Attached files
| file | filename |
|---|---|
| 8-K - MONOTYPE IMAGING HOLDINGS INC. 8-K - Monotype Imaging Holdings Inc. | a51212968.htm |
Exhibit 99.1
Monotype Announces Third Quarter 2015 Results
Company Reports Record Revenue, Driven by Creative Professional
WOBURN, Mass.--(BUSINESS WIRE)--October 30, 2015--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 third quarter ended Sept. 30, 2015.
Third quarter 2015 highlights
- Revenue for the quarter was $49.4 million, up five percent year over year.
- Operating income was $11.3 million, or 23 percent of revenue.
- Non-GAAP net adjusted EBITDA was $17.7 million, or 36 percent of revenue.
- Cash flow from operations was $15.9 million.
“Monotype had a solid third quarter, meeting the high end of our guidance range, driven by the growth in our Creative Professional business – as we continue to see brands turn to Monotype to help expand their presence and ensure consistency across new content platforms like mobile, social and apps,” said Doug Shaw, president and chief executive officer at Monotype. “We’re also encouraged by the growing interest in Swyft Media’s offerings. Branded content like emoji, stickers, photo overlays and frames are becoming a more integrated part of advertising campaigns targeted at millennials and young consumers.”
Scott Landers, chief operating officer at Monotype, said, “Monotype continues to evolve in new ways that we believe will provide sustainable, long-term growth for our Creative Professional business. The expanding mobile and social media ecosystems, and the growing trend of brands and consumers moving toward more personalized communication, open up new opportunities for us to empower expression and engagement in the connected world.”
Third quarter 2015 operating results
Revenue for the quarter was $49.4 million, up five percent compared to $47.1 million for the third quarter of 2014. Creative Professional revenue was $22.5 million, an increase of 12 percent from the same period in 2014. OEM revenue was $26.9 million, flat compared to the third quarter of 2014.
Net income was $8.0 million, compared to $7.0 million in the third quarter of 2014. Earnings per diluted share were $0.20, compared to $0.17 in the same period in 2014. Non-GAAP net income, which excludes the amortization of intangible assets and share-based compensation expense, net of taxes, was $12.1 million, compared to $10.5 million in the third quarter of 2014. Non-GAAP earnings per diluted share were $0.31 compared to $0.27 in the same period in 2014.
Non-GAAP net adjusted EBITDA was $17.7 million, or 36 percent of revenue, compared to $18.0 million in the third quarter of 2014.
A reconciliation of GAAP measures to non-GAAP measures for the three and nine months ended Sept. 30, 2015 and 2014 is provided in the financial tables that accompany this release.
Cash and cash flow
Monotype had cash and cash equivalents of $86.3 million as of Sept. 30, 2015, compared to $74.6 million as of June 30, 2015, and $82.6 million as of Sept. 30, 2014. The company generated $15.9 million of cash from operations in the third quarter of 2015.
Quarterly dividend
Monotype’s most recent dividend payment of $0.10 per share was paid on Oct. 21, 2015, to shareholders of record on Oct. 1, 2015. The next dividend payment of $0.10 per share will be paid on Jan. 22, 2016, to shareholders of record as of Jan. 4, 2016.
Financial outlook
For the fourth quarter, Monotype expects revenue in the range of $48.0 million to $50.5 million. The company anticipates fourth quarter 2015 non-GAAP net adjusted EBITDA in the range of $19.5 million to $22.0 million, GAAP earnings per diluted share in the range of $0.20 to $0.24, and non-GAAP earnings per diluted share in the range of $0.29 to $0.33.
For the full year 2015, Monotype expects revenue in the range of $189.8 million to $192.3 million. The company anticipates full year 2015 non-GAAP net adjusted EBITDA in the range of $69.7 million to $72.2 million, GAAP earnings per diluted share in the range of $0.74 to $0.78 and non-GAAP earnings per diluted share in the range of $1.10 to $1.14. The company’s earnings per diluted share range is slightly higher than Monotype’s previously issued guidance due to a lower than expected tax rate.
Conference call details
Monotype will host a conference call on Friday, Oct. 30, 2015, at 8:30 a.m. EDT to discuss the company’s third quarter 2015 results and business outlook for 2015. Individuals who are interested in listening to the audio webcast should log on to the “Investors” portion of the “Company” section of Monotype’s website at www.monotype.com. The live call can also be accessed by dialing 877-201-0168 (domestic) or 647-788-4901 (international) using passcode 63815143. If individuals are unable to listen to the live call, the audio webcast will be archived in the Investors portion of the company’s website for one year.
Non-GAAP financial measures
This press release contains non-GAAP financial measures under the rules of the U.S. Securities and Exchange Commission. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget and in reporting to lenders. Non-GAAP financial measures are used by Monotype management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, Monotype believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company’s current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. Monotype management compensates for these limitations by considering the company’s financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.
Forward-looking statements
This press release may contain forward-looking statements including those related to future revenues and operating results, the growth of the company’s Creative Professional business and OEM business, the execution of the company’s growth strategy and anticipated business momentum that involve risks and uncertainties that could cause the company’s actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: risks associated with changes in the economic climate, including decreased demand for fonts, Web design tools, branded content offerings or products that incorporate the company’s text imaging solutions; risks associated with the maturation of the printer market and potential decreases in demand for our solutions; risks associated with the interruption of certain manufacturing chains as a result of natural disasters or political tensions; risks associated with changes in the financial markets; risks associated with increased competition, which may result in the company losing customers or force it to reduce prices; risks associated with the development and market acceptance of new products or product features; risks associated with the incurrence of acquisition related costs and the company’s ability to integrate products and employees from acquired companies in a timely manner or at all; risks associated with the company’s ability to adapt its products to new markets and to anticipate and quickly respond to evolving technologies and customer requirements; and risks associated with the ownership and enforcement of the company’s intellectual property. Additional disclosure regarding these and other risks faced by the company is available in the company’s public filings with the Securities and Exchange Commission, including the risk factors included in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2014 and subsequent filings. The forward-looking financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts to be included in the company’s future earnings releases and public filings. While Monotype may elect to update forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so, even if an estimate changes.
About Monotype
Monotype is a leading global provider of typefaces, technology and expertise that enable the best user experience and ensure brand integrity. Headquartered in Woburn, Mass., Monotype provides customers worldwide with typeface solutions for a broad range of creative applications and consumer devices. The company’s libraries and e-commerce sites are home to many of the most widely used typefaces – including the Helvetica®, Frutiger® and Univers® families – as well as the next generation of type designs. Further information is available at www.monotype.com. Follow Monotype on Twitter, Instagram and LinkedIn.
Monotype, Helvetica and Frutiger are trademarks of Monotype Imaging Inc. registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. Univers is a trademark of Monotype GmbH registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. All other trademarks are the property of their respective owners. ©2015 Monotype Imaging Holdings Inc. All rights reserved.
| MONOTYPE IMAGING HOLDINGS INC. | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Unaudited and in thousands) | |||||||||||
|
September 30, 2015 |
December 31, 2014 |
||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 86,315 | $ | 90,325 | |||||||
| Accounts receivable, net of allowance for doubtful accounts | 18,460 | 9,279 | |||||||||
| Income tax refunds receivable | 2,845 | 2,593 | |||||||||
| Deferred income taxes | 2,409 | 2,898 | |||||||||
| Prepaid expense and other current assets | 3,590 | 4,361 | |||||||||
| Total current assets | 113,619 | 109,456 | |||||||||
| Property and equipment, net | 15,305 | 10,578 | |||||||||
| Goodwill | 187,136 | 176,999 | |||||||||
| Intangible assets, net | 71,611 | 73,862 | |||||||||
| Other assets | 2,490 | 3,563 | |||||||||
| Total assets | $ | 390,161 | $ | 374,458 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 1,779 | $ | 1,156 | |||||||
| Accrued expenses and other current liabilities | 21,775 | 24,570 | |||||||||
| Accrued income taxes payable | 1,069 | 640 | |||||||||
| Deferred revenue | 11,180 | 7,107 | |||||||||
| Total current liabilities | 35,803 | 33,473 | |||||||||
| Other long-term liabilities | 3,655 | 2,326 | |||||||||
| Contingent acquisition consideration | 5,055 | 270 | |||||||||
| Deferred income taxes | 35,218 | 32,960 | |||||||||
| Reserve for income taxes, net of current portion | 3,392 | 4,637 | |||||||||
| Accrued pension benefits | 5,418 | 5,679 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 41 | 39 | |||||||||
| Additional paid-in capital | 250,764 | 232,522 | |||||||||
| Treasury stock, at cost | (50,455 | ) | (31,946 | ) | |||||||
| Retained earnings | 108,013 | 98,672 | |||||||||
| Accumulated other comprehensive loss | (6,743 | ) | (4,174 | ) | |||||||
| Total stockholders’ equity | 301,620 | 295,113 | |||||||||
| Total liabilities and stockholders’ equity | $ | 390,161 | $ | 374,458 | |||||||
| MONOTYPE IMAGING HOLDINGS INC. | |||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
| (Unaudited and in thousands, except share and per share data) | |||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| Revenue | $ | 49,352 | $ | 47,063 | $ | 141,803 | $ | 138,098 | |||||||||||
| Costs and expenses: | |||||||||||||||||||
| Cost of revenue | 7,351 | 7,227 | 22,314 | 21,057 | |||||||||||||||
| Cost of revenue—amortization of acquired technology | 1,048 | 1,144 | 3,315 | 3,435 | |||||||||||||||
| Total cost of revenue | 8,399 | 8,371 | 25,629 | 24,492 | |||||||||||||||
| Gross profit | 40,953 | 38,692 | 116,174 | 113,606 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Marketing and selling | 15,472 | 13,361 | 42,980 | 36,466 | |||||||||||||||
| Research and development | 5,155 | 5,227 | 16,244 | 15,890 | |||||||||||||||
| General and administrative | 8,171 | 6,491 | 22,080 | 18,075 | |||||||||||||||
| Amortization of other intangible assets | 862 | 1,587 | 2,354 | 4,450 | |||||||||||||||
| Total operating expenses | 29,660 | 26,666 | 83,658 | 74,881 | |||||||||||||||
| Income from operations | 11,293 | 12,026 | 32,516 | 38,725 | |||||||||||||||
| Other (income) expense: | |||||||||||||||||||
| Interest expense, net | 237 | 265 | 775 | 791 | |||||||||||||||
| Loss on extinguishment of debt | 112 | — | 112 | — | |||||||||||||||
| Other (income) expense, net | (70 | ) | 620 | 612 | 1,000 | ||||||||||||||
| Total other expense | 279 | 885 | 1,499 | 1,791 | |||||||||||||||
| Income before provision for income taxes | 11,014 | 11,141 | 31,017 | 36,934 | |||||||||||||||
| Provision for income taxes | 2,975 | 4,102 | 9,717 | 13,759 | |||||||||||||||
| Net income | $ | 8,039 | $ | 7,039 | $ | 21,300 | $ | 23,175 | |||||||||||
| Net income available to common shareholders—basic | $ | 7,837 | $ | 6,899 | $ | 20,799 | $ | 22,745 | |||||||||||
| Net income available to common shareholders—diluted | $ | 7,838 | $ | 6,899 | $ | 20,802 | $ | 22,745 | |||||||||||
| Net income per common share: | |||||||||||||||||||
| Basic | $ | 0.20 | $ | 0.18 | $ | 0.54 | $ | 0.59 | |||||||||||
| Diluted | $ | 0.20 | $ | 0.17 | $ | 0.53 | $ | 0.57 | |||||||||||
| Weighted average number of shares: | |||||||||||||||||||
| Basic | 38,770,626 | 38,431,031 | 38,808,446 | 38,543,401 | |||||||||||||||
| Diluted | 39,230,783 | 39,487,302 | 39,382,558 | 39,663,807 | |||||||||||||||
| Dividends declared per common share | $ | 0.10 | $ | 0.08 | $ | 0.30 | $ | 0.24 | |||||||||||
| MONOTYPE IMAGING HOLDINGS INC. | ||||||||||||||||||
| OTHER INFORMATION | ||||||||||||||||||
| (Unaudited and in thousands) | ||||||||||||||||||
| RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP NET ADJUSTED EBITDA | ||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Income from operations | $ | 11,293 | $ | 12,026 | $ | 32,516 | $ | 38,725 | ||||||||||
| Depreciation and amortization | 2,810 | 3,177 | 7,906 | 9,147 | ||||||||||||||
| Share based compensation | 3,600 | 2,819 | 9,841 | 7,835 | ||||||||||||||
| Net adjusted EBITDA | $ | 17,703 | $ | 18,022 | $ | 50,263 | $ | 55,707 | ||||||||||
|
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME |
||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| GAAP net income | $ | 8,039 | $ | 7,039 | $ | 21,300 | $ | 23,175 | ||||||||||
| Amortization, net of tax | 1,394 | 1,726 | 3,895 | 4,952 | ||||||||||||||
| Share based compensation, net of tax | 2,628 | 1,782 | 6,761 | 4,920 | ||||||||||||||
| Non-GAAP net income | $ | 12,061 | $ | 10,547 | $ | 31,956 | $ | 33,047 | ||||||||||
|
RECONCILIATION OF GAAP EARNINGS PER DILUTED SHARE TO NON-GAAP EARNINGS PER DILUTED SHARE |
||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| GAAP earnings per diluted share | $ | 0.20 | $ | 0.17 | $ | 0.53 | $ | 0.57 | ||||||||||
| Amortization, net of tax | 0.04 | 0.04 | 0.11 | 0.13 | ||||||||||||||
| Share based compensation, net of tax | 0.07 | 0.06 | 0.17 | 0.13 | ||||||||||||||
| Non-GAAP earnings per diluted share | $ | 0.31 | $ | 0.27 | $ | 0.81 | $ | 0.83 | ||||||||||
| MONOTYPE IMAGING HOLDINGS INC. | ||||||||||||||||||
| OTHER INFORMATION | ||||||||||||||||||
| (Unaudited and in thousands) | ||||||||||||||||||
| OTHER INFORMATION | ||||||||||||||||||
|
Share based compensation is comprised of the following: |
||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Marketing and selling | $ | 1,693 | $ | 1,257 | $ | 4,568 | $ | 3,553 | ||||||||||
| Research and development | 633 | 620 | 1,819 | 1,747 | ||||||||||||||
| General and administrative | 1,274 | 942 | 3,454 | 2,535 | ||||||||||||||
| Total expensed | $ | 3,600 | $ | 2,819 | $ | 9,841 | $ | 7,835 | ||||||||||
| Property and equipment | — | 39 | 82 | 102 | ||||||||||||||
| Total share based compensation | $ | 3,600 | $ | 2,858 | $ | 9,923 | $ | 7,937 | ||||||||||
| MARKET INFORMATION | ||||||||||||||||||
|
The following table presents revenue for our two major markets: |
||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Creative Professional | $ | 22,472 | $ | 20,118 | $ | 63,654 | $ | 56,103 | ||||||||||
| OEM | 26,880 | 26,945 | 78,149 | 81,995 | ||||||||||||||
| Total | $ | 49,352 | $ | 47,063 | $ | 141,803 | $ | 138,098 | ||||||||||
| MONOTYPE IMAGING HOLDINGS INC. | |||||||||
| OTHER INFORMATION | |||||||||
| (Unaudited and in thousands, except share and per share data) | |||||||||
| RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO FORECAST NON-GAAP EARNINGS PER DILUTED SHARE | |||||||||
|
Low End of |
High End of |
||||||||
| Q4 2015 | Q4 2015 | ||||||||
| GAAP net income | $ | 8,000 | $ | 9,600 | |||||
| Amortization, net of tax | 1,200 | 1,200 | |||||||
| Share based compensation, net of tax | 2,300 | 2,300 | |||||||
| Non-GAAP net income | $ | 11,500 | $ | 13,100 | |||||
| GAAP earnings per diluted share | $ | 0.20 | $ | 0.24 | |||||
| Amortization, net of tax, per diluted share | 0.03 | 0.03 | |||||||
| Share based compensation, net of tax, per diluted share |
0.06 |
0.06 |
|||||||
| Non-GAAP earnings per diluted share | $ | 0.29 | $ | 0.33 | |||||
| Weighted average diluted shares used to compute earnings per share |
39,400,000 |
39,400,000 |
|||||||
|
Assumes 35% effective tax rate. |
|||||||||
|
Low End of |
High End of |
||||||||
| 2015 | 2015 | ||||||||
| GAAP net income | $ | 29,300 | $ | 30,900 | |||||
| Amortization, net of tax | 5,100 | 5,100 | |||||||
| Share based compensation, net of tax | 9,000 | 9,000 | |||||||
| Non-GAAP net income | 43,400 | 45,000 | |||||||
| GAAP earnings per diluted share | $ | 0.74 | $ | 0.78 | |||||
| Amortization, net of tax, per diluted share | 0.13 | 0.13 | |||||||
| Share based compensation, net of tax, per diluted share |
0.23 |
0.23 |
|||||||
| Non-GAAP earnings per diluted share | $ | 1.10 | $ | 1.14 | |||||
| Weighted average diluted shares used to compute earnings per share |
39,400,000 |
39,400,000 |
|||||||
|
Assumes 33% effective tax rate. |
|||||||||
| MONOTYPE IMAGING HOLDINGS INC. | |||||||||
| RECONCILIATION OF FORECAST GAAP OPERATING INCOME | |||||||||
| TO FORECAST NON-GAAP NET ADJUSTED EBITDA | |||||||||
| (Unaudited and in thousands) | |||||||||
|
Low End of |
High End of |
||||||||
| Q4 2015 | Q4 2015 | ||||||||
| GAAP operating income | $ | 13,100 | $ | 15,600 | |||||
| Depreciation and amortization | 2,800 | 2,800 | |||||||
| Share based compensation | 3,600 | 3,600 | |||||||
| Non-GAAP net adjusted EBITDA | $ | 19,500 | $ | 22,000 | |||||
|
Low End of |
High End of |
||||||||
| 2015 | 2015 | ||||||||
| GAAP operating income | $ | 45,600 | $ | 48,100 | |||||
| Depreciation and amortization | 10,700 | 10,700 | |||||||
| Share based compensation | 13,400 | 13,400 | |||||||
| Non-GAAP net adjusted EBITDA | $ |
69,700 |
$ | 72,200 | |||||
CONTACT:
Investor Relations:
Monotype
Chris Brooks, 781-970-6120
ir@monotype.com