May 9, 2007 -- Bowne & Co. announced strong operating results for the first quarter of 2007, representing significant improvement over 2006 first quarter results.
Revenue was $211.7 million in the first quarter of 2007 compared to $205.8 million in the comparable 2006 quarter -- a 3% increase. Operating income was $12.4 million in the first quarter of 2007 compared to $3.4 million in 2006. Net income was $10.7 million compared to $1.5 million last year. Diluted earnings per share for the 2007 first quarter improved to $0.34 per share from $0.05 per share in the first quarter of 2006.
Segment profit for the quarter was $20.0 million, representing an increase of $8.2 million, or 70%, from the first quarter of 2006. Segment profit margin in 2007 was 9.4%, a significant improvement over the 5.7% margin achieved in the first quarter of 2006.
Pro forma earnings of $7.8 million increased 98%, or $3.9 million, compared to 2006, resulting in diluted earnings per share of $0.25 compared to $0.12 in 2006. Pro forma earnings in 2007 exclude approximately $3.6 million of benefits related to a tax refund. (See Pro Forma Supplemental Income Information on page eight of this release for a reconciliation of these non-GAAP financial measures to our Condensed Consolidated Statements of Operations.)
David J. Shea, Bowne's Chairman, President and Chief Executive Officer, commented, "This was an outstanding quarter, and our strong operating results demonstrate the successful execution of our key strategic initiatives and healthy capital markets, as we gained market share during the quarter. We're particularly pleased with the improvement in our profitability and continued growth of non-transactional revenue, which is at its highest level since 2001."
Financial Communications: First quarter 2007 revenue of $176.6 million increased $10.1 million, or 6%, compared to the three months ended March 31, 2006, led by growth in transactional and compliance revenue and improved market share in healthy capital markets. Transactional revenue of $60.7 million increased 7%, primarily the result of increased merger and acquisition activity, while compliance revenue increased 11% to $52 million, a record high. As overseas markets continue to improve, international revenue increased 17% to $36.0 million.
Segment profit increased $7.6 million, or 36%, to $29.0 million, and as a percentage of revenue, increased to approximately 16% compared to 13% for the same period in 2006. This margin increase reflects the favorable impact from the execution of our strategic initiatives, including cost savings measures.
Marketing & Business Communications (MBC): MBC reported revenue of $35.1 million, $4.2 million lower than the first quarter of last year. The 2006 results included approximately $4.2 million of non-recurring revenue related to the initial rollout of the Medicare Part D open enrollment program. In addition, 2006 includes approximately $2.3 million of revenue from Vestcom's legacy retail customers that transferred back to Vestcom as part of our transition services agreement and other non-recurring revenue.
Segment profit decreased $300,000 but remained constant as a percentage of revenue at 6%.
Balance Sheet and Cash Flow: For the quarter ended March 31, 2007, cash and marketable securities declined $40.2 million from year-end 2006. This decline reflects the funding of $13.0 million in stock repurchases, $12.4 million for acquisitions, $3.2 million in capital expenditures and the normally high seasonal working capital usage in the first quarter.
Accounts receivable increased approximately $25.1 million compared to December 2006, due principally to normal seasonality and the inclusion of St Ives Financial receivables as a result of the January 2007 acquisition. Days sales outstanding increased to 76 days in March 2007 from 73 days in March 2006. Financial Communications work-in-process inventory was $33.7 million at March 31, 2007, compared to $31.9 million in March 2006. The Company has no borrowings outstanding under its $150 million five-year senior, unsecured revolving credit facility.
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