American Reprographics reports earnings, Sales increase 17.9%
Press release from the issuing company
2/22/07 -- American Reprographics Company, the nation's leading provider of reprographic services and technology today reported its financial results for the fourth quarter, and year ended December 31, 2006.
Net revenue for the fourth quarter of 2006 was $147.0 million compared to $124.7 million in the fourth quarter of 2005, an increase of 17.9%. The Company's gross margin in the fourth quarter of 2006 was 41.6%, compared to 40.2% for the same period in 2005. Net income for the fourth quarter of 2006 was $12.8 million, or $0.28 per diluted share, compared to net income for the fourth quarter of 2005 of $8.6 million, or $0.19 per fully diluted share, adjusted for a pre-tax charge incurred from the early extinguishment of debt of $9.3 million.
Revenue for the full year ended December 31, 2006, was $591.8 million, compared to $494.2 million for 2005, a 19.8% increase year-over-year. The Company's gross margin for the full year ended December 31, 2006, was 43.0%, compared to 41.4% for the 12 months ended December 31, 2005. Net income for 2006 was $51.4 million, or $1.13 per diluted share, including a one-time $14.0 million litigation charge related to the Louis Frey litigation. Adjusted to exclude the effect of the litigation charge net of tax, the Company's net income for 2006 was $59.8 million, or $1.31 per diluted share. Net income for 2005 was $60.5 million, or $1.40 per diluted share, including a one-time $27.7 million income tax benefit due to the Company's reorganization from a limited liability company to a Delaware corporation in conjunction with its IPO in February 2005. Excluding the one-time income tax benefit due to reorganization, debt write-off net of tax benefit, but including proforma incremental tax provision, the Company earned $38.0 million, or $0.88 per fully diluted share, in 2005. Accounting for the aforementioned adjustments, earnings per share increased 48.9% in 2006. Net cash provided by operating activities in 2006 was $98.4 million, compared to $56.6 million in 2005.
"We began the year with a focus on five key business factors that included revenue and earnings growth, cash flow optimization, and digital document management services and FM service line expansion," said S. "Mohan" Chandramohan, Chairman and CEO of American Reprographics Company. "I'm happy to report that we exceeded our objectives in every area of endeavor. We grew sales by 19.8%, our adjusted EPS growth was nearly 50%, and cash flow exceeded 70% of EBITDA for the year. Finally, the combination of digital services and FMs contributed 22.1% of our overall annual revenue."
"I'm also gratified to say that our previously announced management transition plan is well under way. Jonathan Mather, our new CFO who joined us in December, has the financial end of our business well in hand, and we expect a seamless transition as Suri takes over the role of CEO."
K. "Suri" Suriyakumar, President and COO said, "The focus we applied to Premier Accounts this year has begun to bear fruit. We recently signed an exclusive contract with Boeing for the bulk of their in-house printing, and we gained a number of other key customer wins throughout the year including Burns & McDonald, Stantech, Gilbane Construction, and most recently, Whiting- Turner."
"Separately, the refinement of our technology continues to produce efficiencies across all of our business segments. This, combined with the ongoing expansion of our global footprint, has resulted in consistent improvement in ARC's operating margins. The company's performance in 2006 will provide an excellent base upon which to build in 2007."
Based on current trends, American Reprographics Company expects that full year 2007 revenue will be in the range of $690-710 million and that earnings per share will be in the range of $1.58-$1.62 on a diluted basis.
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