2014

Consolidated Graphics Reports Financial Results For The Quarter Ended June 2012

HOUSTON, Aug. 8, 2012 /PRNewswire/ -- Consolidated Graphics, Inc. (NYSE: CGX) today announced financial results for its first quarter ended June 30, 2012.

Revenue for the June quarter was $238.3 million, a $5.0 million or 2.1% decline compared to the prior year quarter.  The decline in revenue compared to the prior year quarter was due to a 2.5% decline in same-store sales, partially offset by sales growth related to an acquisition. The same- store sales change includes the benefit of election-related revenue growth, compared to the prior year.  Adjusted Operating Income for the June 2012 quarter was $2.8 million or 1.2% of revenue, compared to $8.9 million or 3.7% of revenue last year.  Adjusted Net Income was $1.0 million or $.09 per diluted share for the quarter, compared to Adjusted Net Income of $4.9 million or $.43 per diluted share for the prior year quarter. Adjusted EBITDA was $21.4 million for the June 2012 quarter.

Operating income during the June 2012 quarter was $.5 million and included other charges of $1.7 million primarily related to relocating certain production facilities. Operating income for the prior year quarter was $3.6 million and included $4.6 million in other charges due to withdrawing from certain multi-employer pension plans. Net loss for the June 2012 quarter was $.4 million or $.04 diluted loss per share, compared to net income of $1.6 million or $.14 diluted earnings per share last year.

Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics, commented, "The decline in same-store sales reflects the on-going fragile state of the economy. While we are closely managing our costs during these challenging economic times, we are also investing in our capabilities. We believe our industry leading technology and digital investments provide us significant competitive advantages that will enable us to generate profitable growth as the economy improves. Evidence of these advantages include the 6% quarterly year-over-year growth of our digital print business and 30% growth in our web-to-print technology solutions installed since the launch of our Streamline™ product last September." 

Share Repurchase Program Update

During the June 2012 quarter, the Company purchased 276,066 shares of its common stock for $7.9 million 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 1,855,374 shares of its common stock (16% of shares outstanding) for $79.5 million. As of June 30, 2012, the Company had 9,976,253 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, August 8, 2012, at 11:00 a.m. Eastern Time, to discuss its first 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, 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 (loss), 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 (loss) 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




June 30,




2012


2011


Change







$


%


Sales

$238,310


$243,352


(5,042)


(2)


Cost of Sales

187,968


189,211


(1,243)


(1)



Gross Profit

50,342


54,141


(3,799)


(7)


Selling Expenses

23,799


22,602


1,197


5


General and Administrative Expenses

24,503


23,282


1,221


5


Other Charges

1,669


4,641


(2,972)


(64)


Other Expense (Income)

(123)


33


(156)


nm



Operating Income

494


3,583


(3,089)


(86)


Interest Expense

1,500


1,558


(58)


(4)



Income (Loss) before Taxes

(1,006)


2,025


(3,031)


nm


Income Tax Expense (Benefit)

(558)


440


(998)


nm



Net Income (Loss)

(448)


$1,585


(2,033)


nm












Earnings (Loss) Per Share










Basic

($.04)


$.14







Diluted

($.04)


$.14
















Weighted Average Shares Outstanding










Basic

10,172


11,045







Diluted

10,172


11,307















Effective Income Tax Rate

55.5%


21.7%






________________________________









nm- not meaningful









































CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Balance Sheets

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








June 30,

 2012


March 31,

2012



ASSETS










CURRENT ASSETS





Cash and cash equivalents


$


8,138


$

6,065

Accounts receivable, net


153,254


162,093

Inventories


56,515


54,129

Prepaid expenses


14,960


14,976

Deferred income taxes


16,579


16,552

Total current assets


249,446


253,815

PROPERTY AND EQUIPMENT, net


374,729


377,055

GOODWILL


24,768


24,847

OTHER INTANGIBLE ASSETS, net


14,579


15,623

OTHER ASSETS


8,684


10,569



$

672,206


$

681,909

LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES





Current portion of long-term debt


$

26,238


$

23,596

Accounts payable


88,436


90,392

Accrued liabilities


65,737


68,496

Total current liabilities


180,411


182,484

LONG-TERM DEBT, net of current portion


140,665


140,150

OTHER LIABILITIES


34,300


31,523

DEFERRED INCOME TAXES, net


53,081


54,051

           Total liabilities


408,457


408,208

COMMITMENTS AND CONTINGENCIES





SHAREHOLDERS' EQUITY





Common stock, $.01 par value; 100,000,000 shares

authorized; 9,976,253 and 10,239,819 issued and outstanding


99


102

Additional paid-in capital


158,256


161,914

Retained earnings


105,826


109,832

Accumulated other comprehensive income (loss)


(432)


1,853

Total shareholders' equity


263,749


273,701



$

672,206


$

681,909








Total debt


$

166,903


$

163,746

Debt-to-total capitalization



39%



37%












CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

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





Three Months Ended



June 30,



2012


2011







Net income (loss)

$

(448)


$

1,585


Income tax expense (benefit)

(558)


440


Interest expense, net

1,500


1,558


Depreciation and amortization

18,506


17,393


Other charges and accretion of pension liability

1,669


4,673


Share-based compensation expense

707


637


Non-cash foreign currency transaction loss (gain)

(67)


33


Net (gain) loss from asset dispositions

94


(102)


Adjusted EBITDA

$

21,403


$

26,217







Net cash provided by operating activities

$

22,037


$

28,363


Capital expenditures

(15,278)


(17,333)


Proceeds from asset dispositions

205


375


Free Cash Flow

$

6,964


$

11,405







Operating income

$

494


$

3,583


Other charges and accretion of pension liability

1,669


4,673


Share-based compensation expense

707


637


Non-cash foreign currency transaction loss (gain)

(67)


33


Adjusted Operating Income

$

2,803


$

8,926


Adjusted Operating Margin

1.2%


3.7%







Net income (loss)

$

(448)


$

1,585


Other charges and accretion of pension liability

1,669


4,673


Tax benefit of other charges  and accretion of pension

      liability

(651)


(1,749)


Share-based compensation expense, net of taxes

431


389


Non-cash foreign currency transaction loss (gain),

      net of taxes

(41)


20


Adjusted Net Income

$

960


$

4,918














CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

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




Three Months Ended



June 30,



2012


2011







Diluted earnings (loss) per share

$

(.04)


$

.14


Other charges and accretion of pension liability

.16


.41


Tax benefit of other charges and accretion of pension

    liability

(.06)


(.15)


Share-based compensation expense, net of taxes

.04


.03


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

    taxes



Adjustment for diluted shares outstanding

(.01)



Adjusted Diluted Earnings Per Share

$

.09


$

.43










 

SOURCE Consolidated Graphics, Inc.



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