By Susan Kelly August 3, 2004 -- In their first quarter earnings call, Consolidated Graphics (NYSE: CGX) announced revenue for the June quarter was $181.5 million, up 9.5% compared to $165.8 million a year ago. Net income for the June quarter was $6.8 million, or $0.48 per diluted share, representing increases of 9.7%. Compared to the June quarter a year ago, net income increased 88.9% from $3.6 million and diluted earnings per share increased 84.6% from $0.26. Topics of this summary: Chairman’s Comments CGX Strategy First Quarter 2005 Guidance Q & A Chairman’s Comments “The results for the June quarter reflect our ability to capitalize on the continuing steady improvement of economic and industry conditions," commented Joe R. Davis, Chairman and Chief Executive Officer. "We are capable of leveraging the strength of our business model in such a business climate, as evidenced by the improvement in our operating margins this quarter. We have now reported improvement in operating margins for five consecutive quarters, and at 6.9% this quarter, our operating margins are at their highest level in the last eleven quarters. Similarly, diluted earnings per share have also improved for five consecutive quarters, and at $0.48, represents the highest such level for the last fourteen quarters." Mr. Davis continued, "Operationally, we had further accomplishments and made further investments in new technology and equipment in the quarter that will drive future growth in sales and profits. We are very pleased with the momentum that our sales and marketing initiatives are showing, including national sales, CGXSolutions and cross-selling. Additionally, our acquisition pipeline is growing." Editor’s Note:It felt like the CEO was digging deep to find something new to talk about and cited his excitement around a new brochure, new marketing materials, sales meetings, leadership development program for college graduates, print ordering tools, etc. He did state that one or more announcements on acquisitions are forthcoming. Analysts must also be stymied to find something to talk about as the call was very short; only 23 minutes. Financial Summary Capital expenditures were $6.5 for the quarter however, Mr. Davis said that they originally estimated $20MM for the year and now they will be more like $25MM, because of the purchase of four new sheetfed presses. ( Milwaukee, Chicago, Raleigh, Cleveland) and also Xerox’s iGen presses. The cash flow for the June quarter was $7.8 million which impacted from acquisitions, seasonal adjustments, etc. Debt was reduced 22%. EBITDA was $21.9 million; a quarterly high. First Quarter 2005 Guidance CGX is optimistic that the factors contributing to their strong June quarter will sustain for the remainder of the year. In the upcoming September quarter, CGX expects to generate revenue of $186 million and earnings per diluted share of $0.50; is based on flat earnings margins of 6.9%. Q & A CGX believes companies in the selling market are in the 3.5-4.5x multiple range. Joe Davis believes a lot of printers will be shutting their doors in the next several months. Analyst wanted to know how to measure the impact of the marketing improvements that Joe Davis had been explicit about in detailing to the audience on the call. Very little dialogue took place and the analyst was quick to hang up. Industry growth rates no longer follow GDP rates. Joe Davis stated that once some players close their doors and capacity utilization is normalized, then growth rates will return to historical levels.