Schawk, Inc., a leading provider of brand development and deployment services, enabling companies of all sizes to connect their brands with consumers, reported second-quarter 2011 results. Net income in the second quarter of 2011 was $4.0 million, or $0.15 per diluted share, versus $15.8 million, or $0.61 per diluted share, in the second quarter of 2010.
On a non-GAAP basis, adjusting for certain financial impacts further detailed in this earnings release, Adjusted net income was $6.9 million, or $0.26 per diluted share, in the second quarter of 2011 compared to $10.4 million, or $0.40 per diluted share, during the prior-year comparable period.
President and Chief Executive Officer David A. Schawk, commented, "Our second quarter 2011 results reflected decreased activity with our advertising and retail clients primarily due to stronger retail promotional activity in the prior-year comparable period. In addition, during the first six months of 2011 some consumer packaged goods clients remained cautious given elevated commodity prices and sustained economic uncertainty domestically and internationally."
Mr. Schawk added, "However, we see opportunities in this challenging economy from three key industry trends: emerging markets, digital markets, and demand for integrated services. During the second quarter, we expanded or reached agreements to expand our business with certain key global clients as they pushed into developing and emerging markets and sought to take advantage of our full portfolio of integrated services, including our digital marketing capabilities which were enhanced through our acquisitions in 2010. This increased client activity is particularly evident in our European segment where sales have increased over 18% for the quarter and over 9% for the first six months of 2011 compared to the prior-year periods. Furthermore, we continue to believe that existing and prospective clients are seeing the value of our integrated service offering and global capabilities, particularly as they look for ways to differentiate themselves from their competition."
Consolidated Results for Second Quarter Ended June 30, 2011
Consolidated net sales in the second quarter of 2011 were $113.3 million compared to $117.8 million in the same period of 2010, a decrease of approximately $4.5 million, or 3.8 percent, principally driven by a decline in Advertising and retail account sales. Included in the quarter-over-quarter sales decline was an increase of $3.3 million in net sales related to foreign currency translation gains, as the U.S. dollar declined in value relative to the local currencies of certain of the Company's non-U.S. subsidiaries.
Consumer packaged goods (CPG) accounts sales in the second quarter of 2011 were $87.1 million, or 76.8 percent of total sales, compared to $86.4 million in the same period of 2010, an increase of 0.8 percent. The increase over the prior-year quarter was primarily driven by slightly higher product and brand activity by the Company's CPG clients. Advertising and retail accounts sales of $19.0 million, or 16.8 percent of total sales, in the second quarter of 2011 decreased 18.8 percent, from $23.4 million in the prior-year period. Included in the decline in Advertising and retail accounts sales is a $1.3 million decline in revenue related to the previously disclosed loss of a non-core, retail client at the end of the second quarter of 2010 with the balance of the decline driven primarily by lower promotional activity compared to the prior-year period. Entertainment accounts sales declined $0.8 million to $7.2 million, or 6.4 percent of total sales, for the second quarter of 2011 compared to $8.0 million in the same period of 2010.