Standard Register first quarter total revenues decline 4% to $157.6M

Standard Register (NYSE: SR) today announced its financial results for the first quarter 2012. The Company reported revenue of $157.6 million and a net loss of $5.1 million, or $0.18 per share. The results compare to prior year revenue of $164.9 million and net income of $0.4 million, or $0.01 per diluted share. Non-GAAP net income, adjusted for pension loss amortization, pension settlement, restructuring, and deferred tax valuation allowances was $1.9 million, or $0.06 per share, for the first quarter of 2012 as compared to non-GAAP net income of $4.1 million, or $0.14 per diluted share for the same period in 2011.     \

"We saw significant positive activity in the first quarter of 2012 as Healthcare, Financial Services and Commercial Markets business units grew Core solutions during the period. Combined with the on-schedule implementation of our restructuring plan, this gives us good momentum. While revenue was down overall from the year-ago quarter, we have a strong current ratio of 1.9, adequate liquidity for operations and expect to end 2012 with positive cash flow of at least $5 million," said Joseph P. Morgan, Jr., president and chief executive officer.

Morgan continued, "We continue to make the necessary investments to transform Standard Register into a provider of solutions that enable our customers to align their brand communications with their corporate priorities and standards. We are seeing our portfolio evolve and winning new business that demonstrates good progress."

Results

Total revenues declined 4 percent to $157.6 million in the first quarter versus $164.9 million in the prior year. Core priority growth solutions revenues grew 3 percent during the quarter whereas Legacy products, such as business forms and transactional labels, across all business units declined by 9 percent.

Healthcare revenue declined 6 percent to $57.0 million in the first quarter compared to $60.7 million in the prior year. Core solutions grew by 5 percent driven by the acquisition of 100 percent of the ownership interests in iMedConsent, LLC (dba Dialog Medical), which the Company completed in the third quarter 2011, as well as new business and organic growth in patient communications and patient identification and safety solutions. Healthcare technology solutions sales grew 15 percent in the quarter. Legacy products, primarily clinical documents and administrative forms sales declined 12 percent as customers advanced implementation of Electronic Medical Records (EMR) initiatives.

Financial Services revenue showed slight growth at $43.5 million in the first quarter compared to $43.3 million in the prior year. The Company began recognizing revenue from a new Core solutions customer and saw growth in existing smaller customers. These sales served to offset the loss of Legacy and Core solutions from a customer that is expected to impact revenues in this segment by $18 - $20 million this year.

The Commercial Markets business unit experienced a 7 percent decline to $37.6 million for the quarter from $40.3 million in the prior year driven primarily by losses in Legacy products, which represent a disproportionate amount of sales in the business unit. Momentum in Core marketing solutions is expected to grow during the remainder of 2012.

The Industrial business unit generated $19.5 million in revenue or a decline of 5 percent for the quarter as compared to $20.6 million a year ago, driven by pricing pressure and weak demand from HVAC customers, and a 49% decrease from the year-ago quarter for in-mold labeling sales related to timing.

Gross margin as a percent of revenue decreased to 30.6 percent for the current year quarter from 32.4 percent in the prior year quarter. Pricing pressures, particularly in Legacy transactional forms and labels, declines in volume and material cost increases all contributed to the change. Selling, general and administrative expenses, excluding pension and restructuring, declined $1.8 million to $44.4 million, or 28.2 percent of revenue, relative to $46.2 million and 28.0 percent for the prior year quarter.

For the first quarter 2012, capital expenditures were $0.7 million, pension funding contributions were $7.0 million and Non-GAAP cash flow on a net debt basis was $3.4 million. For 2012, the Company is planning to spend $9 - 11 million in capital expenditures to further support its Core growth solutions offering and to contribute at least the minimum requirement of $27.0 million for Pension funding.