DES PLAINES, IL--(Marketwire - August 10, 2009) - Schawk, Inc. (
NYSE:
SGK), a leading
provider of brand point management services, enabling companies of all
sizes to connect their brands with consumers to create deeper brand
affinity, reported second-quarter and first six-months 2009 results. Net
income in the second quarter of 2009 was $4.8 million or $0.19 per diluted
share, versus net income of $0.8 million, or $0.03 per diluted share in the
second quarter of 2008. For the first six months of 2009, net income was
$2.5 million, or $0.10 per diluted share, compared to $5.0 million, or
$0.18 per diluted share, in the comparable prior-year period.
Consolidated Results for Second Quarter Ended June 30, 2009
Net sales in the second quarter of 2009 were $112.0 million compared to
$133.4 million in the same period of 2008, a reduction of $21.4 million, or
16.1 percent. Approximately $6.8 million of the sales decline quarter over
quarter was the result of changes in foreign currency translation rates, as
the U.S. dollar increased in value relative to the local currencies of
certain of the Company's non-U.S. subsidiaries. The remainder of the
quarter-over-quarter decline in sales was the result of a slowdown in the
Company's business compared to the second quarter of 2008. Acquisitions
contributed $2.5 million, or 2.2 percent, during the second quarter of
2009.
The slowdown in the Company's business in the 2009 second quarter was
evident in all reportable segments. The United States and Mexico reportable
segment, which represents more than two-thirds of the Company's sales,
experienced a sales decline of $10.8 million, or 12.6 percent. Sales in the
Europe segment declined $4.8 million, or 27.5 percent, of which $3.5
million was attributable to changes in foreign currency translation rates.
Sales in the Other reportable segment declined $5.9 million, or 19.5
percent, of which $3.0 million was attributable to changes in foreign
currency translation rates.
Consumer products packaging (CPG) accounts sales in the second quarter of
2009 were $74.8 million, or 66.8 percent of total sales, compared to $87.1
million in the same period of 2008, representing a decline of 14.2 percent.
Advertising and retail accounts sales of $27.4 million, or 24.5 percent of
total sales, in the second quarter of 2009 declined 22.9 percent compared
to the prior-year period. Entertainment accounts sales for second quarter
of 2009 of $7.3 million, or 6.5 percent of total sales, declined 13.9
percent compared to the same period in 2008. In response to adverse
economic conditions, many of the Company's clients have reduced their
levels of advertising, marketing and new product introductions and,
particularly with respect to the Company's CPG accounts, have delayed
packaging redesigns and sales promotion projects, resulting in lower
revenue for the Company. However, despite the softness experienced over the
past few quarters, Schawk's market share has remained strong across its
client base. Furthermore, no major clients have been lost during 2009.
On a sequential basis, sales for the second quarter of 2009 increased $6.9
million, or 6.6 percent, versus the first quarter of 2009 driven by
increases in CPG and advertising and retail account sales partially offset
by a decline in entertainment account sales.
Gross profit was $42.9 million in the second quarter of 2009, a decline of
$3.9 million from the second quarter of 2008. However, gross profit as a
percentage of sales increased to 38.3 percent of sales from 35.1 percent of
sales, largely attributable to the Company's cost-reduction activities
implemented during 2008 and 2009.
Selling, general and administrative (SG&A) expenses declined $4.3 million,
to $31.8 million in the second quarter of 2009 from $36.1 million in the
second quarter of 2008, reflecting the Company's cost-reduction
initiatives, partially offset by higher professional fees related to
internal control remediation efforts and related matters of $1.3 million,
and an increase of $0.7 million over the prior-year quarter.
In addition, acquisition integration and restructuring expenses declined
$1.7 million to $1.5 million and expenses related to impairment of
long-lived assets declined $2.1 million to $0.1 million in the second
quarter of 2009 compared to the second quarter of 2008.
The Company reported operating income of $9.5 million in the 2009 second
quarter compared to operating income of $5.3 million in the second quarter
of 2008. The increase in operating income, compared to the prior-year
period, was the result of reductions in SG&A expenses and improvements in
gross margin percent, as previously described, coupled with reductions in
acquisition integration and restructuring expenses, as well as a reduction
in expenses related to impairment of long-lived assets.
Acquisition integration and restructuring expenses declined by $1.7 million
to $1.5 million for the second quarter of 2009, as compared to the same
period last year. The charges in the 2009 second quarter arose from the
Company's previously announced plans to consolidate, reduce and re-align
the Company's work force and operations and are for employee terminations,
asset impairments, obligations for future lease payments and other
associated costs.
The remediation and related expenses of $1.3 million, which is included in
the Company's SG&A expenses, is principally due to an increase in the
Company's costs related to the Company's internal control remediation and
related matters.
During the second quarter of 2009, the Company reported expenses related to
the impairment of long-lived assets of $0.1 million, which is a decline of
$2.1 million compared to the prior-year period.
The Company reported a gain associated with foreign currency transactions
of $0.3 million in both the second quarter of 2009 and second quarter of
2008. These transactions were recorded by non-U.S. subsidiaries primarily
for unhedged currency exposure arising from intercompany debt obligations.
Interest expense in the second quarter of 2009 was $2.5 million compared to
$1.7 million in the second quarter of 2008, due to higher interest expense
payable under the Company's June 2009 amended debt agreements and a higher
average debt balance during the period.
Income tax expense for the second quarter of 2009 was $2.3 million,
compared to income tax expense of $2.9 million in the second quarter of
2008. The reduction in the effective tax rate for the second quarter of
2009 compared to the same period of 2008 was principally driven by the
recording of a $1.5 million valuation allowance for the Company's UK
subsidiary in the second quarter of 2008.
Net income in the second quarter of 2009 was $4.8 million, or $0.19 per
diluted share, compared to net income of $0.8 million, or $0.03 per diluted
share, in the second quarter of 2008. As discussed above, during the second
quarter of 2009 the Company incurred acquisition integration and
restructuring expenses of $1.5 million and remediation and related expenses
of $1.3 million. Additionally the Company benefitted from a $0.3 million
gain on foreign currency transactions in the second quarter of 2009. The
income before income taxes was $7.1 million. Because of this income, the
income tax provision for the second quarter was $2.3 million. Excluding the
aforementioned items (net of tax effect), second-quarter 2009 net income
was $6.5 million, or $0.26 per diluted share, compared to income of $5.7
million, or $0.21 per diluted share, on the same basis for the comparable
prior-year period. Please refer to the tables at the end of this press
release for a reconciliation of non-GAAP measures.
Other Information
Depreciation and amortization expense was $4.7 million in the second
quarter of 2009 compared to $5.4 million in the second quarter of 2008.
Capital expenditures in the second quarter of 2009 were $1.1 million
compared to $3.1 million in the same period of 2008.
EBITDA and Adjusted EBITDA Performance
EBITDA for the second quarter of 2009 was $14.2 million compared to EBITDA
of $10.8 million for the second quarter of 2008. Adjusted EBITDA for the
second quarter of 2009 was $15.7 million compared to $13.9 million for the
second quarter of 2008. These results for EBITDA and Adjusted EBITDA are
calculated consistent with the non-GAAP reconciliation schedule presented
at the end of this press release.
Consolidated Results for Year-to-Date Period Ended June 30, 2009
Year-to-date sales through June 30, 2009, were $217.1 million compared to
$259.8 million in the same period of 2008, a reduction of $42.8 million, or
16.5 percent. Approximately $14.4 million of the sales decline year over
year was the result of changes in foreign currency translation rates, as
the U.S. dollar increased in value relative to the local currencies of
certain of the Company's non-U.S. subsidiaries. The remainder of the
year-over-year decline in sales was the result of a slowdown in the
Company's business compared to the same period of 2008. Acquisitions
contributed $4.9 million, or 2.3 percent, during the first six months of
2009 compared to the prior year.
The year-to-date slowdown in the Company's business was evident in all
reportable segments. The United States and Mexico segment, which
represents more than two-thirds of the Company's sales, experienced a sales
decline of $21.9 million, or 13.0 percent. Sales in the Europe segment
declined $9.9 million, or 28.6 percent, of which $7.7 million was
attributable to changes in foreign currency translation rates. Sales in the
Other reportable segment declined $11.0 million, or 19.3 percent, of which
$6.3 million was attributable to changes in foreign currency translation
rates.
CPG accounts sales in the first six months of 2009 were $143.4 million, or
66.1 percent of total sales, compared to $167.0 million in the same period
of 2008, representing a decline of 14.2 percent. Year-to-date advertising
and retail accounts sales of $53.1 million, or 24.5 percent of total sales,
declined 26.2 percent compared to the prior-year period. Entertainment
accounts sales of $15.6 million, or 7.2 percent of total sales, declined
12.0 percent.
Gross profit was $76.0 million in the first half of 2009, a decline of
$13.7 million from the prior-year period. However, gross profit as a
percent of sales increased to 35.0 percent of sales from 34.5 percent of
sales, which is largely attributable to the Company's cost-reduction
activities implemented during 2008 and 2009.
Selling, general and administrative (SG&A) expenses declined $6.7 million
to $65.7 million in the first half of 2009, from $72.4 million in the
comparable prior-year period. The reduction in spending reflects the
Company's cost-reduction initiatives partially offset by higher
professional fees related to internal control remediation and related
efforts of $3.3 million, an increase of $2.7 million over the prior-year
period.
In addition, acquisition integration and restructuring expenses declined by
$0.9 million to $2.3 million and expenses related to impairment of
long-lived assets declined by $2.1 million to $0.1 million in the first six
months of 2009 compared to the same period for 2008.
The Company reported year-to-date operating income of $7.9 million in the
first six months of 2009 compared to $12.0 million in the same period of
2008. The decrease in operating income, compared to the prior-year period,
was the result of the decline in sales volume during the period partially
offset by reductions in SG&A, acquisition integration and restructuring,
and impairment of long-lived asset expenses as previously described.
The acquisition integration and restructuring charge in the first half of
2009 arose from the Company's previously announced plans to consolidate,
reduce and re-align the Company's work force and operations. As a result of
these actions, the Company incurred costs of $2.3 million for employee
terminations, asset impairments, obligations for future lease payments and
other associated costs.
The remediation and related expenses of $3.3 million, which is included in
the Company's SG&A expenses, is principally due to an increase in the
Company's costs related to internal control remediation and related
matters.
The Company reported a year-to-date gain associated with foreign currency
transactions of $0.4 million compared to a gain of $0.5 million on foreign
currency transactions for the same period in 2008. These transactions were
recorded by non-U.S. subsidiaries primarily for unhedged currency exposure
arising from intercompany debt obligations.
Interest expense for the first six months of 2009 was $3.9 million compared
to $3.5 million in the comparable prior-year period, primarily driven by
higher fees related to the Company's June 2009 amended debt agreements.
Income tax for the first six months of 2009 was $1.6 million, compared to
$3.6 million in the second quarter of 2008. The reduction in tax expense in
2009 is driven primarily by the lower income for the period. The reduction
in the effective tax rate for the first half of 2009 compared to the same
period for 2008 was principally driven by a higher proportion of earnings
in jurisdictions with lower statutory tax rates.
Year-to-date net income was $2.5 million, or $0.10 per diluted share,
compared to net income of $5.0 million, or $0.18 per diluted share, in the
comparable prior-year period. As discussed above, during the first half of
2009 the Company incurred acquisition integration and restructuring
expenses of $2.3 million and remediation and related expenses of $3.3
million. Additionally the Company benefitted from a $0.4 million gain on
foreign currency transactions in the first six months of 2009. The income
before income taxes was $4.1 million. Because of this income, the income
tax provision for the first half of 2009 was $1.6 million. Excluding the
aforementioned items (net of tax effect), year-to-date net income was $5.9
million, $0.24 per diluted share, compared to income of $8.4 million, or
$0.30 per diluted share, on the same basis for the comparable prior-year
period. Please refer to the tables at the end of this press release for a
reconciliation of non-GAAP measures.
Other Information
Depreciation and amortization expense was $9.5 million in the first six
months of 2009 compared to $10.9 million in the prior-year period.
Year-to-date capital expenditures were $2.4 million compared to $5.5
million in the same period of 2008.
During the first six months of 2009, and specifically in the first quarter
of 2009, the Company repurchased 488,700 shares of its stock for a cost of
approximately $4.3 million. The Company has suspended its share repurchase
program.
EBITDA and Adjusted EBITDA Performance
EBITDA for the first six months of 2009 was $17.7 million compared to
EBITDA of $23.1 million for the same period of 2008. Adjusted EBITDA for
the first half of 2009 was $20.0 million compared to $26.2 million for the
comparable prior-year period. These results for EBITDA and Adjusted EBITDA
are calculated consistent with the non-GAAP reconciliation schedule
presented at the end of this press release.
Cost-Reduction Activities
The Company incurred acquisition integration and restructuring charges of
$1.5 million in the second quarter of 2009 and $2.3 million for the first
half of 2009. These year-to-date charges are anticipated to result in total
annual savings of approximately $10.0 million (estimated $7.0 million to be
realized in 2009) and is part of the Company's previously announced actions
for 2009. Furthermore, the Company has taken other specific 2009
cost-reduction actions expected to reduce expenses approximately $6.0 to
$7.0 million for the year. The Company will continue to evaluate
opportunities for further cost-reduction activities, as they arise.
Financing Update
During the second quarter of 2009, the Company reduced its total debt $33.2
million, to $113.0 million, compared to total debt at March 31, 2009. The
reduction in debt was driven by $20.0 million in pro-rata payments to the
Company's lenders, as required under the Company's amended debt agreements,
and additional payments against the Company's revolving credit facility
during the quarter. At June 30, 2009, the Company had $17.1 million of
cash, as well as a revolving credit facility of $80 million, of which
approximately $27 million was available.
Full-Year 2009 Sales and "Adjusted EBITDA" Guidance
As previously communicated in the Company's press release for its
first-quarter 2009 financial results, full-year revenues are expected to
range between $440 to $450 million, and Adjusted EBITDA (as calculated
under the terms of the Company's amended debt agreements) to range between
$43 to $51 million. The Company bases these annual estimates on a current
expectation that consumer spending will modestly increase during 2009,
CPGs, retail and corporate brands will increase the frequency of their
product innovation and promotional activities in response to competitive
pressure, and that the Company's cost reduction activities in 2008 and
during 2009 are anticipated to lower the expense base of the Company.
In the event that consumer confidence is more than modestly increased, the
Company expects that its revenue and Adjusted EBITDA will exceed initial
projections. In addition, the Company presently expects that current cash
balances and anticipated cash flows from operations and other activities
will be sufficient to fund debt service as well as debt reduction through
the end of 2009 without hindering the Company's ability to focus on the
services provided to its clients.
Management Comments
President and Chief Executive Officer David A. Schawk commented,
"Second-quarter sales demonstrate that the economy continues to be
challenging. However, on a sequential basis, second-quarter 2009 revenue
increased nearly $7.0 million over the first quarter of this year. This
revenue increase allowed us to further leverage our cost-reduction
activities to improve our overall operating income.
"As such, we experienced substantial improvement in margins in the second
quarter of 2009. Gross margin improved to 38.3 percent in the second
quarter of 2009 from 35.1 percent in the same period of last year.
Additionally, despite a nearly $21 million decline in revenue,
second-quarter operating income was approximately $9.5 million compared to
$5.3 million in the second quarter of 2008, reflecting the benefits of our
cost-reduction activities as well as reduced expenses for restructuring and
long-lived asset impairments. We are pleased that our cost reduction
initiatives have made an important contribution to the improved financial
profile of this Company, and we are comfortable that the reductions and
initiatives we have undertaken have not impacted our ability to serve our
clients, but rather, have prepared us to better serve our clients when the
economy returns to growth.
"Compared to the prior year period, second-quarter 2009 revenue fell
approximately 11 percent excluding the effects of foreign currency
translation, as clients continued to curtail or delay spending. However,
despite the volume declines, Schawk continues to maintain its portfolio of
clients without any major losses during the year."
Schawk continued, "We continue to take steps to better utilize our global
capacity while reducing our overall cost base, and as a result of the
successful implementation of our restructuring actions thus far in 2009, we
now expect to generate almost $10.0 million in annual cost savings, which
is $2.0 to $3.0 million higher than previously expected. These savings are
incremental to the other 2009 cost-reduction actions expected to reduce
expenses approximately $6.0 to $7.0 million for 2009.
"Given our performance during the second quarter and progress on
implementing our cost-reductions actions for 2009, we are reaffirming the
full-year revenue and Adjusted EBITDA guidance provided in the
first-quarter 2009 earnings release."
Schawk concluded, "We believe we entered this economic downturn in the best
position in our industry, with the ability to deliver end-to-end,
all-encompassing solutions. Along with other changes we have implemented,
our platform in Brand Point Management allows us to use the right assets,
for the right clients, at the right time, and in the right place. This has
made Schawk operationally stronger than we were before. As clients
everywhere respond to economic challenges seeking to consolidate their
purchases, simplify their processes, modify their products and streamline
their procedures, we believe that no other Company in our industry can
match the solutions that Schawk can offer its clients."
Conference Call
Schawk invites you to join its second-quarter 2009 earnings conference call
on Tuesday, August 11 at 9:00 a.m. Central time. To participate in the
conference call, please dial 866-783-2141 or 857-350-1600 at least five
minutes prior to the start time and ask for the Schawk, Inc. conference
call, or on the Internet, go to
http://phx.corporate-ir.net/phoenix.zhtml?c=82169&p=irol-EventDetails&EventId=2365168. A replay will be available through August 18
at 11:59 p.m. Central time. To access the replay, dial 888-286-8010 or
617-801-6888, enter conference ID 74118618, and follow the prompts. The
replay will also be available on the Internet for 30 days at the following
address:
http://phx.corporate-ir.net/phoenix.zhtml?c=82169&p=irol-EventDetails&EventId=2365168.
About Schawk, Inc.
Schawk, Inc, is the leading provider of brand point management services,
enabling companies of all sizes to connect their brands with consumers to
create deeper brand affinity. With a global footprint of more than 60
offices, Schawk helps companies create compelling and consistent brand
experiences by providing integrated strategic, creative and executional
services across brand touchpoints. Founded in 1953, Schawk is trusted by
many of the world's leading organizations to help them achieve global brand
consistency. For more information about Schawk, visit
http://www.schawk.com.
Non-GAAP Financial Measures
There are non-GAAP measures attached to this press release entitled
"Reconciliation of Non-GAAP measures to GAAP." Management believes that the
presentation of these measures provides investors with greater transparency
and supplemental data relating to the Company's financial condition and
results of operations and provides more consistent insight into the
performance of the Company's core operations from period to period.
Non-GAAP measures are reconciled to the closest GAAP measures on schedules
attached to this press release. The non-GAAP measures should not be viewed
as alternatives to GAAP. Furthermore, these measures may not be consistent
with similar measures provided by other companies. See also the Company's
discussion of the use of EBITDA and Adjusted EBITDA in the attached
"Reconciliation of Non-GAAP EBITDA and Adjusted EBITDA."
Safe Harbor Statement
Certain statements in this press release are forward-looking statements
within the meaning of Section 21E of the Securities 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, unanticipated difficulties associated with
additional accounting issues, if any, which may cause our investors to lose
confidence in our reported financial information and may have a negative
impact on the trading price of our stock; our ability to remedy known
internal control deficiencies and weaknesses and the discovery of future
control deficiencies or weaknesses, which may require substantial costs and
resources to rectify; higher than expected costs, or unanticipated
difficulties associated with, integrating acquired operations; 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; changes in or weak consumer
confidence and consumer spending; loss of key management and operational
personnel; our ability to implement our growth strategy, rebranding
initiatives and cost reduction plans and to realize anticipated cost
savings; 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 U.S. response to such attacks; as well as other factors
detailed in Schawk, Inc.'s filings with the Securities and Exchange
Commission.
For more information about Schawk, visit its website at
http://www.schawk.com.
Schawk, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 111,989 $ 133,436 $ 217,077 $ 259,843
Cost of sales 69,055 86,650 141,049 170,090
--------- --------- --------- ---------
Gross profit 42,934 46,786 76,028 89,753
Selling, general and
administrative expenses 31,832 36,104 65,675 72,375
Acquisition integration and
restructuring expenses 1,501 3,174 2,318 3,174
Impairment of long-lived assets 78 2,184 136 2,184
--------- --------- --------- ---------
Operating income (loss) 9,523 5,324 7,899 12,020
Other income (expense)
Interest income 30 64 100 138
Interest expense (2,468) (1,696) (3,917) (3,474)
--------- --------- --------- ---------
(2,438) (1,632) (3,817) (3,336)
--------- --------- --------- ---------
Income (loss) before income
taxes 7,085 3,692 4,082 8,684
Income tax provision (benefit) 2,317 2,916 1,610 3,648
--------- --------- --------- ---------
Net income (loss) $ 4,768 $ 776 $ 2,472 $ 5,036
========= ========= ========= =========
Earnings (loss) per share:
Basic $ 0.19 $ 0.03 $ 0.10 $ 0.19
Diluted $ 0.19 $ 0.03 $ 0.10 $ 0.18
Weighted average number of
common and common equivalent
shares outstanding:
Basic 24,921 27,134 24,928 27,093
Diluted 24,921 27,705 24,929 27,645
Schawk, Inc.
Consolidated Balance Sheets
(In thousands, except share amounts)
June 30, December 31,
2009 2008
------------ ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 17,118 $ 20,205
Trade accounts receivable, less allowance for
doubtful accounts of $2,458 at June 30, 2009
and $3,138 at December 31, 2008 83,905 83,218
Inventories 20,463 23,617
Prepaid expenses and other current assets 13,198 11,243
Income tax receivable 929 3,348
Assets held for sale 2,085 6,555
Deferred income taxes 488 2,765
------------ ------------
Total current assets 138,186 150,951
Property and equipment, less accumulated
depreciation of $99,838 at June 30, 2009 and
$92,583 at December 31, 2008 53,698 58,325
Goodwill 185,987 184,037
Other intangible assets, net 38,482 39,125
Deferred income taxes 2,956 2,752
Other assets 5,999 5,163
------------ ------------
Total assets $ 425,308 $ 440,353
============ ============
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable $ 22,499 $ 20,694
Accrued expenses 60,839 51,934
Income taxes payable 228 --
Deferred income taxes 3,007 82
Current portion of long-term debt 66,331 23,563
------------ ------------
Total current liabilities 152,904 96,273
------------ ------------
Long-term liabilities:
Long-term debt 46,701 112,264
Other liabilities 20,863 29,137
Deferred income taxes 1,962 1,858
------------ ------------
Total long-term liabilities 69,526 143,259
------------ ------------
Stockholders’ equity:
Common stock, $0.008 par value, 40,000,000
shares authorized, 29,700,242 and 29,478,456
shares issued at June 30, 2009 and December
31, 2008, respectively; 24,952,677 and
25,218,566 shares outstanding at June 30,
2009 and December 31, 2008, respectively 218 217
Additional paid-in capital 189,144 187,801
Retained earnings 69,424 68,016
Accumulated comprehensive income (loss), net 4,943 1,368
------------ ------------
263,729 257,402
Treasury stock, at cost, 4,747,565 and
4,259,890 shares of common stock at June 30,
2009 and December 31, 2008, respectively (60,851) (56,581)
------------ ------------
Total stockholders’ equity 202,878 200,821
------------ ------------
Total liabilities and stockholders’ equity $ 425,308 $ 440,353
============ ============
Schawk, Inc.
Reconciliation of Non-GAAP measures to GAAP
(Unaudited)
(In Thousands, Except Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Income before income taxes - GAAP $ 7,085 $ 3,692 $ 4,082 $ 8,684
Plus: Acquisition integration and
restructuring expenses 1,501 3,174 2,318 3,174
Plus: Remediation and related
expenses 1,291 566 3,319 571
Plus: Impairment of long-lived
assets 78 2,184 136 2,184
Less: Foreign currency gain (319) (280) (445) (526)
-------- -------- -------- --------
Adjusted income before income tax -
non GAAP 9,636 9,336 9,410 14,087
Adjusted income tax provision - non
GAAP 3,175 3,618 3,526 5,660
-------- -------- -------- --------
Adjusted net income - non GAAP $ 6,461 $ 5,718 $ 5,884 $ 8,427
======== ======== ======== ========
Weighted average common and common
stock equivalents outstanding -
GAAP 24,921 27,705 24,929 27,645
======== ======== ======== ========
Earnings per diluted share - GAAP $ 0.19 $ 0.03 $ 0.10 $ 0.18
Adjustments - net of tax effects:
Plus: Acquisition integration and
restructuring expenses 0.04 0.07 0.06 0.07
Plus: Remediation and related
expenses 0.03 0.02 0.08 0.01
Plus: Impairment of long-lived
assets 0.01 0.05 0.01 0.05
Less: Foreign currency gain (0.01) (0.01) (0.01) (0.01)
Less: FIN 48 reserve adjustment -- -- -- (0.05)
Plus: UK valuation allowance -- 0.05 -- 0.05
-------- -------- -------- --------
Adjusted earnings per diluted share
- non GAAP $ 0.26 $ 0.21 $ 0.24 $ 0.30
======== ======== ======== ========
Income tax provision (benefit) -
GAAP $ 2,317 $ 2,916 $ 1,610 $ 3,648
Plus: Acquisition integration and
restructuring expenses 441 1,149 710 1,149
Plus: Remediation and related
expenses 513 225 1,318 227
Plus: Impairment of long-lived
assets 22 867 45 867
Less: Foreign currency gain (118) (68) (157) (150)
Plus: FIN 48 reserve adjustment -- -- -- 1,390
Less: UK valuation allowance -- (1,471) -- (1,471)
-------- -------- -------- --------
Adjusted income tax provision - non
GAAP $ 3,175 $ 3,618 $ 3,526 $ 5,660
======== ======== ======== ========
Schawk, Inc.
Reconciliation of Non-GAAP EBITDA and Adjusted EBITDA
(Unaudited)
(In Thousands)
Three Months Ended Six Months Ended Trailing Twelve Months
June 30, June 30, Ended June 30,
---------------- ---------------- -----------------
2009 2008 2009 2008 2009 2008
------- ------- ------- ------- -------- -------
Net income
- GAAP $ 4,768 $ 776 $ 2,472 $ 5,036 ($62,570) $19,680
Interest
expense 2,468 1,696 3,917 3,474 7,295 7,908
Income tax
expense 2,317 2,916 1,610 3,648 (5,138) 14,297
------- ------- ------- ------- -------- -------
Subtotal 9,553 5,388 7,999 12,158 (60,413) 41,885
Depreciation
and
amortization 4,730 5,400 9,508 10,918 19,341 21,773
Impairment of
Goodwill -- -- -- -- 48,041 --
Impairment
of
long-lived
assets 78 -- (1) 136 -- (1) 6,780 1,197
Non-cash
restructuring
charge 77 -- (1) 77 -- (1) 705 -- (1)
Unrealized
foreign
currency
(gain)
loss (725) -- (1) (916) -- (1) 181 (243)
Share-based
compensation 501 -- (1) 879 -- (1) 2,264 449
------- ------- ------- ------- -------- -------
EBITDA -
non GAAP 14,214 10,788 17,683 23,076 16,925 65,061
Permitted
add backs
per
amended
debt
agreements:
Loss on
sale of
property
and
equipment 72 100 44 95 311 412
Permitted
acquisitions -- 454 -- 454 2,102 454
Restructuring
charges 1,424 2,558 2,241 2,558 9,445 2,558
Non-
recurring
pension
withdrawal
expense -- -- -- -- 7,254 --
------- ------- ------- ------- -------- -------
Adjusted
EBITDA -
non GAAP $15,710 $13,900 $19,968 $26,183 $ 36,011 $68,485
======= ======= ======= ======= ======== =======
(1) These items are shown consistent with the Company’s EBITDA and Adjusted
EBITDA as defined in the covenants under its amended debt agreements
for these periods for 2008.
EBITDA is defined as earnings before interest, income taxes, depreciation
and amortization, and other certain non-cash items. Adjusted EBITDA, as
defined in the covenants under the Company's amended debt agreements, is
EBITDA as adjusted to exclude certain items, including items that are
generally considered non-operating. Both measures are important indicators
of performance under the Company's amended debt agreements and provide
management with a consistent measurement tool for evaluating the operating
activities of the Company from period to period. These measures do not
represent cash flows from operations as defined by generally accepted
accounting principles, should not be considered as an alternative to net
income or cash flow from operations as an indicator of our operating
performance, and are not indicative of cash available to fund all cash flow
needs. These measures also may be inconsistent with similar measures
presented by other companies.
Contact Information: AT SCHAWK, INC.:
Timothy Allen
Vice President, Finance
Operations and Investor Relations
847-827-9494
Timothy.Allen@schawk.com
AT DRESNER CORPORATE SERVICES:
Investors:
Philip Kranz
312-780-7240
pkranz@dresnerco.com