Consolidated Graphics CEO Discusses F2Q11 Results - Earnings Call Transcript

Consolidated Graphics, Inc. (

CGX

)

F2Q11 (Qtr End 09/30/10) Earnings Call

November 3, 2010 11:00 a.m. ET

Executives

Alexandra Tramont – Investor Relations, FD

Joe Davis – Chairman and Chief Executive Officer

Jon Biro, Executive Vice President and Chief Financial Officer

Analysts

Charlie Stauzer - CJS Securities

Jamie Clement- Fidelity

Presentation

Operator

Compare to:
Previous Statements by CGX
» Consolidated Graphics Inc. F1Q11 (Qtr End 06/30/2010) Earnings Conference Call Transcript
» Consolidated Graphics F4Q10 (Qtr End 03/31/09) Earnings Call Transcript
» Consolidated Graphics Inc. F3Q10 (Qtr End 12/31/09) Earnings Call Transcript
» Consolidated Graphics Inc. Q2 2010 Earnings Call Transcript

Good day ladies and gentlemen, and welcome to the second quarter 2011 Consolidated Graphics earnings conference call. My name is Tom, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session towards the end of this conference. (Operators Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to Alexandra Tramont of FD. Please proceed.

Alexandra Tramont

Thank you and good morning. Welcome to the Consolidated Graphics conference call. During the call, management will discuss the company's results for the second quarter ended September 30, 2010.

You may receive a copy of today's press release by calling FD at 212-850-5600, or by visiting Consolidated Graphics’ website. The conference is being broadcast live on the internet at www.cgx.com, and a subsequent archive will be available.

Before we begin, I would like to remind everyone that remarks made by management during the course of this morning's call contain forward-looking statements, which involve known and unknown risks, uncertainties or other factors that could cause actual results to differ materially from results, performance or other expectations expressed or implied by these forward-looking statements.

Consolidated Graphics' expectations regarding future sales and profitability assume, among other things, stability of the economy and reasonable growth and the demand for its products, the continued availability of raw materials at affordable prices, retention of its key management and operating personnel, satisfactory labor relations, as well as other factors detailed in Consolidated Graphics’ filings with the Securities and Exchange Commission, including the risk factors set forth in our most recently filed annual report on Form 10-K, quarterly report on Form 10-Q, and current report on Form 8-K.

Forward-looking statement assumptions or factors, stated or referred to on this conference call, are based on information available to Consolidated Graphics as of today. Consolidated Graphics expressly disclaims any duty to provide updates to these forward-looking statements, assumptions or other factors after the date of this call to reflect the occurrence of events, circumstances, or changes in expectations.

In addition, during the course of this call, management of the company will reference certain non-GAAP financial performance measures. Management's opinion regarding the usefulness of such measures, together with the reconciliation of such measures for the most directly comparable GAAP measures for historical periods are included in the Company's earlier filing today, with the Securities and Exchange Commission.

Now with these formalities out of the way, I would like to turn the call over Mr. Joe Davis, Chairman and Chief Executive Officer. Mr. Davis, you may begin.

Joe Davis

Thank you and good morning. With me on the call today is Jon Biro, Executive Vice President and Chief Financial Officer. This quarter we continued our strategy of enhancing our product and service offerings including further investments in our best-in-class technology capabilities. At the same time, we continue to effectively manage our cost. Our results show that this strategy is working.

Sales increased in 264.1 million this quarter, a 3.4% increase. Adjusted operating income increased 59% to 17 million this year. And adjusted diluted earnings per share increase 93%, $0.77 per share.

As stated on prior calls, we are focused on providing customized solutions that allow our customers to improve their return on their print investments, and this focus is producing results.

Digital print sales increased 21% compared to last year and were 14% of our total sales. Sales to national customers served by multiple locations, increased 6% this quarter compared to last year. Investments we are making in people, technology, and equipment are paying off.

Technology is changing the printing business. Demand for personalized printed products in increasing. We have been investing in technology over 10 years. In the last three years, we’ve invested over $100 million in digital, presses, and technology solutions. Currently, we have over 200,000 products that can be ordered by over 250,000 active users utilizing over 420 store front sites.

Store Front are powerful, proprietary application that enables our customers to streamline the way they buy printing. Store Front allow customers to utilize variable data to personalize prints, results at a lower investment and inventory, and enhances the consistency of printed logs, product images, and color quality throughout our customer’s organizations.

Other examples of our technology and products include our cross-media offerings that enable customers to integrate email blasts and personalized URLs into their marketing programs as well as helping our customers utilize Quick Response or QR.

Utilizing our digital press fleets spread across the U.S., Prague and Japan, we print millions of customized printed pieces each year. We plan to continue investing in new technology to enhance our competitive advantages.

As the world leader in sheik and web digital printing, we are enhancing our position by purchasing cutting-edge high-speed digital web presses.

We have installed two high-speed digital web presses in Denver and are in the process of installing another in Maryland. We are one of only a handful of companies in the United States that have high-speed digital web press capabilities. And more importantly, and very importantly, we have the frontend and backend technology to support these presses.

Read the rest of this transcript for free on seekingalpha.com