WOBURN, Mass.--(BUSINESS WIRE)--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 first quarter ended March 31, 2016.
First quarter 2016 highlights
- Revenue for the quarter was $49.8 million, an increase of 8 percent, year over year.
- Creative Professional revenue was $23.9 million, up 17 percent.
- Non-GAAP net adjusted EBITDA was $16.6 million, or 33 percent of revenue.
- Cash and cash equivalents stood at $95.4 million.
“Monotype had a solid first quarter, driven by a strong performance from our Creative Professional business,” said Scott Landers, president and chief executive officer of Monotype. “Brands continue to turn to Monotype for solutions that help them reach customers across the ever-expanding digital ecosystem. Our ability to satisfy new customer use cases continues to be a growth driver in our Creative Professional business.”
Joe Hill, executive vice president and chief financial officer of Monotype, said, “We have aligned our investments to expand the value we offer to brands, and are seeing that translate into new revenue opportunities within our Creative Professional business, which now represents nearly half of our total revenue. We plan to continue to invest and innovate in areas that both encourage and improve the use of type across a variety of new digital mediums.”
First quarter 2016 operating results
Revenue for the quarter increased eight percent to $49.8 million, compared to $46.0 million for the first quarter of 2015. Creative Professional revenue was $23.9 million, a 17 percent increase from the first quarter of 2015. OEM revenue was $25.9 million, an increase of two percent from the same period in 2015.
Net income was $5.4 million, compared to $7.4 million in the first quarter of 2015. Earnings per diluted share were $0.13, compared to $0.18 in the prior year quarter.
Non-GAAP net income, which excludes the amortization of intangible assets, stock-based compensation expense and acquisition-related contingent consideration expense, net of taxes, was $9.5 million, compared to $10.5 million in the first quarter of 2015. Non-GAAP earnings per diluted share were $0.24 compared to $0.26 in the prior year period.
Non-GAAP net adjusted EBITDA was $16.6 million, or 33 percent of revenue, compared to $16.2 million in the first quarter of 2015.
Cash and cash flow
Monotype had cash and cash equivalents of $95.4 million as of March 31, 2016, compared to $87.5 million as of December 31, 2015 and $78.8 million as of March 31, 2015. The company generated $11.2 million of cash from operations in the first quarter of 2016.
Quarterly dividend
Monotype’s most recent dividend payment of $0.11 per share was paid on April 21, 2016, to shareholders of record as of April 1, 2016. The next dividend payment of $0.11 per share will be paid on July 21, 2016 to shareholders of record as of the close of business on July 1, 2016.
Financial outlook
For the second quarter of 2016, Monotype expects revenue in the range of $47.0 million to $50.0 million. The company anticipates second quarter 2016 non-GAAP net adjusted EBITDA in the range of $15.0 million to $17.5 million, GAAP earnings per diluted share in the range of $0.11 to $0.15 and non-GAAP earnings per diluted share in the range of $0.22 to $0.26.
The company is reiterating its full year 2016 guidance, which expects revenue in the range of $202.0 million to $208.0 million. Monotype expects full year 2016 non-GAAP net adjusted EBITDA in the range of $72.0 million to $77.0 million, GAAP earnings per diluted share in the range of $0.63 to $0.71 and non-GAAP earnings per diluted share in the range of $1.08 to $1.16.
Conference call details
Monotype will host a conference call on Friday, April 29, 2016, at 8:30 a.m. EDT to discuss the company’s first quarter 2016 results. 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 91312647. 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 and other digital assets or products that incorporate the company’s solutions; risks associated with the company’s ability to integrate products, services and employees from acquired companies in a timely manner or at all; 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, product features or services; risks associated with the company’s ability to adapt its products or services to new markets or customer uses and to anticipate and quickly respond to evolving technologies and customer requirements; risks associated with the ownership and enforcement of the company’s intellectual property; and risks associated with changes in the financial markets. 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 December 31, 2015 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 the company 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. ©2016 Monotype Imaging Holdings Inc. All rights reserved.
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MONOTYPE IMAGING HOLDINGS INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Unaudited and in thousands) |
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March 31, |
December 31, 2015 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 95,441 | $ | 87,520 | ||||
| Accounts receivable, net of allowance for doubtful accounts | 16,378 | 15,179 | ||||||
| Income tax refunds receivable | 2,132 | 2,558 | ||||||
| Prepaid expenses and other current assets | 3,857 | 3,846 | ||||||
| Total current assets | 117,808 | 109,103 | ||||||
| Property and equipment, net | 14,637 | 15,204 | ||||||
| Goodwill | 187,514 | 185,735 | ||||||
| Intangible assets, net | 67,982 | 69,264 | ||||||
| Restricted cash | 9,323 | 9,304 | ||||||
| Other assets | 3,104 | 3,177 | ||||||
| Total assets | $ | 400,368 | $ | 391,787 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,281 | $ | 1,385 | ||||
| Accrued expenses and other current liabilities | 19,507 | 21,422 | ||||||
| Accrued income taxes payable | 1,094 | 2,395 | ||||||
| Deferred revenue | 9,932 | 10,086 | ||||||
| Total current liabilities | 32,814 | 35,288 | ||||||
| Other long-term liabilities | 7,480 | 6,914 | ||||||
| Deferred income taxes | 38,756 | 35,159 | ||||||
| Reserve for income taxes, net of current portion | 2,376 | 2,316 | ||||||
| Accrued pension benefits | 5,199 | 4,928 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 43 | 42 | ||||||
| Additional paid-in capital | 259,865 | 256,215 | ||||||
| Treasury stock, at cost |
(50,455 |
) |
(50,455 |
) |
||||
| Retained earnings | 109,795 | 108,908 | ||||||
| Accumulated other comprehensive loss |
(5,505 |
) |
(7,528 |
) |
||||
| Total stockholders’ equity | 313,743 | 307,182 | ||||||
| Total liabilities and stockholders’ equity | $ | 400,368 | $ | 391,787 | ||||
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MONOTYPE IMAGING HOLDINGS INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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(Unaudited and in thousands, except share and per share data) |
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Three Months Ended March 31, |
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| 2016 | 2015 | |||||||
| Revenue | $ | 49,842 | $ | 46,046 | ||||
| Cost of revenue | 8,319 | 7,410 | ||||||
| Cost of revenue—amortization of acquired technology | 1,131 | 1,133 | ||||||
| Total cost of revenue | 9,450 | 8,543 | ||||||
| Gross profit | 40,392 | 37,503 | ||||||
| Operating expenses: | ||||||||
| Marketing and selling | 14,087 | 12,976 | ||||||
| Research and development | 7,336 | 5,799 | ||||||
| General and administrative | 8,849 | 6,899 | ||||||
| Amortization of other intangible assets | 735 | 702 | ||||||
| Total operating expenses | 31,007 | 26,376 | ||||||
| Income from operations | 9,385 | 11,127 | ||||||
| Other (income) expense: | ||||||||
| Interest expense | 162 | 346 | ||||||
| Interest income |
(54 |
) |
(112 |
) |
||||
| Other expense (income), net | 812 |
(23 |
) |
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| Total other expense | 920 | 211 | ||||||
| Income before provision for income taxes | 8,465 | 10,916 | ||||||
| Provision for income taxes | 3,107 | 3,559 | ||||||
| Net income | $ | 5,358 | $ | 7,357 | ||||
| Net income available to common stockholders—basic | $ | 5,218 | $ | 7,211 | ||||
| Net income available to common stockholders—diluted | $ | 5,219 | $ | 7,212 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 0.13 | $ | 0.19 | ||||
| Diluted | $ | 0.13 | $ | 0.18 | ||||
| Weighted average number of shares outstanding: | ||||||||
| Basic | 39,122,649 | 38,829,169 | ||||||
| Diluted | 39,521,619 | 39,522,139 | ||||||
| Dividends declared per common share | $ | 0.11 | $ | 0.10 | ||||
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MONOTYPE IMAGING HOLDINGS INC. |
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OTHER INFORMATION |
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(Unaudited and in thousands) |
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RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP NET ADJUSTED EBITDA |
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Three Months Ended March 31, |
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| 2016 |
2015 (2) |
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| Income from operations | $ | 9,385 | $ | 11,127 | ||
| Depreciation and amortization | 2,874 | 2,302 | ||||
| Share based compensation | 3,778 | 2,771 | ||||
| Contingent consideration adjustment (1)(3) | 578 | — | ||||
| Net adjusted EBITDA | $ | 16,615 | $ | 16,200 | ||
(1) In November 2015, we revised our definition of non-GAAP net adjusted
EBITDA to exclude the impact of acquisition-related contingent
consideration adjustments.
(2) Non-GAAP net adjusted EBITDA for the
three months ended March 31, 2015 has been restated to add back the
impact of acquisition-related contingent consideration adjustments in
accordance with our revised definition of non-GAAP net adjusted EBITDA.
(3)
The 2016 amount includes $0.6 million of expense associated with the
deferred compensation arrangement resulting from the Amendment to the
Swyft Merger Agreement.
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RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME |
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Three Months Ended March 31, |
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| 2016 |
2015 (2) |
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| GAAP net income | $ | 5,358 | $ | 7,357 | ||
| Amortization, net of tax | 1,181 | 1,237 | ||||
| Share based compensation, net of tax | 2,391 | 1,868 | ||||
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Contingent consideration adjustment, net of tax (1)(3) |
578 | — | ||||
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Non-GAAP net income |
$ | 9,508 | $ | 10,462 | ||
(1) In November 2015, we revised our definition of non-GAAP earnings per
diluted share to exclude the impact of acquisition-related contingent
consideration adjustments.
(2) Non-GAAP net income for the three
months ended March 31, 2015, has been restated to add back the impact of
acquisition-related contingent consideration adjustments, net of tax, in
accordance with our revised definition of non-GAAP net income.
(3)
The 2016 amount includes $0.6 million of expense associated with the
deferred compensation arrangement resulting from the Amendment to the
Swyft Merger Agreement.
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MONOTYPE IMAGING HOLDINGS INC. |
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OTHER INFORMATION |
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(Unaudited and in thousands) |
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RECONCILIATION OF GAAP EARNINGS PER DILUTED SHARE TO NON-GAAP EARNINGS PER DILUTED SHARE |
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Three Months Ended March 31, |
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| 2016 |
2015 (2) |
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| GAAP earnings per diluted share | $ | 0.13 | $ | 0.18 | ||
| Amortization, net of tax | 0.03 | 0.03 | ||||
| Share based compensation, net of tax | 0.07 | 0.05 | ||||
| Contingent consideration adjustment, net of tax (1)(3) | 0.01 | — | ||||
| Non-GAAP earnings per diluted share | $ | 0.24 | $ | 0.26 | ||
(1) In November 2015, we revised our definition of non-GAAP earnings per
diluted share to exclude the impact of acquisition-related contingent
consideration adjustments.
(2) Non-GAAP earnings per diluted share
for the three months ended March 31, 2015, has been restated to add back
the impact of acquisition-related contingent consideration adjustments,
net of tax, in accordance with our revised definition of non-GAAP
earnings per diluted share.
(3) The 2016 amount includes $0.6
million, or $0.01 per share, of expense associated with the deferred
compensation arrangement resulting from the Amendment to the Swyft
Merger Agreement.
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OTHER INFORMATION |
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Share based compensation is comprised of the following: |
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Three Months Ended March 31, |
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| 2016 | 2015 | |||||
| Marketing and selling | $ | 1,581 | $ | 1,266 | ||
| Research and development | 813 | 542 | ||||
| General and administrative | 1,384 | 963 | ||||
| Total expensed | 3,778 | 2,771 | ||||
| Property and equipment | — | 42 | ||||
| Total share based compensation | $ | 3,778 | $ | 2,813 | ||
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MARKET INFORMATION |
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The following table presents revenue for our two major markets: |
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Three Months Ended |
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| 2016 | 2015 | |||||
| Creative Professional | $ | 23,915 | $ | 20,504 | ||
| OEM | 25,927 | 25,542 | ||||
| Total | $ | 49,842 | $ | 46,046 | ||
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MONOTYPE IMAGING HOLDINGS INC. |
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OTHER INFORMATION |
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(Unaudited and in thousands, except share and per share data) |
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RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO FORECAST NON-GAAP EARNINGS PER DILUTED SHARE |
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Low End of |
High End of |
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| Q2 2016 | Q2 2016 | |||||
| GAAP net income | $ | 4,300 | $ | 5,800 | ||
| Amortization, net of tax | 1,200 | 1,200 | ||||
| Share-based compensation, net of tax | 2,700 | 2,700 | ||||
| Contingent consideration adjustment, net of tax | 600 | 600 | ||||
| Non-GAAP net income | $ | 8,800 | $ | 10,300 | ||
| GAAP earnings per diluted share | $ | 0.11 | $ | 0.15 | ||
| Amortization, net of tax, per diluted share | 0.03 | 0.03 | ||||
| Share-based compensation, net of tax, per diluted share | 0.07 | 0.07 | ||||
| Contingent consideration adjustment, net of tax, per diluted share |
0.01 |
0.01 |
||||
| Non-GAAP earnings per diluted share | $ | 0.22 | $ | 0.26 | ||
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Weighted average diluted shares used to compute earnings per share |
39,800,000 |
39,800,000 |
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Assumes 36% effective tax rate. |
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Low End of |
High End of |
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| 2016 | 2016 | |||||
| GAAP net income | $ | 25,000 | $ | 28,200 | ||
| Amortization, net of tax | 4,700 | 4,700 | ||||
| Share-based compensation, net of tax | 10,900 | 10,900 | ||||
| Contingent consideration adjustment, net of tax | 2,300 | 2,300 | ||||
| Non-GAAP net income | 42,900 | 46,100 | ||||
| GAAP earnings per diluted share | $ | 0.63 | $ | 0.71 | ||
| Amortization, net of tax, per diluted share | 0.12 | 0.12 | ||||
| Share-based compensation, net of tax, per diluted share | 0.27 | 0.27 | ||||
| Contingent consideration adjustment, net of tax, per diluted share |
0.06 |
0.06 |
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| Non-GAAP earnings per diluted share | $ | 1.08 | $ | 1.16 | ||
|
Weighted average diluted shares used to compute earnings per share |
39,800,000 |
39,800,000 |
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Assumes 36% effective tax rate. |
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MONOTYPE IMAGING HOLDINGS INC. |
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RECONCILIATION OF FORECAST GAAP OPERATING INCOME |
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TO FORECAST NON-GAAP NET ADJUSTED EBITDA |
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|
(Unaudited and in thousands) |
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Low End of |
High End of |
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| Q2 2016 | Q2 2016 | |||||
| GAAP operating income | $ | 7,300 | $ | 9,800 | ||
| Depreciation and amortization | 2,900 | 2,900 | ||||
| Share-based compensation | 4,200 | 4,200 | ||||
| Contingent consideration adjustment | 600 | 600 | ||||
| Non-GAAP net adjusted EBITDA | $ | 15,000 | $ | 17,500 | ||
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Low End of |
High End of |
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| 2016 | 2016 | |||||
| GAAP operating income | $ | 41,800 | $ | 46,800 | ||
| Depreciation and amortization | 11,100 | 11,100 | ||||
| Share-based compensation | 16,800 | 16,800 | ||||
| Contingent consideration adjustment | 2,300 | 2,300 | ||||
| Non-GAAP net adjusted EBITDA | $ | 72,000 | $ | 77,000 | ||