PLM Group delivers profitable second quarter despite challenging markets
Press release from the issuing company
MARKHAM, ON, Aug. 13 -- PLM Group today announced it generated net earnings of 1 cent per share, basic and diluted for the three months ended June 30, 2004, compared to 2 cents basic and diluted in the same period a year ago, despite challenging markets for commercial printing and higher selling expenses as the Company expands its customer-focused capabilities.
"This was another difficult quarter for the commercial printing industry," said Barry Pike, PLM's Chairman and Chief Executive Officer. "Even so, PLM has sustained its track record of profitability. Given the factors that we have confronted over this period - industry consolidation, weak demand for print and intense competitive pricing - PLM is more than holding its own."
"We're making important inroads with strategic customers, gaining a solid foothold in lucrative high growth areas such as direct mail, investing in our staff, capabilities and capacity and reducing our debt. Although we are striving to deliver more at both the top and bottom lines, PLM's performance in the second quarter is satisfactory," added Mr. Pike.
During the second quarter, PLM invested $0.9 million in capital equipment for print-related direct mail operations, made additional investments in its sales and production staff to maximize the value of new capabilities and made important advances as part of its quality initiative.
"Considering the new technologies, businesses and people we've assimilated in the past year - and the market conditions we've faced - PLM's financial performance over the first six months of 2004 is exemplary," said Dave Stuart, President and Chief Operating Officer. "Looking deeper at our results, one of the real bright spots of the year to date is the performance of our Digital Services operations (PLM 1:1 and Mailer Magic). Both achieved excellent growth in sales and earnings as the market continued to be very receptive to the kind of unique technologically-advanced, service-oriented capabilities they offer. To support this growth, we ramped up our new card capabilities and commissioned a new NexPress 2100SE digital colour production platform during the quarter. These capabilities, combined with our new VersaMark JetBlack imaging technology for print-on-demand and direct mail applications, are giving us more horsepower as we serve customers during the September back to school sales period."
"From a financial perspective," added Peter Bradley, Executive Vice President and Chief Financial Officer, "we improved our capital structure by reducing our long-term debt by $1.6 million and secured a new banking agreement that gives us greater flexibility. As a result of these activities, at June 30, 2004, our debt to equity ratio was a much improved 35:65 (versus 39:61 at December 31, 2003) and we had sufficient unutilized credit facilities available to fund projected future growth. Clearly, our foundation is strong and this is enabling PLM to fully execute our business expansion strategy."
"The second half of any calendar year is traditionally stronger than the first half due to customer activity related to back to school and Christmas promotions," said Mr. Pike. "Given the weak state of the commercial printing industry, it's hard to say if this seasonal pattern will make much of a difference in 2004. If it does, PLM is well prepared. We have more capabilities and better trained staff than at any time in our history. If it doesn't, these same capabilities should allow us to gain additional market share and remain profitable while setting the stage for greater earnings momentum and investment returns in 2005 and beyond."
"Our near-term operational objective is to optimize productivity and efficiency for our existing print and print-related capabilities," said Mr. Stuart, "while also commissioning our newest piece of equipment: a six colour, large format, KBA 162A sheet-fed press. We took delivery of this new press in the third week of July and we are now providing intensive training for staff with a goal of ramping up production by late September. This press is an important addition to our portfolio because it fills a gap in our offering and will allow us to gain access to more value-added assignments."
Added Mr. Bradley: "While we continue to take a cautious stance with respect to short-term market conditions, and there is always risk associated with commissioning new technologies and equipment, we remain confident in PLM's potential. Everyone here is committed to driving results in the second half of 2004 and managing expense levels to ensure we get the most out of our expanded business base."
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