CEXP
Corporate Express Announces Lower than Expected Third
Quarter Earnings
PR Newswire - November 03, 1998 16:42
BROOMFIELD, Colo., Nov. 3 /PRNewswire/ -- Corporate Express, Inc. (Nasdaq: CEXP), a
leading supplier of goods and services to corporations that value innovative procurement solutions,
today announced that it expects third quarter 1998 earnings to be below security analysts' published
expectations.
The expected earnings shortfall is due to below plan performance in several non-core business units,
primarily Delivery and the United Kingdom, which are expected to account for an approximate $0.07
earnings per share shortfall for the third quarter. The domestic Office Products Business remains on
plan, despite the fact that it is experiencing some sector-specific revenue softness, primarily in markets
that serve financial services and energy-related customers.
"During the first two quarters of 1998, our domestic Office Products Business, Software Business, and
Australian and Canadian operations generated better-than-expected results, which compensated for
shortfalls in some non- core parts of the business," said Bob King, President and CEO. "While the
domestic Office Products Business' operating contribution remains on plan, the top-line softening,
coupled with currency pressures in certain international markets, has reduced the Company's ability to
compensate for its under- performing businesses. While the Delivery Business is performing
substantially below its original 1998 plan, it is on track with its turnaround plan, and we expect it to be
profitable in the third quarter. Despite the earnings pressure, we expect third quarter cash flow to be
strong, in large part, due to continued strong EBITDA performance and our aggressive working capital
management program."
"We created the new Corporate Supplier Division during the third quarter, and we are accelerating our
development and implementation plans," added King. "This acceleration is designed to enable the
Company to clearly differentiate itself and generate additional sales growth. At the same time, we are
continuing our turnaround efforts in the Delivery Business and in the U.K., both of which we expect to
improve sequentially; and we are taking a number of actions aimed at strengthening margins throughout
our global operations. These actions include implementing an aggressive, company-wide cost reduction
initiative, which will likely result in a fourth quarter restructuring charge, continuing our best practices
program, and expanding our 1999 catalog offering in order to stimulate sales and further reduce
wholesaler dependency in our core business."
During the third quarter, Corporate Express purchased approximately 4.2 million shares of its common
stock at an average price of $10.30 in accordance with the Company's ongoing, previously announced
stock repurchase plan. The Company believes that its solid core operating performance, combined
with the Corporate Supplier business strategy becoming a more tangible reality, effectively position the
Company for profitable, long-term growth. Corporate Express also stated today that it has held
preliminary discussions with financial sponsors and is considering a share repurchase or tender for a
significant portion of the Company's outstanding common shares. There can be no assurance that the
Company will enter into a definitive agreement. The Company does not intend to publish information
about the status of these discussions unless and until the Company enters into a definitive agreement or
all the discussions are terminated.
The Company anticipates reporting its third quarter 1998 earnings in early December.
This press release contains forward-looking statements. There can be no assurance that actual results
will not materially differ from the Company's expectations, including actual results for the third quarter.
Factors that could cause actual results to materially differ include uncertainties related to new products
and services, the successful integration of acquisitions, the Company's failure to successfully develop
and implement its Corporate Supplier plans, sustained deterioration in general economic conditions
and the corresponding impact on revenues, and failure to reduce costs effectively.
Corporate Express currently operates in more than 700 worldwide locations, including more than 90
distribution centers, utilizes a fleet of over 10,000 delivery vehicles, and employs approximately
28,000 people in the United States, Canada, the United Kingdom, Ireland, Germany, Switzerland,
France, Italy, Australia and New Zealand.
To obtain a copy of the news release, call PR Newswire Company News on Call: (800) 758-5804,
Corporate Express Extension Number 1003352 or visit the Company's web site at
www.CorporateExpress.com.
SOURCE Corporate Express, Inc.
/CONTACT: Linda Dill, Vice President Strategic Planning and Investor
Relations of Corporate Express, Inc., 303-664-3949/
/Company News On-Call: prnewswire.com or fax,
800-758-5804, ext. 103352/
/Web site: corporateexpress.com
(CEXP) |
