Tuesday, digital graphic imaging and design service provider Schawk Inc. (SGK), in a preliminary report for fiscal year 2008, said it expects a slip to loss from the year-ago period hurt by charges. The company also anticipates fiscal year 2008 revenue marginally higher from prior-estimates and issued earnings outlook for the first quarter of fiscal year 2009.
The Chicago, Illinois-based company expects a fiscal year 2008 net loss of $60.0 million, compared to a net income of $30.6 million in the similar period last year.
Schawk now expects net sales of approximately $494.2 million for the year ended December 31, 2008, a decrease of approximately 9% relative to the comparable prior-year period. Earlier in March, the company indicated net sales guidance of about $489.2 million for 2008, down 9.2% from last year.
Schawk expects to report a full-year 2008 operating loss of approximately $56.6 million, compared to operating income of $60.2 million in the prior year.
The full-year loss for 2008 is also expected to be negatively impacted by $35.4 million charges, which also include approximately $10.4 million restructuring related charges.
The company anticipates the total amount of the non-cash goodwill impairment charge to be approximately $48.0 million for the fourth quarter and full year of 2008. Previously, Schawk had provided an estimate of $20 million to $30 million of goodwill impairment for the fourth quarter and full year of 2008.
Excluding items, 2008 operating income would have been approximately $26.8 million compared to $59.6 million in the fiscal 2007. The company expects to file its fiscal 2008 returns not later than end May 2009. Schawk primarily attributed the delay to the finalization of 2008 goodwill impairment charge.
Restructuring charges are expected to result in total annual savings of approximately $21.9 million, with an estimated $7.4 million in savings realized in 2008.
Looking forward, the company foresees a fiscal year 2009 first-quarter net loss of $2.2 million compared to a profit of $4.3 million in the corresponding quarter last year.
The company expects to report a first-quarter operating loss of approximately $3.3 million, compared to operating income of $6.7 million in the prior-year period. Included in the loss for the first quarter of 2009 is an estimated $1.0 million in restructuring charges related to the additional 2009 cost-reduction actions, as well as estimated expenses of $2.0 million related to the company's remediation and related activities.
The company anticipates first-quarter net sales of approximately $103.8 million, down approximately 18% from prior-year period.
Schawk anticipates additional actions taken and expected to be taken during 2009 will result in restructuring charges of approximately $2.0 to $3.0 million, generating annual savings of $6.0 to $7.0 million beginning the first quarter of 2009. The company has taken other 2009 cost-reduction actions, expected to reduce expenses by approximately $6.0 to $7.0 million for the year.
Schawk is also presently in negotiations with lenders to provide financial covenant flexibility under its revolving credit facility and note agreements in light of the its expectations as to its full-year 2008 operating results and the uncertain and adverse economic conditions in which it presently operates.
Schawk currently expects that it will hold its 2009 annual meeting of shareholders not later than June 30, 2009.
Schawk closed Tuesday's regular trading at $7.00, up $0.05 or 0.72%, on a volume of 71,998 shares on the NYSE.
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