Exhibit 99.1
NEWS RELEASE
Contact: David E. Bosher, Vice President and Treasurer
(analysts)
(804) 287-5685
Teri Schrettenbrunner, Director of Public
Relations (media)
(804) 287-6260
CADMUS COMMUNICATIONS CORPORATION REPORTS
FISCAL 1999 SECOND QUARTER RESULTS
RICHMOND, VA, January 26, 1999 -- Cadmus Communications Corporation (NASDAQ NMS:
CDMS) today announced results for its fiscal second quarter ended December 31,
1998. Financial highlights were as follows:
o Net income rose 7% to $3.1 million, or $.39 per diluted share.
o Sales rose 13% to $108.8 million.
o Operating income rose 10% to $7.4 million and earnings before interest,
taxes, depreciation, and amortization (EBITDA) rose 8% to $12.0
million.
o Free cash flow (cash flow before financing activities and acquisitions)
totaled $7.1 million in the second quarter of 1999 compared to $4.7
million in 1998.
o Operating performance was affected by continued softness in financial
communications and gross margin pressure in the point of purchase
group.
C. Stephenson Gillispie, Jr., chairman, president and chief executive officer,
stated, "For our second quarter, we achieved strong revenue growth, particularly
in our Marketing Communications sector, and we experienced continued earnings
improvement and margin expansion in our Professional Communications sector. In
addition, we generated strong free cash flow and produced another quarter of
growth in EBITDA. However, as we expected, these solid performances were
partially offset by continued profitability issues in our financial
communications and point of purchase groups. Financial communications was
impacted again this quarter by the downturn and volatility in capital markets
activity, while our point of purchase group continued to experience gross margin
pressure associated with the integration of Germersheim, Inc., which we acquired
in fiscal 1998."
Gillispie added, "We are committed to resolving these challenges and achieving
improved profitability in the second half of our fiscal year. We are determined
to build on our strong fiscal 1998 performance. To that end, we are working very
aggressively to address the difficulties in our POP unit. In addition, assuming
the U.S. capital markets continue their recovery, we would anticipate that our
financial communications group will become more profitable in the second half of
fiscal 1999. In the interim, however, we have implemented a number of steps
aimed at controlling costs in each of our businesses, reduced expenses related
to incentive compensation and related benefits to reflect our softer than
planned year-to-date performance, and focused our management team even more
squarely on achieving improved performance and profitability in our fiscal third
and fourth quarters."
Fiscal Second Quarter Operating Results - Detailed Review
- ---------------------------------------------------------
Net income for the second quarter rose 7% to $3.1 million, or $.39 per diluted
share, for the period ended December 31, 1998, compared to net income of $2.9
million, or $.36 per diluted share last year. There were 8,046,000
weighted-average shares outstanding for the second quarter of fiscal 1999,
compared to 8,135,000 weighted-average shares outstanding for the same period of
last year.
Second quarter sales were a record $108.8 million, up 13% from sales of $96.0
million posted in the second quarter of fiscal 1998. Sales for the Professional
Communications sector rose 3% due to continued growth in journal services. In
the Marketing Communications sector, sales rose 25%, as the acquisition of
Germersheim and strong growth from the Company's packaging and promotional,
graphic solutions, and technology solutions groups offset lower financial
communications and tactical marketing sales.
Despite reduced profitability from the Company's financial communications and
point of purchase groups, operating income rose 10% in the second quarter to
$7.4 million from $6.8 million last year. The Company's operating margin
declined as a percent of sales to 6.8% from 7.1% last year.
Fiscal Year-to-Date Operating Results
- -------------------------------------
Net income for the six months ended December 31, 1998 was $5.7 million, or $.70
per diluted share, compared to $5.0 million, or $.61 per diluted share, for the
same period last year. Weighted average shares outstanding were 8,126,000 and
8,122,000 for years 1999 and 1998, respectively.
Sales for the first six months of fiscal 1999 rose 11% to $208.6 million from
$188.4 million in fiscal 1998. Professional Communications sales rose 2% while
Marketing Communications sales registered a 22% increase. Operating income for
the first six months of fiscal 1999 rose 12% to $14.0 million from $12.5 million
in fiscal 1998.
Company Description
Cadmus Communications Corporation provides customers with integrated, end-to-end
information and communications solutions. The Company is organized around two
primary business sectors: Professional Communications serving customers who
publish information, and Marketing Communications serving customers who convey
marketing messages. Cadmus' services include advertising, catalog services,
commercial printing, custom publishing, direct marketing, financial
communications, journal and magazine services, point of purchase, specialty
packaging, and software duplication. Headquartered in Richmond, Virginia, Cadmus
is the 22nd largest graphic communications company in North America.
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"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995:
Information in this release relating to Cadmus' future prospects and performance
are "forward-looking statements" and, as such, are subject to certain risks and
uncertainties that could cause actual results to differ materially. Potential
risks and uncertainties include but are not limited to: (1) continuing
competitive pricing in the markets in which the Company competes, (2) the
ability of the Company to retain management and employees in light of lower than
planned incentives, (3) the gain or loss of significant customers or the
decrease in demand from existing customers, (4) the ability of the Company to
continue to obtain improved efficiencies and lower overall production costs, (5)
changes in the Company's product sales mix, (6) the effective integration of
recent acquisitions, (7) the performance of new management and leadership teams
in the Company and its divisions, (8) the impact of industry consolidation among
key customers, and (9) a rebound in the U.S. capital markets.
**(See attached financial highlights)**
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- --------------------
1998 1997 1998 1997
------- -------- -------- --------
Net sales $108,811 $ 96,048 $208,595 $188,410
Operating expenses:
Cost of sales 87,280 74,381 166,399 146,195
Selling and administrative 14,085 14,867 28,148 29,725
------ ------ ------- -------
101,365 89,248 194,547 175,920
Operating income 7,446 6,800 14,048 12,490
Interest and other expenses:
Interest 2,064 1,861 4,207 3,794
Other, net 307 248 650 640
----- ----- ----- -----
2,371 2,109 4,857 4,434
Income before income taxes 5,075 4,691 9,191 8,056
Income taxes 1,954 1,772 3,539 3,101
----- ----- ----- -----
Net income $ 3,121 $ 2,919 $ 5,652 $ 4,955
====== ======= ======= =======
Net income per share, assuming $ .39 $ .36 $ .70 $ .61
dilution ====== ======== ======== ========
Weighted-average common shares 8,046 8,135 8,126 8,122
outstanding ====== ======== ======== =======
SELECTED HIGHLIGHTS
(In thousands, except per share data and percents)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- --------------------
1998 1997 1998 1997
------- -------- -------- --------
Operating income $ 7,446 $ 6,800 $ 14,048 $ 12,490
Net income 3,121 2,919 5,652 4,955
Depreciation & amortization expense 4,838 4,573 9,711 9,053
EBITDA 11,977 11,125 23,109 20,903
Percent to net sales:
Gross profit 19.8% 22.6% 20.2% 22.4%
Selling, general and 12.9% 15.5% 13.5% 15.8%
administrative expenses
Operating income 6.8% 7.1% 6.7% 6.6%
EBITDA 11.0% 11.6% 11.1% 11.1%
Earnings per share, assuming dilution $ .39 $ .36 $ .70 $ .61
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31, June 30,
(unaudited) 1998
------------ -----------
Assets:
Cash and cash equivalents $ 287 $ --
Accounts receivable, net 78,209 70,571
Inventories 30,277 25,610
Other current assets 8,225 7,939
Property plant and equipment, net 132,658 133,836
Goodwill and other intangibles (net), and 53,491 53,796
other assets
----------- ----------
Total assets $ 303,147 $ 291,752
=========== ==========
Liabilities and shareholders' equity:
Short-term borrowings and current
maturities of long-term debt $ 9,615 $ 8,531
Other current liabilities 59,030 64,652
Long-term debt, less current maturities 102,375 93,224
Other long-term liabilities 19,327 15,529
Shareholders'equity 112,800 109,816
----------- ----------
Total liabilities and shareholders' equity $ 303,147 $ 291,752
=========== ==========