Bowne & Co., Inc. (NYSE: BNE) today announced 2004 first quarter earnings of $3.3 million or $0.09 per share as compared to a loss of $4.4 million, or $0.13 per share, for the first quarter 2003.

Revenues were $289.5 million in the first quarter of 2004 as compared to $255.7 million in the comparable quarter of 2003; a 13% growth rate. Financial Print revenues grew 22%, benefiting from improved transactional activity and increased corporate reporting revenue. Outsourcing and Globalization revenues grew 2% and 3%, respectively.

Topics of this summary:

  • Performance by Segment
  • Outlook
  • Q & A

Performance by Segment

Bowne Chairman and CEO, Mr. Robert Johnson, began today's earnings call with a recap of events impacting the company in the first quarter.

Financial Print  For the 2004 first quarter, Financial Print reported a $31.0 million, or 22%, increase in revenues and segment profit increased $13.5 million, or 125%, as compared to the 2003 first quarter.

The segment profit margin of 14.4% is the highest since the second quarter of 2002. The combination of higher compliance activity, Sarbanes Oxley legislation, and the improved operations efficiency resulted in margins greater than forecasted. In the M&A market, there are several significant transactions in process, and in the IPO market, 42 companies came to market in the first quarter-up from five in the first quarter of 2003-continuing the upward trend from the fourth quarter of 2003. Bowne had 50% market share of this activity. The Enterprise digital print group continues to build momentum in the customized and personalized enrollment and investor kit market. During the quarter a number of new accounts signed contracts for services.

Business Solutions  Revenues reached a record during the first quarter 2004 of $65.4 million, 2% higher than the 2003 first quarter. Segment profit margin of 7.1% is the highest since the second quarter of 2002 and the fourth consecutive quarter of segment profit growth. During the quarter, BBS added seven new multi- year contracts with a total contract value of $26 million. Four of these new contracts are within the Legal sector; two are within Investment Banking and one within Financial Services. In addition, BBS renewed five contracts with existing clients with a total contract value of $42 million and experienced no client losses.

Global Solutions - Revenues of $54.6 million represent a 3% increase over the first quarter 2003. Segment profit was down slightly year-over-year, resulting primarily from certain non-recurring expenditures made in the first quarter. The first quarter also reflects slower activity as a result of normal seasonality. BGS is working on a $5 million contract with a leading European telecommunications firm-spanning work in localization, technical writing and related testing; a $2.7 million deal signed with a leading global e-learning course development firm; and several contracts with European clients in the government and public health sectors for translation and interpretations services.

The CEO, Robert Johnson, said Bowne continues to focus on cash flow and managing receivables. Average days outstanding increased 2 days to 67 days in 2004. Net debt at March 31, 2004 is up from December 31, 2003 approximately $17.7 million to $141.2 million, principally the result of increased Financial Print work-in-process inventory of $25.6 million-up 80% from December 31, 2003 and 13% as compared to March 31, 2003. Capital expenditures in the quarter were $5.1 million versus $6 million Q1 2003.


Due to the volatility of the market, Bowne has declined to provide outlook on a quarterly basis and instead has provided guidance for the full-year 2004 ( which is unchanged from the previous call in February 2004 ):  

$1.1 to $1.2 billion
Financial Print
$620 to $650 million
$270 to $280 million
$240 to $250 million
Segment Profit:  
Financial Print
$70 to $90 million
$19 to $22 million
$18 to $23 million
$(17) to $(25) million
Diluted earnings per share $0.45 to $0.77
Capital expenditures
$25 to $30 million

Q & A

  1. In Financial Print, profit margins are coming in at the high end at 14.4% which implies that Bowne's 2004 guidance is expecting high transactional volume (i.e. increased filings and disclosures) for the balance of the year.
  2. When questioned about the increase in overhead expenditures, Johnson replied that In 2003, this was the completion of our acquisitions and various integration efforts. So to get teams together we created additional expenditures by having 150 executives in for a multi-day management conference as well as marketing programs to position us for market expansion, additional sales staff, and training expenses with some new systems.

Editor's Note: Bowne had one of its best quarters in a very long time. We found it strange that only one analyst asked two questions. It felt like there was no one else was on the call.