Company Reaffirms Guidance for Fiscal Year 2009
VALLEY FORGE, Pa.--(BUSINESS WIRE)--Jan. 22, 2009--AmerisourceBergen Corporation (NYSE:ABC) today reported that in its
fiscal year 2009 first quarter, ended December 31, 2008, diluted
earnings per share from continuing operations were $0.73, a 12 percent
increase. Revenue in the quarter was $17.3 billion, a 0.3 percent
increase. The Company reaffirmed its fiscal year 2009 guidance, saying
it continues to expect diluted earnings per share from continuing
operations to be in the range of $3.08 to $3.25, which represents a 7
percent to 12 percent increase over the $2.89 last fiscal year.
Fiscal First Quarter Highlights
-- Revenue of $17.3 billion, up 0.3 percent.
-- Diluted earnings per share from continuing operations of $0.73, a 12
percent increase.
-- Operating expense dollars, excluding facility consolidations, employee
severance and other charges, were down from prior year's first quarter.
-- Operating margin of 1.14 percent, up 3 basis points.
-- Days-sales-outstanding average 18.3 days, down from 18.9 days in the
prior year first quarter.
-- $88 million of share repurchases.
"In the December quarter, we delivered solid performance reflecting our
two growth drivers, generic drug distribution and our specialty
distribution and related services business," said R. David Yost,
AmerisourceBergen's President and Chief Executive Officer. "Revenue in
the quarter was essentially flat, but would have increased 4.8 percent
if adjusted for the negative impact of the July 1, 2008 loss of the
direct-to-warehouse business of a large retail drug chain. A
double-digit increase in the sale of generic drugs, especially those on
our proprietary formulary, PRxO(R) Generics Solution; good
fee-for-service performance; and disciplined expense control drove
profitability. We used $304 million of cash in our operations as we
built normal seasonal inventories and continue to expect our free cash
flow to be in the range of $460 million to $535 million for fiscal 2009.
Our receivable days were down in the quarter; our balance sheet remains
strong; and we have good financial flexibility."
Results Highlights
-- Revenue: In the first quarter of fiscal 2009, revenue was $17.3 billion,
up 0.3 percent compared to the same quarter in the previous fiscal year,
due primarily to a 5 percent increase in Specialty Group revenue.
AmerisourceBergen Drug Corporation revenue was down 1 percent due to the
loss of business last July that negatively impacted revenue in the
fiscal 2009 first quarter.
-- Operating Expenses: For the first quarter of fiscal 2009, operating
expenses were $292.0 million compared with $291.6 million in the prior
fiscal year's first quarter. Expenses for facility consolidations,
employee severance and other, were $1.0 million and $177,000 in the
first quarters of fiscal 2009 and 2008, respectively.
-- Operating Income: In the fiscal 2009 first quarter, operating income
increased 3 percent to $197.9 million, due primarily to increased gross
profit and expense management. In the prior year's fiscal first quarter,
operating income was positively impacted by a $10 million settlement of
litigation with a major competitor related to sales activities involving
an independent retail group purchasing organization, as well as by $1.4
million representing the net positive impact from pharmaceutical
manufacturer antitrust litigation and facility consolidation, employee
severance and other costs.
-- Tax Rate: The effective tax rate for the first quarter of fiscal 2009
was 38.6 percent, compared to 38.2 percent in the previous fiscal year's
first quarter. We continue to expect our annualized effective tax rate
to be approximately 38.4 percent.
-- Earnings Per Share: Diluted earnings per share from continuing
operations were up 12 percent to $0.73 in the first quarter of fiscal
2009 compared to $0.65 in the previous fiscal year's first quarter,
which included $0.04 per diluted share from the net positive impact of
the litigation settlement with a competitor and special items.
-- Shares Outstanding: Diluted average shares outstanding for the first
quarter of fiscal year 2009 were 155.1 million, down nearly 12 million
from the previous fiscal year's first quarter due primarily to share
repurchases, net of option exercises.
Key Ratios
-- Gross Margin: Gross profit as a percentage of revenue increased 3 basis
points to 2.83 percent in the fiscal 2009 first quarter over the same
period in the previous year driven by double-digit growth in generic
sales and increased contribution from brand-name supplier
fee-for-service agreements. The LIFO charge in the fiscal 2009 first
quarter was $5.0 million compared with a $3.1 million charge in the
previous year's first quarter.
-- Operating Expense Ratio: Operating expenses as a percentage of revenue
in the fiscal first quarter of 2009 were 1.68 percent, down 1 basis
point from the same period in the previous fiscal year.
-- Operating Margin: Operating income as a percentage of revenue increased
3 basis points to 1.14 percent in the fiscal 2009 first quarter compared
with the previous year's first quarter due to improved gross profit and
solid expense management.
Fiscal Year 2009 Expectations
"Looking ahead, the Company continues to expect diluted earnings per
share from continuing operations for fiscal year 2009 to be in a range
of $3.08 to $3.25, which represents an increase of 7 percent to 12
percent over the $2.89 in fiscal year 2008," said R. David Yost,
AmerisourceBergen President and Chief Executive Officer. "Also unchanged
are our key assumptions supporting this diluted earnings per share
range, which are: revenue growth of between 1 percent and 3 percent;
operating margin expansion in the low to mid single digit basis point
range; and free cash flow in the range of $460 million to $535 million,
which includes capital expenditures in the $140 million range.
Assumptions also include the expected repurchase of approximately $350
million of AmerisourceBergen common shares in fiscal 2009."
Conference Call
The Company will host a conference call to discuss its results at 11:00
a.m. Eastern Standard Time on January 22, 2009. Participating in the
conference call will be: R. David Yost, President and Chief Executive
Officer; and Michael D. DiCandilo, Executive Vice President and Chief
Financial Officer of AmerisourceBergen Corporation, and Chief Operating
Officer of AmerisourceBergen Drug Corporation.
To access the live conference call via telephone:
Dial in: (612) 288-0337, no access code required.
To access the live webcast:
Go to the Quarterly Webcasts section on the Investor Relations page at
http://www.amerisourcebergen.com.
A replay of the telephone call and webcast will be available from 2:30 p.m.January 22, 2009 until 11:59 p.m.January 29, 2009. The Webcast replay will be
available for 30 days.
To access the replay via telephone:
Dial in: (800) 475-6701 from within the U.S., access code: 980631
(320) 365-3844 from outside the U.S., access code: 980631
To access the archived webcast:
Go to the Quarterly Webcasts section on the Investor Relations page at
http://www.amerisourcebergen.com.
About AmerisourceBergen
AmerisourceBergen is one of the world's largest pharmaceutical services
companies serving the United States, Canada and selected global markets.
Servicing both pharmaceutical manufacturers and healthcare providers in
the pharmaceutical supply channel, the Company provides drug
distribution and related services designed to reduce costs and improve
patient outcomes. AmerisourceBergen's service solutions range from
pharmacy automation and pharmaceutical packaging to reimbursement and
pharmaceutical consulting services. With more than $70 billion in annual
revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and
employs approximately 10,000 people. AmerisourceBergen is ranked #28 on
the Fortune 500 list. For more information, go to www.amerisourcebergen.com.
Forward-Looking Statements
This news release contains forward-looking statements about
AmerisourceBergen's future business and financial performance, estimates
and prospects. These statements are based on management's current
expectations and are subject to uncertainty and change in circumstances.
Among the factors that could cause actual results to differ materially
from those projected, anticipated or implied are the following: changes
in pharmaceutical market growth rates; the loss of one or more key
customer or supplier relationships; changes in customer mix; customer
delinquencies, defaults or insolvencies; supplier defaults or
insolvencies; changes in pharmaceutical manufacturers' pricing and
distribution policies or practices; adverse resolution of any contract
or other dispute with customers or suppliers; federal and state
government enforcement initiatives to detect and prevent suspicious
orders of controlled substances and the diversion of controlled
substances; changes in U.S. legislation or regulatory action affecting
pharmaceutical product pricing or reimbursement policies, including
under Medicaid and Medicare; changes in regulatory or clinical medical
guidelines and/or labeling for the pharmaceuticals we distribute,
including erythropoiesis-stimulating agents (ESAs) used to treat anemia
patients; price inflation in branded pharmaceuticals and price deflation
in generics; significant breakdown or interruption of our information
technology systems; success of integration, restructuring or systems
initiatives; interest rate and foreign currency exchange rate
fluctuations; economic, business, competitive and/or regulatory
developments in Canada, the United Kingdom and elsewhere outside of the
United States; the impact of divestitures or the acquisition of
businesses that do not perform as we expect or that are difficult for us
to integrate or control; our inability to successfully complete any
other transaction that we may wish to pursue from time to time; changes
in tax legislation or adverse resolution of challenges to our tax
positions; increased costs of maintaining, or reductions in our ability
to maintain, adequate liquidity and financing sources; continued
volatility and further deterioration of the capital and credit markets;
and other economic, business, competitive, legal, tax, regulatory and/or
operational factors affecting our business generally. Our most recent
annual report on Form 10-K, quarterly reports on Forms 10-Q and current
reports 8-K (which we may revise or supplement in future reports filed
to the SEC) provide additional information about these risks,
uncertainties and other matters. We do not undertake to update our
forward-looking statements.
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Three Three
Months Ended % of Months Ended % of
December 31, Total December 31, Total %
2008 Revenue 2007 Revenue Change
Revenue:
Operating revenue $ 16,881,078 $ 16,145,895 5 %
Bulk deliveries to 457,299 1,133,488 -60 %
customer warehouses
17,338,377 100.00 % 17,279,383 100.00 % - %
Cost of goods sold 16,848,529 16,795,167 - %
Gross profit 489,848 2.83 % 484,216 2.80 % 1 %
Operating expenses:
Distribution, selling 272,026 1.57 % 270,770 1.57 % - %
and administrative
Depreciation and 18,909 0.11 % 20,626 0.12 % -8 %
amortization
Facility
consolidations, 1,029 0.01 % 177 - N/M
employee severance and
other
Operating income 197,884 1.14 % 192,643 1.11 % 3 %
Other loss 429 - 737 - -42 %
Interest expense, net 14,183 0.08 % 16,414 0.09 % -14 %
Income from continuing
operations before 183,272 1.06 % 175,492 1.02 % 4 %
income taxes
Income taxes 70,743 0.41 % 67,083 0.39 % 5 %
Income from continuing 112,529 0.65 % 108,409 0.63 % 4 %
operations
(Loss) income from
discontinued (1,473 ) 1,411
operations, net of tax
Net income $ 111,056 $ 109,820
Basic earnings per
share:
Continuing operations $ 0.73 $ 0.66 11 %
Discontinued (0.01 ) 0.01
operations
Total $ 0.72 $ 0.67
Diluted earnings per
share:
Continuing operations $ 0.73 $ 0.65 12 %
Discontinued (0.01 ) 0.01
operations
Total $ 0.72 $ 0.66
Weighted average
common shares
outstanding:
Basic 154,297 164,905
Diluted (1) 155,089 167,062
(1) Includes the dilutive effect of stock options and restricted stock.
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
December 31, September 30,
2008 2008
Current assets:
Cash and cash equivalents $ 470,917 $ 878,114
Accounts receivable, net 3,537,704 3,480,267
Merchandise inventories 4,963,704 4,211,775
Prepaid expenses and other 34,744 55,914
Assets held for sale - 43,691
Total current assets 9,007,069 8,669,761
Property and equipment, net 572,444 552,159
Other long-term assets 2,981,633 2,995,866
Total assets $ 12,561,146 $ 12,217,786
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,655,869 $ 7,326,580
Current portion of long-term debt 1,310 1,719
Other current liabilities 849,618 821,531
Liabilities held for sale - 17,759
Total current liabilities 8,506,797 8,167,589
Long-term debt, less current portion 1,185,339 1,187,412
Other long-term liabilities 153,193 152,740
Stockholders' equity 2,715,817 2,710,045
Total liabilities and stockholders' equity $ 12,561,146 $ 12,217,786
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Three
Months Ended Months Ended
December 31, December 31,
2008 2007
Operating Activities:
Net income $ 111,056 $ 109,820
Loss (income) from discontinued operations 1,473 (1,411 )
Income from continuing operations 112,529 108,409
Adjustments to reconcile income from continuing 47,923 21,665
operations to net cash used in operating activities
Changes in operating assets and liabilities (464,567 ) (235,567 )
Net cash used in operating activities - continuing (304,115 ) (105,493 )
operations
Net cash (used in) provided by operating activities (251 ) 4,463
- discontinued operations
Net cash used in operating activities (304,366 ) (101,030 )
Investing Activities:
Capital expenditures (42,344 ) (26,195 )
Cost of acquired companies, net of cash acquired - (162,506 )
Proceeds from the sale of PMSI 14,936 -
Net short-term investment activity - 467,419
Other - 20
Net cash (used in) provided by investing activities (27,408 ) 278,738
- continuing operations
Net cash used in investing activities - discontinued (1,138 ) (736 )
operations
Net cash (used in) provided by investing activities (28,546 ) 278,002
Financing Activities:
Net borrowings 27,519 26,806
Purchases of common stock (88,352 ) (311,442 )
Exercises of stock options 1,331 4,249
Cash dividends on common stock (15,571 ) (12,498 )
Other 788 (131 )
Net cash used in financing activities - continuing (74,285 ) (293,016 )
operations
Net cash used in financing activities - discontinued - (21 )
operations
Net cash used in financing activities (74,285 ) (293,037 )
Decrease in cash and cash equivalents (407,197 ) (116,065 )
Cash and cash equivalents at beginning of period 878,114 640,204
Cash and cash equivalents at end of period $ 470,917 $ 524,139
AMERISOURCEBERGEN CORPORATION
SUMMARY FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended December 31,
2008 2007 % Change
Total revenue $ 17,338,377 $ 17,279,383 - %
Pharmaceutical Distribution gross $ 489,848 $ 482,631 1 %
profit
Gain on antitrust litigation - 1,585 N/M
settlements
Total gross profit $ 489,848 $ 484,216 1 %
Pharmaceutical Distribution operating $ 198,913 $ 191,235 4 %
income
Facility consolidations, employee (1,029 ) (177 ) N/M
severance and other
Gain on antitrust litigation - 1,585 N/M
settlements
Total operating income $ 197,884 $ 192,643 3 %
Percentages of total revenue:
Pharmaceutical Distribution
Gross profit 2.83 % 2.79 %
Operating expenses 1.68 % 1.69 %
Operating income 1.15 % 1.11 %
AmerisourceBergen Corporation
Gross profit 2.83 % 2.80 %
Operating expenses 1.68 % 1.69 %
Operating income 1.14 % 1.11 %
CONTACT: AmerisourceBergen Corporation
Michael N. Kilpatric
610-727-7118
mkilpatric@amerisourcebergen.com
Source: AmerisourceBergen Corporation