Valuing a Commercial Print ShopPrepared for NEBB Institute

February 19, 2014

Mark L. Pelletier, CMEA, CSBA, RM, SRA, NDsflval@bellsouth.net – Floridavaluations.com

561-313-1067

Introduction The printing industry has struggled over the past five

years as consumers favor digital alternatives versus conventional plate presses. The industry in general is forecasted to remain the same for the next four years. However, there are custom sectors of the printing industry that have remained and are projected to be financially healthy for the foreseeable future.

Today, we will cover:- The types of equipment used in the printing

industry- The differences in printing processes- Industry specific valuation tips- Printing industry outlook

Printing in the U.S.A. Printing Equipment Manufacturers and

Distributors SIC 355 & 5084 / NAICS 333296 & 423830 Printing Shop 323111

Commercial Printers Produce:

Magazines Phone books Labels Advertising brochures Catalogs Newspaper inserts Direct mail marketing pieces Corporate reports and other

financial printing Training manuals Promotional materials Business forms

Book publishers and newspaper publishers are not included in this industry. One room of a 10,000 sq.

foot Custom Print Company

Commercial Printers Most commercial printers offer four distinct

services: Design and other prepress services Actual printing Finishing (including folding, cutting, and binding) Fulfillment, which includes packing, storing, and

shipping (often on a "just-in-time" basis)

Lithography Main printing process used Uses either individual sheets (sheet fed

presses) or continuous rolls of paper (web presses)

Sheet fed presses print up to 16 pages of letter-sized product (a 16 page "signature") at a time, at speeds up to 15,000 impressions per hour.

Web presses print 32 pages at a time at speeds over 40,000 impressions per hour, and are usually used for production runs of more than 50,000 copies.

Presses usually print in one, two, four, or six colors; some presses can print eight.

Sample of a Multicolor Offset Press

Shinohara 52 UV [Ultra Violet] HP [Hewlett Packard] Model 1919 – Multicolor Offset Press. Purchased new 2002

This machine is still applicable today and generating a very good income.

Rear View

Sample of a Multicolor Offset Press

Shinohara 52 UV HP 1919 – Multicolor Offset Press4 Color Equipped with Modulator add-on for Ultra Violet

Side View

Printing Costs Paper is the biggest individual

manufacturing cost Often amounting to 25 percent of revenues Printing papers are often coated, and are

bought in sheets or rolls from distributors. Paper prices can vary significantly from year

to year. Commercial printers generally don't keep large

inventories of paper as requirements change from job to job.

Inks, films, printing plates, and cleaning solvents are other major material costs.

Major Press Manufacturers Conventional Presses

Heidelberg Komori

Digital Presses Xerox Hewlett-Packard’s

Indigo Kodak's Nexpress Punch Graphix’s

Xeikon

HP Indigo – 5600 Digital Copier.

Digital Printing Transfers a document on a personal computer or other

digital storage device to a printing substrate by means of a device that accepts text and graphic output.

Digital printing has steadily replaced lithography in many markets, especially at the consumer and business level, because of its substantially lower production costs.

KODAK NEXPRESS

SX Platform

Offset Printing A method of mass-production printing Images on metal plates are transferred (offset) to

rubber blankets or rollers and then to the print media. The flexible rubber conforms readily to the print media

surface, allowing the process to be used effectively on rough-surfaced media such as canvas, cloth or wood.

KBA Genius 525 Color UV [Ultra Violet] Sheet-fed Offset Printing

Press Purchased new 2004 This machine is still applicable today and

generating very good income.

Prints up to 20” x 14” sheets.

Thermal Printing There are two types of thermographic

printing. Thermal printing - paper is coated with a heat-

sensitive substance Thermal ink transfer printing - heat is used to

transfer print from a ribbon to paper

Life Expectancy Conventional Presses with on-going

maintenance10 to 15 years

Digital units with on-going maintenance 5 to 10 years

The technology of Digital units keeps evolving

with newer oils and inks while the actual process,

rollers, plates, etc. stays relatively the same.

Valuation Tips I have found the Market Approach to be the

best method when establishing market value for this type of equipment.

Cost Depreciation Approach is normally not necessary due to the adequate market sales activity.

Cost Approach is applicable for older presses that fall under the collectible category and there is limited data.

Income approach would be difficult to use due to the many machines involved in the process and the sheer volume of what they produce.

Inspection Tips Look for:

AgeConditionCompleteness of equipmentOperabilityRaritySize; larger pieces, especially the older

machines require higher freight costs to move, they notably have less market value than some of the smaller units.

Some Types of Printing Equipment Printing Presses Addressing Systems – Address and mailing labels Binders – fasten paper and plastic together Sorters and Collators – gather and place in precise order Conveyors Cutters & Knife Trimmers Die Cutters – cutting images onto paper and plastic Dryers – dry ink and paper Feeders Folders of all kinds – fold paper Gluers, Inserters, Trimmers Inserters – insert piece together Numbering Equipment Joggers – jogs paper together to assemble Perforators & Scorers Shrink Wrappers Punch Binders Stitchers Tabbers & Wafer Sealers Hot Stamp Card Counters Milling Machines

Sources to find Equipment Values Ebay Atlantic Zeiser Aribas Care-Graphics Graftecpic Rimec Spartanics Sysco ABDick Heidelburg Bell & Howell Press Access First Graphics Kodak Rollem Newbold HP

Industry Outlook“The printing industry is changing at a rapid pace, driven by new production technology changes in demand and competition from other media for time and money. Printers will need to adapt to the changing market conditions in order to compete in this transitional market. It seems that many printers are still stuck in traditional processes and have not embraced digital or diversification. Investment trends show a tendency away from offset presses, as well as a transition from monochrome digital print towards color digital print and large format print. This is in-line with expected shifts in applications and in the customer demand structure. While digital print is on the rise, the focus on services in addition to print is lagging behind. With print volumes stagnating, a move to digital print can only be the first step into a successful future.” Info Trends

New Industry OpportunityRadio Frequency

Cards

Atlantic Zeiser Versa Cardline – Versatile Card Personalization Solution. Purchased 2007 NewDesigned to run up to 40,000 cards per hour in combination with high capacity card input and

output and a high capacity labeler.

Some industry experts believe these cards will

possibly replace most all magnetic strip cards in

use today.