-- EPS of $0.14 per share
-- Quarterly Cash from Operating Activities of $33.5 million
-- Gross Margin of 37.5%
-- Company reaffirms forecast
American Reprographics Company (
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
June 30, December 31,
----------- -----------
2009 2008
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 56,886 $ 46,542
Accounts receivable, net 69,181 77,216
Inventories, net 10,241 11,097
Deferred income taxes 5,829 5,831
Prepaid expenses and other current assets 7,629 11,976
----------- -----------
Total current assets 149,766 152,662
Property and equipment, net 83,071 89,712
Goodwill 367,786 366,513
Other intangible assets, net 80,305 85,967
Deferred financing costs, net 2,926 3,537
Deferred income taxes 21,878 25,404
Other assets 2,216 2,136
----------- -----------
Total assets $ 707,948 $ 725,931
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 22,730 $ 25,171
Accrued payroll and payroll-related expenses 14,424 13,587
Accrued expenses 24,168 24,913
Current portion of long-term debt and capital
leases 71,580 59,193
----------- -----------
Total current liabilities 132,902 122,864
Long-term debt and capital leases 257,963 301,847
Other long-term liabilities 10,496 13,318
----------- -----------
Total liabilities 401,361 438,029
----------- -----------
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; 45,747,854 and 45,674,810
shares issued and 45,300,200 and 45,227,156
shares outstanding in 2009 and 2008, respectively 46 46
Additional paid-in capital 87,331 85,207
Deferred stock-based compensation (19) (195)
Retained earnings 229,700 215,846
Accumulated other comprehensive loss (8,872) (11,414)
----------- -----------
308,186 289,490
Less cost of common stock in treasury, 447,654
shares in 2009 and 2008 7,709 7,709
----------- -----------
Total American Reprographics Company
stockholders' equity 300,477 281,781
Noncontrolling interest 6,110 6,121
----------- -----------
Total stockholders' equity 306,587 287,902
----------- -----------
Total liabilities and stockholders' equity $ 707,948 $ 725,931
=========== ===========
American Reprographics Company
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Reprographics services $ 92,905 $ 139,211 $ 192,674 $ 281,707
Facilities management 24,898 31,209 51,763 60,760
Equipment and supplies
sales 13,251 14,521 26,100 29,917
---------- ---------- ---------- ----------
Total net sales 131,054 184,941 270,537 372,384
Cost of sales 81,899 105,853 169,403 213,693
---------- ---------- ---------- ----------
Gross profit 49,155 79,088 101,134 158,691
Selling, general and
administrative expenses 30,039 39,499 61,005 79,020
Amortization of intangible
assets 2,914 2,813 5,897 6,001
---------- ---------- ---------- ----------
Income from operations 16,202 36,776 34,232 73,670
Other income, net (38) (43) (97) (245)
Interest expense, net 5,836 6,559 11,632 13,705
---------- ---------- ---------- ----------
Income before income tax
provision 10,404 30,260 22,697 60,210
Income tax provision 4,096 11,384 8,854 22,836
---------- ---------- ---------- ----------
Net income 6,308 18,876 13,843 37,374
(Income) loss attributable
to the noncontrolling
interest (1) - 11 -
---------- ---------- ---------- ----------
Net income attributable to
American Reprographics
Company $ 6,307 $ 18,876 $ 13,854 $ 37,374
========== ========== ========== ==========
Earnings per share
attributable to American
Reprographics Company
shareholders:
Basic $ 0.14 $ 0.42 $ 0.31 $ 0.83
========== ========== ========== ==========
Diluted $ 0.14 $ 0.42 $ 0.31 $ 0.82
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 45,116,358 45,051,449 45,103,150 45,048,244
Diluted 45,243,171 45,441,766 45,157,874 45,407,309
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 Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net income attributable to ARC $ 6,307 $ 18,876 $ 13,854 $ 37,374
Interest expense, net 5,836 6,559 11,632 13,705
Income tax provision 4,096 11,384 8,854 22,836
-------- -------- -------- --------
EBIT 16,239 36,819 34,340 73,915
Depreciation and amortization 12,751 12,216 25,466 24,333
-------- -------- -------- --------
EBITDA $ 28,990 $ 49,035 $ 59,806 $ 98,248
======== ======== ======== ========
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Cash flows provided by operating
activities $ 33,522 $ 41,137 $ 55,798 $ 61,485
Changes in operating assets and
liabilities (11,477) (6,096) (9,555) 6,819
Non-cash (expenses) income,
including depreciation and
amortization (15,737) (16,165) (32,400) (30,930)
Income tax provision 4,096 11,384 8,854 22,836
Interest expense 5,836 6,559 11,632 13,705
Net (income) loss attributable to
the noncontrolling
interest (1) - 11 -
-------- -------- -------- --------
EBIT 16,239 36,819 34,340 73,915
Depreciation and amortization 12,751 12,216 25,466 24,333
-------- -------- -------- --------
EBITDA $ 28,990 $ 49,035 $ 59,806 $ 98,248
======== ======== ======== ========
Non-GAAP Measures
EBIT, 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 $1.2 million and $1.1 million of stock based compensation
expense, for the three months ended June 30, 2009 and 2008, respectively,
and $2.2 million and $2.0 million of stock based compensation expense, for
the six months ended June 30, 2009 and 2008, respectively. 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, 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, EBITDA and related ratios only as supplements. For more information, see our interim Condensed Consolidated Financial Statements and related notes on our 2009 second 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)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Cash flows from operating
activities
Net income $ 6,308 $ 18,876 $ 13,843 $ 37,374
Adjustments to reconcile net income
to net cash provided by operating
activities:
Allowance for accounts
receivable 1,294 831 2,543 1,909
Depreciation 9,837 9,403 19,569 18,332
Amortization of intangible
assets 2,914 2,813 5,897 6,001
Amortization of deferred
financing costs 324 340 655 600
Stock-based compensation 1,228 1,117 2,161 2,029
Excess tax benefit related to
stock options exercised (5) (54) (5) (54)
Deferred income taxes 259 1,626 1,671 2,239
Write-off of deferred financing
costs - 313 - 313
Other noncash items, net (114) (224) (91) (439)
Changes in operating assets and
liabilities, net of effect of
business acquisitions:
Accounts receivable 8,159 4,390 5,734 (5,088)
Inventory 232 288 918 726
Prepaid expenses and other
assets 1,579 (2,413) 5,154 (987)
Accounts payable and accrued
expenses 1,507 3,831 (2,251) (1,470)
-------- -------- -------- --------
Net cash provided by operating
activities 33,522 41,137 55,798 61,485
-------- -------- -------- --------
Cash flows from investing
activities
Capital expenditures (1,945) (2,031) (3,924) (4,332)
Payments for businesses acquired,
net of cash acquired and including
other cash payments associated with
the acquisitions (333) (647) (921) (5,478)
Restricted cash - (13,552) - (12,612)
Other 279 231 442 785
-------- -------- -------- --------
Net cash used in investing
activities (1,999) (15,999) (4,403) (21,637)
-------- -------- -------- --------
Cash flows from financing
activities
Proceeds from stock option
exercises 17 70 17 70
Proceeds from issuance of common
stock under Employee Stock
Purchase Plan 46 12 46 25
Excess tax benefit related to stock
options exercised 5 54 5 54
Payments on long-term debt
agreements and capital leases (25,328) (13,139) (41,206) (25,254)
Net repayments under revolving
credit facility - (12,000) - (22,000)
Payment of loan fees - (94) (44) (726)
-------- -------- -------- --------
Net cash used in financing
activities (25,260) (25,097) (41,182) (47,831)
-------- -------- -------- --------
Effect of foreign currency
translation on cash balances 147 (55) 131 (37)
-------- -------- -------- --------
Net change in cash and cash
equivalents 6,410 (14) 10,344 (8,020)
Cash and cash equivalents at
beginning of period 50,476 16,796 46,542 24,802
-------- -------- -------- --------
Cash and cash equivalents at end of
period $ 56,886 $ 16,782 $ 56,886 $ 16,782
======== ======== ======== ========
Supplemental disclosure of cash
flow information
Noncash investing and financing
activities
Noncash transactions include the
following:
Capital lease obligations
incurred $ 4,470 $ 9,169 $ 9,723 $ 18,353
Issuance of subordinated notes in
connection with the
acquisition of businesses $ - $ 157 $ 246 $ 1,817
Accrued liabilities in connection
with acquisition of businesses $ 167 $ - $ 500 $ -
Change in fair value of
derivative, net of tax effects $ 1,752 $ 5,418 $ 2,187 $ (3)
Contact Information: Contacts: David Stickney American Reprographics Company Phone: 925-949-5100 Joseph Villalta The Ruth Group Phone: 646-536-7003