| Contact: | Geoff Hibner, Chief Financial Officer
Mark Fleming, Director of Investor and Corporate Communications |
BANTA REPORTS STRONG THIRD QUARTER RESULTS
| | • | Third quarter 2004 revenue of $380 million increased 8 percent over the same period last year. |
| | • | Diluted earnings per share increased to 76 cents compared with 62 cents in 2003’s third quarter,including last year’s restructuring charges. |
| | • | Excluding 2003’s restructuring charges, this year’s 76 cents per diluted share increased 13 percentabove 2003’s 67 cents. |
MENASHA, WI . . . Banta Corporation (NYSE: BN) today reported strong results for 2004’s third quarter and first nine months. Revenue for the quarter ended October 2, 2004, was $380 million, 8 percent above the $352 million reported in the same period last year. Net earnings for the three-month period were $19.1 million compared with 2003’s third quarter net earnings of $16.0 million, which included restructuring charges. Excluding the restructuring charges, third quarter net earnings were 11 percent higher than the prior year’s $17.2 million.
Diluted earnings per share for the quarter increased 23 percent to 76 cents, compared with last year’s 62 cents, including the restructuring charges. Excluding the charges, 2003’s third quarter diluted earnings per share rose 13 percent over the prior year’s 67 cents.
“We are encouraged by our third quarter results,” said Chairman and Chief Executive Officer Stephanie A. Streeter. “Volume increased for both our print and supply-chain management businesses. In our Print Sector, momentum in direct marketing remains strong, our catalog turnaround efforts delivered significantly improved results, our publications division maintained its strong performance and our book division reported higher revenue despite pricing challenges. Our Supply-Chain Management Sector
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recorded another exceptional quarter, benefiting from productivity gains and strong volume from both existing and new customers.”
For the nine months ended October 2, 2004, revenue increased to $1.12 billion, 9 percent above the prior year’s $1.02 billion. Net earnings increased 40 percent to $48.4 million ($1.89 per diluted share) compared with the prior year’s $34.5 million ($1.34 per diluted share), including special charges. Excluding the charges, net earnings were 14 percent higher than the prior year’s nine-month net earnings of $42.6 million ($1.66 per diluted share).
The following table provides a reconciliation of net earnings and diluted earnings per share, reported in accordance with generally accepted accounting principles, to earnings and diluted earnings per share excluding special charges, for the three- and nine-month periods ended October 2, 2004, and September 27, 2003:
| Three Months Ended
| Nine Months Ended
|
|---|
Net Earnings (dollars in millions)
| 2004
| 2003
| 2004
| 2003
|
| GAAP net earnings, as reported | | | $ | 19.1 | | $ | 16.0 | | $ | 48.4 | | $ | 34.5 | |
| Restructuring charge | | | | -- | | | 1.2 | | | -- | | | 5.3 | |
| Litigation settlement | | | | -- | | | -- | | | -- | | | 2.8 | |
|
| |
| |
| |
| |
| Net earnings excluding special charges | | | $ | 19.1 | | $ | 17.2 | | $ | 48.4 | | $ | 42.6 | |
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| |
| |
| |
Diluted Earnings per Share (EPS)
|
| GAAP diluted EPS, as reported | | | $ | 0.76 | | $ | 0.62 | | $ | 1.89 | | $ | 1.34 | |
| Restructuring charge | | | | -- | | | 0.05 | | | -- | | | 0.21 | |
| Litigation settlement | | | | -- | | | -- | | | -- | | | 0.11 | |
|
| |
| |
| |
| |
| Diluted EPS excluding special charges | | | $ | 0.76 | | $ | 0.67 | | $ | 1.89 | | $ | 1.66 | |
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| |
OPERATING HIGHLIGHTS
| | • | Banta’s Supply-Chain Management Sector continued to deliver excellent results in the third quarter, recording significant increases in sales and profits. Revenue increased 19 percent to $99 million, and operating earnings of $12.2 million rose 22 percent over the $10.0 million reported for 2003’s third quarter, before last year’s pretax restructuring charges of $1.1 million. The corporation’s customers in the computer hardware market continued to show strength through the third quarter, reflecting an improved technology spending environment. Operating margins also increased compared with 2003’s third quarter as improved productivity, additional volume and better facility utilization enhanced profitability. |
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| | • | Print Sector revenue for the third quarter increased 5 percent, reaching $257 million. Operating earnings increased to $23.1 million, 10 percent above last year’s $21.1 million, before 2003’s special charges of $917,000. Helping generate those gains were improved volume in direct mail, a general increase in magazine pages printed, and the benefits of last year’s catalog division restructuring and modernization. |
| | • | The catalog division experienced its two strongest months of the year in August and September as it won new titles, benefited from an increase in catalog quantities per print run, and tightened its focus on more attractive business opportunities. Catalog revenue for the quarter declined primarily because of last year’s planned shutdown of the St. Paul plant, which reduced overall catalog print capacity. However, profitability increased dramatically as a result of 2003’s restructuring and the subsequent major productivity enhancements and improved plant utilization. |
| | • | Banta’s direct marketing division delivered a healthy double-digit revenue gain and more than doubled its earnings compared with last year’s third quarter. The division benefited from new-customer wins and a strong increase in demand across all of its segments – retail, financial services, consumer packaged goods and ad agencies. Especially robust activity came from a number ofFortune 500 clients requiring more complex levels of print and personalization. |
| | • | Print volume increased in the book division over the prior year, but pricing pressures affected both revenue and profitability. While revenue increased modestly, operating earnings declined compared with the same period last year. Educational print revenue was comparable to the same period last year, however pricing pressures reduced earnings. Trade book revenue and earnings both increased, and the literature management business recorded improved revenue and comparable earnings. |
| | • | The corporation’s publications division reported double-digit gains in third quarter sales and operating earnings. Banta continued to gain market share in special-interest magazines and benefited from a second consecutive quarter of increased magazine page counts. Banta’s internal measure of magazine page counts rose more than 5 percent in the third quarter. |
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| | • | Banta’s single-use healthcare products division reported third quarter sales and earnings comparable to the same period last year. The results were encouraging in light of this year’s significant increase in raw material costs, specifically paper, tissue and resin, which negatively affected profitability. |
| | • | Corporatewide productivity efforts and a heavy emphasis on spending controls will result in lower than originally expected capital expenditures for 2004. Total capital spending for the nine months to date totaled $54 million. Spending for the year is now expected to be in the range of $70 million to $80 million. |
“We are optimistic about business prospects for the remainder of this year and next year,” says Streeter. “The solid economy is supporting an active direct mail and catalog environment, we’re realizing our planned cost savings from last year’s restructuring activities, and we are accelerating our productivity efforts, which should help increase Print Sector margins. Supporting next year’s growth is an active schedule of states adopting new curriculum programs, which drives educational print activity and should produce additional opportunities for our book division. Expectations for our literature management business remain strong as we’ve realigned the business and expanded its capacity to provide print-related supply-chain solutions for our customers’ marketing collateral and program enrollment materials.
“In our Supply-Chain Management Sector, we’re continuing to gain additional opportunities with our existing customers and aggressively pursuing expansion into new markets. We also have several productivity initiatives underway, which should help us maintain solid profitability in this attractive growth business.”
Management reconfirms its previous guidance for 2004 revenue and diluted earnings per share. Expectations are for 2004 revenue to grow at a rate in the mid-single digits over 2003, and diluted EPS to be in a range of $2.63 to $2.71.
Banta will host a conference call to discuss its third quarter results on Wednesday, October 27 at 9:00 a.m. CDT (10:00 a.m. EDT). This call will be simultaneously broadcast in the Investor Information area of Banta’s Website atwww.banta.com, and a replay of the call will be available.
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Banta Corporation (http://www.banta.com) is a technology and market leader in printing and supply-chain management. Banta provides a comprehensive combination of printing and digital imaging solutions to leading publishers and direct marketers, including advanced digital content management and e-business services. Banta’s global supply-chain management businesses provide a wide range of outsourcing capabilities to the world’s largest technology companies. Services range from materials sourcing and product configuration, to customized kitting, order fulfillment and global distribution.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
This news release includes forward-looking statements. Statements that describe future expectations, including revenue and earnings projections, plans, results or strategies, are considered forward-looking. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Factors that could affect actual results include, among others, changes in customers’ order patterns or demand for the corporation’s products and services, pricing, changes in raw material costs and availability, unanticipated changes in sourcing of raw materials (including paper) by customers, unanticipated changes in operating expenses, unanticipated production difficulties, unanticipated issues associated with the corporation’s non-U.S. operations, changes in the pattern of outsourcing supply-chain management functions by customers, unanticipated acquisition or loss of significant customer contracts or relationships, unanticipated difficulties and costs associated with the design and implementation of new administrative systems, the impact of any acquisition or divestiture effected by Banta, changes in the corporation’s effective income tax rate, unanticipated swings in foreign currency exchange rates, and any unanticipated weakening of the economy. These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The forward-looking statements included herein are made as of the date hereof, and Banta undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.
An electronic version of this news release, as well as other information about Banta Corporation, is available through the company’s World Wide Web home site atwww.banta.com
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Banta Corporation
Unaudited Condensed Consolidated Financial Statements
($000’s omitted, except per share data)
| 3 Months Ended September
| 9 Months Ended September
|
|---|
| 2004
| 2003
| 2004
| 2003
|
|---|
Revenues: | | | | | | | | | | | | | | |
| Printing and Supply-Chain Services | | | $ | 355,854 | | $ | 327,030 | | $ | 1,046,444 | | $ | 952,177 | |
| Product Sales | | | | 24,477 | | | 24,585 | | | 74,597 | | | 72,599 | |
|
| |
| |
| |
| |
| Total Revenues | | | | 380,331 | | | 351,615 | | | 1,121,041 | | | 1,024,776 | |
Cost of Printing and Supply-Chain Services | | | | 275,582 | | | 255,203 | | | 821,584 | | | 745,364 | |
| Cost of Products Sold | | | | 20,383 | | | 19,837 | | | 61,834 | | | 57,567 | |
|
| |
| |
| |
| |
| Gross Profit | | | | 84,366 | | | 76,575 | | | 237,623 | | | 221,845 | |
SG&A Expense | | | | 53,746 | | | 47,859 | | | 159,513 | | | 148,356 | |
| Restructuring Charge | | | | -- | | | 2,048 | | | -- | | | 8,517 | |
| Litigation Settlement | | | | -- | | | -- | | | -- | | | 4,602 | |
|
| |
| |
| |
| |
| Earnings from Operations | | | | 30,620 | | | 26,668 | | | 78,110 | | | 60,370 | |
Other Income (Expense) | | |
| Interest Expense | | | | (1,396 | ) | | (1,835 | ) | | (4,974 | ) | | (6,461 | ) |
| Interest Income | | | | 536 | | | 598 | | | 1,539 | | | 1,756 | |
| Other, net | | | | (114 | ) | | (6 | ) | | 549 | | | (408 | ) |
|
| |
| |
| |
| |
| Earnings before Income Taxes | | | | 29,646 | | | 25,425 | | | 75,224 | | | 55,257 | |
| Provision for Income Taxes | | | | 10,550 | | | 9,470 | | | 26,850 | | | 20,800 | |
|
| |
| |
| |
| |
| Net Income | | | $ | 19,096 | | $ | 15,955 | | $ | 48,374 | | $ | 34,457 | |
|
| |
| |
| |
| |
Basic Earnings per Share | | | $ | 0.77 | | $ | 0.62 | | $ | 1.92 | | $ | 1.36 | |
Diluted Earnings per Share | | | $ | 0.76 | | $ | 0.62 | | $ | 1.89 | | $ | 1.34 | |
Average Shares Outstanding: | | |
| Basic | | | | 24,900 | | | 25,534 | | | 25,156 | | | 25,402 | |
| Diluted | | | | 25,207 | | | 25,784 | | | 25,551 | | | 25,620 | |
Composite Tax Rate | | | | 35.6 | % | | 37.2 | % | | 35.7 | % | | 37.6 | % |
SEGMENT INFORMATION
| 3 Months Ended September
| 9 Months Ended September
|
|---|
Net Sales
| 2004
| 2003
| 2004
| 2003
|
| Printing Services | | | $ | 256,708 | | $ | 243,630 | | $ | 741,522 | | $ | 707,231 | |
| Supply-Chain Management Services | | | | 99,146 | | | 83,400 | | | 304,922 | | | 244,946 | |
| Healthcare Products | | | | 24,477 | | | 24,585 | | | 74,597 | | | 72,599 | |
|
| |
| |
| |
| |
| | | | $ | 380,331 | | $ | 351,615 | | $ | 1,121,041 | | $ | 1,024,776 | |
|
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| |
| |
| |
Earnings from Operations
|
| Printing Services | | | $ | 23,083 | | $ | 20,157 | | $ | 56,787 | | $ | 43,067 | |
| Supply-Chain Management Services | | | | 12,234 | | | 8,860 | | | 34,028 | | | 23,294 | |
| Healthcare Products | | | | 2,448 | | | 2,527 | | | 7,388 | | | 8,915 | |
|
| |
| |
| |
| |
| Segment earnings from operations | | | | 37,765 | | | 31,544 | | | 98,203 | | | 75,276 | |
| Unallocated corporate expenses | | | | (7,145 | ) | | (4,876 | ) | | (20,093 | ) | | (14,906 | ) |
| Interest expense | | | | (1,396 | ) | | (1,835 | ) | | (4,974 | ) | | (6,461 | ) |
| Interest income | | | | 536 | | | 598 | | | 1,539 | | | 1,756 | |
| Other expense | | | | (114 | ) | | (6 | ) | | 549 | | | (408 | ) |
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| |
| |
| |
| |
| Earnings before income taxes | | | $ | 29,646 | | $ | 25,425 | | $ | 75,224 | | $ | 55,257 | |
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| |
| |
| |
| |
Depreciation/Amortization | | | $ | 14,847 | | $ | 15,278 | | $ | 45,556 | | $ | 46,552 | |
Capital Expenditures | | | $ | 16,186 | | $ | 19,710 | | $ | 54,282 | | $ | 51,922 | |
Banta Corporation
Unaudited Condensed Consolidated Financial Statements
($000’s omitted, except per share data)
| As of
|
|---|
| ASSETS | Oct. 2, 2004
| Jan. 3, 2004
|
Cash and short-term investments | | | $ | 134,046 | | $ | 181,112 | |
| Receivables | | | | 248,963 | | | 234,219 | |
| Inventories | | | | 92,686 | | | 75,150 | |
| Other current assets | | | | 20,871 | | | 32,685 | |
|
| |
| |
| Total current assets | | | | 496,566 | | | 523,166 | |
|
| |
| |
Plant and equipment, net | | | | 293,038 | | | 286,347 | |
| Other assets | | | | 81,479 | | | 76,510 | |
|
| |
| |
Total Assets | | | $ | 871,083 | | $ | 886,023 | |
|
| |
| |
LIABILITIES AND SHAREHOLDERS' INVESTMENT | | |
Accounts payable | | | $ | 124,107 | | $ | 132,841 | |
| Other accrued liabilities | | | | 87,605 | | | 66,888 | |
| Current maturities of long-term debt | | | | 25,479 | | | 24,122 | |
|
| |
| |
| Total current liabilities | | | | 237,191 | | | 223,851 | |
|
| |
| |
Long-term debt | | | | 68,331 | | | 87,712 | |
| Deferred income taxes | | | | 14,572 | | | 14,793 | |
| Other noncurrent liabilities | | | | 43,628 | | | 46,238 | |
| Shareholders' investment | | | | 507,361 | | | 513,429 | |
|
| |
| |
Total Liabilities and Shareholders' Investment | | | $ | 871,083 | | $ | 886,023 | |
|
| |
| |
Statement of Cash Flows
| 9 Months Ended September
|
|---|
| 2004
| 2004
|
| CASH FLOW FROM OPERATING ACTIVITIES | | |
Net Earnings | | | $ | 48,374 | | $ | 34,457 | |
| Adjustments to reconcile net earnings to | | |
| net cash provided | | |
| Depreciation and amortization | | | | 45,556 | | | 46,552 | |
| Deferred income taxes | | | | (729 | ) | | 2,050 | |
| Tax benefit from the exercise of stock options | | | | 1,110 | | | 1,404 | |
| Gain on sale of fixed assets | | | | (637 | ) | | (388 | ) |
| Change in assets and liabilities | | | | (15,283 | ) | | 2,829 | |
| Other | | | | 148 | | | -- | |
|
| |
| |
| Cash provided by operating activities | | | | 78,539 | | | 86,904 | |
|
| |
| |
CASH FLOW FROM INVESTING ACTIVITIES | | |
Capital expenditures | | | | (54,282 | ) | | (51,922 | ) |
| Proceeds from sale of fixed assets | | | | 2,384 | | | 436 | |
| Acquisition of business | | | | -- | | | (2,379 | ) |
|
| |
| |
| Cash used for investing activities | | | | (51,898 | ) | | (53,865 | ) |
|
| |
| |
CASH FLOW FROM FINANCING ACTIVITIES | | |
Repayments of long-term debt, net | | | | (17,988 | ) | | (17,822 | ) |
| Dividends paid | | | | (13,007 | ) | | (12,402 | ) |
| Proceeds from exercise of stock options | | | | 2,053 | | | 5,891 | |
| Repurchase of common stock | | | | (44,353 | ) | | -- | |
|
| |
| |
| Cash used for financing activities | | | | (73,295 | ) | | (24,333 | ) |
|
| |
| |
Effect of exchange rate changes on cash | | |
| and cash equivalents | | | | (412 | ) | | 6,702 | |
|
| |
| |
Net (decrease) increase in cash | | | $ | (47,066 | ) | $ | 15,408 | |
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