Standard Register Reports 2Q 2013 Financial Results

Standard Register announced its financial results for the second quarter of 2013. The company reported revenue of $136.8 million and a net loss of $4.8 million or $0.80 per share. The results compare to second quarter 2012 revenue of $155.1 million and a net loss of $1.1 million or $0.19 per share. The number of shares and net income/loss per share for prior periods have been adjusted on a retroactive basis to reflect the company’s 1-for-5 reverse stock split, which was effective May 9, 2013.

In a separate announcement this morning, Standard Register said that it has acquired WorkflowOne, a printing and document management firm with complementary business and market presence. The announcement also contained information on Standard Register’s renewal and expansion of its credit facility.

“Although we still face the volatility of a declining market for our traditional printing products, the investments we have made in technology-enabled solutions have created a portfolio with increasing relevance in the market,” said Joseph P. Morgan Jr., president and chief executive officer. “We are particularly enthused with the near-term and long-term value creation benefits of the acquisition announced this morning. Along with the increased capabilities from combining our sales and operations with those of WorkflowOne, we are looking to the future of our industry and positioning our company for incremental growth opportunities by utilizing the cash flow from our now larger manufacturing network to invest in workflow, communications and analytics innovation. This is a bold move at the right time with the right financial structure. It makes our pension obligation more manageable, and gives us additional resources to execute within our strategy.”

Total revenue for the second quarter declined 11.8% to $136.8 million compared to $155.1 million in the prior year quarter. The decline was primarily the result of reduced volumes in printed clinical forms and transactional documents.

Healthcare revenue declined 12.0% to $48.2 million compared to $54.8 million in the second quarter of 2012. Operating profit declined to $1.8 million from $3.8 million in the prior year quarter. Healthcare technology-enabled solutions sales to both new and existing customers continued to be strong during the quarter, offsetting some of the volume decline in clinical documents and the effect of large one-time projects in the first and second quarters of 2012.

Business Solutions revenue declined 11.7% to $88.6 million from $100.3 million in the second quarter last year. Approximately half of this decline is due to reductions in revenue with a large financial services customer that reorganized its distribution channels and restructured operations. Revenue from this customer declined $6.0 million during the quarter. The decline in revenue from this customer is expected to slow during the second half of the year and to total $18 to $20 million for the year. Lower volumes in printed documents also contributed to the revenue decline. Operating profit declined to $0.9 million compared to $2.6 million last year.

Gross margin as a%age of revenue decreased to 28.5% from 30.0% for the same quarter last year. Pricing pressure and declines in volume contributed to the change. Selling, general and administrative (SG&A) expenses declined 5.7% in the quarter reflecting the realization of the restructuring and cost reduction efforts.

Total revenues for the first half of 2013 declined 11.0% to $278.4 million and the company incurred a net loss of $6.8 million or $1.15 per share for the first half of 2013, compared to revenue of $312.7 million and a net loss of $6.2 million or $1.07 per share for the first half of 2012.

Healthcare revenues declined 12.6% to $97.7 million from $111.8 million in the first half of 2012. Operating profit for the first half of 2013 was $3.9 million compared to $6.3 million for the prior year.

Business Solutions revenues declined 10.1% to $180.7 million from $200.9 million in the first half of the prior year. Operating profit increased by 16.5% to $3.8 million from $3.3 million.