Banta Bucks Down Trend with Solid Q2 Results, Print Revenue Up 4%
Press release from the issuing company
MENASHA, Wis., July 26 --Banta Corporation today reported solid results for the second quarter and first six months of 2002. Net earnings and diluted earnings per share reached record levels for both periods due to strong facility utilization, and significant efforts to control costs and maximize efficiencies. Achieving revenue growth was more difficult given lower paper prices, the slow pace of the economic recovery and competitive pricing.
Net earnings for the second quarter were $13.4 million compared with last year's $12.5 million, a 7 percent increase. Operating earnings also rose 7 percent to $24.7 million versus $23.2 million. Diluted earnings per share reached 52 cents compared with 50 cents for the same period last year. Additional shares outstanding compared to the prior-year quarter, primarily from the exercise of stock options, reduced 2002 second quarter earnings per share by one-and-a-half cents. Sales for the quarter were $333 million compared with last year's $339 million. Lower paper prices reduced this year's second quarter sales by approximately $10 million.
For the six-month period ended June 29, 2002, net earnings increased to $23.9 million, a 6 percent gain over the $22.6 million earned in the first half of 2001, excluding the investment write-off taken in the first quarter of 2001. Diluted earnings per share for the six-month period reached 93 cents versus 91 cents in 2001. Sales were $666 million compared with last year's $713 million.
"We are very pleased with our results for the second quarter and first half of the year," notes Chairman and Chief Executive Officer Donald D. Belcher. "In a very challenging economy, our operations performed exceedingly well, reporting excellent manufacturing activity and a solid increase in operating margins. We generated strong cash flow of $20 million in the second quarter and continued to improve our working capital position. Inventories remain at historically low levels and we reduced capital expenditures to match capacity demands."
Highlights of the second quarter include:
* Banta's Print Sector delivered a strong quarter with sales increasing 4 percent. Without the effect of lower paper prices, which were 14 percent below last year's level, revenue would have increased nearly 9 percent. Increased operating margins were achieved through strong plant utilization, aggressive cost controls and continuous improvement initiatives. -- The corporation's book division capitalized on a strong educational print market and increased demand for its literature management services. Improved plant utilization and growth in value-added services drove profitability gains.
* Banta's consumer catalog business recorded impressive revenue gains during its traditionally slow second quarter, adding several new customers. In addition, productivity initiatives helped boost profits.
* Direct marketers' reluctance to launch new promotional campaigns, together with industry pricing pressures, reduced revenue and earnings at the corporation's direct marketing units. While management expects print demand to strengthen during the second half of the year, competitive pricing may continue to affect results.
* Sales in the publications division were comparable to the same period in 2001 -- a significant achievement considering advertising page counts were down 15 percent compared to last year's second quarter.
* Banta's Supply-Chain Management Sector recorded a solid second quarter, despite a continuing weak technology market. Although the slowdown reduced sales versus the same period last year, operating earnings continued strong as aggressive cost controls, increased efficiencies and a favorable product mix helped maximize performance. "I am particularly excited about our recently announced agreement to purchase supply-chain provider Mentor Media," says Belcher. "With its multiple operations in Singapore, China, Taiwan and South Korea, Mentor will significantly advance our strategic vision of global supply-chain management leadership." The acquisition is expected to close early in the fourth quarter.
* The corporation's healthcare unit delivered increased sales, however operating margins were lower due to one-time manufacturing realignment expenses absorbed in the second quarter.
Given Banta's solid first half performance, management continues to expect the corporation to achieve mid-single digit growth in 2002 diluted earnings per share. Full-year earnings per share are projected to be in the range of $2.40 to $2.45 versus 2001's $2.31, before last year's investment write-off. However, given the continuing sluggish economy, lower paper prices, competitive pricing and ad spending reductions, Banta now expects 2002 revenues will be flat to slightly down compared to last year.
"I am convinced that Banta has never been better positioned to benefit from an economic upturn and to achieve its long-term growth goals," says Belcher. "We hold strong positions in healthy markets and we continue to capitalize on our commitment to customers and our focus on excellent execution. Perhaps most important, our leadership at all levels of the corporation has never been stronger."
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