Consolidated Graphics F4Q10 (Qtr End 03/31/09) Earnings Call Transcript

Consolidated Graphics F4Q10 (Qtr End 03/31/09) Earnings Call Transcript
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Consolidated Graphics (CGX)

F4Q10 (Qtr End 03/31/09) Earnings Call

May 5, 2010 11:00 am ET


Eric Boyriven - FD

Joe Davis - CEO

Jon Biro - EVP and CFO


Charles Strauzer - CJS Securities

Jamie Clement - Sidoti

Jared King - TriplePoint Capital



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Good day, ladies and gentlemen. And welcome to the fourth quarter 2010 Consolidated Graphics earnings conference call. My name is [Fab] and I’ll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Eric Boyriven of FD. Please proceed.

Eric Boyriven

Thank you and good morning. Welcome to the Consolidated Graphics conference call. During the call management will discuss the company’s results for the fourth quarter ending March 31, 2010.

You may receive a copy of today’s press release by calling FD at 212-850-5600 or by visiting Consolidated Graphics website. This conference is being broadcast live on the internet at and a subsequent archive will be made 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 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-KA, 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 filings today with the Securities and Exchange Commission.

Now, with these formalities out of the way, I would like to turn the call over to Joe Davis, Chief Executive Officer. Joe, 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. Sales for the March 2010 quarter were $237 million compared to $247 million for the March 2009 quarter. The 4% decline resulted almost entirely from lower same-store sales.

However, I am pleased to report that adjusted operating income and adjusted operating margins increased in the current quarter, compared to the same quarter last year despite the lower sales level. Adjusted operating income was $10.3 million or 4.4% of sales in this quarter compared to $6.6 million or 2.7% of sales in last year’s quarter.

Adjusted net income for the March quarter increased to $6.2 million or $0.54 per share from adjusted net income of $2.5 million or $0.22 per share last year. All things considered, this was a good year for Consolidated Graphics. We maintained profitability, reduced debt by 42% and continue to improve our already best in class capabilities.

As it turned out, when we began the year, we were near at the bottom of a very severely session. We quickly adapted to the new economic reality by adjusting our cost consistent with the weaker demand environment. We are hopefully exiting this recession, but we have a very strong balance sheet and an improved competitive position.

During the recession, we recognized that our customers were focused than ever on reducing their cost. So, we brought our customers customized solutions to help them achieve that goal, while many of our competitors can only offer printing services, we offered total solutions that reduced costs and improved returns on our customer sales and marketing investments.

From producing print using traditional offset methods to producing print utilizing the world’s largest high-end digital press fleet or providing customers our proprietary software solutions, such as StoreFront, we are able to help our customers lower their costs and grow their business. And since we have 70 companies, we can print close to the ultimate destination reducing freight costs in time to market.

Using our technology, customers are able to streamline their ordering process and ensure consistency of their brand. Our print on demand capabilities allow our customers to order just what they need, when they need it, and where they need it, eliminating warehouse costs and the cost of [all solutions].

We are one of the few printers in North America able to meet all of the printing needs of our customers. That’s from business cards to grand format size matters and everything in between. As an example, Ford Motor Company wanted to produce custom vehicle brochures for more than 3300 Ford dealers across the United States.

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