Monotype Imaging Announces Fourth Quarter and Full Year 2010 Results
Company Reports Record Fourth Quarter Revenue and Net Adjusted EBITDA
WOBURN, Mass., Feb 17, 2011 (BUSINESS WIRE) -- Monotype Imaging Holdings Inc.
(TYPE), a leading global provider of text imaging solutions, today announced
financial results for the fourth quarter and full year ended Dec. 31, 2010.
Fourth quarter and full year 2010 highlights:
Fourth quarter revenue was $29.4 million, a 17 percent increase year-over-year.
Full year 2010 revenue was $106.7 million, an increase of 13 percent
year-over-year. Operating income for the fourth quarter increased 45 percent to
$10.2 million. Full year 2010 operating income was $33.1 million, an increase of
25 percent over the prior year. Non-GAAP net adjusted EBITDA for the fourth
quarter was $13.8 million, or 47 percent of revenue. Full year 2010 non-GAAP net
adjusted EBITDA was $47.8 million, or 45 percent of revenue. Cash flow from
operations for the full year ended Dec. 31, 2010, was $43.7 million, a 56 percent
increase over the prior year period.
"2010 was a year of recovery and progress for Monotype Imaging, capped by a
record fourth-quarter performance," said Doug Shaw, president and chief executive
officer. "Looking forward to 2011, we are well positioned to capitalize on our
expanded product portfolio and deliver increased value to our customers."
Scott Landers, senior vice president and chief financial officer, said, "We've
demonstrated once again the ability to drive double-digit organic growth. We've
also held true to our business model, resulting in expanded margins as our top
line growth accelerated. We exited 2010 in a strong financial position with cash
balances in excess of $40 million and net debt of $23 million."
Fourth quarter operating results
Revenue for the fourth quarter of 2010 was $29.4 million, up 17 percent compared
to $25.1 million in the fourth quarter of 2009. OEM revenue for the quarter was
$22.5 million, an increase of 22 percent year-over-year. Creative Professional
revenue for the quarter was $6.9 million, increasing four percent from the fourth
quarter of 2009.
Net income for the fourth quarter of 2010 was $6.1 million, compared to $4.0
million in the prior year period. Earnings per diluted share for the fourth
quarter of 2010 were $0.17, compared to $0.11 in the fourth quarter of 2009.
In the fourth quarter of 2010, non-GAAP net adjusted EBITDA was $13.8 million or
47 percent of revenue, compared to $10.6 million or 42 percent in the fourth
quarter of 2009.
Full year 2010 operating results
Revenue for the full year 2010 was $106.7 million, an increase of 13 percent
compared to $94.0 million in the full year 2009. OEM revenues were $80.0 million,
increasing 16 percent year-over-year. Creative Professional revenues were $26.7
million, an increase of six percent year-over-year.
Net income for the full year 2010 was $18.4 million, compared to net income of
$13.4 million for the prior year. Earnings per diluted share for the full year
2010 were $0.51 compared to earnings per diluted share of $0.38 for the full year
2009.
For the full year 2010, non-GAAP net adjusted EBITDA was $47.8 million or 45
percent, compared to non-GAAP net adjusted EBITDA of $41.0 million or 44 percent
for the prior year.
A reconciliation of GAAP operating income to non-GAAP net adjusted EBITDA for the
three and 12 months ended Dec. 31, 2010 and 2009 is provided in the financial
tables that accompany this release.
Cash, cash flow and debt balances
Monotype Imaging had cash and cash equivalents of $42.8 million as of Dec. 31,
2010, an increase of $8.2 million from $34.6 million at the end of the prior
year. Monotype Imaging generated $8.0 million of cash from operations in the
fourth quarter of 2010 and $43.7 million on a full year basis.
The company's outstanding debt was $65.9 million as of Dec. 31, 2010, a decrease
from $78.5 million as of Sept. 30, 2010 and $91.4 million at the end of the prior
year. The company was in compliance with all debt covenants at year end.
Net debt, defined as outstanding debt less cash and cash equivalents, was $23.1
million as of Dec. 31, 2010, a decrease of $33.7 million from the prior year end.
Introduction of additional Non-GAAP financial measures
Beginning in the first quarter of 2011, Monotype Imaging will add certain
non-GAAP financial measures to its financial reporting, including non-GAAP net
income and non-GAAP earnings per diluted share. These non-GAAP measures will
exclude the amortization of intangible assets and stock-based compensation
expense, net of taxes. Further information is provided in the non-GAAP financial
measures section of this press release.
Financial outlook
For the first quarter of 2011, Monotype Imaging expects revenue in the range of
$28.5 million to $30.0 million. The company expects first quarter 2011 non-GAAP
net adjusted EBITDA in the range of $12.3 million to $13.3 million, GAAP earnings
per diluted share in the range of $0.12 to $0.14 and non-GAAP earnings per
diluted share in the range of $0.18 to $0.20.
For full year 2011, Monotype Imaging expects revenue in the range of $119.0
million to $123.0 million. The company expects full year 2011 non-GAAP net
adjusted EBITDA in the range of $52.0 million to $55.0 million and GAAP earnings
per diluted share in the range of $0.55 to $0.60 and non-GAAP earnings per
diluted share in the range of $0.80 to $0.85.
Conference call details
Monotype Imaging will host a conference call on Thursday, Feb. 17, 2011 at 8:30
a.m. EST to discuss the company's fourth quarter and full year 2010 results and
business outlook for 2011. Individuals who are interested in listening to the
audio webcast should log on to the "Investor Relations" portion of the "About Us"
section of Monotype Imaging's website at monotypeimaging.com. The live
call can also be accessed by dialing (877) 941-2927 (domestic) or (480) 629-9724
(international) using passcode 4401292. If individuals are unable to listen to
the live call, the audio webcast will be archived in the "Investor Relations"
portion of the company's website for one year.
Non-GAAP financial measures
This press release contains non-GAAP financial measures under the rules of the
U.S. Securities and Exchange Commission. This non-GAAP information supplements
and is not intended to represent a measure of performance in accordance with
disclosures required by generally accepted accounting principles. Non-GAAP
financial measures are used internally to manage the business, such as in
establishing an annual operating budget and in reporting to lenders. Non-GAAP
financial measures are used by Monotype Imaging management in its operating and
financial decision-making because management believes these measures reflect
ongoing business in a manner that allows meaningful period-to-period comparisons.
Accordingly, Monotype Imaging believes it is useful for investors and others to
review both GAAP and non-GAAP measures in order to (a) understand and evaluate
current operating performance and future prospects in the same manner as
management does and (b) compare in a consistent manner the company's current
financial results with past financial results. The primary limitations associated
with the use of non-GAAP financial measures are that these measures may not be
directly comparable to the amounts reported by other companies and they do not
include all items of income and expense that affect operations. Monotype Imaging
management compensates for these limitations by considering the company's
financial results and outlook as determined in accordance with GAAP and by
providing a detailed reconciliation of the non-GAAP financial measures to the
most directly comparable GAAP measures in the tables attached to this press
release.
Forward-looking statements
This press release may contain forward-looking statements including those related
to future revenues and operating results, the growth of the company's OEM
business and Creative Professional business, the execution of the company's
growth strategy and anticipated business momentum that involve risks and
uncertainties that could cause the company's actual results to differ materially.
Factors that might cause or contribute to such differences include, but are not
limited to: risks associated with changes in the economic climate, including
decreased demand for fonts or products that incorporate the company's text
imaging solutions; risks associated with changes in the financial markets,
including the availability of credit; risks associated with increased
competition, which may result in the company losing customers or force it to
reduce prices; risks associated with the development and market acceptance of new
products or product features; risks associated with the company's ability to
adapt its products to new markets and to anticipate and quickly respond to
evolving technologies and customer requirements; risks associated with the
company's recent acquisition; and risks associated with the ownership and
enforcement of the company's intellectual property. Additional disclosure
regarding these and other risks faced by the company is available in the
company's public filings with the Securities and Exchange Commission, including
the risk factors included in the company's Annual Report on Form 10-K for the
year ended Dec. 31, 2009 and subsequent filings. The forward-looking financial
information set forth in this press release reflects estimates based on
information available at this time. These amounts could differ from actual
reported amounts stated in the company's Annual Report on Form 10-K for the year
ended Dec. 31, 2010. While Monotype Imaging may elect to update forward-looking
statements at some point in the future, the company specifically disclaims any
obligation to do so, even if an estimate changes.
About Monotype Imaging
Monotype Imaging combines technology with design to help the world communicate.
Based in Woburn, Mass. with offices in the U.S., Europe and Asia, Monotype
Imaging brings text imaging and graphical user interface capabilities to consumer
electronics devices such as laser printers, copiers, mobile phones, navigation
devices, digital cameras, e-book readers, digital televisions, set-top boxes and
consumer appliances. The company also provides printer drivers and color imaging
solutions to printer manufacturers and OEMs (original equipment manufacturers).
Monotype Imaging technologies are combined with access to more than 14,000
typefaces from the Monotype(R), Linotype(R) and ITC(R) typeface libraries -- home
to some of the world's most widely used designs, including the Times New
Roman(R), Helvetica(R) and ITC Franklin Gothic(TM) typefaces. Fonts are licensed
to creative, business and Web professionals through e-commerce portals, direct
and indirect sales and custom design services. Monotype Imaging offers
industry-standard font solutions that support all of the world's major languages.
Information about Monotype Imaging can be found at
monotypeimaging.com.
Monotype is a trademark of Monotype Imaging Inc. registered in the U.S. Patent
and Trademark Office and may be registered in certain jurisdictions. Times New
Roman is a trademark of The Monotype Corp. registered in the U.S. Patent and
Trademark Office and may be registered in certain other jurisdictions. Linotype
is a trademark of Linotype GmbH registered in the U.S. Patent and Trademark
Office and may be registered in certain jurisdictions. Helvetica is a trademark
of Linotype Corp. registered in the U.S. Patent and Trademark Office and may be
registered in certain jurisdictions in the name of Linotype Corp. or its licensee
Linotype GmbH. ITC is a trademark of International Typeface Corp. registered in
the U.S. Patent and Trademark Office and may be registered in certain
jurisdictions. ITC Franklin Gothic is a trademark of International Typeface Corp.
and may be registered in certain jurisdictions. All other trademarks are the
property of their respective owners. (C) 2011 Monotype Imaging Holdings Inc. All
rights reserved.
MONOTYPE IMAGING HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands)
December 31,
-------------------------------------
20102009
------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents$42,786$34,616
Accounts receivable, net4,7205,145
Income tax refunds receivable340885
Deferred income taxes350878
2,4801,666
Prepaid expenses and other current assets
--------------
Total current assets50,67643,190
Property, plant and equipment, net1,5891,790
Goodwill142,354140,745
Intangible assets, net80,23985,088
Other assets3,9471,564
--------------
Total assets$ 278,805$ 272,377
==== =========== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$753$395
Accrued expenses and other current liabilities13,0458,635
Accrued income taxes1,171903
Deferred revenue8,5066,446
Current portion of long-term debt8,35516,293
--------------
Total current liabilities31,83032,672
Long-term debt, less current portion57,50475,060
Other long-term liabilities471784
Deferred income taxes19,32818,310
Reserve for income taxes, net of current portion1,1251,550
Accrued pension benefits3,5653,479
Stockholders' equity:
Common stock3535
Additional paid-in capital155,791148,273
Treasury stock, at cost(86)(86)
Retained earnings (accumulated deficit)8,317(10,043)
Accumulated other comprehensive income9252,343
--------------
Total stockholders' equity164,982140,522
--------------
Total liabilities and stockholders' equity$ 278,805$ 272,377
==== =========== =======
MONOTYPE IMAGING HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except share and per share data)
Three Months EndedYear Ended
December 31,December 31,
----------------------------------------------------------------
2010200920102009
Revenue$29,405$25,116$106,659$94,005
Costs and expenses:
Cost of revenue1,9241,8707,4776,861
Cost of revenue--amortization of acquired technology8808483,4883,383
----------------------------------------
Total cost of revenue2,8042,71810,96510,244
----------------------------------------
Gross profit26,60122,39895,69483,761
Operating expenses:
Marketing and selling7,0266,35825,93523,645
Research and development3,8793,95815,40414,142
General and administrative4,2883,87716,48814,674
Amortization of other intangible assets1,2181,1974,7954,744
----------------------------------------
Total operating expenses16,41115,39062,62257,205
Income from operations10,1907,00833,07226,556
Other (income) expense:
Interest expense1,0341,2534,4214,496
Interest income(3)(1)(16)(61)
Other expense, net377531,6871,144
----------------------------------------
Total other expense1,4081,3056,0925,579
Income before provision for income taxes8,7825,70326,98020,977
Provision for income taxes2,6511,6818,6207,575
----------------------------------------
Net income$6,131$4,022$18,360$13,402
=== ============= ============= ============= ==========
Net income available to common shareholders - basic & diluted$6,083$4,000$18,237$13,315
=== ============= ============= ============= ==========
Net income per common share:
Basic$0.17$0.12$0.52$0.39
Diluted$0.17$0.11$0.51$0.38
Weighted average number of shares:
Basic35,302,47034,470,33134,762,91934,365,544
Diluted36,611,19135,594,59935,990,29535,288,126
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP NET
ADJUSTED EBITDA
Three Months EndedYear Ended
December 31,December 31,
----------------------------------------
2010200920102009
------------ ------------ ------------ ------------
GAAP operating income$ 10,190$7,008$ 33,072$ 26,556
Depreciation and amortization2,3572,3499,3239,298
Share based compensation1,2441,2825,4505,186
------------------------
Non-GAAP net adjusted EBITDA$ 13,791$ 10,639$ 47,845$ 41,040
==== ========== ========== ========== ======
OTHER INFORMATION
Share based compensation is comprised of the following:
Three Months EndedYear Ended
December 31,December 31,
------------------------------
2010200920102009
---------- ---------- --------- ---------
Marketing and selling$493$470$ 2,042$ 1,818
Research and development2622781,1541,186
General and administrative4895342,2542,182
--------------------
Total share based compensation$ 1,244$ 1,282$ 5,450$ 5,186
=== ======== ======= ======= =====
MARKET INFORMATION
The following table presents revenue for our two major markets:
Three Months EndedYear Ended
December 31,December 31,
-----------------------------------
2010200920102009
----------- ----------- ----------- ----------
OEM$ 22,512$ 18,461$80,000$ 68,967
Creative professional6,8936,65526,65925,038
-------------------------
Total$ 29,405$ 25,116$ 106,659$ 94,005
=== ========= ======== ========= ======
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
RECONCILIATION OF FORECAST GAAP NET INCOME TO FORECAST NON-GAAP
NET INCOME AND NON-GAAP EARNINGS PER DILUTED SHARE
Q1 2011
--------------------------------------------
Low End of GuidanceHigh End of Guidance
GAAP net income$4,400$5,050
Amortization, net of tax1,4001,400
Share-based compensation, net of tax900900
--------------------
Non-GAAP net income$6,700$7,350
========= ==================== ==========
Non-GAAP earnings per diluted share$0.18$0.20
========= ==================== ==========
Weighted average diluted shares used to compute non-GAAP earnings36,500,00036,500,000
per share
Assumes 35% effective tax rate.
RECONCILIATION OF FORECAST GAAP OPERATING INCOME TO
FORECASTNON-GAAP NET ADJUSTED EBITDA
Q1 2011
-------------------------------------------
Low End of GuidanceHigh End of Guidance
GAAP operating income$8,500$9,500
Depreciation and amortization2,4002,400
Share-based compensation1,4001,400
-------------------
Non-GAAP net adjusted EBITDA$12,300$13,300
========= =================== ==========
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
RECONCILIATION OF FORECAST GAAP NET INCOME TO FORECAST NON-GAAP
NET INCOME AND NON-GAAP EARNINGS PER DILUTED SHARE
2011
--------------------------------------------
Low End of GuidanceHigh End of Guidance
GAAP net income$20,300$22,100
Amortization, net of tax5,3005,300
Share-based compensation, net of tax4,2004,200
--------------------
Non-GAAP net income$29,800$31,600
========= ==================== ==========
Non-GAAP earnings per diluted share$0.80$0.85
========= ==================== ==========
Weighted average diluted shares used to compute non-GAAP earnings37,100,00037,100,000
per share
Assumes 35% effective tax rate.
RECONCILIATION OF FORECAST GAAP OPERATING INCOME TO
FORECASTNON-GAAP NET ADJUSTED EBITDA
2011
-------------------------------------------
Low End of GuidanceHigh End of Guidance
GAAP operating income$36,200$39,200
Depreciation and amortization9,4009,400
Share-based compensation6,4006,400
-------------------
Non-GAAP net adjusted EBITDA$52,000$55,000
========= =================== ==========
SOURCE: Monotype Imaging Holdings Inc.
ICR
Staci Mortenson, 781-970-6120
ir@monotypeimaging.com |
