Attached files
file | filename |
---|---|
8-K - FORM 8-K - CONSOLIDATED GRAPHICS INC /TX/ | c95444e8vk.htm |
Exhibit 99.1
FOR: | Consolidated Graphics, Inc. | |||
CONTACT: | Jon C. Biro | |||
Executive Vice President/ | ||||
FOR IMMEDIATE RELEASE
|
Chief Financial Officer | |||
Consolidated Graphics, Inc. | ||||
(713) 787-0977 | ||||
Christine Mohrmann/Alexandra Tramont | ||||
FD | ||||
(212) 850-5600 |
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR THE
QUARTER ENDED DECEMBER 2009
QUARTER ENDED DECEMBER 2009
HOUSTON, TEXAS February 3, 2010 Consolidated Graphics, Inc. (NYSE: CGX) today announced
financial results for the quarter ended December 31, 2009.
Revenue for the December quarter was $276.4 million, down 12.5% compared to the same quarter
last year. The decline was due to lower election-related business and, as a result of the current
economic environment, lower same-store sales of 6.8%.
Adjusted Operating Income for the December 2009 quarter was $23.0 million or 8.3% of revenue
compared to $25.4 million or 8.0% of revenue for the same quarter last year. Despite the impact of
lower revenues, continued cost reduction efforts in 2009 allowed for a modest improvement in
Adjusted Operating Margin. Adjusted Net Income for the December 2009 quarter was $14.1 million, or
$1.23 Adjusted Diluted Earnings Per Share compared to Adjusted Net Income of $13.7 million, or
$1.21 Adjusted Diluted Earnings Per Share for the prior year quarter.
Operating income of $18.6 million in the December 2009 quarter included charges of $3.1
million primarily related to the impairment of certain production equipment and lease termination
charges. The $55.5 million operating loss in the December 2008 quarter included charges totaling
$79.5 million for the impairment of goodwill, the impairment of certain production equipment and
litigation. Net income for the December 2009 quarter was $11.4 million, or $1.00 diluted earnings
per share.
The Company generated $16.0 million in Free Cash Flow for the current quarter, compared to
$23.5 million for the same quarter in the prior year. Adjusted EBITDA was $41.8 million for the
December 2009 quarter, compared to $42.4 million for the same quarter in the prior year. For the
nine months ended December 31, 2009, the Company produced Free Cash Flow of $101.7 million and
Adjusted EBITDA of $90.7 million. As of December 31, 2009, total debt was $221.1 million; $93.1
million or 30% lower than the debt balance at March 31, 2009.
Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics, commented, We
are pleased with our performance in the December 2009 quarter in what continues to be a challenging
environment. Even though quarterly same-store revenues declined 6.8% from last year, the rate of
decline has slowed in each of the last three quarters as customer demand in many of our markets
appears to have stabilized. During the quarter, we continued to focus on delivering an
industry-leading offering that meets the changing needs of our customers, and on aggressively
managing our costs, which ultimately allowed us to improve profitability over both the year ago and
September 2009 quarters. We were able to achieve these results despite an $18 million decline
in election-related business compared to the prior year quarter. Going forward, we will continue to
monitor and appropriately manage our costs while at the same time investing in the future, building
on our best-in-class capabilities and leveraging our advantages of technology, scale and financial
strength to take advantage of the opportunities we see in the marketplace.
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR DECEMBER 2009 QUARTER | PAGE -2 |
Mr. Davis added, While the economy and our market appear to be stabilizing, it remains
difficult to project our future revenues and earnings. Nevertheless, based on current market
conditions, we expect the March quarter revenue to be in the range of $245 $260 million
representing same-store sales growth of up to 5%, excluding election-related revenue. This should
allow us to achieve Adjusted Net Income growth in the March 2010 quarter compared to the prior year
period.
A reconciliation of the non-GAAP financial measures, Adjusted EBITDA, Free Cash Flow, Adjusted
Operating Income, Adjusted Operating Margin, Adjusted Net Income and Adjusted Diluted Earnings Per
Share are included in the attached tables and in the Current Report on Form 8-K filed today. The
Form 8-K also includes the basis for managements use of the non-GAAP financial measures.
Consolidated Graphics, Inc. will host a conference call today, Wednesday, February 3, 2010, at
11:00 a.m. Eastern Time, to discuss its third quarter fiscal 2010 results. The conference call will
be simultaneously broadcast live over the Internet on our website (www.cgx.com) and a subsequent
archive of such call will also be available on our website.
Consolidated Graphics, Inc. (CGX), headquartered in Houston, Texas, is one of North Americas
leading general commercial printing companies. With 70 printing businesses strategically located
across 27 states, Toronto, and Prague, we offer an unmatched geographic footprint, unsurpassed
capabilities, and unparalleled levels of convenience, efficiency and service. With locations in or
near virtually every major U.S. market, CGX provides the service and responsiveness of a local
printer enhanced by the economic, geographic and technological advantages of a large national
organization.
Consolidated Graphics vast and technologically advanced sheetfed and web printing
capabilities are complemented by the worlds largest integrated digital footprint. By coupling
North Americas most comprehensive printing capabilities with strategically located fulfillment
centers and industry-leading technology, CGX delivers end-to-end print production and management
solutions that are based on the needs of our customers to improve their results. For more
information, visit www.cgx.com.
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR DECEMBER 2009 QUARTER | PAGE -3 |
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, in which the Company discusses factors it believes may affect its performance or results
in the future. Forward-looking statements are all statements other than historical facts, such as
statements regarding assumptions, expectations, beliefs and projections about future events or
conditions. You can generally identify forward-looking statements by the appearance in such a
statement of words like anticipate, believe, continue, could, estimate, expect,
intend, may, might, plan, potential, predict, forecast, project, should or will
or other comparable words or the negative of such words. The accuracy of the Companys assumptions,
expectations, beliefs and projections depends on events or conditions that change over time and are
thus susceptible to change based on actual experience, new developments and known and unknown
risks, including those created by general market conditions, competition and the possibility that
events may occur beyond the Companys control, which may limit its ability to maintain or improve
its operating results or financial condition or acquire additional printing businesses. The Company
gives no assurance that the forward-looking statements will prove to be correct and does not
undertake any duty to update them. The Companys actual future results might differ from the
forward-looking statements made in this press release for a variety of reasons, which include
continuing weakness in the economy, financial stability of its customers, the sustained growth of
its digital printing business, seasonality of election-related business, its ability to adequately
manage business expenses, including labor costs, the unfavorable outcome of legal proceedings, the
lack of or adequacy of insurance coverage for its operations, the continued availability of raw
materials at affordable prices, retention of its key management and operating personnel,
satisfactory labor relations, the potential for additional goodwill impairment charges, its ability
to identify new acquisition opportunities, negotiate and finance such acquisitions on acceptable
terms and successfully absorb and manage such acquisitions in a timely and efficient manner, as
well as other risks described under the heading Risk Factors of our Annual Report on Form 10-K/A
and the risk factors and cautionary statements described in the other documents the Company files
or furnishes from time to time with the Securities and Exchange Commission, including its Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Should one or more of the foregoing risks or
uncertainties materialize, or should the Companys underlying assumptions, expectations, beliefs or
projections prove incorrect, the Companys actual results may vary materially from those
anticipated in its forward-looking statements, and its business, financial condition and results of
operations could be materially and adversely affected.
This press release also contains references to the non-GAAP financial measures of Adjusted
EBITDA, which we define as earnings, or net income, before interest, income taxes, depreciation and
amortization, goodwill impairment charges, litigation and other charges, share-based compensation
expense, non-cash foreign currency transaction gains and losses and net losses/gains from asset
dispositions, Free Cash Flow, which we define as net cash provided by operating activities less
capital expenditures plus proceeds from assets dispositions, Adjusted Operating Income, which we
define as operating income before goodwill charges, litigation and other charges, share based
compensation expense, and non-cash foreign currency translation net (gain)/loss, Adjusted Operating
Margin, which we define as Adjusted Operating Income divided by sales, Adjusted Net Income, which
we define as net income before goodwill charges, litigation and other charges, share based
compensation expense, non-cash foreign currency transaction net (gain)/loss, all net of tax, and
Adjusted Diluted Earnings Per Share, which we define as Adjusted net Income divided by diluted
weighted average number of common shares outstanding. Reconciliations of these non-GAAP financial
measures to comparable GAAP financial measures are provided in the tables below. Managements
opinion regarding the usefulness of these non-GAAP financial measures to investors and a
description of the ways in which management used such measures can be found in the Current Report
on Form 8-K we filed today with the Securities and Exchange Commission.
(Tables to follow)
# # #
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR DECEMBER 2009 QUARTER | PAGE -4 |
CONSOLIDATED GRAPHICS, INC.
Condensed Consolidated Income Statements
(In thousands, except per share amounts and unaudited)
Condensed Consolidated Income Statements
(In thousands, except per share amounts and unaudited)
Three Months Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | Change | ||||||||||||||||||||||
% | % | $ | % | |||||||||||||||||||||
Sales |
$ | 276,374 | 100.0 | $ | 315,815 | 100.0 | (39,441 | ) | (12.5 | ) | ||||||||||||||
Cost of Sales |
209,770 | 75.9 | 241,055 | 76.3 | (31,285 | ) | (13.0 | ) | ||||||||||||||||
Gross Profit |
66,604 | 24.1 | 74,760 | 23.7 | (8,156 | ) | (10.9 | ) | ||||||||||||||||
Selling Expenses |
22,678 | 8.2 | 26,153 | 8.3 | (3,475 | ) | (13.3 | ) | ||||||||||||||||
General and Administrative Expenses(1) |
22,117 | 8.0 | 24,981 | 7.9 | (2,864 | ) | (11.5 | ) | ||||||||||||||||
Goodwill Impairment Charge |
| 0.0 | 62,524 | 19.8 | (62,524 | ) | nm | |||||||||||||||||
Litigation and Other Charges |
3,138 | 1.1 | 17,000 | 5.4 | (13,862 | ) | (81.5 | ) | ||||||||||||||||
Other (Income) Expense, net |
48 | 0.0 | (386 | ) | (0.1 | ) | 434 | nm | ||||||||||||||||
Operating Income (loss) |
18,623 | 6.7 | (55,512 | ) | (17.6 | ) | 74,135 | nm | ||||||||||||||||
Interest Expense, net |
2,616 | 0.9 | 4,108 | 1.3 | (1,492 | ) | (36.3 | ) | ||||||||||||||||
Income (loss) before
Taxes |
16,007 | 5.8 | (59,620 | ) | (18.9 | ) | 75,627 | nm | ||||||||||||||||
Income Taxes |
4,568 | 1.7 | (16,054 | ) | (5.1 | ) | 20,622 | nm | ||||||||||||||||
Net Income (loss) |
$ | 11,439 | 4.1 | $ | (43,566 | ) | (13.8 | ) | 55,005 | nm | ||||||||||||||
Earnings (loss) Per Share |
||||||||||||||||||||||||
Basic |
1.02 | (3.91 | ) | |||||||||||||||||||||
Diluted |
1.00 | (3.91 | ) | |||||||||||||||||||||
Weighted Average Shares Outstanding |
||||||||||||||||||||||||
Basic |
11,164 | 11,147 | ||||||||||||||||||||||
Diluted |
11,458 | 11,147 | ||||||||||||||||||||||
Effective Income Tax Rate |
28.5 | % | 26.9 | % |
(1) Share based
compensation included in these expenses |
$ | 1,196 | $ | 1,725 |
nm = | not meaningful |
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR DECEMBER 2009 QUARTER | PAGE -5 |
CONSOLIDATED GRAPHICS, INC.
Condensed Consolidated Income Statements
(In thousands, except per share amounts and unaudited)
Condensed Consolidated Income Statements
(In thousands, except per share amounts and unaudited)
Nine Months Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | Change | ||||||||||||||||||||||
% | % | $ | % | |||||||||||||||||||||
Sales |
$ | 753,861 | 100.0 | $ | 897,960 | 100.0 | (144,099 | ) | (16.0 | ) | ||||||||||||||
Cost of Sales |
586,985 | 77.9 | 679,974 | 75.7 | (92,989 | ) | (13.7 | ) | ||||||||||||||||
Gross Profit |
166,876 | 22.1 | 217,986 | 24.3 | (51,110 | ) | (23.4 | ) | ||||||||||||||||
Selling Expenses |
69,053 | 9.2 | 81,336 | 9.1 | (12,283 | ) | (15.1 | ) | ||||||||||||||||
General and Administrative Expenses(1) |
65,756 | 8.7 | 71,975 | 8.0 | (6,219 | ) | (8.6 | ) | ||||||||||||||||
Goodwill Impairment Charge |
| 0.0 | 62,524 | 7.0 | (62,524 | ) | nm | |||||||||||||||||
Litigation and Other Charges |
5,771 | 0.8 | 17,000 | 1.9 | (11,229 | ) | (66.1 | ) | ||||||||||||||||
Other (Income) Expense, net |
212 | 0.0 | (638 | ) | (0.1 | ) | 850 | nm | ||||||||||||||||
Operating Income (loss) |
26,084 | 3.5 | (14,211 | ) | (1.6 | ) | 40,295 | nm | ||||||||||||||||
Interest Expense, net |
7,447 | 1.0 | 12,171 | 1.4 | (4,724 | ) | (38.8 | ) | ||||||||||||||||
Income (loss) before Taxes |
18,637 | 2.5 | (26,382 | ) | (2.9 | ) | 45,019 | nm | ||||||||||||||||
Income Taxes |
5,430 | 0.7 | (2,735 | ) | (0.3 | ) | 8,165 | nm | ||||||||||||||||
Net Income (loss) |
$ | 13,207 | 1.8 | $ | (23,647 | ) | (2.6 | ) | 36,854 | nm | ||||||||||||||
Earnings (loss) Per Share |
||||||||||||||||||||||||
Basic |
1.18 | (2.12 | ) | |||||||||||||||||||||
Diluted |
1.16 | (2.12 | ) | |||||||||||||||||||||
Weighted Average Shares Outstanding |
||||||||||||||||||||||||
Basic |
11,162 | 11,135 | ||||||||||||||||||||||
Diluted |
11,390 | 11,135 | ||||||||||||||||||||||
Effective Income Tax Rate |
29.1 | % | 10.4 | % | ||||||||||||||||||||
(1) Share based compensation included in these expenses |
$ | 3,949 | $ | 5,119 |
nm = | not meaningful |
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR DECEMBER 2009 QUARTER | PAGE -6 |
CONSOLIDATED GRAPHICS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts and unaudited)
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts and unaudited)
December 31, | March 31, | |||||||
2009 | 2009 | |||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 8,070 | $ | 9,762 | ||||
Accounts receivable, net |
193,269 | 173,501 | ||||||
Inventories |
49,782 | 52,737 | ||||||
Prepaid expenses |
11,399 | 17,340 | ||||||
Deferred income taxes |
17,861 | 18,909 | ||||||
Total current assets |
280,381 | 272,249 | ||||||
PROPERTY AND EQUIPMENT, net |
395,551 | 430,519 | ||||||
GOODWILL |
29,436 | 29,436 | ||||||
OTHER INTANGIBLE ASSETS, net |
22,636 | 24,691 | ||||||
OTHER ASSETS |
7,552 | 8,313 | ||||||
$ | 735,556 | $ | 765,208 | |||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Current portion of long-term debt |
$ | 22,505 | $ | 27,026 | ||||
Accounts payable |
94,602 | 48,519 | ||||||
Accrued liabilities |
90,229 | 86,718 | ||||||
Income taxes payable |
385 | 553 | ||||||
Total current liabilities |
207,721 | 162,816 | ||||||
LONG-TERM DEBT, net of current portion |
198,564 | 287,164 | ||||||
OTHER LIABILITIES |
14,254 | 14,794 | ||||||
DEFERRED INCOME TAXES |
50,273 | 49,970 | ||||||
Total liabilities |
470,812 | 514,744 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
SHAREHOLDERS EQUITY |
||||||||
Common stock, $.01 par value; 100,000,000 shares
authorized; 11,167,667 and 11,152,875 issued and
outstanding |
111 | 111 | ||||||
Additional paid-in capital |
163,813 | 163,131 | ||||||
Retained earnings |
101,013 | 87,806 | ||||||
Accumulated other comprehensive loss |
(193 | ) | (584 | ) | ||||
Total shareholders equity |
264,744 | 250,464 | ||||||
$ | 735,556 | $ | 765,208 | |||||
Total debt |
$ | 221,069 | $ | 314,190 | ||||
Debt-to-total capitalization |
46 | % | 56 | % |
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR DECEMBER 2009 QUARTER | PAGE -7 |
CONSOLIDATED GRAPHICS, INC.
Reconciliations of Non-GAAP Financial Measures
(In thousands, except per share amounts, and unaudited)
Reconciliations of Non-GAAP Financial Measures
(In thousands, except per share amounts, and unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net income (loss) |
$ | 11,439 | $ | (43,566 | ) | $ | 13,207 | $ | (23,647 | ) | ||||||
Income taxes |
4,568 | (16,054 | ) | 5,430 | (2,735 | ) | ||||||||||
Interest expense, net |
2,616 | 4,108 | 7,447 | 12,171 | ||||||||||||
Depreciation and amortization |
17,374 | 16,859 | 52,779 | 48,865 | ||||||||||||
Goodwill impairment charge |
| 62,524 | | 62,524 | ||||||||||||
Litigation and other charges |
3,138 | 17,000 | 5,771 | 17,000 | ||||||||||||
Share-based compensation expense |
1,196 | 1,725 | 3,949 | 5,119 | ||||||||||||
Non-cash foreign currency transaction net (gain)/loss |
48 | (386 | ) | 212 | (638 | ) | ||||||||||
Net loss from asset dispositions |
1,426 | 220 | 1,859 | 691 | ||||||||||||
Adjusted EBITDA |
$ | 41,805 | $ | 42,430 | $ | 90,654 | $ | 119,350 | ||||||||
Net cash provided by operating activities |
$ | 23,850 | $ | 44,884 | $ | 120,254 | $ | 89,163 | ||||||||
Capital expenditures |
(10,306 | ) | (21,435 | ) | (21,686 | ) | (56,002 | ) | ||||||||
Proceeds from asset dispositions |
2,476 | 96 | 3,106 | 1,284 | ||||||||||||
Free Cash Flow |
$ | 16,020 | $ | 23,545 | $ | 101,674 | $ | 34,445 | ||||||||
Operating income (loss) |
$ | 18,623 | $ | (55,512 | ) | $ | 26,084 | $ | (14,211 | ) | ||||||
Goodwill impairment charge |
| 62,524 | | 62,524 | ||||||||||||
Litigation and other charges |
3,138 | 17,000 | 5,771 | 17,000 | ||||||||||||
Share-based compensation expense |
1,196 | 1,725 | 3,949 | 5,119 | ||||||||||||
Non-cash foreign currency transaction net (gain)/loss |
48 | (386 | ) | 212 | (638 | ) | ||||||||||
Adjusted Operating Income |
$ | 23,005 | $ | 25,351 | $ | 36,016 | $ | 69,794 | ||||||||
Adjusted Operating Margin |
8.3 | % | 8.0 | % | 4.8 | % | 7.8 | % | ||||||||
Net income (loss) |
$ | 11,439 | $ | (43,566 | ) | $ | 13,207 | $ | (23,647 | ) | ||||||
Goodwill impairment charge |
| 62,524 | | 62,524 | ||||||||||||
Tax benefit of goodwill impairment charge |
| (16,466 | ) | | (16,466 | ) | ||||||||||
Litigation and other charges |
3,138 | 17,000 | 5,771 | 17,000 | ||||||||||||
Tax benefit of litigation and other charges |
(1,224 | ) | (6,630 | ) | (2,251 | ) | (6,630 | ) | ||||||||
Share-based compensation expense, net of taxes |
730 | 1,052 | 2,409 | 3,123 | ||||||||||||
Non-cash foreign currency transaction net
(gain)/loss, net of taxes |
29 | (235 | ) | 129 | (389 | ) | ||||||||||
Adjusted Net Income |
$ | 14,112 | $ | 13,679 | $ | 19,265 | $ | 35,515 | ||||||||
CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR DECEMBER 2009 QUARTER | PAGE -8 |
CONSOLIDATED GRAPHICS, INC.
Reconciliations of Non-GAAP Financial Measures
(In thousands, except per share amounts, and unaudited)
Reconciliations of Non-GAAP Financial Measures
(In thousands, except per share amounts, and unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Diluted earnings (loss) per share |
$ | 1.00 | $ | (3.91 | ) | $ | 1.16 | $ | (2.12 | ) | ||||||
Goodwill impairment charge |
| 5.51 | | 5.48 | ||||||||||||
Tax benefit of goodwill impairment charge |
| (1.45 | ) | | (1.44 | ) | ||||||||||
Litigation and other charges |
.27 | 1.50 | .51 | 1.49 | ||||||||||||
Tax benefit of litigation and other charges |
(.11 | ) | (.58 | ) | (.20 | ) | (.58 | ) | ||||||||
Share-based compensation expense, net of taxes |
.06 | .09 | .21 | .27 | ||||||||||||
Non-cash foreign currency transaction net
(gain)/loss, net of taxes |
.01 | (.02 | ) | .01 | (.03 | ) | ||||||||||
Adjustment for diluted shares outstanding |
| .07 | | .04 | ||||||||||||
Adjusted Diluted Earnings Per Share |
$ | 1.23 | $ | 1.21 | $ | 1.69 | $ | 3.11 | ||||||||