Standard Register Reports Strong Q3: To Intensify New Business Efforts
Press release from the issuing company
DAYTON, Ohio--Oct. 18, 2002--Standard Register today reported results for the third quarter and nine-month period ended September 29, 2002.
Net income in the 2002 third quarter was $6.5 million or $0.23 per diluted share compared to a loss of $1.4 million or ($0.05) per diluted share in the 2001 third quarter. Excluding restructuring charges, net income in the 2001 third quarter was $1.7 million or $0.06 per diluted share.
Revenue in the 2002 third quarter was $252.7 million compared to $278.2 million in the quarter last year. The decrease in revenue and the significant increase in net income in the quarter were primarily the result of the restructuring undertaken in 2001. During the restructuring, the company eliminated approximately $250 million of low-margin and nonstrategic business, reduced yearly fixed operating costs by over $125 million, reduced production capacity by 30 percent, and improved working capital turnover by 25 percent.
Revenue in the first nine months of 2002 was $770.3 million compared to $910.7 million for the comparable period of 2001. While revenues were lower, primarily as a result of restructuring, year-to-date gross margin improved from 33.3 percent of sales last year to 39.6 percent in 2002. Net income in the 2002 nine-month period was $28.3 million, or $0.99 per diluted share, compared to a loss of $60.6 million or ($2.20) per diluted share in the 2001 period. Excluding restructuring expenses and other nonrecurring items, net income in the nine-month period of 2001 was $13.8 million or $0.50 perdiluted share.
"While our earnings rose significantly in the quarter and year to date, we were striving for stronger performance," said Dennis Rediker, president and chief executive officer. "Revenue was soft in reaction to challenging market conditions, preventing us from fully reaping the benefits of the lower cost structure we created in the restructuring. At the same time, we continued to invest in initiatives to help deliver superior long-term shareholder value, including e-business and Six Sigma process improvement.
"To help drive stronger results going forward, we will increase our intensity and aggressiveness in acquiring new business and extending our reach with current customers. We have a full spectrum of solutions that uniquely positions us in the marketplace and provides us a distinct competitive advantage. With offerings ranging from consulting to personalized communications to custom e-business solutions, we can revolutionize how companies interact with their customers, suppliers, employees, and other key constituents to achieve superior performance. We are confident in our ability to achieve long-term growth across our businesses with our innovative solutions combined with ongoing productivity improvements and our increased competitiveness."
Cash and short-term investments totaled $138.2 million after expenditures of approximately $100 million for acquisitions in the quarter.
"Excluding our acquisitions, cash flow from operations was a positive $22 million in the quarter, continuing our pattern of strong cash flow in 2002," Rediker said.
The balance sheet also reflects the impact of the stock market decline on the company's defined benefit pension plan, which has assets invested predominantly in common stocks. Based on the cumulative effect of declines in stock values over the last several quarters, the company adjusted the pension plan's carrying value on the balance sheet from a $113-million asset at the end of June to a $76-million liability at the end of the third quarter, in keeping with Statement of Financial Accounting Standards No. 87. This adjustment, net of deferred income taxes, reduced shareholders' equity by $113 million. The company expects its pension expense in 2003 to be approximately $10 million higher than in 2002, largely dependent upon the performance of the stock market over the balance of the year. The company has a well-diversified portfolio of investments and significant capacity to make contributions to the pension plan, as necessary.
Standard Register's net debt to total capital ratio was 17 percent at the end of the third quarter.
"With our low debt ratio, strong cash reserves, and strong cash flow from operations, we have the resources to continue to invest in acquisitions and other initiatives to help us drive long-term profitable growth," Rediker said.
The company expects fourth-quarter revenue and profit to be higher than in the third quarter, in line with typical seasonality. In light of year-to-date results and outlook for the fourth quarter, the company is currently estimating diluted earnings per share for 2002 in the $1.25 to $1.30 range.
In other news, Standard Register's Board of Directors on October 17, 2002, declared a quarterly dividend of $0.23 per share to be paid on December 6, 2002, to shareholders of record as of November 22, 2002.
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.