Financial

The Montreal Gazette has published a story detailing the tribulations of Pazazz Printing. In the story, CEO Warren Werbitt reflects on the lessons learned during the company's toughest period in 2008 and 2009 which culminated in the company filing a Notice of Intention in March this year.

In the article, Werbitt credits strong relationships with both clients, suppliers and even his bank for his company's survival.

"What did I learn?" Werbitt said. "You have to watch who you do business with. Be diligent. Make decisions with your head and not emotion. We have to be extremely efficient, and people have to be accountable. When business gets tough, take what you learn and go forward."

Netherlands-based Buhrs Mailing Solutions, which manufacturers mailing and finishing systems, has entered into insolvency. The company has 4,500 of its mailing systems installed worldwide.

Buhrs had implemented a global reorganization plan in 2008 which saw it slash jobs and cut costs by up to 40 percent. According to the company, although it generated "significant losses" in 2008 and 2009, it is seeing orders up 25 percent over the same period in the previous year and is on track to being profitable. The company employs 250 people today, down from 360 just prior to its reorganization program.

Buhrs was founded in 1908 in the Netherlands and is sold in over 40 countries. In Canada, Buhrs is distributed by Insource.



Based in Uniondale, New York, National Envelope Corporation filed for Chapter 11 bankruptcy protection on June 10, while describing its intentions to reorganize under a financial-restructuring plan.

Founded in 1952, National Envelope now claims to be the largest manufacturer of envelopes in the world, with 14 manufacturing facilities, two distribution centres, and approximately 3,500 employees in the U.S. and Canada. 

The company expects to keep all of its facilities open during the Chapter 11 reorganization process.

“The strategic reorganizing of National Envelope is well underway," stated Stephen Gawrylewski, Chief Restructuring Officer and Interim CEO. "We have been constrained by our capital structure and by the unprecedented economic slowdown...fortunately, the fundamentals of our business remain strong and provide an excellent foundation for the future."



Transcontinental has announced its second quarter results in which the company saw an increase in operating income of 18 percent over the same period in 2009.

“I am very satisfied with our second quarter results and the performance of the past four quarters, which have all been higher than the previous comparable quarters,” said François Olivier, President and Chief Executive Officer of Transcontinental. “We are systematically building the new Transcontinental by accompanying our customers with marketing strategies based on advertising personalization and the new communication platforms, while strengthening our traditional core business, which still provides extremely effective marketing tools. This strategy, combined with our employees’ efforts to innovate and improve every day, will allow us to take full advantage of the opportunities that are opening up in our niches.”

The company generated 4-percent less revenues from the same quarter of 2009, earning $510 million in Q2 2010. Profits for the second-quarter was $68.7 million, about half of which comes from discontinued operations, compared to a loss of $144.3 million a year earlier.

Presstek Inc. today reported financial and operating results for the first quarter ended April 3, 2010, which included total revenues of US$34.5 million to match its revenue level in the first quarter of 2009. This also represents a revenue increase of US$1.0 million, or approximately three percent versus the fourth quarter of 2009.


Presstek reported an operating loss of US$271,000 in the first quarter of 2010, which represents a US$1.6 million improvement from a loss of $1.8 million in the 2009 first quarter. In the quarter, the Company had adjusted EBITDA of US$1.8 million, an increase of US$1.4 million when compared to the first quarter of 2009.

"For the second straight quarter we have increased our sequential revenue, grown our adjusted EBITDA and significantly reduced our debt net of cash. Our current debt net of cash of US$5.4 million represents an 85 percent reduction from our high point of $37.0 million three years ago this quarter," said Presstek President and CEO, Jeff Jacobson.



Equipment revenue for Presstek increased 28 percent to US$6.4 million in the first quarter of 2010, compared with US$5.0 million for the same period last year. The company states the increase was driven by increased DI press sales, including its 52DI units now integrated with aqueous coating. 



Consumables revenue totaled US$21.5 million in the first quarter of 2010, compared with US$21.9 million for the same period last year. Service revenue declined approximately 13 percent to US$6.6 million in the first quarter of 2010 compared to the year ago quarter.



“We are pleased with our progress and the momentum that we have generated over the past two quarters,” stated Jacobson. “As we look to the remainder of 2010 we believe that we will see an increase in revenue versus the prior year as we continue to expand our market presence with our new product offerings and expanded distribution footprint. With this increased annual revenue we also expect to see continued positive adjusted EBITDA levels for the remainder of 2010."




Domtar Corporation announced it has generated net earnings of $58 million in the first quarter of 2010 compared to a net loss of $45 million in the prior year's quarter. The company's sales in the first quarter was $1.5 billion.

"Despite a still modest economic recovery we recorded strong financial results due to price increases and higher pulp, paper and wood shipments," said John D. Williams, President and Chief Executive Officer. Discussing the Company's operations.

"Towards the end of the first quarter, our paper manufacturing system was balanced with our customer demand. We are now operating at full capacity with a lengthening backlog as a result of increased paper demand. We also have built inventories of pulp ahead of the second quarter, as we expect a higher level of maintenance work at our mills and in preparation for the first phase of the recently announced investments at our Kamloops pulp mill that will result in a 41-day shutdown."

The company says it expects the market to remain stable and for pulp prices to increase. However, exchange-rate pressure will continue to be felt, as well as higher maintenance costs is to be expected in the second quarter.



Vistaprint has just announced its fiscal 3rd quarter 2010 results, ended March 31, 2010, which saw the company boost its revenues 30 percent over the same quarter in the previous year.

The quarter saw revenues hit $166 million, which when taking out the factor of currency exchange fluctuations, still reflects a gain of 25 percent. Operating income for the quarter was $17.8 million, an 11 percent increase compared to its 2009 numbers.

"Vistaprint delivered strong third quarter revenue in line with our guidance," said Robert Keane, President and Chief Executive Officer. "Our earnings performance exceeded our expectations due to strong gross margins and lower than anticipated expenses during the quarter. We continued to execute toward our accelerated investment plans for the fiscal year, although the timing of some of our investments has shifted into the fourth quarter. We are pleased with our results and believe that we remain well positioned to continue to drive competitive advantage and deliver strong financial results for years to come."

Other figures of note released by the company include the fact, that in the quarter, the company acquired 1.6-million new customers, which represented 33 percent of the company's business that quarter. The company had, on average, 54,000 orders daily in the quarter, a significant boost of 23 percent over the previous year's quarter. During the quarter, the company started offering luggage tags, folded business cards, consumer Websites and recycled paper options for business cards and postcards.

By the end of its fiscal year, the company said it expects to make capital expenditures of between $95 and $100 million, which includes expansion of the company's manufacturing plant in Windsor, Ontario, and a new manufacturing base in Australia, to be operational in the company's first fiscal quarter of 2011.


Pazazz Printing CEO Warren Werbitt published the following open letter regarding the current state of his company. Pazazz filed for restructuring in March.



On Monday March 1, 2010 Pazazz Printing filed an NOI (CCAA) to preserve and maximize the value of the business. Over a 51 day period Pazazz Printing made a proposal to its creditors and suppliers and negotiated an agreeable restructuring plan. On Tuesday April 20, 2010 our proposal to the creditors was accepted!   

I am writing this letter to explain what I have experienced. It's been a long nine weeks and we can finally move forward.

For me personally, it has been a mentally and morally difficult experience.  After 18 years of working to build Pazazz Printing and its team I suddenly thought the world caved in. We had just finished a major expansion in late 2008 and I was feeling on top of the world. Who could have anticipated what was coming in 2009?

2009 brought the recession and absolute panic. The business world changed and the brakes were put on. Businesses stopped spending and people were laid off out of fear. This resulted in a chain reaction, causing other businesses difficult times. Banks got nervous and credit became scarce. Businesses were burdened and forced to act as banks for their clients. The pressure on the system was unbearable and Pazazz Printing got caught in the loop.

What I learned from this challenge is what goes around comes around. Everyone you pass on the way up you pass on the way down. If you always treat people with respect and dignity then they will treat you the same in return. I have been overwhelmed with support. What I realized is that I have connected with so many people over the years, that Pazazz Printing is well positioned in the industry and that the company has a solid reputation.

When I knew we had no choice but to file the NOI, I spoke with every employee, called most of our suppliers and as many clients as I possibly could. My hands shook every time I picked up the phone. Once they answered and I forced the words out of my mouth, most people's reactions were supportive - they were truly sorry to hear about our situation. Most suppliers offered their help in many ways, except credit (of course which I expected). Not one supplier stopped selling to us. When suppliers picked up remaining consignment goods they were surprised to see everything accounted for. What we had not used was returned.  I was told that often everything disappears. 

The last nine weeks has been a tremendous wakeup call. Pazazz Printing is not playing games. It was always our intention to stay in business, grow our business and continue servicing our clients.

Pazazz Printing has not laid off any employees. We have always run lean and everyone is committed to help the company succeed. I firmly believe that with the encouragement and cooperation of our dedicated team, loyal clients and committed suppliers Pazazz Printing will persist and become a better and stronger company.

I would like to thank everyone for their continued support and business.

Yours Truly,

Warren Werbitt
Founder and CEO


Canada’s largest printing company reversed a $6.4-million loss in the first quarter of last year, with a profit of $26.2-million in the first-quarter of the current fiscal year, as Transcontinental Inc. nears the completion of its unique newspaper/flyer platform.


“Our first-quarter results show a marked increase in our profitability compared to the first quarter of 2009, and this is the third consecutive quarter in which it has improved,” stated François Olivier, President and CEO, in a press release. Olivier continued to state that the results speak to the company’s implementation of a cost-cutting plan over the past year, as well as the employee's dedication to the rationalization measures.

In the first quarter ended January 31, 2010, Transcontinental recorded consolidated revenues of $559.3 million, compared to $625.4 million in the first quarter 2009, down 11 percent. The company points to an unfavourable exchange rate effect of $20.5 million, as the primary reason for the 11-percent decrease. Transcontinental also points to a negative $18.2-million effect because of the divestiture or closure of plants and publications, as well as a decline in paper prices, which had a negative impact of $10.4 million on its revenues.

Within its financial statement, Transcontinental expects positive numbers in its upcoming earnings reports, as it continues with the rationalization plan. The company, for example, will generate proceeds of more than US$100 million with the pending (second-quarter) completion of a deal to sell most of its U.S.-based direct-mail assets to IWCO Direct.

The company also stated that it expects to have its new hybrid newspaper and flyer-printing platform fully operational by late 2010. In July 2009, Transcontinental signed a deal to purchase four triple-wide KBA Commander CT presses – a total of 16 towers – to be installed at plants in Toronto, Calgary and Vancouver. KBA states that each press line has a maximum hourly output of 90,000 full-colour newspapers, inserts or magazines with up to 48 broadsheet or 96 tabloid pages.



Presstek has announced that it has settled a 2007 investigation with the Securities Exchange Commission regarding the company's financials from that period. Presstek has agreed to pay a civil penalty of US$400,000, a sum which had been allotted in the company's third quarter of last year.

"This investigation related to matters that occurred prior to the changes in executive leadership which took place in 2007," said Jeff Jacobson, Presstek's Chairman, President and Chief Executive Officer. "We feel very strongly about corporate governance and we are pleased to put this legacy issue behind us."

Presstek also posted its Q4 results, which saw the company post a loss of US$700,000. The loss is in improvement over its 2008 Q4 numbers, which resulted in a loss of $900,000. Revenues, however, saw a sharp drop over the fourth quarter of 2008, plunging 21 percent from $42.3 million to $33.5 million. Equipment revenue faced the steepest decline of 40 percent. The company managed to cut expenses year-over-year by $5 million, or 29 percent.

"These results represent our first sequential quarterly increase in revenue since the second quarter of 2008; a return to positive adjusted EBITDA after two negative quarters; and a strengthening of our overall financial position as we were able to significantly reduce our debt net of cash in the quarter," said Jacobson. "These positive financial results combined with the recent sale of Lasertel, the closing on our new credit facility, the completion of the SEC review and the successful result achieved with the International Trade Commission in the VIM patent litigation give us a great deal of momentum as we move forward."

Warren Werbitt, CEO and founder of Pazazz Printing, last week submitted a Notice of Intention with Bankruptcy Canada, which means the Montreal company intends to submit a proposal for restructuring under the Companies’ Creditors Arrangement Act.

A Notice of Intention document is filed with the Official Receiver as the first step under the Companies’ Creditors Arrangement Act (CCAA). In a telephone conversation with PrintAction, Werbitt states that he plans to restructure Pazazz Printing through the CCAA process.


"Moving forward, I have every intention of maintaining the same level of integrity and respect that I have had for this industry over the past 18 years," says Werbitt, "And for all of the employees, clients and suppliers who have supported Pazazz. I am taking the bull by the horns and I am not turning away."



In late 2007, Werbitt became a beacon for the future of Canadian printing, after producing a YouTube video called Printing’s Alive. He used this attention to support the strategic efforts of associations like the NAPL and the CPIA’s scholarship trust fund. Werbitt continued to say that several industry members and suppliers have shown tremendous support for Pazazz when he notified them about the filing last week.
 
While many printing companies have suffered over the past year and a half of economic turmoil, Pazazz’ situation was amplified based on several large capital investments and commitments made just prior to the Wall Street meltdown. An October 2008 press release issued by the company, describes how Pazazz had invested $7 million over the past few years, which included moving into a new 65,000-square-foot facility and purchasing a 56-inch, 6-colour KBA press. In September 2009, Pazazz also installed a new Xerox iGen4 press to bolster its toner-based production.



Heidelberg Canada President Richard Armstrong confirms Mississauga facility will stay open despite major restructuring efforts that will see marketing and other aspects move south.

Heidelberg Canada, faced with what it describes as "continued weak demand," has made considerable cuts to staff and states it will only be closing the demonstration area within its facility on Kenway Drive in Mississauga.

In an interview with PrintAction this morning, Armstrong declined to comment on the specific number of jobs that will be cut at Heidelberg Canada with the restructuring, "I don't want to get into the numbers, but we have let go a considerable number of people.

"Primary areas that have been affected are administration, marketing, and product management, and areas [where] we can share resources around between the countries. We've made some reductions, but we've tried to keep the number of service people still strong."

Press demonstrations, as a result, will be handled through its Atlanta facility, which is larger. According to Armstrong the rest of the facility, which also houses a substantial warehouse, will continue to operate and the company structure will remain unchanged, with Heidelberg Canada remaining a distinct entity.

When asked about the rationale behind the restructuring, Armstrong said it was a move to maintain profitability: "The way I see the market out there, we've got the economy at work which has really curtailed the amount of capital equipment that's being purchased, which has impacted us. Also, I see the future having a demand for less machines, primarily due to the fact that the number of printed sheets in sheetfed [which] I don't see it growing. But I do see that the productivity of our machines, and our competitor's machines, have really doubled in the last decade, so the sheer mass of printing machines and various other machines is going to be less. So we're trying to prepare ourselves for a different type of future."


In the fourth quarter of 2009, Worldcolor generated consolidated revenues from continuing operations of $848 million compared to $1.0 billion in the fourth quarter of 2008, which represents a decline of 18 percent. Also in the fourth quarter of 2009, Worldcolor reported that its cost of sales decreased by 23 percent compared to last year's quarter.

In late January of this year, Quad/Graphics Inc. announced its intent to acquire Montreal-based World Color Press Inc. The transaction is expected to close approximately in the summer of 2010.

Consolidated operating income in the fourth quarter of 2009 before IAROC was $83 million, compared to $50 million in the fourth quarter of 2008. Worldcolor also reported that its consolidated adjusted EBITDA was $132 million in the fourth quarter of 2009, compared to $118 million in the fourth quarter of 2008.

For the combined full year of 2009, Worldcolor reported combined adjusted EBITDA of $329 million, nearly 60 percent of which was earned in the five-month period after emerging from bankruptcy. The 2009 combined consolidated net loss from continuing operations was $154 million, compared to a net loss from continuing operations of $944 million for the same period in 2008.


 


KingsWeb Inc., a Mississauga-based commercial printer has closed its doors. Managed by the Slater family for over 25 years, the company operated out of a 50,000-square-foot facility.

The company had approximately 70 employees running two shifts, six days a week.

Multiple calls to the company yielded a simple message saying that the office was closed. The company also operated Queenstone Services, a trade printing sister company in the same building.

The company operated four Mitsubishi presses out of its sheetfed press division and a full-size, 6-unit Mitsubishi press out of its web press division.

KingsWeb claimed it was the only 6-colour Mitsubishi full web press in North America and one of the few in the world able to print stochastic on a web press through a thermally stabilized, computer-controlled process.







HP’s financial results for its first fiscal quarter (ended January 31), included a 4% revenue increase in its Imaging and Printing Group, relative to the year-ago quarter. Company-wide first quarter net revenues increased by 8%, reaching US$31.2 billion.

"HP is well-positioned to outperform the market," stated Mark Hurd, HP CEO, in a press release. "The strength of our portfolio, leaner cost structure and accelerating market momentum give us the confidence to raise our full-year outlook."


First quarter revenue was up 9% in the Americas to US$13.6 billion. Revenue was up 1% in Europe, the Middle East and Africa and 26% in Asia Pacific to US$12.1 billion and US$5.4 billion, respectively. Revenue from outside of the United States in the first quarter accounted for 65% of total HP revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) increasing 41% over the prior-year period while accounting for 10% of total HP revenue.


The company’s first quarter of 2010 received a boost from its Enterprise Storage and Servers division, which reported total revenue of US$4.4 billion, up 11%.


Within the Imaging and Printing Group, “Supplies” revenue was up 1%, while commercial and consumer hardware revenue increased 4% and 21%, respectively. Printer unit shipments increased 16%, with commercial printer hardware units up 11% and consumer printer hardware units up 18%. 



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