Cambium Learning Group Announces Second Quarter Earnings

DALLAS, Aug. 8, 2013 /PRNewswire/ -- Cambium Learning Group, Inc. (NASDAQ: ABCD, the "Company"), a leading educational solutions and services company committed to helping all students reach their full potential by providing evidence-based solutions and expert professional services, announced today its financial results for the second quarter of 2013.

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For the first half of 2013, company-wide order volumes decreased 5% compared to the first half of 2012, and order volume changes by segment were as follows:

• Voyager Sopris Learning decreased 10%
• Learning A-Z increased 11%
• ExploreLearning increased 23%
• Kurzweil/IntelliTools decreased 14%

The Company's Voyager Sopris Learning and Kurzweil/IntelliTools segments experienced order volume challenges in the first half of 2013, while Learning A-Z and ExploreLearning continued their double digit growth.  

"Learning A-Z and ExploreLearning have a compelling value proposition in today's educational market with quality content and innovative and award-winning technology.  We expect continued growth from these business units," said John Campbell, chief executive officer of Cambium Learning Group, Inc.    "We have been slow to execute our strategy of transitioning the Voyager Sopris Learning and Kurzweil/IntelliTools products to the innovative technology-based learning solutions demanded by today's market, which has impacted our top line growth.  We believe our ongoing development efforts will result in a product portfolio that provides school districts with updated technology and solutions that address the issues teachers are facing with the new Common Core State Standards.  Voyager Sopris Learning's recent release of the adolescent intervention literacy solution LANGUAGE! Live and Kurzweil/IntelliTools' firefly offering, a subscription solution which has shown strong growth year over year, are examples of the types of products that we believe will reverse the downward top-line trend," continued Mr. Campbell.     

Other highlights include:

• GAAP net revenues for the first half of 2013 increased by 9% to $74.2 million, compared with $68.3 million in the first half of 2012.  In addition to the order volume improvement in the Company's subscription businesses, deferred revenue balances decreased by $9.5 million in the first half of 2013, as the Company recognized revenue on prior-period technology and service sales that were delivered during the period.  Comparatively, deferred revenue balances decreased by $6.8 million in the first half of 2012.  
• GAAP net revenues by segment for the first half of 2013, and the percentage change from the first half of 2012, were as follows: 
  • Voyager Sopris Learning: $45.8 million, increased 6%
  • Learning A-Z: $15.7 million, increased 27%
  • ExploreLearning: $7.8 million, increased 13%
  • Kurzweil/IntelliTools: $4.9 million, decreased 17%
• On an adjusted basis, EBITDA was $13.4 million in the first half of 2013, up $9.0 million from $4.4 million in the first half of 2012. The increase in adjusted EBITDA was the result of the increase in net revenues and cost savings from the re-engineering and restructuring initiatives completed in 2012.
• In the second quarter of 2013, the Company received a $12.3 million tax refund from the state of Michigan.  Additionally, the Company was able to move $3.0 million of cash out of an escrow fund held for the benefit of a potential tax indemnity obligation which was not triggered.  Both of these cash inflows are reflected as cash provided from operating activities.  Portions of the Michigan settlement and the escrow account held for the benefit of the potential tax indemnity were in turn paid out to the holders of the contingent value rights issued in the Company's 2009 merger with Voyager Learning Company.  The contingent value rights payments of $7.7 million are reflected as cash used in investing activities.
• The Company has cash and cash equivalents of $46.3 million on the balance sheet as of June 30, 2013.  Cash provided by operations during the first half of 2013 was $11.0 million, cash used in investing activities was $15.6 million, and cash used in financing activities was $0.9 million.  The Company's operations are highly seasonal and the first half of the year is historically cash flow negative.  

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA and Adjusted Net Revenues are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that these non-GAAP measures provide useful information to investors, because they reflect the underlying performance of the ongoing operations of the Company and provide investors with a view of the Company's operations from management's perspective. Adjusted EBITDA and Adjusted Net Revenues remove significant purchase accounting, non-operational or certain non-cash items from earnings. The Company uses Adjusted EBITDA and Adjusted Net Revenues to monitor and evaluate the operating performance of the Company and as the basis to set and measure progress towards performance targets, which directly affect compensation for employees and executives. The Company generally uses these non-GAAP measures as measures of operating performance and not as measures of the Company's liquidity.  The Company's presentation of EBITDA, Adjusted EBITDA and Adjusted Net Revenues should not be construed as an indication that future results will be unaffected by unusual, non-operational or non-cash items.

About Cambium Learning Group, Inc.
Cambium Learning Group is a leading educational solutions and services company that is committed to helping every student reach their full potential by providing evidence-based solutions and expert professional services to empower educators and raise the achievement levels of all students. Cambium is composed of four business units: Voyager Learning (www.voyagerlearning.com) and Sopris Learning (www.soprislearning.com), Learning A–Z® (www.learninga-z.com), ExploreLearning® (www.explorelearning.com), and Kurzweil/IntelliTools (www.kurzweiledu.com). Together, these business units provide best-in-class intervention and supplemental instructional materials; gold-standard professional development and school-improvement services; breakthrough technology solutions for online learning and professional support; valid and reliable assessments; and proven materials to support a positive and safe school environment. For more information, visit www.cambiumlearning.com. 

Media and Investor Contact:
Barbara Benson
Cambium Learning Group, Inc.
investorrelations@cambiumlearning.com

Forward Looking Statements
Some of the statements contained herein constitute forward-looking statements.  These statements relate to future events, including the future financial performance of Cambium Learning Group, Inc., and involve known and unknown risks, uncertainties and other factors that may cause the markets, actual results, levels of activity, performance or achievements of Cambium Learning Group, Inc. to be materially different from any actual future results, levels of activity, performance or achievements.  These risks and other factors you should consider include, but are not limited to, the ability to successfully attract and retain a broad customer base for current and future products, changes in customer demands or industry standards, success of ongoing product development, maintaining acceptable margins, the ability to control costs, K-12 enrollment and demographic trends, the level of educational and education technology funding, the impact of federal, state and local regulatory requirements on the business of the company, the loss of key personnel, the impact of competition, the uncertainty of general economic conditions and financial market performance, and those other risks and uncertainties listed under the heading "RISK FACTORS" in Cambium Learning Group, Inc.'s Form 10-K. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," "projects," "intends," "prospects," or "priorities," or the negative of such terms, or other comparable terminology. These statements are only predictions.  Actual events or results may differ materially. Cambium Learning Group, Inc. does not assume or undertake any obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.

SOURCE Cambium Learning Group, Inc.