By Steven Schnoll November 9, 2004 -- Banta Corporation (NYSE: BN) delivers strong third quarter results. Results are a testament to the efforts of Chairman and CEO, Stephanie Streeter, and her team to drive down expenses and improve margins. The company reported third quarter net earnings of $19.1 million or $0.76 per diluted share compared to net income of $16 million or $0.62 per share earnings in the same period in 2003, a whopping 20% increase. Q3 revenues were up 8% to $380 million from $352 million in the same 2003 quarter. Topics of this summary Company Performance Overview Guidance Raine’s Radar Q & A Company Performance Banta reported significantly improved volume in just about all areas of the company. The two areas reflecting the best improvement were print and supply chain management. For the first nine months of the year revenue increased 9% to $1.12 billion compared to $1.02 billion in the comparable 2003 period. The Supply Chain Management segment delivered excellent results. Revenue increased 19% to $99 million and operating earnings increased 22% to $12.2 million from $10 million in Q3 of 2003. Much of this growth was attributed to the large computer hardware customers who experienced growth in their respective markets. Print revenue increased by 5% in Q3 to $257 million. Operating earnings increased to $23.1 million 10% above the same quarter last year. The increase was partly due to gains in direct mail, a general increase in printed magazine pages, and the results of restructuring in the catalog division. The catalog division experienced its two strongest months in August and September benefiting from new wins and increases in print runs. The direct mail area was rewarded from activity based around complex levels of customization in personalization. The book division was the only down news, while print volume increased slightly pricing pressure negatively impacted profitability. Guidance Banta maintained its previous guidance for the year predicting revenue of approximately $1.5 billion reflecting growth in the mid single digit range. Diluted EPS should fall in the $2.63 to $2.71 range. Raine’s Radar Banta is very proud of the results from 2003 to 2004 and rightly so. While the industry is still experiencing price pressure the Streeter team is looking inward first to reduce costs and improve productivity efficiency before going on an equipment buying binge. Her four cornerstone pillars of productivity improvement, market segmentation, strategic alliance and employee leadership/talent initiative are paying rich dividends. As one analyst said, it was a boring call. How many graphic communication companies can laugh at that gesture? The only problem may be a complacency emanating from mid level Banta employees feeling the company is running at capacity and all they have to do is sit back and relax. Maybe a little too boring? Q & A Literature management slowed in Q3 due to the loss of a large customer. Q4 should be strong and gaining momentum for 2005 Margins should fall slightly in Supply Chain Management for Q4 but still should be better than Q4 2003. The decrease in capital expenditures should not adversely affect growth due to the improved productivity gains. If growth demands the purchase of a new press it will be done. The cost of implementing PeopleSoft applications in 2004 should be around $11 million. In 2005 the cost will be around $10 million. No new major contracts are up for renewal. Stock is trading around 14x earnings, no plans for stock purchase. Use of cash will be determined based on highest and best use. Some of the best opportunities in 2005 will be capacity improvements through programs like Six Sigma and Lean Manufacturing Strong on education segment opportunities due to several market influences i.e. adoption cycles of new education programs, increased emphasis on reading programs, “no child left behind” initiatives, potential 20% increase in education spending. Supply Chain experienced many new customers representing 20% of Q4 volume. “Feel very good” about existing customers like Dell and HP in Supply Chain area