Mail-Well Shakeup Includes Plant Closings
ENGLEWOOD, CO—Mail-Well has announced some sweeping changes that are projected to help the company realize a financial goal of achieving 15 to 20 percent annual EPS growth over the next five years, a plan that includes selling some plants and closing others.
The company has decided to concentrate its resources on the envelope and commercial printing segments, and will sell its smaller label and printed office products segment. Proceeds from the divestitures, which are slated to transpire over a 12-month period, will be used to decrease Mail-Well's debt, with a debt-to-total capital goal of less than 55 percent by the end of 2003.
Excluding the business unit divestitures, Mail-Well's 2001 sales are projected to be $1.6 billion, down from $2.4 billion in 2000.
"Growing in seven years from $16 million in annual sales to $2.4 billion is a major achievement for any public company," notes Paul Reilly, president, CEO and chairman of Mail-Well. "But the Mail-Well of the future, while still committed to growth in multi-billion dollar markets, must be a more disciplined and strategically focused Mail-Well, with even greater emphasis on improving our competitive position and return on capital.
"We must simplify our business and sharpen our strategic focus to compete more effectively as one company and to address investor confusion over multiple product lines," Reilly adds. "The general commercial printing and envelope markets offer Mail-Well the best opportunities to leverage our current size and leadership position for sales growth and profit expansion going forward."
The company also announced that it will close nine U.S. plants and fold the assets into the remaining 27 envelope operations. The consolidation plan is expected to provide estimated annual operating savings of $38 million when fully implemented. The one-time cash cost of the consolidation will be $43 million in 2001 and $4 million to complete the consolidation in 2002.