Mail-Well Announces Q2: A Loss of $3.1 Million on Sales of $421 Million
Press release from the issuing company
ENGLEWOOD, Colo., July 18 -- Mail-Well, Inc. announced today its results for the quarter and six months ended June 30, 2002. Consistent with the July 9th announcement, pro forma results from continuing operations before restructuring and other non-recurring charges were a loss of $3.1 million, or $0.07 per share, on sales of $421 million during the second quarter and a loss of $0.7 million, or $0.02 per share, on $864 million of sales for the six months ended June 30, 2002, compared to earnings of $4.8 million, or $0.10 per share, on sales of $472 million for the same quarter the previous year, and $10.1 million, or $0.21 per share, on $960 million of sales in the first six months of last year.
The continuing operations now include the results of PrintXcel as the Special Committee of the Board has agreed with management's recommendation to keep that operation as part of Mail-Well. The corresponding pro forma results before restructuring and other non-recurring charges for "New Mail-Well," including PrintXcel but excluding the results of assets held for sale, were a loss of $4.5 million or $0.10 per share on sales of $395 million during the second quarter and a loss of $4.2 million or $0.09 per share on $817 million of sales for the six months ended June 30, 2002, compared to earnings of $2.3 million or $0.05 per share on sales of $451 million for the same quarter the previous year, and $5.4 million or $0.11 per share on $921 million of sales in the first six months of last year.
As part of Mail-Well's previously announced consolidation of certain Envelope plants and other restructuring programs, a charge of $9.3 million was recorded during the quarter, bringing the total to $23.8 million for the first half of the year. During the quarter the Company also recorded an impairment charge of $2.8 million on certain of the non-strategic assets held for sale. This charge was based on the proceeds currently anticipated from the sale of these assets which are expected to occur in the third quarter. Also during the quarter, the loss from discontinued operations was increased slightly due to the completion of the sale of the label business and final settlements on the sale of Curtis 1000.
Since PrintXcel was withdrawn from the market, the assets and liabilities of this business have been added back to the balance sheet at fair market value. This required the recognition of an additional $10.4 million loss primarily related to the reversal of a tax asset recorded in anticipation of PrintXcel's sale. Mail-Well completed the refinancing of its bank debt by securing a new $300 million senior secured credit facility. Part of the availability of this new credit facility was used to pay off existing bank debt. As a result of this refinancing, the Company wrote-off deferred financing fees as an extraordinary loss of $5.4 million, net of income taxes. As a result of the foregoing, the Company's net loss was $34.3 million for the quarter, or $0.72 per share, compared to a net loss of $92.5 million, or $1.95 per share, during the second quarter of 2001. On a year to date basis, the Company's net loss was $56.0 million, or $1.17 per share, compared to a net loss of $88.9 million, or $1.87 per share for the comparable period of 2001.
Paul Reilly, Chairman, President and CEO, stated, "During the quarter we have seen continuing declines in our three businesses. In both Envelope and PrintXcel, we have been able to maintain or increase our margins through cost controls and efficiency improvements despite lower sales. However, this has not been possible in our Commercial Printing business which continues to experience very weak demand and competitive pricing pressures. Our full year forecast for EBITDA is expected to be in a range of $125 to $140 million for our three businesses, which will constitute "New Mail-Well" going forward. The low end of this range assumes that the expected seasonal upturn in Envelope sales in the second half of the year will not occur, while the top end of the range assumes a 6% increase in Envelope sales above the normal seasonality typical of the third and fourth quarters. This also assumes that sales for Commercial Printing and PrintXcel will be at the same levels as the second quarter adjusted only for seasonality throughout the second half of the year."
Reilly continued, "During the first half of the year, we announced the sale of Curtis 1000 and our Label business. We have letters of intent on the remaining non-strategic operations we have for sale and expect to complete these sales during the third quarter. With this phase of our strategic realignment coming to a close, the issuance of $350 million of senior bonds in the first quarter and the refinancing of our banking debt in the second quarter, Mail-Well is on a sound financial base to operate within these tough economic conditions. We have the funds necessary to retire our 5% subordinated notes when they come due in November 2002 and face no further significant maturities on any of our debt before 2005."
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.