United Stationers Inc. Reports Preliminary First Quarter Results for 2008

Business Wire, April 18, 2008

DEERFIELD, Ill. -- United Stationers Inc. (NASDAQ:USTR) today reported preliminary sales and earnings per share for the three months ended March 31, 2008. Earnings per share for the first quarter of 2008 are expected to be in the range of $0.85 to $0.90 versus $0.90 in the year-ago quarter. Adjusted for a previously reported restructuring charge of $0.03 per share, first quarter 2007 earnings per share were $0.93. The weakness reflects lower sales in certain product categories and customer channels. Also, supplier allowances earned in the quarter were negatively impacted by lower inventory purchase volume as well as a shift to product categories with lower rebates.

Economy, Timing of Holidays Expected to Negatively Affect First Quarter Results

Sales for the first quarter are expected to be approximately $1.25 billion, up 5% compared with $1.19 billion a year ago. The acquisition of ORS Nasco in December 2007 added approximately $74 million to 2008 first quarter sales. Excluding ORS Nasco, sales were down approximately 1% to $1.18 billion. Sales were strong in the janitorial and breakroom category, up approximately 15%. This helped offset a 5% combined sales decline in office supplies, technology products, and office furniture due primarily to a significant decline in national account sales. The sales slowdown occurred mostly in March and reflected weakness in the economy and the timing of the Easter holiday, which fell in the first quarter of this year versus the second quarter in 2007. Sales to date in April have improved from March levels.

Gross margin for the quarter is expected to be approximately 14.7%, compared with 15.1% in the year-ago quarter. Gross margin remained under pressure, with the weak economy contributing to an unfavorable product mix. Lower sales in office supplies, technology products and office furniture - and additional inventory reductions related to improved inventory efficiency and the declining sales trends - resulted in significantly lower purchase volumes. As a result, volume-related allowances earned from the company's suppliers for the first quarter were down substantially.

Operating expenses as a percent of sales are expected to be approximately 11.2%, compared with 10.8% in the first quarter of 2007, which included the previously reported restructuring charge of $1.4 million or 0.1% of sales. This increase in the operating expense ratio is primarily due to lower sales volume and the higher cost structure at ORS Nasco.

As a result of these factors, the company expects reported EPS for the first quarter to be in the range of $0.85 to $0.90 per share, compared with an adjusted $0.93 per share last year, as noted above. The EPS range referenced above for the first quarter of 2008 includes accretion attributable to ORS Nasco of approximately $0.04.

Net cash provided by operating activities is expected to reach $45 to $50 million for the quarter, after adding back the year-over-year decrease in accounts receivable sold of $63 million.

2008 Outlook

"The first quarter, specifically March, presented a very challenging market," said Richard W. Gochnauer, president and chief executive officer of United Stationers. "As a result, we have stepped up our efforts to deliver new growth initiatives, implement additional cost reductions and address margin pressure to offset the impacts of soft sales and a less favorable mix. We also see opportunities to further improve our industrial and janitorial/breakroom categories, which are performing in line with our expectations.

"Our continued focus on working capital management is enabling us to deliver strong cash flow and maintain a solid balance sheet," Gochnauer added. "Our first quarter cash flow performance is expected to be strong, and we repurchased $68 million of stock. We are confident that our business strategy remains sound and are optimistic about our long-term prospects."

The first quarter results included here are preliminary and final results may change, subject to management and independent auditors completing their quarterly closing review.

Earnings Release and Conference Call

United Stationers Inc. will report final first quarter results on Thursday, May 1, 2008, at close of market. In connection with the earnings release, United Stationers will host a conference call, which will also be broadcast over the Internet on Friday, May 2, 2008 beginning at 10:00 a.m. Central Time. The press release containing the full text of the earnings announcement and accompanying financial tables, along with other information relating to the call, will be available on the Investor Information section of United Stationers' Web site, www.unitedstationers.com.

To participate, callers within the U.S. and Canada should dial (866) 356-4123 and International callers should dial (617) 597-5393 approximately ten minutes before the time of the presentation. The passcode is "36624438". To listen to the webcast via the Internet, participants should visit the Investor Information section of the company's Web site at www.unitedstationers.com at least 15 minutes prior to the event's broadcast. Then, follow the instructions provided to assure that the necessary audio application is downloaded and installed. Windows Media Player is required to listen to this Webcast. This program can be obtained at no charge to the user. In addition, interested parties can access an archived version of the call, which will also be located on the Investor Information section of United Stationers' Web site approximately two hours after the conclusion of the call and for the following two weeks.