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8-K - 8-K - CONSOLIDATED GRAPHICS INC /TX/a13-4391_18k.htm

Exhibit 99.1

 

 

FOR:

 

Consolidated Graphics, Inc.

 

 

 

 

CONTACT:

 

Jon C. Biro

 

 

Executive Vice President/

 

 

Chief Financial Officer

 

 

Consolidated Graphics, Inc.

 

 

(713) 787-0977

 

 

 

 

 

Alexandra Tramont/Matt Steinberg

 

 

 

 

 

FTI Consulting, Inc.

 

 

(212) 850-5600

 

CONSOLIDATED GRAPHICS REPORTS FINANCIAL RESULTS FOR THE

QUARTER ENDED DECEMBER 31, 2012

 

Quarterly Highlights:

·                  Sales grew 4.0% year-over-year to $295.3 million

·                  Adjusted Diluted Earnings per Share was $1.75, the all-time high in the history of the Company

·                  Adjusted EBITDA improved 9.2% to $42.7 million

 

HOUSTON, TEXAS — February 6, 2013 — Consolidated Graphics, Inc. (NYSE: CGX) today announced financial results for its third quarter ended December 31, 2012.

 

Revenue for the December 2012 quarter increased 4.0% to $295.3 million, compared to the prior year. Adjusted Operating Income increased 17.3% for the quarter to $24.3 million or 8.2% of revenue, compared to $20.7 million or 7.3% of revenue last year. Adjusted Net Income increased 32.4% to $16.9 million for the quarter, compared to $12.7 million for the prior year. Adjusted Diluted Earnings per share increased 43.4% to $1.75, compared to $1.22 last year. Adjusted EBITDA increased 9.2% to $42.7 million for the quarter and Free Cash Flow was $16.8 million for the quarter.

 

Operating income during the December 2012 quarter was $23.3 million, compared to $17.6 million for the prior year. Net income for the quarter was $16.3 million or $1.68 diluted earnings per share, compared to $10.8 million or $1.04 diluted earnings per share last year.

 

Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics, commented, “Revenue growth this quarter was driven by growth in digital print revenue, which increased 3.6%, as well as strong election-related revenue. The sales growth we experienced was made possible by investment in our best of class digital print platform, along with our technology infrastructure and solutions.  Looking forward, we are optimistic that with an improving U.S. economy in 2013, we will experience greater demand for our products and services.”

 



 

During the December 2012 quarter, the Company purchased 46,336 shares of its common stock for $1.2 million (average cost of $26.06 per share) pursuant to a share repurchase program authorizing the Company to purchase up to an aggregate of $170.0 million of the Company’s common shares. Since beginning the share repurchase program in November 2010, the Company has purchased 2,269,152 shares of its common stock (19% of shares outstanding) for $90.5 million. As of December 31, 2012, the Company had 9,618,475 common shares outstanding.

 

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 to the most directly comparable GAAP financial measures are included in the attached tables and in the related Current Report on Form 8-K filed with the Securities and Exchange Commission. The Form 8-K also includes the basis for management’s use of these non-GAAP financial measures.

 

Consolidated Graphics, Inc. will host a conference call today, Wednesday, February 6, 2013, at 11:00 a.m. Eastern Time, to discuss its third quarter fiscal 2013 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 America’s leading general commercial printing companies. With 70 printing businesses strategically located across 27 states, Toronto, Prague, and Gero, Japan, CGX offers 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 world’s largest integrated digital footprint. By coupling North America’s 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.

 

2



 

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 Company’s 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 Company’s 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 Company’s actual future results might differ from the forward-looking statements made in this press release for a variety of reasons, which include 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, or charges related to our withdrawal from multi-employer pension plans, 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 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 Company’s underlying assumptions, expectations, beliefs or projections  prove incorrect, the Company’s 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.

 

Regulation G Reconciliation

 

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, other charges and accretion of pension liability, 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 impairment charges, other charges and accretion of pension liability, share-based compensation expense, and non-cash foreign currency transaction net gains and losses, Adjusted Operating Margin, which we define as Adjusted Operating Income divided by sales, Adjusted Net Income, which we define as net income before goodwill impairment charges, other charges and accretion of pension liability, share-based compensation expense,  non-cash foreign currency transaction net gain and losses, 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 the most directly comparable GAAP financial measures are provided in the tables below. Management’s 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 related Current Report on Form 8-K we filed with the Securities and Exchange Commission.

 

(Tables to follow)

 

# # #

 

3



 

CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Income Statements

(In thousands, except per share amounts, and unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

Change

 

2012

 

2011

 

Change

 

 

 

 

 

 

 

$

 

%

 

 

 

 

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

295,277

 

$

283,891

 

11,386

 

4

 

$

797,220

 

$

794,644

 

2,576

 

0

 

Cost of Sales

 

222,716

 

216,052

 

6,664

 

3

 

613,390

 

611,207

 

2,183

 

0

 

Gross Profit

 

72,561

 

67,839

 

4,722

 

7

 

183,830

 

183,437

 

393

 

0

 

Selling Expenses

 

23,939

 

23,149

 

790

 

3

 

70,030

 

68,411

 

1,619

 

2

 

General and Administrative Expenses

 

24,638

 

24,839

 

(201

)

(1

)

73,571

 

72,266

 

1,305

 

2

 

Goodwill Impairment Charge

 

 

1,984

 

(1,984

)

nm

 

 

1,984

 

(1,984

)

nm

 

Other Charges

 

349

 

 

349

 

nm

 

4,311

 

5,281

 

(970

)

(18

)

Other Expense

 

290

 

238

 

52

 

22

 

17

 

429

 

(412

)

(96

)

Operating Income

 

23,345

 

17,629

 

5,716

 

32

 

35,901

 

35,066

 

835

 

2

 

Interest Expense

 

1,246

 

1,676

 

(430

)

(26

)

4,081

 

4,831

 

(750

)

(16

)

Income before Taxes

 

22,099

 

15,953

 

6,146

 

39

 

31,820

 

30,235

 

1,585

 

5

 

Income Tax Expense

 

5,840

 

5,119

 

721

 

14

 

9,300

 

10,281

 

(981

)

(10

)

Net Income

 

$

16,259

 

$

10,834

 

5,425

 

50

 

$

22,520

 

$

19,954

 

2,566

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.69

 

$

1.05

 

 

 

 

 

$

2.28

 

$

1.86

 

 

 

 

 

Diluted

 

$

1.68

 

$

1.04

 

 

 

 

 

$

2.27

 

$

1.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

9,622

 

10,332

 

 

 

 

 

9,886

 

10,712

 

 

 

 

 

Diluted

 

9,659

 

10,459

 

 

 

 

 

9,937

 

10,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Income Tax Rate

 

26.4

%

32.1

%

 

 

 

 

29.2

%

34.0

%

 

 

 

 

 

nm- not meaningful

 

4



 

CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts, and unaudited)

 

 

 

December 31,
2012

 

March 31,
2012

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

8,525

 

$

6,065

 

Accounts receivable, net

 

181,515

 

162,093

 

Inventories

 

60,941

 

54,129

 

Prepaid expenses

 

10,891

 

14,976

 

Deferred income taxes

 

9,848

 

16,552

 

Total current assets

 

271,720

 

253,815

 

PROPERTY AND EQUIPMENT, net

 

357,018

 

377,055

 

GOODWILL

 

24,974

 

24,847

 

OTHER INTANGIBLE ASSETS, net

 

12,933

 

15,623

 

OTHER ASSETS

 

7,551

 

10,569

 

 

 

$

674,196

 

$

681,909

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Current portion of long-term debt

 

$

21,437

 

$

23,596

 

Accounts payable

 

90,055

 

90,392

 

Accrued liabilities

 

71,511

 

68,496

 

Income taxes payable

 

2,790

 

 

Total current liabilities

 

185,793

 

182,484

 

LONG-TERM DEBT, net of current portion

 

130,811

 

140,150

 

OTHER LIABILITIES

 

35,208

 

31,523

 

DEFERRED INCOME TAXES, net

 

42,989

 

54,051

 

Total liabilities

 

394,801

 

408,208

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

Common stock, $.01 par value; 100,000,000 shares authorized; 9,618,475 and 10,239,819 issued and outstanding

 

96

 

102

 

Additional paid-in capital

 

153,833

 

161,914

 

Retained earnings

 

124,434

 

109,832

 

Accumulated other comprehensive income

 

1,032

 

1,853

 

Total shareholders’ equity

 

279,395

 

273,701

 

 

 

$

674,196

 

$

681,909

 

 

 

 

 

 

 

Total debt

 

$

152,248

 

$

163,746

 

Debt-to-total capitalization

 

35

%

37

%

 

5



 

CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

(In thousands, except per share amounts, and unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

16,259

 

$

10,834

 

$

22,520

 

$

19,954

 

Income tax expense

 

5,840

 

5,119

 

9,300

 

10,281

 

Interest expense, net

 

1,246

 

1,676

 

4,081

 

4,831

 

Depreciation and amortization

 

18,230

 

18,663

 

55,153

 

53,774

 

Goodwill impairment charge

 

 

1,984

 

 

1,984

 

Other charges and accretion of pension liability

 

349

 

182

 

4,311

 

5,543

 

Share-based compensation expense

 

666

 

710

 

1,849

 

1,853

 

Non-cash foreign currency transaction (gain) loss

 

(27

)

238

 

(240

)

429

 

Net (gain) loss from asset dispositions

 

97

 

(331

)

165

 

(725

)

Adjusted EBITDA

 

$

42,660

 

$

39,075

 

$

97,139

 

$

97,924

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

19,979

 

$

24,901

 

$

61,779

 

$

63,329

 

Capital expenditures

 

(4,176

)

(19,710

)

(31,373

)

(48,813

)

Proceeds from asset dispositions

 

954

 

1,795

 

1,736

 

2,694

 

Free Cash Flow

 

$

16,757

 

$

6,986

 

$

32,142

 

$

17,210

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

23,345

 

$

17,629

 

$

35,901

 

$

35,066

 

Goodwill impairment charge

 

 

1,984

 

 

1,984

 

Other charges and accretion of pension liability

 

349

 

182

 

4,311

 

5,543

 

Share-based compensation expense

 

666

 

710

 

1,849

 

1,853

 

Non-cash foreign currency transaction (gain) loss

 

(27

)

238

 

(240

)

429

 

Adjusted Operating Income

 

$

24,333

 

$

20,743

 

$

41,821

 

$

44,875

 

Adjusted Operating Margin

 

8.2

%

7.3

%

5.2

%

5.6

%

 

 

 

 

 

 

 

 

 

 

Net income

 

$

16,259

 

$

10,834

 

$

22,520

 

$

19,954

 

Goodwill impairment charge

 

 

1,984

 

 

1,984

 

Tax benefit of goodwill impairment charge

 

 

(774

)

 

(774

)

Other charges and accretion of pension liability

 

349

 

182

 

4,311

 

5,543

 

Tax benefit of other charges and accretion of pension liability

 

(136

)

(71

)

(1,681

)

(2,089

)

Share-based compensation expense, net of taxes

 

406

 

433

 

1,127

 

1,130

 

Non-cash foreign currency transaction (gain) loss, net of taxes

 

(16

)

145

 

(146

)

262

 

Adjusted Net Income

 

$

16,862

 

$

12,733

 

$

26,131

 

$

26,010

 

 

6



 

CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

(In thousands, except per share amounts, and unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.68

 

$

1.04

 

$

2.27

 

$

1.83

 

Goodwill impairment charge

 

 

.19

 

 

.18

 

Tax benefit of goodwill impairment charge

 

 

(.07

)

 

(.07

)

Other charges and accretion of pension liability

 

.04

 

.02

 

.43

 

.51

 

Tax benefit of other charges and accretion of pension liability

 

(.01

)

(.01

)

(.17

)

(.18

)

Share-based compensation expense, net of taxes

 

.04

 

.04

 

.11

 

.10

 

Non-cash foreign currency transaction (gain) loss, net of taxes

 

 

.01

 

(.01

)

.02

 

Adjusted Diluted Earnings Per Share

 

$

1.75

 

$

1.22

 

$

2.63

 

$

2.39

 

 

7