Slide 1: First Quarter 2008 Financial Review and Analysis
First Quarter 2008 Financial Review and Analysis (Unaudited) April 22, 2008
Slide 2: Forward-looking statements
Certain statements contained in this document are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements and financial or other business targets are subject to certain ri
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation contains certain non-GAAP measures as defined by SEC rules. The most directly comparable GAAP measures have been included in the earnings news release for the quarter. Reconciliations of non-GAAP measures to the most directly comparable GAAP measu
Slide 4: Challenging business conditions continued through Q1... actions underway to improve results
Challenging business conditions continued through Q1... actions underway to improve results Slowdown in U.S. retail environment drove sales declines (organic basis) for both RIS and Office Products Office Products customers reduced inventories... estimated two weeks' less inventory on hand vs. year
Slide 5: First Quarter Overview
First Quarter Overview Net sales increased 18.4% over prior year Net effect of Paxar acquisition was approx. 14% Currency added 6% ($0.05 benefit to earnings per share) Sales declined approximately 2% on an organic basis Operating margin before restructuring and asset impairment charges and transiti
Slide 6: First Quarter Overview (continued)
First Quarter Overview (continued) Annual effective tax rate for 2008 expected to be in the 15%-18% range (down from 18%-20% originally) Ongoing annual tax rate now expected to be in the 17%-19% range for the foreseeable future (down from 18%-20% previously), subject to significant volatility from q
Slide 7: Reported Sales Growth and Management Analysis of Underlying Sales Trends
Reported Sales Growth 3.9% 8.1% 18.5% 21.4% 18.4% Management Analysis of Underlying Sales Trends (1) Reported Sales Growth less the impacts of foreign currency translation and acquisitions, net of divestitures (calculation may not tie due to rounding). Q1-07 Q2-07 Q3-07 Organic Sales Growth(1) 1.3%
Slide 8: Margin Analysis
Gross Profit Margin (Total Company) 25.8% 27.5% 28.1% Operating Margin (non-GAAP(2)): Pressure-Sensitive Materials 8.0% 9.7% 9.0% Retail Information Services (RIS) 1.0% 4.3% 6.8% Office and Consumer Products 11.1% 12.6% 21.9% Other Specialty Converting 5.8% 7.1% 2.1% Total Company 6.3% 7.8% 9.6% (1)
Slide 9: Key Factors Impacting Margin
Key Factors Impacting Margin (see Slide 18 for prior year reconciliation for Paxar) Gross profit margin before Paxar integration costs declined by 40 basis points compared to prior year margin, as reported Adjusting the prior year number to include Paxar, gross profit margin declined 170 basis point
Slide 10: Pressure-Sensitive Materials: Q1-2008 Segment Overview
PRESSURE-SENSITIVE MATERIALS Reported sales of $920 mil., up 7% compared with prior year Organic sales growth of approx. 1%, slower than Q4 pace Change in sales for roll materials business by region, adjusted for the effect of currency and intercompany sales: Europe up at low single digit rate (impr
Slide 11: Retail Information Services: Q1-2008 Segment Overview
Q1-2008 Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $372 mil., up 138% compared with prior year due to the Paxar acquisition Organic sales decline of approx. 1% Continued weakness of domestic retail apparel market; sales on products destined for European market remaine
Slide 12: Paxar Integration Update
Paxar Integration Update Targeting up to $125 mil. of annual synergy savings when complete Realized approx. $17 mil. of savings in Q1, up from $11 mil. in Q4 Over 75% of targeted savings expected to be captured in run rate by year-end No change to anticipated cash costs of integration ($165 - $180 m
Slide 13: Office and Consumer Products; Other Specialty Converting
Q1-2008 Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $194 mil., down 9% compared with prior year Organic sales decline of approx. 12%, due in part to customer inventory reductions ($12 mil. estimated impact to net sales) Excluding restructuring charges, operating margi
Slide 14: Cash Flow and Debt-To-Total Capital
Cash Flow and Debt-To-Total Capital (Millions, except as noted) Q1-08 Q1-07 Cash flow from operations $ 56.0 $ 11.9 Payment for capital expenditures $ 38.4 $ 56.4 Payment for software and other deferred charges $ 16.5 $ 15.0 Free Cash Flow(1) $ 1.1 $(59.5) Dividends $ 43.8 $ 42.7 Share Repurchase $
Slide 15: 2008 Earnings Guidance (revised): Key Considerations
2008 Earnings Guidance (revised): Key Considerations Guidance for adjusted (non-GAAP) earnings per share (see Slide 17 for reconciliation to GAAP): $4.00 to $4.30 (from $4.15 to $4.55 previously) Performance within range is highly dependent on organic growth and product mix Midpoint of range assumes
Slide 16: 2008 Earnings Guidance (revised): Key Assumptions
2008 Earnings Guidance (revised): Key Assumptions Reported revenue up 10% to 12%, including approximately 5% benefit from currency, and 7% from acquisitions Sales roughly flat on an organic basis, with modest volume growth offset by negative price/mix Raw material cost inflation of approximately 2.5
Slide 17: 2008 Earnings and Free Cash Flow Guidance
2008 Earnings and Free Cash Flow Guidance 2008 Guidance Reported (GAAP) Earnings Per Share $3.60 - $3.90 Add Back: Estimated Integration Transition Costs, Restructuring and Asset Impairment Charges* ~ $0.40 Adjusted (non-GAAP) Earnings Per Share $4.00 to $4.30 * Subject to revision as plans are fina
Slide 18: Backup: First Quarter Margin Comparison Reconciliation - Total Company
Backup: First Quarter Margin Comparison Reconciliation for Effects of Paxar - Total Company Reconciliation for Effects of Paxar - Total Company Reconciliation for Effects of Paxar - Total Company
Slide 19: Backup: First Quarter Margin Comparison Reconciliation - RIS
Backup: First Quarter Margin Comparison Reconciliation for Effects of Paxar - RIS Reconciliation for Effects of Paxar - RIS Reconciliation for Effects of Paxar - RIS