Bowne Announces 1Q Results; Says Financial Printing Market Very Weak
Press release from the issuing company
New York, May 10, 2001 -- Bowne & Co. Inc. (BNE) today announced operating results for the three months ended March 31, 2001. Net sales for the quarter were $270,192,000 compared to $285,148,000 for the quarter ended March 31, 2000. Non-transactional revenues grew 13% to $196 million or 73% of total revenue.
The Company had a net loss for the quarter ended March 31, 2001 of $5,291,000 compared to net earnings of $6,261,000, resulting in a loss per share of $0.16 compared to diluted earnings per share of $0.17 for the same period last year. Adjusted net income and diluted earnings per share for the quarter ended March 31, 2001 were approximately $5,109,000 and $0.15, respectively, excluding the impact of the impairment charge and losses from Immersant, which will be closed during the second quarter. (Pro Forma Income Information.)
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter ended March 31, 2001, decreased to $8,831,000 from $27,780,000 in the first quarter of 2000. This decline included a non-cash charge of $9.3 million related to the impairment of certain assets in the Internet segment.
Robert M. Johnson, chairman and chief executive officer of Bowne stated, "While our financial printing segment continues to be negatively impacted by the general downturn in capital market activity, the results from our globalization and outsourcing are very encouraging and reaffirm our strategy to diversify our revenue base. The impact of this diversification cannot be overemphasized and we view the growth of the non-transactional revenue as key to continued stable long-term growth. This quarter's results demonstrate that even in a very weak transactional financial printing market, Bowne's basic business and strategy remain strong.
"Bowne Global Solutions (BGS) revenues grew 54% from the comparative 2000 period. We are especially pleased with these results since the first quarter has traditionally been the weakest of the year. EBITDA of $1,075,000 represents the third consecutive quarter of positive results and compares to a loss of $3,290,000 for the first quarter of 2000. BGS continues to build momentum toward being the market leader in globalization, and the recent significant contracts with Siebel, Nokia, and HP.com are evidence of our growing pipeline. As a result, we expect their results to continue to improve."
Mr. Johnson continued, "We see ourselves in a position of strength in the globalization market, and we are committed to further enhancing BGS' market position and operating performance."
Carl J. Crosetto, president of Bowne, noted, "Bowne Business Solution's (BBS) revenues of $54.7 million and EBITDA of $2,689,000 were both records. Eight consecutive quarters of revenue growth have yielded a compound growth rate exceeding 20%. We've added several new clients and expanded services in many of our existing clients. We will continue to invest in this business to support our long-term strategic growth objectives as we did in our recent acquisition of Document Management Services in Boston."
Mr. Johnson concluded, "While we certainly cannot control the flow of deals in the capital markets, we are committed to aggressively managing our costs as evidenced by our recently announced second round of cost reductions. These latest reductions, representing additional annual savings of more than $30 million, will begin to impact our results in the second quarter. We expect that these fundamental changes to our structure will provide long-term benefits going forward. In addition, we are committed to sustaining the benefits from these reductions, as the transaction flow in the capital markets re-energizes, as it inevitably will. We continue to monitor those markets very closely, while looking at our business model for further opportunities to gain efficiencies and reduce costs."
The Company stated that earnings were negatively impacted by the results of the Internet unit, Immersant and the impairment charge related to that segment. The Company has determined that it will exit this business during the second quarter. The impact on earnings is described on Pro Forma Income Information.
As announced on April 23, 2001, Bowne expects to incur a charge during the second quarter of $4 million to $6 million as a result of its cost reduction program, with an additional second quarter charge of $9 million to $11 million, primarily non-cash, related to the Company's exit from the Internet business. The Company expects to report the Internet segment and related charges as a discontinued operation beginning in the second quarter.
The company stated that it continues to focus on cash flow and managing receivables. Days outstanding decreased 10% to 81 days in 2001 from 89 days in 2000. Cash used in operations reflects normal seasonality and is favorable to the prior year. Financial printing work-in-process inventories decreased 18% to $25,600,000 in 2001 from 2000.
The following statements are based upon current expectations. These statements, and certain statements above, are forward-looking and actual results may differ materially. Current trends in the global economy, particularly in the domestic and international capital markets, make it difficult at present to project activity.
For the second quarter of 2001, the company expects that results from continuing operations from each of its business segments will perform relatively consistent with the first quarter results. The results of its financial print business and, to a lesser degree, its outsourcing business will continue to be impacted by the anticipated softness in the capital markets, both domestically and internationally. Although several circumstances, including volatile market conditions and the effect of the Immersant closing, have limited the company's visibility into future financial results, Bowne projects 2001 results to be in the following ranges.
* Revenues: $1.0 to $1.1 billion
* Diluted earnings per share, from continuing operations in the range of $0.45 to $0.60
* Capital expenditures: $38 million to $42 million
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