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Top 50 turns 10

Jun 1, 2003 12:00 AM

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In 1994, american printer took a page from Inc. Magazine's annual listing of the 500 fastest-growing private companies and began our own, industry-specific listing: the Top 50 Fastest Growing Printers. Our objective was to recognize those graphic-arts firms that, through creative vision, savvy management and hard work, grew rapidly in a short period of time.

Our rules for the awards program were simple. To be eligible, companies had to have been in business for a minimum of four years and have sales of more than $1 million during the most recent calendar year. Winners were selected based on their percent of sales growth over the three previous years.

We realized that tracking fast growth didn't necessarily indicate growing profit. But basing our listings on revenue growth allowed for simplicity and objectivity — and resulted in a unique perspective each year on industry growth. Printers read our June issue each year to see how they, and their competitors, placed in the list.

Those who made it to the Top 50 also found it to be a great marketing tool. “When we ask people what they know about us, the first thing they say is that we're one of the fastest-growing printers,” Ryan Simons, president of Print-Tech Promotional Group (Madison, WI), recently told us. Print-Tech first appeared in our Top 50 listing in 1999.

And Michael Cunningham, former owner, president and CEO of Cunningham Graphics (now ADP Graphic Communications in Jersey City, NJ (see p. 26), partly credited our Top 50 program in helping get his company in the public eye. “The big thing in growing a company or in taking a company public is its [history of] growth,” he explains. “That's what [investors] are looking for. Being in american printer's Top 50 competition five years in a row was a huge help to our company.”

Catching up

This year marks the 10th anniversary of the Top 50 Fastest Growing Printers program. In celebration — and in light of the recession, which continues to affect printer growth — we at american printer decided to devote this year's coverage to our past winners. We wanted to know, where are they now? How have they fared in this recession? What is the secret of their success?

So we caught up with a handful of past Top 50 printers, from a range of backgrounds, and found out what they were up to. Read on for updates on their businesses and their insights on the industry.

Where are they now?

The economy is expected to start rising — really! Top 50 printers, meanwhile, are hanging in there. The past few years have not been kind to the graphic-arts industry. At the Web Offset Assn.'s 51st Annual Management and Technical Conference in May, NAPL (Paramus, NJ) chief economist Andrew Paparozzi described the situation succinctly: “Business has been lousy for nearly three years. Are things turning around or not?”

The answer, it turns out, is maybe. The economy as a whole reportedly grew 1.6 percent in Q1 of this year. Sales for the NAPL Printing Business Panel, a representative group of more than 300 printers surveyed monthly on a range of key printing issues, however, were down 1.9 percent in Q1. The same panel had made modest gains in sales in late 2002. Paparozzi adds, “Costs are rising faster than our prices, efficiency, etc., creating a classic profit squeeze.”

The economist notes that the economy had grown five consecutive quarters prior to the war, “but the growth wasn't from a broad-enough base to create consistent recovery [across the economy].” Hence the printing industry's downturn last quarter.

“I was far too optimistic last year,” concedes Paparozzi. He says, however, that according to the Blue Chip Economic Indicators, general recovery is expected to speed up in the final quarters of 2003. If this happens, print sales will grow up to 2.5 percent this year and up to 4.1 percent in 2004.

Still, “we've got a long way to come back,” the economist observes. “Sales volumes robust enough to restore pricing power and profits may have to wait until 2005.”

Going the straight and narrow

In these dire conditions, past Top 50 winners have kept their noses to the grindstone, managed their businesses conservatively and continued to diligently serve their customers. It hasn't been easy, but many seem to be surviving. Comments John Berthelsen, president of Suttle-Straus (Waunakee, WI), which first placed in our Top 50 in 1995, “The printing industry continues to be challenging, and every company is feeling the malaise that hangs over us. In spite of that, companies that focus on their customers, on their employees and on a solid business plan will continue to grow and be successful.”

At Reflections Printing in Minneapolis, “we have become even more focused on what has made us successful to this point: our customers,” reports co-owner Christopher J. Clemens. Reflections Printing was a 2002 Top 50 printer. But efficiency is key for the printer, too: “We have always been efficient and have run our shop very lean,” Clemens says. “That has helped us compete in the Midwest market, where price competition and overcapacity erode margins.” (Livingston, MT), a 2001 Top 50 printer, has been a “boot-strap” startup, which director of marketing Jeff Batton says has helped the operation avoid the usual path of dot-com companies. “By operating without massive investments from outside investors, we have been forced to focus our efforts on things that are really important to long-term success, rather than allowing ourselves to get distracted by fads,” he says. “In a real way, this has led us to focus heavily on improving our customer-retention rate, which is allowing us to earn more from our existing customer base. In action, this looks like outstanding service, which our clients tell us we deliver in spades.” This philosophy is reinforced with better back-end technology and a companywide training program that focuses on all aspects of working with customers.

And that's exactly what printers need to do to win, says Michael Cunningham, former owner of consolidator Cunningham Graphics. “There's a lot of despair in the industry and a lot of capacity, but less business,” he acknowledges. “Companies have to think creatively to survive. And that's a benefit to printers. If printers can take on a lot of responsibility for the clients that they serve, offer more vertical integration, going further upstream in companies, they stand to win.”

Acquisitions on the horizon

Others have looked to new equipment to help them succeed in the tough marketplace. The First Impression Group, a Top 50 printer from 1995, purchased a four-color Heidelberg Speedmaster 74 perfector in 2001. “It was the catalyst for us to get into more of the four-color world. With our new equipment, we have been able to handle higher-end four- and five-color work,” says partner Kevin Finley. He reports the company grew 34 percent in 2001 and 12 percent last year. It also recently added a fifth salesperson to its existing team of four.

Reflections' Clemens notes financing for equipment purchases is still hard to get in this business climate, but the printer solved the problem through acquisition. In January, fellow Minneapolis printer M & M Printing was folded into Reflections' operations, adding one- and two-color printing to the latter company's four- and six-color capabilities. “The acquisition,” says Clemens, “was a great move for us. It allowed us to strengthen our sales and acquire equipment that gives us additional capability and capacity.”

In an industry where merger and acquisition (M&A) activity plummeted from 189 transactions in 1998 to a mere 42 in 2002, Harris DeWeese, chairman and CEO of Compass Capital Partners (Radnor, PA), an M&A specialist, agrees that smaller, local deals are occurring more often.

“From five years ago, the M&A consolidation activity has declined precipitously, due to the continuing generally weak economy,” DeWeese explains. “And many of the deals done in the 2000 to 2002 period were distress-type actions.” He notes that of the largest consolidators, the 10 Printing Arts of America companies were sold out of bankruptcy, Consolidated Graphics did about five deals in 2002, and Mail-Well has been divesting companies. (By contrast, Mail-Well purchased 29 companies in 1998, 18 of which Compass Capital sold to them.)

DeWeese does foresee consolidation activity starting to pick up again in the next 18 to 24 months by gargantuan consolidators who need to grow and diversify their businesses. “These things are cyclical, and it's almost Darwinian,” he says. Moore (Missisauga, ON), for example, recently announced that it is acquiring Wallace (Lisle, IL).

But Cunningham contends M&A activity will be strongest among like-size printers joining forces. “When two printers come together to survive and make a better company, that's a perfect reason to do it. What this does is makes the resulting company that much stronger,” he observes.

Indeed, “if it were the right opportunity for us to purchase another printer, we would do it,” says Jack Noe Jr., vice president of Kreger Printing (Cincinnati). “I think after this little downswing is over, it's going to be a booming time again. It's just a matter of keeping your horns pulled in until that happens, and then going for it.”

Spoken like a true Top 50 printer.

M&A report

The Compass Report, a comprehensive annual report on graphic-arts mergers and acquisitions (M&A), is now available from M&A specialists Compass Capital Partners (Radnor, PA). The report will be available free to any printer. To request a copy, call (610) 293-0210.

“We are a halfsize shop and will continue to be. As clients have shortened their run lengths, we are taking business away from the 40-inch printers.”
Kevin Finley, partner, The First Impression Group (Eagan, MN)
> First appeared on Top 50 list in 1995

“Economists continue to tell our industry it will improve in the next six months — I have heard that now for two years.”
Christopher J. Clemens, co-owner, Reflections Printing (Minneapolis)
> First appeared on Top 50 list in 2002

“We have quarterly meetings to update everyone in the company on our successes and upcoming challenges. This helps culturally to develop a team of owners rather than employees.”
Jeff Batton, director of marketing, (Livingston, MT)
> First appeared on Top 50 list in 2001

“We may see much lower percentages of increase, but growth is still possible. The key is to provide a range of products and services that puts us well beyond being just a ‘plain old printer.’”
John Berthelsen, president, Suttle-Straus, Inc. (Waunakee, WI)
> First appeared on Top 50 list in 1995