Standard Register Reports Q2 Loss: Revenue Down 2.8%
Press release from the issuing company
DAYTON, Ohio--July 22, 2004--Standard Register today reported results for the 2004 second quarter and first half ended June 27, 2004.
Second Quarter Results of Operations
Revenue for the second quarter of 2004 was $226.5 million, down 2.8 percent from the same quarter of 2003. More significantly, revenue has edged higher in each of the most recent three consecutive quarters. "This relatively stable pattern over the trailing four quarters stands in stark contrast to the declining revenue pattern during earlier periods that was the major contributing factor to the decreases in profitability during 2002 and 2003," said Dennis Rediker, Standard Register's president and chief executive officer.
The net loss in the second quarter was $2.6 million or $0.09 per share, compared to a net loss of $12.0 million or $0.42 per share in the 2003 quarter. Restructuring, asset impairment, and the amortization of past years' pension losses reduced earnings in both periods, as indicated in the table below. The Company also recorded a tax adjustment in the current quarter, equivalent to $0.03 per share. Excluding these items, per share earnings were $0.04 this year versus $0.08 in the prior period.
The $0.04 per share decrease is attributable to weaker pricing, which reduced both the revenue and gross margin by the equivalent of $0.15 per share, partially offset by reductions in SG&A expenses and depreciation, which added about $0.11 to per share earnings.
The Company paid down $25 million of debt during the quarter. Excluding the debt repayment, there was a net cash outflow of $7.4 million, including restructuring spending of $2.2 million and $5.0 million of voluntary pension contributions. Capital expenditures and dividends were $4.8 million and $6.6 million, respectively, similar in amount to first quarter levels. Net debt was just 24 percent of total capital at quarter-end.
First Half Results of Operations
Revenue was $452.5 million for the first half, down 3.5 percent from the $469.1 million reported in the prior year. The majority of this decrease was attributable to lower prices in the traditional core business.
The net loss for the first half of 2004 was $9.1 million or $0.32 per share, compared to a loss of $13.1 million or $0.46 for the comparable period of 2003. Again, restructuring, impairment, pension expense, and the tax adjustment figured prominently in the comparative results for the two periods, as indicated in the table below. Excluding these items, earnings per share were off $0.10, primarily reflecting the net effect of lower prices offset in part by cost reductions.
"We will continue to pursue opportunities to grow our top line," said Rediker, adding, "Our backlogs and custom finished inventories are 3.5 percent higher than year earlier levels and new account implementations are up significantly versus last year. Industry oversupply and technology are working against our traditional core products, however, and our near term outlook is for relatively steady revenue performance, influenced by typical quarterly seasonal factors.
"We are encouraged by our steady progress in retaining and growing our healthcare base while focusing on achieving market share gains in our traditional core products. We will continue to support our SMARTworks e-procurement platform, and to invest in our long-term growth opportunities in Print on Demand and our ExpeData(TM) Digital Pen and Paper offering.
"In the very near term, however, our focus must be on addressing the performance of operations that currently do not make a sufficient contribution to profit, and on improving our overall Company productivity," said Rediker. "Accordingly, we expect to improve our cost and expense ratios over the next several quarters by a total of approximately five percentage points in relation to revenue."
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