EXHIBIT 99.1
[SCHAWK LOGO]
AT SCHAWK, INC.: AT DRESNER CORPORATE SERVICES:
JAMES J. PATTERSON INVESTORS: KRISTINE WALCZAK
SR. VP AND CFO 312-726-3600
847-827-9494 KWALCZAK@DRESNERCO.COM
JPATTERSON@SCHAWK.COM
MEDIA: KYRA KYLES
312-780-7208
KKYLES@DRESNERCO.COM
SCHAWK ANNOUNCES INCREASED REVENUES AND EARNINGS
IN FIRST QUARTER 2005 AND ISSUES GUIDANCE FOR 2005
- Quarterly Revenue Up 151 Percent Reflecting Winnetts And Seven
Worldwide Acquisitions And Strong Internal Growth
- Quarterly Operating Income Up 76 Percent
- Quarterly Earnings Per Share Up 38 Percent
- Guidance Targets $1.25 to $1.30 EPS For 2005
DES PLAINES, IL, APRIL 28, 2005--SCHAWK, INC. (NYSE: SGK), one of North
America's leading providers of digital imaging graphic services to the consumer
products and brand imaging markets, today reported first-quarter 2005 results.
Strong sales of graphic services to consumer products packaging clients and
significant new consumer goods introductions drove organic growth that totaled
12.3 percent of revenues, and acquired companies increased total revenues by
138.8 percent during the quarter.
CONSOLIDATED RESULTS
The following results reflect the combined revenues of Schawk, Winnetts and
Seven Worldwide, Inc. As previously disclosed, the Company completed the
acquisition of certain assets of Weir Holdings Inc. (trade name "Winnetts") on
December 31, 2004, and completed the acquisition of Seven Worldwide on January
31, 2005. Since a portion of the consideration for the Seven Worldwide
acquisition included Schawk common stock, the Company's weighted average diluted
shares outstanding totaled 25.7 million for the first quarter of 2005 versus
22.4 million in the same period last year.
Schawk reported net income of $5.6 million in the first quarter of 2005 compared
with $3.6 million in the prior-year first quarter, an increase of 55.6 percent.
First-quarter 2005 earnings were $0.22 per fully diluted share compared to $0.16
per fully diluted share in the first quarter of 2004, an increase of 37.5
percent.
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Schawk reported net sales of $130.8 million for the first quarter of 2005
compared to $52.1 million in the same quarter of 2004, a 151.1 percent increase.
Winnetts contributed $9.9 million and Seven Worldwide contributed $62.4 million
(February and March only) of net sales to first-quarter 2005 results. Gross
margin for the first quarter decreased to 34.1 percent in 2005 from 39.9 percent
in 2004, primarily due to lower margin business from Seven Worldwide and
Winnetts.
Operating income for the first quarter of 2005 increased 75.8 percent to $10.9
million compared to $6.2 million in the first quarter of 2004, primarily due to
continued strength in sales to consumer products packaging clients as well as
operating income from the acquired companies. Operating margin was 8.3 percent
in the first quarter of 2005 compared to 12.0 percent in the same period of 2004
primarily due to lower margin business from Seven Worldwide and Winnetts.
Other income (expense) for the first quarter of 2005 was $1.9 million of net
other expense, a $1.4 million increase over the same period of 2004.
First-quarter 2005 net other income (expense) included interest expense of $1.9
million, offset by $0.1 million of interest income. First-quarter 2004 net other
income (expense) of $0.5 million consisted of interest expense. The increase in
interest expense was due to $155 million of additional indebtedness incurred in
connection with the Winnetts and Seven Worldwide acquisitions. Income tax
expense for the first quarter of 2005 was at an effective tax rate of 38.2
percent compared to 37.0 percent in the prior-year first quarter. The higher
effective tax rate in 2005 was attributable to increased profits in higher tax
jurisdictions as compared to the prior year.
OTHER INFORMATION
Depreciation and amortization expense was $6.2 million for the first quarter of
2005 compared to $2.9 million in the prior-year first quarter. The increase is
due to the inclusion of depreciation and amortization expense from Winnetts and
Seven Worldwide.
Capital expenditures in the first quarter of 2005 were $3.4 million compared to
$1.9 million in the same period of 2004. The higher capital expenditures in the
2005 period were primarily due to completion of the build out of the new Toronto
facility as well as capital expenditures at the acquired companies.
MANAGEMENT COMMENTS
President and Chief Executive Officer David A. Schawk commented, "Schawk's
strong results for the first quarter of 2005 are attributable to new product
introductions and promotions by clients, increased market share from existing
clients, continued streamlining of operations resulting in higher productivity
and profitability, new client wins, and results from the Winnetts and Seven
Worldwide acquisitions. Schawk's vision of delivering world-class service to our
clients has never been stronger than it is today. We believe the combination of
Schawk, Seven Worldwide and Winnetts into one company will provide tremendous,
untapped potential in terms of our people, services and new business
opportunities, which will benefit the Company and its shareholders in the
future.
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"As we stated last quarter, new regulations regarding consumer product labeling
as well as the continuation of "better-for-you" and other consumer and personal
appearance product introductions are strong trends we believe will continue
through 2005. These trends require new packaging concepts and graphics, which
translate into revenue opportunities for Schawk. Schawk is able to meet its
clients' needs on the packaging front, as well as provide the speed-to-shelf and
supply chain efficiencies demanded by the new product introductions.
Additionally, we expect that the increase in retail advertising attributable to
Seven Worldwide business in the first quarter of 2005 compared to last year
should translate into increased promotional, point-of-sale and advertising
related revenues throughout 2005, as these new products are brought to market."
Mr. Schawk continued, "On January 31 of this year, Schawk became the largest
brand imaging solutions firm in the world. With two well-timed acquisitions, we
took a giant step forward, expanding our service footprint, knowledge base, and
global reach. Integration teams have been put into place to integrate people,
knowledge, information, assets, and cultures. Seven Worldwide and Winnetts are
in the process of being rebranded as Schawk, which will help our clients,
suppliers and partners better understand the breadth and scope of the Schawk
organization and our "One Company" strategy.
"With continued strength in our markets and the integration of Winnetts and
Seven Worldwide well underway, we believe full-year 2005 revenues will be in the
range of $625 million to $635 million, and full-year earnings per share will be
$1.25 to $1.30 per diluted share. However, this guidance does not include an
anticipated restructuring charge later in 2005 of $0.05 to $0.10 per share. We
anticipate that most of the restructuring will be initiated by June 30, 2005.
Schawk, Inc., headquartered in suburban Chicago, is a leading supplier of
digitized high resolution color graphic services, brand consulting and design
and an array of digitally based workflow solutions, all aimed at bringing
enhanced value to its clients. Schawk provides these advanced services for the
food, beverage, health & beauty, pharmaceutical, home care and consumer products
packaging, point of sale, retail and advertising markets.
Certain statements in this press release are forward-looking statements within
the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended and are subject to the safe harbor created thereby. These statements are
made based upon current expectations and beliefs that are subject to risk and
uncertainty. Actual results might differ materially from those contained in the
forward-looking statements because of factors, such as, among other things,
higher than expected costs, or unanticipated difficulties associated with,
integrating the acquired operations of Winnetts and Seven Worldwide, higher than
expected costs associated with compliance with legal and regulatory
requirements, the strength of the United States economy in general and
specifically market conditions for the consumer products industry, the level of
demand for Schawk's services, loss of key management and operational personnel,
our ability to implement our growth strategy, the stability of state, federal
and foreign tax laws, our continued ability to identify and exploit industry
trends and exploit technological advances in the imaging industry, our ability
to implement restructuring plans, the stability of political conditions in Asia
and other foreign countries in which we have production capabilities, terrorist
attacks and the
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U.S. response to such attacks, as well as other factors detailed in Schawk,
Inc.'s filings with the Securities and Exchange Commission.
Schawk invites you to join its First-Quarter 2005 Earnings Conference Call today
at 9:30 a.m. central time. Hosting the call will be David A. Schawk, president
and CEO, A. Alex Sarkisian, executive vice president and chief operating
officer, and Jim Patterson, senior vice president and chief financial officer.
To join the call, please dial 800-257-2182 or 303-275-2170 at least five minutes
prior to the start time and ask for the Schawk, Inc. conference call. If you are
unable to participate on the call, a replay will be available through May 5,
2005, at 11:59 p.m. eastern time, by dialing 800-405-2236 or 303-590-3000,
entering conference ID 11028055, and following the prompts. To access the call
on the Internet, go to: http://www.actioncast.acttel.com, event ID 28361, with a
replay available for 30 days.
For more information about Schawk, visit our website at
http://www.schawk.com.
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SCHAWK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2005 2004
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Net sales $ 130,751 $ 52,077
Cost of sales 86,197 31,310
Selling, general, and administrative expenses 33,676 14,542
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Operating income 10,878 6,225
Other income (expense)
Interest income 69 --
Interest expense (1,943) (465)
--------------- ----------------
(1,874) (465)
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Income before income taxes 9,004 5,760
Income tax provision 3,440 2,133
--------------- ----------------
Net income $ 5,564 $ 3,627
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Earnings per share:
Basic $ 0.23 $ 0.17
Diluted $ 0.22 $ 0.16
Weighted average number of common and common
equivalent shares outstanding 25,670 22,366
Dividends per common share $0.0325 $0.0325
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SCHAWK, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
2005 2004
(UNAUDITED)
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ASSETS
Current assets:
Cash and cash equivalents $ 8,228 $7,268
Trade accounts receivable, less allowance for doubtful accounts
of $5,973 at March 31, 2005 and $1,773 at December 31, 2004 137,732 56,332
Inventories 30,766 10,339
Prepaid expenses and other 14,778 4,702
Refundable income taxes 285 1,832
Deferred income taxes 16,404 2,353
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Total current assets 208,193 82,826
Property and equipment, less accumulated depreciation of
$72,017 at March 31, 2005 and $69,668 at December 31, 2004 95,517 46,431
Goodwill 209,652 71,720
Intangible assets, net 57,846 12,754
Other assets 6,581 7,032
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Total assets $577,789 $220,763
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 27,323 $ 8,424
Accrued expenses 89,975 26,578
Income taxes payable 11,042 --
Current portion of long-term debt and capital lease obligations 6,632 6,683
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Total current liabilities 134,972 41,685
Long-term debt 181,542 39,500
Capital lease obligations 270 464
Other 20,342 979
Deferred income taxes 41,494 6,695
Stockholders' Equity:
Common stock 223 191
Additional paid-in capital 163,614 92,350
Retained earnings 66,059 61,330
Accumulated comprehensive income 2,081 2,442
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231,977 156,313
Treasury stock, at cost (32,808) (24,873)
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Total stockholders' equity 199,169 131,440
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Total liabilities and stockholders' equity $577,789 $220,763
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