Business News

Monotype Imaging Announces Fourth Quarter and Full Year 2009 Results

Monday 08. March 2010 - Company Reports Strong Revenue and Profitability

Monotype Imaging Holdings Inc. (Nasdaq: TYPE), a leading global provider of text imaging solutions, today announced financial results for the fourth quarter and full year ended Dec. 31, 2009.

Fourth quarter and full year 2009 highlights:

Fourth quarter revenue was $25.1 million, an eight percent decline year-over-year and a nine percent increase over the prior quarter. Full year 2009 revenue was $94.0 million, a decrease of 15 percent year-over-year.
Net income for the fourth quarter was $4.0 million, versus $4.1 million in the fourth quarter of 2008. Full year 2009 net income was $13.4 million, versus $15.4 million in the prior year.
Non-GAAP net adjusted EBITDA for the fourth quarter was $10.6 million, or 42 percent of revenue. Full year 2009 non-GAAP net adjusted EBITDA was $41.0 million, or 44 percent of revenue.
Cash flow from operations was $5.7 million for the fourth quarter and $28.1 million for the full year 2009. Cash and cash equivalents balance as of Dec. 31, 2009, was $34.6 million, an increase of $2.7 million from the prior year, inclusive of $22.5 million in debt repayments.
“A return to sequential growth in our OEM business contributed to fourth quarter total revenues that exceeded our expectations. Our overall business has grown sequentially during each of the past two quarters, and we believe we have effectively managed the business past the low point we experienced earlier in 2009,” said Doug Shaw, president and chief executive officer. “The strategic investments we made over the last year have strengthened our product offerings and expanded our market opportunities. We believe the company is well positioned for 2010 and beyond.”

Scott Landers, senior vice president and chief financial officer, said, “Our results for the fourth quarter and the full year 2009 reflect our ability to manage our business to significant levels of profitability. We balanced cost containment with investments, while at the same time grew our cash balances to $34.6 million and reduced our debt balances by over $22 million.”

Fourth quarter operating results

Revenue for the fourth quarter of 2009 was $25.1 million, down eight percent compared to $27.4 million in the fourth quarter of 2008. OEM revenue for the quarter was $18.5 million, decreasing eight percent year-over-year. Creative Professional revenue for the quarter was $6.7 million, decreasing nine percent from the fourth quarter of 2008.

Net income for the fourth quarter of 2009 was $4.0 million, compared to $4.1 million in the prior year period. Earnings per diluted share for the fourth quarter of 2009 were $0.11, consistent with the fourth quarter of 2008.

In the fourth quarter of 2009, non-GAAP net adjusted EBITDA was $10.6 million, compared to $13.1 million in the fourth quarter of last year.

Beginning in the second quarter of 2009, Monotype Imaging changed its definition of non-GAAP net adjusted EBITDA to be calculated as GAAP operating income and adding back share-based compensation, depreciation and amortization expenses.

Full year 2009 operating results

Revenue for the full year 2009 was $94.0 million, a decrease of 15 percent compared to $110.9 million in the full year 2008. OEM revenues were $69.0 million, decreasing 11 percent year-over-year. Creative Professional revenues were $25.0 million, decreasing 24 percent year-over-year.

Net income for the full year 2009 was $13.4 million, compared to net income of $15.4 million for the prior year. Earnings per diluted share for the full year 2009 were $0.38 compared to earnings per diluted share of $0.43 for the full year 2008.

For the full year 2009, non-GAAP net adjusted EBITDA was $41.0 million, compared to non-GAAP net adjusted EBITDA of $48.9 million for the prior year.

A reconciliation of GAAP operating income to non-GAAP net adjusted EBITDA for the three and 12 months ended Dec. 31, 2009 and 2008 is provided in the financial tables that accompany this release.

Cash, cash flow and debt balances

Monotype Imaging had cash and cash equivalents of $34.6 million as of Dec. 31, 2009, an increase from $31.9 million at the end of the prior year. Monotype Imaging generated $5.7 million of cash from operations in the fourth quarter of 2009 and $28.1 million on a full year basis. The company’s outstanding debt was $91.4 million as of Dec. 31, 2009, a decrease from $99.2 million as of Sept. 30, 2009 and $113.6 million at the end of the prior year.

Financial Outlook

For the first quarter of 2010, Monotype Imaging expects revenue in the range of $24.0 million to $25.0 million. The company expects first quarter 2010 non-GAAP net adjusted EBITDA in the range of $9.5 million to $10.5 million and earnings per share in the range of $0.07 to $0.09.

For full year 2010, Monotype Imaging expects revenue in the range of $100 million to $104 million. The company expects full year 2010 non-GAAP net adjusted EBITDA in the range of $42 million to $45 million and earnings per share in the range of $0.36 to $0.41.