Monotype Imaging Announces First Quarter 2012 Results
Company Reports Record Results
WOBURN, Mass., May 01, 2012 (BUSINESS WIRE) -- Monotype Imaging Holdings Inc.
(TYPE), a leading provider of typefaces, technology and expertise for creative
applications and consumer devices, today announced financial results for the
first quarter ended March 31, 2012.
First quarter 2012 highlights
-- Revenue for the quarter was a record $34.3 million, a 16 percent increase
year-over-year.
-- OEM and Creative Professional businesses achieved record results, reporting
$24.6 million and $9.7 million, respectively.
-- Operating income was $10.1 million, or 30 percent of revenue.
-- Non-GAAP net adjusted EBITDA was $14.4 million, or 42 percent of revenue,
inclusive of approximately $500,000 of Bitstream related transaction costs.
-- Cash flow from operations was $8.0 million, a 14 percent increase
year-over-year.
"I would like to welcome our new associates from Bitstream who officially joined
the Monotype family on March 19, 2012. In our first quarter, we had record
financial results, driven by continued strength in our Display Imaging and
Creative Professional businesses," said Doug Shaw, president and chief executive
officer. "We continued to execute on our goal of diversifying our revenue
streams, both through organic growth and acquisition. Today, greater than 60
percent of our revenue is generated from consumer electronics devices, e-commerce
sites, Web fonts, custom font design and ISVs, reflective of our investments to
reach an expanded market for our typefaces, technology and expertise."
"The acquisition of Bitstream's font business brings to Monotype Imaging
complementary skill sets and product offerings, which have already contributed to
our revenue. We're making good progress as we integrate offices and teams,
including the development facility in India, and we expect to leverage these
resources in support of our growth initiatives," said Scott Landers, senior vice
president and chief financial officer.
First quarter 2012 operating results
Revenue for the quarter was $34.3 million, up 16 percent compared to $29.7
million for the first quarter of 2011. Revenue from the acquisition of
Bitstream's font business contributed approximately 200 basis points of growth,
primarily to the Creative Professional business. OEM revenue was $24.6 million,
increasing 13 percent from the first quarter of 2011. Creative Professional
revenue was $9.7 million, increasing 24 percent from the same period in 2011.
Net income was $5.7 million, compared to $5.4 million in the first quarter of
2011. Earnings per diluted share were $0.15, compared to $0.15 in the same period
in 2011.
Non-GAAP net income, which excludes the amortization of intangible assets and
stock-based compensation expense, net of taxes, was $8.1 million, compared to
$7.8 million in the first quarter of 2011. Non-GAAP earnings per diluted share
were $0.22, compared to $0.21 in the same period in 2011.
Non-GAAP net adjusted EBITDA was $14.4 million, or 42 percent of revenue,
compared to $13.4 million or 45 percent of revenue in the first quarter of 2011.
In the first quarter of 2012, Monotype Imaging's operating expense and
profitability metrics, such as non-GAAP net adjusted EBITDA, included
approximately $500,000 of transaction costs and approximately $200,000 of
operating expenses related to the acquisition of Bitstream's font business.
A reconciliation of GAAP measures to non-GAAP measures for the three months ended
March 31, 2012 and 2011 is provided in the financial tables that accompany this
release.
Cash, cash flow and debt balances
During the first quarter of 2012, Monotype Imaging repaid $10 million in debt
principal. The company drew approximately $25 million on its revolving line of
credit and used approximately $25 million in cash to finance the acquisition of
Bitstream's font business. Outstanding debt was $52.3 million as of March 31,
2012, compared to $37.3 million as of Dec. 31, 2011, and $64.4 million as of
March 31, 2011.
Monotype Imaging had cash and cash equivalents of $28.1 million as of March 31,
2012, compared to $53.9 million as of Dec. 31, 2011 and $48.9 million as of March
31, 2011. The company generated $8.0 million of cash from operations in the first
quarter of 2012, an increase of 14 percent year-over-year.
Financial outlook
For the second quarter of 2012, Monotype Imaging expects revenue in the range of
$37.5 million to $39.0 million. The company anticipates second quarter 2012
non-GAAP net adjusted EBITDA in the range of $14.5 million to $16.0 million, GAAP
earnings per diluted share in the range of $0.15 to $0.18 and non-GAAP earnings
per diluted share in the range of $0.23 to $0.25.
For the full year 2012, Monotype Imaging expects revenue in the range of $146.0
million to $151.0 million. The company anticipates full year 2012 non-GAAP net
adjusted EBITDA in the range of $59.0 million to $63.0 million, GAAP earnings per
diluted share in the range of $0.67 to $0.72 and non-GAAP earnings per diluted
share in the range of $0.96 to $1.01.
Second quarter and full year guidance include approximately $300,000 and $800,000
of transaction costs, respectively.
Conference call details
Monotype Imaging will host a conference call on Tuesday, May 1, 2012, at 8:30
a.m. EDT to discuss the company's first quarter 2012 results and business outlook
for 2012. 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 877-941-0843 (domestic) or 480-629-9819 (international) using
passcode 4530410. 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 the interruption of certain
manufacturing chains as a result of natural disasters; 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 ability to integrate the acquisition of Bitstream's
font business; 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, 2011 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-Q for the quarter ended March 31, 2012. 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 is a leading provider of typefaces, technology and expertise
that enable the best user experience and ensure brand integrity. Based in Woburn,
Mass., Monotype Imaging provides customers worldwide with typeface solutions for
a broad range of creative applications and consumer devices. The company's
library and e-commerce sites are home to many of the most widely used typefaces
-- including the Helvetica(R), Frutiger(R) and Univers(R) families -- as well as
the next generation of type designs. Further information is available 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. Helvetica,
Frutiger and Univers are trademarks 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. All other trademarks are
the property of their respective owners. (C)2012 Monotype Imaging Holdings Inc.
All rights reserved.
MONOTYPE IMAGING HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands)
March 31,December 31,
20122011
------------------------------
Assets
Current assets:
Cash and cash equivalents$28,077$53,850
Restricted cash2,613--
Accounts receivable, net of allowance for doubtful accounts6,6316,588
Income tax refunds receivable--733
Deferred income taxes2,378506
Prepaid expenses and other current assets3,4603,228
--------------
Total current assets43,15964,905
Property and equipment, net2,4202,404
Goodwill173,481140,807
Intangible assets, net91,97871,664
Deferred income taxes3,721396
Other assets4,3643,646
--------------
Total assets$ 319,123$ 283,822
==== =========== =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$524$1,123
Accrued expenses and other current liabilities13,64912,235
Accrued income taxes1,5541,280
Deferred revenue8,5057,742
Current portion of long-term debt10,00010,000
--------------
Total current liabilities34,23232,380
Long-term debt, less current portion42,32127,321
Other long-term liabilities406225
Deferred income taxes29,69120,596
Reserve for income taxes, net of current portion1,2351,174
Accrued pension benefits3,9293,765
Stockholders' equity:
3736
Common stock
Additional paid-in capital170,125167,448
Treasury stock, at cost(86)(86)
Retained earnings36,70630,986
Accumulated other comprehensive income527(23)
-------------- ----
Total stockholders' equity207,309198,361
--------------
Total liabilities and stockholders' equity$ 319,123$ 283,822
==== =========== =======
MONOTYPE IMAGING HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except share and per share data)
Three Months Ended
March 31,
----------------------------------
20122011
-------------------- --------------------
Revenue$34,349$29,729
Cost of revenue3,6582,026
Cost of revenue--amortization of acquired technology795777
--------------------
Total cost of revenue4,4532,803
--------------------
Gross profit29,89626,926
Operating expenses:
Marketing and selling9,2717,798
Research and development4,3444,127
General and administrative4,9274,193
Amortization of other intangible assets1,2211,291
--------------------
Total operating expenses19,76317,409
--------------------
Income from operations10,1339,517
Other (income) expense:
Interest expense451916
Interest income(7)(37)
Loss (gain) on foreign exchange267(396)
Loss on derivatives126672
Other(11)--
---------- -----------
Total other expense8261,155
--------------------
Income before provision for income taxes9,3078,362
Provision for income taxes3,5872,922
--------------------
Net income$5,720$5,440
====== ================ ==========
Net income available to common stockholders--basic$5,633$5,359
====== ================ ==========
Net income available to common stockholders--diluted$5,636$5,362
====== ================ ==========
Net income per common share:
Basic$0.16$0.15
Diluted$0.15$0.15
Weighted average number of shares:
Basic36,282,42835,041,895
Diluted37,607,04736,402,836
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP NET
ADJUSTED EBITDA
Three Months Ending
March 31,
----------------------------
20122011
---------------- ----------------
Income from operations$10,133$9,517
Depreciation and amortization2,3332,304
Share based compensation1,9231,569
--------------
Net adjusted EBITDA$14,389$13,390
Transaction costs45394
--------------
Net adjusted EBITDA, excluding transaction costs$14,842$13,484
======= ============== =======
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
Three Months Ended
March 31,
--------------------------------
20122011
------------------ ------------------
GAAP net income$5,720$5,440
Amortization, net of tax1,2401,346
Share based compensation, net of tax1,1831,021
----------------
Non-GAAP net income$8,143$7,807
======== ================ ========
RECONCILIATION OF GAAP EARNINGS PER DILUTED SHARE TO NON-GAAP
EARNINGS PER DILUTED SHARE
Three Months Ended
March 31,
--------------------------------
20122011
------------------ ------------------
GAAP earnings per diluted share$0.15$0.15
Amortization, net of tax0.040.03
Share based compensation, net of tax0.030.03
----------------
Non-GAAP earnings per diluted share$0.22$0.21
======== ================ ========
Transaction costs, net of tax0.01--
----------------
Non-GAAP earnings per diluted share, excluding transaction costs$0.23$0.21
======== ================ ========
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
(Unaudited and in thousands)
OTHER INFORMATION
Share based compensation is comprised of the following:
Three Months Ended
March 31,
----------------------------
20122011
---------------- ----------------
Marketing and selling$831$667
Research and development441364
General and administrative651538
--------------
Total share based compensation$1,923$1,569
======= ============== =======
MARKET INFORMATION
The following table presents revenue for our two major markets:
Three Months Ended
March 31,
------------------------------------
20122011
-------------------- --------------------
OEM$24,644$21,898
Creative Professional9,7057,831
------------------
Total$34,349$29,729
========= ================== =========
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
--------------------- ----------------------
Q2 2012Q2 2012
--------------------- ----------------------
GAAP net income$5,800$6,700
Amortization, net of tax1,6001,600
Share-based compensation, net of tax1,2001,200
--------------------
Non-GAAP net income$8,600$9,500
========= ==================== ==========
GAAP earnings per diluted share$0.15$0.18
Amortization, net of tax, per diluted share0.040.04
Share-based compensation, net of tax, per diluted share0.030.03
--------------------
Non-GAAP earnings per diluted share$0.23$0.25
========= ==================== ==========
Weighted average diluted shares used to compute non-GAAP earnings37,700,00037,700,000
per share
Assumes 36% effective tax rate.
Low End of GuidanceHigh End of Guidance
--------------------- ----------------------
20122012
--------------------- ----------------------
GAAP net income$25,200$27,100
Amortization, net of tax6,1006,100
Share-based compensation, net of tax4,8004,800
--------------------
Non-GAAP net income36,10038,000
====================
GAAP earnings per diluted share$0.67$0.72
Amortization, net of tax, per diluted share0.160.16
Share-based compensation, net of tax, per diluted share0.130.13
--------------------
Non-GAAP earnings per diluted share$0.96$1.01
========= ==================== ==========
Weighted average diluted shares used to compute non-GAAP earnings37,800,00037,800,000
per share
Assumes 37% effective tax rate.
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP OPERATING INCOME
TO FORECAST NON-GAAP NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End ofHigh End of
GuidanceGuidance
------------------------
Q2 2012Q2 2012
-------------- --------------
GAAP operating income$9,800$ 11,300
Depreciation and amortization2,8002,800
Share-based compensation1,9001,900
------------
Non-GAAP net adjusted EBITDA$ 14,500$ 16,000
====== ============ ======
Low End ofHigh End of
GuidanceGuidance
----------------------
20122012
------------- -------------
GAAP operating income$ 40,600$ 44,600
Depreciation and amortization10,80010,800
Share-based compensation7,6007,600
------------
Non-GAAP net adjusted EBITDA$ 59,000$ 63,000
===== =========== ======
SOURCE: Monotype Imaging Holdings Inc.
Investor Relations Contact:
ICR
Staci Mortenson, 781-970-6120
ir@monotypeimaging.com |
