2014

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, Feb. 6, 2013 /PRNewswire/ -- 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.

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


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




































































                       

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%









 

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


















 

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




















 

 

SOURCE Consolidated Graphics, Inc.



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