Banta to Shutter 3 Plants, Lay Off 650Banta Corp., Menasha, WI, last week said it would close down three of its 35 facilities and lay off about 650 employees as part of a restructuring program that also will include a focus on acquisitions to strengthen its core printing business.
Analysts were surprised at the move but project a second-half recovery for the printing giant as it benefits from newly acquired clients and a seasonal increase in catalog printing.
"I think it was more than we expected, but that's good because it should have a positive effect on earnings," said Stephen E. Keane, an analyst with Robert W. Baird & Co., Milwaukee. "The three plants that they are closing essentially lost 14 cents a share in 1998, and the outlook was that they were not going to make money in 1999."
The company said it would close its digital pre-press plant in Charlotte, NC; a mailing and fulfillment center in Berkeley, IL; and a printing plant in Kent, WA. Business at the facilities will be transferred to other Banta locations. The 650 layoffs include 350 at the three plants and another 300 in other areas of the company.
Banta will take a second-quarter pretax restructuring charge of $50 million to $55 million for the actions, which, in addition to the closings, include the write-down of impaired assets and the reduction of excess capacity. Because of ongoing volume shortfalls in its long-run direct mail and consumer catalog plants and continued losses at the three facilities that are being shuttered, the company said its earnings per share for the first half of 1999 would be about 5 percent to 7 percent below the year-ago level of 82 cents, divided equally between the first and second quarters. First-quarter earnings are scheduled to be released on April 27.
"Meaningful improvement will not occur until the second half of this year, with full benefits starting in the year 2000," said chairman Donald D. Belcher.
Customers of Banta should not expect to see any differences in the services they receive, the company said.
"We're not losing any of our capabilities to serve our customers," said Banta spokesman Mark Fleming. "Basically we're eliminating underperforming divisions within the company to boost profitability and improve operating margins."
As part of the restructuring plan, the company said it would pursue acquisition candidates to strengthen its core printing business.
"Some of our more recent acquisitions have focused on new technologies for digital content management," Fleming said.
In addition to its printing operations, which accounted for more than $1 billion of its total 1998 revenues of $1.34 billion, Banta also has fulfillment and distribution operations as well as a digital content management business.
The recent low volumes in Banta's direct mail printing business have been the result of reduced orders from existing clients, analysts said, not from the loss of any major accounts.
Keane said he expected improvements both in Banta's digital business and in its catalog-printing business later this year.
"The consumer catalog side is seasonal, and that always picks up later in the year," he said. In the digital business, he said, "the expectation is that that sector will start to show some improvement."
Banta has signed several new accounts in recent months, including a 10-year fulfillment-and-distribution contract with IDG Books Worldwide and a five-year agreement to print and distribute ProBook catalogs for Home Depot. In addition, the company's Centrus digital content management system is expected to be installed in several new customers around mid-year.