EDITOR's NOTE: Last fall (2001) we published a special report on Moore Corporation which detailed the swift moves their new CEO, Robert Burton, made to bring the company back from the brink. A short time later, one of Moore's customers contacted us and said her firm was also a Banta customer. She suggested we examine Banta's two year stock chart and publish a similar report on the publicly traded company. Surface research suggested there was very little information in the public domain about Banta - outside their required press releases and annual report. So we teamed with contributing WTT columnist, Gail Nickel-Kailing to uncover the reasons for Banta's stellar performance. Gail is principal consultant at Business Strategies Etc. Banta Corporation launched a little over 100 years ago in eastern Wisconsin near the shores of Lake Winnebago, the state’s largest lake. The company has followed a long-term strategy resulting in profitable growth through diversified business units. While the company saw a slump between 1998 that bottomed out in early 2000, their stock price has risen nearly 120%. Not only have they seen remarkable growth in their stock price, they have continued to increase their quarterly dividends for the past 24 years, and have described their performance for the last 15 quarters as: "positive (2), strong (1) solid (4), excellent (1), outstanding (1), and record (6)." These days, its refreshing to hear positive comments on the earnings front - especially in the printing industry. Banta's Diversified Success: A Culture Based on Performance By WTT Contributing Columnist Gail Nickel-Kailing July 9, 2002 -- When someone in a small town turns 100, newspapers run pictures of the centenarian and inevitably ask the question: "To what do you attribute your longevity?" And the sharp-eyed senior would say, "doing the right things, and doing things right!" As Banta Corporation moves into its second century, the printing industry could very well ask the same question. Banta seems to be following the same advice. Banta Corporation has twice been named as one of Fortune magazine’s "Most Admired Companies" in America (for 2002 and 2001). The Menasha company ranked second overall in the printing industry category. The list was compiled to rate the 10 largest companies (by revenue) in 58 industries based on eight attributes: innovation, financial soundness, employee talent, use of corporate assets, long-term investment value, social responsibility, quality of management, and quality of products and services. And in 2001, Forbes magazine rated Banta as one of the Platinum 400 "Best Big Companies in America." Company Overview Banta’s portfolio of businesses fall into three areas: printing and digital imaging, supply-chain management, and healthcare products. Thirty-five subsidiaries employ more than 8000 people in North America, Europe, and Asia. Banta generated revenues of more than $1.46 billion in 2001. Established in 1901 in Menasha WI, and still headquartered there, Banta Corporation became a NASDAQ publicly traded company in 1971 and was listed on the New York Stock Exchange in December 1998. Sales for 2001 were down 5% from the prior-year sales of $1.54 billion. Print segment sales for 2001 were approximately 8% below the prior year; believed to be influenced by a softer economy that specifically impacted the educational book market and publications market, and a reduction in paper prices of approximately 9%. Despite the reduction in consolidated sales, gross profit as a percentage of sales improved from 20.2% in 2000 to 20.4% in 2001. Contributing to this improvement were changes in product mix, improved operating efficiencies and aggressive cost control measures. The printing and digital imaging and supply chain segments have similar technologies for managing inventories and distributing products and share a target customer profile. However the healthcare product line seems to be related to the other segments only by the nature of the substrate. That is, the healthcare product line is primarily made up of disposable paper products sold to the healthcare industry. The contribution from the printing and digital imaging and supply chain segments has changed somewhat over the last three years: printing and digital imaging has dropped from 76% of the revenue in 1999 to 69% of the revenue in 2001 and, conversely the supply chain revenue has grown from 16% in 1999 to 24% in 2001.   2001 2000 1999 Printing & Digital Imaging 69% 71% 76% Supply Chain 24% 22% 16% Healthcare 7% 7% 8%   100% 100% 100% The Three Business Units Printing and Digital Imaging The largest business unit is the Printing and Digital Imaging group which could be considered two units in one: Printing and Banta Integrated Media. Banta serves publishers of educational and general books, special-interest magazines, consumer and business catalogs, and direct marketing materials. In addition to printing and digital imaging, The company offers multimedia and software packages, interactive media and on-line services. Printing Segment Revenue and earnings (Dollars in thousands) 2001 2000 1999 Net Sales $1,009,047 $1,100,213 $997,150 Earnings from Operations* $93,778 $106,196 $93,410 *Earnings from operations for 1999 exclude a restructuring charge of $55.0 million. Earnings from operations as a percent of net sales has remained fairly consistent over the last three years at about 9.3% to 9.6%. Banta's Printing and Digital Imaging segment comprises five sectors, each focused on separate print markets and all supported across these markets by Banta Integrated Media. The ratio of revenues for the five market sectors have changed some, but not dramatically over the last three years. Category 2001 2000 1999 Books 33% 33% 29% Direct Marketing 22% 21% 24% Catalogs 22% 22% 23% Magazines 19% 19% 17% Digital Imaging 4% 5% 7%   100% 100% 100% * Banta Book Group Banta provides the book publishing market with a variety of print and electronic media products, in addition to a full range of value-added packaging, fulfillment and distribution services. Twenty manufacturing and distribution centers across the United States and Mexico serve publishing customers in the educational, trade, professional and religious segments. Banta provides products ranging from soft cover books, technical manuals and business directories, to specialty calendars, multimedia kits and instructional games. * Banta Direct Marketing Group Printed materials for direct marketing customers are provided by three plants. These products vary in format and size and include magazine and catalog inserts, bill stuffers, brochures, booklets, cards and target market products designed to sell a product or solicit a response. Recent advances in imaging technology have enabled customers to obtain personalized direct mail pieces at press speeds and allows Banta to promote advanced one-to-one marketing products for direct marketers. The company’s direct marketing customers are primarily marketers of financial services, packaged goods, and retail products and ad agencies. * Banta Catalog Group Two of the company’s facilities produce catalogs primarily for the specialty, business-to-business, industrial and retail catalog markets. Bindery services provide ink-jet imaging and demographic binding (which allows several different versions of the same catalog to be bound simultaneously). Distribution services are provided by Banta’s various operating units, including computerized mail distribution planning systems. These services assist Banta’s customers in optimizing postage costs and are an integral part of catalog printing services. * Banta Publications Group The company’s three plants serving the magazine market print, sort and mail more than 800 different titles of magazines. These magazines are primarily short-to-medium run publications (usually less than 350,000 copies), which are generally distributed to subscribers by mail. Banta’s primary magazine customers are publishers of specialty magazines, including religious, business and professional journals and hobby, craft and sporting publications. Banta also provides its customers with computerized mailing lists and distribution services. * Digital Imaging Prepress services are provided by several of the facilities to publishers, printers and advertising agencies. Such services include the conversion of full-color photographs, art and text into color separated film and digital files for use in the production of printing plates. These units also provide electronic graphic design, digital photography and on-demand print services. During the last several years, these units have diversified their customer base to include packaging customers and have maximized plant utilization by connecting facilities through a network of high-speed telecommunication lines. Banta Integrated Media has been focused as a separate sales and support function that can serve all the printing groups, including Supply Chain Management. Banta’s Digital Content Management Solutions Center in Cambridge Massachusetts provides sophisticated database systems for archiving, managing, retrieving and enabling multiple uses of customers' digital information. Other offerings include web site hosting and maintenance, as well as electronic commerce solutions. Banta Integrated Media - a company within a company Originally New Frontiers Information Corporation (NFIC), Banta Integrated Media was founded in 1994 by four Massachusetts Institute of Technology (M.I.T.) computer science graduate students with the goal of building a new generation of database-driven Web sites and E-Commerce solutions. At about the same time, Banta convened a taskforce to investigate the market for content management, as a business driver for both traditional offset and variable data digital printing. In late 1995, as a part of its corporate strategic initiative to aggressively invest in on-line and database capabilities, Banta acquired NFIC. And in the fall of 1998, Banta purchased Meadows Information Systems, developer of QuarkXTension™ and related products, AutoPrice™ and DataMerge™. Headquartered in Cambridge, MA, Banta Integrated Media employs 155 full time publishing and related technology professionals, and has additional offices in Mountain View, CA, Chicago, IL, and London, England. While Banta Integrated Media includes graphic and web designers, they do not provide agency services, but help customers become successful through strategy, development and execution. Integrated Media delivers communication through brand and channel management, by wrapping services around the "front end" and "back end" to provide a more complete product and service solution around Banta’s traditional print business. Banta Integrated Media may be small, but the group appears to be strategically positioned to support both Banta’s internal sales force as well as alternative sales channels, as indicated by the recent alliance with Hewlett Packard - (HP). The agreement promotes enterprise printing through the use of Banta's digital content management product, B-Media and the company’s design/merge tools. The products extend Banta’s reach into enterprise customers. Supply-Chain Management Supply-chain management grew out of Banta’s printing capabilities and its commitment to providing a complete range of value-added packaging and fulfillment services for printing customers. More than 30 years ago Banta worked with its educational publishers to not only print their manuals and books, but also to provide the services of packaging the various print products along with other materials into teaching kits. The company assembled the kits and managed the inventory, shipping the finished kits to their customers. In a planned and logical move in October 1995, Banta acquired B.G. Turnkey Services Limited. This was rolled into the existing operations to form Banta Global Turnkey (BGT) Group. It was a strategic acquisition that has since grown into a major part of the company, contributing 24% of 2001 combined revenue. The growth of this group has also changed Banta’s image from an "old-fashioned" commercial printer to that of a worldwide supply chain management company in a market with the potential for compound annual growth over the next 5-7 years of 20-24%. From packaging and fulfillment for publishers, the services evolved to building kits for the software industry producing the shrink-wrapped software products that included documentation manuals, diskettes, CD-ROMs and promotional print products. Since then Banta has expanded into hardware products which, in addition to packaging and fulfillment, includes various product assembly, configuration and testing activities. The Banta Global Turnkey Group provides sourcing, packaging, assembly, testing, fulfillment, and distribution services for a wide range of technology companies. In addition to basic assembly, packaging and distribution services, Global Turnkey offers Web-based business management systems that provide an infrastructure and common process for managing and tracking, on a worldwide basis, product quality, inventories, distribution status and product lifecycles. Along with web-reporting solutions, Banta provides in-house account management and new product introduction expertise to manage global product releases, such as the Microsoft® Windows® XP European rollout, on the customer’s behalf. Last month, Banta showed their commitment to this segment by acquiring Singapore- based Mentor Media signaling a major Asian expansion. Supply Chain Management Revenue and earnings (Dollars in thousands) 2001 2000 1999 Net Sales $345,865 $335,772 $213,397 Earnings from Operations $24,683 $20,698 $10,308 Net sales of the Supply Chain Management Group grew more than 62% from 1999 through 2001, and earnings from operations grew almost 48% over the same time period. Earnings from operations as a percent of net sales has grown consistently from 4.8% in 1999 to 7.1% in 2001. Healthcare Banta Healthcare Products is a bit of an "odd man out" in the corporate line-up; an anomaly that extends the company’s reach beyond their traditional printing and digital imaging segments, and more closely related supply chain management. It’s a small part of the overall businesses and two manufacturing facilities produce sterile and non-sterile disposable products used in hospitals, outpatient clinics and dental offices. Net sales of the Healthcare group remained fairly stable over the last three years, ranging from $101.7 million to $104.7 million. Earnings from operations as a percent of revenue had a much more volatile path over the same time period: dropping by more than half from 14.3% in 1999 to 7.1% in 2000, before rising to 9.3% in 2001. Healthcare Revenue and earnings (Dollars in thousands) 2001 2000 1999 Net Sales $103,023 $101,744 $104,731 Earnings from Operations $9,549 $7,243 $14,992 Will this unit be spun off? If the right offer were made, it is very likely, but in the meantime "if it ain’t broke, don’t fix it." As long as this group continues to make a good, steady contribution to both the top line and the bottom line, and it is self-sufficient enough to avoid being a distraction, it is logical that it will remain a part of Banta Corporation. This is definitely a company to watch. They’ve weathered tough economic times with flying colors and, if history can predict the future, the forecast is bright. Gail Kailing can be reached at [email protected].