GBC Reports 2000 Results; Revenue Flat, 4Q Down 8%
Press release from the issuing company
NORTHBROOK, Ill.-Feb. 13, 2001-- GBC General Binding Corporation (Nasdaq: GBND) today reported results for 2000 reflecting significant improvements in cash flow and debt reduction resulting from the substantially-complete efforts of its previously-announced restructuring and cost reduction programs.
"We entered the year with a comprehensive and ambitious set of programs designed to significantly improve operational efficiencies across our businesses and to strengthen our financial flexibility, and the organization did a great job of executing these initiatives," said Jim Miller, Chairman of the Board. "Most of the work was centered on enhancing the profitability of our product lines and streamlining our worldwide infrastructure to further leverage our leading worldwide market positions and strong customer relationships. We have cut costs, improved our supply chain efficiencies, and reduced our working capital, and the substantial improvements in our gross profit margin, EBITDA and debt level are directly attributable to these activities. Collectively, they increase our competitiveness and further solidify our foundation for future growth which should materially contribute to shareholder value."
For the year, the Company reported operating income of $55.9 million, up sharply from the $30.1 million posted in 2000. Most of the increase was attributable to the Office Products Group, where operating income nearly doubled to $39.3 million from $20.1 million in the prior year. This Group benefited from an increase in sales, especially an increase in sales of visual communication products, as well as from higher gross margins related to cost reduction and supply chain initiatives and a significantly lower level of customer credits for returned goods, as these returned to normalized levels during the year. Operating income in the Films Group increased 14%, spurred primarily by reduced operating expense levels and increased sales.
In the Document Finishing Group, operating income fell by about 2%, as subpar salesforce productivity and investments in training and development did not offset increases in the Group's gross margins. In the Europe Group, operating results improved by $5.1 million, primarily due to a balance of improvements in gross margins and operating expenses. The Group continues to be affected by the decline in European currencies vis-a-vis the U.S. dollar, as roughly half of it products are sourced in U.S. dollars. However, after adjusting for these currency movements, fiscal year-end changes and businesses exited, sales for the Group were up about 3%. Other financial highlights for the year are:
Sales were $911 million, compared to $912 million reported in 1999. However, after adjusting for currency effects, changes in 1999 fiscal reporting periods for certain international subsidiaries, and for lines of business exited in 2000, sales in 2000 were up almost 5% over last year.
Cash flow, as measured by EBITDA, was $95.3 million, up sharply from the $71.1 million posted in 1999.
Net income was $4.3 million, or $0.27 per diluted share, excluding expenses totaling $5.1 million before taxes, or $0.12 per diluted share, for special charges related to restructuring programs, consulting projects, and non-cash losses on asset dispositions.
For the prior year 1999, the Company reported a loss of $13.0 million, or $(0.83) per diluted share, excluding $50.2 million of similar special charges.
Total debt at year-end was $407 million, down almost $63 million from the $470 million balance at year-end 1999.
"Looking forward," Mr. Miller continued, "2001 will reflect a continuation of meaningful shareholder value creation with a balancing of efforts directed towards three primary goals of profitable long-term revenue growth, continuing operational improvement and financial flexibility. Our first goal of growing revenues will undoubtedly be affected by the challenging economic environment, but we expect to benefit from new product introductions, expanded marketing initiatives, and salesforce productivity improvements. In addition, we have already begun important investments in new joint ventures that should begin to generate growth this year, and we will also begin accelerating our investments in R&D and marketing opportunities this year to drive growth in future years. To achieve our second goal, we intend to build on the cost saving and productivity improvements of the year 2000, particularly in our supply chain, distribution, manufacturing and sourcing areas. Our third goal, enhancing financial flexibility, will be aided by a continued focus on improving our working capital levels, as well as by expected improvements in cash flow, and both these should help to continue driving down debt and interest expense."
"Overall, our revenue forecast is complicated by the current economic uncertainty, but we are expecting to achieve at least modest revenue growth this year. Our increased R&D and marketing investments will likely moderate the growth in EBITDA and earnings per share somewhat this year. But, we still expect to show growth in these areas as well, particularly in earnings per share. EBITDA growth should mirror the growth we expect in revenues. And, earnings per share for the year, before special items, should improve somewhat over the $0.27 per share earned last year."
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