Banta Reports Strong Q1: Encouraging momentum in the marketplace
Press release from the issuing company
MENASHA, Wis., April 27 -- Banta Corporation today reported solid increases in 2004 first quarter sales, net earnings and diluted earnings per share compared with the same period last year.
"Our first quarter results are very encouraging," says Banta President and Chief Executive Officer Stephanie A. Streeter. "We're achieving the expected productivity improvements from last year's restructuring activities and capital investments, and we benefited from an improving economy, which was most evident in our commercial print and supply-chain management businesses."
2004 first quarter sales were $373 million, an increase of 11 percent above 2003's $336 million. Net earnings for this year's first quarter were $14.1 million, compared with $11.2 million during the same period last year. Diluted earnings per share for the first quarter were 54 cents compared with 44 cents in 2003. Excluding 2003's first quarter restructuring charge of approximately $600,000, after tax, 2004 first quarter net earnings rose 19 percent compared with the prior year's $11.8 million, and diluted earnings per share were 17 percent higher than last year's 46 cents.
During the quarter, the company repurchased 1 million shares (approximately 3.9%) of its outstanding common stock under its existing repurchase authorization. The shares were purchased from a financial intermediary pursuant to an accelerated share repurchase program. The shares were purchased at a price of $43.69 per share, subject to a market price adjustment provision.
-- Banta's Supply-Chain Management Sector delivered strong performance in the first quarter. Sales reached $103 million, an increase of $21.4 million or 26 percent over 2003's first quarter, as Banta experienced improved activity with existing customers and benefited from the addition of several new customers. Approximately $4 million of the increase was due to changes in currency values between the Euro and the dollar. Operating earnings were 19 percent higher than the year-ago period, helped by improved facility utilization. During last year's fourth quarter Banta closed supply-chain management facilities in Dublin, Ireland, and Guadalajara, Mexico, as part of the corporation's 2003 restructuring. "Our operational consolidations made a positive impact on facility utilization and productivity," notes Streeter. "This past quarter we benefited from those actions, as well as a strengthening technology sector that presented new business opportunities and generated greater unit volumes from most of our major customers. We also experienced the start of a more normal mix of material sales to value-added sales, which resulted in declines in both gross margins and operating margins. As communicated previously, we have been anticipating and preparing for changes in product mix and margins as our supply-chain revenues continue to grow."
-- Print Sector sales climbed 6 percent above sales levels in the same period last year, reaching $247 million. Sector operating earnings in the first quarter, compared with the same period a year ago, rose 27 percent as overall utilization improved, demand strengthened in Banta's direct marketing business and productivity improved at the corporation's consumer catalog operation.
-- The catalog division reported dramatically increased earnings as efficiencies and productivity significantly improved, the result of last year's restructuring and modernization programs. First quarter pricing stabilized for the corporation's catalog business, remaining at fourth quarter 2003 levels, primarily due to Banta's focus on providing value-added services in areas such as prepress, mail list processing and distribution.
-- The direct marketing division rebounded nicely in the first quarter, further building on momentum that began developing during 2003's fourth quarter. Sales rose 26 percent, and operating earnings more than doubled compared with 2003's first quarter. Direct mail activity accelerated in all of Banta's product categories as direct marketers increased print quantities and launched new promotional campaigns.
-- Educational printing improved compared with 2003's first quarter. Reduced publisher inventories prompted higher-than-normal reprint activity during the first quarter, helping boost the book division's sales and earnings. The outlook for educational print in 2004 remains stable. Growth will continue to be constrained by state budget deficits and this year's absence of major curriculum adoption programs. Solid first-quarter activity in literature management and trade books also contributed to the book division's improved performance.
-- Banta's publications division delivered both higher sales and earnings in the first quarter despite a further industrywide reduction in magazine pages printed. During the month of March, however, Banta enjoyed its first monthly page count increase in 37 months, an encouraging sign for future magazine prin requirements. In addition, market share gains continued to support the division's strong performance.
-- Banta's single-use healthcare products division reported mixed results for the first quarter. Sales increased 4 percent and operating profits, although ahead of expectations, fell 23 percent due to higher raw material prices and expenses related to a facility consolidation. During the first quarter, manufacturing at Healthcare's Rialto, CA, plant was transferred to the division's primary operation in Neenah, WI. The consolidation, which does not affect Rialto's distribution facility, should contribute to improved Healthcare performance during the remainder of 2004.
"Our recent investments in productivity initiatives, efforts to maximize facility utilization, and success in pursuing new business opportunities have converged with a strengthening economy to support our confidence in our ability to deliver strong 2004 results," says Streeter. "Pricing seems to have stabilized for some of our print businesses, however we have not seen a general, or sustained, improvement in the industry. We remain cautiously optimistic that a growing economy will create more demand for print and positively impact pricing. In the meantime, Banta's operational capabilities, business diversity, and ability to capitalize on the outsourcing trends in print and supply-chain management should continue to deliver solid results for our shareholders."
Banta management reaffirmed its guidance for 2004, which was provided in its 2003 year-end earnings release dated Jan. 27, 2004. "We see encouraging momentum in the marketplace and remain positive about our near-term growth prospects," said Streeter.
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