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New England Business Service, Inc. Announces Record Second Quarter Results

Press release from the issuing company

GROTON, Mass.- Jan. 17, 2001--New England Business Service, Inc. (NYSE: NEB) today announced record results for its second quarter ended December 23, 2000. Revenues grew 13% to a record $154.9 million from the prior year's $137.5 million. The revenue performance in the quarter reflected a significant contribution from the Company's acquisition of PremiumWear, Inc. this past July. Net income of $8.8 million, or $.66 per share, includes a previously announced $395 thousand, one-time after tax charge associated with integration costs, and compares with $8.7 million, or $.62 per share in the year ago period. Excluding the impact of this non-recurring charge, earnings were $9.2 million versus $8.8 million in prior year's second quarter. Diluted earnings per share were $.69, approximately 10% higher than last year's $.63 per share on a comparable basis. Second quarter results for fiscal 2001 include approximately $.15 per share of acquisition-related amortization expense versus $.13 per share last year. Mr. Robert J. Murray, Chairman and CEO, commented, "Both sales and profits in the second quarter rose to the highest level in the Company's history. This past quarter was a seasonally important period for our greeting card and work apparel lines, and both performed exceptionally well. The quarter also benefited from a continuation of strong momentum at PremiumWear. Partially offsetting this strong performance was somewhat weaker demand for printed products. Overall, the Company achieved an underlying revenue growth rate in the second quarter of approximately 4%." Murray added, "We are continuing to make investments in growth areas. Early response to payroll processing services sold through the McBee sales force has been encouraging. Our partnership with Advantage Payroll is excellent, and we have been delighted by their quality and high level of customer service. We are making good progress toward the integration of our rapidly growing Company Colors line of personalized work apparel with PremiumWear, and expect this transition to be completed over the next six months. The new Jockey and Field & Stream lines from PremiumWear are receiving strong interest from their dealers and distributors. We believe this has PremiumWear well positioned for their important spring season." Murray continued, "We have some concerns about general economic weakness, and as announced last week, see the potential of a modest but measurable impact on our business in the second half of this year. As a consequence, we have reduced our revenue and earnings growth rates from earlier guidance. Versus an earlier expectation of sales growth for the year of approximately 20% and earnings growth of about 10%, we now see sales growing in the range of 17% to 19%, to $570 to $580 million, and earnings per share growing in the 6% to 9% range, or $2.20 to $2.25 without 1-time charges, and $1.88 to $1.93 as reported." During the second quarter of fiscal year 2001 the Company repurchased 213,700 shares of its stock. The Company's Board of Directors declared a dividend of $.20 per share with a record date of February 2, 2001 and a payment date of February 16, 2001. The Company's conference call to review the second quarter results will be broadcast live in the investor relations section of the Company's Web site www.nebs.com at 11:00 AM EDT on Thursday, January 18, 2001. A replay will also be available at the same location.

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