The Company reported fiscal 2018 first quarter total revenues of $2.06 billion, a 5% increase compared to $1.97 billion in the prior year period, reflecting continued growth in the Digital Real Estate Services segment, the acquisitions of Australian Regional Media (“ARM”) and Wireless Group plc (“Wireless Group”) and a $26 million positive impact from foreign currency fluctuations. Growth was partially offset by lower print advertising revenues at the News and Information Services segment. Adjusted Revenues (which exclude the foreign currency impact, acquisitions and divestitures as defined in Note 1) increased 1%. Net income for the quarter was $87 million as compared to nil in the prior year. The increase was primarily driven by higher Total Segment EBITDA, as discussed below, and lower depreciation and amortization expense, partially offset by higher income tax expense associated with higher pre-tax income. Click Read More below for additional information.
As you are most likely aware, the packaging industry and much of North America has faced significant shipping and logistics challenges over the past several months.
Several factors such as demand for freight services outstripping the number of trucks on the road, inclement weather conditions, and the implementation of the new Electronic Logging Device (ELD) regulations in December 2017, have collectively compounded the issue of imbalance in the truck and driver supply. The ELD mandate will have an impact on freight costs. Most carriers that have implemented ELDs have reported productivity decreases of approximately 15% with fewer miles driven per day. It is also expected that some capacity may be taken out of the market due to the rising costs. The net result of all of this is high load to carrier ratios driving up freight rates which often change with little notice.
Working aggressively with logistics partners, we’ve taken a variety of actions:
• Revised our rate schedules to gain access to additional supply and prioritize Novolex’s loads
• Placed an even greater emphasis on internal processes and inter-day status reviews between our Customer Service and Transportation teams, optimizing communications between the groups and providing real-time monitoring of all shipments
While we are hopeful the situation will improve over time, in the short-term we believe these challenges will continue to be a headwind. We need and are seeking your help in working through these challenging times together:
• Please provide as much lead time as possible for your orders
• Order in full and even truckloads as much as possible
• Allow for flexible appointment times and extended receiving hours
• Expedite loading and unloading as much as possible
Excerpt from Novolex letter to customers dated 2/26/18.