PLM Group posts profit for the fourth quarter on 10% sales growth
Press release from the issuing company
MARKHAM, ON, March 29 - PLM Group today reported net income for the three months ended December 31, 2003 of $0.1 million (1 cent per share basic and diluted) despite weak market conditions in what is traditionally a strong period for the commercial printing industry and the material impact of substantially enacted future tax rate increases.
Without this non-cash tax charge, net income per share would have been 4 cents basic and diluted. Net income in the fourth quarter of 2002 was $1.7 million or 6 cents basic, 5 cents diluted.
This is the 14th consecutive quarter of profitable results from operations for PLM. This track record has been earned during a very challenging period for the industry overall and reflects the Company's growth, cost containment and profitability initiatives. Sales in the fourth quarter increased 13% to $28.7 million compared to $25.4 million in the same period a year ago, primarily as a result of the impact of recent acquisitions.
In compliance with the 2001 change in Generally Accepted Accounting Principles relating to future income tax rates, fourth quarter net income included a non cash charge of $0.9 million to adjust the Company's accumulated future income tax liability to reflect recently substantially enacted legislation in Ontario to increase future corporate income tax rates.
2003 Annual Results
Net income for the 12 months ended December 31, 2003 was $2.9 million (10 cents per share basic and diluted) compared to $4.1 million (15 cents basic and 14 cents diluted) for the same period in 2002. Had the Company not been required to record the non cash, tax charge in the fourth quarter, net income for the year would have been $3.8 million (13 cents per share basic and diluted).
Sales for the 12 months were a record $108 million, a 10% increase over 2002. This increase was partially the result of recent acquisitions and partially the result of the development of significant new business which offset the impact of customer consolidation and a 20% reduction in paper pricing during 2003 which had a negative impact on gross sales for the period.
"Although not a surprise, the performance of our print-based operations during the fourth quarter was disappointing and reflected downward pressure on paper pricing, not any deficiency on the part of our team," said Barry Pike, PLM Chairman and Chief Executive Officer. "The continued impact of lower raw material costs, which has a negative effect on sales cannot be understated but despite this, PLM improved its gross margin as a result of both improved efficiency and an increase in higher value added services in the sales mix." These higher value added services included the digital and direct mail capabilities added through the 2003 acquisitions of Optium and Mailer Magic.
"Our philosophy of providing a progressive work environment for our staff, combined with leading edge technology continues to attract the best people in our industry to PLM. We believe that this provides our best platform for success, even more so now than in the past." Added Pike.
"We've already uncovered some major account opportunities as a result of our acquisitions of Mailer and Optium," added Mr. Pike, "and we believe this is just the beginning of some very strong synergies across our operations."
Said Dave Stuart, PLM President and Chief Operating Officer: "Since making these purchases, we've integrated Optium and Mailer Magic into PLM and spent considerable time training our joint sales teams to cross-sell our expanded capabilities. During the first quarter of 2004, we will complete our planned integration of Mailer Magic into the PLM campus and this will lead to much improved efficiencies."
Said Peter Bradley, Executive Vice President and Chief Financial Officer: "The continuing weakness and uncertainty in the economy, the decline in the U.S. dollar and the decline in paper pricing were major performance impediments in 2003. And yet despite this, we remained profitable. This indicates that PLM's strategy of providing our customers with a broad array of services and high value added components is working and positions us well during a difficult time for our industry."
Overall, management believes that PLM has the financial strength to take advantage of opportunities in the coming months. With the advent of the Company's new Digital Services facility during the first half of 2004, a full year contribution from Optium and Mailer Magic and the recent acquisition of key sales staff, management is cautiously optimistic about the Company's prospects for 2004.
However, management believes that the industry is continuing to undergo a restructuring and that results for the short term will continue to be depressed in comparison to prior years as a result of continued downward pricing pressure.
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