Mail-Well To Close 9 Plants and Sell Labels & Printed Office Products Businesses
Press release from the issuing company
ENGLEWOOD, Colo., June 13 With the goal of increasing value for shareowners, Mail-Well, Inc. announced today its new strategic direction.
Following a 90 day review of how best to serve customer, employee and shareholder interests, the new direction will result in the following changes with the financial goal of achieving 15-20% annual EPS growth over the next five years:
-- Mail-Well will concentrate resources on its two largest segments:
envelopes and commercial printing.
-- Mail-Well will sell its smaller label and printed office products
-- Mail-Well's 2001 sales, excluding the business unit divestitures, are
expected to be approximately $1.6 billion.
-- The proceeds from the divestitures, which the company expects to
complete within the next 12 months, will be used to decrease
Mail-Well's debt, with a debt-to-total capital goal of less than
55% by the end of 2003.
-- To improve productivity, utilization, and sales coordination,
Mail-Well Envelope will close nine existing U.S. plants and move the
business and necessary equipment into the remaining 27 envelope
operations. The plan is to grow total envelope sales while
consolidating. The consolidation plan, together with the
implementation of best practices within the remaining envelope plant and the commercial print plants, are expected to provide estimated
annual operating savings of $38 million when fully implemented. The
one-time cash cost of the consolidation will be $43 million in
2001 and $4 million to complete the consolidation in 2002.
-- Mail-Well will continue its acquisition program, but with a sharpened
focus on building local general commercial printing market share and on further consolidating the envelope industry.
-- All acquisitions will be evaluated with strict leverage and cost of
capital criteria -- 45%-55% debt-to-total capital ratio target and
earnings in excess of Mail-Well's 12% after-tax cost of capital.
"Growing in seven years from $16 million in annual sales to $2.4 billion is a major achievement for any public company,'' said Paul Reilly, chief executive officer and president of Mail-Well. "But the Mail-Well of the future, while still committed to growth in multi-billion dollar markets, must be a more disciplined and strategically focused Mail-Well with even greater emphasis on improving our competitive position and return on capital.''
Reilly emphasized that the label and printed office products businesses are well-managed, profitable organizations and are leaders in their respective markets.
"We must simplify our business and sharpen our strategic focus to compete more effectively as one company and to address investor confusion over multiple product lines,'' he explained. "The general commercial printing and envelope markets offer Mail-Well the best opportunities to leverage our current size and leadership position for sales growth and profit expansion going forward.''
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