|By Business Wire||
|April 25, 2014 08:00 AM EDT||
Standard Register (NYSE: SR) today announced its financial results for the first quarter of 2014. The Company reported revenue of $228.5 million and a net loss of $7.1 million or $0.83 per diluted share. The results compare to revenue of $141.6 million for the first quarter of 2013 and net income of $4.7 million or $0.80 per diluted share.
Adjusted EBITDA, which excludes certain items as detailed in the attached reconciliation, was $13.2 million compared to $12.2 million for the first quarter of 2013.
Results for the first quarter of 2013 do not include results from WorkflowOne, which Standard Register acquired on August 1, 2013.
“Although we are not satisfied with the overall results, first-quarter revenue increased in a number of our growth solutions,” said Joseph P. Morgan, Jr., president and chief executive officer. “We are investing in the growing areas of our business and have a healthy pipeline. However, many of our solutions have long sales cycles and lengthy customized implementations, which delay realization of revenue. Throughout 2014, we will be focused on driving sales of our entire portfolio into our large customer base. The acquisition brought us many new opportunities and the integration is proceeding on track with, and in some respects ahead of our internal plan.”
First Quarter Results
Total revenue increased 61 percent to $228.5 million compared to $141.6 million in the 2013 first quarter. On a pro forma basis, including WorkflowOne revenue for the first quarter of 2013, the Company would have reported revenue of $253.7 million.
Gross Margin as a percentage of revenue was 27.3 percent, compared to 29.6 percent for the first quarter last year. Unit and volume decreases, and costs associated with integration of the acquisition contributed to the decrease in gross margin. Selling, general and administrative (SG&A) expenses were $58.7 million compared to $34.7 million for the first quarter last year. The increase is primarily attributable to the acquisition and integration.
The Company incurred $5.5 million of additional expense in the first quarter of 2014 related to executing the acquisition, restructuring and integration. Capital expenditures were $3.6 million compared to $3.9 million in the first quarter last year. The Company expects to invest approximately $15 to $21 million in 2014 capital expenditures.
Standard Register contributed $5.9 million to the Company’s qualified pension plan in the first quarter of 2014 compared to $5.8 million in the first quarter last year. Total pension contributions to meet minimum funding requirements for 2014 are expected to be $42.0 million compared to contributions of $24.7 million for 2013.
Standard Register operates two business units: Healthcare and Business Solutions.
Healthcare revenue was $64.8 million, an increase of 31 percent over revenue of $49.5 million in the first quarter of 2013. Technology-enabled patient information systems continued a double-digit growth rate in the first quarter, however regulatory changes in requirements for distribution of printed materials, and a large kitting project in the first quarter of 2013 also impacted the overall comparable business unit results. Operating profit was $1.9 million compared to $2.1 million in the 2013 first quarter.
Business Solutions revenue was $163.7 million, an increase of 78 percent over revenue of $92.1 million in the 2013 first quarter. The increase was attributable to business added from the acquisition and growth in revenue from Mexico-based label manufacturing operations. Declines in demand for traditional printed forms and transactional documents continue to outpace growth in the other solutions in the business unit performance. Operating profit was $1.4 million compared to $2.9 million in the 2013 first quarter.
First Quarter Highlights
- The acquisition integration process is proceeding on track with internal plans and the Company is beginning to realize expected synergies. In the first quarter of 2014, systems and data centers were integrated, headcount reduced, three production facilities closed and three warehouse facilities closed.
- The first of two high-speed ink jet presses was installed in Sacramento, California. The second, larger press was delivered to Columbus, Ohio, early in April. Both are expected to contribute to customer communications solutions sales during 2014.
- An efficient consolidation of the Dayton workforce into one headquarters location will result in significant savings as the lease of the former WorkflowOne offices has been assigned.
- Standard Register Healthcare launched an innovative SMARTworks® EffectiveResponse solution for patient follow-up, an important accountable care requirement for healthcare providers.
- The Company’s Mexico-based operations received a supplier award from Carrier Mexico for superior quality performance, including 100 percent on-time delivery.
- Standard Register’s Product Marking and Labeling launched the first on-demand labeling solution to allow businesses to order durable UL/CUL approved digital labels online economically, regardless of volume, to address a significant pain point for the industry.
Standard Register’s president and chief executive officer Joseph P. Morgan, Jr., and chief financial officer Robert Ginnan will host a conference call at 10:00 a.m. EDT on Friday, April 25, 2014, to review the first quarter results. The call can be accessed via an audio webcast at http://www.standardregister.com.
About Standard Register
Standard Register (NYSE:SR), is trusted by the world’s leading companies to advance their reputations and add value to their operations by aligning communications with corporate brand standards. Providing market-specific insights and a compelling portfolio of workflow, content and analytics solutions to address the changing business landscape in healthcare, financial services, manufacturing, transportation and retail markets, Standard Register is the recognized leader in the management and execution of mission-critical communications. More information is available at http://www.standardregister.com.
Safe Harbor Statement
This press release contains forward-looking statements covered by the Private Securities Litigation Reform Act of 1995. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results could differ materially from the Company’s current expectations. Factors that could cause the Company’s results to differ materially from those expressed in forward-looking statements include, without limitation, our ability to successfully integrate the acquired assets or achieve the expected synergies of the WorkflowOne acquisition, access to capital for expanding in our solutions, the pace at which digital technologies and electronic health records (EHR) adoption erode the demand for certain products and services, the success of our plans to deal with the threats and opportunities brought by digital technology, results of cost containment strategies and restructuring programs, our ability to attract and retain key personnel, variation in demand and acceptance of the Company’s products and services, frequency, magnitude and timing of paper and other raw material price changes, the timing of the completion and integration of acquisitions, general business and economic conditions beyond the Company’s control, and the consequences of competitive factors in the marketplace, including the ability to attract and retain customers. The Company undertakes no obligation to revise or update forward-looking statements as a result of new information, since these statements may no longer be accurate or timely. For more information, see the Company’s most recent Form 10-K and other filings with the Securities and Exchange Commission.
Non-GAAP Measures Presented in This Press Release
The Company reports its results in accordance with Generally Accepted Accounting Principles in the United States (GAAP). However, we believe that certain non-GAAP measures found in this press release, when presented in conjunction with comparable GAAP measures, are useful for investors. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows where amounts are either excluded or included, not in accordance with generally accepted accounting principles. We discuss several measures of operating performance, including Adjusted EBITDA and cash flow on a net debt basis, which are not calculated in accordance with GAAP. These non-GAAP measures should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.
Management uses Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and excludes pension benefit cost, restructuring and impairment charges, acquisition and integration expense and certain acquisition fair value and other miscellaneous adjustments, to evaluate the Company’s results. We believe this non-GAAP financial measure is useful to investors because it provides a more complete understanding of our current underlying operating performance, a clearer comparison of current period results with past reports of financial performance, and greater transparency regarding information used by management in its decision-making. Internally, management and our Board of Directors use this non-GAAP measure to evaluate our business performance. The Company’s debt covenants are also based on the Adjusted EBITDA calculation.
In addition, because our credit facility is borrowed under a revolving credit agreement, which currently permits us to borrow and repay at will up to a balance of $125 million (subject to limitations related to receivables, inventories, and letters of credit), we take the measure of cash flow performance prior to borrowing or repayment of the credit facility. In effect, we evaluate cash flow as the change in net debt (credit facility debt less cash equivalents).
The table below provides a reconciliation of these non-GAAP measures to their most comparable measure calculated in accordance with GAAP.
|THE STANDARD REGISTER COMPANY|
|CONSOLIDATED STATEMENTS OF INCOME|
|(In thousands, except per share amounts)|
13 Weeks Ended
|13 Weeks Ended|
|Mar 30, 2014||
Mar 31, 2013
|COST OF SALES||166,023||99,700|
|Selling, general and administrative||58,679||34,736|
|Acquisition and integration costs||2,697||1,107|
|Restructuring and other exit costs||2,806||626|
|TOTAL OPERATING EXPENSES||64,618||36,469|
|(LOSS) INCOME FROM OPERATIONS||(2,152||)||5,451|
|OTHER INCOME (EXPENSE)|
|Other income (expense)||163||(1||)|
|Total other expense||(4,825||)||(625||)|
|(LOSS) INCOME BEFORE INCOME TAXES||(6,977||)||4,826|
|Income tax expense||151||127|
|NET (LOSS) INCOME||$||(7,128||)||$||4,699|
|Average Number of Shares Outstanding - Basic||8,590||5,872|
|Average Number of Shares Outstanding - Diluted||8,590||5,906|
|BASIC (LOSS) INCOME PER SHARE||$||(0.83||)||$||0.80|
DILUTED (LOSS) INCOME PER SHARE
|Depreciation and amortization||
|SEGMENT OPERATING RESULTS|
|13 Weeks Ended||13 Weeks Ended|
|Mar 30, 2014||
Mar 31, 2013
NET (LOSS) INCOME BEFORE TAXES
|Total Net (Loss) Income Before Taxes||$||(6,977||)||$||4,826|
|CONSOLIDATED BALANCE SHEETS|
|Mar 30, 2014||Dec 29, 2013|
|Cash and cash equivalents||$||3,081||$||2,342|
|Other current assets||15,561||14,508|
|Total current assets||234,178||236,356|
|Plant and equipment||90,593||93,003|
|Goodwill and intangible assets||130,904||133,444|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|Pension benefit liability||185,531||192,779|
|Other long-term liabilities||6,887||6,989|
|Total liabilities and shareholders' deficit||$||473,490||$||480,877|
|CONSOLIDATED STATEMENT OF CASH FLOWS|
|13 Weeks Ended||13 Weeks Ended|
|Mar 30, 2014||Mar 31, 2013|
|Net (loss) income plus non-cash items||$||5,772||$||10,169|
|Contributions to qualified pension plan||(5,932||)||(5,839||)|
|Net cash (used in) provided by operating activities||(1,111||)||4,873|
|Additions to plant and equipment||(3,637||)||(3,889||)|
|Proceeds from sale of equipment||49||77|
|Net cash used in investing activities||(3,588||)||(3,812||)|
|Net change in borrowings under credit facility||6,761||(629||)|
|Principal payments on long-term debt||(1,107||)||(592||)|
|Net cash provided by (used in) financing activities||5,508||(1,221||)|
|Effect of exchange rate||(70||)||211|
|Net change in cash||$||739||$||51|
|RECONCILIATION OF GAAP TO NON-GAAP MEASURES|
|13 Weeks Ended||13 Weeks Ended|
Mar 30, 2014
|Mar 31, 2013|
|GAAP Net (Loss) Income||$||(7,128||)||$||4,699|
|Depreciation and amortization||9,196||5,066|
|Restructuring and impairment||3,242||626|
|Acquisition and integration costs||2,697||1,107|
|Non-cash stock compensation||681||469|
|GAAP Net Cash Flow||$||739||$||51|
|Credit facility (borrowed) paid||(6,761||)||629|
|Non-GAAP Net Cash Flow||$||(6,022||)||$||680|
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 26, 2014 06:00 AM EST Reads: 1,935
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
Dec. 26, 2014 06:00 AM EST Reads: 2,311
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
Dec. 26, 2014 05:00 AM EST Reads: 1,772
We are reaching the end of the beginning with WebRTC, and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will w...
Dec. 26, 2014 05:00 AM EST Reads: 1,848
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to th...
Dec. 26, 2014 04:15 AM EST Reads: 2,664
SYS-CON Media announced that Centrify, a provider of unified identity management across cloud, mobile and data center environments that delivers single sign-on (SSO) for users and a simplified identity infrastructure for IT, has launched an ad campaign on Cloud Computing Journal. The ads focus on security: how an organization can successfully control privilege for all of the organization’s identities to mitigate identity-related risk without slowing down the business, and how Centrify provides ...
Dec. 26, 2014 04:00 AM EST Reads: 1,730
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
Dec. 26, 2014 04:00 AM EST Reads: 1,974
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Dec. 26, 2014 02:45 AM EST Reads: 2,115
The term culture has had a polarizing effect among DevOps supporters. Some propose that culture change is critical for success with DevOps, but are remiss to define culture. Some talk about a DevOps culture but then reference activities that could lead to culture change and there are those that talk about culture change as a set of behaviors that need to be adopted by those in IT. There is no question that businesses successful in adopting a DevOps mindset have seen departmental culture change, ...
Dec. 26, 2014 01:45 AM EST Reads: 1,596
In her General Session at 15th Cloud Expo, Anne Plese, Senior Consultant, Cloud Product Marketing, at Verizon Enterprise, focused on finding the right mix of renting vs. buying Oracle capacity to scale to meet business demands, and offer validated Oracle database TCO models for Oracle development and testing environments. Anne Plese is a marketing and technology enthusiast/realist with over 19+ years in high tech. At Verizon Enterprise, she focuses on driving growth for the Verizon Cloud platfo...
Dec. 26, 2014 01:00 AM EST Reads: 2,425
"There is a natural synchronization between the business models, the IoT is there to support ,” explained Brendan O'Brien, Co-founder and Chief Architect of Aria Systems, in this SYS-CON.tv interview at the 15th International Cloud Expo®, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 26, 2014 12:00 AM EST Reads: 2,830
SYS-CON Events announced today that Gridstore™, the leader in hyper-converged infrastructure purpose-built to optimize Microsoft workloads, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Gridstore™ is the leader in hyper-converged infrastructure purpose-built for Microsoft workloads and designed to accelerate applications in virtualized environments. Gridstore’s hyper-converged infrastructure is the ...
Dec. 25, 2014 04:00 PM EST Reads: 1,791
This builds on Puppet Labs' first class Windows support, including native .MSI packages for x32 and x64 operating systems, modules to extend common Windows server management tools, including Powershell, and integrations with Microsoft Azure and Visual Studio. By automating common Windows administration tasks, Puppet Labs is enabling users to adopt DevOps practices, thereby reducing the time needed to deploy applications from weeks to hours.
Dec. 25, 2014 04:00 PM EST Reads: 1,084
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
Dec. 25, 2014 02:00 PM EST Reads: 2,473
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.
Dec. 25, 2014 12:30 PM EST Reads: 1,840