FOR IMMEDIATE RELEASE
SYMBOL: GISX
Thursday, October 26, 2006
TRADED: Nasdaq
GLOBAL IMAGING RESULTS SET RECORDS FOR FISCAL SECOND QUARTER
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
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.
