Cambium Learning Group Announces 2013 Earnings
2013 Top Line Growth Driven by Technology Segments; All Segments Contribute to Year over Year Earnings Improvements
DALLAS, March 6, 2014 /PRNewswire/ -- Cambium Learning® Group, Inc. (NASDAQ: ABCD, the "Company"), a leading educational solutions and services company committed to helping all students reach their full potential by providing evidence-based solutions and expert professional services, announced today its financial results for the year ended December 31, 2013.
|
Three Months Ended December 31, |
Year Ended December 31, | |||||||
|
($ in millions) |
2013 |
2012 |
$ Change |
% Change |
2013 |
2012 |
$ Change |
% Change |
|
GAAP net revenues |
$33.3 |
$34.3 |
$(1.0) |
(2.9)% |
$150.5 |
$148.6 |
$1.9 |
1.3% |
|
Increase in deferred revenue |
1.7 |
1.9 |
(0.2) |
(10.5)% |
9.3 |
8.3 |
1.0 |
12.0% |
|
GAAP net income (loss) |
(5.7) |
(88.8) |
83.1 |
93.6% |
(14.3) |
(133.8) |
119.5 |
89.3% |
|
EBITDA |
5.0 |
(78.1) |
83.1 |
106.4% |
27.1 |
(83.9) |
111.0 |
132.3% |
|
Adjusted EBITDA |
6.4 |
4.5 |
1.9 |
42.2% |
31.2 |
21.4 |
9.8 |
45.8% |
|
Goodwill impairment |
– |
(52.2) |
52.2 |
100.0% |
– |
(66.9) |
66.9 |
100.0% |
|
Impairment of |
(2.2) |
(30.4) |
28.2 |
92.8% |
(2.2) |
(33.7) |
31.5 |
93.5% |
Financial Highlights for the Year Ended December 31, 2013
During 2013, company-wide order volumes were down less than 1% compared with the same period of 2012, and order volume changes by segment were as follows:
- Voyager Sopris Learning™ decreased 12%
- Learning A–Z increased 28%
- ExploreLearning increased 27%
- Kurzweil/IntelliTools decreased 13%
Learning A–Z and ExploreLearning continued their trend of double-digit growth rates. Offsetting this growth, Voyager Sopris Learning and Kurzweil/IntelliTools continued to show order volume declination as reductions in legacy products are currently outpacing gains from newer online and technology-enabled solutions.
Other highlights include:
- Overall, GAAP net revenues in 2013 increased by 1% to $150.5 million compared with $148.6 million in 2012. GAAP net revenues by segment for 2013, and the percentage change from 2012, were as follows:
- Voyager Sopris Learning: $90.3 million, decreased 7%
- Learning A–Z: $33.5 million, increased 28%
- ExploreLearning: $16.3 million, increased 14%
- Kurzweil/IntelliTools: $10.4 million, decreased 7%
- Results of operations for 2013 were also impacted by the following:
- Impairment charges of $1.2 million related to the Class.com product line, which will be discontinued in 2014
- Impairment charges of $1.0 million for in-process product development projects that will not be completed
- On an adjusted basis, EBITDA was $31.2 million in 2013, up $9.8 million from $21.4 million in 2012. The increase in adjusted EBITDA was primarily the result of increased revenues in Learning A–Z, that flowed through to earnings and lower costs in the Voyager Sopris Learning and Kurzweil/IntelliTools segments, attributable both to savings from the re-engineering and restructuring initiatives completed in 2012 and ongoing efforts to right-size costs in slower-growing areas of the company.
- The Company has cash and cash equivalents of $68.0 million on the balance sheet as of December 31, 2013. Cash provided by operations during 2013 was $45.8 million, cash used in investing activities was $23.8 million, and cash used in financing activities was $5.9 million.
Financial Highlights for the Quarter Ended December 31, 2013
For the quarter ended December 31, 2013, company-wide order volumes declined 3% compared with the same period of 2012, and order volume changes by segment were as follows:
- Voyager Sopris Learning decreased 21%
- Learning A–Z increased 31%
- ExploreLearning increased 16%
- Kurzweil/IntelliTools decreased 8%
On an adjusted basis, EBITDA for the quarter ended December 31, 2013 was $6.4 million, up $1.9 million from the quarter ended December 31, 2012. Net revenues were down $1.0 million for the quarter ended December 31, 2013, versus 2012, commensurate with the overall decline in fourth quarter order volumes.
"Our financial performance in 2013 was in line with management's expectations, and we were pleased to have such continued strong growth in the Learning A–Z and ExploreLearning segments, slowed rates of decline in the Voyager Sopris Learning and Kurzweil/IntelliTools segments, and good results from our cost savings initiatives," said John Campbell, chief executive officer of Cambium Learning Group, Inc. "Our company ultimately defines success by how well we help teachers improve student reading, writing, math, and science performance, so we strive to build the best solutions possible. I am pleased with our progress in 2013 toward meeting both our financial goals and our company mission."
Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and Adjusted Net Revenues are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that these non-GAAP measures provide useful information to investors, because they reflect the underlying performance of the ongoing operations of the Company and provide investors with a view of the Company's operations from management's perspective. Adjusted EBITDA and Adjusted Net Revenues remove significant purchase accounting, non-operational or certain non-cash items from earnings. The Company uses Adjusted EBITDA and Adjusted Net Revenues to monitor and evaluate the operating performance of the Company and as the basis to set and measure progress toward performance targets, which directly affect compensation for employees and executives. The Company generally uses these non-GAAP measures as measures of operating performance and not as measures of the Company's liquidity. The Company's presentation of EBITDA, Adjusted EBITDA, and Adjusted Net Revenues should not be construed as an indication that future results will be unaffected by unusual, non-operational or non-cash items.
About Cambium Learning Group, Inc.
Cambium Learning® Group is a leading educational solutions and services company that is committed to helping all students reach their full potential by providing evidence-based solutions and expert professional services to empower educators and raise the achievement levels of all students. The company is composed of four business units: Voyager Sopris Learning (www.voyagersopris.com), Learning A-Z (www.learninga-z.com), ExploreLearning (www.explorelearning.com), and Kurzweil (www.kurzweiledu.com) and IntelliTools (www.intellitools.com). Together, these business units provide best-in-class intervention and supplemental instructional materials; gold-standard professional development and school-improvement services; breakthrough technology solutions for online learning and professional support; valid and reliable assessments; and proven materials to support a positive and safe school environment. Cambium Learning Group, Inc. (ABCD), is based in Dallas, Texas. For more information, please visit www.cambiumlearning.com
Media and Investor Contact:
Philip Davis
Cambium Learning Group, Inc.
[email protected]
Forward-Looking Statements
Some of the statements contained herein constitute forward-looking statements. These statements relate to future events, including the future financial performance of Cambium Learning Group, Inc., and involve known and unknown risks, uncertainties and other factors that may cause the markets, actual results, levels of activity, performance or achievements of Cambium Learning Group, Inc., to be materially different from any actual future results, levels of activity, performance, or achievements. These risks and other factors you should consider include, but are not limited to, the ability to successfully attract and retain a broad customer base for current and future products, changes in customer demands or industry standards, success of ongoing product development, maintaining acceptable margins, the ability to control costs, K–12 enrollment and demographic trends, the level of educational and education technology funding, the impact of federal, state, and local regulatory requirements on the business of the company, the loss of key personnel, the impact of competition, the uncertainty of general economic conditions and financial market performance, and those other risks and uncertainties listed under the heading "RISK FACTORS" in Cambium Learning Group, Inc.'s Form 10-K. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," "projects," "intends," "prospects," or "priorities," or the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Cambium Learning Group, Inc., does not assume or undertake any obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether as a result of new information, future events, or otherwise.
|
Cambium Learning Group, Inc. and Subsidiaries Consolidated Statements of Operations | ||||||
|
For the Years Ended December 31, | ||||||
|
(In thousands, except per share data) |
2013 |
2012 | ||||
|
Net revenues: |
||||||
|
Product revenues |
$ |
127,799 |
$ |
130,160 | ||
|
Service revenues |
22,721 |
18,399 | ||||
|
Total net revenues |
150,520 |
148,559 | ||||
|
Cost of revenues: |
||||||
|
Cost of product revenues |
29,167 |
33,284 | ||||
|
Cost of service revenues |
17,521 |
17,679 | ||||
|
Amortization expense |
17,519 |
24,716 | ||||
|
Total cost of revenues |
64,207 |
75,679 | ||||
|
Research and development expense |
9,810 |
10,907 | ||||
|
Sales and marketing expense |
42,233 |
46,367 | ||||
|
General and administrative expense |
21,341 |
21,427 | ||||
|
Shipping and handling costs |
1,722 |
2,834 | ||||
|
Depreciation and amortization expense |
4,895 |
6,182 | ||||
|
Goodwill impairment |
- |
66,893 | ||||
|
Embezzlement-related expense |
118 |
516 | ||||
|
Impairment of long-lived assets |
2,227 |
33,707 | ||||
|
Total costs and expenses |
146,553 |
264,512 | ||||
|
Income (loss) before interest, other income (expense) |
||||||
|
and income taxes |
3,967 |
(115,953) | ||||
|
Net interest income (expense): |
||||||
|
Interest income |
191 |
433 | ||||
|
Interest expense |
(19,010) |
(19,116) | ||||
|
Net interest income (expense) |
(18,819) |
(18,683) | ||||
|
Other income (expense), net |
764 |
1,125 | ||||
|
Loss before income taxes |
(14,088) |
(133,511) | ||||
|
Income tax expense |
(165) |
(272) | ||||
|
Net loss |
$ |
(14,253) |
$ |
(133,783) | ||
|
Net loss per common share: |
||||||
|
Basic net loss per common share |
$ |
(0.30) |
$ |
(2.71) | ||
|
Diluted net loss per common share |
$ |
(0.30) |
$ |
(2.71) | ||
|
Average number of common shares and equivalents outstanding: |
||||||
|
Basic |
47,040 |
49,395 | ||||
|
Diluted |
47,040 |
49,395 | ||||
|
Cambium Learning Group, Inc. and Subsidiaries Consolidated Balance Sheets | ||||||
|
As of December 31, | ||||||
|
(In thousands, except per share data) |
2013 |
2012 | ||||
|
ASSETS |
||||||
|
Current assets: |
||||||
|
Cash and cash equivalents |
$ |
67,993 |
$ |
51,904 | ||
|
Accounts receivable, net |
15,767 |
17,813 | ||||
|
Inventory |
9,221 |
16,620 | ||||
|
Tax receivables |
- |
12,234 | ||||
|
Restricted assets, current |
1,343 |
4,387 | ||||
|
Assets held for sale |
- |
380 | ||||
|
Other current assets |
6,873 |
5,892 | ||||
|
Total current assets |
101,197 |
109,230 | ||||
|
Property, equipment and software at cost |
43,224 |
35,535 | ||||
|
Accumulated depreciation and amortization |
(22,909) |
(14,514) | ||||
|
Property, equipment and software, net |
20,315 |
21,021 | ||||
|
Goodwill |
47,842 |
47,404 | ||||
|
Acquired curriculum and technology intangibles, net |
8,719 |
9,320 | ||||
|
Acquired publishing rights, net |
4,705 |
7,602 | ||||
|
Other intangible assets, net |
6,251 |
7,836 | ||||
|
Pre-publication costs, net |
13,401 |
11,660 | ||||
|
Restricted assets, less current portion |
5,492 |
6,754 | ||||
|
Other assets |
8,288 |
9,632 | ||||
|
Total assets |
$ |
216,210 |
$ |
230,459 | ||
|
Cambium Learning Group, Inc. and Subsidiaries Consolidated Balance Sheets | ||||||
|
As of December 31, | ||||||
|
(In thousands, except per share data) |
2013 |
2012 | ||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
||||||
|
Current liabilities: |
||||||
|
Capital lease obligations, current |
$ |
995 |
$ |
1,290 | ||
|
Accounts payable |
1,301 |
3,007 | ||||
|
Contingent value rights, current |
- |
7,599 | ||||
|
Accrued expenses |
25,279 |
20,530 | ||||
|
Deferred revenue, current |
53,532 |
45,974 | ||||
|
Total current liabilities |
81,107 |
78,400 | ||||
|
Long-term liabilities: |
||||||
|
Long-term debt |
174,491 |
174,328 | ||||
|
Capital lease obligations, less current portion |
2,019 |
3,014 | ||||
|
Deferred revenue, less current portion |
7,829 |
5,631 | ||||
|
Other liabilities |
13,954 |
15,131 | ||||
|
Total long-term liabilities |
198,293 |
198,104 | ||||
|
Stockholders' equity (deficit): |
||||||
|
Preferred stock ($.001 par value, 15,000 shares authorized, |
||||||
|
zero shares issued and outstanding at December 31, 2013 and 2012) |
- |
- | ||||
|
Common stock ($.001 par value, 150,000 shares authorized, |
||||||
|
51,208 and 51,208 shares issued, and 45,042 and 47,098 shares |
||||||
|
outstanding at December 31, 2013 and 2012, respectively) |
51 |
51 | ||||
|
Capital surplus |
283,673 |
282,450 | ||||
|
Accumulated deficit |
(332,695) |
(318,442) | ||||
|
Treasury stock at cost (6,166 and 4,110 shares at December 31, |
||||||
|
2013 and December 31, 2012, respectively) |
(12,147) |
(7,528) | ||||
|
Other comprehensive loss: |
||||||
|
Pension and postretirement plans |
(2,072) |
(2,576) | ||||
|
Accumulated other comprehensive loss |
(2,072) |
(2,576) | ||||
|
Total stockholders' equity (deficit) |
(63,190) |
(46,045) | ||||
|
Total liabilities and stockholders' equity (deficit) |
$ |
216,210 |
$ |
230,459 | ||
|
Reconciliation Between Net Revenues and Adjusted Net Revenues and Between Net Loss and Adjusted EBITDA for the Years Ended December 31, 2013 and 2012 (Unaudited) | ||||||
|
($ in thousands) |
2013 |
2012 | ||||
|
Total net revenues |
$ |
150,520 |
$ |
148,559 | ||
|
Non-operational or non-cash costs included in net revenues but excluded |
||||||
|
from adjusted net revenues: |
||||||
|
Adjustments related to purchase accounting |
75 |
324 | ||||
|
Adjusted net revenues |
$ |
150,595 |
$ |
148,883 | ||
|
Net loss |
$ |
(14,253) |
$ |
(133,783) | ||
|
Reconciling items between net loss and EBITDA: |
||||||
|
Depreciation and amortization |
22,414 |
30,898 | ||||
|
Net interest expense |
18,819 |
18,683 | ||||
|
Income tax expense |
165 |
272 | ||||
|
Income (loss)from operations before interest, income taxes, and |
||||||
|
depreciation and amortization (EBITDA) |
27,145 |
(83,930) | ||||
|
Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA: |
||||||
|
Other income, net |
(764) |
(1,125) | ||||
|
Re-engineering and restructuring costs |
- |
8,370 | ||||
|
Merger and acquisition activities |
732 |
829 | ||||
|
Stock-based compensation and expense |
1,080 |
874 | ||||
|
Embezzlement-related expense |
118 |
516 | ||||
|
Adjustments related to purchase accounting |
95 |
257 | ||||
|
Goodwill impairment |
- |
66,893 | ||||
|
Impairment of long-lived assets |
1,189 |
27,763 | ||||
|
Adjustments to CVR liability |
74 |
915 | ||||
|
Management transition |
1,501 |
- | ||||
|
Adjusted EBITDA |
$ |
31,170 |
$ |
21,362 | ||
|
Reconciliation Between Net Revenues and Adjusted Net Revenues and Between Net Loss and Adjusted EBITDA for the Three Months Ended December 31, 2013 and 2012 (Unaudited) | ||||
|
($ in thousands) |
2013 |
2012 | ||
|
Total net revenues |
$ 33,348 |
$ 34,317 | ||
|
Non-operational or non-cash costs included in |
||||
|
net revenues but excluded from adjusted net revenues: |
||||
|
Adjustments related to purchase accounting |
- |
11 | ||
|
Adjusted net revenues |
$ 33,348 |
$ 34,328 | ||
|
Net loss |
$ (5,734) |
$(88,807) | ||
|
Reconciling items between net loss and EBITDA: |
||||
|
Depreciation and amortization |
6,071 |
6,072 | ||
|
Net interest expense |
4,791 |
4,651 | ||
|
Income tax expense |
(132) |
14 | ||
|
Income (loss)from operations before interest, |
||||
|
income taxes, and depreciation and |
||||
|
amortization (EBITDA) |
4,996 |
(78,070) | ||
|
Non-operational or non-cash costs included in |
||||
|
EBITDA but excluded from Adjusted EBITDA: |
||||
|
Other income, net |
(119) |
(889) | ||
|
Re-engineering and restructuring costs |
- |
2,130 | ||
|
Merger and acquisition activities |
247 |
145 | ||
|
Stock-based compensation and expense |
105 |
356 | ||
|
Embezzlement-related expense |
- |
64 | ||
|
Adjustments related to purchase accounting |
- |
10 | ||
|
Goodwill impairment |
- |
52,193 | ||
|
Impairment of long-lived assets |
1,189 |
27,763 | ||
|
Adjustments to CVR liability |
- |
754 | ||
|
Adjusted EBITDA |
$ 6,418 |
$ 4,456 | ||
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SOURCE Cambium Learning Group
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