Schawk Reports Earnings, March Better than February and January
Press release from the issuing company
Schawk, Inc. (NYSE: SGK), North America’s leading provider of digital imaging prepress services to the consumer products industry, today reported income after taxes of $1.8 million before restructuring charges and the loss at InterchangeDigital for the first quarter of 2001, slightly better than the fourth quarter of 2000, but below the prior year first quarter of $3.0 million on the same basis. Earnings per share for the first quarter ended March 31, 2001, excluding the restructuring charge and the loss at InterchangeDigital, were $0.09 per share compared to $0.09 per share in the fourth quarter of 2000 and versus $0.14 per share in the prior year first quarter on the same basis.
Net income for the first quarter of 2001 was $1.4 million compared to $2.9 million in the prior year first quarter. Earnings per share for the first quarter of 2001 were $0.07 per share as compared to $0.14 per share in the first quarter of 2000. Revenues decreased by 11% on an “apples to apples” basis in the first quarter of 2001 versus the first quarter of 2000. (The Company sold its Montreal operations, effective June 1, 2000 therefore that operation is excluded from the comparison.) The total decrease in revenues was 13%. The decrease in revenues reflected the continuing hold on new designs at clients that have recently been acquired or have announced that they are involved in a merger or acquisition with another consumer products company. As was disclosed by the Company in its third quarter earnings release, nine of the Company’s top twenty accounts were involved in merger activity. As previously disclosed this situation negatively impacted fourth quarter of 2000 revenues, was expected to continue and did impact the Company in the first quarter of 2001. Revenues with the Company’s top ten accounts in the first quarter of 2001 were down 10% versus the prior year first quarter.
The first quarter of 2001 did, however, end on a positive note. The month of March revenues and profits were significantly better than January and February’s results. It is too early to tell whether the Company’s top accounts will increase activity in the second quarter of 2001 or for the balance of the year.
Operating income before restructuring charges and the loss at InterchangeDigital was $4.3 million in the quarter ended March 31, 2001, a $2.5 million decrease from $6.8 million on the same basis in the prior year first quarter. The decrease in operating income was primarily a result of lower revenues as described previously. The operating margin before restructuring charges and InterchangeDigital’s loss was 9% for the first quarter of 2001 versus 13% on the same basis in the prior year first quarter. Excluding all start-ups, operating margins were 10% for the first quarter of 2001 versus 14% in the prior year first quarter.
David A. Schawk, President and Chief Executive Officer, commented on the results for the quarter, “In the first quarter, we saw a continuation of the slowness we experienced in the fourth quarter of 2000. As we mentioned in last year’s third quarter earnings release, nine of our top twenty accounts were involved in mergers with other consumer products companies. This fact coupled with the general softness in the economy contributed to a weaker than normal first quarter. Some of our clients’ mergers have been completed and we are looking forward to a return to stronger volumes with these clients. Other mergers are being reviewed by the U.S. Department of Justice, and this will delay the consummation of their acquisitions.
Mr. Schawk concluded with, “ Despite the soft market conditions, we are making investments in our business to solidify our position as the leading company in the digital imaging services industry. Our e-commerce initiatives are progressing well. In our international operations, we had a record quarter for first quarter revenues in both Asia and Latin America. Our InterchangeDigital subsidiary recently announced its second digital asset management product, Satellite. We continue to be the only company that can service multinational consumer products companies around the globe and we look forward to helping our clients, employees and shareholders achieve their objectives.” Schawk, Inc., headquartered in suburban Chicago, is a leading supplier of digitized high- resolution color imaging, database management and on-site facility management, as well as related prepress and digital archiving and distribution services. Schawk provides advanced technology services for the food, beverage and consumer products packaging, advertising and promotional markets.
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