Standard Register (NYSE: SR) today announced its financial results for
the second quarter, which ended July 4, 2010. For the quarter, the
Company reported revenue of $164.7 million and a breakeven on a per
share basis, or a net loss of $0.1 million. The second quarter results
compare to last year's revenue of $171.0 million and a net profit of
$3.2 million, or $0.11 per share. Through the first half, the Company
reported revenue of $332.1 million and a net loss of $0.9 million, or
$0.03 per share. The first half results compare to last year's revenue
of $345.6 million and a net loss of $7.8 million, or $0.27 per share.
Results from Operations
Stabilization of revenue continued across most business units during the
quarter with the Emerging and Industrial market segments reporting
growth relative to the prior year at four and nineteen percent
respectively. Although revenue declines lessened in Financial Services,
instability within the segment and technology automation continues to
create unit declines in printed products that are only partially offset
by new customer growth. Healthcare revenues fell below expectations as
core document management printed solutions eroded due to technology
advancements and pricing pressures associated with bringing on new
contracts, and labels and patient identification solutions did not make
up for those declines.
?Although Healthcare revenues came short of expectations, I am confident
that we are on track with our overall strategy,? stated Joseph Morgan,
president and chief executive officer. ?Through the first half of the
year, we closed 47 new contracts, 25 of which were associated with the
Novation agreement that was signed last year. We are also seeing record
deals in technology solutions supporting our intent to expand our
offering in this area. It is imperative that we grow share now in order
to allow us to transform our Healthcare portfolio towards more durable
solutions for the future.?
Gross margin for the Company as a percent of revenue was 31.4 percent
for the quarter versus 31.7 percent in the prior year. The major
difference between the two periods was a favorable LIFO adjustment,
which was $0.2 million for the current quarter versus a favorable $0.8
million during the same period last year. The first half results were
very similar, as gross margin was 31.7 percent for the current year
versus 31.4 percent during the prior year. Again, the LIFO adjustment
was the primary difference between the two periods with the current
period at $1.9 million versus $0.7 million for the prior year. The cost
containment portions of the MyC3 initiative, announced last year,
allowed the Company to maintain the gross margin from operations despite
the lower revenue units.
MyC3 savings efforts in Selling General and Administrative expenses
funded investments in technology, materials science, and key expertise
to support our market development. Also, during the prior year we
experienced a reversal of incentive compensation related to the first
half 2009 results that was not repeated during the current year.
Overall, these changes resulted in a net $2.2 million increase for the
quarter and $4.6 million through the first half.
?The personnel investments we made during the quarter to support
Healthcare, Financial and Industrial are examples of how we continue to
advance our market expertise within these segments,? said Morgan. ?The
industry knowledge provided by these resources will allow us to
accelerate our overall transformation efforts in order to take advantage
of the opportunities that exist within these markets.?
The breakeven results in the second quarter of 2010 included $4.7
million of pension loss amortization, or $0.10 per share after tax and
$1.0 million of restructuring, or $0.02 per share after tax. Excluding
these items, non-GAAP adjusted net income was $3.3 million, or $0.12 per
share, for the second quarter of 2010 compared with non-GAAP adjusted
net income of $5.6 million, or $0.19 per share for the prior year. The
first half of 2010 included $9.3 million of pension loss amortization,
or $0.19 per share after tax and $1.5 million of restructuring, or $0.03
per share after tax. Excluding these items, non-GAAP adjusted net income
was $5.6 million, or $0.19 per share, for the first half of 2010
compared with non-GAAP adjusted net income of $9.7 million, or $0.33 per
share for the prior year.
Capital expenditures were $10.6 million through the first half utilizing
a combination of $4.3 million in cash and $6.3 million through operating
and capital lease agreements. Capital expenditures are expected to end
the year in the $17-19 million range. During the second quarter, the
Company purchased the assets of Fusion Graphics, Inc. for approximately
$2.5 million.
?The acquisition of Fusion Graphics is another example of our market
focused transformation, in that it allows us to broaden our intellectual
property portfolio and enhance our material science capabilities while
remaining focused on the markets we serve,? noted Morgan.
Pension funding was $13.5 million through six months with an additional
$15.5 million planned for the balance of the year. Non-GAAP cash flow on
a net debt basis was $10.9 million negative for the first half,
primarily due to increases in working capital and the Fusion Graphics
acquisition.
Dividend
On Thursday, July 29, 2010, Standard Register's board of directors
declared a quarterly dividend of $0.05 per share payable on September
10, 2010, to shareholders of record as of August 27, 2010. The board
will consider future dividend payments on a quarter-by-quarter basis in
accordance with its normal practice.
Conference Call
Standard Register's President and Chief Executive Officer Joe Morgan and
Chief Financial Officer Bob Ginnan will host a conference call at 10:00
a.m. EDT on July 30, 2010, to review the second quarter results. The
call can be accessed via an audio web cast accessible at: http://www.standardregister.com/investorcenter.
About Standard Register
Standard Register is a premier document services provider, trusted by
companies to manage the critical documents they need to thrive in
today's competitive climate. Employing nearly a century of industry
expertise, Lean Six Sigma methodologies and other leading technologies,
the Company helps organizations increase efficiency, reduce costs,
mitigate risks, grow revenue and meet the challenges of a changing
business landscape. The Company offers document and label solutions,
technology solutions, consulting and print supply chain services to help
clients manage documents throughout their enterprises. More information
is available at http://www.standardregister.com.
Safe Harbor Statement
This report includes forward-looking statements covered by the Private
Securities Litigation Reform Act of 1995. A forward-looking statement is
neither a prediction nor a guarantee of future events or circumstances,
and those future events or circumstances may not occur. All statements
regarding our expected future financial condition, revenues or revenue
growth, projected costs or cost savings, cash flows and future cash
obligations, dividends, capital expenditures, business strategy,
competitive positions, market shares, growth opportunities for existing
products or products under development, and objectives of management are
forward-looking statements that involve certain risks and uncertainties.
In addition, forward-looking statements include statements in which we
use words such as ?anticipates,? ?projects,? ?expects,? ?plans,?
?intends,? ?believes,? ?estimates,? ?targets,? and other similar
expressions that indicate trends and future events. These
forward-looking statements are based on current expectations and
estimates. We cannot assure you that such expectations will prove to be
correct. The Company undertakes no obligation to update forward-looking
statements as a result of new information, since these statements may no
longer be accurate or timely. Because such statements deal with future
events, actual results for fiscal year 2010 and beyond could differ
materially from our current expectations.
Factors that could cause the Company's results to differ materially from
those expressed in forward-looking statements include, without
limitation, variation in demand and acceptance of the Company's products
and services, the frequency, magnitude and timing of paper and other
raw-material price changes, general business and economic conditions
beyond the Company's control, timing of the completion and integration
of acquisitions, the consequences of competitive factors in the
marketplace, results of the MyC3 initiative and other cost-containment
strategies, and the Company's success in attracting and retaining key
personnel. Additional information concerning factors that could cause
actual results to differ materially from those projected is contained in
the Company's filing with The Securities and Exchange Commission,
including its report on Form 10-K for the year ended January 3, 2010.
Non-GAAP Measures Presented in This Press Release
The Company reports its results in accordance with Generally Accepted
Accounting Principles in the United States (GAAP). However, we believe
that certain non-GAAP measures found in this press release, when
presented in conjunction with comparable GAAP measures, are useful for
investors. Generally, a non-GAAP financial measure is a numerical
measure of a company's performance, financial position, or cash flows
where amounts are either excluded or included, not in accordance with
generally accepted accounting principles. We discuss several measures of
operating performance including adjusted net income and earnings per
share and cash flow on a net debt basis which are not calculated in
accordance with GAAP. These non-GAAP measures should not be considered
as substitutes for, or superior to, results determined in accordance
with GAAP.
Management evaluates the Company's results excluding pension loss
amortization, pension settlements, restructuring charges, and asset
impairments. We believe that this non-GAAP financial measure is useful
to investors because it provides a more complete understanding of our
current underlying operating performance, a clearer comparison of
current period results with past reports of financial performance, and
greater transparency regarding information used by management in its
decision making. Internally, management and our Board of Directors use
this non-GAAP measure to evaluate our business performance and to
establish incentive compensation.
In addition, because our credit facility is borrowed under a revolving
credit agreement, which currently permits us to borrow and repay at will
up to a balance of $100 million (subject to limitations related to
receivables, inventories, and letters of credit), we take the measure of
cash flow performance prior to borrowing or repayment of the credit
facility. In effect, we evaluate cash flow as the change in net debt
(credit facility debt less cash and cash equivalents).
The table below provides a reconciliation of these non-GAAP measures to
their most comparable measure calculated in accordance with GAAP.
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THE STANDARD REGISTER COMPANY
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STATEMENT OF OPERATIONS
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(Dollars in thousands, except per share amounts)
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Second Quarter
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Y-T-D
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13 Weeks Ended
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13 Weeks Ended
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26 Weeks Ended
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26 Weeks Ended
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4-Jul-10
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28-Jun-09
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4-Jul-10
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28-Jun-09
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$
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164,682
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$
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171,015
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TOTAL REVENUE
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$
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332,105
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$
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345,635
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112,964
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116,833
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COST OF SALES
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226,778
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237,218
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51,718
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54,182
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GROSS MARGIN
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105,327
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108,417
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COSTS AND EXPENSES
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50,508
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48,270
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Selling, general and administrative
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104,653
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100,057
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-
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-
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Pension settlement losses
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-
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19,747
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-
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850
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Asset impairments
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-
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850
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1,026
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(394
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)
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Restructuring and other exit costs
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1,458
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207
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51,534
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48,726
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TOTAL COSTS AND EXPENSES
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106,111
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120,861
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184
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5,456
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INCOME (LOSS) FROM OPERATIONS
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(784
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(12,444
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OTHER INCOME (EXPENSE)
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(601
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(333
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Interest expense
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(991
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(636
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)
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190
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209
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Other income
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192
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257
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(411
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(124
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Total other expense
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(799
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(379
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(227
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5,332
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(LOSS) INCOME BEFORE INCOME TAXES
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(1,583
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(12,823
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(117
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2,158
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Income Tax (Benefit) Expense
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(660
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(5,021
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$
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(110
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$
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3,174
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NET (LOSS) INCOME
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$
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(923
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$
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(7,802
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28,912
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28,833
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Average Number of Shares Outstanding - Basic
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28,893
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28,816
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28,912
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28,834
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Average Number of Shares Outstanding - Diluted
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28,893
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28,816
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$
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-
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$
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0.11
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BASIC AND DILUTED INCOME (LOSS) PER SHARE
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$
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(0.03
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$
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(0.27
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$
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0.05
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$
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0.05
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Dividends declared for the period
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$
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0.10
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$
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0.28
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MEMO:
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$
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6,192
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$
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6,201
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Depreciation and amortization
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$
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12,279
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$
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12,420
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$
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4,668
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$
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3,546
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Pension loss amortization
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$
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9,336
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$
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8,203
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SEGMENT OPERATING RESULTS
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(Dollars in thousands)
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Second Quarter
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Y-T-D
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© Business Wire 2010
| Latest news on STD REGISTER |
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