DAYTON, Ohio - Standard Register today announced its financial results for the first quarter of 2013. The Company reported revenue of $141.6 million and a net loss of $2.0 million or $0.07 per share. The results compare to first quarter 2012 revenue of $157.6 million and a net loss of $5.1 million or $0.18 per share.
Non-GAAP net income from operations, after adjustments for pension loss amortization, pension settlement, restructuring charges and related tax effects, was $3.3 million or $0.11 per share compared to $1.9 million or $0.06 per share for the first quarter of 2012.
"Our progress continued in the quarter with improvement in operating profit and positive cash flow, and increasing demand for our solutions enabled by technology," said Joseph P. Morgan, Jr., president and chief executive officer. "Our investments have been very targeted to support efficiency and our technology-enabled growth solutions. As a result, we expect to achieve positive cash flow for 2013. We also expect the decline in revenue to slow during the rest of the year."
First Quarter Results
Total revenue declined 10.2% to $141.6 million compared to $157.6 million in the prior year quarter. The decline was primarily the result of reduced volumes in printed clinical forms and transactional documents. As the Company focuses on the technology portfolio of solutions and services that are providing growth, it will report on solutions sets (Marketing Communications, Customer Communications, Product Marking and Labeling, Patient Identification and Safety, Patient Information Solutions and Document Management), and no longer define its business with the terms "Core" and "Legacy."
Healthcare revenue declined 13.2%, to $49.5 million compared to $57.0 million in the first quarter of 2012. Operating profit declined 19.2% to $2.1 million from $2.6 million in the prior year quarter. Large one-time projects in the first quarter of 2012 and continued declines in clinical documents had an impact on the results comparison. Healthcare technology solutions sales to both new and existing customers increased in the quarter, and the technology pipeline remains strong.
Business Solutions revenue declined 8.4%, to $92.1 million from $100.6 million in the first quarter last year. More than half of this decline is due to reductions in revenue with a large financial services customer that reorganized its distribution channels and restructured operations. Revenue from this customer declined $5.4 million in the quarter and the revenue loss is expected to be $18 to $20 million for the year. Lower volumes in printed documents also contributed to the revenue decline. Operating profit quadrupled, to $2.9 million compared to $0.7 million last year. The increase was primarily attributable to expense management and growth in labeling orders driven by improvements in the overall economy affecting many industries that Standard Register serves.
Gross margin as a percentage of revenue decreased to 29.6% from 30.6% for the same quarter last year. Pricing pressure and declines in volume contributed to the change. Selling, general and administrative (SG&A) expenses declined 15.2% in the quarter reflecting the realization of the restructuring cost reduction efforts, which are on track with the $60 million of savings expected for the year. Capital expenditures were $4.4 million compared to $0.7 million in last year's quarter. The company continues to invest in software technology for its customer communications solutions, and systems to improve efficiency and inform management decisions.
The Company contributed $5.8 million to its qualified pension plan compared to $7.0 million in the first quarter of 2012. Total pension contribution obligation for 2013 is expected to be $24.8 million compared to $20.7 million obligation for 2012.
On March 31, 2013, the Company entered into the fourth and final year of its credit facility, which moves $43 million of debt to be classified as current on the balance sheet. The Company is renegotiating with banking partners and confident of renewing its credit facility on comparable terms later in 2013 or early 2014.