Wallace Reports Fourth Quarter Results, Examining Further Cost Cutting Moves
Press release from the issuing company
LISLE, Ill.---Sept. 12, 2001--Wallace, the leading national provider of comprehensive total print management products and services, today reported its fourth quarter financial results, which met previously announced expectations.
Fourth quarter revenue was $405.6 million, down $19.9 million or 4.7% from the fourth quarter of the prior fiscal year. Year-to-date revenue was $1,692.8 million, up $47.2 million or 2.9% over the prior year. (Revenue numbers have been restated for freight expense per EITF Issue 00-10.)
The company reported fourth quarter net earnings of $0.14 per diluted share, versus $0.26 in the prior year's quarter. Included in the current quarter's number is approximately $9.5 million (or $0.14 per share) of charges related to re-evaluating company estimates of reserves, including those in accounts receivable and inventory, in light of current economic and business conditions. The company also indicated that a change in accounting estimate related to workers compensation benefits also contributed to the aforementioned charges.
"Weak economic conditions have adversely impacted our business,'' said David Jones, Wallace's Chairman of the Board and Chief Executive Officer. "And we are not assuming any strengthening in the economy until beyond the end of this calendar year. This weakness has particularly impacted our Integrated Graphics operating segment, especially in the commercial print area. As the economy gradually improves, so will our customer ordering patterns within this market. Until then, we are taking actions that will improve this segment's performance without sacrificing long-term growth prospects.''
Total debt at the end of the fourth quarter was $288.1 million, down $47.7 million from the third quarter. The total debt to totalc apitalization ratio was lowered to 33.2%, versus 36.9% at the end of the third quarter. "Our focus on working capital management and the balance sheet has resulted in continued reduction in our accounts receivable and inventory balances,'' said Vicki Avril, Senior Vice President and Chief Financial Officer. "Cash flow generated from operations exceeded our expectations for the quarter, and we believe it will remain strong in fiscal year 2002. We have significantly increased our financial flexibility and maintained a strong overall balance sheet as we proceed into our next fiscal year.''
"We were pleased with the performance of our Forms and Labels operating segment, especially in light of the very difficult marketplace,'' said Mike Duffield, President and Chief Operating Officer. "Growing revenues and stabilized margins as a result of our Total Print Management (TPM) strategy have served to stabilize this segment, despite the competitive marketplace.
"However, results from our Integrated Graphics segment were much lower than expected,'' Duffield added. "One factor contributing to this shortfall was the fact that one major customer changed their normal ordering patterns, and took more product in our second quarter instead of our fourth quarter. The extra volume helped the second quarter, but we were unable to replace that volume in the fourth quarter as we had planned.
"Additionally, local or transactional business declined in the quarter as demand lessened significantly for commercial print items related to advertising and marketing initiatives,'' Duffield continued. "On a positive note, contractual revenues for this segment related to our TPM strategy actually increased in the quarter. However, the decrease in local or transactional business more than offset the increase in contractual sales.''
To improve prospective financial and operational performance, the company is currently evaluating other cost reduction actions, production process improvements, plant consolidations, and further reductions in its workforce. "We are optimistic about our future,'' added Jones. "The fundamentals of our business are solid. Operating cash flows are strong. Our strategy is working, and steps are being taken to improve both short and long term performance. We believe this company is well-positioned within our industry and in the marketplace.''
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.