Consolidated Graphics Sales Up 19%, CFO to Step Down
Press release from the issuing company
May 9 -- Consolidated Graphics, Inc. today announced financial results for its fourth quarter and year-ended March 31, 2007. Also, G. Christopher Colville, Executive Vice President and Chief Financial Officer, will be leaving the Company effective June 30, 2007 in order to devote more time to his family and pursue other personal interests. (See comments below)
Revenue for the March quarter was $263.9 million, up 19% compared to $221.9 million a year ago. Net income for the March quarter was $6.9 million, or $.50 per diluted share, which includes the impact of an after-tax $7.8 million, or $.56 per diluted share, non-cash goodwill impairment, which was determined when the Company completed its annual evaluation of goodwill in the fourth quarter. Excluding the goodwill impairment, net income was $14.8 million compared to $10.5 million a year ago, resulting in a 43% increase in diluted earnings per share to $1.06 from $.74 in the prior year.
Pursuant to generally accepted accounting principles, each of the Company's facilities is separately evaluated annually for impairment of goodwill because they comprise individual reporting units under the Company's business model. Upon completion of the required evaluation, the Company concluded that the goodwill at four locations should be impaired. In the aggregate, these facilities account for approximately 3% of the Company's total sales. Also, each of these facilities generates positive cash flow; accordingly, the Company is evaluating steps that can be taken to improve their financial performance.
For the fiscal year ended March 31, 2007, revenue was a record $1.01 billion, up 14% compared to $879.0 million in fiscal 2006. Net income in 2007 was $50.7 million, or $3.65 per diluted share. Excluding the goodwill impairment mentioned above, net income in 2007 was $58.6 million compared to $38.5 million in 2006, resulting in a 54% increase in diluted earnings per share to $4.21 from $2.73 in the prior year.
Commenting on the results, Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics stated, "The fourth quarter wrapped up an outstanding year of growth in sales and profits for Consolidated Graphics. Many factors contributed to this growth, including acquisitions, strong internal sales growth, incremental operating efficiencies, better purchasing power, and our continued investment in technology. I am confident that we can continue to execute on our strategy, expand our industry-leading position and further leverage our competitive advantages for continued growth."
Mr. Davis concluded, "We have a lot of momentum and foresee a strong start to fiscal 2008. For the June quarter, we project quarterly revenues to increase 12% from the prior year to $268 million, with EBITDA projected to be $38 million, up 10% from the prior year, and sequentially flat relative to the March quarter. Diluted earnings per share for the June quarter is projected at $.98, and includes an expected increase in our overall effective tax rate to 38% in fiscal 2008 from 36.6% in fiscal 2007, which included a one-time income tax benefit in the June quarter. Compared to the March quarter results, the projections for the June quarter also include an incremental after-tax charge of $.04 per share for stock-based compensation expense, reflecting our typical timing patterns for this expense over the course of the year."
CFO to Leave
G. Christopher Colville, Executive Vice President and Chief Financial Officer, will be leaving the Company effective June 30, 2007 in order to devote more time to his family and pursue other personal interests. The Company has begun a search to identify both external and internal candidates as possible successors.
Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics, commented, "We greatly appreciate the invaluable contributions that Chris has made to the growth and success of Consolidated Graphics over the years and offer him and his family our best wishes going forward."
Also commenting, Mr. Colville said, "I am fortunate to have been associated with Consolidated Graphics since our initial public offering in 1994 when we had annual revenues of $49 million. Today, Consolidated Graphics is the leading company in the general commercial printing market with $1.1 billion in annual run rate revenues, strong profitability, great growth opportunities and a deep and talented management team. I am very proud of what we have accomplished at CGX and am extremely confident that CGX will continue to execute on its strategy to generate long-term growth in sales and profits."
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