
customer service in the years ahead. We are investing in a common
operating and information technology platform, consolidating our
workforce and facilities, rebranding the company to Essendant
across our businesses, and exiting a non-strategic and low margin
business. These actions are consistent with our strategy to become
the fastest and most convenient solution for workplace essentials.
I remain confident these actions will accelerate our operating
performance, position us for success in the market, and benefit our
shareholders."
|
(1)
|
This is non-GAAP
information. See the Reconciliation of Non-GAAP Financial Measures
section of this document for more information.
|
|
|
|
Note: All EPS numbers
in this document are diluted unless stated otherwise.
|
First Quarter Performance
First quarter 2015 sales increased 6.2%, driven by prior year
acquisitions. The current quarter gross margin was 15.3 percent of
sales, up from 14.9 percent of sales in the first quarter of
2014.
- Sales of industrial supplies increased 57.2 percent to
$210.3 million, including
$90.2 million from the CPO and MEDCO
acquisitions made in 2014. Weakness in the energy and industrial
sectors drove a $13.7 million sales
decline in the core industrial business. Janitorial and breakroom
supplies sales increased 8.3 percent to $357.7 million from $330.3
million. Total office products sales were down 3.5 percent
to $727.3 million from $753.6 million.
- The gross margin rate of 15.3 percent included a favorable 40
basis points from acquisitions. Excluding acquisitions, gross
margin remained flat on improved product margin offset by higher
LIFO expense.
- Adjusted operating expenses(1) were $167.9 million or 12.6 percent of sales, compared
to $148.8 million, or 11.9 percent of
sales, in the prior year quarter. The $19.1
million increase was driven by $17.5
million from acquisitions and $1.6
million from operating investments.
- Adjusted operating income(1) was $36.5 million, or 2.7 percent of sales, down from
$38.2 million, or 3.0 percent of
sales, in the prior year quarter.
- Net loss was $4.0 million,
including $23.9 million of after-tax
costs related to repositioning actions. Adjusted net
income(1) was $19.9
million compared to $21.9
million in the prior year quarter. The current quarter
effective tax rate increased due to unfavorable discrete items in
the quarter related to listing a non-strategic business for sale.
Adjusted earnings per share were $0.52(1), compared to $0.55 in the first quarter of 2014.
Cash Flow, Debt Trends and Share Repurchases
Net cash provided by operating activities for the period ended
March 31, 2015 was $62.7 million, compared with $1.5 million for the same period last year. The
increase over the prior year was driven by lower accounts
receivable balances and improved changes in accounts payable and
accrued liabilities. Cash flow used in investing activities totaled
$5.5 million in 2015, compared with
$5.9 million last year. The company
estimates the 2015 full-year total capital expenditures to be
$30 million to $35 million.
The company has approximately $1.0
billion of total committed debt capacity. As of
March 31, 2015, the company had total
debt outstanding of $684.3 million
compared with $562.5 million as of
March 31, 2014. Debt-to-total
capitalization increased to 45.2 percent at March 31, 2015 from 40.4 percent at March 31, 2014 due to the acquisition of MEDCO in
the fourth quarter of 2014. In the first quarter of 2015, the
company paid $16.0 million to acquire
approximately 0.4 million shares and paid cash dividends of
$5.4 million to common shareholders.
Repositioning for Sustained Success
As previously announced in February, the company is taking
decisive actions to reposition the business, provide enhanced
customer service, and create sustained long-term success. These
actions are as follows:
- During 2015 the company will invest an incremental $15.0 million to move to a common
operating/information technology platform that will simplify the
customer experience and deliver operating cost savings. In the
first quarter the company invested $1.0
million. Total cost savings from this initiative are
expected to be $5.0 to $10.0 million
in the second half of 2016, and $15.0 to
$20.0 million on an annual basis thereafter.
- In the first quarter the company recorded the following pre-tax
charges:
- Workforce and facility consolidations of $6.4 million. Additional actions will occur later
in 2015 for a full year pre-tax charge of approximately
$9.0 million. The company expects
these actions to drive savings of $6.0
million in 2015 and $10.0
million annually, beginning in 2016
- Non-cash impairment of intangibles and accelerated amortization
related to rebranding efforts totaling $10.5
million. The company expects a total charge of $12.0 million for the full year;
- Non-cash charge of $13.6 million
related to listing a non-strategic business for sale. Additional
impacts of this sale are expected during 2015 related to
transaction costs and foreign exchange volatility.
Conference Call
United Stationers will hold a conference call followed by a
question and answer session on Thursday,
April 23, 2015, at 7:30 a.m.
CDT, to discuss first quarter 2015 results. To participate,
callers within the U.S. should dial (877) 358-2531, callers within
Canada should dial (855) 669-9657,
and international callers should dial (412) 902-6623 approximately
10 minutes before the presentation. The conference ID is
"10063085." 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 "Q1-15
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.
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: end-user demand for products in the office,
technology, and furniture product categories may continue to
decline; United's reliance on key customers, and the risks inherent
in continuing or increased customer concentration and
consolidations; 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; the impact of United's repositioning, restructuring
and rebranding activities on United's customers, suppliers, and
operations; United's reliance on supplier allowances and
promotional incentives; 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 supply chain disruptions or
changes in key suppliers' distribution strategies; United's ability
to maintain its existing information technology systems and the
systems and e-commerce 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 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.
Company Overview
United Stationers Inc. is a leading supplier of workplace
essentials, with 2014 net sales of $5.3
billion. The company stocks a broad assortment of over
160,000 items, including technology products, traditional office
products, janitorial and breakroom supplies, office furniture,
industrial supplies, and automotive aftermarket tools. The
Company's network of 77 distribution centers allows it to deliver
these products to approximately 30,000 reseller customers. One of
the Company's wholly owned subsidiaries is an online retailer which
sells direct to end consumers. This network, combined with United's
breadth and depth of inventory, enables the Company to ship most
products overnight to more than ninety percent of the U.S. and
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.
In June 2015 United Stationers
will become Essendant Inc. and will trade on the NASDAQ Global
Select Market under the symbol ESND.
|
United Stationers
Inc. and Subsidiaries
Condensed
Consolidated Statements of Income
(in thousands, except
per share data)
|
|
|
|
For the Three Months Ended
|
|
March 31,
|
|
2015
|
|
|
2014
|
|
Net sales
|
$
|
1,332,375
|
|
|
$
|
1,254,139
|
|
Cost of goods
sold
|
|
1,127,925
|
|
|
|
1,067,056
|
|
Gross
profit
|
|
204,450
|
|
|
|
187,083
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Warehousing, marketing and
administrative expenses
|
|
198,372
|
|
|
|
148,849
|
|
Operating
income
|
|
6,078
|
|
|
|
38,234
|
|
Interest expense,
net
|
|
4,839
|
|
|
|
3,374
|
|
Income before income
taxes
|
|
1,239
|
|
|
|
34,860
|
|
Income tax
expense
|
|
5,231
|
|
|
|
13,003
|
|
Net (loss)
income
|
$
|
(3,992)
|
|
|
$
|
21,857
|
|
Net (loss) income per
share - basic:
|
$
|
(0.10)
|
|
|
$
|
0.56
|
|
Average number of common
shares outstanding - basic
|
|
38,115
|
|
|
|
39,194
|
|
Net (loss) income per
share - diluted:
|
$
|
(0.10)
|
|
|
$
|
0.55
|
|
Average number of common
shares outstanding - diluted
|
|
38,534
|
|
|
|
39,655
|
|
Dividends declared
per share
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
United Stationers
Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(dollars in
thousands, except share data)
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
As of
March 31,
|
|
|
As of December 31,
|
|
2015
|
|
|
2014
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
23,631
|
|
|
$
|
20,812
|
|
Accounts receivable,
less allowance for doubtful accounts of $18,043 in 2015 and $19,725
in 2014
|
|
665,426
|
|
|
|
702,527
|
|
Inventories
|
|
871,310
|
|
|
|
926,809
|
|
Assets held for
sale
|
|
15,799
|
|
|
|
-
|
|
Other current
assets
|
|
31,226
|
|
|
|
30,042
|
|
Total current
assets
|
|
1,607,392
|
|
|
|
1,680,190
|
|
Property, plant and
equipment, net
|
|
133,640
|
|
|
|
138,217
|
|
Goodwill
|
|
394,186
|
|
|
|
398,042
|
|
Intangible assets,
net
|
|
96,797
|
|
|
|
111,958
|
|
Other long-term
assets
|
|
49,440
|
|
|
|
41,810
|
|
Total
assets
|
$
|
2,281,455
|
|
|
$
|
2,370,217
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
$
|
467,657
|
|
|
$
|
485,241
|
|
Accrued
liabilities
|
|
175,770
|
|
|
|
192,792
|
|
Liabilities held for
sale
|
|
6,956
|
|
|
|
-
|
|
Current maturities of
long-term debt
|
|
41
|
|
|
|
851
|
|
Total current
liabilities
|
|
650,424
|
|
|
|
678,884
|
|
Deferred income
taxes
|
|
13,985
|
|
|
|
17,763
|
|
Long-term
debt
|
|
684,238
|
|
|
|
713,058
|
|
Other long-term
liabilities
|
|
104,413
|
|
|
|
104,394
|
|
Total
liabilities
|
|
1,453,060
|
|
|
|
1,514,099
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Common stock, $0.10
par value; authorized - 100,000,000 shares, issued - 74,435,628
shares in 2015 and 2014
|
|
7,444
|
|
|
|
7,444
|
|
Additional paid-in
capital
|
|
413,546
|
|
|
|
412,291
|
|
Treasury stock, at
cost – 36,089,975 shares in 2015 and 35,719,041 shares in
2014
|
|
(1,057,955)
|
|
|
|
(1,042,501)
|
|
Retained
earnings
|
|
1,532,325
|
|
|
|
1,541,675
|
|
Accumulated other
comprehensive loss
|
|
(66,965)
|
|
|
|
(62,791)
|
|
Total stockholders'
equity
|
|
828,395
|
|
|
|
856,118
|
|
Total liabilities and
stockholders' equity
|
$
|
2,281,455
|
|
|
$
|
2,370,217
|
|
United Stationers
Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
(in
thousands)
|
|
|
|
For the Three
Months Ended
|
|
March 31,
|
|
2015
|
|
|
2014
|
|
Cash Flows From
Operating Activities:
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(3,992)
|
|
|
$
|
21,857
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
12,223
|
|
|
|
9,523
|
|
Share-based
compensation
|
|
2,640
|
|
|
|
3,225
|
|
Gain on the
disposition of property, plant and equipment
|
|
(15)
|
|
|
|
(4)
|
|
Amortization of
capitalized financing costs
|
|
272
|
|
|
|
287
|
|
Excess tax benefits
related to share-based compensation
|
|
(262)
|
|
|
|
(494)
|
|
Asset impairment
charges
|
|
23,610
|
|
|
|
-
|
|
Deferred income
taxes
|
|
(1,858)
|
|
|
|
(2,450)
|
|
Changes in operating
assets and liabilities (net of acquisitions):
|
|
|
|
|
|
|
|
Decrease (increase) in
accounts receivable, net
|
|
26,217
|
|
|
|
(15,583)
|
|
Decrease in
inventory
|
|
42,759
|
|
|
|
81,714
|
|
Increase in other
assets
|
|
(10,126)
|
|
|
|
(1,041)
|
|
Increase (decrease) in
accounts payable
|
|
645
|
|
|
|
(47,191)
|
|
Decrease in checks
in-transit
|
|
(13,613)
|
|
|
|
(31,751)
|
|
Decrease in accrued
liabilities
|
|
(16,521)
|
|
|
|
(13,654)
|
|
Increase (decrease) in
other liabilities
|
|
743
|
|
|
|
(2,948)
|
|
Net cash provided by
operating activities
|
|
62,722
|
|
|
|
1,490
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(5,490)
|
|
|
|
(6,390)
|
|
Proceeds from the
disposition of property, plant and equipment
|
|
18
|
|
|
|
458
|
|
Net cash used in
investing activities
|
|
(5,472)
|
|
|
|
(5,932)
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
|
|
|
Net (repayments)
borrowings under revolving credit facility
|
|
(29,630)
|
|
|
|
4,562
|
|
Borrowings under
Receivables Securitization Program
|
|
-
|
|
|
|
9,300
|
|
Repayment of
debt
|
|
-
|
|
|
|
(135,000)
|
|
Proceeds from the
issuance of debt
|
|
-
|
|
|
|
150,000
|
|
Net disbursements from
share-based compensation arrangements
|
|
(875)
|
|
|
|
(1,704)
|
|
Acquisition of
treasury stock, at cost
|
|
(16,028)
|
|
|
|
(12,491)
|
|
Payment of cash
dividends
|
|
(5,396)
|
|
|
|
(5,509)
|
|
Excess tax benefits
related to share-based compensation
|
|
262
|
|
|
|
494
|
|
Payment of debt
issuance costs
|
|
(36)
|
|
|
|
(605)
|
|
Net cash (used in)
provided by financing activities
|
|
(51,703)
|
|
|
|
9,047
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(1,758)
|
|
|
|
33
|
|
Transfer of cash to
held for sale
|
|
(970)
|
|
|
|
-
|
|
Net change in cash
and cash equivalents
|
|
2,819
|
|
|
|
4,638
|
|
Cash and cash
equivalents, beginning of period
|
|
20,812
|
|
|
|
22,326
|
|
Cash and cash
equivalents, end of period
|
$
|
23,631
|
|
|
$
|
26,964
|
|
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)
|
|
|
|
For the Three Months Ended March
31,
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
% to
|
|
|
|
|
|
% to
|
|
|
Amount
|
|
Net Sales
|
|
|
Amount
|
|
Net Sales
|
|
|
Net Sales
|
$
|
1,332,375
|
|
|
100.0
|
%
|
|
$
|
1,254,139
|
|
|
100.0
|
%
|
|
Gross
profit
|
$
|
204,450
|
|
|
15.3
|
%
|
|
$
|
187,083
|
|
|
14.9
|
%
|
|
Operating
expenses
|
$
|
198,372
|
|
|
14.9
|
%
|
|
$
|
148,849
|
|
|
11.9
|
%
|
|
Workforce reduction
and facility consolidation charge
|
|
(6,433)
|
|
|
(0.5%)
|
|
|
|
-
|
|
|
-
|
|
|
Rebranding -
intangible asset impairment and amortization
|
|
(10,462)
|
|
|
(0.8%)
|
|
|
|
-
|
|
|
-
|
|
|
Asset held for sale
impairment
|
|
(13,566)
|
|
|
(1.0%)
|
|
|
|
-
|
|
|
-
|
|
|
Adjusted operating
expenses
|
$
|
167,911
|
|
|
12.6
|
%
|
|
$
|
148,849
|
|
|
11.9
|
%
|
|
Operating
income
|
$
|
6,078
|
|
|
0.5
|
%
|
|
$
|
38,234
|
|
|
3.0
|
%
|
|
Operating expense
items noted above
|
|
30,461
|
|
|
2.3
|
%
|
|
|
-
|
|
|
-
|
|
|
Adjusted operating
income
|
$
|
36,539
|
|
|
2.7
|
%
|
|
$
|
38,234
|
|
|
3.0
|
%
|
|
Net (loss)
income
|
$
|
(3,992)
|
|
|
|
|
|
$
|
21,857
|
|
|
|
|
|
Operating expense
items noted above, net of tax
|
|
23,896
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Adjusted net
income
|
$
|
19,904
|
|
|
|
|
|
$
|
21,857
|
|
|
|
|
|
Diluted (loss)
earnings per share
|
$
|
(0.10)
|
|
|
|
|
|
$
|
0.55
|
|
|
|
|
|
Per share operating
expense items noted above
|
|
0.62
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Adjusted diluted
earnings per share
|
$
|
0.52
|
|
|
|
|
|
$
|
0.55
|
|
|
|
|
|
Adjusted diluted
earnings per share - change over the prior year period
|
|
(5.5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares - diluted
|
|
38,534
|
|
|
|
|
|
|
39,655
|
|
|
|
|
Note: Adjusted Operating Expenses, Adjusted Operating Income,
Adjusted Net Income and Adjusted Earnings per Share in the first
quarter of 2015 exclude the effects of a $6.4 million workforce reduction and facility
consolidation charge, $10.5 million
intangible asset charge and accelerated amortization related to
rebranding, and $13.6 million
impairment charge related to listing a non-strategic business for
sale. 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 and to the results of the prior 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.
For Further Information Contact:
Cody
Phipps
President and Chief Executive
Officer
or
Todd Shelton
Senior Vice
President and Chief Financial Officer
United
Stationers Inc.
(847) 627-7000
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/united-stationers-reports-first-quarter-2015-financial-results-and-update-on-repositioning-actions-300070484.html
SOURCE United Stationers