Standard Register Reports Third Quarter 2011 Financial Results

Standard Register announced its financial results for the third quarter. The Company reported revenue of $157.5 million and a net profit of $8.4 million, or $0.29 per diluted share. The results compare to prior year revenue of $163.6 million and a net profit of $1.4 million, or $0.05 per diluted share. Through nine months, the Company reported revenue of $486.7 million and a net profit of $8.0 million, or $0.28 per diluted share. The nine month results compare to prior year revenue of $495.7 million and a net profit of $0.5 million, or $0.02 per diluted share. The results for the current quarter and year reflect a favorable impact to net profit of $12.2 million, or $0.42 per diluted share due to termination of the postretirement healthcare plan.

Results of Operations

Core solution revenues across the Company grew during the quarter but were lower than overall expectations. Slightly accelerated declines in legacy products, such as business forms and transactional labels, across all business units resulted in a 4% overall revenue decline during the quarter.

The Healthcare business unit showed improved growth in its core solution revenues in part due to the Dialog Medical acquisition but also through organic growth, particularly within patient communications. Software sales for that segment were lower than expected when factoring out the Dialog Medical revenues. Clinical documents and administrative forms sales eroded as expected, albeit at the high end of estimates.

The Industrial business unit continued its progress with in-mold labeling solutions but experienced overall softness in manufacturing parts solutions as orders from existing customers declined during the quarter. HVAC and home appliance manufacturers, which are a large part of the segment's customer base, reported declining sales during the quarter, and short-term forecasts are cautious. Sales from new contracts and growth in marketing and critical communications stabilized the segment, allowing for modest growth overall.

Within the Commercial business unit, Financial Services also saw strong growth in core revenues; particularly marketing and critical communication solutions. Sales from new contracts in this segment are being mainly offset by declines isolated to a major customer. Commercial markets experienced overall declines due to continued erosion in legacy products and reductions in core solutions that were the result of lost revenues from a few large customers.

"Turmoil within the economy in segments like banking combined with accelerated declines in legacy products affect our business and emphasize the need to accelerate our transformation to market-focused core solutions," said Joseph P. Morgan, Jr., president and chief executive officer. "During the quarter we launched several marketing solutions and critical communications initiatives aimed at helping our customers to meet their strategic objectives and advance their reputations. We have also completed the majority of investments in software, services and print technology, which is vital to our success with these solutions. Although we experienced modest growth in core revenues during the quarter, we are not satisfied with the results and they do not represent our expectations going forward. We will continue proactively to execute our strategy and react quickly and decisively to any further deterioration of the overall economy."