SYS-CON MEDIA Authors: Elizabeth White, Liz McMillan, Pat Romanski, Esmeralda Swartz, AppDynamics Blog

News Feed Item

Standard Register Reports Second Quarter 2014 Financial Results

Standard Register (NYSE: SR) today announced its financial results for the second quarter of 2014.

The Company reported revenue of $225.3 million and a net loss of $5.8 million or $0.67 per diluted share. For the 2013 second quarter, revenue was $136.8 million and net income was $2.0 million or $0.34 per diluted share.

Adjusted EBITDA, which excludes certain items as detailed in the attached reconciliation, was $15.5 million compared to $8.9 million for the second quarter of 2013.

Results for the second quarter of 2013 do not include results from WorkflowOne, which Standard Register acquired on August 1, 2013.

“The benefits from integration are evident, with increased revenue in all solutions and improvement in margin and adjusted EBITDA over the first quarter,” said Joseph P. Morgan, Jr., president and chief executive officer. “The business is stabilizing as we continue to invest in our growth solutions, sell our portfolio of solutions across our growing base of more than 12,000 customers and move new business through implementation.”

Second Quarter Results

Total revenue increased 64.7 percent to $225.3 million from $136.8 million in the 2013 second quarter. On a pro forma basis, including WorkflowOne, revenue for the second quarter of 2013 was $247.8 million.

Gross margin as a percentage of revenue improved to 28.2 percent from 27.3 percent in the first quarter of 2014 and compared to 28.5 percent in the second quarter of 2013. Selling, General and Administrative (SG&A) expenses were $57.1 million for the second quarter of 2014 compared to $35.4 million for the second quarter last year. The increase is primarily attributable to the inclusion of WorkflowOne.

Standard Register operates two business units: Business Solutions and Healthcare.

Business Solutions revenue was $160.9 million for the second quarter of 2014, an increase of 81.5 percent over revenue of $88.6 million in the 2013 second quarter. Business added from the acquisition, and growth in Mexico-based label manufacturing operations and promotional products sales contributed to the increase. Operating profit was $2.6 million compared to $0.9 million last year.

Healthcare revenue was $64.4 million, an increase of 33.7 percent over revenue of $48.2 million in the second quarter of 2013. Technology-enabled solutions in patient information management continued to grow in the second quarter, and business added from the acquisition contributed to the increase. Health insurance reform, electronic health record (EHR) adoption and state electronic records adoption are decreasing orders for printed forms. Operating profit was $2.9 million for the quarter compared to $1.8 million last year.

Second Quarter Highlights

  • Integration of the WorkflowOne acquisition is progressing on schedule with consolidation of production facilities and technology platforms, sales forces and customer service teams. The Company has exited 19 facilities since the acquisition of WorkflowOne (including third party logistics sites), and continues to anticipate at least $40 million in annual savings when the integration is complete at the end of 2015.
  • High-speed ink jet web presses are now operational in Sacramento, California and Columbus, Ohio, contributing to customer communications solutions sales and strengthened pipelines.
  • A Customer Service Center of Excellence was established in Denver, Colorado, serving the western United States and Hawaii with the studio concept of specialists to support specific customers and solutions.
  • Standard Register was awarded a patent for chemically reactive ink that helps deter certain types of document fraud. The Company has earned approximately 900 patents since its founding in 1912, and has 102 active U.S. patents in the areas of labels and form/label combinations, in-mold labeling, software and/or equipment, security print and specialty inks and business forms.
  • The Company invested in its SMARTworks® platform to expand the capabilities for configurable promotional products and support for on-demand publishing and marketing solutions, and added more automation to the Center for Excellence distribution center in Jeffersonville, Indiana.

First Half of Year Results

Total revenue increased 63.0 percent to $453.8 million and the Company incurred a net loss of $12.9 million or $1.50 per diluted share, compared to revenue of $278.4 million and net income of $6.7 million or $1.13 per diluted share for the first half of 2013. On a pro forma basis, including WorkflowOne, revenue for the first half of 2013 was $501.5 million.

Adjusted EBITDA was $28.6 million for the first half of 2014 compared to $21.1 million for the first half of 2013.

Business Solutions revenue increased 79.6 percent to $324.6 million for the first half of 2014 compared to $180.7 million for the prior year first half. Operating profit increased 4.6 percent, to $4.0 million from $3.8 million last year.

Healthcare revenue increased 32.3 percent to $129.2 million compared to $97.7 million for the first half of 2013. Operating profit increased 23.4 percent to $4.8 million from $3.9 million last year.

Gross margin as a percentage of revenue was 27.7 percent for the first half of 2014 compared to 29.1 percent last year. SG&A expenses were $115.8 million for the first half of 2014 compared to $70.1 million last year. The increase is primarily attributable to the inclusion of WorkflowOne.

Capital expenditures, including capital leases, for the first half of 2014 were $14.9 million compared to $6.4 million last year. The Company continues to invest in the areas with growth potential, including digital printing, label operations in Mexico, marking and decorative technology, software development and its SMARTworks® workflow platform.

Standard Register contributed $14.1 million to its qualified pension plan in the first half of 2014 compared to $10.5 million in the first half of 2013. Total pension contributions for 2014 are expected to be $42.2 million in 2014 and $34.4 million in 2015. The Company is monitoring the progress of the Highway Bill, which may reduce pension funding obligation for 2014 and 2015.

Conference Call

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, July 25, 2014, to review the second 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, future pension funding requirements and recognition of actuarial gains and losses, 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).

A reconciliation of non-GAAP measures to their most comparable measure calculated in accordance with GAAP is included in the tables below.

           
 
THE STANDARD REGISTER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Second Quarter Y-T-D
13 Weeks Ended 13 Weeks Ended 26 Weeks Ended 26 Weeks Ended
Jun 29, 2014   Jun 30, 2013 Jun 29, 2014   Jun 30, 2013
 
$ 225,299 $ 136,817 TOTAL REVENUE $ 453,788 $ 278,437
 
161,876     97,762   COST OF SALES 327,899     197,462  
 
63,423     39,055   GROSS MARGIN 125,889     80,975  
 
OPERATING EXPENSES
57,104 35,366 Selling, general and administrative 115,783 70,102
3,515 679 Acquisition and integration costs 6,212 1,786
244 Asset impairments 680
2,960     193   Restructuring and other exit costs 5,766     819  
 
63,823     36,238   TOTAL OPERATING EXPENSES 128,441     72,707  
 
(400 )   2,817   (LOSS) INCOME FROM OPERATIONS (2,552 )   8,268  
 
OTHER INCOME (EXPENSE)
(5,127 ) (530 ) Interest expense (10,115 ) (1,154 )
3     59   Other income 166     58  
(5,124 ) (471 ) Total other expense (9,949 ) (1,096 )
 
(5,524 ) 2,346 (LOSS) INCOME BEFORE INCOME TAXES (12,501 ) 7,172
 
273     307   Income tax expense 424     434  
 
$ (5,797 )   $ 2,039   NET (LOSS) INCOME $ (12,925 )   $ 6,738  
 
8,615 5,925 Average Number of Shares Outstanding - Basic 8,603 5,898
8,615 6,038 Average Number of Shares Outstanding - Diluted 8,603 5,972
 
$ (0.67 ) $ 0.34 BASIC (LOSS) INCOME PER SHARE $ (1.50 ) $ 1.14
$ (0.67 ) $ 0.34 DILUTED (LOSS) INCOME PER SHARE $ (1.50 ) $ 1.13
 
MEMO:
$ 9,231 $ 4,938 Depreciation and amortization $ 18,427 $ 10,004
 
           
SEGMENT OPERATING RESULTS
(In thousands)
(Unaudited)
13 Weeks Ended 13 Weeks Ended 26 Weeks Ended 26 Weeks Ended
Jun 29, 2014   Jun 30, 2013   Jun 29, 2014   Jun 30, 2013
REVENUE
$ 64,456 $ 48,176 Healthcare

$

129,233

$

97,671
160,843     88,641   Business Solutions   324,555       180,766  
$ 225,299     $ 136,817   Total Revenue

$

453,788    

$

278,437  
 
NET (LOSS) INCOME BEFORE TAXES
$ 2,949 $ 1,769 Healthcare

$

4,819

$

3,905
2,583 894 Business Solutions 4,005 3,828
(11,056 )   (317 ) Unallocated   (21,325

)

 

 

(561 )
$ (5,524 )   $ 2,346   Total Net (Loss) Income Before Taxes

$

(12,501

)

 

$

7,172  
 
 
CONSOLIDATED BALANCE SHEETS
(In thousands)
Jun 29, 2014   Dec 29, 2013
ASSETS (Unaudited)
Cash and cash equivalents $ 3,027 $ 2,342
Accounts receivable 150,094 157,567
Inventories 60,597 61,939
Other current assets 17,425     14,508  
Total current assets 231,143 236,356
 
Plant and equipment 93,743 93,003
Goodwill and intangible assets 128,381 133,444
Deferred taxes 9,311 9,306
Other assets 8,400     8,768  
Total assets $ 470,978     $ 480,877  
 
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities $ 128,253 $ 125,357
Long-term debt 279,577 263,880
Pension benefit liability 176,481 192,779
Other long-term liabilities 9,718 10,158
Shareholders' deficit (123,051 ) (111,297 )
         
Total liabilities and shareholders' deficit $ 470,978     $ 480,877  
 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)
26 Weeks Ended 26 Weeks Ended
Jun 29, 2014   Jun 30, 2013
 
Net loss plus non-cash items $ 14,940 $ 17,761
Working capital 6,113 5,516
Restructuring payments (6,817 ) (1,329 )
Contributions to qualified pension plan (14,052 ) (10,521 )
Other (4,416 )   (2,608 )
Net cash (used in) provided by operating activities (4,232 )   8,819  
 
Capital expenditures (7,472 ) (6,301 )
Proceeds from sale of equipment 411     88  
Net cash used in investing activities (7,061 )   (6,213 )
 
Net change in borrowings under credit facility 14,641 (1,729 )
Principal payments on long-term debt (2,494 ) (1,193 )
Other (146 )   (200 )
Net cash provided by (used in) financing activities 12,001     (3,122 )
 
Effect of exchange rate (23 )   (15 )
 
Net change in cash $ 685     $ (531 )
 
           
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands)
(Unaudited)
13 Weeks Ended 13 Weeks Ended 26 Weeks Ended 26 Weeks Ended
Jun 29, 2014   Jun 30, 2013 Jun 29, 2014   Jun 30, 2013
$ (5,797 ) $ 2,039 GAAP Net (Loss) Income $ (12,925 ) $ 6,738
Adjustments:
273 307 Income taxes 424 434
5,127 530 Interest 10,115 1,154
9,231     4,938   Depreciation and amortization 18,427     10,004  
$ 8,834     $ 7,814   EBITDA $ 16,041     $ 18,330  
 
Adjustments:
3,204 193 Restructuring and impairment 6,446 819
3,515 679 Acquisition and integration costs 6,212 1,786
(548 ) (507 ) Pension expense (1,096 ) (1,014 )
663 507 Non-cash stock compensation 1,344 976
(212 )   194   Other (323 )   194  
$ 15,456     $ 8,880   Adjusted EBITDA $ 28,624     $ 21,091  
 
GAAP Net Cash Flow $ 685 $ (531 )
Adjustments:
Credit facility (borrowed) paid (14,641 )   1,729  
Non-GAAP Net Cash Flow $ (13,956 )   $ 1,198  
 

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Software Defined Storage provides many benefits for customers including agility, flexibility, faster adoption of new technology and cost effectiveness. However, for IT organizations it can be challenging and complex to build your Enterprise Grade Storage from software. In his session at Cloud Expo, Paul Turner, CMO at Cloudian, looked at the new Original Design Manufacturer (ODM) market and how it is changing the storage world. Now Software Defined Storage companies can build Enterprise grade ...
AppDynamics, the application intelligence leader for software-defined businesses, announced the general availability of the AppDynamics Fall '14 Release. Serving the combined needs of IT and business teams across the enterprise, the latest release provides a comprehensive view across all aspects of digital performance in ultra large scale deployments. AppDynamics delivers Application Intelligence by building out advanced capabilities across the key areas of analytics, unified monitoring and D...
IBM and Docker, Inc. have announced a strategic partnership that enables enterprises to more efficiently, quickly and cost effectively build and run the next generation of applications on the IBM Cloud and on prem via the Docker open platform for distributed applications. Enterprises can use the combination of IBM and Docker to create and manage a new generation of portable distributed applications that are rapidly composed of discrete interoperable Docker containers, have a dynamic lifecycle, a...
Hardware will never be more valuable than on the day it hits your loading dock. Each day new servers are not deployed to production the business is losing money. While Moore's Law is typically cited to explain the exponential density growth of chips, a critical consequence of this is rapid depreciation of servers. The hardware for clustered systems (e.g., Hadoop, OpenStack) tends to be significant capital expenses. In his session at Big Data Expo, Mason Katz, CTO and co-founder of StackIQ, disc...
SYS-CON Media announced that Splunk, a provider of the leading software platform for real-time Operational Intelligence, has launched an ad campaign on Big Data Journal. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices. The ads focus on delivering ROI - how improved uptime delivered $6M in annual ROI, improving customer operations by minin...
"We are the top stocking distributor for HP renew products in North America. We can only sell to U.S. authorized partners and resellers for HP," explained Miguel Diazdelcastillo Jr., Sales Executive at Creative Business Solutions, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Puppet Labs on Wednesday released the DevOps Salary Report, based on salary data gathered from Puppet Labs' industry-recognized State of DevOps Report. The data confirms that market demand for DevOps skills is growing, and that DevOps engineers are among the highest paid IT practitioners today. That's because IT organizations today are grappling with how to be more agile and responsive to the business, while maintaining the stability of their infrastructure. DevOps practices, such as continuous ...
Companies today struggle to manage the types and volume of data their customers and employees generate and use every day. With billions of requests daily, operational consistency can be elusive. In his session at Big Data Expo, Dave McCrory, CTO at Basho Technologies, will explore how a distributed systems solution, such as NoSQL, can give organizations the consistency and availability necessary to succeed with on-demand data, offering high availability at massive scale.
The cloud is becoming the de-facto way for enterprises to leverage common infrastructure while innovating and one of the biggest obstacles facing public cloud computing is security. In his session at 15th Cloud Expo, Jeff Aliber, a global marketing executive at Verizon, discussed how the best place for web security is in the cloud. Benefits include: Functions as the first layer of defense Easy operation –CNAME change Implement an integrated solution Best architecture for addressing network-l...
Vormetric on Wednesday announced the results of its 2015 Insider Threat Report (ITR), conducted online on their behalf by Harris Poll and in conjunction with analyst firm Ovum in fall 2014 among 818 IT decision makers in various countries, including 408 in the United States. The report details striking findings around how U.S. and international enterprises perceive security threats, the types of employees considered most dangerous, environments at the greatest risk for data loss and the steps or...
CodeFutures has announced Dan Lynn as its new CEO. Lynn assumes the role from Founder Cory Isaacson, who has joined RMS and will now serve as chairman of CodeFutures. Lynn brings more than 14 years of advanced technology and business success experience, and will help CodeFutures build on its industry leadership around its Agile Big Data initiatives. His technical expertise will be invaluable in advancing CodeFutures’ AgilData platform and new processes for streamlining and gaining value from gro...
In this scenarios approach Joe Thykattil, Technology Architect & Sales at TimeWarner / Navisite, presented examples that will allow business-savvy professionals to make informed decisions based on a sound business model. This model covered the technology options in detail as well as a financial analysis. The TCO (Total Cost of Ownership) and ROI (Return on Investment) demonstrated how to start, develop and formulate a business case that will allow both small and large scale projects to achieve...
IBM has announced a new strategic technology services agreement with Anthem, Inc., a health benefits company in the U.S. IBM has been selected to provide operational services for Anthem's mainframe and data center server and storage infrastructure for the next five years. Among the benefits of the relationship, Anthem has the ability to leverage IBM Cloud solutions that will help increase the ease, availability and speed of adding infrastructure to support new business requirements.
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
SYS-CON Media announced that Cisco, a worldwide leader in IT that helps companies seize the opportunities of tomorrow, has launched a new ad campaign in Cloud Computing Journal. The ad campaign, a webcast titled 'Is Your Data Center Ready for the Application Economy?', focuses on the latest data center networking technologies, including SDN or ACI, and how customers are using SDN and ACI in their organizations to achieve business agility. The Cisco webcast is available on-demand.