Revenues up 10.4 Percent and Operating Income up 11.1 Percent from
Year-Ago Quarter TAMPA, Fla., Oct. 26 /PRNewswire/ -- Global
Imaging Systems, Inc. (NASDAQ:GISX) today announced record
revenues, operating income, net income and earnings per share for
its fiscal second quarter ended September 30, 2006. Highlights of
the quarter include: * Revenues increased 10.4 percent to $285.8
million. * Automated office equipment, primarily copiers, continued
to post positive internal revenue growth for the 33rd consecutive
quarter. * Operating income grew 11.1 percent to $31.3 million. *
Net income was up 17.9 percent to $18.0 million. * Adjusted EBITDA
increased 9.7 percent to $36.0 million. * Other income of $1.2
million resulted from the sale of selected training division
assets. * Diluted earnings per share were $0.35, up 16.7 percent
from the year ago second quarter diluted EPS of $0.30 after
adjusting to reflect the 2-for-1 stock split in August 2006. *
Repurchased 941,965 shares of common stock for a total price of
approximately $20.0 million. * Acquired 20th core company, adding
approximately $13.0 million in annualized revenue. The company also
reported record results for the first half of fiscal 2007 ended
September 30, 2006. Highlights of the first six months include: *
Revenues increased 9.0 percent to $550.7 million. * Operating
income grew 10.8 percent to $61.1 million. * Net income was up 12.4
percent to $33.6 million. * Adjusted EBITDA increased 9.6 percent
to $70.2 million. * Diluted earnings per share were $0.65, up 10.2
percent from the year ago first half diluted EPS of $0.59 after
adjusting to reflect the 2-for-1 stock split in August 2006. *
Completed the recasting of the company's capital structure, which
includes a more flexible senior credit facility with lower interest
rates. * Paid down debt to 27.0 percent of total capital. *
Repurchased 1,564,365 shares of common stock for a total price of
approximately $32.5 million. * Completed three acquisitions,
acquiring approximately $29.4 million in annualized revenue. Tom
Johnson, chairman and CEO of Global Imaging Systems, said, "Another
quarter of record earnings confirms our strategy from day one.
Twelve years ago Global was founded with a stated mission to be the
most profitable, not necessarily the biggest distributor of office
technology. Thanks to our dedicated employees and loyal customers,
we have consistently grown operating income faster than revenues
and this past quarter was no exception. We've had a great first
half of fiscal 2007 and are looking forward to the balance of the
year." Michael Shea, president and COO of Global Imaging Systems,
said, "We face continued competitive pressure on automated office
equipment sales. However, our constant focus on customer retention
and aftermarket revenues, including our print management program,
resulted in revenue growth from our more profitable service and
supplies business that was consistent with our internal revenue
targets." Mr. Shea also commented, "Our ongoing, unrelenting
attention to management development, sales training, manpower
staffing levels and productivity improvement will help ensure our
continued revenue and earnings success." Mr. Johnson said, "We
ended the quarter with combined internal growth of six percent;
which was at the high end of our previous guidance. Our second
quarter internal growth for automated office equipment was lower
than expected at one percent, due in part to a number of large
equipment placements moving from sales to rentals. This was offset
by a very strong 24 percent internal growth from our technology
business. Our estimate for third quarter growth in total revenue,
including acquisitions to date but not potential future
acquisitions, is seven to nine percent. In light of the increasing
shift to rentals in the automated office equipment business, our
estimate for third quarter internal revenue growth is three to five
percent. Diluted earnings per share should be in the range of 33 to
35 cents. This would compare with split-adjusted diluted EPS of 32
cents (64 cents as originally reported) for the third quarter last
year. Our acquisition program's external growth goal for fiscal
year 2007 remains to acquire $60 to $100 million in annualized
revenue." The company's second quarter conference call is scheduled
for this morning, October 26, at 10:00 a.m. ET, and the third
quarter 2007 conference call is scheduled for January 25, 2007 at
10:00 a.m. ET. You may access the calls through live webcasts by
using the link provided on the company's Internet home page at
http://www.gisx.com/ . The webcasts will also be archived and
available on the company's website. About Global Imaging Systems
Global Imaging Systems offers thousands of middle-market customers
a one- stop solution for office technology needs in 32 states and
the District of Columbia. The company provides a broad line of
office technology solutions including the sale and service of
copiers and other automated office equipment, network integration
services, and electronic presentation systems. The company is also
a disciplined, profitable consolidator in the highly fragmented
office technology solutions industry. This press release includes
presentations of earnings before interest, taxes, depreciation and
amortization ("EBITDA") and adjusted EBITDA. Adjusted EBITDA
represents EBITDA adjusted for the loss on early extinguishment of
debt and other income. EBITDA is a measure commonly used by the
capital markets to value enterprises. Interest, taxes, depreciation
and amortization can vary significantly between companies due in
part to differences in accounting policies, tax strategies, levels
of indebtedness and interest rates. Excluding these items provides
insight into the underlying results of operations and facilitates
comparisons between Global and other companies. EBITDA is also a
useful measure of the company's ability to service debt and is one
of the measures used for determining debt covenant compliance.
Management believes EBITDA and adjusted EBITDA information is
useful to investors for these reasons. Both EBITDA and adjusted
EBITDA are non-GAAP financial measures and should not be viewed as
an alternative to GAAP measures of performance. Management believes
the most directly comparable GAAP financial measure is net income
and has provided a reconciliation of EBITDA and adjusted EBITDA to
net income in this press release. This news release contains
forward-looking statements and statements based on forward-looking
information, including statements relating to Global's expected
future acquisitions, future revenue growth and future diluted
earnings per share. These statements include the words "expect,"
"believe," "should," variations of such words, "we are optimistic"
and similar expressions which are intended to identify such
forward-looking statements. These statements are based on numerous
assumptions and are subject to uncertainties and risks. Actual
results could differ materially. Factors that might cause Global's
results to differ materially include risks relating to changes in
the overall economy; rising interest rates; Global's debt and debt
service obligations; the challenge of integrating acquired
businesses; the need for funding acquisitions; Global's ability to
close acquisitions in a timely and cost-effective manner; the need
for skilled employees; rapid technological change in Global's
industry; dependence on suppliers; and high levels of competition.
Most of these risks are discussed in more detail under the caption
"Risk Factors" in Global's annual report on Form 10-K for the year
ended March 31, 2006. GLOBAL IMAGING SYSTEMS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amounts in thousands
except per-share amounts) Three Months Ended Six Months Ended
September 30, September 30, 2006 2005 2006 2005 Revenues: Equipment
and supplies sales $ 216,765 $ 194,993 $ 412,418 $ 377,500 Service
and rentals 69,026 63,818 138,302 127,640 Total revenues 285,791
258,811 550,720 505,140 Costs and operating expenses: Cost of
equipment and supplies sales 142,525 126,036 266,046 241,761
Service and rental costs 36,182 33,076 72,100 66,425 Selling,
general and administrative expenses 75,361 71,099 150,591 140,959
Intangible asset amortization 437 436 906 889 Total costs and
operating expenses 254,505 230,647 489,643 450,034 Income from
operations 31,286 28,164 61,077 55,106 Other income 1,194 - 1,194 -
Loss on early extinguishment of debt - - (1,045) - Interest expense
(3,138) (3,445) (6,463) (6,771) Income before income taxes 29,342
24,719 54,763 48,335 Income taxes 11,326 9,443 21,138 18,417 Net
income $ 18,016 $ 15,276 $ 33,625 $ 29,918 Net income per common
share: Basic $ 0.35 $ 0.33 $ 0.68 $ 0.65 Diluted(a) $ 0.35 $ 0.30 $
0.65 $ 0.59 Weighted average number of shares outstanding: Basic
51,017 45,810 49,462 46,160 Diluted 52,081 51,574 52,190 51,943 (a)
The calculation of diluted earnings per common assumes the
conversion of convertible notes issued in May 2003 resulting in
4,814 additional shares for the three months ended September 30,
2005, and 1,719 and 4,814 additional shares for the six months
ended September 30, 2006 and 2005, respectively. For purposes of
diluted earnings per common share, net income for the three months
ended September 30, 2005 includes the addback of $442, representing
interest and financing fee expense, net of taxes, associated with
the convertible notes. For the six months ended September 30, 2006
and 2005, net income includes the addback of $219 and $885,
respectively. All previously outstanding convertible notes were
converted to common stock as of June 9, 2006. Reconciliation of Net
Income to EBITDA and Adjusted EBITDA: Net income $ 18,016 $ 15,276
$ 33,625 $ 29,918 Income taxes 11,326 9,443 21,138 18,417 Interest
expense 3,138 3,445 6,463 6,771 Amortization 437 436 906 889
Depreciation 4,246 4,180 8,249 8,091 EBITDA 37,163 32,780 70,381
64,086 Other income (1,194) - (1,194) - Loss on early
extinguishment of debt - - 1,045 - Adjusted EBITDA $ 35,969 $
32,780 $ 70,232 $ 64,086 GLOBAL IMAGING SYSTEMS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) September
30, March 31, 2006 2006 ASSETS Current assets: Cash and cash
equivalents $ 10,112 $ 51,610 Accounts receivable, net 142,165
131,497 Inventories 109,156 98,073 Other current assets 15,209
14,757 Total current assets 276,642 295,937 Rental equipment, net
17,504 15,687 Property and equipment, net 19,042 17,810 Goodwill
and other assets 574,952 555,223 Total assets $ 888,140 $ 884,657
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable and accrued liabilities $ 99,211 $ 102,500 Current
maturities of long-term debt 24 2,133 Deferred revenue 27,799
27,159 Income taxes payable 10,588 7,711 Total current liabilities
137,622 139,503 Deferred income taxes 45,958 42,247 Long-term debt,
less current maturities 190,066 260,713 Other long-term liabilities
- 976 Total liabilities 373,646 443,439 Total stockholders' equity
514,494 441,218 Total liabilities and stockholders' equity $
888,140 $ 884,657 GLOBAL IMAGING SYSTEMS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended September 30, 2006 2005 OPERATING ACTIVITIES: Net
income $ 33,625 $ 29,918 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation 8,249 8,091
Amortization 906 889 Amortization of financing fees 347 545 Other
income (1,194) - Non-cash portion of loss on early extinguishment
of debt 1,045 - Tax benefit of stock option exercises and vested
restricted stock - 1,159 Deferred income tax expense 4,018 3,671
Stock-based compensation expense 1,582 841 Changes in operating
assets and liabilities, net of amounts acquired in purchase
business combinations: Accounts receivable (8,752) (4,437)
Inventories (8,907) (2,581) Prepaid expenses and other current
assets (747) (1,051) Other assets 108 669 Accounts payable and
accrued liabilities (8,541) (20,189) Deferred revenue (576) 201
Income taxes payable 2,877 7,083 Other long-term liabilities - 976
Net cash provided by operating activities 24,040 25,785 INVESTING
ACTIVITIES: Purchases of property, equipment and rental equipment,
net of proceeds from disposals (10,645) (11,118) Proceeds from sale
of technology training division assets 1,575 - Purchases of
businesses, net of cash acquired (20,208) (8,864) Net cash used in
investing activities (29,278) (19,982) FINANCING ACTIVITIES:
Payments on long-term debt (241,508) (32,876) Proceeds from
issuances of long-term debt 226,251 31,728 Financing fees paid
(2,112) - Purchases of treasury stock (32,548) (20,000) Stock
options exercised 10,019 2,096 Tax benefit of stock option
exercises and vested restricted stock 3,638 - Net cash used in
financing activities (36,260) (19,052) Net decrease in cash and
cash equivalents (41,498) (13,249) Cash and cash equivalents,
beginning of period 51,610 25,365 Cash and cash equivalents, end of
period $ 10,112 $ 12,116 Non-cash financing activity: Conversion of
convertible notes to common stock, net $ 56,105 $ - Treasury stock
issued for business purchases $ 1,100 $ 920 Note: Certain prior
year amounts have been reclassified to conform to the current year
presentation. DATASOURCE: Global Imaging Systems, Inc. CONTACT: Tom
Johnson, Chairman and CEO, or Michael Shea, President and COO, or
Ray Schilling, Executive Vice President and CFO, Global Imaging
Systems, Inc., +1-813-960-5508 or Investor Relations Consultants,
Inc., +1- 727-781-5577 or E-mail, Web site: http://www.gisx.com/
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