Consolidated Graphics Reports Financial Results For The Quarter And Year Ended March 31, 2013

Fourth Quarter Highlights:

- Both revenue and same-store sales increased year-over-year

- Operating Income increased 115% to $12.8 million

- Adjusted Diluted Earnings Per Share increased 182% to $.79

May 15, 2013, 07:30 ET from Consolidated Graphics, Inc.

HOUSTON, May 15, 2013 /PRNewswire/ -- Consolidated Graphics, Inc. (NYSE: CGX) today announced financial results for its fourth quarter and year ended March 31, 2013.

Revenue for the March 2013 quarter increased to $251.0 million, compared to $250.6 million for the same quarter last year due to a .5% same-store sales increase, excluding election related business. Adjusted Operating Income increased 115% for the quarter to $12.8 million or 5.1% of revenue, compared to $6.0 million or 2.4% of revenue last year. Adjusted Net Income increased 167% to $7.6 million for the quarter, compared to $2.9 million for the prior year. Adjusted Diluted Earnings Per Share for the March quarter increased 182% to $.79, compared to $.28 last year. Adjusted EBITDA increased 22.9% to $30.7 million for the quarter and Free Cash Flow was $32.4 million.

Largely due to $12.6 million in charges related to the withdrawal from certain multi-employer pension plans and impairment of goodwill, operating loss for the March 2013 quarter was $.2 million. The March 2012 quarter operating loss was $8.3 million and included charges for withdrawing from certain multi-employer pension plans and asset impairments. Net loss for the March 2013 quarter was $.3 million or $.03 diluted loss per share, compared to a net loss of $5.9 million or $.57 diluted loss per share in the prior year.

Revenue for the fiscal year ended March 31, 2013 increased to $1,048 million, compared to $1,045 million in the prior year and Adjusted Operating Income increased 7.4% to $54.6 million.

Adjusted EBITDA for the year ended March 31, 2013 increased 4.0% to $127.9 million and Adjusted Diluted Earnings per share were $3.43 for the year, compared to $2.70 in the prior year. Full year Free Cash Flow was $64.6 million.

Operating income for the year ended March 31, 2013 was $35.7 million and included $16.9 million in charges for withdrawing from certain multi-employer pension plans, asset impairment, including goodwill, and facility relocation. Operating income for the year ended March 31, 2012 was $26.7 million and included charges for withdrawing from certain multi-employer pension plans, asset impairment, including goodwill, and facility relocation. Net income for the year was $22.2 million or $2.26 diluted earnings per share, compared to net income of $14.1 million or $1.32 diluted earnings per share in the prior year.

Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics, commented "We continue to see growth in several key areas of the commercial printing industry. For example, our temporary point of sale product revenues are growing and Consolidated Graphics is in a unique position to deliver these unmatched solutions to customers. These solutions include our ability to distribute and then print consistent and high quality products across our platform. Using our solutions, customers can get to market faster, at an overall lower cost. Other key growth areas for Consolidated Graphics include digital print, packaging, fulfillment and collectible cards. These product areas, which represent 38% of our overall sales, all grew compared to last year and we expect these trends to continue going forward. We will continue to invest and enhance our capabilities in these areas."

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, May 15, 2013, at 11:00 a.m. Eastern Time, to discuss its fourth 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.

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)

 

CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Income Statements

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

Three Months Ended

Year Ended

March 31,

March 31,

2013

2012

Change

2013

2012

Change

$

%

$

%

Sales

$251,017

$250,551

466

$1,048,237

$1,045,195

3,042

Cost of Sales

191,579

197,957

(6,378)

(3)

804,969

809,163

(4,194)

(1)

Gross Profit

59,438

52,594

6,844

13

243,268

236,032

7,236

3

Selling Expenses

22,835

22,354

481

2

92,865

90,765

2,100

2

General and Administrative Expenses

23,887

25,187

(1,300)

(5)

97,458

97,454

4

Goodwill Impairment Charge

949

949

nm

949

1,984

(1,035)

(52)

Other Charges

11,682

13,505

(1,823)

(13)

15,993

18,786

(2,793)

(15)

Other Expense

272

(135)

407

nm

289

294

(5)

(2)

Operating Income (Loss)

(187)

(8,317)

8,130

nm

35,714

26,749

8,965

34

Interest Expense, Net

1,146

1,460

(314)

(22)

5,227

6,291

(1,064)

(17)

Income (Loss) before Taxes

(1,333)

(9,777)

8,444

nm

30,487

20,458

10,029

49

Income Tax Expense (Benefit)

(1,038)

(3,925)

2,887

nm

8,262

6,356

1,906

30

Net Income (Loss)

($295)

($5,852)

5,557

nm

$22,225

$14,102

8,123

58

Earnings (Loss) Per Share

Basic

($.03)

($.57)

$2.27

$1.33

Diluted

($.03)

($.57)

$2.26

$1.32

Weighted Average Shares Outstanding

Basic

9,621

10,231

9,812

10,592

Diluted

9,621

10,231

9,837

10,708

Effective Income Tax Rate

78%

40%

27%

31%

______

nm- not meaningful

 

CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Balance Sheets

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

March 31,

 2013

March 31,

2012

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

12,217

$

6,065

Accounts receivable, net

164,647

162,093

Inventories

55,389

54,129

Prepaid expenses

15,877

14,976

Deferred income taxes

10,215

9,763

Total current assets

258,345

247,026

PROPERTY AND EQUIPMENT, net

343,832

377,055

GOODWILL

23,870

24,847

OTHER INTANGIBLE ASSETS, net

11,936

15,623

OTHER ASSETS

6,660

10,569

$

644,643

$

675,120

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Current portion of long-term debt

$

20,550

$

23,596

Accounts payable

83,578

90,392

Accrued liabilities

71,974

68,496

Total current liabilities

176,102

182,484

LONG-TERM DEBT, net of current portion

103,134

140,150

OTHER LIABILITIES

44,255

31,523

DEFERRED INCOME TAXES, net

42,778

47,262

           Total liabilities

366,269

401,419

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY

Common stock, $.01 par value; 100,000,000 shares authorized; 9,633,475 and 10,239,819 issued and outstanding

96

102

Additional paid-in capital

154,657

161,914

Retained earnings

124,139

109,832

Accumulated other comprehensive income (loss)

(518)

1,853

Total shareholders' equity

278,374

273,701

$

644,643

$

675,120

Total debt

$

123,684

$

163,746

Debt-to-total capitalization

31%

37%

 

CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

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

Three Months Ended

Year Ended

March 31,

March 31,

2013

2012

2013

2012

Net income (loss)

$

(295)

$

(5,852)

$

22,225

$

14,102

Income tax expense (benefit)

(1,038)

(3,925)

8,262

6,356

Interest expense, net

1,146

1,460

5,227

6,291

Depreciation and amortization

17,646

18,645

72,799

72,419

Goodwill impairment charge

949

949

1,984

Other charges and accretion of pension liability

11,682

13,623

15,993

19,166

Share-based compensation expense

476

797

2,325

2,650

Non-cash foreign currency transaction (gain) loss

(111)

(135)

(351)

294

Net (gain) loss from asset dispositions

294

404

459

(321)

Adjusted EBITDA

$

30,749

$

25,017

$

127,888

$

122,941

Net cash provided by operating activities

$

38,435

$

44,863

$

100,214

$

108,192

Capital expenditures

(7,479)

(11,152)

(38,852)

(59,965)

Proceeds from asset dispositions

1,482

515

3,218

3,209

Free Cash Flow

$

32,438

$

34,226

$

64,580

$

51,436

Operating income (loss)

$

(187)

$

(8,317)

$

35,714

$

26,749

Goodwill impairment charge

949

949

1,984

Other charges and accretion of pension liability

11,682

13,623

15,993

19,166

Share-based compensation expense

476

797

2,325

2,650

Non-cash foreign currency transaction (gain) loss

(111)

(135)

(351)

294

Adjusted Operating Income

$

12,809

$

5,968

$

54,630

$

50,843

Adjusted Operating Margin

5.1%

2.4%

5.2%

4.9%

Net income (loss)

$

(295)

$

(5,852)

$

22,225

$

14,102

Goodwill impairment charge

949

949

1,984

Tax benefit of goodwill impairment charge

(370)

(370)

(774)

Other charges and accretion of pension liability

11,682

13,623

15,993

19,166

Tax benefit of other charges and accretion of pension liability

(4,556)

(5,313)

(6,237)

(7,402)

Share-based compensation expense, net of taxes

290

486

1,417

1,617

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

(68)

(82)

(214)

179

Adjusted Net Income

$

7,632

$

2,862

$

33,763

$

28,872

 

CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

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

Three Months Ended

Year Ended

March 31,

March 31,

2013

2012

2013

2012

Diluted earnings (loss) per share

$

(.03)

$

(.57)

$

2.26

$

1.32

Goodwill impairment charge

.10

.10

.19

Tax benefit of goodwill impairment charge

(.04)

(.04)

(.07)

Other charges and accretion of pension liability

1.21

1.32

1.63

1.79

Tax benefit of other charges and accretion of pension liability

(.47)

(.51)

(.63)

(.70)

Share-based compensation expense, net of taxes

.03

.05

.13

.15

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

(.01)

(.01)

(.02)

.02

Adjusted Diluted Earnings Per Share

$

.79

$

.28

$

3.43

$

2.70

SOURCE Consolidated Graphics, Inc.



RELATED LINKS

http://www.cgx.com