-- EPS of $0.17 per share
-- YTD Cash from Operating Activities of $22.3 million
-- Gross Margin of 37.3%
-- Company reaffirms forecast
American Reprographics Company (
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
March 31, December 31,
----------- -----------
2009 2008
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 50,476 $ 46,542
Accounts receivable, net 78,477 77,216
Inventories, net 10,417 11,097
Deferred income taxes 5,832 5,831
Prepaid expenses and other current assets 8,632 11,976
----------- -----------
Total current assets 153,834 152,662
Property and equipment, net 87,126 89,712
Goodwill 367,270 366,513
Other intangible assets, net 83,099 85,967
Deferred financing costs, net 3,250 3,537
Deferred income taxes 23,601 25,404
Other assets 2,197 2,136
----------- -----------
Total assets $ 720,377 $ 725,931
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 24,409 $ 25,171
Accrued payroll and payroll-related expenses 12,360 13,587
Accrued expenses 23,984 24,913
Current portion of long-term debt and capital
leases 67,733 59,193
----------- -----------
Total current liabilities 128,486 122,864
Long-term debt and capital leases 282,897 301,847
Other long-term liabilities 12,281 13,318
----------- -----------
Total liabilities 423,664 438,029
----------- -----------
Commitments and contingencies
Stockholders' equity:
American Reprographics Company stockholders'
equity:
Preferred stock, $0.001 par value, 25,000,000
shares authorized; zero and zero shares issued
and outstanding -- --
Common stock, $0.001 par value, 150,000,000
shares authorized; 45,688,233 and 45,674,810
shares issued and 45,240,579 and 45,227,156 shares
outstanding in 2009 and 2008, respectively 46 46
Additional paid-in capital 86,080 85,207
Deferred stock-based compensation (88) (195)
Retained earnings 223,393 215,846
Accumulated other comprehensive loss (11,118) (11,414)
----------- -----------
298,313 289,490
Less cost of common stock in treasury,
447,654 shares in 2009 and 2008 7,709 7,709
----------- -----------
Total American Reprographics Company
stockholders' equity 290,604 281,781
Noncontrolling interest 6,109 6,121
----------- -----------
Total stockholders' equity 296,713 287,902
----------- -----------
Total liabilities and stockholders' equity $ 720,377 $ 725,931
=========== ===========
American Reprographics Company
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
Reprographics services $ 99,769 $ 142,496
Facilities management 26,865 29,551
Equipment and supplies sales 12,849 15,396
----------- -----------
Total net sales 139,483 187,443
Cost of sales 87,504 107,840
----------- -----------
Gross profit 51,979 79,603
Selling, general and administrative expenses 30,966 39,521
Amortization of intangible assets 2,983 3,188
----------- -----------
Income from operations 18,030 36,894
Other income, net (59) (202)
Interest expense, net 5,796 7,146
----------- -----------
Income before income tax provision 12,293 29,950
Income tax provision 4,758 11,452
----------- -----------
Net income 7,535 18,498
Plus net loss attributable to the noncontrolling
interest 12 -
----------- -----------
Net income attributable to American Reprographics
Company $ 7,547 $ 18,498
=========== ===========
Earnings per share attributable to American
Reprographics Company shareholders:
Basic $ 0.17 $ 0.41
=========== ===========
Diluted $ 0.17 $ 0.41
=========== ===========
Weighted average common shares outstanding:
Basic 45,089,790 45,045,038
Diluted 45,100,225 45,390,827
American Reprographics Company
Non-GAAP Measures
Reconciliation of Net Income Attributable to ARC to EBIT and EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
Net income attributable to ARC $ 7,547 $ 18,498
Interest expense, net 5,796 7,146
Income tax provision 4,758 11,452
----------- -----------
EBIT 18,101 37,096
Depreciation and amortization 12,715 12,117
----------- -----------
EBITDA $ 30,816 $ 49,213
=========== ===========
Reconciliation of Cash Flows Provided by Operating Activities to EBIT and
EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
Cash flows provided by operating activities $ 22,276 $ 20,348
Changes in operating assets and liabilities 1,922 12,915
Non-cash (expenses) income, including
depreciation and amortization (16,663) (14,765)
Income tax provision 4,758 11,452
Interest expense, net 5,796 7,146
Net loss attributable to the noncontrolling
interest 12 -
----------- -----------
EBIT 18,101 37,096
Depreciation and amortization 12,715 12,117
----------- -----------
EBITDA $ 30,816 $ 49,213
=========== ===========
Non-GAAP Measures
EBIT and EBITDA and related ratios presented in this report are
supplemental measures of our performance that are not required by or
presented in accordance with accounting principles generally accepted in
the United States of America ("GAAP"). These measures are not measurements
of our financial performance under GAAP and should not be considered as
alternatives to net income, income from operations, or any other
performance measures derived in accordance with GAAP or as an alternative
to cash flow from operating, investing or financing activities as a measure
of our liquidity.
EBIT represents net income before interest and taxes. EBITDA represents net
income before interest, taxes, depreciation and amortization. Amortization
does not include $0.9 million of stock based compensation expense, for each
of the three months ended March 31, 2009 and 2008. EBIT margin is a
non-GAAP measure calculated by dividing EBIT by net sales. EBITDA margin is
a non-GAAP measure calculated by dividing EBITDA by net sales.
We present EBIT and EBITDA and related ratios because we consider them
important supplemental measures of our performance and liquidity. We
believe investors may also find these measures meaningful, given how our
management makes use of them. The following is a discussion of our use of
these measures.
We use EBIT and EBITDA to measure and compare the performance of our
operating segments. Our operating segments' financial performance includes
all of the operating activities except for debt and taxation which are
managed at the corporate level for U.S. operating segments. As a result,
EBIT is the best measure of divisional profitability and the most useful
metric by which to measure and compare the performance of our operating
segments. We also use EBIT to measure performance for determining operating
division-level compensation and use EBITDA to measure performance for
determining consolidated-level compensation. We also use EBIT and EBITDA to
evaluate potential acquisitions and to evaluate whether to incur capital
expenditures.
EBIT, EBITDA and related ratios have limitations as analytical tools, and
you should not consider them in isolation, or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations are as
follows:
-- They do not reflect our cash expenditures, or future requirements for
capital expenditures and contractual commitments;
-- They do not reflect changes in, or cash requirements for, our working
capital needs;
-- They do not reflect the significant interest expense, or the cash
requirements necessary, to service interest or principal payments on our
debt;
-- Although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced in
the future, and EBITDA does not reflect any cash requirements for such
replacements; and
-- Other companies, including companies in our industry, may calculate
these measures differently than we do, limiting their usefulness as
comparative measures.
Because of these limitations, EBIT, EBITDA, and related ratios should not
be considered as measures of discretionary cash available to us to invest
in business growth or to reduce our indebtedness. We compensate for these
limitations by relying primarily on our GAAP results and using EBIT and
EBITDA only as supplements. For more information, see our Condensed
Consolidated Financial Statements and related notes on our 2009 first
quarter report on Form 10-Q. Additionally, please refer to our 2008 Annual
Report on Form 10-K.
American Reprographics Company
Consolidated Statements of Cash Flows
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
Cash flows from operating activities
Net income $ 7,535 $ 18,498
Adjustments to reconcile net income to net cash
provided by operating activities:
Allowance for accounts receivable 1,249 1,078
Depreciation 9,732 8,929
Amortization of intangible assets 2,983 3,188
Amortization of deferred financing costs 331 260
Stock-based compensation 933 912
Deferred income taxes 1,412 613
Other noncash items, net 23 (215)
Changes in operating assets and liabilities,
net of effect of business acquisitions:
Accounts receivable (2,425) (9,478)
Inventory 686 438
Prepaid expenses and other assets 3,575 1,426
Accounts payable and accrued expenses (3,758) (5,301)
----------- -----------
Net cash provided by operating activities 22,276 20,348
----------- -----------
Cash flows from investing activities
Capital expenditures (1,979) (2,301)
Payments for businesses acquired, net of cash
acquired and including other cash payments
associated with the acquisitions (588) (4,831)
Restricted cash - 940
Other 163 554
----------- -----------
Net cash used in investing activities (2,404) (5,638)
----------- -----------
Cash flows from financing activities
Proceeds from issuance of common stock under
Employee Stock Purchase Plan - 13
Payments on long-term debt agreements and capital
leases (15,878) (12,115)
Net repayments under revolving credit facility - (10,000)
Payment of loan fees (44) (632)
----------- -----------
Net cash used in financing activities (15,922) (22,734)
----------- -----------
Effect of foreign currency translation on cash
balances (16) 18
----------- -----------
Net change in cash and cash equivalents 3,934 (8,006)
Cash and cash equivalents at beginning of period 46,542 24,802
----------- -----------
Cash and cash equivalents at end of period $ 50,476 $ 16,796
=========== ===========
Supplemental disclosure of cash flow information
Noncash investing and financing activities
Noncash transactions include the following:
Capital lease obligations incurred $ 5,253 $ 9,184
Issuance of subordinated notes in connection
with the acquisition of businesses $ 246 $ 1,660
Accrued liabilities in connection with
acquisition of businesses $ 333 $ -
Change in fair value of derivative, net of tax
effects $ 435 $ (5,421)
Contact Information: Contacts: David Stickney VP of Corporate Communications Phone: 925-949-5100 Email: Joseph Villalta The Ruth Group Phone: 646-536-7003 Email: