Monotype Imaging Announces Second Quarter 2011 Results
Company Reports Record Revenue and Increases Annual Guidance
WOBURN, Mass., Jul 29, 2011 (BUSINESS WIRE) -- Monotype Imaging Holdings Inc.
(TYPE), a leading global provider of text imaging solutions, today announced
financial results for the second quarter ended June 30, 2011.
Second quarter 2011 highlights:
-- Second quarter revenue was a record $31.1 million, a 27 percent increase
year-over-year.
-- Operating income for the second quarter increased 46 percent to $9.7 million,
a 31 percent operating margin.
-- Non-GAAP net adjusted EBITDA for the second quarter increased 33 percent to
$13.8 million, or 44 percent of revenue.
-- Second quarter non-GAAP earnings per diluted share were $0.22.
"Monotype Imaging delivered a strong quarter. Our OEM results reflect an
increasing contribution from our Display Imaging business, complementing our
leadership position within the printer OEM market," said Doug Shaw, president and
chief executive officer. "Our ability to strengthen and extend brands across
print and digital media is increasing the value we can provide our customers and
is driving the growth in our Creative Professional business."
"The investments we've been making to diversify our business resulted in record
revenue, while we continued to drive significant levels of profitability," said
Scott Landers, senior vice president and chief financial officer. "Our new credit
facility will allow Monotype Imaging maximum, financial flexibility as we
continue to invest in the future."
Second quarter operating results
Revenue for the second quarter of 2011 was $31.1 million, up 27 percent compared
to $24.4 million in the second quarter of 2010. OEM revenue for the quarter was
$22.9 million, increasing 24 percent from the second quarter of 2010. Creative
Professional revenue for the quarter was $8.2 million, increasing 35 percent from
the second quarter of 2010.
Net income for the second quarter of 2011 was $5.6 million, compared to $3.0
million in the second quarter of 2010. Earnings per diluted share for the second
quarter of 2011 were $0.15 compared to $0.08 in the same period last year.
Non-GAAP net income for the second quarter of 2011, which excludes the
amortization of intangible assets and stock-based compensation expense, net of
taxes, was $8.1 million, compared to $5.3 million in the second quarter of 2010.
Non-GAAP earnings per diluted share for the second quarter of 2011 were $0.22,
compared to $0.15 in the same period last year.
In the second quarter of 2011, non-GAAP net adjusted EBITDA was $13.8 million or
44 percent of revenue, compared to $10.4 million or 43 percent of revenue in the
second quarter of 2010.
A reconciliation of GAAP measures to non-GAAP measures for the three and six
months ended June 30, 2011 and 2010 is provided in the financial tables that
accompany this release.
Cash, cash flow and debt balances
Monotype Imaging had cash and cash equivalents of $53.1 million as of June 30,
2011, an increase from $48.9 million as of March 31, 2011. Monotype Imaging
generated $10.4 million of cash from operations in the second quarter of 2011.
The company's outstanding debt was $57.3 million as of June 30, 2011, a decrease
from $65.9 million as of Dec. 31, 2010.
Net debt, defined as outstanding debt less cash and cash equivalents, was $4.3
million as of June 30, 2011, a decrease from $23.1 million as of Dec. 31, 2010.
Debt refinancing
On July 13, 2011, Monotype Imaging entered into a new credit agreement that
provides for a five-year, $120 million secured revolving credit facility. The new
credit agreement replaces the company's existing term loan, which was scheduled
to expire in July, 2012. The agreement provides Monotype Imaging with lower
interest rates, increased flexibility for use of cash and the ability to increase
the facility to $140 million upon request, with lender consent.
In connection with the debt refinancing, the company expects to record a
non-cash, non-operating charge of approximately $425,000 or $0.01 per share in
the third quarter of 2011.
Further information is available in the company's Form 8-K, which was filed on
July 19, 2011, and can be found in the Investor Relations section of
monotypeimaging.com.
Financial outlook
For the third quarter of 2011, Monotype Imaging expects revenue in the range of
$30.0 million to $31.5 million. The company expects third quarter 2011 non-GAAP
net adjusted EBITDA in the range of $13.0 million to $14.0 million, GAAP earnings
per diluted share in the range of $0.14 to $0.16 and non-GAAP earnings per
diluted share in the range of $0.20 to $0.22.
For full year 2011, Monotype Imaging expects revenue in the range of $121.0
million to $124.0 million. The company expects full year 2011 non-GAAP net
adjusted EBITDA in the range of $53.0 million to $55.0 million and GAAP earnings
per diluted share in the range of $0.58 to $0.61 and non-GAAP earnings per
diluted share in the range of $0.84 to $0.87.
Third quarter and full year GAAP earnings per diluted share and non-GAAP earnings
per diluted share include the impact of the non-cash charge associated with the
company's debt refinancing.
Conference call details
Monotype Imaging will host a conference call on Friday, July 29, 2011, at 8:30
a.m. EDT to discuss the company's second quarter 2011 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 866-225-8754 (domestic) or 480-629-9645
(international) using passcode 4456424. 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; 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, 2010 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 Quarterly Report on Form 10-Q for the
quarter ended June 30, 2011. 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)
June 30,December 31,
20112010
------------------------------
Assets
Current assets:
Cash and cash equivalents$53,060$42,786
Accounts receivable, net of allowance for doubtful accounts6,0804,720
Income tax refunds receivable440340
Deferred income taxes436350
Prepaid expenses and other current assets2,2972,480
--------------
Total current assets62,31350,676
Property and equipment, net1,9251,589
Goodwill145,843142,354
Intangible assets, net77,02180,239
Other assets4,1753,947
--------------
Total assets$ 291,277$ 278,805
==== =========== =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$513$753
Accrued expenses and other current liabilities9,84213,045
Accrued income taxes--1,171
Deferred revenue11,3008,506
Current portion of long-term debt10,0008,355
--------------
Total current liabilities31,65531,830
Long-term debt, less current portion47,34457,504
Other long-term liabilities765471
Deferred income taxes22,37219,328
Reserve for income taxes, net of current portion1,2381,125
Accrued pension benefits3,9933,565
Stockholders' equity:
3635
Common stock
Additional paid-in capital161,489155,791
Treasury stock, at cost(86)(86)
Retained earnings19,3558,317
Accumulated other comprehensive income3,116925
--------------
Total stockholders' equity183,910164,982
--------------
Total liabilities and stockholders' equity$ 291,277$ 278,805
==== =========== =======
MONOTYPE IMAGING HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except share and per share data)
Three Months EndedSix Months Ended
June 30,June 30,
----------------------------------------------------------------
2011201020112010
----------------------------------------
Revenue$31,066$24,435$60,795$48,896
Costs and expenses:
Cost of revenue2,9611,9104,9873,728
Cost of revenue--amortization of acquired technology7988681,5751,739
----------------------------------------
Total cost of revenue3,7592,7786,5625,467
----------------------------------------
Gross profit27,30721,65754,23343,429
Operating expenses:
Marketing and selling8,2316,20416,02912,178
Research and development3,9333,5708,0607,591
General and administrative4,1444,0728,3378,096
Amortization of other intangible assets1,3041,1872,5952,388
----------------------------------------
Total operating expenses17,61215,03335,02130,253
Income from operations9,6956,62419,21213,176
Other (income) expense:
Interest expense8851,1081,8012,303
Interest income(25)--(62)(13)
(Gain) loss on foreign exchange(85)1,701(481)2,689
Loss (gain) on derivatives351(1,008)1,023(1,765)
Other (income) expense, net--(9)--(9)
-------------------- ----------------------- ---
Total other expense1,1261,7922,2813,205
Income before provision for income taxes8,5694,83216,9319,971
Provision for income taxes2,9711,7885,8933,665
----------------------------------------
Net income$5,598$3,044$11,038$6,306
=== ============= ============= ============= ==========
Net income available to common stockholders - basic & diluted$5,502$3,022$10,861$6,266
=== ============= ============= ============= ==========
Net income per common share:
Basic$0.16$0.09$0.31$0.18
Diluted$0.15$0.08$0.30$0.17
Weighted average number of shares:
Basic35,308,94134,727,21935,176,15634,651,885
Diluted36,772,51535,992,54136,638,69735,924,077
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP NET
ADJUSTED EBITDA
Three Months EndedSix Months Ended
June 30,June 30,
----------------------------------------
2011201020112010
------------------------
GAAP operating income$9,695$6,624$ 19,212$ 13,176
Depreciation and amortization2,3632,3054,6674,648
Share based compensation1,7531,4743,3222,811
------------------------
Non-GAAP net adjusted EBITDA$ 13,811$ 10,403$ 27,201$ 20,635
==== ========== ========== ========== ======
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
Three Months EndedSix Months Ended
June 30,June 30,
--------------------------------------
2011201020112010
----------------------
GAAP net income$ 5,598$ 3,044$ 11,038$6,306
Amortization, net of tax1,3731,2952,7182,610
Share based compensation, net of tax1,1459292,1661,778
----------------------
Non-GAAP net income$ 8,116$ 5,268$ 15,922$ 10,694
==== ========= ========= ========== ======
RECONCILIATION OF GAAP EARNINGS PER DILUTED SHARE TO NON-GAAP
EARNINGS PER DILUTED SHARE
Three Months EndedSix Months Ended
June 30,June 30,
--------------------------------
2011201020112010
----------------
GAAP earnings per diluted share$ 0.15$ 0.08$ 0.30$ 0.17
Amortization, net of tax0.040.040.070.07
Share based compensation, net of tax0.030.030.060.05
----------------
Non-GAAP earnings per diluted share$ 0.22$ 0.15$ 0.43$ 0.29
==== ======== ======== ======== ====
OTHER INFORMATION
Share based compensation is comprised of the following:
Three Months EndedSix Months Ended
June 30,June 30,
------------------------------------
2011201020112010
--------------------
Marketing and selling$728$543$ 1,395$ 1,023
Research and development409309773615
General and administrative6166221,1541,173
--------------------
Total share based compensation$ 1,753$ 1,474$ 3,322$ 2,811
==== ========= ========= ========= =====
MONOTYPE IMAGING HOLDINGS INC.
MARKET INFORMATION
(Unaudited and in thousands)
The following table presents revenue for our two major markets:
Three Months EndedSix Months Ended
June 30,June 30,
----------------------------------------
2011201020112010
------------------------
OEM$ 22,885$ 18,387$ 44,783$ 36,008
Creative professional8,1816,04816,01212,888
------------------------
Total$ 31,066$ 24,435$ 60,795$ 48,896
==== ========== ========== ========== ======
MONOTYPE IMAGING HOLDINGS INC. OTHER INFORMATION (Unaudited and in thousands,
except share and per share data)
RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO FORECAST NON-GAAP
EARNINGS PER DILUTED SHARE
Low End of GuidanceHigh End of Guidance
--------------------------------------
Q3 2011Q3 2011
-------------------- ----------------------
GAAP net income$5,100$5,800
Amortization, net of tax1,2001,200
Share-based compensation, net of tax1,1001,100
-------------------
Non-GAAP net income7,4008,100
===================
Low End of GuidanceHigh End of Guidance
---------------------------------------
Q3 2011Q3 2011
--------------------- ----------------------
GAAP earnings per diluted share$0.14$0.16
Amortization, net of tax, per diluted share0.030.03
Share-based compensation, net of tax, per diluted share0.030.03
--------------------
Non-GAAP earnings per diluted share$0.20$0.22
========= ==================== ==========
Weighted average diluted shares used to compute non-37,300,00037,300,000
GAAP
earnings per share
Assumes 34% effective tax rate.
Low End of GuidanceHigh End of Guidance
--------------------------------------
20112011
-------------------
GAAP net income$21,400$22,500
Amortization, net of tax5,1005,100
Share-based compensation, net of tax4,4004,400
-------------------
Non-GAAP net income30,90032,000
===================
Low End of GuidanceHigh End of Guidance
---------------------------------------
20112011
--------------------
GAAP earnings per diluted share$0.58$0.61
Amortization, net of tax, per diluted share0.140.14
Share-based compensation, net of tax, per diluted share0.120.12
--------------------
Non-GAAP earnings per diluted share$0.84$0.87
========= ==================== ==========
Weighted average diluted shares used to compute non-36,800,00036,800,000
GAAP
earnings per share
Assumes 35% effective tax rate.
MONOTYPE IMAGING HOLDINGS INC. OTHER INFORMATION (Unaudited and in thousands)
RECONCILIATION OF FORECAST GAAP OPERATING INCOME TO FORECAST NON-GAAP NET
ADJUSTED EBITDA
Low End of GuidanceHigh End of Guidance
--------------------------------------
Q3 2011Q3 2011
-------------------- ----------------------
GAAP operating income$9,200$10,200
Depreciation and amortization2,1002,100
Share-based compensation1,7001,700
-------------------
Non-GAAP net adjusted EBITDA$13,000$14,000
========= =================== ==========
Low End of GuidanceHigh End of Guidance
--------------------------------------
20112011
-------------------
GAAP operating income$37,300$39,300
Depreciation and amortization8,9008,900
Share-based compensation6,8006,800
-------------------
Non-GAAP net adjusted EBITDA$53 ,000$55,000
========= =================== ==========
SOURCE: Monotype Imaging Holdings Inc.
Investor Relations Contact:
ICR
Staci Mortenson, 781-970-6120
ir@monotypeimaging.com |
