CINCINNATI, OHIO, August 7,
2018 - Multi-Color Corporation (NASDAQ: LABL) today announced first
quarter fiscal 2019 results.
"Current results are mixed with healthy organic
growth and earnings from our Home & Personal Care and Wine
& Spirits markets, whereas our Food & Beverage market
performance is below expectations. As a result, we see upside
value from current levels with our existing business," said Nigel
Vinecombe, Executive Chairman of Multi-Color Corporation.
Q1 Fiscal 2019 Highlights
-
Revenues increased to $456 million.
-
Organic growth was 6% driven by North America
and Developing Markets.
-
Operating margins were 1% lower in the quarter
primarily due to acquisition and integration expenses.
-
Gross margins at 19% were made up of 22% for our
legacy business and 16% for FY18 acquisitions. Gross margin
improvement for our FY18 Constantia Labels acquisition is a high
priority with further revenue and cost synergy opportunities being
addressed.
-
Core EBITDA, a non-GAAP financial measure, was
$78 million at 17% of revenues, up 1% of revenues on the prior year
quarter.
-
Higher investment in capital expenditure during
the quarter at $34 million; forecast FY19 capital expenditures
remains at circa 5% of revenues.
Fiscal 2019 Results
-
Net revenues increased 88% to $456.1 million
compared to $242.4 million in the prior year quarter.
Acquisitions occurring after the beginning of fiscal 2018 accounted
for an 80% increase in revenues, net of divestitures. Organic
revenue increased by 6% and was broadly based across geographies
and markets. Foreign exchange rates, primarily driven by
appreciation of the Euro, led to a 2% increase in revenues quarter
over quarter.
-
Gross profit increased 78% or $38.6 million
compared to the prior year quarter. Acquisitions occurring
after the beginning of fiscal 2018 contributed 61% or $30.3 million
to gross profit, net of divestitures. Core gross profit, a
non-GAAP financial measure, increased 78% or $38.7 million compared
to the prior year quarter. Organic gross profit increased 15%
or $7.3 million. The remaining increase of 2% or $1 million
related to the favorable effects of foreign exchange. Core
gross margins, a non-GAAP financial measure, were 19.3% of net
revenues for the current year quarter compared to 20.4% in the
prior year quarter.
-
Selling, general and administrative expenses
increased 81% or $19.2 million compared to the prior year quarter
primarily related to acquisitions and acquisition-related
expenses. Acquisitions occurring after the beginning of
fiscal 2018, net of divestitures, and unfavorable foreign exchange
contributed $15.1 million and $0.4 million, respectively, to the
increase. Core SG&A, a non-GAAP financial measure,
increased 70% or $15.9 million compared to the prior year
quarter. Core SG&A decreased as a
percentage of sales to 8.5% from 9.4% compared to the prior year
quarter. Non-core items related to acquisition and
integration expenses were $4.2 million, primarily related to
Constantia Labels, in the current year quarter compared to $0.9
million in the prior year quarter.
-
Operating income increased 75% or $19.4 million
compared to the prior year quarter primarily due to improved
organic operating performance, acquisitions and related
synergies. Operating income includes $15.2 million in
relation to acquisitions occurring after the beginning of fiscal
2018, net of divestitures. Core operating income, a non-GAAP
financial measure, increased 85% or $22.8 million compared to the
prior year quarter. Non-core items in the current year
quarter primarily related to inventory purchase accounting
adjustments of $0.1 million and acquisition and integration
expenses of $4.2 million.
-
Interest expense increased $12.9 million in the
current year quarter compared to the prior year quarter primarily
due to the increase in debt borrowings to finance the Constantia
Labels acquisition.
-
Other expense was $1 million in the current year
quarter primarily related to unfavorable foreign exchange resulting
from re-measurement of trade payables, primarily in Latin America
and South Africa. This compares to other expense of $1
million in the prior year quarter primarily related to the release
of a foreign indemnification receivable of $1.1 million for which
an offsetting tax liability was also relieved reducing the prior
year quarter effective tax rate.
-
The effective tax rate increased to 28% for the
current year quarter compared to 23% in the prior year
quarter. The effective tax rate on core net income, a
non-GAAP financial measure, was 26% for the current year quarter
compared to 23% in the prior year quarter, which included the
release of a tax liability related to a foreign indemnification
receivable related to previous acquisitions for $1.1
million.
-
Net income increased 29% or $4 million in the
current year quarter compared to the prior year quarter. Core
net income increased 48% or $7 million compared to the prior year
quarter.
-
Diluted EPS increased 7% or $0.06 in the current
year quarter compared to the prior year quarter. Excluding
the impact of the non-core items noted below, core EPS, a non-GAAP
financial measure, increased 23% to $1.06 compared to $0.86 in the
prior year quarter.
The following table shows adjustments made to net
income and diluted EPS between reported GAAP and non-GAAP results
for the three months ended June 30, 2018 and 2017. Refer to
the tables in Exhibit A for a reconciliation of adjustments made to
gross profit, SG&A expenses, operating income, EBITDA, income
before income taxes, income tax expense, and effective tax rate
between reported GAAP and non-GAAP results. The sum of the
EPS amounts may not equal the totals due to rounding.
|
Three Months Ended |
|
06/30/18 |
Diluted |
06/30/17 |
Diluted |
|
(in 000's) |
EPS |
(in 000's) |
EPS |
Net
income attributable to MCC and diluted EPS, as reported |
$ |
18,139 |
$ |
0.88 |
$ |
14,106 |
$ |
0.82 |
Inventory purchase accounting charges, net of tax |
|
92 |
|
* |
|
- |
|
* |
Acquisition and integration expenses, net of tax |
|
3,514 |
|
0.17 |
|
618 |
|
0.04 |
Facility closure expenses, net of tax |
|
18 |
|
* |
|
23 |
|
* |
Core
net income and diluted EPS, (Non-GAAP) |
$ |
21,763 |
$ |
1.06 |
$ |
14,747 |
$ |
0.86 |
*Diluted EPS is less than $0.01 |
|
|
|
|
|
|
|
|
First Quarter 2019 Earnings
Conference Call and Webcast
The Company will hold a conference call on
Tuesday, August 7, 2018 at 10:00 a.m. (ET) to discuss the news
release. For domestic access to the conference call, please
call 866-516-2921 (participant code 3568402) or for international
access, please call +1 213-660-0878 (participant code 3568402) by
9:45 a.m. (ET). A replay of the conference call will be
available at 1:00 p.m. (ET) on Tuesday, August 7, 2018 through 1:00
p.m. (ET) on Tuesday, August 14, 2018 by calling 855-859-2056
(participant code 3568402) or internationally, by calling +1
404-537-3406 (participant code 3568402). In addition, the
call will be broadcast over the Internet and can be accessed from a
link on the Company's home page at http://www.mcclabel.com.
Listeners should go to the website prior to the call to register
and to download any necessary audio software.
Safe Harbor
Statement
The Company believes certain statements contained
in this report that are not historical facts that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and that are intended to
be covered by the safe harbors created by that Act. All statements
contained herein other than statements of historical fact are
forward-looking statements. Forward-looking statements include
statements regarding our future financial position, business
strategy, budgets, projected costs, plans and objectives of
management for future operations. The words "may," "continue,"
"estimate," "intend," "plan," "will," "believe," "project,"
"expect," "anticipate" and similar expressions (as well as the
negative versions thereof) may identify forward-looking statements,
but the absence of these words does not necessarily mean that a
statement is not forward-looking. With respect to the
forward-looking statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Reliance should not be
placed on forward-looking statements because they involve known and
unknown risks, uncertainties and other factors which may cause
actual results, performance or achievements to differ materially
from those expressed or implied. Such forward-looking statements
speak only as of the date made. The Company undertakes no
obligation to update any forward-looking statements to reflect
events or circumstances after the date on which they are made.
Statements concerning expected financial
performance, on-going business strategies, and possible future
actions which the Company intends to pursue in order to achieve
strategic objectives constitute forward-looking information.
Implementation of these strategies and the achievement of such
financial performance is each subject to numerous conditions,
uncertainties and risk factors, including those contained in Item
1A in "Risk Factors" in our Form 10-K. Factors which could cause
actual performance by the Company to differ materially from these
forward-looking statements include, without limitation: factors
discussed in conjunction with a forward-looking statement; changes
in global economic and business conditions; changes in business
strategies or plans; raw material cost pressures; availability of
raw materials; availability to pass raw material cost increases to
our customers; interruption of business operations; changes in, or
the failure to comply with, government regulations, legal
proceedings and developments, including but not limited to, tax law
changes; acceptance of new product offerings, services and
technologies; new developments in packaging; our ability to
effectively manage our growth and execute our long-term strategy;
our ability to manage foreign operations and the risks involved
with them, including compliance with applicable anti-corruption
laws; currency exchange rate fluctuations; tariffs and trade wars;
our ability to manage global political uncertainty; terrorism and
political unrest; increases in general interest rate levels and
credit market volatility affecting our interest costs; competition
within our industry; our ability to consummate and successfully
integrate acquisitions; our ability to recognize the benefits of
acquisitions, including potential synergies and cost savings;
failure of an acquisition or acquired company to achieve its plans
and objectives generally; risk that proposed or consummated
acquisitions may disrupt operations or pose difficulties in
employee retention or otherwise affect financial or operating
results; risk that some of our goodwill may be or later become
impaired; the success and financial condition of our significant
customers; our ability to maintain our relationships with our
significant customers; dependence on information technology; our
ability to market new products; our ability to maintain an
effective system of internal control; ongoing claims, lawsuits and
governmental proceedings, including environmental proceedings;
availability, terms and developments of capital and credit;
dependence on key personnel; quality of management; our ability to
protect our intellectual property and the potential for
intellectual property litigation; employee benefit costs; and risk
associated with significant leverage. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
About Multi-Color
(http://www.mcclabel.com)
Cincinnati, Ohio, U.S.A. based Multi-Color Corporation (MCC),
established in 1916, is a leader in global label solutions
supporting a number of the world's most prominent brands including
leading producers of home and personal care, wine and spirits, food
and beverage, healthcare and specialty consumer products. MCC
serves international brand owners in the North American, Latin
American, EMEA (Europe, Middle East and Africa) and Asia Pacific
regions with a comprehensive range of the latest label technologies
in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve, Heat
Transfer, Roll Fed, and Aluminum Labels. MCC employs approximately
8,400 associates across 72 operations globally and is a public
company trading on the NASDAQ Global Select Market (company symbol:
LABL). For additional information on Multi-Color, please visit
http://www.mcclabel.com.
Multi-Color Corporation and
Subsidiaries |
Condensed Consolidated Statements of
Income |
(unaudited) |
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, 2018 |
|
June 30, 2017 |
|
|
|
|
|
|
|
|
Net
revenues |
$ |
456,131 |
|
$ |
242,440 |
|
Cost
of revenues |
|
368,121 |
|
|
192,983 |
|
Gross
profit |
|
88,010 |
|
|
49,457 |
|
Gross
margin |
|
19.3% |
|
|
20.4% |
|
Selling, general and administrative expenses |
|
42,768 |
|
|
23,589 |
|
Facility closure expenses |
|
27 |
|
|
34 |
|
Operating income |
|
45,215 |
|
|
25,834 |
|
Interest expense |
|
19,199 |
|
|
6,335 |
|
Other
expense, net |
|
1,044 |
|
|
1,199 |
|
Income
before income taxes |
|
24,972 |
|
|
18,300 |
|
Income
tax expense |
|
6,880 |
|
|
4,158 |
|
Net
income |
$ |
18,092 |
|
$ |
14,142 |
|
Less:
Net income (loss) attributable to noncontrolling interests |
|
(47) |
|
|
36 |
|
Net
income attributable to Multi-Color Corporation |
$ |
18,139 |
|
$ |
14,106 |
|
|
|
|
|
|
|
|
Basic
shares outstanding |
|
20,439 |
|
|
16,943 |
|
Diluted shares outstanding |
|
20,545 |
|
|
17,152 |
|
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
0.89 |
|
$ |
0.83 |
|
Diluted earnings per share |
$ |
0.88 |
|
$ |
0.82 |
|
Multi-Color Corporation |
Selected Balance Sheet
Information |
(in thousands) |
Unaudited |
|
|
|
|
|
|
|
June 30, 2018 |
|
March 31, 2018 |
|
|
|
|
|
|
Current Assets |
$ |
594,478 |
|
$ |
601,183 |
Total
Assets |
$ |
2,819,043 |
|
$ |
2,902,976 |
Current Liabilities |
$ |
301,932 |
|
$ |
327,227 |
Total
Liabilities |
$ |
2,104,478 |
|
$ |
2,142,603 |
Stockholders' Equity |
$ |
714,565 |
|
$ |
760,373 |
Total
Debt |
$ |
1,604,745 |
|
$ |
1,598,685 |
Exhibit A
The Company reports its financial results in
accordance with generally accepted accounting principles in the
U.S. (GAAP). To provide investors with additional information along
with period-to-period comparisons of the Company's financial and
operating results, the Company reports certain non-GAAP financial
measurements, as defined by the Securities and Exchange Commission.
These measurements are supplemental in nature and should not be
considered to be an alternative to reported results prepared in
accordance with GAAP. The Company's non-GAAP financial measurements
reported for the periods presented in this earnings release are:
core gross profit, core SG&A, core operating income, core
EBITDA, core net income, core diluted EPS, core income before
income taxes, core income tax expense, and core effective tax
rate.
These non-GAAP financial measurements are adjusted
to exclude inventory purchase accounting adjustments, acquisition
and integration expenses and facility closure expenses. These
adjustments are disclosed to give the reader an indication of the
performance of the business excluding discrete costs related to
acquisitions of the new businesses. Acquisition costs represent
discrete, external, transaction-related costs, specific to
acquisitions that we believe will be accretive in future periods.
Similarly, facility closure expenses relate to discrete costs to
close plants that management believes will ultimately benefit the
business.
These non-GAAP financial measures provide
investors with an understanding of the Company's gross profit,
SG&A expenses, operating income, core EBITDA, net income,
diluted EPS, income before income taxes, income tax expense, and
effective tax rate adjusted to exclude the effect of the non-core
items identified above. Core EBITDA is a non-GAAP financial measure
used to measure operating results, defined as earnings before
interest, taxes, depreciation and amortization, and other
non-operating income and expenses. We believe that these non-GAAP
financial measures assist investors in making a consistent
comparison to the three months ended June 30, 2018 and 2017. In
addition, management uses these non-GAAP financial measures
internally to perform trend analysis and analyze operating
performance to ensure resources are allocated effectively. The
non-GAAP measures allow management to analyze trends and
performance without masking or distorting the results with the
special items identified by management.
Core Gross Profit:
|
Three Months Ended |
|
06/30/18 |
|
06/30/17 |
|
(in 000's) |
|
(in 000's) |
Gross
profit, as reported |
$ |
88,010 |
|
$ |
49,457 |
Inventory purchase accounting charges |
|
131 |
|
|
- |
Core
gross profit, (Non-GAAP) |
$ |
88,141 |
|
$ |
49,457 |
Core
gross profit, (Non-GAAP) |
|
|
|
|
|
as a % of net revenues |
|
19.3% |
|
|
20.4% |
Core SG&A Expenses:
|
Three Months Ended |
|
06/30/18 |
|
06/30/17 |
|
(in 000's) |
|
(in 000's) |
SG&A expenses, as reported |
$ |
42,768 |
|
$ |
23,589 |
Acquisition & integration expenses |
|
(4,220) |
|
|
(906) |
Core
SG&A expenses, (Non-GAAP) |
$ |
38,548 |
|
$ |
22,683 |
Core
SG&A expenses, as a % |
|
|
|
|
|
of net revenues, (Non-GAAP) |
|
8.5% |
|
|
9.4% |
Core Operating Income:
|
Three Months Ended |
|
06/30/18 |
|
06/30/17 |
|
(in 000's) |
|
(in 000's) |
Operating income, as reported |
$ |
45,215 |
|
$ |
25,834 |
Inventory purchase accounting charges |
|
131 |
|
|
- |
Acquisition & integration expenses |
|
4,220 |
|
|
906 |
Facility closure expenses |
|
27 |
|
|
34 |
Core
operating income, (Non-GAAP) |
$ |
49,593 |
|
$ |
26,774 |
Core
operating income, as a % |
|
|
|
|
|
of net revenues, (Non-GAAP) |
|
10.9% |
|
|
11.0% |
Core EBITDA:
|
Three Months Ended |
|
06/30/18 |
|
06/30/17 |
|
(in 000's) |
|
(in 000's) |
Net income attributable to MCC, as reported |
$ |
18,139 |
|
|
14,106 |
Inventory purchase accounting charges, net of
tax |
|
92 |
|
|
- |
Acquisition and integration expenses, net of
tax |
|
3,514 |
|
|
618 |
Facility closure expenses, net of tax |
|
18 |
|
|
23 |
Core net income (Non-GAAP) |
$ |
21,763 |
|
$ |
14,747 |
|
|
|
|
|
|
Interest expense |
|
19,199 |
|
|
6,335 |
Core income tax expense (Non-GAAP) |
|
7,634 |
|
|
4,457 |
Depreciation |
|
17,902 |
|
|
8,492 |
Amortization |
|
10,410 |
|
|
3,604 |
Net income (loss) attributable to non-controlling
interests |
|
(47) |
|
|
36 |
Other expense, net |
|
1,044 |
|
|
1,199 |
Core EBITDA, (Non-GAAP) |
$ |
77,905 |
|
$ |
38,870 |
Core EBITDA as a % of net revenues, (Non-GAAP) |
|
17.1% |
|
|
16.0% |
Core Tax:
|
Three Months Ended |
|
06/30/18 |
|
06/30/17 |
|
(in 000's) |
|
(in 000's) |
Income
before income taxes, as reported |
$ |
24,972 |
|
$ |
18,300 |
Non-core items |
|
4,378 |
|
|
940 |
Core
income before income taxes, (Non-GAAP) |
$ |
29,350 |
|
$ |
19,240 |
|
|
|
|
|
|
|
Three Months Ended |
|
06/30/18 |
|
06/30/17 |
|
(in 000's) |
|
(in 000's) |
Income
tax expense, as reported |
$ |
6,880 |
|
$ |
4,158 |
Non-core items |
|
754 |
|
|
299 |
Core
income tax expense, (Non-GAAP) |
$ |
7,634 |
|
$ |
4,457 |
|
|
|
|
|
|
Effective tax rate |
|
28% |
|
|
23% |
Core
effective tax rate (Non-GAAP) |
|
26% |
|
|
23% |
For more information, please contact: Sharon E.
Birkett
Vice President and Chief Financial Officer
Multi-Color Corporation, (513) 345-5311
Q1 FY2019 Earnings
Release
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Multi-Color Corporation via Globenewswire
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