Consolidated Graphics Reports Financial Results For The Quarter Ended December 31, 2012

Consolidated Graphics Reports Financial Results For The Quarter Ended December
                                   31, 2012

Quarterly Highlights:

- Sales grew 4.0% year-over-year to $295.3 million

- Adjusted Diluted Earnings per Share was $1.75, the all-time high in the
history of the Company

- Adjusted EBITDA improved 9.2% to $42.7 million

PR Newswire

HOUSTON, Feb. 6, 2013

HOUSTON, Feb. 6, 2013 /PRNewswire/ -- Consolidated Graphics, Inc. (NYSE: CGX)
today announced financial results for its third quarter ended December 31,
2012.

Revenue for the December 2012 quarter increased 4.0% to $295.3 million,
compared to the prior year. Adjusted Operating Income increased 17.3% for the
quarter to $24.3 million or 8.2% of revenue, compared to $20.7 million or 7.3%
of revenue last year. Adjusted Net Income increased 32.4% to $16.9 million for
the quarter, compared to $12.7 million for the prior year. Adjusted Diluted
Earnings per share increased 43.4% to $1.75, compared to $1.22 last year.
Adjusted EBITDA increased 9.2% to $42.7 million for the quarter and Free Cash
Flow was $16.8 million for the quarter.

Operating income during the December 2012 quarter was $23.3 million, compared
to $17.6 million for the prior year. Net income for the quarter was $16.3
million or $1.68 diluted earnings per share, compared to $10.8 million or
$1.04 diluted earnings per share last year.

Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics,
commented, "Revenue growth this quarter was driven by growth in digital print
revenue, which increased 3.6%, as well as strong election-related revenue. The
sales growth we experienced was made possible by investment in our best of
class digital print platform, along with our technology infrastructure and
solutions.  Looking forward, we are optimistic that with an improving U.S.
economy in 2013, we will experience greater demand for our products and
services."

During the December 2012 quarter, the Company purchased 46,336 shares of its
common stock for $1.2 million (average cost of $26.06 per share) 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
2,269,152 shares of its common stock (19% of shares outstanding) for $90.5
million. As of December 31, 2012, the Company had 9,618,475 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,
February 6, 2013, at 11:00 a.m. Eastern Time, to discuss its third 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, or charges related to our withdrawal from multi-employer pension
plans, 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, 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 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                 Nine Months Ended
                                  December 31,                       December 31,
                                  2012      2011      Change         2012      2011      Change
                                                      $        %                         $        %
Sales                             $295,277  $283,891  11,386   4     $797,220  $794,644  2,576    0
Cost of Sales                     222,716   216,052   6,664    3     613,390   611,207   2,183    0
        Gross Profit              72,561    67,839    4,722    7     183,830   183,437   393      0
Selling Expenses                  23,939    23,149    790      3     70,030    68,411    1,619    2
General and Administrative        24,638    24,839    (201)    (1)   73,571    72,266    1,305    2
Expenses
Goodwill Impairment Charge        —         1,984     (1,984)  nm    —         1,984     (1,984)  nm  
Other Charges                     349       —         349      nm    4,311     5,281     (970)    (18)
Other Expense                     290       238       52       22    17        429       (412)    (96)
        Operating Income          23,345    17,629    5,716    32    35,901    35,066    835      2
Interest Expense                  1,246     1,676     (430)    (26)  4,081     4,831     (750)    (16)
        Income  before Taxes      22,099    15,953    6,146    39    31,820    30,235    1,585    5
Income Tax Expense                5,840     5,119     721      14    9,300     10,281    (981)    (10)
        Net Income                $16,259   $10,834   5,425    50    $22,520   $19,954   2,566    13
Earnings Per Share
        Basic                     $1.69     $1.05                    $2.28     $1.86
        Diluted                   $1.68     $1.04                    $2.27     $1.83
Weighted Average Shares
Outstanding
        Basic                     9,622     10,332                   9,886     10,712
        Diluted                   9,659     10,459                   9,937     10,885
Effective Income Tax Rate         26.4%     32.1%                    29.2%     34.0%
^________________________________
nm- not meaningful

                       

CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts, and unaudited)
                                                       December 31,  March 31,
                                                                     2012
                                                        2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents                              $  8,525      $ 6,065
Accounts receivable, net                               181,515       162,093
Inventories                                            60,941        54,129
Prepaid expenses                                       10,891        14,976
Deferred income taxes                                  9,848         16,552
Total current assets                                   271,720       253,815
PROPERTY AND EQUIPMENT, net                            357,018       377,055
GOODWILL                                               24,974        24,847
OTHER INTANGIBLE ASSETS, net                           12,933        15,623
OTHER ASSETS                                           7,551         10,569
                                                       $  674,196    $ 681,909
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt                      $  21,437     $ 23,596
Accounts payable                                       90,055        90,392
Accrued liabilities                                    71,511        68,496
Income taxes payable                                   2,790         —
Total current liabilities                              185,793       182,484
LONG-TERM DEBT, net of current portion                 130,811       140,150
OTHER LIABILITIES                                      35,208        31,523
DEFERRED INCOME TAXES, net                             42,989        54,051
           Total liabilities                           394,801       408,208
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 100,000,000 shares
authorized;                                            96            102

   9,618,475 and 10,239,819 issued and outstanding
Additional paid-in capital                             153,833       161,914
Retained earnings                                      124,434       109,832
Accumulated other comprehensive income                 1,032         1,853
Total shareholders' equity                             279,395       273,701
                                                       $  674,196    $ 681,909
Total debt                                             $  152,248    $ 163,746
Debt-to-total capitalization                              35%          37%

 

CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

(In thousands, except per share amounts, and unaudited)
                                    Three Months Ended    Nine Months Ended
                                    December 31,          December 31,
                                    2012        2011      2012       2011
Net income                          $ 16,259    $ 10,834  $ 22,520   $ 19,954
Income tax expense                  5,840       5,119     9,300      10,281
Interest expense, net               1,246       1,676     4,081      4,831
Depreciation and amortization       18,230      18,663    55,153     53,774
Goodwill impairment charge          —           1,984     —          1,984
Other charges and accretion of      349         182       4,311      5,543
pension liability
Share-based compensation expense    666         710       1,849      1,853
Non-cash foreign currency           (27)        238       (240)      429
transaction (gain) loss
Net (gain) loss from asset          97          (331)     165        (725)
dispositions
Adjusted EBITDA                     $  42,660   $ 39,075  $  97,139  $ 97,924
Net cash provided by operating      $  19,979   $ 24,901  $  61,779  $ 63,329
activities
Capital expenditures                (4,176)     (19,710)  (31,373)   (48,813)
Proceeds from asset dispositions    954         1,795     1,736      2,694
Free Cash Flow                      $  16,757   $ 6,986   $  32,142  $ 17,210
Operating income                    $  23,345   $ 17,629  $  35,901  $ 35,066
Goodwill impairment charge          —           1,984     —          1,984
Other charges and accretion of      349         182       4,311      5,543
pension liability
Share-based compensation expense    666         710       1,849      1,853
Non-cash foreign currency           (27)        238       (240)      429
transaction (gain) loss
Adjusted Operating Income           $  24,333   $ 20,743  $  41,821  $ 44,875
Adjusted Operating Margin           8.2%        7.3%      5.2%       5.6%
Net income                          $   16,259  $ 10,834  $  22,520  $  19,954
Goodwill impairment charge          —           1,984     —          1,984
Tax benefit of goodwill impairment  —           (774)     —          (774)
charge
Other charges and accretion of      349         182       4,311      5,543
pension liability
Tax benefit of other charges and
accretion of pension                (136)       (71)      (1,681)    (2,089)

       liability
Share-based compensation expense,   406         433       1,127      1,130
net of taxes
Non-cash foreign currency
transaction (gain) loss, net of     (16)        145       (146)      262

       taxes
Adjusted Net Income                 $   16,862  $ 12,733  $  26,131  $  26,010

 

CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

(In thousands, except per share amounts, and unaudited)
                                       Three Months Ended  Nine Months Ended
                                       December 31,        December 31,
                                       2012        2011    2012      2011
Diluted earnings per share             $  1.68     $ 1.04  $  2.27   $ 1.83
Goodwill impairment charge             —           .19     —         .18
Tax benefit of goodwill impairment     —           (.07)   —         (.07)
charge
Other charges and accretion of pension .04         .02     .43       .51
liability
Tax benefit of other charges and
accretion of pension                   (.01)       (.01)   (.17)     (.18)

       liability
Share-based compensation expense, net  .04         .04     .11       .10
of taxes
Non-cash foreign currency transaction
(gain) loss, net of                    —           .01     (.01)     .02

       taxes
Adjusted Diluted Earnings Per Share    $    1.75   $ 1.22  $   2.63  $  2.39

 

 

SOURCE Consolidated Graphics, Inc.

Website: http://www.cgx.com
Contact: Jon C. Biro, Executive Vice President/Chief Financial Officer,
Consolidated Graphics, Inc., +1-713-787-0977; or Alexandra Tramont or Matt
Steinberg, FTI Consulting, Inc., +1-212-850-5600