NEW YORK, April 28 -- Bowne & Co., Inc., a global leader in delivering high-value document management solutions, today announced 2004 first quarter earnings of $3.3 million-or $0.09 per share-compared to a loss of $4.4 million, or $0.13 per share, for the first quarter 2003. The results for both quarters include the impact of restructuring charges.
Excluding the restructuring charges, net of tax of $4.5 million, pro forma diluted earnings per share were $0.21 in 2004 as compared to a pro forma loss per share of $0.03 in 2003. (See Pro Forma Supplemental Income Information attached hereto for a reconciliation of these non-GAAP financial measures to our consolidated statements of operations).
Revenues were $289.5 million in the first quarter of 2004 as compared to $255.7 million in the comparable quarter of 2003-a 13% growth rate. Financial Print revenues grew 22%, benefiting from improved transactional activity and increased corporate reporting revenue. Outsourcing and Globalization revenues grew 2% and 3%, respectively.
"We are extremely pleased with our first quarter performance. The actions we have taken over the past three years to improve the efficiency of our operating model are providing a strong earnings base as the markets rebound," said Chairman and CEO Robert M. Johnson.
"The strong results in our Financial Print and Outsourcing businesses not only reflect the modestly improved environment in the capital markets, but also the leverage our more efficient operating models provide to both businesses. The restructuring charges taken in the first quarter are consistent with the guidance we gave at year-end. We expect additional charges in the second quarter as we complete the previously announced restructuring associated with the creation of our more efficient business models. These steps, coupled with the improvement in the markets we serve, make us optimistic about the remainder of 2004. "
Johnson reported the following regarding each of Bowne's business segments:
Financial Print - "For the 2004 first quarter, Financial Print reported a $31.0 million, or 22%, increase in revenues and more significantly, segment profit increased $13.5 million, or 125%, as compared to the 2003 first quarter-underscoring the improved efficiency of our Financial Print business. The strong performance of our Financial Print segment builds on the improvement we experienced in the second half of 2003."
"Financial Print's segment profit margin of 14.4% is up dramatically from last year and is the highest since the second quarter of 2002. Transactional print revenue, while up 49% from the first quarter of 2003, is actually down slightly from each of the last two quarters of 2003. However, the combination of higher compliance activity and the improved efficiency built into our operations resulted in the significantly improving margins that we had forecast. We continue to be optimistic about 2004 in Financial Print, due to the slow-building momentum in the capital markets. In the M&A market, there are several significant transactions in process, and in the IPO market, 42 companies came to market in the first quarter-up from five in the first quarter of 2003-continuing the upward trend from the fourth quarter of 2003." "Within Financial Print, Enterprise Solutions, our digital print group, continues to build momentum in the customized and personalized enrollment and investor kit market. During the quarter a number of new accounts signed contracts for services. We also experienced significant expansion activity within existing accounts and production volumes continue to be significantly higher than in 2003," Johnson said.
Business Solutions (BBS) - "Revenues reached a record during the first quarter 2004 of $65.4 million, 2% higher than the 2003 first quarter. More importantly, segment profit margin of 7.1% is the highest since the second quarter of 2002 and the fourth consecutive quarter of segment profit growth. We continue to see the benefits of our 2003 restructuring along with increasing customer volumes. During the quarter, BBS added seven new multi- year contracts with a total contract value of $26 million. Four of these new contracts are within the Legal sector, two are within Investment Banking and one within Financial Services. In addition, we have renewed five contracts with existing clients with a total contract value of $42 million and experienced no client losses."
"During the second quarter we expect to see continued growth in existing customer volumes. Our litigation support business, Bowne DecisionQuest, is poised for growth as we continue to profitably grow our Outsourcing Business by driving new service expansions, penetrating new markets and a continued focus on our expenses."
Global Solutions - "Global Solutions' revenues of $54.6 million represent a 3% increase over the first quarter 2003. Segment profit was down slightly year-over-year, resulting primarily from certain non-recurring expenditures made in the first quarter in anticipation of significantly improving activity as the year progresses. The first quarter also reflects slower activity as a result of normal seasonality. We are optimistic about 2004 for several reasons as we extend our services to a more diversified client base to capture broader market opportunities. This diversification includes a $5 million contract with a leading European telecommunications firm-spanning work in localization, technical writing and related testing; a $2.7 million deal signed with a leading global e-learning course development firm; and several contracts with European clients in the government and public health sectors for translation and interpretations services."
Johnson said Bowne continues to focus on cash flow and managing receivables. Average days outstanding increased 2 days to 67 days in 2004. Net debt at March 31, 2004 is up from December 31, 2003 approximately $17.7 million to $141.2 million, principally the result of increased Financial Print work-in-process inventory of $25.6 million-up 80% from December 31, 2003 and 13% as compared to March 31, 2003.
The company noted that forward-looking statements of future performance contained in the foregoing and in the following statements and certain statements made elsewhere in this release are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including demand for and acceptance of the company's services, new technological developments, competition and general economic or market conditions, particularly in the domestic and international capital markets.
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