AmerisourceBergen Reports $0.69 in Diluted EPS from Continuing Operations, a 13% Percent Increase, and Revenue of $21.5 Billion for the December Quarter

Thu Jan 24, 2013 7:00am EST

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Company Reaffirms Fiscal Year 2013 EPS Guidance Range of $3.06 to $3.16
VALLEY FORGE, Pa.--(Business Wire)--
AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year
2013 first quarter, ended December 31, 2012, diluted earnings per share from
continuing operations were $0.69, a 13 percent increase. Revenue in the quarter
was $21.5 billion, up 6 percent. The Company also reaffirmed its expectations
for fiscal year 2013 diluted earnings per share from continuing operations in
the range of $3.06 to $3.16. All the results are presented in accordance with
U.S. generally accepted accounting principles (GAAP). 

Fiscal First Quarter Highlights

* Revenue of $21.5 billion, up 5.7 percent. 
* Diluted earnings per share from continuing operations of $0.69, a 13.1 percent
increase. 
* Gross profit of $671.9 million, up 15.1 percent. 
* Operating income of $287.3 million, up 2.1 percent. 
* Share repurchases of $284.7 million.

"We are off to a solid start in our fiscal year 2013, with December quarter
results in line with our expectations," said Steven H. Collis, AmerisourceBergen
President and Chief Executive Officer. "During the quarter, we successfully
implemented our previously announced new contract with our largest customer, and
we continued to make progress on the integration of World Courier. As we look
ahead, we are well positioned to meet our objectives for the year and to
continue to have significant financial flexibility." 

Summary of Quarterly Results

* Revenue: Revenue was $21.5 billion in the first quarter of fiscal 2013, a 5.7
percent increase over the same quarter in the previous fiscal year, driven by a
4.8 percent increase in AmerisourceBergen Drug Corporation (ABDC) revenue, and a
9.6 percent increase in AmerisourceBergen Specialty Group (ABSG) revenue. 
* Gross Profit: Gross profit in the fiscal 2013 first quarter was $671.9
million, a 15.1 percent increase over the year-ago same period driven primarily
by contributions from the recent addition of World Courier, and a $12.3 million
gain from antitrust litigation settlements. Gross profit as a percentage of
revenue was 3.13 percent, a 26 basis point improvement over the same period in
the previous year. 
* Operating Expenses: For the first quarter of fiscal 2013, operating expenses
were $384.7 million compared with $302.5 million in the prior fiscal year`s
first quarter, a 27.2 percent increase. The increase in operating expenses was
due to the operating expenses of acquisitions completed in fiscal 2012, and
increased depreciation and amortization costs. Compared to the prior year,
operating expenses as a percentage of revenue in the fiscal first quarter of
2013 were up 30 basis points to 1.79 percent. 
* Operating Income: In the fiscal 2013 first quarter, operating income increased
2.1 percent to $287.3 million, due to the increase in gross profit, which was
largely offset by the increase in operating expenses. Operating income as a
percentage of revenue decreased 5 basis points to 1.34 percent in the period
compared with the previous year`s first quarter. 
* Tax Rate: The effective tax rate for the first quarter of fiscal 2013 was 39.6
percent, compared to 38.2 percent in the previous fiscal year`s first quarter.
Going forward, we expect our annualized effective tax rate to be approximately
39.5 percent. 
* Earnings Per Share: Diluted earnings per share from continuing operations were
up 13.1 percent to $0.69 in the first quarter of fiscal 2013 compared to $0.61
in the previous fiscal year`s first quarter. Earnings per share growth exceeded
the 1.4 percent growth in income from continuing operations due to the 10.3
percent reduction in diluted average shares outstanding. 
* Shares Outstanding: Diluted average shares outstanding for the first quarter
of fiscal year 2013 were 236.0 million, down 27.1 million shares from the
previous fiscal year`s first quarter due primarily to share repurchases, net of
option exercises over the last twelve months.

Segment Discussion

The Pharmaceutical Distribution segment includes both AmerisourceBergen Drug
Corporation and AmerisourceBergen Specialty Group. Other includes
AmerisourceBergen Consulting Services (ABCS) and World Courier. The results of
operations from AndersonBrecon are reported as income from discontinued
operations. 

Pharmaceutical Distribution Segment

In the first fiscal quarter of 2013, Pharmaceutical Distribution revenues were
$21.1 billion, an increase of 5 percent compared to the same quarter in the
prior year. ABDC revenues increased 5 percent, due primarily to an increase in
sales volume resulting from the implementation of our new contract with our
largest customer, offset in part by the loss of a food and drug retail group
purchasing organization customer. ABSG revenues increased 10 percent, which was
driven by strong performance in our third party logistics, blood products,
vaccine, and physician office distribution businesses. 

Operating income of $268.6 million in the December quarter of fiscal 2013
decreased 2 percent compared to the same period in the previous year driven by a
10 basis point decline in operating margin due to decreased contributions from
generic conversions, customer mix shift towards lower margin business in ABDC,
and disappointing performance in our Canadian distribution business, all of
which was offset in part by strong growth in certain of our higher margin
specialty distribution businesses. 

Other

Revenues included in Other were $427.9 million in the first quarter of fiscal
2013, including significant contributions from recent acquisitions: World
Courier which was not included in the same quarter in the previous year; and
TheraCom, which anniversaried on November 1, 2012. Gross profit and operating
expenses also increased significantly compared to the prior year due to the
inclusion of operating results from the acquisitions completed during fiscal
2012. Operating income increased significantly to $20.6 million in the first
quarter of fiscal 2013, due to the recent acquisitions and strong performance in
our consulting business. 

Fiscal Year 2013 Expectations

"Looking ahead, the Company continues to expect diluted earnings per share from
continuing operations in fiscal year 2013 to be in the range of $3.06 to $3.16,"
said Steven H. Collis, AmerisourceBergen President and Chief Executive Officer.
"Key assumptions supporting that range are: revenue growth in the 6 percent to 9
percent range; operating income growth in the 3 percent to 5 percent range; an
operating margin decline in the high single to low double-digit basis points
range; and free cash flow in the range of $750 million to $850 million, which
includes capital expenditures in the $180 million range. Subject to market
conditions, we expect to spend approximately $400 million to repurchase our
common shares in fiscal year 2013." 

Conference Call

The Company will host a conference call to discuss its results at 11:00 a.m.
Eastern Standard Time on January 24, 2013. Participating in the conference call
will be: Steven H. Collis, President and Chief Executive Officer; and Tim G.
Guttman, Senior Vice President and Chief Financial Officer. 

To access the live conference call via telephone:

Dial in: The dial-in number for the live call will be (612) 332-0802. No access
code is needed. 

To access the live webcast:

Go to 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 24, 2013 until 11:59 p.m. January 31, 2013. The Webcast replay will be
available for 30 days. 

To access the telephone replay from within the US, dial 800-475-6701. From
outside the US, dial 320-365-3844. The access code for the replay is 277342. 

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 healthcare providers and pharmaceutical manufacturers 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 niche premium logistics and
pharmaceutical packaging to reimbursement and pharmaceutical consulting
services. With over $80 billion in annualized revenue, AmerisourceBergen is
headquartered in Valley Forge, PA, and employs approximately 13,000 people.
AmerisourceBergen is ranked #29 on the Fortune 500 list. For more information,
go to www.amerisourcebergen.com. 

Forward-Looking Statements

Certain of the statements contained in this press release are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. 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; qui tam litigation for alleged violations of fraud and
abuse laws and regulations and/or any other laws and regulations governing the
marketing, sale, purchase, and/or dispensing of pharmaceutical products or
services and any related litigation, including shareholder derivative lawsuits;
changes in federal and state 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 pharmaceutical products we distribute, including certain
anemia products; price inflation in branded pharmaceuticals and price deflation
in generics; greater or less than anticipated benefit from launches of the
generic versions of previously patented pharmaceutical products; significant
breakdown or interruption of our information technology systems; our inability
to realize the anticipated benefits of the implementation of an enterprise
resource planning (ERP) system; success of integration, restructuring or systems
initiatives; interest rate and foreign currency exchange rate fluctuations;
risks associated with international business operations, including
non-compliance with the U.S. Foreign Corrupt Practices Act, anti-bribery laws
and economic sanctions and import laws and regulations; economic, business,
competitive and/or regulatory developments outside of the United States; changes
and/or potential changes in Canadian provincial legislation affecting
pharmaceutical product pricing or service fees or regulatory action by
provincial authorities in Canada to lower pharmaceutical product pricing and
service fees; 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 laws or legislative
initiatives that could adversely affect our tax positions and/or our tax
liabilities 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; volatility and deterioration of the capital and
credit markets; and other economic, business, competitive, legal, tax,
regulatory and/or operational factors affecting our business generally. Certain
additional factors that management believes could cause actual outcomes and
results to differ materially from those described in forward-looking statements
are set forth (i) in Item 1A (Risk Factors) in the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 2012 and elsewhere in that
report and (ii) in other reports filed by the Company pursuant to the Securities
Exchange Act of 1934.

                                                                                                                                                                  
 AMERISOURCEBERGEN CORPORATION                                                                                                                                    
 FINANCIAL SUMMARY                                                                                                                                                
 (In thousands, except per share data)                                                                                                                            
 (unaudited)                                                                                                                                                      
                                                                                                                                                                  
                                                                                                                                                                  
                                                             Three                                       Three                                                    
                                                             Months Ended                                Months Ended                                             
                                                             December 31,            % of                December 31,            % of                %            
                                                             2012                    Revenue             2011                    Revenue             Change       
                                                                                                                                                                  
 Revenue                                                     $21,466,314             100.00  %           $20,311,922             100.00  %           5.7    %     
                                                                                                                                                                  
 Cost of goods sold                                          20,794,390                                  19,728,005                                  5.4    %     
                                                                                                                                                                  
 Gross profit (1)                                            671,924                 3.13    %           583,917                 2.87    %           15.1   %     
                                                                                                                                                                  
 Operating expenses:                                                                                                                                              
 Distribution, selling and administrative                    342,213                 1.59    %           268,893                 1.32    %           27.3   %     
 Depreciation and amortization                               40,523                  0.19    %           30,046                  0.15    %           34.9   %     
 Employee severance, litigation and other (2)                1,929                   0.01    %           3,559                   0.02    %           -45.8  %     
 Total operating expenses                                    384,665                 1.79    %           302,498                 1.49    %           27.2   %     
                                                                                                                                                                  
 Operating income                                            287,259                 1.34    %           281,419                 1.39    %           2.1    %     
                                                                                                                                                                  
 Other income                                                (23          )          -       %           (1           )          -       %                        
                                                                                                                                                                  
 Interest expense, net                                       18,698                  0.09    %           22,576                  0.11    %           -17.2  %     
                                                                                                                                                                  
 Income from continuing operations before income taxes       268,584                 1.25    %           258,844                 1.27    %           3.8    %     
                                                                                                                                                                  
 Income taxes                                                106,359                 0.50    %           98,887                  0.49    %           7.6    %     
                                                                                                                                                                  
 Income from continuing operations                           162,225                 0.76    %           159,957                 0.79    %           1.4    %     
                                                                                                                                                                  
 Income from discontinued operations, net of income taxes    6,386                                       2,159                                       195.8  %     
                                                                                                                                                                  
 Net income                                                  $168,611                0.79    %           $162,116                0.80    %           4.0    %     
                                                                                                                                                                  
                                                                                                                                                                  
 Basic earnings per share:                                                                                                                                        
 Continuing operations                                       $0.70                                       $0.62                                       12.9   %     
 Discontinued operations                                     0.03                                        0.01                                                     
 Total                                                       $0.73                                       $0.63                                       15.9   %     
                                                                                                                                                                  
 Diluted earnings per share:                                                                                                                                      
 Continuing operations                                       $0.69                                       $0.61                                       13.1   %     
 Discontinued operations                                     0.03                                        0.01                                                     
 Rounding                                                    (0.01        )                              -                                                        
 Total                                                       $0.71                                       $0.62                                       14.5   %     
                                                                                                                                                                  
 Weighted average common shares outstanding:                                                                                                                      
 Basic                                                       232,361                                     258,461                                                  
 Diluted (3)                                                 235,992                                     263,084                                     -10.3  %     
                                                                                                                                                                  


 (1)    Includes a $12.3 million gain from antitrust litigation settlements in the three months ended December 31, 2012.                                                                                                                                                                                                 
 (2)    Includes $1.4 million of employee severance and other restructuring costs and $0.5 million of acquisition costs related to business combinations in the three months ended December 31, 2012. Includes $3.6M of acquisition costs related to business combinations in the three months ended December 31, 2011.  
 (3)    Includes the dilutive effect of stock options, restricted stock, and restricted stock units.                                                                                                                                                                                                                     


                                                                              
 AMERISOURCEBERGEN CORPORATION                                                
 CONDENSED CONSOLIDATED BALANCE SHEETS                                        
 (in thousands)                                                               
 (unaudited)                                                                  
                                                                              
                                                                              
 ASSETS                                                                       
                                               December 31,    September 30,  
                                               2012            2012           
 Current assets:                                                              
 Cash and cash equivalents                     $417,404        $1,066,608     
 Accounts receivable, net                      4,361,266       3,938,597      
 Merchandise inventories                       5,965,563       5,689,147      
 Prepaid expenses and other                    54,318          73,811         
 Assets held for sale                          223,648         218,988        
 Total current assets                          11,022,199      10,987,151     
                                                                              
 Property and equipment, net                   800,340         780,013        
 Other long-term assets                        3,672,993       3,676,962      
                                                                              
 Total assets                                  $15,495,532     $15,444,126    
                                                                              
                                                                              
 LIABILITIES AND STOCKHOLDERS' EQUITY                                         
                                                                              
 Current liabilities:                                                         
 Accounts payable                              $9,879,850      $9,630,110     
 Other current liabilities                     1,504,432       1,535,534      
 Liabilities held for sale                     51,455          48,838         
 Total current liabilities                     11,435,737      11,214,482     
                                                                              
 Long-term debt                                1,396,107       1,446,770      
                                                                              
 Other long-term liabilities                   326,453         326,162        
                                                                              
 Stockholders' equity                          2,337,235       2,456,712      
                                                                              
 Total liabilities and stockholders' equity    $15,495,532     $15,444,126    
                                                                              


                                                                                                                                                                 
 AMERISOURCEBERGEN CORPORATION                                                                                                                                   
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                 
 (in thousands)                                                                                                                                                  
 (unaudited)                                                                                                                                                     
                                                                                                                                                                 
                                                                                                                      Three                 Three                
                                                                                                                      Months Ended          Months Ended         
                                                                                                                      December 31,          December 31,         
                                                                                                                      2012                  2011                 
                                                                                                                                                                 
 Operating Activities:                                                                                                                                           
 Net income                                                                                                           $168,611              $162,116             
 Income from discontinued operations                                                                                  (6,386     )          (2,159      )        
 Income from continuing operations                                                                                    162,225               159,957              
 Adjustments to reconcile income from continuing operations to net cash (used in) provided by operating activities    68,109                53,142               
 Changes in operating assets and liabilities                                                                          (481,659   )          205,931              
 Net cash (used in) provided by operating activities - continuing operations                                          (251,325   )          419,030              
 Net cash provided by operating activities - discontinued operations                                                  9,618                 12,673               
 Net cash (used in) provided by operating activities                                                                  (241,707   )          431,703              
                                                                                                                                                                 
 Investing Activities:                                                                                                                                           
 Capital expenditures                                                                                                 (56,543    )          (45,531     )        
 Cost of acquired companies, net of cash acquired                                                                     -                     (250,501    )        
 Other                                                                                                                23                    -                    
 Net cash used in investing activities - continuing operations                                                        (56,520    )          (296,032    )        
 Net cash used in investing activities - discontinued operations                                                      (4,859     )          (2,607      )        
 Net cash used in investing activities                                                                                (61,379    )          (298,639    )        
                                                                                                                                                                 
 Financing Activities:                                                                                                                                           
 Net (repayments) borrowings                                                                                          (50,492    )          563,116              
 Purchases of common stock                                                                                            (284,691   )          (128,042    )        
 Exercises of stock options                                                                                           39,750                16,450               
 Cash dividends on common stock                                                                                       (49,595    )          (33,708     )        
 Debt issuance costs and other                                                                                        (1,090     )          (6,535      )        
 Net cash (used in) provided by financing activities - continuing operations                                          (346,118   )          411,281              
 Net cash used in financing activities - discontinued operations                                                      -                     -                    
 Net cash (used in) provided by financing activities                                                                  (346,118   )          411,281              
                                                                                                                                                                 
 (Decrease) increase in cash and cash equivalents                                                                     (649,204   )          544,345              
                                                                                                                                                                 
 Cash and cash equivalents at beginning of period                                                                     1,066,608             1,825,990            
                                                                                                                                                                 
 Cash and cash equivalents at end of period                                                                           $417,404              $2,370,335           
                                                                                                                                                                 


                                                                                                             
 AMERISOURCEBERGEN CORPORATION                                                                               
 SUMMARY SEGMENT INFORMATION                                                                                 
 (dollars in thousands)                                                                                      
 (unaudited)                                                                                                 
                                                                                                             
                                                                                                             
                                             Three Months Ended December 31,                                 
 Revenue                                     2012                     2011                     % Change      
                                                                                                             
 Pharmaceutical Distribution                 $21,082,711              $20,134,050              5      %      
 Other (1)                                   427,890                  209,325                  104    %      
 Intersegment eliminations                   (44,287      )           (31,453      )           41     %      
                                                                                                             
 Revenue                                     $21,466,314              $20,311,922              6      %      
                                                                                                             
                                                                                                             
                                                                                                             
                                                                                                             
                                             Three Months Ended December 31,                                 
 Operating Income                            2012                     2011                     % Change      
                                                                                                             
 Pharmaceutical Distribution                 $268,629                 $275,372                 -2     %      
 Other (1)                                   20,559                   9,606                    114    %      
 Employee severance, litigation and other    (1,929       )           (3,559       )           -46    %      
                                                                                                             
 Operating income                            $287,259                 $281,419                 2      %      
                                                                                                             
                                                                                                             
                                                                                                             
                                                                                                             
 Percentages of revenue:                                                                                     
                                                                                                             
 Pharmaceutical Distribution                                                                                 
 Gross profit                                2.65         %           2.74         %                         
 Operating expenses                          1.37         %           1.38         %                         
 Operating income                            1.27         %           1.37         %                         
                                                                                                             
 Other (1)                                                                                                   
 Gross profit                                26.55        %           14.93        %                         
 Operating expenses                          21.75        %           10.34        %                         
 Operating income                            4.80         %           4.59         %                         
                                                                                                             
 AmerisourceBergen Corporation                                                                               
 Gross profit                                3.13         %           2.87         %                         
 Operating expenses                          1.79         %           1.49         %                         
 Operating income                            1.34         %           1.39         %                         
                                                                                                             


 (1) Other for the three months ended December 31, 2012 is comprised of the AmerisourceBergen Consulting Services ("ABCS") operating segment and the World Courier Group, Inc. operating segment. Other for the three months ended December 31, 2011 is comprised solely of the ABCS operating segment.  
                                                                                                                                                                                                                                                                                                         


AmerisourceBergen Corporation
Barbara Brungess, 610-727-7199
bbrungess@amerisourcebergen.com



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