By Trevor Shackelford November 3, 2005 -- Banta Corporation (NYSE: BN) announced their third quarter results today. Total revenue for Banta's third quarter was $381 million, 7% higher than the $356 million reported for the third quarter of 2004. Earnings from continuing operations for the quarter increased 23% to a record $21.7 million, compared with $17.6 million reported for the same period in 2004. Diluted earnings per share for the quarter was $0.89 per share, up 27% from $0.70 per diluted share reported for the same period in 2004. Third quarter earnings were favorably impacted by a lower tax rate in 2005 compared with 2004 and by share repurchases. Contents of this Summary Quarter Highlights Segment Performance Guidance Raine Radar Q & A Quarter Highlights Gross profit for the quarter was $86.7 million, up 8% from $80.3 million reported for the same period in 2004. Gross margin for the third quarter was 22.8%, an increase of 20 basis points from last year. SG&A expenses for the quarter were $56 million, compared to $52.1 million reported last year. As a percentage of revenue, SG&A was 14.7% compared to 14.6% a year ago. Operating earnings for the quarter increased to $30.7 million or 8.1% of revenue from $28.17 million, or 7.9% of revenue reported for the same period in 2004. Effective tax rate for the quarter was 28.5%, compared to 35.5% reported in a year ago and 32% reported in the first and second quarters in this year. Ratio of long-term debt to capital declined to 11.5% at the end of the quarter from 15.6% a year-ago. The company had $142 million in cash at the end of the third quarter was about $8 million more than last year. During the quarter the company added 32 magazine titles to their roster. Segment Performance Printing Services Segment Q3 revenues for the segment were $284 million, up 11% from $257 million in the same period last year. About half of the increase was due to higher paper prices. Operating earnings rose 13% from improved facility utilization and productivity initiatives such as equipment rebuilds. Banta’s book division reported a revenue increase of 3% and operating earnings up 16% compared with the year-ago quarter. Helping drive profitability was a robust educational print market. The division was negatively affected by several large B2B catalogs being moved from the third quarter to the fourth. The direct marketing division reported revenues up 11% and operating earnings up 43% compared with the year-ago quarter. The division benefited from a better product mix that contained more complex and targeted direct mail products. The consumer catalog division revenue increased 35%, while operating earnings grew even more dramatically. Market share gains and strong customer retention combined with significant productivity improvements to deliver excellent Q3 results. Operational improvements included a major press rebuild that was completed near the end of the second quarter. Banta’s publication division reported a 6% increase in revenues for the third quarter, with approximately three-fourths of that increase due to higher paper prices. Operating earnings declined 13% compared with third quarter in 2004. Banta’s literature management division reported double-digit revenue increase in the third quarter, but operating earnings declined due to additional overhead expenses and much less favorable product mix. Supply-Chain Management Service Segment Q3 revenues for the segment were $97.3 million, down 2% from $99.1 million reported for the same period in 2004. Operating earnings for the quarter were $11.1 million, down 9% from $12.2 million reported for the same period last year. A major factor affecting results was a temporary shutdown of the Houston, Texas operation due to hurricane Rita. Despite the lost production, productivity efforts and favorable value-added product mix throughout the business resulted in improved third quarter operating margins compared with the first half of the year. Guidance Banta management has reaffirmed its previous full-year 2005 revenue guidance, and modestly raised and narrowed the range for expected earnings per share. Revenue is expected to be in the range of $1.5 billion to $1.55 billion. Full-year diluted earnings per share from continuing operations are now anticipated in the range of $2.90 to $2.96, which includes the expected $0.08 to $0.09 per share increase due to a lower tax rate in the second half and excludes any tax effect of potential repatriation of foreign earnings. The prior range was $2.80 to $2.95. Effective income tax rate for the fourth quarter remain flat at 28.5% as reported in the Q3, indicating average rate for the fiscal year will be approximately 30%. Raine Radar Banta posted an outstanding third quarter. A 7% growth in revenues, a lower tax rate, and almost $1.5 million shares bought back since the beginning of the year have led to a record EPS quarter for the company. It seems like the company can do no wrong, but Banta’s focus on operational efficiencies and the release of new products and increasingly more complex services have been the key to the company’s success. The company will be looking to improve on its already stellar performance next quarter. Q & A Segmentation and personalization of direct mail products differentiate the company from its competitors in terms of profitability and long term positioning. The company’s capital spending is approximately equal to depreciation over the last of couple of years. Banta contributed approximately $10 million to its pension plan. Banta’s working capital levels depend upon the type of customers and paper purchases made by the company. The company’s supply chain management services unit in Singapore is growing very well with increasing revenues and margins. The company anticipates that print margins will be in the range of 8% to 9% next quarter. The company’s supply chain margins are expected to decrease as the business accelerates.