Standard Register Reports Increased Profits, Stabilized Revenue
DAYTON, OH—Oct. 29, 2010—Standard Register announced its financial results for the third quarter, which ended Oct. 3, 2010. For the quarter, it had revenue of $163.6 million and a net profit of $1.4 million. That compares to last year's quarterly revenue of $163.5 million and a net loss of $5.5 million, which included $10.6 million of restructuring expense primarily related to the MyC3 strategic earnings improvement initiative announced during the quarter.
Through the first nine months, Standard Register reported revenue of $495.7 million and a net profit of $0.5 million. Those results compare to last year's revenue for the period of $509.2 million and a net loss of $13.3 million, which in addition to the MyC3 restructuring incurred during the quarter, included pension settlement charges of $20.4 million.
Results from Operations
The company posted its sixth consecutive quarter of stabilizing revenue trends resulting in growth for the quarter of $0.1 million, net income of $1.4 million, and positive cash flow of $7.7 million when measured from a non-GAAP net debt basis.
"Returning the company to growth has been a principal objective of our turnaround," stated Joseph Morgan, president and CEO. "Revenue, profits and cash flow are the key metrics that we use internally to measure our progress. To see all three metrics move in a positive direction during the quarter provides validation that our strategy is working."
Healthcare rebounded from the prior quarter, posting one percent revenue growth over the prior year third quarter with solid growth in patient communications, wristbands and labels, and workflow solutions. The Industrial market segment continues to show steady growth of twelve percent over the prior year, primarily due to continued but moderating economic recovery within its manufacturing customer base, growth from new customers in both our Mexico and domestic operations and new revenues from in-mold labeling solutions.
Within our Commercial business unit, Financial Services continued to reduce their revenue declines by bringing on new customers, although not overcoming continued challenges in technology automation and other printed product unit declines. Only the Emerging market segment showed signs of weakening revenue trends as the company intentionally began balancing the pursuit of unit growth in a highly commoditized and aggressively priced product categories against improving overall profitability within the segment. Across all business units, we experienced double-digit growth within our marketing solutions.
Gross margin as a percent of revenue was 31.7 for the quarter versus 32.5 in the prior year. LIFO inventory adjustments continue to be the major difference between the two periods as a favorable $0.7 million was recorded for the current period versus a favorable $2.3 million for the same period last year. Through nine months, gross margin was identical between the two years at 31.7 percent of revenue with LIFO at $2.6 million favorable for the current year, versus $3.0 million favorable for the prior year. The cost containment portions of the MyC3 initiative, announced last year, allowed the Company to maintain the gross margin from operations despite lower revenue units.
Net income for the quarter was $1.4 million, compared with a loss of $5.5 million for the prior year quarter. Adjusting for pension loss amortization, pension settlement losses and restructuring and impairment charges, non-GAAP adjusted net income was $4.2 million, or $0.15 per share for the third quarter of 2010, compared with non-GAAP adjusted net income of $3.4 million, or $0.11 per share for the prior year quarter.
On a year-to-date basis, net income of $0.5 million compared with a net loss of $13.3 million for the prior year. Adjusting for pension loss amortization, pension settlement losses and restructuring and impairment charges, non-GAAP adjusted net income was $9.8 million compared with non-GAAP adjusted net income of $13.1 million for the prior year.
Capital expenditures were $12.8 million through the first nine months using a combination of $6.5 million in cash and $6.3 million through operating and capital lease agreements. In addition, the Company purchased the assets of Fusion Graphics, Inc. for $2.5 million during the second quarter. Capital expenditures are expected to end the year in the $15-17 million range. Pension funding was $17.7 million through the first nine months with an additional $7.6 million planned for the fourth quarter. Although positive during the quarter, non-GAAP cash on a net debt basis was $3.2 million negative for the first nine months.
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. The Company 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 www.standardregister.com.
Source: Company press release.