-- EPS of $0.14 per share -- Quarterly Cash from Operating Activities of $33.5 million -- Gross Margin of 37.5% -- Company reaffirms forecastAmerican 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