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
October 3, 2016
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
Woburn, Massachusetts 01801
(Address of Principal Executive Offices, including Zip Code)
Registrants 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)) |
Item 7.01 Regulation FD.
Spokespersons of Monotype Imaging Holdings Inc. (the Company) plan to present the information in the presentation slides attached hereto as Exhibit 99.1 at the Companys previously announced webinar on Monday, October 3, 2016 at 4:30 p.m. EDT.
The furnishing of the attached presentation is not an admission as to the materiality of any information therein. The information contained in the slides is summary information that is intended to be considered in the context of more complete information included in the Companys filings with the U.S. Securities and Exchange Commission (the SEC) and other public announcements that the Company has made and may make from time to time by press release or otherwise. The Company undertakes no duty or obligation to update or revise the information contained in this report, although it may do so from time to time as its management believes is appropriate. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosures.
On October 3, 2016, the Company issued a press release announcing an update to its financial outlook to reflect the impact of the Companys recent acquisition of Olapic. A copy of the press release is furnished as Exhibit 99.2.
The information included on this Form 8-K pursuant to Item 7.01 (including Exhibits 99.1 and 99.2) 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. |
99.1 | Slide presentation of Monotype Imaging Holdings Inc.* | |
99.2 | Press Release, dated as of October 3, 2016, of Monotype Imaging Holdings Inc.* |
* | Furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MONOTYPE IMAGING HOLDINGS INC. | ||||||
Date: October 3, 2016 | By: |
/s/ Scott E. Landers | ||||
Scott E. Landers | ||||||
Chief Executive Officer |
EXHIBIT LIST
Exhibit
99.1 | Slide presentation of Monotype Imaging Holdings Inc.* | |
99.2 | Press Release, dated as of October 3, 2016, of Monotype Imaging Holdings Inc.* |
* | Furnished herewith. |
Monotype and Olapic October 3, 2016 Exhibit 99.1
Safe Harbor Statement This presentation contains forward looking statements that involve significant risks and uncertainties, including those discussed in the “Risk Factors” section of Monotype Imaging Holdings Inc.’s Form 10-K and subsequent filings with the SEC. We are providing this information as of today’s date and do not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. No forward-looking statement can be guaranteed and actual results may differ materially from those that are projected.
How We Got Here
How We Got Here ENGAGEMENT EXPRESSION 1986- Founded Print & Desktop Linotype ITC Monotype 2006+ Mobile Devices Fonts for Mobile 2010+ Digital Content Web fonts Apps Ads Email 2016+ Brand Engagement Branded Assets Fonts Emoji UGC
Why Expand Beyond Type?
Past TV Print Ads Brochures Direct Mail Brand Color Fonts Emoji UGC Stock/ Pro Images Sound Stock/ Pro Video
Today TV Print Ads Brochures Direct Mail Websites Social Messaging HTML5 Ads Email eCommerce Brand Color Fonts Emoji UGC Stock/ Pro Images Sound Stock/ Pro Video
Analytics TV Print Ads Brochures Direct Mail Websites Social Messaging HTML5 Ads Email eCommerce Today Brand Color Fonts Emoji UGC Stock/ Pro Images Sound Stock/ Pro Video
What Did We Consider?
What Did We Consider? Source: George Day, HBR, December 2007 Is the opportunity real? Is the market real? Is the product real? Can we succeed? Is it worth it? Can the product be competitive? Can our company be competitive? Will the product be profitable at an acceptable risk? Does launching the product make strategic sense?
Why Olapic?
Analytics TV Print Ads Brochures Direct Mail Websites Social Messaging HTML5 Ads Email eCommerce Today Brand Color Fonts Emoji UGC Stock/ Pro Images Sound Stock/ Pro Video
Content Crunch The Challenge
Consumers Want Content Of consumers are influenced by social media when making a retail transaction PWC: Total Retail 2016 More than 70% use three channels or more when researching a purchase Blue Nile Research: The Content that Compels People to Buy, 2015 Consumers who use social media during the shopping process are 4x more likely to spend more on purchases Deloitte: Navigating the New Digital Divide, 2015 Consumers are 5x more dependent on content than they were 5 years ago Nielsen: The Role of Content in the Consumer Decision Making Process, March 2014 5X 78% 70% 4X
Top Challenges for B2C Content Marketers 2016 B2C Content Marketing Trends North America: Content Marketing Institute/MarketingProfs 39% 46% 56% 50% 46% 35%
Content Challenges Distribution Channels Quality Content Content is only as valuable as what you're able to do with it. Marketing channels are only as valuable as what you put through them.
The Opportunity A New Type of Content
Consumers Trust Earned Content More Than Professional Brand Content 55% of consumers, of all ages, trust customer photos more than they trust brand or professional photos of consumers have postponed or decided against a purchase due to unhelpful product photos engaged consumers browse an average of 9 user-generated photos per session when availabl. return visitor rate of consumers who engage with UGC (vs. <10% industry average) 63% 40% 9 Olapic Internal Research 2014 – US/UK
Olapic Bridges The Gap Demand Brand Creation Organic Creation
Bridge the Gap Between Content & Distribution Paid, Owned, Earned Content Strategy In-store Loyalty Email ecommerce Social Video Mobile Website Advertising Analytics & Insights Channels Continuous Narrative
Olapic The Solution
The Olapic Approach 01 Curate 02 Activate 03 Analyze
Curate Easily find, filter, select and manage thousands of high-performance, on-brand photos Collect Curate Moderate Request & Manage Rights Manage
Activate Increase ROI of each marketing channel and optimize the entire customer journey Web & eCommerce Social Advertising Mobile Email Offline Partners
Analyze Measure influence on sales, lift in revenue, and engagement Measure Sales Lift Brand Ambassadors Track Engagement
Olapic In Action
Case Study – West Elm West Elm embraces images to help tell their brand story and drive business growth across channels — from digital to print and in-store.
Case Study – West Elm e-commerce
Case Study – West Elm Email Marketing
Case Study – West Elm Offline Advertising
Case Study – West Elm Social Advertising
Case Study – West Elm Mobile Commerce
Nearly 400 Brands Using Olapic
2016 Fiscal Year Impact Guidance and Pro Forma Outlook
Guidance ($MM, except per share data) Q3 2016 TYPE Impact of Olapic* Consolidated Revenue $49.0 - $52.0 $0.5 - $1.5 $49.5 - $53.5 Non-GAAP Net Adjusted EBITDA $16.5 - $19.0 $(4.0) - $(3.0) $12.5 - $16.0 EPS $0.14 - $0.18 $(0.09) - $(0.08) $0.05 - $0.10 Non-GAAP EPS $0.24 - $0.28 $(0.07) - $(0.06) $0.17 - $0.22 FY 2016 TYPE Impact of Olapic* Consolidated Revenue $199.5 - $205.5 $2.0 - $4.0 $201.5 - $209.5 Non-GAAP Net Adjusted EBITDA $71.0 - $76.0 $(11.5) - $(9.8) $59.5 – $66.2 EPS $0.64 - $0.72 $(0.27) - $(0.24) $0.37 - $0.48 Non-GAAP EPS $1.05 - $1.13 $(0.20) - $(0.17) $0.85 - $0.96 *Since the acquisition date of August 9, 2016. A detailed reconciliation of all non-GAAP financial measures to the most directly comparable GAAP measures is provided in today’s press release.
Q3 2016 Consolidated Guidance Impact of Olapic pre-acquisition period (July 1-August 8) & estimated tax impact Addback of Olapic deferred revenue impairment Addback of transaction costs Pro forma outlook Revenue $49.5 - $53.5 $1.6 $1.4 $52.5 – $56.5 Non-GAAP Net Adjusted EBITDA $12.5 - $16.0 $(3.1) - $(3.0) $1.4 $0.6 $11.4 – $15.0 FY 2016 Consolidated Guidance Impact of Olapic pre-acquisition period (January 1-August 8) & estimated tax impact Addback of Olapic deferred revenue impairment Addback of transaction costs Pro forma outlook Revenue $201.5 - $209.5 $9.4 $3.6 $214.5 – $222.5 Non-GAAP Net Adjusted EBITDA $59.5 – $66.2 $(14.4) - $(14.0) $3.6 $1.3 $50.0 – $57.1 Non-GAAP Pro Forma Outlook ($MM) (Olapic pre-acquisition impact based on unaudited estimates) A detailed reconciliation of all non-GAAP financial measures to the most directly comparable GAAP measures is provided in today’s press release.
Strong Recurring and Predictable Revenue $218.5M* *Midpoint of the 2016 pro forma outlook for the combined companies. Includes estimates of impact of Olapic from January 1, 2016 and addback of the deferred revenue impairment.
Q&A
Thank You
Exhibit 99.2
Monotype Announces Updated Q3 and Full Year 2016 Financial Guidance
Following Acquisition of Olapic
WOBURN, Mass., October 3, 2016 (Nasdaq: TYPE), a leader in helping to empower expression and engagement through type, technology and expertise, today announced it has updated its previously issued Q3 and full year 2016 financial guidance to reflect the impact of the recent Olapic acquisition which closed on August 9, 2016. The company is also hosting a webinar for investors today at 4:30 p.m. EDT to provide insight around the recent acquisition of Olapic.
Were happy to have closed the Olapic transaction in Q3 and to be able to provide guidance on how it will impact our financial outlook for the quarter and the rest of the year, said Scott Landers, president and CEO at Monotype. We remain excited about the future of Monotype and believe Olapic will be a meaningful growth driver for us going forward.
Joe Hill, chief financial officer at Monotype, said, In addition to our GAAP results, we will be analyzing and monitoring the business on a pro forma basis, which we believe is a meaningful representation of the operating performance of Olapic and the combined businesses. Our pro forma results assume that we owned Olapic for the full third quarter and full 2016 fiscal year, and excludes the estimated impact of purchase accounting related adjustments and transaction costs.
Updated Guidance for the Third Quarter and Full Year 2016
For the third quarter of 2016, Monotype now expects revenue in the range of $49.5 million to $53.5 million compared to its previous guidance of $49.0 million to $52.0 million. For the full year 2016, Monotype now expects revenue in the range of $201.5 million to $209.5 million, compared to previous guidance of $199.5 million to $205.5 million. This includes a purchase accounting adjustment for deferred revenue impairment of $1.4 million for Q3 and $3.6 million for the full year 2016.
Q3 GAAP net income is now expected to be in the range of $2.0 million to $4.1 million, compared to previously issued guidance of $5.5 million to $7.2 million. Monotype now expects Q3 non-GAAP net adjusted EBITDA to be in the range of $12.5 million to $16.0 million, compared to previously issued guidance of $16.5 million to $19.0 million. Full year 2016 GAAP net income is expected to be in the range of $14.9 million to $19.0 million, compared to previously issued guidance of $25.4 million to $28.6 million. Full year 2016 non-GAAP net adjusted EBITDA is now expected to be in the range of $59.5 million to $66.2 million compared to previously issued guidance of $71.0 million to $76.0 million.
The company now expects earnings per diluted share to be in the range of $0.05 to $0.10 for Q3, compared to previously issued guidance of $0.14 to $0.18. Full year 2016 GAAP earnings per diluted share is expected to be in the range of $0.37 to $0.48, compared to previously issued guidance of $0.64 to $0.72. Monotype expects non-GAAP earnings per diluted share for Q3 to be in the range of $0.17 to $0.22, compared to previously issued guidance of $0.24 to $0.28. Full year 2016 non-GAAP earnings per diluted share is expected to be in the range of $0.85 to $0.96, compared to the previously issued range of $1.05 to $1.13.
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Pro Forma Outlook for the Third Quarter and Full Year 2016
On a pro forma basis, Monotype expects non-GAAP pro forma revenue (inclusive of unaudited, estimated Olapic revenue prior to the acquisition), in the third quarter of between $52.5 million to $56.5 million, and non-GAAP pro forma net adjusted EBITDA of between $11.4 million to $15.0 million. For the full year, non-GAAP pro forma revenue is expected to be between $214.5 million to $222.5 million and non-GAAP pro forma net adjusted EBITDA is expected to be in the range of between $50.0 million to $57.1 million. These pro forma expectations are based on unaudited pre-acquisition results from Olapic.
Webinar Details
Individuals who are interested in joining in the webcast can register for the event here. The live call can also be accessed by dialing 844-229-7594 (domestic) or 314-888-4259 (international) using passcode 83674306. If individuals are unable to participate in the live call, the webcast will be archived in the Investors portion of the companys 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 companys 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 companys 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 press release may contain forward-looking statements including those related to the companys future revenues and operating results; the companys integration of the acquisition of Olapic and the financial impact of the acquisition; and the execution of the companys product, growth and expansion strategies and anticipated business momentum that involve risks and uncertainties that could cause the companys 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 companys products or products that incorporate the companys solutions; risks associated with the companys ability to adapt its products or services to new markets and to anticipate and quickly respond to evolving technologies and customer requirements; risks associated with the companys development of and the market acceptance of new products, product features or services; risks associated with the companys
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integration of the Olapic acquisition; risks associated with the companys ability to expand products and services offered through acquired companies; risks associated with increased competition in markets the company serves, including the risks that increased competition may result in the companys 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 companys 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 companys public filings with the Securities and Exchange Commission, including the risk factors included in the companys Annual Report on Form 10-K for the year ended December 31, 2015 and subsequent filings including filings on Form 10-Q and Form 8-K. The forward-looking financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts to be included in the companys 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 is a leading global provider of typefaces, technology and expertise that enable the best user experience and ensure brand integrity. Headquartered in Woburn, Mass., Monotype provides customers worldwide with typeface solutions for a broad range of creative applications and consumer devices. The companys libraries and e-commerce sites are home to many of the most widely used typefaces including the Helvetica®, Frutiger® and Univers® families as well as the next generation of type designs. Further information is available at www.monotype.com. Follow Monotype on Twitter®, Instagram® and LinkedIn®.
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MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP REVENUE TO
FORECAST NON-GAAP PRO FORMA REVENUE
(Unaudited and in thousands)
Low End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP revenue |
$ | 49,000 | $ | 500 | $ | 49,500 | ||||||
Pre-acquisition revenue(1) |
| 1,600 | 1,600 | |||||||||
Deferred revenue impairment |
| 1,400 | 1,400 | |||||||||
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Non-GAAP pro forma revenue |
$ | 49,000 | $ | 3,500 | $ | 52,500 | ||||||
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(1) | Non-GAAP pro forma revenue includes $0, $1.6 million and $1.6 million, respectively, of estimated Olapic revenue recognized during the period of July 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
High End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP revenue |
$ | 52,000 | $ | 1,500 | $ | 53,500 | ||||||
Pre-acquisition revenue(1) |
| 1,600 | 1,600 | |||||||||
Deferred revenue impairment |
| 1,400 | 1,400 | |||||||||
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Non-GAAP pro forma revenue |
$ | 52,000 | $ | 4,500 | $ | 56,500 | ||||||
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(1) | Non-GAAP pro forma revenue includes $0, $1.6 million and $1.6 million, respectively, of estimated Olapic revenue recognized during the period of July 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
Low End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP revenue |
$ | 199,500 | $ | 2,000 | $ | 201,500 | ||||||
Pre-acquisition revenue(1) |
| 9,400 | 9,400 | |||||||||
Deferred revenue impairment |
| 3,600 | 3,600 | |||||||||
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Non-GAAP pro forma revenue |
$ | 199,500 | $ | 15,000 | $ | 214,500 | ||||||
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(1) | Non-GAAP pro forma revenue includes $0, $9.4 million and $9.4 million, respectively, of estimated Olapic revenue recognized during the period of January 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
High End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP revenue |
$ | 205,500 | $ | 4,000 | $ | 209,500 | ||||||
Pre-acquisition revenue(1) |
| 9,400 | 9,400 | |||||||||
Deferred revenue impairment |
| 3,600 | 3,600 | |||||||||
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Non-GAAP pro forma revenue |
$ | 205,500 | $ | 17,000 | $ | 222,500 | ||||||
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(1) | Non-GAAP pro forma revenue includes $0, $9.4 million and $9.4 million, respectively, of estimated Olapic revenue recognized during the period of January 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
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MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP NET INCOME TO
FORECAST NON-GAAP NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 5,500 | $ | (3,500 | ) | $ | 2,000 | |||||
Interest expense, net |
300 | | 300 | |||||||||
Other (income) expense, net |
200 | | 200 | |||||||||
Provision (benefit) for income taxes |
3,500 | (2,300 | ) | 1,200 | ||||||||
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Income (loss) from operations |
9,500 | (5,800 | ) | 3,700 | ||||||||
Depreciation and amortization |
2,600 | 800 | 3,400 | |||||||||
Share based compensation |
3,800 | 600 | 4,400 | |||||||||
Contingent consideration adjustment(1) |
600 | 400 | 1,000 | |||||||||
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Non-GAAP net adjusted EBITDA |
$ | 16,500 | $ | (4,000 | ) | $ | 12,500 | |||||
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(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
High End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 7,200 | $ | (3,100 | ) | $ | 4,100 | |||||
Interest expense, net |
300 | | 300 | |||||||||
Other (income) expense, net |
200 | | 200 | |||||||||
Provision (benefit) for income taxes |
4,300 | (1,700 | ) | 2,600 | ||||||||
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Income (loss) from operations |
12,000 | (4,800 | ) | 7,200 | ||||||||
Depreciation and amortization |
2,600 | 800 | 3,400 | |||||||||
Share based compensation |
3,800 | 600 | 4,400 | |||||||||
Contingent consideration adjustment(1) |
600 | 400 | 1,000 | |||||||||
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Non-GAAP net adjusted EBITDA |
$ | 19,000 | $ | (3,000 | ) | $ | 16,000 | |||||
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(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
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MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP NET INCOME TO
FORECAST NON-GAAP NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 25,400 | $ | (10,500 | ) | $ | 14,900 | |||||
Interest expense, net |
600 | | 600 | |||||||||
Other (income) expense, net |
1,100 | | 1,100 | |||||||||
Provision (benefit) for income taxes |
15,700 | (6,200 | ) | 9,500 | ||||||||
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Income (loss) from operations |
42,800 | (16,700 | ) | 26,100 | ||||||||
Depreciation and amortization |
10,700 | 2,200 | 12,900 | |||||||||
Share based compensation |
15,100 | 1,800 | 16,900 | |||||||||
Contingent consideration adjustment(1) |
2,400 | 1,200 | 3,600 | |||||||||
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Non-GAAP net adjusted EBITDA |
$ | 71,000 | $ | (11,500 | ) | $ | 59,500 | |||||
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(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
High End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 28,600 | $ | (9,600 | ) | $ | 19,000 | |||||
Interest expense, net |
600 | | 600 | |||||||||
Other (income) expense, net |
1,100 | | 1,100 | |||||||||
Provision (benefit) for income taxes |
17,500 | (5,400 | ) | 12,100 | ||||||||
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Income (loss) from operations |
47,800 | (15,000 | ) | 32,800 | ||||||||
Depreciation and amortization |
10,700 | 2,200 | 12,900 | |||||||||
Share based compensation |
15,100 | 1,800 | 16,900 | |||||||||
Contingent consideration adjustment(1) |
2,400 | 1,200 | 3,600 | |||||||||
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Non-GAAP net adjusted EBITDA |
$ | 76,000 | $ | (9,800 | ) | $ | 66,200 | |||||
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(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
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MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP NET INCOME TO
FORECAST NON-GAAP PRO FORMA NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 5,500 | $ | (3,500 | ) | $ | 2,000 | |||||
Interest expense, net |
300 | | 300 | |||||||||
Other (income) expense, net |
200 | | 200 | |||||||||
Provision (benefit) for income taxes(1) |
3,500 | (2,900 | ) | 600 | ||||||||
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Income (loss) from operations(1) |
9,500 | (6,400 | ) | 3,100 | ||||||||
Pre-acquisition net adjusted EBITDA(2) |
| (2,500 | ) | (2,500 | ) | |||||||
Deferred revenue impairment(3) |
| 1,400 | 1,400 | |||||||||
Depreciation and amortization |
2,600 | 800 | 3,400 | |||||||||
Share based compensation |
3,800 | 600 | 4,400 | |||||||||
Contingent consideration adjustments(4) |
600 | 400 | 1,000 | |||||||||
Transaction costs(5) |
| 600 | 600 | |||||||||
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Non-GAAP pro forma net adjusted EBITDA |
$ | 16,500 | $ | (5,100 | ) | $ | 11,400 | |||||
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(1) | Olapic pro forma provision (benefit) for income taxes and income (loss) from operations includes estimated pre-acquisition tax impact. |
(2) | Non-GAAP pro forma net adjusted EBITDA includes $0, $2.5 million and $2.5 million, respectively, of estimated Olapic net adjusted EBITDA recognized during the period of July 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
(3) | Non-GAAP pro forma net adjusted EBITDA includes $0, $1.4 million and $1.4 million, respectively, to add back the estimated purchase accounting adjustment for the impairment of deferred revenue. |
(4) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
(5) | Non-GAAP pro forma net adjusted EBITDA excludes $0, $0.6 million and $0.6 million, respectively, of transaction expenses Monotype expects to incur associated with the Olapic acquisition. |
High End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 7,200 | $ | (3,100 | ) | $ | 4,100 | |||||
Interest expense, net |
300 | | 300 | |||||||||
Other (income) expense, net |
200 | | 200 | |||||||||
Provision (benefit) for income taxes(1) |
4,300 | (2,200 | ) | 2,100 | ||||||||
|
|
|
|
|
|
|||||||
Income (loss) from operations(1) |
12,000 | (5,300 | ) | 6,700 | ||||||||
Pre-acquisition net adjusted EBITDA(2) |
| (2,500 | ) | (2,500 | ) | |||||||
Deferred revenue impairment(3) |
| 1,400 | 1,400 | |||||||||
Depreciation and amortization |
2,600 | 800 | 3,400 | |||||||||
Share based compensation |
3,800 | 600 | 4,400 | |||||||||
Contingent consideration adjustments(4) |
600 | 400 | 1,000 | |||||||||
Transaction costs(5) |
| 600 | 600 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP pro forma net adjusted EBITDA |
$ | 19,000 | $ | (4,000 | ) | $ | 15,000 | |||||
|
|
|
|
|
|
8
(1) | Olapic pro forma provision (benefit) for income taxes and income (loss) from operations includes estimated pre-acquisition tax impact. |
(2) | Non-GAAP pro forma net adjusted EBITDA includes $0, $2.5 million and $2.5 million, respectively, of estimated Olapic net adjusted EBITDA recognized during the period of July 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
(3) | Non-GAAP pro forma net adjusted EBITDA includes $0, $1.4 million and $1.4 million, respectively, to add back the estimated purchase accounting adjustment for the impairment of deferred revenue. |
(4) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
(5) | Non-GAAP pro forma net adjusted EBITDA excludes $0, $0.6 million and $0.6 million, respectively, of transaction expenses Monotype expects to incur associated with the Olapic acquisition. |
9
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP NET INCOME TO
FORECAST NON-GAAP PRO FORMA NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 25,400 | $ | (10,500 | ) | $ | 14,900 | |||||
Interest expense, net |
600 | | 600 | |||||||||
Other (income) expense, net |
1,100 | | 1,100 | |||||||||
Provision (benefit) for income taxes(1) |
15,700 | (9,100 | ) | 6,600 | ||||||||
|
|
|
|
|
|
|||||||
Income (loss) from operations(1) |
42,800 | (19,600 | ) | 23,200 | ||||||||
Pre-acquisition net adjusted EBITDA(2) |
| (11,500 | ) | (11,500 | ) | |||||||
Deferred revenue impairment(3) |
| 3,600 | 3,600 | |||||||||
Depreciation and amortization |
10,700 | 2,200 | 12,900 | |||||||||
Share based compensation |
15,100 | 1,800 | 16,900 | |||||||||
Contingent consideration adjustments(4) |
2,400 | 1,200 | 3,600 | |||||||||
Transaction costs(5) |
| 1,300 | 1,300 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP pro forma net adjusted EBITDA |
$ | 71,000 | $ | (21,000 | ) | $ | 50,000 | |||||
|
|
|
|
|
|
(1) | Olapic pro forma provision (benefit) for income taxes and income (loss) from operations includes estimated pre-acquisition tax impact. |
(2) | Non-GAAP pro forma net adjusted EBITDA includes $0, $11.5 million and $11.5 million, respectively, of estimated Olapic net adjusted EBITDA recognized during the period of January 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
(3) | Non-GAAP pro forma net adjusted EBITDA includes $0, $3.6 million and $3.6 million, respectively, to add back the estimated purchase accounting adjustment for the impairment of deferred revenue. |
(4) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
(5) | Non-GAAP pro forma net adjusted EBITDA excludes $0, $1.3 million and $1.3 million, respectively, of transaction expenses Monotype expects to incur associated with the Olapic acquisition. |
High End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 28,600 | $ | (9,600 | ) | $ | 19,000 | |||||
Interest expense, net |
600 | | 600 | |||||||||
Other (income) expense, net |
1,100 | | 1,100 | |||||||||
Provision (benefit) for income taxes(1) |
17,500 | (7,900 | ) | 9,600 | ||||||||
|
|
|
|
|
|
|||||||
Income (loss) from operations(1) |
47,800 | (17,500 | ) | 30,300 | ||||||||
Pre-acquisition net adjusted EBITDA(2) |
| (11,500 | ) | (11,500 | ) | |||||||
Deferred revenue impairment(3) |
| 3,600 | 3,600 | |||||||||
Depreciation and amortization |
10,700 | 2,200 | 12,900 | |||||||||
Share based compensation |
15,100 | 1,800 | 16,900 | |||||||||
Contingent consideration adjustments(4) |
2,400 | 1,200 | 3,600 | |||||||||
Transaction costs(5) |
| 1,300 | 1,300 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP pro forma net adjusted EBITDA |
$ | 76,000 | $ | (18,900 | ) | $ | 57,100 | |||||
|
|
|
|
|
|
10
(1) | Olapic pro forma provision (benefit) for income taxes and income (loss) from operations includes estimated pre-acquisition tax impact. |
(2) | Non-GAAP pro forma net adjusted EBITDA includes $0, $11.5 million and $11.5 million, respectively, of estimated Olapic net adjusted EBITDA recognized during the period of January 1, 2016 to August 8, 2016. We acquired Olapic on August 9, 2016. |
(3) | Non-GAAP pro forma net adjusted EBITDA includes $0, $3.6 million and $3.6 million, respectively, to add back the estimated purchase accounting adjustment for the impairment of deferred revenue. |
(4) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
(5) | Non-GAAP pro forma net adjusted EBITDA excludes $0, $1.3 million and $1.3 million, respectively, of transaction expenses Monotype expects to incur associated with the Olapic acquisition. |
11
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO
FORECAST NON-GAAP EARNINGS PER DILUTED SHARE
(Unaudited and in thousands, except share and per share data)
Low End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 5,500 | $ | (3,500 | ) | $ | 2,000 | |||||
Amortization, net of tax of $600, $300 and $900, respectively |
1,000 | 500 | 1,500 | |||||||||
Share based compensation, net of tax of $1,400, $200 and $1,600, respectively |
2,400 | 300 | 2,700 | |||||||||
Contingent consideration adjustment, net of tax of $0, $0 and $0, respectively(1) |
600 | 400 | 1,000 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP net income (loss) |
$ | 9,500 | $ | (2,300 | ) | $ | 7,200 | |||||
|
|
|
|
|
|
|||||||
GAAP earnings (loss) per diluted share |
$ | 0.14 | $ | (0.09 | ) | $ | 0.05 | |||||
Amortization, net of tax of $0.01, $0.00 and $0.01, respectively, per diluted share |
0.03 | | 0.03 | |||||||||
Share based compensation, net of tax of $0.03, $0.01 and $0.04, respectively, per diluted share |
0.06 | 0.01 | 0.07 | |||||||||
Contingent consideration adjustment, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.01 | 0.01 | 0.02 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP earnings (loss) per diluted share |
$ | 0.24 | $ | (0.07 | ) | $ | 0.17 | |||||
|
|
|
|
|
|
|||||||
Weighted average diluted shares used to compute earnings per share |
40,400,000 | 40,400,000 | 40,400,000 |
Assumes 39% effective tax rate.
(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
High End of Guidance | ||||||||||||
Q3 2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 7,200 | $ | (3,100 | ) | $ | 4,100 | |||||
Amortization, net of tax of $600, $300 and $900, respectively |
1,000 | 500 | 1,500 | |||||||||
Share based compensation, net of tax of $1,400, $200 and $1,600, respectively |
2,400 | 300 | 2,700 | |||||||||
Contingent consideration adjustment, net of tax of $0, $0 and $0, respectively(1) |
600 | 400 | 1,000 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP net income (loss) |
$ | 11,200 | $ | (1,900 | ) | $ | 9,300 | |||||
|
|
|
|
|
|
|||||||
GAAP earnings (loss) per diluted share |
$ | 0.18 | $ | (0.08 | ) | $ | 0.10 | |||||
Amortization, net of tax of $0.01, $0.00 and $0.01, respectively, per diluted share |
0.03 | | 0.03 | |||||||||
Share based compensation, net of tax of $0.03, $0.01 and $0.04, respectively, per diluted share |
0.06 | 0.01 | 0.07 | |||||||||
Contingent consideration adjustment, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.01 | 0.01 | 0.02 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP earnings (loss) per diluted share |
$ | 0.28 | $ | (0.06 | ) | $ | 0.22 | |||||
|
|
|
|
|
|
|||||||
Weighted average diluted shares used to compute earnings per share |
40,400,000 | 40,400,000 | 40,400,000 |
12
Assumes 39% effective tax rate.
(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
13
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO
FORECAST NON-GAAP EARNINGS PER DILUTED SHARE
(Unaudited and in thousands, except share and per share data)
Low End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 25,400 | $ | (10,500 | ) | $ | 14,900 | |||||
Amortization, net of tax of $2,500, $900 and $3,400, respectively |
4,400 | 1,000 | 5,400 | |||||||||
Share based compensation, net of tax of $5,400, $700 and $6,100, respectively |
9,700 | 600 | 10,300 | |||||||||
Contingent consideration adjustment, net of tax of $0, $0 and $0, respectively(1) |
2,300 | 1,300 | 3,600 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP net income (loss) |
$ | 41,800 | $ | (7,600 | ) | $ | 34,200 | |||||
|
|
|
|
|
|
|||||||
GAAP earnings (loss) per diluted share |
$ | 0.64 | $ | (0.27 | ) | $ | 0.37 | |||||
Amortization, net of tax of $0.06, $0.02 and $0.08, respectively, per diluted share |
0.11 | 0.02 | 0.13 | |||||||||
Share based compensation, net of tax of $0.14, $0.02 and $0.16, respectively, per diluted share |
0.24 | 0.02 | 0.26 | |||||||||
Contingent consideration adjustment, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.06 | 0.03 | 0.09 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP earnings (loss) per diluted share |
$ | 1.05 | $ | (0.20 | ) | $ | 0.85 | |||||
|
|
|
|
|
|
|||||||
Weighted average diluted shares used to compute earnings per share |
39,800,000 | 39,800,000 | 39,800,000 |
Assumes 39% effective tax rate.
(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
High End of Guidance | ||||||||||||
2016 | ||||||||||||
Monotype | Olapic | Combined | ||||||||||
GAAP net income (loss) |
$ | 28,600 | $ | (9,600 | ) | $ | 19,000 | |||||
Amortization, net of tax of $2,500, $900 and $3,400, respectively |
4,400 | 1,000 | 5,400 | |||||||||
Share based compensation, net of tax of $5,400, $700 and $6,100, respectively |
9,700 | 600 | 10,300 | |||||||||
Contingent consideration adjustment, net of tax of $0, $0 and $0, respectively(1) |
2,300 | 1,300 | 3,600 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP net income (loss) |
$ | 45,000 | $ | (6,700 | ) | $ | 38,300 | |||||
|
|
|
|
|
|
|||||||
GAAP earnings (loss) per diluted share |
$ | 0.72 | $ | (0.24 | ) | $ | 0.48 | |||||
Amortization, net of tax of $0.06, $0.02 and $0.08, respectively, per diluted share |
0.11 | 0.02 | 0.13 | |||||||||
Share based compensation, net of tax of $0.14, $0.02 and $0.16, respectively, per diluted share |
0.24 | 0.02 | 0.26 | |||||||||
Contingent consideration adjustment, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.06 | 0.03 | 0.09 | |||||||||
|
|
|
|
|
|
|||||||
Non-GAAP earnings (loss) per diluted share |
$ | 1.13 | $ | (0.17 | ) | $ | 0.96 | |||||
|
|
|
|
|
|
|||||||
Weighted average diluted shares used to compute earnings per share |
39,800,000 | 39,800,000 | 39,800,000 |
14
Assumes 39% effective tax rate.
(1) | Includes charges to operations for adjustments to estimated contingent consideration and for portions of merger consideration accounted for as compensation expense under GAAP. |
Contact:
Amy Aylward
Monotype
amy.aylward@monotype.com
15