INTERVIEW-U.S.Office sees 98 sales near $5b
June 5, 1997 01:42 PM
By Dan Burns
NEW YORK, June 5 (Reuter) - U.S. Office Products OFIS chairman and chief executive officer said Thursday he expects the fast-growing company to have annualized sales of nearly $5 billion when fiscal 1998 ends next April.
Jonathan Ledecky told Reuters in an interview that he would be "extremely disappointed" if the company did not achieve that goal. The company's stated goal is to have $8 billion in sales annually by the end of fiscal 2000.
"Five billion by next April is consistent with that pace," he said.
Ledecky also said he is "extremely confident" that U.S. Office Products will meet or beat analysts expectations for first quarter 1998 earnings. The First Call consensus estimate for the first quarter is $0.32 per share.
In operating earnings reported earlier Thursday, U.S. Office Products recorded fiscal 1997 revenues of more than $2.8 billion and earnings per share of $1.28 before one-time acquisition and restructuring charges.
U.S. Office Products snapped up smaller companies at a rapid-fire pace during 1997, acquiring 117 by the time the year ended April 26.
That pace will fall off during 1998, Ledecky said, but the average dollar value of purchases in future will be higher.
For instance, in 1997 the company bought 74 "spokes" -- companies with annual sales no higher than $5 million -- and acquired 43 "hubs" -- companies having sales of $15 million or more.
Future acquisitions are likely to focus more on "hubs," Ledecky said. More typical of future acquisitions is the company's plans to buy Mail Boxes Etc MAIL in a $277 million stock transaction.
Also, for the first time since its inception in 1995, Ledecky said U.S. Office Products will derive more growth from internal sources than from acquisitions.
"The acquisitions pace will slow as we consolidate operations and focus earnings growth on internal operations," Ledecky said. "We will only buy companies that are acretive to our earnings."
Nevertheless, the company has a backlog of proposed acquisitions totaling "several hundred million dollars" that will be completed in coming weeks and months, he said.
Commenting on the proposed merger of competitors Office Depot Inc ODP and Staples SPLS , Ledecky predicted U.S. Office Products would come out ahead whether the deal is approved or killed by a federal judge.
"If it's approved, I believe it will set off an avalanche of acquisitions and transactions in the office products sector," Ledecky said. "Others will want to find strategic partners to keep pace with the size of the industry leader."
"If it doesn't happen, there will be consolidation anyway," he said, adding that he would expect both Office Depot and Staples to go searching for new merger partners.
Ledecky declined to comment when asked if U.S. Office Products would seek a partnership with either Office Depot of Staples should the merger not go through. "Either way, we will be either eating at the buffet table or we'll be the main meal," he said. He did not elaborate.
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Following are Reuters Alerts related to this article
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ALERT
U.S. OFFICE PRODUCTS SAYS SEES FY98 SALES NEAR $5 BLN VS $2.8 BLN IN FY97
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ALERT
U.S. OFFICE SAYS PACE OF ACQUISITIONS TO SLOW FROM FY97 PACE
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ALERT
U.S. OFFICE SEES DOLLAR VALUE OF FY98 ACQUISITIONS UP FROM EARLIER LEVELS
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ALERT
U.S. OFFICE "EXTREMELY CONFIDENT" CAN MEET ANALYST Q1 1998 EPS VIEW $0.32/SHR-CEO
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