Schawk's Revenues Grow 5.2% in Second Quarter
DES PLAINES, IL—Aug 04, 2010—Schawk, Inc. (NYSE: SGK), a leading provider of brand point management services, reported second-quarter 2010 results. Net income in the second quarter of 2010 was $15.8 million, vs. $4.8 millionin the second quarter of 2009. Net income for the first six months of 2010 was $18.3 million, compared to $2.5 million for the comparable prior-year period.
President and CEO David A. Schawk, commented, "Schawk's second-quarter financial results reflect the signals we received from our consumer packaged goods clients in late 2009 and early 2010 that product and brand activity would be increasing. Our revenue growth, as well as previous and continued cost-reduction activities, drove improved operating margins and earnings per share both for the second quarter and first six months of 2010 compared to the prior-year comparable periods."
Consolidated Results for Second Quarter Ended June 30, 2010
Consolidated net sales in the second quarter of 2010 were $117.8 million, compared to $112.0 million in the same quarter of 2009, an increase of approximately $5.9 million, or 5.2 percent. Approximately $1.0 million of the sales increase quarter-over-quarter was the result of changes in foreign currency translation rates, as the U.S. dollar declined in value relative to the local currencies of certain of the Company's non-U.S. subsidiaries. The remainder of the quarter-over-quarter increase in sales was the result of an increase in product and brand activity from consumer packaged goods (CPG) clients as well as increased promotional activity from advertising and retail clients.
CPG accounts sales in the second quarter of 2010 were $82.9 million, or 70.4 percent of total sales, compared to $79.9 million in the same quarter of 2009, an increase of 3.7 percent. The increase over the prior-year quarter was primarily driven by increased product and brand activity by Schawk's CPG clients. Advertising and retail accounts sales of $23.4 million, or 19.9 percent of total sales, in the second quarter of 2010 increased 12.0 percent, from $20.9 million in the second quarter of 2009, driven by increased promotional activity relative to last year. Entertainment accounts sales for the second quarter of 2010 of $8.0 million, or 6.8 percent of total sales, decreased 3.1 percent, from $8.3 million in the same period of 2009.
Gross profit was $46.8 million in the second quarter of 2010, an increase of $3.9 million from the second quarter of 2009. Second-quarter 2010 gross profit as a percentage of sales increased to 39.7 percent of sales from 38.3 percent of sales in the 2009 second-quarter period. The increase was largely attributable to the Company's cost-reduction activities implemented throughout 2009 and during 2010, coupled with higher sales in the 2010 second quarter relative to the 2009 second quarter, which further leveraged these cost-reduction activities.
Schawk reported operating income of $16.0 million in the 2010 second quarter compared to $9.5 million in the second quarter of 2009. The increase in operating income compared to the prior-year quarter was primarily the result of the increase in gross margin and reduced SG&A and acquisition integration and restructuring expenses.
Net income in the second quarter of 2010 was $15.8 million, or $0.61 per diluted share, compared to $4.8 million, or $0.19 per diluted share, in the second quarter of 2009. Excluding the after-tax effects of acquisition integration and restructuring expenses, long-lived asset impairment expenses, foreign currency gain or loss and discrete tax period benefits, Adjusted net income was $10.4 million, or $0.40 per diluted share, for the second quarter of 2010 compared to $6.5 million, or $0.26 per diluted share, on a comparable basis for the 2009 second quarter. Please refer to the tables at the end of this press release for a reconciliation of these non-GAAP measures.
EBITDA and Management Adjusted EBITDA Performance
EBITDA for the second quarter of 2010 was $21.0 million compared to $14.9 million for the second quarter of 2009. Management adjusted EBITDA for the second quarter of 2010 was $21.4 million compared to $17.4 million for the second quarter of 2009. Please refer to the "Reconciliation of Non-GAAP EBITDA and Management Adjusted EBITDA" table attached at the end of this press release for a reconciliation of these measures.
About Schawk, Inc.
Schawk, Inc. is a leading provider of brand point management services, enabling companies of all sizes to connect their brands with consumers to create deeper brand affinity. With a global footprint of more than 48 offices, Schawk helps companies create compelling and consistent brand experiences by providing integrated strategic, creative and executional services across brand touchpoints. Founded in 1953, Schawk is trusted by many of the world's leading organizations to help them achieve global brand consistency. For more information about Schawk, visit http://www.schawk.com.