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A Leading Supplier of
Business Essentials
2
Forward-Looking Statements and Non-GAAP Measures
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: United’s reliance on key customers, and the risks inherent in continuing or increased customer concentration; end-user demand for products in the office, technology and furniture product categories may continue to decline; 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 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 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 presentation 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.
Asterisks (*) designate 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 section. Except as noted, all references within this presentation to financial results are presented in accordance with U.S. Generally Accepted Accounting Principles.
3
1,400+ Manufacturers
140,000+ products
25,000+ Resellers
reach millions of business
consumers
Leading Wholesale Distributor of Business Essentials
4
Office Products and Furniture
Janitorial and Breakroom Industrial
Business Essentials Categories
5
Business Essentials Categories*
* 2013 percent of total sales
29%
26%
6%
26%
10%
Office Supplies
Office Furniture
OFFICE PRODUCTS
61%
INDUSTRIAL
JANITORIAL AND
BREAKROOM
Technology Products
6
Office Products Janitorial and Break
room Supplies Industrial Supplies
Total market size
$90+B $40+B $300+B
Number of distributors
<10,000 >12,000 >150,000
Wholesale penetration with resellers
40-50% 7-9% 1-3%
Channel efficiency inventory $ required for $1 sales
$0.99 $1.20 $2.69
United 2013 Sales
$3.1B $1.3B $518M
Leadership in Large, Attractive Markets
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The fastest, most convenient source for everyday business essentials.
Nationwide distribution
network with next/same
day delivery
Single order of broad
product portfolio with
enhanced eBusiness
capabilities
Superior commercial
and category
knowledge
Speed Expertise Convenience
Our Value Proposition
8
Our Value Proposition
• Next day delivery
to over 90% of the
U.S.
• 97% line fill rates
• eBusiness
solutions
Shift to online buying
Digital impact on work environment
Reseller access to a broad product assortment
B2B expect B2C capabilities
Forces at Work
10
To become the premier supplier of digitally sourced Business Essentials
• Strengthen our core business
• Win the shift to online
• Diversify into higher growth channels and categories
Our Strategy
11
$5 billion Industrial
Office Products
$10+ billion
Industrial
Janitorial & Breakroom
Office Products
New/Emerging
Online
Janitorial & Breakroom
11
Well Positioned to Take Advantage of Current Trends
12
Janitorial and Breakroom
• Bags & can liners
• Chemicals & janitorial
• Facility maintenance
• Safety
• Waste receptacles
• Paper & dispensers
• Skin care and
personal hygiene
• Floor & carpet care
• Foodservice
• Mops, brooms &
brushes
• Odor control
• and more...
13
Janitorial and Breakroom Sales
(milliions)
* Ten-year CAGR 19.8% from 1997-2013.
$74
$202 $240
$310
$402 $412 $426 $472
$699
$849
$925
$1,053
$1,118 $1,105
$1,222
$1,282 $1,335
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
(in
mill
ion
s)
Jan/San Sales Growth
*Ten-year CAGR is 12.1% (2003-2013).
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Industrial
• Abrasives
• Chemicals, lubricants
& paints
• Electrical & lighting
• Hand tools
• Janitorial equipment
• Material handling
• Measuring and
leveling tools
• MRO supplies
• Power tools
• Safety & security
• Welding supplies
• and more...
15
Industrial Sales
CAGR
27.3%
$301
$230
$282
$349
$409
$518
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2008 2009 2010 2011 2012 2013
CAGR 27.3%
*22.5% CAGR since 2009 financial crisis.
(milliions)
16
Financial Highlights
17
Long-Term Goals
• Outperform underlying market growth
• Achieve operating margins in excess of 5 percent
• Drive ROIC expansion
• Achieve top quartile peer performance
18
Strong Financial Performance
Sales
$ Billions
Operating Income – Adjusted*
$ Millions
3.7 3.8
4.3 4.5 4.6
5.0
4.7 4.8 5.0 5.1 5.1
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
140
162 171
184
204
189
177
198 204 207
223
$-
$50.0
$100.0
$150.0
$200.0
$250.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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$1.20
$1.44 $1.50
$1.64
$1.93 $2.02
$1.96
$2.19
$2.51
$2.82
$3.29
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Strong Financial Performance
Post-Split Diluted EPS – Adjusted*
$/share
15.0% 14.5%
15.2%
16.4%
17.1%
10.0%
10.8% 10.9%
11.4% 10.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2009 2010 2011 2012 2013
ROE vs. ROIC
ROE ROIC
20
Strong Cash Flow & Effective Capital Deployment
Note: Initiated cash dividend in Q1 2011
Capital Allocation (2003-2013)
In millions
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1 2
Operating Cash Flows
Stock Repurchases
Capital Spending
Acquisitions
Dividend Payments
21
Summary
• Attractive growth opportunities
• Expanding set of eBusiness
solutions
• Attracting talent with a
purpose-driven culture
• Generating strong free cash
flow and returning cash to
investors
22
Become End-Consumer Obsessed
Create a Brand-First Culture
Transform your Online Experience
Build a Winning Sales Organization Expand the Market
Target your Campaigns
Be Capital Smart