Standard Register reports results, Sales up 3.6 percent
Press release from the issuing company
DAYTON, Ohio, Feb. 23 -- Standard Register today reported its financial results for the fourth quarter and total year ended December 31, 2006.
Results of Operations
Revenue on Continuing Operations for the fourth quarter 2006 was $228.1 million, up 3.6 percent over the comparable quarter of 2005. Total year 2006 Revenue on Continuing Operations was $894.9 million, compared to $890.7 million for the prior year.
Revenue growth for both the quarter and total year was driven by strong performances in the Company's Print-On-Demand Services, Commercial Print, and Document Systems business units, as indicated below. Despite modest increases in label sales, the Document & Label Solutions (DLS) business unit reported overall decreases of 4.9 percent and 3.5 percent for the quarter and total year, reflecting a very competitive market for these traditional products. Approximately 40 percent of the DLS decreases were isolated to a single customer account.
Gross margins also improved for both the quarter and total year 2006 periods as a result of the overall revenue increases and continuing improvement in manufacturing productivity. Depreciation and amortization expenses were also lower, continuing the trend of recent years. Increased investment in software development, higher sales and marketing compensation, and increased fringe costs pushed selling, general and administrative expense higher in both the quarter and total year.
In addition, higher expense for restructuring, impairment, pension loss amortization, and pension settlement had a substantial unfavorable effect on 2006 reported earnings, as indicated in the table below. Excluding these expense items, Income from Continuing Operations was $8.7 million for the fourth quarter 2006 versus $8.8 million for the comparable quarter of 2005; on the same basis, the total year Income from Continuing Operations was $37.3 million in 2006 compared to $37.7 million for 2005.
Including these expense items and after Interest & Other Expenses and Income Taxes, the Company reported a Net Loss on Continuing Operations for the fourth quarter of $0.2 million or $0.01 per share, compared to a Net Profit of $2.4 million or $0.08 per share in the prior year. For the total year 2006, Net Income on Continuing Operations was $0.2 million or $0.01 per share, versus $7.1 million or $0.25 per share in 2005.
The Company sold its InSystems subsidiary in June 2006 and classified the former business unit as a discontinued operation. Total Net Income, including the results of InSystems operations and its sale, was $1.1 million or $0.04 per share for the fourth quarter compared to a break-even result in the fourth quarter 2005. For the whole of 2006, the Company reported a loss of $11.7 million or $0.41 per share, versus a profit of $1.4 million or $0.05 per share in the prior year.
"Despite challenging industry conditions for traditional printed documents, we believe there is good business and cash flow in this industry segment if we continue our market focus and improvements in productivity. We were pleased to see the increases in revenue and gross margin in our other business units, which underscores our shifting mix and our long-term growth opportunity," said Dennis L. Rediker, Standard Register's president and chief executive officer.
Cash flow was a negative $19.5 million, primarily a result of higher year- end accounts receivable and 2006 pension contributions of $25 million that were twice the level of the prior two years' average. The higher receivables related to the timing of payments at a few large accounts and an increase in December's revenue. The balance sheet remained strong with a 25.7 percent ratio of net debt (total debt less cash and short-term investments) to total capital.
"Looking forward to 2007, we expect revenue for the total year to increase in the low-to-mid single digit range overall with a continuation of the strategic mix change we witnessed in 2006. Capital spending is expected to step up in 2007 to the $25 - $28 million range in order to support expected growth in the Print-On-Demand Services business, while contributions to the pension plan are expected to fall back to $20 million," added Rediker.
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