Standard Register Reports Q3 Revenue Down
-- Graphic Arts Online, 10/24/2008
DAYTON, OH, (BUSINESS WIRE), October 24, 2008—Standard Register (NYSE: SR) today reported its financial results for the third quarter ended September 28, 2008.Results of Operations
Net Income from Continuing Operations for the third quarter was $2.2 million, or $0.07 per share, compared to $2.0 million or $0.07 per share last year. Through nine months, the Company reported Net Income on Continuing Operations of $6.0 million, or $0.21 per share, compared to a Continuing Operations Net Loss for the same period in 2007 of $3.6 million, or $0.12 per share.
Revenue for the third quarter was $189.0 million, down 9.3% compared to $208.3 million recorded for the comparable quarter of 2007. On a year-to-date basis, revenue was $595.0 million in the current year, down 8.0% versus $646.9 million last year. The economic slow-down accounted for the majority of the revenue decreases.
The Company's cost reduction initiatives have helped to improve earnings thus far this year, despite the revenue decrease. Cost reduction actions yielding $40.0 million annually were undertaken mid-year 2007. A new round of expense cuts was announced this year, including a freeze of pension benefits, consolidation of some print centers and warehouses, and a reorganization of field sales support that total an additional $13.0 million in annualized savings.
Restructuring charges figured prominently in both years' results. The effect on earnings of these charges plus the amortization of past years' pension losses and pension settlement charges are identified in the table that follows.
For the third quarter, Non-GAAP Adjusted Operating Income (income on continuing operations before restructuring, impairment, pension loss amortization, and pension settlement charges) was $12.2 million versus $13.7 million in 2007. The decrease reflects the lower revenue, partially offset by reduced costs.
Adjusted operating income through nine months was $30.7 million, compared to $26.4 million in the prior year - an increase of $4.3 million in earnings despite an almost $52 million decrease in revenue. This improvement primarily reflects the significantly lower cost structure established after mid-year 2007, plus ongoing 2008 cost initiatives.
Net debt ended the quarter at $40.4 million, up $9.0 million in the quarter, but $10.9 million below the level at the outset of the year. Higher pension funding and an increase in working capital contributed to the rise in net debt during the quarter. The $10.9 million positive net cash flow during the first nine months of this year was a product of improved operating earnings, an increase in working capital turnover, and relatively modest capital spending.
"In this economy and market environment, we must continue to closely manage costs and focus our energies and investments on areas that hold opportunity for long-term growth. Despite the overall decline in the quarter's revenue, we saw a 9.0% increase in sales to the manufacturing market and only modest decreases in the healthcare and financial sectors," said Joe Morgan, acting chief executive officer. "At this time, we do not expect the recent acquisitions and disruptions that occurred to date in the financial market to have a material adverse impact on our business."
Outlook
Our past guidance called for second half revenue to slightly exceed that for the first half of the year. In light of the third quarter results and our expectation that there will be no significant change in economic or market conditions during the fourth quarter, we now expect the second half revenue to trail that for the first half.
Past earnings guidance was for the total year 2008 Non-GAAP Adjusted Operating Income (income before restructuring, impairment, pension amortization, and pension settlement) to come in above the prior year. Notwithstanding on-going expense reduction initiatives, lowered second half revenue outlook increases the likelihood that the adjusted operating income will come in below that for 2007.
Dividend
Standard Register's board of directors declared on October 23, 2008 a quarterly dividend of $0.23 per share to be paid on December 5, 2008, to shareholders of record as of November 21, 2008.
Conference Call
Standard Register's acting chief executive officer Joseph P. Morgan and chief financial officer Craig Brown will host a conference call at 10 a.m. EDT on October 24, 2008, to review the third quarter results. The call can be accessed via an audio web cast which is accessible at: http://www.standardregister.com/investorcenter.
Presentation of Information in This Press Release
This press release presents information that excludes restructuring, impairment charges, and amortization of past pension losses and pension settlement charges. These financial measures are considered non-GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows where amounts are either excluded or included not in accordance with generally accepted accounting principles (GAAP). This information is intended to enhance an overall understanding of the financial performance due to the non-operational nature of these items and the significant change from period to period. This presentation is consistent with the manner in which the Board of Directors internally evaluates performance. The presentation of non-GAAP information is not meant to be considered in isolation or as a substitute for results prepared in accordance with principles generally accepted in the United States.
About Standard Register
Standard Register is a premier document services provider, trusted by companies to manage the critical documents they need to thrive in today's competitive climate. Employing nearly a century of industry expertise, Lean Six Sigma methodologies and other leading technologies, the company helps organizations increase efficiency, reduce costs, mitigate risks, grow revenue and meet the challenges of a changing business landscape. It offers document and label solutions, technology solutions, consulting and print supply chain services to help clients manage documents throughout their enterprises. More information is available at http://www.standardregister.com.
Safe Harbor Statement
This report includes forward-looking statements covered by the Private Securities Litigation Reform Act of 1995. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results for fiscal year 2008 and beyond could differ materially from the Company's current expectations. Forward-looking statements are identified by words such as "anticipates," "projects," "expects," "plans," "intends," "believes," "estimates," "targets," and other similar expressions that indicate trends and future events. Factors that could cause the Company's results to differ materially from those expressed in forward-looking statements include, without limitation, variation in demand and acceptance of the Company's products and services, the frequency, magnitude and timing of paper and other raw-material-price changes, general business and economic conditions beyond the Company's control, timing of the completion and integration of acquisitions, the consequences of competitive factors in the marketplace, cost-containment strategies, and the Company's success in attracting and retaining key personnel. Additional information concerning factors that could cause actual results to differ materially from those projected is contained in the Company's filing with The Securities and Exchange Commission, including its report on Form 10-K for the year ended December 30, 2007. The Company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely.
