Election Work Decline Sparks CGX Revenue Dip
HOUSTON—Consolidated Graphics (CGX) announced financial results for its second quarter ended Sept. 30. Revenue for the quarter was $256.1 million, compared to $263.6 million for the same quarter last year. The 2.9 percent decline in revenue was primarily caused by an expected decline in election related business.
Adjusted operating income was $15.7 million or 6.1 percent of revenue for the quarter, compared to $14.7 million or 5.6 percent of revenue for the same period last year. Adjusted net income increased 48 percent or $4 million and was $12.3 million for the September quarter, compared to $8.3 million in the prior year quarter. Adjusted diluted earnings per share for the September quarter increased 49 percent to $1.25, compared to $.84 last year. Adjusted EBITDA was $32 million for the quarter and free cash flow was $13.7 million.
Operating income for the September 2013 quarter was $13 million and included other charges of $1.8 million, primarily related to $.9 million in costs incurred in connection with the recently announced transaction with RR Donnelley, accretion of the discount of liability attributable to our withdrawal from certain multi-employer pension plans and the impairment of certain equipment. Operating income for the prior year quarter was $12.1 million and included $2.3 million in other charges, primarily related to relocating certain production facilities and related asset impairments. Net income for the September 2013 quarter was $10.6 million or $1.09 diluted earnings per share, compared to net income of $6.7 million or $.68 diluted earnings per share last year. Net income for the September 2013 quarter included $2.2 million in benefits for tax reserve credits due to the settlement of certain tax audits.
"Our results improved again during the second quarter," said Joe Davis, chairman and CEO of CGX. "Consolidated Graphics' success this quarter and over the long-term has been due to our outstanding employees and their ability to provide the service and responsiveness of a local printing company while offering customers the flexible solutions and competitive pricing available from our wide network.
"The recently announced signing of a definitive agreement by which RR Donnelley will acquire Consolidated Graphics will enable our customers and employees to benefit significantly from RR Donnelley's broad range of printing capabilities and our combined geographic footprint. RR Donnelley's customers will benefit from the planned adoption of Consolidated Graphics' local service model for all of its commercial printing group."
The transaction with RR Donnelley is expected to close in the first calendar quarter of 2014 and is subject to customary closing conditions, including regulatory approval and approval of CGX's shareholders.