WOBURN, Mass., Oct. 31, 2013 - 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, 2013.
Third quarter 2013 highlights
"The long-term growth strategy we articulated three years ago is driving top-line results, as more Creative Professional customers turn to Monotype for type-centric solutions that ensure brand integrity and creative expression," said Doug Shaw, president and chief executive officer. "We believe we are well positioned as a strategic solutions provider to help customers achieve their goals. Moving ahead, we expect to end the year with a strong fourth-quarter performance across all our businesses."
"During the third quarter, we continued to deliver solid financial results and cash flow, all while investing for the future," said Scott Landers, senior vice president and chief financial officer. "Our confidence in Monotype's long-term growth potential has been reaffirmed with the announcement of a share repurchase program, which demonstrates our ongoing commitment to deliver value to shareholders."
Third quarter 2013 operating results
Revenue for the quarter was $40.5 million, up seven percent compared to $38.0 million for the third quarter of 2012. Creative Professional revenue was $16.4 million, a gain of 20 percent from the third quarter of 2012. OEM revenue was $24.0 million, compared to $24.3 million in the prior year period.
Net income was $7.1 million, compared to $8.0 million in the third quarter of 2012. Earnings per diluted share were $0.18, compared to $0.21 in the prior year period.
Non-GAAP net income, which excludes the amortization of intangible assets and stock-based compensation expense, net of taxes, was $10.1 million, compared to $10.8 million in the third quarter of 2012. Non-GAAP earnings per diluted share were $0.25, compared to $0.29 in the prior year period.
Non-GAAP net adjusted EBITDA was $16.9 million, or 42 percent of revenue, compared to $17.0 million in the third quarter of 2012.
A reconciliation of GAAP measures to non-GAAP measures for the three and nine months ended Sept. 30, 2013 and 2012 is provided in the financial tables that accompany this release.
Cash and cash flow
Monotype had cash and cash equivalents of $64.3 million as of Sept. 30, 2013, compared to $39.3 million as of Dec. 31, 2012, and $51.7 million as of June 30, 2013. The company generated $11.4 million of cash from operations in the third quarter of 2013.
Share repurchase program
Monotype today announced that its board of directors has authorized a share repurchase program of up to $50 million of the company's outstanding shares of common stock over the next two years. Purchases under the program, intended to offset shareholder dilution, are expected to be made periodically on the open market as business and market conditions warrant. The share repurchase program does not obligate Monotype to acquire any particular amount of common stock, and the program may be suspended or discontinued at any time.
Monotype's most recent dividend payment of $0.06 per share was paid on Oct. 21, 2013, to shareholders of record on Oct. 1, 2013. The next dividend payment of $0.06 per share will be paid on Jan. 22, 2014, to shareholders of record as of Jan. 2, 2014.
For the fourth quarter of 2013, Monotype expects revenue in the range of $42.2 million to $43.7 million. The company anticipates fourth quarter 2013 non-GAAP net adjusted EBITDA in the range of $17.5 million to $19.0 million, GAAP earnings per diluted share in the range of $0.18 to $0.20 and non-GAAP earnings per diluted share in the range of $0.26 to $0.28.
For the full-year 2013, Monotype expects revenue in the range of $165.8 to $167.3 million. The company anticipates full year 2013 non-GAAP net adjusted EBITDA in the range of $70.2 million to $71.7 million, GAAP earnings per diluted share in the range of $0.78 to $0.80 and non-GAAP earnings per diluted share in the range of $1.08 to $1.10.
Conference call details
Monotype will host a conference call on Thursday, Oct. 31, 2013, at 8:30 a.m. EDT to discuss the company's third quarter 2013 results and business outlook for 2013. Individuals who are interested in listening to the audio webcast should log on to the Investors portion of the About Us section of Monotype's website at www.monotype.com. The live call can also be accessed by dialing 877-941-8609 (domestic) or 480-629-9771 (international) using passcode 4644186. 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.
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 or products that incorporate the company's text imaging 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, including the availability of credit; 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 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 Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2013 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 stated in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2012. 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.
Monotype is a leading global provider of typefaces, technology and expertise that enable the best user experience and ensure brand integrity. Based 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.
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. ©2013 Monotype Imaging Holdings Inc. All rights reserved.