Worldcolor increases earnings in Q3
Monday, November 16, 2009
Press release from the issuing company
Montréal, Canada – Worldcolor reported increased combined consolidated adjusted earnings before interest, tax, depreciation and amortization (adjusted EBITDA) in the third quarter of 2009 compared to the same period in the prior year, highlighting the Company's efforts to improve efficiencies and to align its cost structure with the current challenging economic environment.
In the third quarter of 2009, Worldcolor generated combined consolidated revenues from continuing operations of $769.9 million compared to $993.6 million in the third quarter of 2008. Combined consolidated operating income in the third quarter of 2009 before impairment of assets, restructuring and other charges was $51.5 million compared to $33.7 million in the third quarter of 2008. Combined consolidated adjusted EBITDA was $103.4 million in the third quarter of 2009 compared to $94.2 million in the third quarter of 2008. The higher adjusted EBITDA in the quarter resulted from increased operational efficiencies and ongoing cost-containment initiatives. In the third quarter of 2009 cost of sales decreased by 26% compared to the third quarter of 2008 while revenues in the third quarter 2009 decreased by 23% compared to the same period last year. For the third quarter ended September 30, 2009, Worldcolor reported a combined consolidated net income of $13.3 million, compared to a net loss from continuing operations of $63.6 million for the same period in 2008. These results incorporated impairment of assets, restructuring and other charges (IAROC), net of income taxes, of $8.9 million compared with $5.1 million for the same period in 2008, as well as reorganization items of $13.0 million which, net of income taxes, compared to $24.0 million in the third quarter of 2008. In addition to the improvement in operating income, the Company benefited from reduced financial expense mainly due to gains on foreign exchange and lower interest expenses post emergence from creditor protection in July, 2009. With $52.9 million of cash on hand and access to a $350 million credit facility, of which $85 million was drawn on September 30, 2009, the Company believes it has adequate liquidity to achieve its operational goals going forward.
"The new Worldcolor is making a satisfactory beginning. The quarter-over-quarter improvement in profitability exceeded our expectations. It is spread across most of our businesses and was achieved despite generally lower volumes related to the difficult global economy and reduced advertising spending in North America," said Mark Angelson, Chairman and CEO of Worldcolor. "We have important work ahead, but we see many opportunities to improve our business and our industry position. We will continue to take a disciplined and rigorous approach to improving operational efficiencies through cost-reductions across our entire platform."
The Company recently announced new and renewed agreements with important customers including USA Weekend, Pace Communications, Macmillan and ABA Publishing. Worldcolor continues to expand and diversify its product offerings including services that allow publishers and retailers to repurpose content in a timely manner, across multiple platforms to reach the greatest audience and to maximize the return on their advertising spend.
"We are encouraged by the positive response we have received from our customers and other stakeholders. We are focused on proactive relationships with customers and continue to make progress in renewing existing partnerships and beginning new ones," commented Mr. Angelson.
For the three quarters of 2009, Worldcolor reported a combined consolidated net loss from continuing operations of $172.1 million, compared to a net loss from continuing operations of $289.9 million for the same period in 2008. The results for the three quarters of 2009 incorporate IAROC, net of income taxes, of $21.8 million compared to $47.8 million for the same period in 2008 as well as reorganization items of $62.1 million which, net of income taxes, compared to $62.3 million in the first three quarters of 2008. Combined consolidated revenues for the first three quarters of 2009 were $2.22 billion compared to $2.98 billion for the same period in 2008. The lower revenues are mainly due to decreased volume in addition to price erosion.