UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
February
15, 2019
Date
of Report (Date of earliest event reported)
MONOTYPE IMAGING HOLDINGS INC.
(Exact
name of registrant as specified in its charter)
Delaware |
001-33612 |
20-3289482 |
(State or Other Jurisdiction of Incorporation) |
(Commission File No.) |
(IRS Employer Identification No.) |
600 Unicorn Park Drive |
(Address of Principal Executive Offices, including Zip Code) |
Registrant’s
telephone number, including area code: (781) 970-6000
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 |
Results of Operations and Financial Condition |
On February 15, 2019, Monotype Imaging Holdings Inc. (the “Company”) announced its financial results for the quarter and the twelve months ended December 31, 2018. A copy of the press release (the “Press Release”) issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information on this Form 8-K (including Exhibit 99.1) shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) or otherwise
subject to the liabilities of that Section, nor shall it be deemed
incorporated by reference in any filing by the Company under the
Securities Act of 1933, as amended, or the Exchange Act, except as
expressly set forth by specific reference in such a filing.
Item 9.01 |
Financial Statements and Exhibits |
(d) |
Exhibits |
|
The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed: | ||
99.1 Press Release issued by Monotype Imaging Holdings Inc. on February 15, 2019. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Current Report on Form 8-K
to be signed on its behalf by the undersigned thereunto duly authorized.
MONOTYPE IMAGING HOLDINGS INC. |
||
|
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February 15, 2019 |
By: |
/s/ Anthony Callini |
Anthony Callini |
||
Executive Vice President, Chief Financial |
EXHIBIT INDEX
Exhibit Number |
Description | |
Press Release issued by Monotype Imaging Holdings Inc. on February 15, 2019. |
Exhibit 99.1
Monotype Announces Fourth Quarter and Full-Year 2018 Results
Company Posts Record Performance, and Exceeds Revenue and Profitability Expectations
WOBURN, Mass.--(BUSINESS WIRE)--February 15, 2019--Monotype Imaging Holdings Inc. (Nasdaq: TYPE) today announced financial results for the fourth quarter and full year ended December 31, 2018.
Fourth quarter 2018 highlights
Full-year 2018 highlights
“We ended the year with a very strong fourth quarter, capping off the most successful year in company history,” said Scott Landers, president and CEO of Monotype. “The investments we’ve made in our enterprise sales, design, marketing and engineering capabilities have had a positive effect on our top and bottom line results. Our efforts continue to translate into tangible customer value. Our ability to execute over the past few years has enabled us to transform our business from one serving mainly mature markets to now one solidly rooted in growing markets.”
Tony Callini, executive vice president and chief financial officer of Monotype, said, “We are very pleased with our performance in 2018. We exceeded the high end of our guidance for net adjusted EBITDA, as well as the previous high-water mark from 2014, reflecting improved operational leverage across the portfolio. We will continue to operate with a focus on enhancing profitability while growing revenue and returning value to shareholders.”
Fourth quarter 2018 operating results
Revenue for the quarter
increased 10% to $71.4 million, compared to $65.0 million for the fourth
quarter of 2017. Creative Professional revenue was $49.6 million, a 29%
increase from the fourth quarter of 2017. OEM revenue was $21.8 million,
a decrease of 18% from the same period in 2017, as expected.
Gross margin for the quarter was 85.1% compared to 83.1% in the prior year quarter.
Net income was $9.5 million, compared to net income of $11.9 million in the fourth quarter of 2017. Earnings per diluted share was $0.23, compared to earnings per diluted share of $0.28 in the prior year.
Non-GAAP net income, which excludes the amortization of intangible assets, stock-based compensation expense, acquisition-related compensation expense, and non-recurring expenses, net of taxes, was $18.2 million, compared to $20.3 million in the fourth quarter of 2017. Non-GAAP earnings per diluted share were $0.45 in the fourth quarter of 2018, compared to $0.51 in the prior year period.
Non-GAAP net adjusted EBITDA was $26.8 million, or 37.5% of revenue, compared to $18.6 million in the fourth quarter of 2017. In the first quarter of 2018, Monotype updated its definition of non-GAAP net adjusted EBITDA to include the add back of non-recurring expense to GAAP income (loss) from operations. Accordingly, all non-GAAP financial measures have been recast for the three months and year ended December 31, 2017, to add back certain advisor fees and restructuring expenses included in non-recurring expenses.
Full-year 2018 operating results
Revenue for the year was
$246.7 million, an increase of 5% compared to $235.8 million for 2017.
Creative Professional revenue was $159.1 million, an increase of 22%
year over year. OEM revenue was $87.6 million, down 17% year over year,
as expected.
Net income for 2018 was $12.3 million, compared to net income of $11.6 million for the prior year. Earnings per diluted share were $0.29, compared to earnings per diluted share of $0.27 in 2017.
Non-GAAP net income, which excludes the amortization of intangible assets, stock based compensation expense, and acquisition-related compensation expense, net of taxes, was $47.3 million, compared to $37.9 million in 2017. Non-GAAP earnings per diluted share were $1.17, compared to $0.95 in 2017.
The company’s 2018 effective tax rate was approximately 43%.
Non-GAAP net adjusted EBITDA was $73.4 million, or 29.7% of revenue, compared to non-GAAP net adjusted EBITDA of $55.8 million in 2017.
A reconciliation of GAAP measures to non-GAAP measures for the three months and years ended December 31, 2018 and 2017 is provided in the financial tables that accompany this release.
Cash and cash flow
Monotype had cash and cash equivalents of
$60.1 million as of December 31, 2018, compared to $70.1 million as of
September 30, 2018 and $82.8 million as of December 31, 2017. The
company generated $11.4 million of cash from operations in the fourth
quarter of 2018, consistent with the same period last year. During the
fourth quarter of 2018, the company repaid $5.0 million on its
outstanding revolving line of credit.
In the fourth quarter of 2018, Monotype repurchased approximately 560,000 shares of common stock on the open market at prevailing market prices, for a total consideration of $10.7 million. For the full year, Monotype repurchased approximately 890,000 shares of common stock on the open market at prevailing market prices for a cumulative consideration of $17.3 million.
Quarterly dividend
Monotype’s most recent dividend payment of
$0.116 per share was paid on January 22, 2019, to shareholders of record
as of the close of business on January 2, 2019. A dividend of $0.116
cents per share will be paid on April 18, 2019, to shareholders of
record as of the close of business on April 1, 2019.
Financial outlook
Monotype’s first quarter and full-year 2019
financial guidance are set forth in the following tables:
(in $ millions, except for per share data) | Q1 2019 | Full-Year 2019 | ||
Revenue | $55.5 – $59.5 | $247.0 – $257.0 | ||
Non-GAAP net adjusted EBITDA |
$12.5 – $15.5 |
$71.5 – $78.5 | ||
Operating expenses | $39.0 – $41.0 | $158.0 – $161.0 | ||
GAAP earnings per diluted share |
$0.07 – $0.13 |
$0.72 – $0.84 | ||
Non-GAAP earnings per diluted share |
$0.19 – $0.25 |
$1.18 – $1.30 | ||
Conference call details
Monotype will host a conference call
on Friday, February 15, 2019, at 8:30 a.m. EST to discuss the company’s
fourth quarter and full-year 2018 results and business outlook for 2019.
Individuals who are interested in listening to the audio webcast should
log on to the Investors portion of the Company section of the Monotype
website at www.monotype.com. The live call can also be accessed
by dialing (855) 312-5713 (domestic) or (703) 925-2611 (international)
using passcode 8298138. If individuals are unable to listen to the live
call, the audio webcast will be archived in the Investors portion of the
company’s website for one year.
Non-GAAP financial measures
This press release contains
non-GAAP financial measures under the rules of the U.S. Securities and
Exchange Commission. This non-GAAP information supplements and is not
intended to represent a measure of performance in accordance with
disclosures required by generally accepted accounting principles.
Non-GAAP financial measures are used internally to manage the business,
such as in establishing an annual operating budget and in reporting to
lenders. Non-GAAP financial measures are used by Monotype management in
its operating and financial decision-making because management believes
these measures reflect ongoing business in a manner that allows
meaningful period-to-period comparisons. Accordingly, Monotype believes
it is useful for investors and others to review both GAAP and non-GAAP
measures in order to (a) understand and evaluate current operating
performance and future prospects in the same manner as management does,
and (b) compare in a consistent manner the company’s current financial
results with past financial results. The primary limitations associated
with the use of non-GAAP financial measures are that these measures may
not be directly comparable to the amounts reported by other companies
and they do not include all items of income and expense that affect
operations. Monotype management compensates for these limitations by
considering the company’s financial results and outlook as determined in
accordance with GAAP and by providing a detailed reconciliation of the
non-GAAP financial measures to the most directly comparable GAAP
measures in the tables attached to this press release.
Forward-Looking Statements
This release may contain
forward-looking statements including those related to future revenues
and operating results; the growth of the company’s business; anticipated
savings, costs and expenses resulting from the company’s restructuring
actions and changes to the company’s product portfolio; the impact of
the company’s revenue recognition policy; the impact of federal tax
reform legislation; the execution of the company’s capital allocation
and funding strategies; and anticipated business momentum that involve
risks and uncertainties that could cause the company’s actual results to
differ materially. Factors that might cause or contribute to such
differences include, but are not limited to risks associated with
changes in the economic climate including decreased demand for the
company’s products or products that incorporate the company’s solutions;
risks associated with the company’s ability to adapt products or
services to new markets and to anticipate and quickly respond to
evolving technologies and customer requirements; risks associated with
the company’s development of and the market acceptance of new products,
product features or services; risks associated with the anticipated cost
savings and expenses from the company’s restructuring actions and wind
down of certain of the company’s products including that such savings
and expenses are not as predicted; risks associated with increased
competition in markets the company serves, including the risks that
increased competition may result in the company’s inability to gain new
customers, retain existing customers or may force the company to reduce
prices; risks associated with the ownership and enforcement of the
company’s intellectual property; and risks associated with geopolitical
conditions and changes in the financial markets. Additional disclosure
regarding these and other risks faced by the company is available in the
company’s public filings with the Securities and Exchange Commission,
including the risk factors included in the company’s Annual Report on
Form 10-K for the year ended December 31, 2017 and subsequent filings.
The forward-looking financial information set forth in this release
reflects estimates based on information available at this time. These
amounts could differ from actual reported amounts to be included in the
company’s future earnings releases and public filings. While the company
may elect to update forward-looking statements at some point in the
future, the company specifically disclaims any obligation to do so, even
if an estimate changes.
About Monotype
Monotype empowers creative minds to build and
express authentic brands through design, technology and
expertise. Further information is available at www.monotype.com.
Follow Monotype on Twitter, Instagram and LinkedIn.
Monotype is a trademark of Monotype Imaging Inc. registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. ©2019 Monotype Imaging Holdings Inc. All rights reserved.
MONOTYPE IMAGING HOLDINGS INC. |
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December 31, | ||||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 60,106 | $ | 82,822 | ||||
Restricted cash | 6,000 | 11,987 | ||||||
Accounts receivable, net of allowance for doubtful accounts | 55,943 | 34,461 | ||||||
Income tax refunds receivable | 5,122 | 1,204 | ||||||
Prepaid expenses and other current assets | 6,473 | 5,714 | ||||||
Total current assets | 133,644 | 136,188 | ||||||
Property and equipment, net | 14,105 | 16,763 | ||||||
Goodwill | 276,222 | 279,131 | ||||||
Intangible assets, net | 74,699 | 84,856 | ||||||
Restricted cash | — | 6,000 | ||||||
Other assets | 8,986 | 3,112 | ||||||
Total assets | $ | 507,656 | $ | 526,050 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,719 | $ | 1,467 | ||||
Accrued expenses and other current liabilities | 43,840 | 43,096 | ||||||
Accrued income taxes payable | 510 | 522 | ||||||
Deferred revenue | 10,337 | 15,102 | ||||||
Total current liabilities | 56,406 | 60,187 | ||||||
Revolving line of credit | 75,000 | 93,000 | ||||||
Other long-term liabilities | 3,102 | 6,428 | ||||||
Deferred income taxes | 35,083 | 28,004 | ||||||
Reserve for income taxes | 2,471 | 2,783 | ||||||
Accrued pension benefits | 5,888 | 6,280 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 46 | 44 | ||||||
Additional paid-in capital | 319,486 | 298,113 | ||||||
Treasury stock, at cost | (83,518 | ) | (64,083 | ) | ||||
Retained earnings | 99,605 | 97,815 | ||||||
Accumulated other comprehensive loss | (5,913 | ) | (2,521 | ) | ||||
Total stockholders’ equity | 329,706 | 329,368 | ||||||
Total liabilities and stockholders’ equity | $ | 507,656 | $ | 526,050 | ||||
MONOTYPE IMAGING HOLDINGS INC. |
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Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue | $ | 71,398 | $ | 65,016 | $ | 246,737 | $ | 235,789 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue | 9,758 | 10,123 | 41,545 | 38,761 | ||||||||||||
Cost of revenue—amortization of acquired technology | 858 | 885 | 3,441 | 3,529 | ||||||||||||
Total cost of revenue | 10,616 | 11,008 | 44,986 | 42,290 | ||||||||||||
Gross profit | 60,782 | 54,008 | 201,751 | 193,499 | ||||||||||||
Operating expenses: | ||||||||||||||||
Marketing and selling | 21,599 | 23,014 | 79,981 | 89,431 | ||||||||||||
Research and development | 7,996 | 9,271 | 33,428 | 37,049 | ||||||||||||
General and administrative | 12,335 | 12,031 | 50,597 | 46,063 | ||||||||||||
Restructuring | 2,755 | 3,185 | 9,569 | 3,185 | ||||||||||||
Amortization of other intangible assets | 847 | 1,016 | 3,687 | 4,067 | ||||||||||||
Total operating expenses | 45,532 | 48,517 | 177,262 | 179,795 | ||||||||||||
Income from operations | 15,250 | 5,491 | 24,489 | 13,704 | ||||||||||||
Other (income) expense: | ||||||||||||||||
Interest expense, net | 768 | 666 | 3,121 | 2,722 | ||||||||||||
Other (income) expense, net | (100 | ) | (45 | ) | (274 | ) | 4,813 | |||||||||
Total other expense | 668 | 621 | 2,847 | 7,535 | ||||||||||||
Income before income taxes | 14,582 | 4,870 | 21,642 | 6,169 | ||||||||||||
Provison for (benefit from) income taxes | 5,126 | (7,000 | ) | 9,369 | (5,391 | ) | ||||||||||
Net income | $ | 9,456 | $ | 11,870 | $ | 12,273 | $ | 11,560 | ||||||||
Net income available to common shareholders—basic | $ | 9,151 | $ | 11,304 | $ | 11,527 | $ | 10,615 | ||||||||
Net income available to common shareholders—diluted | $ | 9,151 | $ | 11,306 | $ | 11,527 | $ | 10,615 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.23 | $ | 0.28 | $ | 0.29 | $ | 0.27 | ||||||||
Diluted |
$ | 0.23 | $ | 0.28 | $ | 0.29 | $ | 0.27 | ||||||||
Weighted-average number of shares: | ||||||||||||||||
Basic | 40,110,039 | 39,746,203 | 40,262,717 | 39,619,133 | ||||||||||||
Diluted | 40,185,709 | 39,988,868 | 40,386,896 | 39,858,248 | ||||||||||||
Dividends declared per common share | $ | 0.116 | $ | 0.113 | $ | 0.464 | $ | 0.449 | ||||||||
MONOTYPE IMAGING HOLDINGS INC. |
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Three Months Ended December 31, |
Year Ended December 31, |
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2018 |
2017 (1) |
2018 |
2017 (1) |
|||||||||||||
GAAP net income | $ | 9,456 | $ | 11,870 | $ | 12,273 | $ | 11,560 | ||||||||
Interest expense, net | 768 | 666 | 3,121 | 2,722 | ||||||||||||
Other (income) expense, net | (100 | ) | (45 | ) | (274 | ) | 4,813 | |||||||||
Provision for (benefit from) income taxes |
5,126 | (7,000 | ) | 9,369 | (5,391 | ) | ||||||||||
Income from operations | 15,250 | 5,491 | 24,489 | 13,704 | ||||||||||||
Depreciation and amortization | 3,195 | 3,126 | 12,743 | 12,397 | ||||||||||||
Stock based compensation(2) | 5,174 | 4,826 | 18,336 | 20,120 | ||||||||||||
Acquisition-related compensation(3) | 389 | 1,518 | 3,323 | 5,739 | ||||||||||||
Non-recurring expenses(4) | 2,755 | 3,675 | 14,489 | 3,885 | ||||||||||||
Net adjusted EBITDA | $ | 26,763 | $ | 18,636 | $ | 73,380 | $ | 55,845 | ||||||||
(1) Net adjusted EBITDA has been recast for the three months and year ended December 31, 2017 to conform to the current definition by adding back certain advisor fees and restructuring expenses included in non-recurring expenses.
(2) For the three months ended December 31, 2018, the amount excludes a $0.9 million non-recurring increase for acceleration of awards by employees included in the restructuring plan. For the year ended December 31, 2018, the amount excludes a $0.9 million non-recurring increase for acceleration and a $1.4 million non-recurring reduction for forfeiture of awards by employees included in the restructuring plan. These amounts are included in non-recurring expenses.
(3) For the three months ended December 31, 2018 and 2017, the amount includes $0.4 million and $0.9 million, respectively, of expense associated with the deferred compensation arrangements with the founders of Olapic in connection with the acquisition and $0 and $0.6 million, respectively, of expense associated with the deferred compensation arrangements resulting from an amendment to the Swyft Merger Agreement. For the years ended December 31, 2018 and 2017, the amount includes $2.8 million and $3.5 million, respectively, of expense associated with the deferred compensation arrangements with the founders of Olapic in connection with the acquisition and $0.5 million and $2.2 million, respectively, of expense associated with the deferred compensation arrangements resulting from an amendment to the Swyft Merger Agreement.
(4) For the three months ended December 31, 2018, the amount includes $2.8 million of restructuring expenses. For the three months ended December 31, 2017, the amount includes $0.5 million of certain advisor fees related to shareholder activities and $3.2 million of restructuring expenses. For the year ended December 31, 2018, the amount includes $2.7 million of certain advisor fees related to shareholder activities, $2.2 million of royalty expenses, recorded in cost of sales, associated with revenue that was not recognized under ASC 606 and $9.6 million of restructuring expenses. For the year ended December 31, 2017, the amount includes $0.7 million of certain advisor fees related to shareholder activities and $3.2 million of restructuring expenses.
MONOTYPE IMAGING HOLDINGS INC. |
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Three Months Ended December 31, |
Year Ended December 31, |
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2018 |
2017(1) |
2018 |
2017(1) |
|||||
GAAP net income available to common stockholders—diluted | $ 9,456 | $ 11,870 | $ 11,527 | $ 10,615 | ||||
Amortization, net of tax of $384, $701, $1,647 and $2,803, respectively | 1,321 | 1,200 | 5,481 | 4,793 | ||||
Stock based compensation, net of tax of $543, $1,400, $2,769 and $5,837, respectively(2) | 4,630 | 3,426 | 15,567 | 14,283 | ||||
Acquisition-related compensation, net of tax of $0, $0, $0 and $0, respectively(3) | 389 | 1,518 | 3,323 | 5,739 | ||||
Non-recurring expenses, net of tax of $303, $1,356, $3,043 and $1,434, respectively(4) | 2,452 | 2,319 | 11,446 | 2,451 | ||||
Non-GAAP net income | $ 18,248 | $ 20,333 | $ 47,344 | $ 37,881 | ||||
(1) Non-GAAP net income has been recast for the three months and year ended December 31, 2017 to conform to the current definition by adding back certain advisor fees and restructuring expenses included in non-recurring expenses.
(2) For the three months ended December 31, 2018, the amount excludes a $0.8 million, net of tax, non-recurring increase for acceleration of awards by employees included in the restructuring plan. For the year ended December 31, 2018, the amount excludes a $0.7 million, net of tax, non-recurring increase for acceleration and a $1.2 million, net of tax, non-recurring reduction for forfeiture of awards by employees included in the restructuring plan. These amounts are included in non-recurring expenses.
(3) For the three months ended December 31, 2018 and 2017, the amount includes $0.4 million and $0.9 million, respectively, of expense associated with the deferred compensation arrangements with the founders of Olapic in connection with the acquisition and $0 and $0.6 million, respectively, of expense associated with the deferred compensation arrangements resulting from an amendment to the Swyft Merger Agreement. For the years ended December 31, 2018 and 2017, the amount includes $2.8 million and $3.5 million, respectively, of expense associated with the deferred compensation arrangements with the founders of Olapic in connection with the acquisition and $0.5 million and $2.2 million, respectively, of expense associated with the deferred compensation arrangements resulting from an amendment to the Swyft Merger Agreement.
(4) For the three months ended December 31, 2018, the amount includes $2.5 million, net of tax, of restructuring expenses. For the three months ended December 31, 2017, the amount includes $0.3 million, net of tax, of certain advisor fees related to shareholder activities and $2.0 million, net of tax, of restructuring expenses. For the year ended December 31, 2018, the amount includes $2.2 million, net of tax, of certain advisor fees related to shareholder activities, $1.7 million, net of tax, of royalty expenses, recorded in cost of sales, associated with revenue that was not recognized under ASC 606 and $7.5 million, net of tax, of restructuring expenses. For the year ended December 31, 2017, the amount includes $0.5 million, net of tax, of certain advisor fees related to shareholder activities and $2.0 million, net of tax, of restructuring expenses.
MONOTYPE IMAGING HOLDINGS INC. |
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Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||
2018 |
2017(1) |
2018 |
2017(1) |
|||||||||||
GAAP net income per diluted share | $ | 0.23 | $ | 0.28 | $ | 0.29 | $ | 0.27 | ||||||
Amortization, net of tax of $0.01, $0.02, $0.04 and $0.07, respectively | 0.03 | 0.03 | 0.13 | 0.12 | ||||||||||
Stock based compensation, net of tax of $0.01, $0.04, $0.07 and $0.15, respectively(2) | 0.12 | 0.10 | 0.39 | 0.36 | ||||||||||
Acquisition-related compensation, net of tax of $0, $0, $0 and $0, respectively(3) | 0.01 | 0.04 | 0.08 | 0.14 | ||||||||||
Non-recurring expenses, net of tax of $0.01, $0.03, $0.08 and $0.04, respectively(4) | 0.06 | 0.06 | 0.28 | 0.06 | ||||||||||
Non-GAAP earnings per diluted share | $ | 0.45 | $ | 0.51 | $ | 1.17 | $ | 0.95 | ||||||
(1) Non-GAAP net income has been recast for the three months and year ended December 31, 2017 to conform to the current definition by adding back certain advisor fees and restructuring expenses included in non-recurring expenses.
(2) For the three months ended December 31, 2018, the amount excludes a $0.8 million, or $0.02 per share, net of tax, non-recurring increase for acceleration of awards by employees included in the restructuring plan. For the year ended December 31, 2018, the amount excludes a $0.7 million, or $0.02 per share, net of tax, non-recurring increase for acceleration and a $1.2 million, or $0.03 per share, net of tax, non-recurring reduction for forfeiture of awards by employees included in the restructuring plan. These amounts are included in non-recurring expenses.
(3) For the three months ended December 31, 2018 and 2017, the amount includes $0.4 million, or $0.01 per share and $0.9 million, or $0.02 per share, respectively, of expense associated with the deferred compensation arrangements with the founders of Olapic in connection with the acquisition and $0, or $0.00 per share, and $0.6 million, or $0.02 per share, respectively, of expense associated with the deferred compensation arrangements resulting from an amendment to the Swyft Merger Agreement. For the years ended December 31, 2018 and 2017, the amount includes $2.8 million, or $0.07 per share and $3.5 million, or $0.09 per share, respectively, of expense associated with the deferred compensation arrangements with the founders of Olapic in connection with the acquisition and $0.5 million, or $0.01 per share and $2.2 million, or $0.05 per share, respectively, of expense associated with the deferred compensation arrangements resulting from an amendment to the Swyft Merger Agreement.
(4) For the three months ended December 31, 2018, the amount includes $2.5 million, or $0.06 per share, net of tax, of restructuring expenses. For the three months ended December 31, 2017, the amount includes $0.3 million, or $0.01 per share, net of tax, of certain advisor fees related to shareholder activities and $2.0 million, or $0.05 per share, net of tax, of restructuring expenses. For the year ended December 31, 2018, the amount includes $2.2 million, or $0.05 per share, net of tax, of certain advisor fees related to shareholder activities, $1.7 million, or $0.04 per share, net of tax, of royalty expenses, recorded in cost of sales, associated with revenue that was not recognized under ASC 606 and $7.5 million, or $0.19 per share, net of tax, of restructuring expenses. For the year ended December 31, 2017, the amount includes $0.5 million, or $0.01 per share, net of tax, of certain advisor fees related to shareholder activities and $2.0 million, or $0.05 per share, net of tax, of restructuring expenses.
MONOTYPE IMAGING HOLDINGS INC. |
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OTHER INFORMATION |
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Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||
2018 |
2017 |
2018 | 2017 | |||||||||
Marketing and selling | $ | 2,478 | $ | 2,205 | $ | 6,993 | $ | 9,553 | ||||
Research and development | 1,373 | 1,079 | 4,154 | 4,306 | ||||||||
General and administrative | 2,176 | 1,542 | 6,641 | 6,261 | ||||||||
Total expensed | $ | 6,027 | $ | 4,826 | $ | 17,788 | $ | 20,120 | ||||
Property and equipment | 3 | 50 | 27 | 147 | ||||||||
Total stock based compensation | $ | 6,030 | $ | 4,876 | $ | 17,815 | $ | 20,267 | ||||
MARKET INFORMATION |
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Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Creative Professional | $ | 49,590 | $ | 38,361 | $ | 159,119 | $ | 130,595 | ||||
OEM | 21,808 | 26,655 | 87,618 | 105,194 | ||||||||
Total | $ | 71,398 | $ | 65,016 | $ | 246,737 | $ | 235,789 | ||||
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO FORECAST NON-GAAP EARNINGS PER DILUTED SHARE |
||||||
Low End of |
High End of |
|||||
Q1 2019 | Q1 2019 | |||||
GAAP net income | $ |
2,800 |
$ |
5,000 |
||
Amortization, net of tax of $400 and $400, respectively
|
1,300 |
1,300 |
||||
Stock based compensation, net of tax of $700 and $700, respectively |
3,500 |
3,500 |
||||
Acquisition-related compensation, net of tax of $0 and $0, respectively | 200 | 200 | ||||
Non-GAAP net income | $ |
7,800 |
$ |
10,000 |
||
GAAP earnings per diluted share | $ |
0.07 |
$ |
0.13 |
||
Amortization, net of tax of $0.01 and $0.01, respectively, per diluted share |
0.03 |
0.03 |
||||
Stock based compensation, net of tax of $0.02 and $0.02, respectively, per diluted share |
0.09 |
0.09 |
||||
Acquisition-related compensation, net of tax of $0.00 and $0.00, respectively, per diluted share |
0.00 |
0.00 |
||||
Non-GAAP earnings per diluted share | $ |
0.19 |
$ |
0.25 |
||
Weighted average diluted shares used to compute earnings per share | 40,100,000 | 40,100,000 | ||||
Assumes 28% effective tax rate. |
||||||
|
Low End of |
High End of |
||||
2019 | 2019 | |||||
GAAP net income | $ | 28,700 | $ | 33,800 | ||
Amortization, net of tax of $1,900 and $1,900, respectively |
4,900 |
4,900 |
||||
Stock based compensation, net of tax of $2,800 and $2,800, respectively |
13,200 |
13,200 |
||||
Acquisition-related compensation, net of tax of $0 and $0, respectively | 400 | 400 | ||||
Non-GAAP net income |
47,200 | 52,300 | ||||
GAAP earnings per diluted share | $ | 0.72 | $ | 0.84 | ||
Amortization, net of tax of $0.05 and $0.05, respectively, per diluted share |
0.12 |
0.12 |
||||
Stock based compensation, net of tax of $0.07 and $0.07, respectively, per diluted share |
0.33 |
0.33 |
||||
Acquisition-related compensation, net of tax of $0.00 and $0.00, respectively, per diluted share |
0.01 |
0.01 |
||||
Non-GAAP earnings per diluted share | $ | 1.18 | $ | 1.30 | ||
Weighted average diluted shares used to compute earnings per share | 40,100,000 | 40,100,000 | ||||
Assumes 28% effective tax rate. |
||||||
MONOTYPE IMAGING HOLDINGS INC. |
||||||
Low End of |
High End of |
|||||
Q1 2019 | Q1 2019 | |||||
GAAP net income | $ |
2,800 |
$ |
5,000 |
||
Interest, net | 900 | 900 | ||||
Other (income) expense, net |
— |
— |
||||
Provision for income taxes | 1,300 | 2,100 | ||||
Income from operations |
5,000 |
8,000 |
||||
Depreciation and amortization | 3,100 | 3,100 | ||||
Stock based compensation | 4,200 | 4,200 | ||||
Acquisition-related compensation | 200 | 200 | ||||
Non-GAAP net adjusted EBITDA | $ |
12,500 |
$ |
15,500 |
||
Low End of |
High End of |
|||||
2019 | 2019 | |||||
GAAP net income | $ | 28,700 | $ | 33,800 | ||
Interest, net | 3,300 | 3,300 | ||||
Other (income) expense, net |
— |
— |
||||
Provision for income taxes | 11,200 | 13,100 | ||||
Income from operations | 43,200 | 50,200 | ||||
Depreciation and amortization | 11,900 | 11,900 | ||||
Stock based compensation | 16,000 | 16,000 | ||||
Acquisition-related compensation | 400 | 400 | ||||
Non-GAAP net adjusted EBITDA | $ | 71,500 | $ | 78,500 |
CONTACT:
Investor Relations:
Chris Brooks
Monotype
ir@monotype.com