Wallace Reports 3Q Revenue Up, Forms Business Continues to Lag
Press release from the issuing company
LISLE, Ill.-June 12, 2001--Wallace, the leading national provider of comprehensive total print management products and services, today announced its third quarter earnings, reflecting improvement in revenue and operating income over the same period of the prior fiscal year.
Third quarter revenue was $395.7 million, up $6.9 million or 1.8% over the third quarter of the prior fiscal year. Year-to-date revenue was $1,224.0 million, up $63.4 million or 5.5% over the prior year. Actual Diluted Earnings Per Share was $0.34 for the current quarter, versus a loss of ($0.41) for the third quarter of fiscal 2000. Excluding any applicable restructuring and one-time charges, Diluted Earnings Per Share was $0.34 for the current quarter, versus $0.27 for the third quarter of fiscal 2000; on the same basis, year-to-date EPS was $1.17 versus $1.00 from a year ago.
Operating income was $30.5 million, up $3.3 million or 12.0% over comparable numbers for the third quarter of fiscal 2000, after adjusting for any applicable restructuring and one-time charges. On the same basis, year-to-date operating income was $102.6 million, up $13.0 million or 14.5% over the prior fiscal year. Residual restructuring charges were only $30,000 in the third quarter of the current fiscal year. The company also reiterated that it expects overall fourth quarter results to be similar to third quarter results.
"While we did improve our third quarter results from the comparable period of last year, revenues from the Forms and Label segment were lower than expected, due primarily to the economic slowdown and its impact on our customer base. The downturn has adversely impacted the ordering patterns of our customers and created a significantly more price competitive market place,'' said David Jones, Wallace's Chairman of the Board and Chief Executive Officer. "This change in the company's overall revenue mix, as well as adverse general economic conditions, unfavorably impacted our margins, resulting in lower earnings than we had anticipated.''
Total debt at the end of the third quarter was $335.8 million, down $20.7 million from the second quarter. The total debt to total capitalization ratio was lowered to 36.9%, versus 38.5% at the end of the second quarter. "Our working capital management initiative continues to produce excellent results,'' said Vicki Avril, Senior Vice President and Chief Financial Officer. "Cash flow generated from operations met our expectations for the quarter, and we remain ahead of our plan for the total fiscal year. We have made continued progress in managing balance sheet issues, and remain confident that we will meet our fiscal year-end debt projections of a total debt to total capitalization ratio at the mid-30% level.''
Wallace continued to implement processes to leverage and utilize its nationwide print plant capacity in order to gain market share and capitalize on vendor consolidation. The recently announced sales organization alignment is one example of the changes that have taken place that are intended to help accomplish this goal. "This alignment clarified organizational responsibilities and defined basic strategies that will help build Total Print Management (TPM) sales and top-line revenue growth,'' said Mike Duffield, President and Chief Operating Officer. "Clearer roles and team selling will optimize TPM sales opportunities that are present within both our existing customer base as well as with new customers, and will also positively influence local or transactional business, as well. This organization alignment will provide for increased nationwide asset utilization, effectively adding capacity without corresponding capital outlays.''
"We continue to control and reduce costs to offset the general revenue slowdown and resulting margin pressure that we are currently experiencing,'' added Jones. "I believe we have made good progress in lowering costs, making more efficient use of working capital, and improving overall utilization of our existing asset base. As our sales force begins to generate increasing revenues by leveraging its new alignment, and as the economy gradually improves, I feel we are the industry's best-positioned company for overall margin expansion.''
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