Standard Register (NYSE: SR) today announced its financial
results for the first quarter 2012. The Company reported revenue of
$157.6 million and a net loss of $5.1 million, or $0.18 per share.
The results compare to prior year revenue of $164.9 million and net
income of $0.4 million, or $0.01 per diluted share. Non-GAAP net
income, adjusted for pension loss amortization, pension settlement,
restructuring, and deferred tax valuation allowances was $1.9
million, or $0.06 per share, for the first quarter of 2012 as
compared to non-GAAP net income of $4.1 million, or $0.14 per
diluted share for the same period in 2011.
“We saw significant positive activity in the first quarter of
2012 as Healthcare, Financial Services and Commercial Markets
business units grew Core solutions during the period. Combined with
the on-schedule implementation of our restructuring plan, this
gives us good momentum. While revenue was down overall from the
year-ago quarter, we have a strong current ratio of 1.9, adequate
liquidity for operations and expect to end 2012 with positive cash
flow of at least $5 million,” said Joseph P. Morgan, Jr., president
and chief executive officer.
Morgan continued, “We continue to make the necessary investments
to transform Standard Register into a provider of solutions that
enable our customers to align their brand communications with their
corporate priorities and standards. We are seeing our portfolio
evolve and winning new business that demonstrates good
progress.”
Results
Total revenues declined 4 percent to $157.6 million in the first
quarter versus $164.9 million in the prior year. Core priority
growth solutions revenues grew 3 percent during the quarter whereas
Legacy products, such as business forms and transactional labels,
across all business units declined by 9 percent.
Healthcare revenue declined 6 percent to $57.0 million in the
first quarter compared to $60.7 million in the prior year. Core
solutions grew by 5 percent driven by the acquisition of 100
percent of the ownership interests in iMedConsent, LLC (dba Dialog
Medical), which the Company completed in the third quarter 2011, as
well as new business and organic growth in patient communications
and patient identification and safety solutions. Healthcare
technology solutions sales grew 15 percent in the quarter. Legacy
products, primarily clinical documents and administrative forms
sales declined 12 percent as customers advanced implementation of
Electronic Medical Records (EMR) initiatives.
Financial Services revenue showed slight growth at $43.5 million
in the first quarter compared to $43.3 million in the prior year.
The Company began recognizing revenue from a new Core solutions
customer and saw growth in existing smaller customers. These sales
served to offset the loss of Legacy and Core solutions from a
customer that is expected to impact revenues in this segment by $18
- $20 million this year.
The Commercial Markets business unit experienced a 7 percent
decline to $37.6 million for the quarter from $40.3 million in the
prior year driven primarily by losses in Legacy products, which
represent a disproportionate amount of sales in the business unit.
Momentum in Core marketing solutions is expected to grow during the
remainder of 2012.
The Industrial business unit generated $19.5 million in revenue
or a decline of 5 percent for the quarter as compared to $20.6
million a year ago, driven by pricing pressure and weak demand from
HVAC customers, and a 49% decrease from the year-ago quarter for
in-mold labeling sales related to timing.
Gross margin as a percent of revenue decreased to 30.6 percent
for the current year quarter from 32.4 percent in the prior year
quarter. Pricing pressures, particularly in Legacy transactional
forms and labels, declines in volume and material cost increases
all contributed to the change. Selling, general and administrative
expenses, excluding pension and restructuring, declined $1.8
million to $44.4 million, or 28.2 percent of revenue, relative to
$46.2 million and 28.0 percent for the prior year quarter.
For the first quarter 2012, capital expenditures were $0.7
million, pension funding contributions were $7.0 million and
Non-GAAP cash flow on a net debt basis was $3.4 million. For 2012,
the Company is planning to spend $9 - 11 million in capital
expenditures to further support its Core growth solutions offering
and to contribute at least the minimum requirement of $27.0 million
for Pension funding.
Conference Call
Standard Register’s President and Chief Executive Officer Joe
Morgan and Chief Financial Officer Bob Ginnan will host a
conference call at 10:00 a.m. EDT on April 20, 2012, to review the
first quarter results. The call can be accessed via an audio web
cast accessible at:
http://www.standardregister.com/investorcenter.
About Standard Register
Standard Register (NYSE:SR) is trusted by the world’s leading
companies to advance their reputations by aligning communications
with corporate standards and priorities. Providing market-specific
insights and a compelling portfolio of solutions to address the
changing business landscape in healthcare, financial services,
commercial and industrial markets, Standard Register is the
recognized leader in the management and execution of
mission-critical communications. 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 2012 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, our access to capital for expanding in
Core solutions, the pace at which digital technologies erode the
demand for certain legacy products, the success of our plans to
deal with the threats and opportunities brought by digital
technology, results of cost containment strategies and
restructuring programs, our ability to attract and retain key
personnel, variation in demand and acceptance of the Company’s
products and services, frequency, magnitude and timing of paper and
other raw material price changes, the timing of the completion and
integration of acquisitions, general business and economic
conditions beyond the Company’s control, and the consequences of
competitive factors in the marketplace including the ability to
attract and retain customers. 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.
Non-GAAP Measures Presented in This Press Release
The Company reports its results in accordance with Generally
Accepted Accounting Principles in the United States (GAAP).
However, we believe that certain non-GAAP measures found in this
press release, when presented in conjunction with comparable GAAP
measures, are useful for investors. 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. We discuss several measures of operating performance
including non-GAAP net income and earnings per diluted share and
cash flow on a net debt basis, which are not calculated in
accordance with GAAP. These non-GAAP measures should not be
considered as substitutes for, or superior to, results determined
in accordance with GAAP.
Management evaluates the Company’s results, excluding pension
loss amortization, pension settlements, restructuring charges, and
deferred tax valuation allowances. We believe this non-GAAP
financial measure is useful to investors because it provides a more
complete understanding of our current underlying operating
performance, a clearer comparison of current period results with
past reports of financial performance, and greater transparency
regarding information used by management in its decision
making.
In addition, because our credit facility is borrowed under a
revolving credit agreement, which currently permits us to borrow
and repay at will up to a balance of $100 million (subject to
limitations related to receivables, inventories, and letters of
credit), we take the measure of cash flow performance prior to
borrowing or repayment of the credit facility. In effect, we
evaluate cash flow as the change in net debt (credit facility debt
less cash and cash equivalents).
THE STANDARD REGISTER COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands,
except per share amounts) (Unaudited)
13 Weeks Ended
13 Weeks Ended 1-Apr-12 3-Apr-11
TOTAL REVENUE $ 157,649 $ 164,889
COST OF SALES 109,448
111,435
GROSS MARGIN
48,201 53,454
COSTS AND EXPENSES Selling,
general and administrative
50,215 52,303 Pension settlement
983 - Restructuring and other exit costs
1,122
74
TOTAL COSTS AND
EXPENSES 52,320
52,377
(LOSS) INCOME FROM OPERATIONS (4,119
) 1,077
OTHER INCOME (EXPENSE) Interest
expense
(704 ) (572 ) Other income
16
5
Total other expense
(688 ) (567 )
(LOSS) INCOME BEFORE INCOME
TAXES (4,807 ) 510 Income Tax Expense
305 82
NET (LOSS) INCOME $ (5,112 )
$ 428 Average Number of Shares
Outstanding - Basic
29,117 28,976 Average Number of Shares
Outstanding - Diluted
29,117 28,997
BASIC AND
DILUTED (LOSS) INCOME PER SHARE $ (0.18 )
$ 0.01 Dividends per share declared for the period
$
0.05 $ 0.05 MEMO: Depreciation and amortization
$ 5,822 $ 5,350 Pension loss amortization
$
5,785 $ 6,073
SEGMENT OPERATING RESULTS
(Dollars in thousands) (Unaudited)
13 Weeks Ended
13 Weeks Ended 1-Apr-12 3-Apr-11
REVENUE Financial Services
$ 43,471 $ 43,306
Commercial Markets
37,608 40,331 Healthcare
57,050
60,672 Industrial
19,520
20,580 Total Revenue
$ 157,649
$ 164,889
GROSS MARGIN Financial
Services
$ 12,873 $ 13,143 Commercial Markets
9,823 11,187 Healthcare
19,359 22,572 Industrial
6,146 6,552 Total
Gross Margin
$ 48,201 $ 53,454
NET (LOSS) INCOME BEFORE TAXES Financial
Services
$ 1,571 $ 1,691 Commercial Markets
(1,107 ) (293 ) Healthcare
2,568 4,683
Industrial
208 789 Unallocated
(8,047 )
(6,360 ) Total Net (Loss) Income Before Taxes
$ (4,807 ) $ 510
CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
(Unaudited)
1-Apr-12 1-Jan-12
ASSETS Cash and cash equivalents
$ 1,534 $
1,569 Accounts receivable
107,532 113,403 Inventories
51,196 48,822 Other current assets
10,075
9,058 Total current assets
170,337 172,852 Plant and equipment
$
69,068 $ 73,950 Goodwill and intangible assets
14,206
14,479 Deferred taxes
23,991 23,996 Other assets
8,800 8,584 Total assets
$ 286,402 $ 293,861
LIABILITIES AND SHAREHOLDERS' DEFICIT Current
liabilities
88,901 83,443 Deferred compensation
4,240
5,777 Long-term debt
56,174 60,149 Pension benefit
obligation
227,377 236,206 Other long-term liabilities
7,358 7,339 Shareholders' deficit
(97,648
) (99,053 ) Total liabilities and
shareholders' deficit
$ 286,402
$ 293,861
CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) (Unaudited)
13 Weeks Ended
13 Weeks Ended 1-Apr-12 3-Apr-11
Net (loss) income plus non-cash items
$ 9,059
$ 11,362 Working capital
11,177 8,840 Restructuring payments
(1,653 ) (683 ) Contributions to qualified pension
plan
(7,000 ) (8,000 ) Other
(5,131
) (2,068 ) Net cash provided by
operating activities
6,452
9,451 Capital expenditures, net
(713
) (1,879 ) Proceeds from sale of equipment
8
- Net cash used in investing
activities
(705 ) (1,879
) Net change in borrowings under credit facility
(3,389 ) (5,728 ) Principal payments on long-term
debt
(724 ) (357 ) Dividends paid
(1,470
) (1,459 ) Other
(5 )
(15 ) Net cash used in financing activities
(5,588 ) (7,559 ) Effect
of exchange rate
(194 )
13 Net change in cash
$ (35 )
$ 26
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES (Dollars
in thousands, except per share amounts) (Unaudited)
13
Weeks Ended 13 Weeks Ended 1-Apr-12
3-Apr-11 GAAP Net (Loss) Income
$
(5,112 ) $ 428 Adjustments: Pension loss amortization
5,785 6,073 Pension settlement
983 - Restructuring
charges
1,122 74 Tax effect of adjustments (at statutory tax
rates)
(3,113 ) (2,441 ) Deferred tax valuation
allowance
2,232 -
Non-GAAP Net Income
$ 1,897 $
4,134 GAAP (Loss) Income Per Share
$
(0.18 ) $ 0.01 Adjustments, net of tax: Pension loss
amortization
0.12 0.13 Pension settlement
0.02 -
Restructuring charges
0.02 - Deferred tax valuation
allowance
0.08 -
Non-GAAP Income Per Share
$ 0.06
$ 0.14 GAAP Net Cash Flow
$ (35
) $ 26 Adjustments: Credit facility paid
3,389
5,728 Non-GAAP Net Cash Flow
$ 3,354 $ 5,754
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