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Author: TannerMirabel Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 71064  
Subject: SGK Date: 12/15/2003 1:27 PM
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Recommendations: 2
Hi,

I used to post frequently at TMF under "LucidDreamer" and have finally resumed looking at stocks since the market appears to finally be rebounding. I used to lurk at this board quite a bit, and respected the views of many of the posters here, including Mike Buckley from reading the Gorilla Game board. I hope it is not inappropriate to plug a stock that I am very interested in. Feel free to give feedback good or bad.

I am long SGK, and wanted to bring it to the attention of other investors, in the hopes of gaining some positive or negative insights in the company/stock/industry that I may have overlooked.

This stock is not a tech gorilla, but rather a small-cap stock that actually produces a dividend, and has consistently been profitable, even throughout the recent stock market slowdown.

Here is a description off of www.clearstation.com:
Schawk, Inc. is a provider of digital imaging prepress services in three primary markets: consumer products packaging, advertising agencies, and promotion. For the 9 months ended 9/30/03, revenues increased 10% to $150.8M. Net income rose 33% to $13.1M. Revenues reflects new accounts and increased business with existing customers.Earnings also benefited from cost reductions from restructuring and other initiatives in prior years. http://www.schawk.com/

Some highlights to mention
===========================

Using the same website for info, you can see that SGK has made a profit every quarter since 1st quarter 2000.

The have momentum, being near a 52 week high.

I am not big into technical trading and "gaps" but apparently trenchrat is of the belief that NYSE stocks do not always close their gaps.

Unlike most stocks, they did not have as drastic a dropoff in revenues the past few years. They made $206 mill in 2000, $186 mill in 2001 & 2002, and it appears they are going to approach $200 mill this year.

They appear to be in acquisition mode, buying out companies ala Cisco, to increase their market share, and to eliminate competition.

Apparently the CIO does a very good job of integrating new companies into the mix quickly, making the acquisitions more profitable overall.

Here are some case studies to get an idea of what products they deliver. You will recognize many of the companies they do business for:
http://www.schawk.com/cpg/case/case.html

Thanks and keep up the good work on this board,
Tanner

Below is the latest earnings report from www.quicken.com:








Schawk Announces Increased Sales and Earnings
Wednesday, October 22, 2003 07:30 AM ET Printer-friendly version

-- Q3 EPS Of 20 Cents In 2003 Versus 14 Cents In 2002 -- Sales Increased 8.5 Percent Versus Prior Year Third Quarter -- Q3 Operating Margin Increased To 14.0 Percent From 12.3 Percent Due To Increased Sales

DES PLAINES, Ill.--(BUSINESS WIRE)--Oct. 22, 2003--




Schawk, Inc. (NYSE: SGK, news), one of North America's leading providers of digital imaging graphics services to the consumer products industry, reported third quarter earnings of $0.20 per fully diluted share compared to $0.14 per fully diluted share for the third quarter of 2002. For the nine months ended September 30, 2003, the Company reported earnings of $0.60 per fully diluted share compared to $0.45 per fully diluted share for the first nine months of 2002.

Net income was $4.3 million in the third quarter of 2003, compared with $3.1 million for the prior year third quarter. For the nine months ended September 30, 2003, net income was $13.1 million compared to $9.9 million for the prior year nine-month period.

Third Quarter Ended September 30, 2003

Schawk reported net sales of $50.5 million for the third quarter of 2003 compared to $46.6 million in the same quarter of 2002, an 8.5 percent increase. Strong sales of graphics services to consumer products packaging clients, which increased 9.5 percent, were accompanied by slight growth in sales of graphics services to advertising agency clients compared to the same quarter of 2002. The increase in sales to consumer product packaging clients in the quarter was primarily the result of growth in sales of package design services and graphic services to existing accounts that increased the number of product line extensions, new designs and promotions to improve market share in 2003.

Gross margin for the third quarter increased to 41.3 percent in 2003 from 39.6 percent in 2002, primarily due to higher sales, and as a result of keeping production costs close to their prior year levels.

Operating income for the third quarter of 2003 was $7.1 million compared to $5.7 million in the third quarter of 2002, primarily due to strength in sales to consumer products packaging clients. Operating margin was 14.0 percent in the third quarter of 2003 compared to 12.3 percent in the same period of 2002, due to higher sales in the 2003 period. Operating income in the third quarter of 2002 was negatively impacted by $0.4 million in severance costs classified as other charges.

Other income (expense) for the third quarter of 2003 was $0.1 million of net other expense, a $0.6 million decrease from the third quarter of 2002. The change in results was due to the following items:


Gain related to the distribution of proceeds from the $0.3 million
sale of a mutual insurance company in which Schawk
was a policy holder
----------------------------------------------------------------------
Lower interest expense due to lower outstanding debt $0.3 million
and lower interest rates
----------------------------------------------------------------------
Net decrease in other expenses $0.6 million
----------------------------------------------------------------------


Income tax expense for the third quarter of 2003 and 2002 was at an effective tax rate of approximately 38 percent.

Nine Months Ended September 30, 2003

For the nine-month period ended September 30, 2003, net sales were $150.8 million compared to $137.2 million for the same period of the prior year, a 10.0 percent increase. This increase is primarily the result of the strengthening market for graphics services for consumer products packaging clients in 2003, which led to increased sales of 11.6 percent during the period, as compared to sales of graphics services to advertising agency clients, which were approximately equal to the prior year period. As noted above, the increase in sales to consumer product packaging clients in the first nine months of 2003 was primarily the result of growth in sales of package design services and graphic services to existing accounts that increased the number of product line extensions, new designs and promotions to increase market share in 2003.

Gross margin for the nine-month period of 2003 was 41.6 percent compared to 40.5 percent in the comparable prior year period. Gross margin increased in the 2003 period primarily as a result of higher sales and a $0.5 million gain on the sale of a building in the first quarter of 2003.

Operating income increased to $21.6 million for the nine months ended September 30, 2003, compared to $15.4 million in the same period last year, and operating margin for the 2003 nine-month period was 14.3 percent compared to 11.2 percent for the prior year period, primary due to increased sales in 2003. In addition, results for the nine-month period of 2003 included the aforementioned gain on the sale of a building of $0.5 million. Conversely, operating income from 2002 was negatively impacted by $2.5 million in impairment and other charges.

Other income (expense) in the nine-month period ended September 30, 2003, resulted in net other expense of $0.4 million, a $1.6 million decrease, compared to $2.0 million in the comparable prior year period. The decrease in other expense was primarily a result of the following items:


Proceeds from life insurance policy $0.4 million
----------------------------------------------------------------------
Litigation settlement in Schawk's favor $0.4 million
----------------------------------------------------------------------
Lower interest income - prior year period included ($0.2 million)
interest income from tax refunds
----------------------------------------------------------------------
Gain related to the distribution of proceeds from the $0.3 million
sale of a mutual insurance company in which Schawk was
a policy holder
----------------------------------------------------------------------
Lower interest expense due to lower outstanding debt $0.7 million
and lower interest rates
----------------------------------------------------------------------
Net decrease in other expense $1.6 million
----------------------------------------------------------------------


Income tax expense for the nine months ended September 30, 2003 was at an effective rate of 38.3 percent compared to an unusually low rate of 26.9 percent in the prior year period. The lower rate in the 2002 period was as a result of state tax refunds and the settlement of an outstanding tax obligation in the second quarter of that year. It is currently anticipated that the effective tax rate will be in the range of 38 percent to 39 percent for the full year of 2003.

Other Information

Depreciation and amortization expense was $2.7 million for both the third quarter of 2003 and the third quarter of 2002. For the 2003 nine-month period, depreciation and amortization was $8.6 million compared to $9.0 million in the prior year nine-month period.

Capital expenditures in the third quarter of 2003 were $1.2 million compared to $2.2 million in the third quarter of 2002. For the nine-month period of 2003, capital expenditures were $5.3 million compared to $5.7 million in the prior year period.

Also, since the Company's long-term credit facility matures in May 2004, Schawk's outstanding borrowings of $16 million drawn under this facility are listed under current liabilities as "short-term debt expected to be refinanced" on the balance sheet. The Company intends to refinance the outstanding borrowings on its credit facility, and its bank has indicated its interest in extending long-term credit prior to or concurrent with the maturity date of the credit facility.

Management Comments

David A. Schawk, President and Chief Executive Officer commented, "Business levels remained strong in the third quarter in the graphic services for consumer products packaging market. Our strong third quarter performance in 2003 marks the eighth consecutive quarterly year-over-year increase in net income and earnings per share for Schawk, Inc. Our 14.0 percent operating margin was in line with our expectations for the third quarter, and represents an increase over the second quarter of this year when our operating margin was 13.6 percent. We will strive to continue to achieve mid-teen operating margins for the fourth quarter of 2003 and throughout 2004. We also further reduced total borrowings to the lowest level in ten years at $30.3 million, and have a very conservative 23 percent total debt-to-total capital ratio.

"We have already been awarded a number of new business opportunities in 2003 that we expect will help us to achieve our sales growth targets for 2004. Our success in this area is evidence that the sales strategy we implemented in the beginning of this year is beginning to produce the results that we anticipated. Consistent with our growth strategy, we are also actively considering a number of acquisition opportunities that have the potential to help us achieve 20 percent sales growth in 2004."

Mr. Schawk concluded, "As an independent graphic services provider with international operations and complete services offering from concept to print management, Schawk is well positioned to deliver value to its clients. Recent assignments included multiple high value services such as workflow management, prepress, digital asset management, and design and art production. These marketing services are being purchased by clients seeking to leverage our ability to bring enhanced value across their supply chain. By offering integrated services to it consumer package goods and retail clients, Schawk is able to reduce the amount of time it takes to bring a new product to market, as well as achieve significant cost savings for its clients."

Schawk, Inc., headquartered in suburban Chicago, is a leading supplier of digitized high resolution color graphic services, brand consulting and design, and an array of digitally based workflow solutions all aimed at bringing enhanced value to its clients. Schawk provides these advanced services for the food, beverage, and consumer products packaging, point of sale, and advertising markets.

Certain statements in this press release are forward-looking statements within the meaning of Section 21E of the Securities and 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, 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, loss of key management and operational personnel, our ability to implement our growth strategy, the stability of state, federal and foreign tax laws, our ability to identify and exploit industry trends and to exploit technological advances in the imaging industry, our ability to continue 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.

Schawk invites you to join its Third Quarter 2003 Earnings Conference Call, on Wednesday, October 22 at 9:30 a.m. central time. Hosting the call will be A. Alex Sarkisian, Executive Vice President and Corporate Secretary, and James J. Patterson, Sr. Vice President and CFO. To join the call, please dial 800-366-7417 or 303-262-2050 at least five minutes prior to start time and ask for the Schawk, Inc. conference call. If you are unable to participate in the call, a replay will be available through October 29 at 11:59 p.m. eastern time, by dialing 800-405-2236 or 303-590-3000, entering pass code 555593, and following the prompts.

To access the call on the Internet, go to: http://www.actioncast.acttel.com. The event ID number is 17932. The replay on the Internet will be available for 30 days. For more information about Schawk, visit our website at http://www.schawk.com.

Financial Tables to Follow



Schawk, Inc.
Consolidated Statements of Operations
Three Months Ended September 30, 2003 and 2002
(Unaudited)
(In Thousands, Except Per Share Amounts)

2003 2002
-------------------

Net sales $50,500 $46,556
Cost of sales 29,633 28,126
Selling, general, and administrative expenses 13,812 12,263
Restructuring and other charges -- 421
--------- ---------

Operating income 7,055 5,746

Other income (expense)
Interest income -- 1
Interest expense (415) (707)
Other income 297 --
--------- ---------
(118) (706)
--------- ---------

Income before income taxes 6,937 5,040

Income tax provision 2,628 1,915
--------- ---------

Net income $4,309 $3,125
========= =========

Earnings per share:
Basic $0.20 $0.15
Diluted $0.20 $0.14

Weighted average number of common and common
equivalent shares outstanding 21,952 21,721
Dividends per common share $0.0325 $0.0325

Schawk, Inc.
Consolidated Statements of Operations
Nine Months Ended September 30, 2003 and 2002
(Unaudited)
(In Thousands, Except Per Share Amounts)

2003 2002
---------------------

Net sales $150,840 $137,185
Cost of sales 88,028 81,560
Selling, general, and administrative expenses 41,238 37,688
Restructuring and other charges -- 2,542
---------- ----------

Operating income 21,574 15,395

Other income (expense)
Interest income 51 229
Interest expense (1,471) (2,175)
Other income 1,046 --
---------- ----------
(374) (1,946)
---------- ----------

Income before income taxes and minority interest 21,200 13,449

Income tax provision 8,112 3,619
---------- ----------
Income before minority interest 13,088 9,830
Minority interest in net loss of subsidiary -- 21
---------- ----------

Net income $13,088 $9,851
========== ==========

Earnings per share:
Basic $0.61 $0.46
Diluted $0.60 $0.45

Weighted average number of common and common
equivalent shares outstanding 21,718 21,696
Dividends per common share $0.0975 $0.0975


Schawk, Inc.
Consolidated Balance Sheets (In Thousands)

September 30 Dec. 31,
2003 2002
(unaudited)
---------------------
Assets
Current assets:
Cash and cash equivalents $2,985 $2,051
Trade accounts receivable, less allowance for
doubtful accounts of $1,605 in 2003 and $1,269
in 2002 38,401 37,946
Inventories 9,019 8,540
Prepaid expenses and other 3,378 3,539
Refundable income taxes 487 889
Deferred income taxes 1,722 1,713
---------------------
Total current assets 55,992 54,678

Property and equipment, net 37,490 41,113
Goodwill 61,268 60,476
Other assets 4,011 4,203
---------------------
Total assets $158,761 $160,470
=====================

Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $4,505 $4,696
Accrued expenses 15,644 13,787
Income taxes payable 574 --
Notes payable to banks 2,220 3,281
Current portion of long-term debt and capital
lease obligations 6,063 6,260
Short-term debt expected to be refinanced 16,000 --
---------------------
Total current liabilities 45,006 28,024

Long-term debt 6,000 37,186
Capital lease obligations 40 46
Other 980 1,029
Deferred income taxes 4,692 4,418

Stockholders' Equity:
Common stock 187 186
Additional paid-in capital 87,431 85,922
Retained earnings 38,261 27,253
Accumulated comprehensive loss, net 460 (1,558)
---------------------
126,339 111,803
Treasury stock, at cost (24,296) (22,036)
---------------------
Total stockholders' equity 102,043 89,767
---------------------
Total liabilities and stockholders' equity $158,761 $160,470
=====================




CONTACT: Schawk, Inc.
James J. Patterson, 847-827-9494
jpatterson@schawk.com
or
Dresner Corporate Services
Kristine Walczak, 312-726-3600
kwalczak@dresnerco.com



Track your stocks, the market, and more by email!

Latest SGK Headlines

• Schawk, Inc. Completes Acquisition of Blue Mint - San Francisco Brand Strategy & Design Agency Business Wire, December 02, 2003


• Schawk, Inc. Again Named a ``Best Workplace in America' in the Graphic Arts Industry by Printing Industries of America Business Wire, November 18, 2003


• Schawk Names Christopher Splan Vice President of Business Development, Graphic Services Business Wire, November 17, 2003


• Schawk, Inc. to Acquire Pixxon, Inc. - San Francisco Market Leader in Graphic Services Business Wire, October 31, 2003


• Schawk, Inc. Announces Regular Quarterly Dividend Business Wire, October 24, 2003



More SGK News

Stock Insight

Symbol Last Change


SGK 13.80 +0.06





Index
DJIA 10,106.50 +64.40


Nasdaq 1,951.88 +2.88




Monday, December 15, 2003 12:38 PM EST. Quote delayed: 15 minutes Nasdaq, 20 minutes others.




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