Prepress

Monotype Imaging Announces Second Quarter 2012 Results

Friday 27. July 2012 - Company Reports Record Results and Announces Quarterly Cash Dividend Program

Monotype Imaging Holdings Inc. (Nasdaq: TYPE), a leading provider of typefaces, technology and expertise for creative applications and consumer devices, today announced financial results for the second quarter ended June 30, 2012.
Second quarter 2012 and recent highlights
Revenue for the quarter was a record $38.5 million, a 24 percent increase year-over-year.
Operating income was $11.9 million, or 31 percent of revenue.
Non-GAAP net adjusted EBITDA was $16.4 million, or 43 percent of revenue.
Cash flow from operations was $14.9 million, a 43 percent increase year-over-year.
Company announces cash dividend program with initial quarterly rate of $0.04 per share of common stock.
“In the second quarter, we delivered record profitability, driven by record results in both our OEM and Creative Professional businesses. We also capitalized on revenue opportunities and realized initial expense synergies from our Bitstream acquisition, helping the company attain 43 percent net adjusted EBITDA margins,” said Doug Shaw, president and chief executive officer. “Our second quarter results reflect our continued efforts to enhance our product portfolio, improve diversification and increase momentum in our growth businesses.”
“We’re excited to announce our new cash dividend program,” said Scott Landers, senior vice president and chief financial officer. “Monotype is a unique company with a business model reinforced by recurring revenue, strong cash generation and high profit margins. We are confident that our business model can support long-term growth while providing an additional source of return for our shareholders through quarterly dividends.”
Second quarter 2012 operating results
Revenue for the quarter was $38.5 million, up 24 percent compared to $31.1 million for the second quarter of 2011. OEM revenue was $24.9 million, increasing nine percent from the second quarter of 2011. Creative Professional revenue was $13.5 million, increasing 66 percent from the same period last year.
Net income was $7.4 million, compared to $5.6 million in the second quarter of last year. Earnings per diluted share were $0.19, compared to $0.15 in the same period last year.
Non-GAAP net income, which excludes the amortization of intangible assets and stock-based compensation expense, net of taxes, was $10.1 million, compared to $8.1 million in the second quarter of 2011. Non-GAAP earnings per diluted share were $0.27, compared to $0.22 in the same period last year.
Non-GAAP net adjusted EBITDA was $16.4 million, or 43 percent of revenue, compared to $13.8 million in the second quarter of last year.
A reconciliation of GAAP measures to non-GAAP measures for the three and six months ended June 30, 2012 and 2011 is provided in the financial tables that accompany this release.
Cash, cash flow and debt balances
Outstanding debt was $42.3 million as of June 30, 2012, compared to $37.3 million as of Dec. 31, 2011, and $57.3 million as of June 30, 2011. Outstanding debt as of June 30, 2012 includes the drawdown of approximately $25 million on the company’s revolving line of credit to finance the acquisition of Bitstream completed on March 19, 2012.
Monotype had cash and cash equivalents of $32.9 million as of June 30, 2012, compared to $53.9 million as of Dec. 31, 2011 and $28.1 million as of March 31, 2012. The company generated $14.9 million of cash from operations in the second quarter of 2012, an increase of 43 percent year-over-year.
Quarterly dividend
Monotype’s board of directors approved a quarterly cash dividend program. The cash dividend will be paid on Oct. 19, 2012 to shareholders of record as of the close of business on Oct. 1, 2012. The initial quarterly dividend rate will be $0.04 per share of common stock or $0.16 annually. Monotype intends to increase this payout over time. Future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of the board of directors.
“During the past five years, we have generated predictable cash flows regardless of economic conditions,” said Landers. “Since the beginning of 2007, our operations have funded over $120 million in debt principal repayments, and we have invested significantly behind our growth initiatives. We’ve created a more diversified company and are well positioned to take advantage of expanded market opportunities in displays and digital publishing. As we look forward, we believe our disciplined capital allocation strategy, which now includes a cash dividend program, will support our growth strategies, manage our balance sheet and provide shareholders with an additional source of equity return.”
Financial outlook
For the third quarter of 2012, Monotype expects revenue in the range of $36.5 million to $38.0 million. The company anticipates third quarter 2012 non-GAAP net adjusted EBITDA in the range of $15.0 million to $16.0 million, GAAP earnings per diluted share in the range of $0.17 to $0.19 and non-GAAP earnings per diluted share in the range of $0.24 to $0.26.
For the full year 2012, Monotype expects revenue in the range of $146.0 million to $149.0 million. The company anticipates full year 2012 non-GAAP net adjusted EBITDA in the range of $61.0 million to $63.0 million, GAAP earnings per diluted share in the range of $0.69 to $0.73 and non-GAAP earnings per diluted share in the range of $0.97 to $1.01.