Multi-Color's fiscal Q4 net income up 8.9% year-over-year to US$4.5M, net sales up 78% to US$160.6M; company cites positive sales mix, increased sales volume, US$57.1M in revenues due to York Label acquisition

Kendall Sinclair

CINCINNATI , May 21, 2012 (press release) – Multi-Color Corporation  today announced fiscal 2012 results including 4% organic growth (excluding foreign exchange), stable 20% gross margins and progress with the York Label Group acquisition integration.

"Total revenues grew 51% to over $500 million in fiscal 2012 and revenues, including the full year impact of acquisitions occurring in fiscal 2012, are expected to exceed $650 million in fiscal 2013. Organic revenue growth was 4% (excluding foreign exchange) and operational improvements helped us achieve a 14% organic operating income improvement (excluding foreign exchange) for fiscal 2012," said Nigel Vinecombe, President and CEO of Multi-Color Corporation.

Fiscal 2012 highlights:

- Net revenues increased 51% to $510.2 million from $338.3 million in the prior year. Net revenues increased 45% or $151.4 million due to acquisitions and start-ups occurring after the beginning of fiscal 2011. Of this acquisition-related revenue increase, $109.9 million is attributable to the acquisition of York Label Group. In addition, organic net revenues, excluding the impact of foreign exchange, increased 4% in the current year comprised of a 2% increase in sales volumes and a 2% favorable impact of sales mix. The impact of foreign exchange rates compared to the prior year was 2% primarily driven by the appreciation in the Australian dollar.

- Gross profit increased $30.3 million or 45% compared to the prior year. Adjusted for special items, gross profit increased $31.4 million or 46%. Acquisitions and start-ups occurring after the beginning of fiscal 2011 contributed 31% to the adjusted gross profit increase. The remaining 15% increase was due to the impact of foreign exchange rates, higher sales volumes and favorable sales mix impacts in the current year. Gross margins, adjusted for special items, were steady at 20% of sales revenues compared to the prior year.

- Selling, general and administrative (SG&A) expenses increased $18.4 million compared to the prior year due to the impact of acquisitions of $12.3 million, integration expenses related to the acquisition of York Label Group of $5.6 million and an increase in acquisition-related expenses of $1.2 million, partially offset by $1.7 million of one-time severance and accelerated stock compensation charges in the prior year. Adjusted for special items, SG&A expenses increased by 50% compared to the prior year due primarily to the impact of new acquisitions mentioned above. Special items included in SG&A expenses in the year ended March 31, 2012 consisted of $5.6 million of integration expenses related to the York Label Group acquisition and $2.5 million of acquisition related expenses. The integration expense consisted primarily of severance and other termination benefits and professional fees. Special items included in SG&A expenses in the year ended March 31, 2011 consisted of $1.7 million of severance and accelerated stock compensation expenses, $1.3 million in acquisition related expenses and $1.3 million of legal fees and other items. Adjusted SG&A, as a percent of sales, was steady at 8.5% in the current year.

- In January 2012, the Company announced plans to consolidate its manufacturing facility located in Kansas City, Missouri into its other existing facilities. In connection with the consolidation of the Kansas City facility, the Company incurred a charge of $1.2 million in the fourth quarter of fiscal 2012 primarily for employee severance and other termination benefits, non-cash charges related to asset impairments and relocation and other costs. The Company expects the transition from the Kansas City facility to be complete by the end of the first quarter of fiscal 2013.

- As previously disclosed, in the fourth quarter of fiscal 2011, the Company recorded a charge of $2.8 million ($1.8 million after tax) related to the settlement of a legal dispute with the John Henry Company.

- Operating income increased $13.3 million or 41% compared to the prior year. Adjusted for special items, operating income increased 43% to $56.4 million from $39.5 million. Acquisitions and start-ups occurring after the beginning of fiscal 2011 contributed 27% to the adjusted operating income increase. The remaining increase is due to the impact of favorable foreign exchange rates, higher sales volumes, favorable sales mix impact and other cost decreases.

- Interest expense increased by $8 million compared to the prior year. Adjusted for special items, interest expense increased by $7.5 million compared to the prior year. The special charge of $0.5 million is a write-off certain deferred financing fees in conjunction with the debt modification to the Company's credit facility related to the York Label Group acquisition. The remaining increase is due primarily to an increase in debt borrowings to finance acquisitions, primarily the York Label Group acquisition, and the impact of foreign exchange rates. The Company had $402.1 million of debt at March 31, 2012 compared to $127.3 million at March 31, 2011.

- The effective tax rate was 37% in fiscal 2012 compared to 28% in the prior year due primarily to a higher percentage of income in higher tax jurisdictions and an increase in valuation allowances recorded in certain foreign jurisdictions. The Company expects its annual effective tax rate to be approximately 37% in fiscal 2013 reflecting a higher percentage of income in North America.

- Diluted earnings per share (EPS) decreased to $1.32 per diluted share from $1.40 in the prior year. Excluding the impact of the special items noted below, adjusted EPS increased 5% to $1.85 per diluted share from $1.76. Net income attributable to Multi-Color Corporation increased to $19.7 million from $18.4 million in the prior year. Adjusted for special items, net income attributable to Multi-Color Corporation increased to $27.6 million from $23.1 million in the prior year.

- On October 3, 2011, Multi-Color Corporation acquired York Label Group and its joint venture in Chile for $329.2 million in stock and cash plus net debt assumed of $9.9 million, subject to certain post closing adjustments. York Label Group is a home & personal care, food & beverage, wine & spirit and healthcare label printing company headquartered in Omaha, Nebraska. On July 1, 2011, the Company acquired Warszawski Dom Handlowy, a consumer products and spirit label company located in Warsaw, Poland for $7.8 million, plus net debt assumed of $4 million. On April 1, 2011, Multi-Color Corporation acquired La Cromografica S.R.L. in Italy for $9.9 million including net debt assumed.

- On April 2, 2012, Multi-Color acquired Labelgraphics Holdings ("Labelgraphics") for $26.4 million less net debt plus a future performance based earn-out. Labelgraphics, based in Glasgow, Scotland, supplies spirit & wine markets bottled in the U.K. These markets are experiencing growth through spirit shipments to developing markets and imported wine shipments bottled in the U.K.

The following table shows adjustments made to Net Income Attributable to Multi-Color Corporation and Diluted EPS between reported GAAP and Non-GAAP results for fiscal 2012 and 2011. For a reconciliation of adjustments made to Gross Profit, SG&A expenses, Operating Income and Interest Expense between reported GAAP and Non-GAAP results, see the tables in Exhibit B:

                                                        Year Ended                                Year Ended
                                                        2012                                EPS   2011          EPS
                                                        (in 000's)                                (in 000's)
        Net Income Attributable to Multi-Color          $                        19,700  $  1.32  $  18,411  $  1.40
        Corporation and EPS, as reported
        Acquisition Expense, Net of Tax                                          2,243      0.17     926        0.07
        York Label Group Integration Expense, Net of Tax                         3,727      0.24     -          -
        Severance and Accelerated Stock Compensation                             -          -        1,138      0.09
        Expense, Net of Tax
        Deferred Financing Fee Charge, Net of Tax                                300        0.02     -          -
        Facility Closure Expense (Income), Net of Tax                            715        0.04     (192)      (0.01)
        Legal Settlement and Related Legal Fees, Net of                          -          -        2,418      0.18
        Tax
        Inventory Purchase Accounting Charge, Net of Tax                         923        0.06     289        0.02
        Other Special Items, Net of Tax                                          -          -        146        0.01
        Adjusted Net Income Attributable to Multi-Color $                        27,608  $  1.85  $  23,136  $  1.76
        Corporation and EPS, (Non-GAAP)

                                                           Three Months Ended
                                                           03/31/12                            EPS   03/31/11     EPS
                                                           (in 000's)                                (in 000's)
        Net Income Attributable to Multi-Color Corporation $                         4,494  $  0.28  $  4,128  $  0.31
        and EPS, as reported
        Acquisition Expense, Net of Tax                                              378       0.02     38        -
        York Label Group Integration Expense, Net of Tax                             1,351     0.09     -         -
        Facility Closure Expense (Income), Net of Tax                                715       0.04     -         -
        Legal Settlement and Related Legal Fees, Net of Tax                          -         -        2,114     0.16
        Other Special Items, Net of Tax                                              -         -        146       0.01
        Adjusted Net Income Attributable to Multi-Color    $                         6,938  $  0.43  $  6,426  $  0.48
        Corporation and EPS, (Non-GAAP)

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