8-KEarnings & ResultsRegulation FDExhibits & Filings

Cencora, Inc. 8-K Report, Financial Results (Oct 31, 2013)

Filed October 31, 2013For Securities:COR

Summary

AmerisourceBergen Corporation (COR) filed an 8-K on October 31, 2013, to report its financial results for the fiscal quarter and year ended September 30, 2013. The filing also announced the company's revised approach to reporting adjusted earnings starting in fiscal year 2014, along with its financial outlook for fiscal year 2014. This shift in reporting methodology is intended to provide investors with a clearer view of the company's ongoing operational performance by excluding certain non-recurring or non-operational items. Key to investors is the company's forward-looking guidance. AmerisourceBergen anticipates strong revenue and operating income growth in fiscal year 2014, driven by the onboarding of new business. However, the company expects a slight decline in operating margins due to the nature of this new business. The guidance also includes significant share repurchase plans, which could potentially boost earnings per share. Investors should pay close attention to the specific items being excluded from adjusted earnings and the underlying assumptions for the fiscal year 2014 projections.

Key Highlights

  • 1AmerisourceBergen announced its financial results for the fiscal quarter and year ended September 30, 2013.
  • 2The company will implement a new basis for reporting 'adjusted earnings' starting in fiscal year 2014, excluding LIFO charges/credits, warrant expense, acquisition-related expenses and amortization, special one-time expenses, and antitrust litigation gains.
  • 3For fiscal year 2013, adjusted diluted earnings per share (EPS) were reported at $3.21, an increase of $0.07 from the previously released $3.14, driven by specific accounting adjustments.
  • 4The company provided guidance for fiscal year 2014, projecting adjusted diluted EPS to be in the range of $3.60 to $3.73.
  • 5Fiscal year 2014 revenue growth is expected to be between 28% and 31%, with operating income growth projected at 12% to 16%.
  • 6An operating margin decline in the high teens basis points is anticipated in FY2014 due to onboarding lower-margin business.
  • 7AmerisourceBergen plans approximately $500 million in share repurchases during fiscal year 2014, with most expected in the second half of the year.

Frequently Asked Questions

Beginning in fiscal year 2014, AmerisourceBergen will report 'adjusted earnings' that exclude specific items to better reflect ongoing operational performance. These exclusions include LIFO charges and credits, warrant expense, acquisition-related expenses and amortization of intangibles, special one-time employee severance, litigation, and other expenses, as well as gains from antitrust litigation settlements. Additionally, adjusted diluted EPS will exclude accounting dilution from unexercised equity warrants.

The company projects adjusted diluted EPS from continuing operations to be between $3.60 and $3.73 for fiscal year 2014. This is supported by expected revenue growth of 28% to 31% and operating income growth of 12% to 16%. They also anticipate free cash flow between $500 million and $700 million and plan to repurchase approximately $500 million of their stock.

The company anticipates an operating margin decline in the high teens basis points range in fiscal year 2014. This is attributed to the onboarding of significant new business that has a lower profit margin compared to their existing operations.

The adjusted diluted EPS for fiscal year 2013 was reported at $3.21, an increase of $0.07 from the previously announced $3.14. This difference was primarily due to specific accounting adjustments: employee severance, litigation, and other expenses totaling $23.5 million, and acquisition-related intangibles amortization of $24.4 million, were offset by gains from antitrust litigation settlements of $22.9 million. There were no accounting dilutions from warrants in fiscal year 2013.