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Monotype Imaging Announces Fourth Quarter and Full Year 2010 Results

Friday 18. February 2011 - Company Reports Record Fourth Quarter Revenue and Net Adjusted EBITDA

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, 2010.
Fourth quarter and full year 2010 highlights:
Fourth quarter revenue was $29.4 million, a 17 percent increase year-over-year. Full year 2010 revenue was $106.7 million, an increase of 13 percent year-over-year.
Operating income for the fourth quarter increased 45 percent to $10.2 million. Full year 2010 operating income was $33.1 million, an increase of 25 percent over the prior year.
Non-GAAP net adjusted EBITDA for the fourth quarter was $13.8 million, or 47 percent of revenue. Full year 2010 non-GAAP net adjusted EBITDA was $47.8 million, or 45 percent of revenue.
Cash flow from operations for the full year ended Dec. 31, 2010, was $43.7 million, a 56 percent increase over the prior year period.
“2010 was a year of recovery and progress for Monotype Imaging, capped by a record fourth-quarter performance,” said Doug Shaw, president and chief executive officer. “Looking forward to 2011, we are well positioned to capitalize on our expanded product portfolio and deliver increased value to our customers.”
Scott Landers, senior vice president and chief financial officer, said, “We’ve demonstrated once again the ability to drive double-digit organic growth. We’ve also held true to our business model, resulting in expanded margins as our top line growth accelerated. We exited 2010 in a strong financial position with cash balances in excess of $40 million and net debt of $23 million.”
Fourth quarter operating results
Revenue for the fourth quarter of 2010 was $29.4 million, up 17 percent compared to $25.1 million in the fourth quarter of 2009. OEM revenue for the quarter was $22.5 million, an increase of 22 percent year-over-year. Creative Professional revenue for the quarter was $6.9 million, increasing four percent from the fourth quarter of 2009.
Net income for the fourth quarter of 2010 was $6.1 million, compared to $4.0 million in the prior year period. Earnings per diluted share for the fourth quarter of 2010 were $0.17, compared to $0.11 in the fourth quarter of 2009.
In the fourth quarter of 2010, non-GAAP net adjusted EBITDA was $13.8 million or 47 percent of revenue, compared to $10.6 million or 42 percent in the fourth quarter of 2009.
Full year 2010 operating results
Revenue for the full year 2010 was $106.7 million, an increase of 13 percent compared to $94.0 million in the full year 2009. OEM revenues were $80.0 million, increasing 16 percent year-over-year. Creative Professional revenues were $26.7 million, an increase of six percent year-over-year.
Net income for the full year 2010 was $18.4 million, compared to net income of $13.4 million for the prior year. Earnings per diluted share for the full year 2010 were $0.51 compared to earnings per diluted share of $0.38 for the full year 2009.
For the full year 2010, non-GAAP net adjusted EBITDA was $47.8 million or 45 percent, compared to non-GAAP net adjusted EBITDA of $41.0 million or 44 percent 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, 2010 and 2009 is provided in the financial tables that accompany this release.
Cash, cash flow and debt balances
Monotype Imaging had cash and cash equivalents of $42.8 million as of Dec. 31, 2010, an increase of $8.2 million from $34.6 million at the end of the prior year. Monotype Imaging generated $8.0 million of cash from operations in the fourth quarter of 2010 and $43.7 million on a full year basis.
The company’s outstanding debt was $65.9 million as of Dec. 31, 2010, a decrease from $78.5 million as of Sept. 30, 2010 and $91.4 million at the end of the prior year. The company was in compliance with all debt covenants at year end.
Net debt, defined as outstanding debt less cash and cash equivalents, was $23.1 million as of Dec. 31, 2010, a decrease of $33.7 million from the prior year end.
Introduction of additional Non-GAAP financial measures
Beginning in the first quarter of 2011, Monotype Imaging will add certain non-GAAP financial measures to its financial reporting, including non-GAAP net income and non-GAAP earnings per diluted share. These non-GAAP measures will exclude the amortization of intangible assets and stock-based compensation expense, net of taxes. Further information is provided in the non-GAAP financial measures section of this press release.
Financial outlook
For the first quarter of 2011, Monotype Imaging expects revenue in the range of $28.5 million to $30.0 million. The company expects first quarter 2011 non-GAAP net adjusted EBITDA in the range of $12.3 million to $13.3 million, GAAP earnings per diluted share in the range of $0.12 to $0.14 and non-GAAP earnings per diluted share in the range of $0.18 to $0.20.
For full year 2011, Monotype Imaging expects revenue in the range of $119.0 million to $123.0 million. The company expects full year 2011 non-GAAP net adjusted EBITDA in the range of $52.0 million to $55.0 million and GAAP earnings per diluted share in the range of $0.55 to $0.60 and non-GAAP earnings per diluted share in the range of $0.80 to $0.85.