Standard Register Announces Q3 Growth of 10 Percent in Revenue Compared to Previous Year
Gross margin as a percentage of revenue improved to 28.3 percent in the third quarter of 2014 from 26.9 percent in the prior year. This improvement in gross margin reflects our integration efforts and the reduction of 19 facilities that have been exited since the acquisition of WorkflowOne (including third party logistics sites).
Selling, General and Administrative (SG&A) expenses were $55.5 million for the third quarter of 2014 compared to $54.4 million for the third quarter last year, which included only two months of expenses of WorkflowOne.
As anticipated because of $15.5 million of qualified pension plan contributions and $8.3 million of spending on restructuring and integration, the Company used cash of $10.1 million in the third quarter of 2014 on a net debt basis.
Standard Register operates two business units: Business Solutions and Healthcare.
Business Solutions revenue was $153.7 million for the third quarter of 2014, an increase of 12.6 percent over revenue of $136.5 million in the 2013 third quarter. The additional month in the third quarter of 2014 of business from WorkflowOne and growth in promotional products sales contributed to the increase. Operating income was $1.1 million compared to an operating loss of $1.5 million last year.
Healthcare revenue was $65.7 million, an increase of 4.5 percent over revenue of $62.9 million in the third quarter of 2013. Continued growth in sales of multi-year software subscriptions and the additional month of business from WorkflowOne in the third quarter of 2014 contributed to the increase. Operating income was $5.3 million for the quarter compared to $2.1 million last year.
Third Quarter Highlights
- Improvement in gross margin and Adjusted EBITDA reflects the progress to date in the integration of the WorkflowOne acquisition, including workforce reduction and consolidation of production and warehousing facilities.
- Pension contributions were lowered in 2014-16 by $33 million as a result of the Highway and Transportation Funding Act of 2014.
- Signed three-year, multi-million dollar contract with CareSource, one of the nation's largest Managed Medicaid plans in the country, for the management of communication workflows and production of external information.
- The Company obtained approval of its business plan to demonstrate how it will return to compliance with New York Stock exchange listing standards. Standard Register will be required to achieve the minimum continued listing standards at the completion of the prescribed plan period ending on July 9, 2015, unless the listing is reassessed prior to that date.
First Three Quarters Results
Total revenue increased 40.9 percent to $673.2 million and the Company incurred a net loss of $18.5 million or $2.15 per share, compared to revenue of $477.8 million and a net loss of $16.5 million or $2.79 per share for the first three quarters of 2013. On a pro forma basis, including WorkflowOne, revenue for the first three quarters of 2013 was $733.2 million.