Acquisitions and consolidations make a shaky year in the print industry remain profitable.
Transcontinental Printing
Once again Transcontinental Printing, Warminster, Pa., has achieved the top ranking on the BFL&S Top 100 Manufacturers list. Reporting $2 billion in development within the United States for its latest fiscal year completed—$200 million more than last year's figures—the company thrives on nothing less than offering the best.
According to Tracy Dennis, director of business, this year the best has meant concentrating on strategic relocation maneuvers and internal growth. "We've undergone consolidation, as well as staff, procedural, manufacturing and program changes that all contribute to Transcontinental's continued success," said Dennis.
The consolidation Dennis spoke of was the regrouping of Transcontinental's three Philadelphia operations—consisting of U.S. direct marketing activities—under one roof. This alteration was done, added Dennis, to substantially increase the company's production capacity, particularly its lettershop services.
As a way to maintain its profit growth internally, Transcontinental launched Horizon 2005—a new cultural and objective initiative that includes a focus on the Kaizen process, which is based on a Japanese method for continuous improvement. The initiative consisted of gaining input from the company's entire personnel, and involved setting an average annual growth target of 15 percent, toward $3 billion in sales, in 2005.
As the newly shaped company enters 2003, Dennis concluded that its goal is to complete its consolidation while continuing to grow its business. As it stands now, Transcontinental consists of 51 plants and 11,000 employees, with the addition of vice president of sales Clif McDougall, a 13-year veteran of the industry.
By Sharon Cole
PrintXcel
Avoiding the build-it-and-they-will-come strategy once favored by numerous companies, PrintXcel racked up $265 million in sales in fiscal year 2001, once again reaching the No. 2 position in the BFL&S annual Top 100 Manufacturers report.
The key to the company's sustained success, explained Kevin Lombardo, president and CEO of the Englewood, Colorado-based print supplier, is listening to its customers. "We try to identify and develop applications that solve business issues for our customers in support of their end-users, not just put ink on paper," said Lombardo. "We do that by partnering with our customers to understand the dynamics in each market."
However, PrintXcel's customers are not the only ones who benefit from the array of products and services the print supplier has developed. The benefits are reciprocal, Lombardo said, because PrintXcel responds to the information it receives from
its distributors. "By partnering with our customers we are able to identify solutions and new products and services that bring value to our sales relationships," Lombardo said.
In keeping with this philosophy, PrintXcel has acquired a portfolio of product brands, including Discount Labels, Lancer Label, Wisco Envelope and VersaSeal, with marquee-level brand values. The print leader also spent $17 million over the past two years in infrastructure upgrades.
Despite a $15 million drop in sales from the previous year—$13 million of which Lombardo attributed to the company's decision to exit markets it determined were without long-term viability—PrintXcel managed to build its share of customers ordering two or more product sets from 35 percent to 85 percent of its top 100 customers.
Another factor in the company's success is its ability to reach customers in the Fortune 1000 and broad middle markets by selling through independent distributors.
Despite the death knell sounded by analysts eager to augur the obsolescence of printed business products, Lombardo said PrintXcel continues to experience de-mand for traditional products, while still positioning its distributors for future success by offering them the latest in specialty documents, commercial printing, direct mail, envelopes and labels.
"The reason for all the investment is because we're supporting our distributors as they reposition from the annuity sale of the traditional document to being able to sell every type of specialty product," said Lombardo, adding,"We are repositioning to where the future is, not where the past has been."
In terms of the future, PrintXcel will focus on process-color labels for advertising and packaging applications, and its VersaSeal products.
By Allan Martin Kemler
Ennis Business Forms
For the past 10 years, Ennis Business Forms, DeSoto, Texas, has placed among the top four in BFL&S' manufacturer rankings. The reason for this success may lie in Ennis' unique culture.
Said President and CEO Keith Walters, "We don't have a lot of structure or different management levels as too much structure gets in the way and negatively impacts distributors." He added that this philosophy helps to reduce overhead, allowing Ennis distributors to compete with directs while maintaining a profitable business.
"Distributors are our sales and marketing arm and the experts in servicing end-users," he continued. "We don't need to dictate to them how to sell."
Distributor feedback, however, does play a significant role in daily operations, and Ennis continues to invite groups of distributors together for informal exchanges of ideas and concerns. With distributors moving away from conventional forms and becoming interested in different products, these discussions have resulted in some of the company's major acquisitions, bringing not only new products to the table, but also new distributors.
For instance, the desire to market profitable point-of-purchase items fueled the acquisition of Denver-based Adams McClure two-and-a-half years ago. In addition, the servicing of financial markets inspired the acquisition of Northstar Financial Forms in Roseville, Minn.
With so many varied products and services under one umbrella, Ennis is able to bring three platforms to the market—forms solutions, promotional solutions and financial solutions.
Walters was already CEO when he became president and chairman of Ennis in 1998. Since then, four additional enterprises have been acquired. In addition, Ennis recently signed an intent to acquire Calibrated Forms, Columbus, Kansas.
Summarizing Ennis' success, Walters said, "Ennis has a large and diverse distributor base. It is up to those distributors to carry the message forward."
By Maggie DeWitt
Champion Industries
Rocked by terrorism, accounting scandals and a lingering recession, the U.S. economy's effect on big business has left many companies yearning for the halcyon days of the late 20th century. Of course, most of those companies do not have Champion Industries' balance sheet.
Thanks to the Huntington, West Virginia-based company's enviable debt/equity ratio and the availability of $26 million in working capital, Champion was able to limit a drop in sales during fiscal year 2001 to less than 1 percent.
A large measure of the company's ability to avoid major losses, explained Vice President and CFO Todd Fry, was the result of the acquisition of two companies which helped Champion leverage advantages in production, sales and distribution.
According to Fry, the two acquisitions—Cordage, Cincinnati and Transdata Systems, Baton Rouge, La.—were specifically purchased to heighten Champion's customer relations and supply chain management systems.
Despite possessing the cash reserves to remain acquisition-minded this past year, Champion moved to close plants in both Ohio and South Carolina to minimize its overhead. Subsequent to the acquisition of Cordage, Champion liquidated the division through a strategic alliance with a third party and then allied itself with printing supplies distributor Xpedx, Livonia, Mich.
Even with the success Champion has had maintaining its sales levels, Fry insists that much of it is due to the company's excellent financial standing.
"The income statement can fool you a number of times, but the balance sheet can only fool you once," said Fry. "With our balance sheet, the equity and the capital is there, therefore spikes are easier to take."
In spite of near daily stock market fluctuations and the rising number of wary investors watching from the sidelines, Fry said Champion intends to continue its aggressive yet prudent practice of looking at opportunities to purchase companies that can make it more competitive.
By Allan Martin Kemler
TST/Impresso
If Marshall Sorokwacz, president of TST/Impresso, Coppell, Texas, had to describe the nature of business this past fiscal year, he would say it was rocky. Having been a passenger Sept. 11, 2001 on an airplane bound for Philadelphia that was set down in Nashville, Tenn., Sorokwacz experienced his first indication that times may be tough for a while.
"Those events greatly affected our revenue," said Sorokwacz. "Backlogs went down and overall business dropped to almost 30 percent for a couple of months."
What contributed to the significant drop, he explained, was that TST's initial reaction to September 11 was to hunker down in case something else should further rattle the economy. As a result, Sorokwacz said that business was tenuous for some time. "But we were able to control costs and overhead while being cautiously aggressive," he added.
Despite the uneasiness, TST managed to write approximately $123 million in sales this past fiscal year, $27 million more than last year, resulting in a No. 5 ranking on this year's BFL&S Top Manufacturers list.
How did TST do it? According to Sorokwacz, it was the result of reporting a full year's worth of numbers from the acquisition of one company, as well as about five months of numbers from a more recent acquisition. Those acquisitions included all assets of the Sky division of Durango-Georgia Converting, Greencastle, Pa., and the business forms and small rolls assets of United Computer Supplies, Itasca, Ill.
Upon completion of the United maneuver, Sorokwacz estimated that TST's consolidated annual sales would exceed $120 million in fiscal 2002, and $160 million in fiscal 2003. As it looks now, Sorokwacz said his projection is ringing true; currently TST is operating at $160 million annualized.
What also contributed to TST's increase was its elimination of unnecessary administrative overhead during each acquisition. When all was said and done, 90 percent of Sky's people, and more than 50 percent of United's employees were retained.
As for the future success of TST, Sorokwacz would like to see company sales expand and profitability enhanced. He added that the best way to do this may be to change its shareholding structure.
"In fact, we just announced that we are exploring the idea of going private," Sorokwacz said. "This will eliminate the cost of being public while still retaining our shareholders."
In order to pull off this transition, TST/Impreso has engaged the broker, Matrix Capital Markets Group, Richmond, Va., to locate a strategic investor to purchase a minority interest in the company.
"We're looking for a better strategic partner that is interested in buying our public shares," said Sorokwacz. "One that will allow us to continue to grow."
By Sharon Cole