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Ir deck march 2014

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22
A Leading Supplier of Business Essentials
Transcript

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

7

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).

14

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

19

$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


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