-- EPS of $0.02 per share -- YTD Cash from Operating Activities of $9.5 million -- Gross Margin of 32.9% -- Company reaffirms annual forecastAmerican Reprographics Company (
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
March 31, December 31,
------------ ------------
2010 2009
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 26,183 $ 29,377
Accounts receivable, net 59,108 53,919
Inventories, net 10,398 10,605
Deferred income taxes 5,664 5,568
Prepaid expenses and other current assets 9,567 7,011
------------ ------------
Total current assets 110,920 106,480
Property and equipment, net 68,108 74,568
Goodwill 332,518 332,518
Other intangible assets, net 71,618 74,208
Deferred financing costs, net 3,698 4,082
Deferred income taxes 26,880 26,987
Other assets 2,020 2,111
------------ ------------
Total assets $ 615,762 $ 620,954
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 23,055 $ 23,355
Accrued payroll and payroll-related expenses 11,186 8,804
Accrued expenses 24,317 24,540
Current portion of long-term debt and capital
leases 57,006 53,520
------------ ------------
Total current liabilities 115,564 110,219
Long-term debt and capital leases 206,952 220,711
Other long-term liabilities 9,214 8,000
------------ ------------
Total liabilities 331,730 338,930
------------ ------------
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; 46,117,752 and 46,112,653
shares issued and 45,670,098 and 45,664,999
shares outstanding in 2010 and 2009,
respectively 46 46
Additional paid-in capital 91,478 89,982
Retained earnings 201,678 200,961
Accumulated other comprehensive loss (7,470) (7,273)
------------ ------------
285,732 283,716
Less cost of common stock in treasury, 447,654
shares in 2010 and 2009 7,709 7,709
------------ ------------
Total American Reprographics Company
stockholders' equity 278,023 276,007
Noncontrolling interest 6,009 6,017
------------ ------------
Total stockholders' equity 284,032 282,024
------------ ------------
Total liabilities and stockholders' equity $ 615,762 $ 620,954
============ ============
American Reprographics Company
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
--------------------------
2010 2009
------------ ------------
Reprographics services $ 76,257 $ 99,769
Facilities management 22,403 26,865
Equipment and supplies sales 13,501 12,849
------------ ------------
Total net sales 112,161 139,483
Cost of sales 75,310 87,504
------------ ------------
Gross profit 36,851 51,979
Selling, general and administrative expenses 27,131 30,966
Amortization of intangible assets 2,636 2,983
------------ ------------
Income from operations 7,084 18,030
Other income, net (43) (59)
Interest expense, net 5,888 5,796
------------ ------------
Income before income tax provision 1,239 12,293
Income tax provision 530 4,758
------------ ------------
Net income 709 7,535
Income attributable to noncontrolling interest 8 12
------------ ------------
Net income attributable to American
Reprographics Company $ 717 $ 7,547
============ ============
Earnings per share attributable to American
Reprographics Company shareholders:
Basic $ 0.02 $ 0.17
============ ============
Diluted $ 0.02 $ 0.17
============ ============
Weighted average common shares outstanding:
Basic 45,150,483 45,089,794
Diluted 45,356,871 45,100,225
American Reprographics Company
Non-GAAP Measures
Reconciliation of cash flows provided by operating activities to
EBIT and EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------------
2010 2009
------------ ------------
Cash flows provided by operating activities $ 9,468 $ 22,276
Changes in operating assets and liabilities 5,083 1,922
Non-cash (expenses) income, including
depreciation and amortization (13,842) (16,663)
Income tax provision 530 4,758
Interest expense 5,888 5,796
Net loss attributable to the noncontrolling
interest 8 12
------------ ------------
EBIT 7,135 18,101
Depreciation and amortization 11,656 12,715
Stock-based compensation 1,461 933
------------ ------------
EBITDA $ 20,252 $ 31,749
============ ============
American Reprographics Company
Non-GAAP Measures
Reconciliation of net income attributable to ARC to EBIT and EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
---------------------------
2010 2009
------------- -------------
Net income attributable to ARC $ 717 $ 7,547
Interest expense, net 5,888 5,796
Income tax provision 530 4,758
------------- -------------
EBIT 7,135 18,101
Depreciation and amortization 11,656 12,715
Stock-based compensation 1,461 933
------------- -------------
EBITDA $ 20,252 $ 31,749
============= =============
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 flows 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, amortization and stock-based
compensation. 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
segment-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 2010 first quarter report on Form 10-Q. Additionally, please refer to
our 2009 Annual Report on Form 10-K.
In our calculation of EBITDA for the three months ended March 31, 2010 and
2009 we excluded stock-based compensation expense of $1.5 million and $0.9
million, respectively, as we believe this presentation facilitates a
meaningful comparison of our operating results. Additionally, the exclusion
of stock-based compensation to arrive at EBITDA is consistent with the
definition of EBITDA in our amended credit and guaranty agreement,
therefore we believe this information is useful to investors in assessing
our ability to meet our debt covenants.
American Reprographics Company
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------------
2010 2009
------------ ------------
Cash flows from operating activities
Net income $ 709 $ 7,535
Adjustments to reconcile net income to net
cash provided by operating activities:
Allowance for accounts receivable 261 1,249
Depreciation 9,020 9,732
Amortization of intangible assets 2,636 2,983
Amortization of deferred financing costs 384 331
Stock-based compensation 1,461 933
Deferred income taxes 274 1,412
Other noncash items, net (194) 23
Changes in operating assets and liabilities,
net of effect of business acquisitions:
Accounts receivable (5,419) (2,425)
Inventory 156 686
Prepaid expenses and other assets (2,515) 3,575
Accounts payable and accrued expenses 2,695 (3,758)
------------ ------------
Net cash provided by operating activities 9,468 22,276
------------ ------------
Cash flows from investing activities
Capital expenditures (1,217) (1,979)
Payments for businesses acquired, net of cash
acquired and including other cash payments
associated with the acquisitions - (588)
Other 551 163
------------ ------------
Net cash used in investing activities (666) (2,404)
------------ ------------
Cash flows from financing activities
Proceeds from stock option exercises 16 -
Excess tax benefit related to stock-based
compensation 3 -
Payments on long-term debt agreements and
capital leases (11,202) (15,878)
Net borrowings (repayments) under revolving
credit facility (814) -
Payment of loan fees - (44)
------------ ------------
Net cash used in financing activities (11,997) (15,922)
------------ ------------
Effect of foreign currency translation on cash
balances 1 (16)
------------ ------------
Net change in cash and cash equivalents (3,194) 3,934
Cash and cash equivalents at beginning of
period 29,377 46,542
------------ ------------
Cash and cash equivalents at end of period $ 26,183 $ 50,476
============ ============
Supplemental disclosure of cash flow
information
Noncash investing and financing activities
Noncash transactions include the following:
Capital lease obligations incurred $ 1,930 $ 5,253
Issuance of subordinated notes in connection
with the acquisition of businesses $ - $ 246
Accrued liabilities in connection with
acquisition of businesses $ - $ 333
Net (loss) gain on derivative $ (313) $ 435
Contact Information: Contacts: David Stickney VP of Corporate Communications Phone: 925-949-5100 Joseph Villalta The Ruth Group Phone: 646-536-7003