Daisytek Posts Third-Quarter Sales, Earnings Gains

Daisytek International

In the quarter, which ended Dec. 31, Daisytek generated sales of $309.3 million, a 23 percent gain from $251 million a year earlier. The distributor's third-quarter 2001 earnings were $5 million, or 29 cents per diluted share, up 33 percent from $3.8 million, or 25 cents per diluted share, in the prior-year quarter. The company met the Thomson Financial/First Call earnings forecast of 29 cents per share.

"Daisytek has again delivered an impressive quarter, with strong revenue and net income growth," Daisytek President and CEO Jim Powell said in a statement. "We are moving forward aggressively on operational plans in the areas of information technology improvements, distribution efficiencies and cost-saving back-office consolidations to support our strategic growth initiatives and lower costs."

Overall gross margins in third-quarter 2002 were 10.3 percent, down from 10.6 percent during the second quarter and 11.3 percent in fiscal third-quarter 2001, the company said. Executives attributed the margin erosion to the effects of the Sept. 11 terrorist attacks and the "relatively lower margin contribution" from Digital Storage, which Daisytek acquired in its 2002 fiscal first quarter.

SG&A for third-quarter 2002 was 7.2 percent of total revenue, compared with 8.2 percent for the prior quarter and 8.5 percent a year ago. SG&A was "favorably impacted" by reduced operating costs at Daisytek's Memphis distribution center; adoption of SFAS 142, which means the company no longer amortizes goodwill; lower SG&A costs at Digital Storage; and restructuring activities, the company said.

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Daisytek forecasts full-year 2002 revenue at between $1.18 billion and $1.2 billion, with earnings per share between $1.03 and $1.06. For fiscal 2003, the distributor expects revenue between $1.35 billion and $1.4 billion, executives said.

In addition, Daisytek announced an 18-month restructuring plan, which began in the third quarter. The effort includes internal IT improvements, consolidation of regional warehouses into five regional distribution hubs, and centralization of back-office resources.

Daisytek stock closed today up 15 percent, or 2 cents per share, to $13.71 per share.