American Greetings (AM)
Q4 2011 Earnings Call
April 28, 2011 9:00 am ET
Stephen Smith - Chief Financial Officer and Senior Vice President
Zev Weiss - Chief Executive Officer, Director and Member of Executive Committee
Gregory Steinberg - Director of Investor Relations and Treasurer
Jeffery Stein - Soleil Securities Group, Inc.
Previous Statements by AM
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Thank you, Alisha. Good morning, everyone, and welcome to our fourth quarter conference call. I'm Greg Steinberg, the company's Treasurer and Head Manager, Investor Relations. Joining me today on the call are Zev Weiss, our CEO; Jeff Weiss, our COO; and Steve Smith, our CFO.
We released our earnings for the fourth quarter fiscal 2011 this morning. If you do not yet have our fourth quarter press release, you can find a copy within the Investors section of the American Greetings website at investors.americangreetings.com.
As you may expect, some of our comments today include statements about projections for the future. Those projections involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. We cannot guarantee the accuracy of any forecasts or estimates, and we do not plan to update any forward-looking statements.
If you would like more information on our risks involved in the forward-looking statements, please see our annual report or our SEC filings. Previous earnings releases as well as our 10-Ks, 10-Qs and annual report are available on the Investors section of the American Greetings website.
We will now proceed with comments from both our CEO and CFO, followed by a question-and-answer session. Zev?
Thank you, Greg, and good morning, everyone. First of all, I would like to share with you how pleased I am with our overall performance this year. Our business is running well. Our financial results exceeded our expectations and the team had a great performance in the otherwise challenging year.
Today, I would like to discuss both the product leadership initiatives and the completed integration of Papyrus and Recycled Paper Greetings, and then move to some comments about our outlook for our fiscal year 2012.
Steve will then share some details on our fourth quarter and fiscal year 2011 performance. Let me start with a product leadership initiative. The foundation for our product leadership strategy is based on continuous research. That research and our experience tells us that cards are important to consumers. They are relevant to how women connect with each other, and it is our goal to ensure that we keep our products on trend in order to meet consumer's ongoing needs.
Research also supports our belief and confidence that greeting cards will continue to be used to help people connect with each other and recognize life's special moments. Looking back at history, our predecessors likely wonder if the increase in the price of postage stamps will cause greeting cards to go away, but it didn't.
Of this probably also thought that with the advent of inexpensive long-distance phone calls, people would call each other on special occasions and stop sending cards, but that didn't happen either. And there came the development of the electronic greetings, that could be sent over the internet. But again, that new technology did not stop the sending of paper greeting cards.
What we have seen is that consumers are using technology in an ever-increasing way of connecting with their families and friends. However, as consumers are innovated with e-mails, text messages and posts that are often quick and informal, we feel a real opportunity to help them connect in a more meaningful way.
Recognizing the changes in consumer's communication patterns, as well as the opportunities that result from those trends, we have established what we believe to be the industry-leading portfolio of products. Over the last two years, we have taken several leaps forward to create, develop and provide products that help consumers say what they might otherwise have trouble saying themselves.
We had an upscale products like Papyrus and humorous products like Recycled Paper Greetings. Internally, we enhanced our creative resources to develop even more exceptional artwork, color palettes and editorial sentiments that really help people connect emotionally.
Our creative team has also internally developed to be the industry leader, retailers have taken notice. Retailers are asking us how to get our products into their stores. We are pleased that we've been able to capitalize on our product leadership strategy by winning additional space at retail.
To further our current strategy, on national dimension, just last month, we announced the acquisition of a greeting card company in the U.K. named Watermark. Watermark has grown to approximately $40 million of annual revenue as their product has a unique style and tone that resonates with local consumers. This acquisition broadens our product offering in the U.K., and Watermark has become part of our international segment.
Let me shift to some of the changes we have made to our portfolio businesses to enhance our focus on our greeting card leadership strategy. Two years ago, we sold our retail store operations and acquired both Papyrus and Recycled Paper Greetings. I am pleased that we have met our goals of successfully integrating these two businesses over the last two years.
Success for us means the expenses of the integrations came in slightly under our original budget, and we meaningfully exceeded our original integration savings target of $15 million by achieving $20 million of savings this year.