Master Graphics Reports Record Quarterly Results.MEMPHIS Memphis, city, ancient Egypt Memphis (mĕm`fĭs), ancient city of Egypt, capital of the Old Kingdom (c.3100–c.2258 B.C.), at the apex of the Nile delta and 12 mi (18 km) from Cairo. , Tenn.--(BUSINESS WIRE)--Aug. 11, 1998--Master Graphics, Inc. (Nasdaq: MAGR) today announced results (unaudited) for the second quarter and the first six months of its 1998 fiscal year. Highlights for the second quarter ended June June: see month. 30, 1998 (per share amounts diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ): -- Revenues advanced to a record $38.5 million, up from the $3.9 million posted in the comparable quarter last year, and a 37% increase from the first quarter of 1998. -- Gross profit improved 38% from quarter to quarter, to $10.2 million from $7.4 million in the first quarter of this year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. also advanced by 32%, rising to $3.3 million in the second quarter from $2.5 million in the first quarter. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were 8.5% for the quarter. -- Net earnings before extraordinary items were $734,000, or $0.13 per share, versus a loss of ($655,000), or ($0.16) per share, in the second quarter of 1997. Second quarter earnings represent a 65% improvement over the $443,000, or $0.10 per share, earned before extraordinary items in the first quarter. -- The Company realized a net loss after extraordinary items of ($1.4 million), or ($0.27) per share. The second quarter included a non-recurring, extraordinary charge of $2.1 million (net of tax), or ($0.40) per share, for the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of deferred financing costs associated with loans repaid with the proceeds from the Company's initial public offering. Highlights for the first six months, ended June 30, 1998 (per share amounts diluted): -- Revenues advanced to a record $66.5 million, a more than 800% increase from the $7.1 million posted in the first half of last year. -- Gross profit improved some 1400% year to year, to $17.6 million from $1.1 million in the comparable period last year. Operating income for the six months was $5.8 million, versus an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of ($625,000) last year. -- Net earnings before extraordinary items were $1.2 million, or $0.24 per share, versus a loss of ($904,000), or ($0.23) per share, in the first half of 1997. -- The Company realized a net loss of ($921,000), or ($0.20) per share, after the extraordinary item. Master Graphics Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. John P. Miller said, "We are pleased to announce record results for our first quarter as a public company. Our revenues advanced from both the comparable and previous quarters, continuing the predictable performance of the companies which have chosen to become part of Master Graphics. Gross and operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. also showed improvement. Following the quarter's end, we announced the pending acquisition of Golden Rule Printing, another market- leading company with exceptional management and a strong history of success. This is the first of many post-IPO acquisitions that we are working on and hope to complete in the coming weeks." Master Graphics currently has 11 divisions located across the country, and is growing rapidly through the acquisition of market-leading general commercial printing companies. Master Graphics adds managerial and operational expertise, scheduling flexibility and more effective marketing of production capacity through its Master Central clearinghouse clearinghouse Institution established by firms engaged in similar activities to enable them to offset transactions with one another in order to limit payment settlements to net balances. . Certain matters discussed in this press release may constitute forward -looking statements within the meaning of the federal securities laws. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. due to a number of factors including the Company's limited operating history, general economic conditions, competitive factors, the ability of the Company to integrate the operations of acquired companies and the other risks inherent in the general commercial printing business. For further information on factors which could impact the Company and the statements contained herein, reference is made to the filings of Master Graphics, Inc. with the Securities and Exchange Commission. -0-
MASTER GRAPHICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Data) (Unaudited)
Three Months Ended June 30, 1997 1998
Net revenue $ 3,915 $ 38,525
Cost of revenue 3,240 28,289
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Gross profit 675 10,236
Selling, general and administrative expenses 1,134 6,969
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Operating income (loss) (459) 3,267
Other income (expense):
Interest expense (97) (2,746)
Other, net (63) 213
---------------------
Income (loss) before income taxes
and extraordinary loss (619) 734
Income tax expense 36 0
---------------------
Net earnings (loss) before
extraordinary loss $ (655) $ 734
Extraordinary loss, net of income tax
benefit of $1,458 0 (2,098)
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Net loss $ (655) $(1,364)
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Basic earnings per share:
Net earnings (loss) before
extraordinary loss $ (0.16) $ 0.14
Extraordinary loss $ 0.00 $ (0.43)
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Net loss $ (0.16) $ (0.29)
Diluted earnings per share:
Net earnings (loss) before
extraordinary loss $ (0.16) $ 0.13
Extraordinary loss $ 0.00 $ (0.40)
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Net loss $ (0.16) $ (0.27)
Six months ended June 30, 1997 1998
Net revenue $ 7,076 $66,545
Cost of revenue 5,931 48,943
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Gross profit 1,145 17,602
Selling, general and administrative expenses 1,770 11,834
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Operating income (loss) (625) 5,768
Other income (expense):
Interest expense (254) (4,994)
Other, net 0 399
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Income (loss) before income taxes
and extraordinary loss (879) 1,173
Income tax expense 25 (4)
---------------------
Net earnings (loss) before
extraordinary loss $ (904) $ 1,177
Extraordinary loss, net of income tax
benefit of $1,458 0 (2,098)
---------------------
Net loss $ (904) $ (921)
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Basic earnings per share:
Net earnings (loss) before
extraordinary loss $ (0.23) $ 0.25
Extraordinary loss $ 0.00 $ (0.47)
---------------------
Net loss $ (0.23) $(0.22)
Diluted earnings per share:
Net earnings (loss) before
extraordinary loss $ (0.23) $ 0.24
Extraordinary loss $ 0.00 $ (0.44)
---------------------
Net loss $ (0.23) $ (0.20)
MASTER GRAPHICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands, Except Share Data)
December 31, June 30,
1997 1998
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,174 $ 1,575
Trade accounts receivable, net 14,989 26,185
Inventories:
Raw materials and supplies 1,927 3,146
Work-in-process 2,909 4,168
Total inventories 4,836 7,314
Deferred income taxes 161 161
Other current assets 1,320 1,972
-----------------------
Total current assets 22,480 37,207
Property, plant and equipment, net 29,550 52,075
Goodwill, net 28,853 40,157
Deferred loan costs, net 1,396 1,142
Due from shareholder 3,895 0
Other 210 2,383
Total assets 86,384 132,964
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LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current installments of
long-term debt 3,834 3,093
Accounts payable 5,466 6,963
Accrued expenses 6,489 4,448
-----------------------
Total current liabilities 15,789 14,502
Long-term debt, net of current
installments 65,484 80,024
Deferred income taxes 2,266 3,447
Other liabilities 1,065 1,111
Redeemable preferred stock 0 1,379
Redeemable common stock warrant 3,376 0
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock ($0.001 par value; 100,000,000 shares
authorized; 4,000,000 shares issued and outstanding at
December 31, 1997 and 7,666,664 shares issued
and outstanding at June 30, 1998) 4 8
Additional paid-in capital 3,850 38,861
Retained earnings (deficit) (5,450) (6,370)
-----------------------
Total shareholders' equity (1,596) 32,499
Total liabilities and shareholders'
equity $ 86,384 $ 132,964
=======================
CONTACT: Master Graphics, Memphis
Media contact: Mimi Hall, 901/682-1360
Financial contact: Lance Fair, 901/685-2020
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