Banta Reports 1Q Results: Earnings Rise, Optimistic about Demand
Wednesday, April 24, 2002
MENASHA, Wis., April 23 -Banta Corporation today reported an excellent start to the year, with higher first quarter net earnings compared to the same period last year. Sales for the first three months of the year were lower, reflecting reduced paper prices and a continued soft economy. Net earnings for the first quarter of 2002 reached $10.5 million, a 4 percent increase over last year's $10.1 million, which excludes the one-time $7.5 million after-tax investment write-off taken in the first quarter of 2001. Diluted earnings per share were 41 cents, equal to last year, however last year Banta had fewer shares outstanding. Including the one-time charge, last year's first quarter diluted EPS was 11 cents per share. First quarter sales were $333 million versus last year's $372 million. Chairman and Chief Executive Officer Donald D. Belcher says Banta's solid first quarter performance created encouraging momentum. "Our diversified business mix, strong market positioning, value-added service capabilities and continued cost containment have helped us counter the effects of a very slow economic recovery," says Belcher. "Through a continuing focus on effectively managing working capital, our first quarter inventories reached an all-time low. We have reduced our capital expenditures to match capacity requirements, which combined with our solid earnings helped us deliver a record $45 million first quarter cash flow. "First quarter operating margins increased in our print sector and healthcare business, while supply-chain margins remained strong despite softer revenues," notes Belcher. Operational highlights for the first quarter: * Banta's supply-chain management sector delivered a solid quarter considering the sluggish technology markets. Sales and earnings were lower compared to the same period last year, though profitability remained strong with good operating margins and a favorable value-added product mix. "We are encouraged by the growth prospects for supply-chain management, despite the slow recovery in technology spending," says Belcher. "Our customers are the global leaders in hardware and software technology, and our organization is well positioned to capitalize on a tech sector rebound." * Operating earnings for the Banta print sector rose 7 percent, assisted by continuing productivity improvement initiatives, improved plant utilization and a favorable product mix. Sales declined 8 percent, with about two-thirds of the decrease due to lower paper prices. -- A good educational print market provided strength for Banta's book business, creating more balanced plant work loads and improved efficiencies compared to the same period last year. * The continued slow advertising environment created a 15 percent ad page decline versus last year's first quarter, causing softness in sales and earnings at Banta's publications division. However, the outlook for higher ad spending and the benefits of continued market share gains should translate to improved activity for the remainder of 2002. * Revenue from consumer catalogs remained near 2001 levels, while productivity initiatives helped boost profitability. * Low levels of promotional spending and customer delays in releasing print programs combined to reduce the direct marketing division's first quarter sales and earnings. In recent weeks, advertising spending and print order inquiries have increased, signaling improved activity for the remainder of the year. * Banta's single-use healthcare products unit reported solid profits on comparable sales. Healthcare continued to capture the benefits of its global sourcing and productivity initiatives undertaken in 2000. "We are pleased with our first quarter results," emphasizes Belcher. "Our balanced business portfolio and strong operating performance position us to capitalize on an improving economy. "We believe that our earnings for the first half of 2002 will be comparable to the same period last year, before the first quarter 2001 one-time investment write-off," notes Belcher. "Our expectations for the full-year 2002 are for mid-single digit growth in sales and earnings, reflecting the outlook for a gradually improving economy." Effective January 1, 2002, Banta has adopted the new accounting standard FASB 142, which eliminates annual goodwill amortization. The new standard benefits the corporation by about $3 million annually, spread evenly over four quarters. It added about 1.8 cents to first quarter 2002 earnings per share.