Business News
Standard Register Reports First Quarter 2009 Financial Results
Friday 24. April 2009 - Overview: In this very challenging economic time, the Company is demonstrating its ability to reduce expenses as is evident by holding gross margin percentage steady with a 15.7 percent revenue decline and reducing SG&A by $7.3 million excluding pension amortization. The Company has added to its customer base in the quarter and has not experienced any significant customer losses.
Standard Register (NYSE: SR) today reported its financial results for the first quarter ended March 29, 2009.
Results of Operations
Revenue for the first quarter was $174.6 million, down 15.7 percent compared with $207.2 million recorded for the comparable quarter of 2008. Gross margin as a percent of revenue was 31.1 percent compared with 31.3 percent in the prior year. “Despite the revenue shortfall, our gross margin as a percent of revenue remained even with last year due to the successful execution of cost reduction initiatives implemented in 2007 and 2008,” said Joe Morgan, president and chief executive officer. “We have added to our customer base in the quarter and have not experienced any significant customer losses. Our top line has mainly been impacted by the reduction in corporate spending by many of our customers combined with a continued technology trend that impacts many legacy products.”
Net income from continuing operations was a loss of $11.0 million or $0.38 per share compared with income of $2.5 million or $0.09 per share last year. The loss was primarily due to considerable pension settlement charges representing $19.7 million on a pre-tax basis or $0.41 per share. SG&A expenses were $51.8 million compared with $59.5 million in the comparable quarter of 2008. These expenses included non-cash pension loss amortization of $4.7 million vs. $5.2 million in the prior year and are a result of prior years’ pension losses as well as declining interest rates. Non-cash pension settlement charges were significant and were related to lump sum payments made to retirees. No pension settlement charges were recorded in the prior year. SG&A expenses, excluding pension loss amortization, decreased in the quarter by $7.3 million. This represented the seventh consecutive quarter of year over year lower SG&A expenses excluding pension amortization. In late 2008, the Company announced plans to reduce annualized costs by $33 million. This was in addition to successfully achieving $40 million from cost-savings measures introduced in mid 2007. “One of our key areas of focus is the relentless pursuit of cost reduction,” added Morgan. “This will continue to receive our full attention throughout 2009.”
Cash flow on a net debt basis was negative due primarily to unusually large payments in the Company’s non-qualified plans and the $0.23 per share dividend paid to shareholders in the quarter.
The Company completed its organizational transformation initiatives by aligning sales, marketing, client satisfaction and in some cases, manufacturing by the major vertical markets of healthcare, industrial products and commercial, a business unit comprised of specific market sectors including financial, government and retail. This targeted approach resulted in the signing of 43 multi-year contracts during the quarter. These contracts represent over $11.0 million in new business on an annualized basis and support the Company’s strategy that focusing on a concentrated number of vertical markets will lead to growth in revenue and earnings over the long term.
Dividend
Standard Register’s board of directors today declared a quarterly dividend of $0.05 per share to be paid on June 5, 2009, to shareholders of record as of May 22, 2009. The board will consider future dividend payments on a quarter-by-quarter basis in accordance with its normal practice.