Cambium Learning Group Announces First Quarter Earnings Second Consecutive Quarter of Order Volume Growth PR Newswire DALLAS, May 9, 2013 DALLAS, May 9, 2013 /PRNewswire/ -- Cambium Learning Group, Inc. (NASDAQ: ABCD, the "Company"), a leading educational solutions and services company committed to helping every student reach their full potential by providing evidence-based solutions and expert professional services, announced today its financial results for the first quarter of 2013. (Logo: http://photos.prnewswire.com/prnh/20100129/CLGROUPLOGO) Three Months Ended (In millions) March 31, 2013 March 31, 2012 $ Change % Change GAAP net revenues $ 31.4 $ 27.9 $ 3.6 13% Decrease in deferred (7.9) (7.1) (0.8) -12% revenue GAAP net loss (9.1) (20.3) 11.2 55% EBITDA 0.5 (7.3) 7.8 107% Adjusted EBITDA 2.2 (3.1) 5.4 171% The Company reported increases in order volume and revenue in the first quarter of 2013 compared to the first quarter of 2012, due to continued growth in service offerings and online products. The growth in these areas in the first quarter was sufficient to overcome continued weakness in the Company's legacy print-based product sales. The Learning A-Z and ExploreLearning segments and service offerings led by the school turnaround product line have been the most consistent growth areas of the Company. "While modest at 3%, the continued order volume improvement for a second consecutive quarter is a good indicator that our continued investment in technology and high-growth services aligns strategically with the changing market," said John Campbell, chief executive officer of Cambium Learning Group, Inc. In the first quarter of 2013, the Company began providing separate results for the Learning A-Z, ExploreLearning and Kurzweil/IntelliTools businesses, rather than reporting them as a combined Cambium Learning Technologies segment. For the first quarter of 2013, company-wide order volumes increased 3% compared to the first quarter of 2012, and order volume changes by segment were as follows: oVoyager Sopris Learning decreased 2% oLearning A-Z increased 15% oExploreLearning increased 62% oKurzweil/IntelliTools decreased 20% Other highlights include: oGAAP net revenues for the first quarter of 2013 increased by 13% to $31.4 million, compared with $27.9 million in the first quarter of 2012. In addition to the order volume improvement, the Company's deferred revenue balances decreased by $7.9 million in the first quarter of 2013, as the Company recognized revenue on prior-period technology and service sales that were delivered during the quarter. Comparatively, deferred revenue balances decreased by $7.1 million in the first quarter of 2012. oGAAP net revenues by segment for the first quarter of 2013, and the percentage change from the first quarter of 2012, were as follows: oVoyager Sopris Learning: $17.5 million, increased 15% oLearning A-Z: $7.6 million, increased 27% oExploreLearning: $3.8 million, increased 13% oKurzweil/IntelliTools: $2.6 million, decreased 21% oOn an adjusted basis, EBITDA was $2.2 million in the first quarter of 2013, up $5.4 million from a loss of $3.1 million in the first quarter of 2012. The increase in adjusted EBITDA was primarily due to the increase in net revenues and cost savings from the re-engineering and restructuring initiatives completed in 2012. oThe Company has cash and cash equivalents of $31.1million on the balance sheet as of March31, 2013. Cash used in operations during the first quarter of 2013 was $16.2million, as the Company's operations are highly seasonal and the first half of the year is historically cash flow negative. Discontinuance of Investor Conference Calls Effective immediately, the Company will cease holding investor conference calls to discuss quarterly financial results. The Company is a Smaller Reporting Company and a "controlled company" within the context of the NASDAQ rules. Accordingly, in addition to eliminating the management time commitment associated with these conference calls, the Company determined that conference calls are not an efficient means of communicating with stakeholders. For additional details on the Company's first quarter financial results, please see the Company's Quarterly Report on Form 10-Q, which has been filed with the Securities and Exchange Commission. 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 towards 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 Groupis a leading educational solutions and services company that is committed to helping every student reach their full potential by providing evidence-based solutions and expert professional services to empower educators and raise the achievement levels of all students. Cambium is composed of four business units: Voyager Learning (www.voyagerlearning.com) and Sopris Learning (www.soprislearning.com), Learning A–Z (www.learninga-z.com), ExploreLearning (www.explorelearning.com), and Kurzweil/IntelliTools (www.kurzweiledu.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. For more information, visit www.cambiumlearning.com. Media and Investor Contact: Barbara Benson Cambium Learning Group, Inc. email@example.com 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 Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) (Unaudited) Three Months Ended March 31, March 31, 2013 2012 Net revenues $31,429 $ 27,855 Cost of revenues: Cost of revenues 11,403 11,166 Amortization expense 3,707 6,370 Total cost of revenues 15,110 17,536 Research and development expense 2,331 3,332 Sales and marketing expense 10,333 11,896 General and administrative expense 6,793 5,745 Shipping and handling costs 299 327 Depreciation and amortization expense 1,216 1,659 Embezzlement and related expense (recoveries) - (85) Impairment of long-lived assets - 2,791 Total costs and expenses 36,082 43,201 Loss before interest, other income (expense) and income (4,653) (15,346) taxes Net interest expense (4,576) (4,777) Other income, net 219 36 Loss before income taxes (9,010) (20,087) Income tax expense (68) (177) Net loss $(9,078) $(20,264) Net loss per common share: Basic net loss per common share $ (0.19) $ (0.41) Diluted net loss per common share $ (0.19) $ (0.41) Average number of common shares and equivalents outstanding: Basic 47,397 49,947 Diluted 47,397 49,947 Cambium Learning Group, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except per share data) As of March 31, December 31, 2013 2012 ASSETS (unaudited) Current assets: Cash and cash equivalents $ 31,149 $ 51,904 Accounts receivable, net 18,152 17,813 Inventory 14,253 16,620 Tax receivables 12,312 12,234 Restricted assets, current 4,351 4,387 Assets held for sale 380 380 Other current assets 5,393 5,892 Total current assets 85,990 109,230 Property, equipment and software at cost 37,465 35,535 Accumulated depreciation and amortization (16,305) (14,514) Property, equipment and software, net 21,160 21,021 Goodwill 47,404 47,404 Acquired curriculum and technology intangibles, net 8,383 9,320 Acquired publishing rights, net 6,878 7,602 Other intangible assets, net 7,385 7,836 Pre-publication costs, net 12,499 11,660 Restricted assets, less current portion 6,422 6,754 Other assets 9,294 9,632 Total assets $ 205,415 $ 230,459 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Capital lease obligations, current $ 1,044 $ 1,290 Accounts payable 1,352 3,007 Contingent value rights, current 7,654 7,599 Accrued expenses 14,766 20,530 Deferred revenue, current 38,614 45,974 Total current liabilities 63,430 78,400 Long-term liabilities: Long-term debt 174,368 174,328 Capital lease obligations, less current portion 2,781 3,014 Deferred revenue, less current portion 5,067 5,631 Other liabilities 14,854 15,131 Total long-term liabilities 197,070 198,104 Stockholders' equity (deficit): Preferred stock ($.001 par value, 15,000 shares authorized, zero shares issued and outstanding at - - March 31, 2013 and December 31, 2012) Common stock ($.001 par value, 150,000 shares authorized, 51,208 and 51,208 shares issued, and 46,904 and 47,098 shares 51 51 outstanding at March 31, 2013 and December 31, 2012, respectively) Capital surplus 282,702 282,450 Accumulated deficit (327,520) (318,442) Treasury stock at cost (4,304 and 4,110 shares at (7,772) (7,528) March 31, 2013 and December 31, 2012, respectively) Other comprehensive income (loss): Pension and postretirement plans (2,546) (2,576) Accumulated other comprehensive income (loss) (2,546) (2,576) Total stockholders' equity (deficit) (55,085) (46,045) Total liabilities and stockholders' equity $ 205,415 $ 230,459 (deficit) Reconciliation Between Net Revenues to Adjusted Net Revenues and Between Net Loss and Adjusted EBITDA for the Three Months Ended March 31, 2013 and 2012 Three Months Ended March 31, 2013 2012 (In thousands) (Unaudited) Total net revenues $31,429 $27,855 Non-operational or non-cash costs included in net revenues but excluded from adjusted net revenues: Adjustments related to purchase 9 132 accounting Adjusted net revenues $31,438 $27,987 Net loss (9,078) (20,264) Reconciling items between net loss and EBITDA: Depreciation and amortization 4,923 8,029 Net interest expense 4,576 4,777 Income tax expense 68 177 Income (loss) from operations before interest, income taxes, and depreciation and amortization 489 (7,281) (EBITDA) Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA: Other income, net (219) (36) Re-engineering and restructuring - 3,704 costs Management transition 1,501 - Merger and acquisition activities 158 181 Stock-based compensation and expense 229 225 Embezzlement and related expenses - (85) (recoveries) Adjustments related to purchase 29 103 accounting Adjustments to CVR liability 55 53 Adjusted EBITDA $ 2,242 $(3,136) SOURCE Cambium Learning Group, Inc. Website: http://www.cambiumlearning.com
Cambium Learning Group Announces First Quarter Earnings
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