Multi-Color fiscal 2013 Q1 net income down 11.2% year-over-year to US$7.9M as expenses increased; net revenues up 64% to US$165M on acquisitions, favorable impact of pricing and sales mix, partially offset by foreign exchange rates
August 7, 2012
– Multi-Color Corporation (NASDAQ: LABL) today announced first quarter fiscal 2013 results which sets a good foundation for fiscal 2013.
"Organic revenue growth continues in our largest market of North America, somewhat offset by softer organic European revenues in the quarter. Operating margins are solid but still impacted by integration activities in North and Latin America," said Nigel Vinecombe, President and CEO of Multi-Color Corporation.
First quarter highlights:
Net revenues increased 64% to $165 million from $100.6 million compared to the three months ended June 30, 2011. Net revenues increased 66% or $66.2 million due to acquisitions occurring after June 30, 2011. Organic net revenues increased by 2% due to a favorable impact of pricing and sales mix. Net revenues decreased 4% compared to the prior year quarter due to the unfavorable impact of foreign exchange rates primarily driven by depreciation in the Australian dollar and the Euro.
Gross profit increased $8.7 million or 39% compared to the first three months of the prior year. Adjusted for special items, gross profit increased $9.2 million or 41%. The increase is primarily due to acquisitions occurring after June 30, 2011 partially offset by a decrease related to the unfavorable impact of foreign exchange rates in the current quarter. Gross margins, adjusted for special items, decreased to 19% of net revenues compared to 22% of net revenues in the prior year quarter. This reduction in adjusted gross margins is due primarily to lower European sales, integration inefficiencies in North and Latin America and an above average quarter in the prior year. The adjusted gross margin for the three months ended June 30, 2012 is similar to the adjusted gross margin for fiscal year 2012.
Selling, general and administrative (SG&A) expenses increased $5.6 million compared to the prior year quarter due to the impact of acquisitions, costs related to the closure of the Kansas City facility of $0.6 million and severance costs related to the integration of York of $0.3 million partially offset by the impact of foreign exchange rates in the current quarter. Adjusted for special items, SG&A expenses increased by 60% compared to the prior year quarter due primarily to the impact of new acquisitions. Special items included in SG&A expenses in the three months ended June 30, 2012 consisted of $0.6 million of costs related to the closure of the Kansas City facility, $0.3 million of integration expenses related to the York Label Group acquisition and $0.1 million of acquisition related expenses. Adjusted SG&A, as a percent of sales, was 7.7% in the current quarter compared to 7.9% in the prior year quarter.
Operating income increased $3.1 million or 22% compared to the prior year quarter. Adjusted for special items, operating income increased 31% to $18.7 million from $14.3 million. The increase was due primarily to acquisitions occurring after June 30, 2011 partially offset by a decrease due to the unfavorable impact of foreign exchange rates and integration inefficiencies in North and Latin America.
Interest expense increased by $3.8 million compared to the prior year quarter. The increase is due primarily to an increase in debt borrowings to finance acquisitions, including the York Label Group acquisition. The Company had $431.6 million of debt at June 30, 2012 compared to $141 million at June 30, 2011.
The effective tax rate was 33% for the first quarter of fiscal 2013 compared to 29% in the prior year quarter due primarily to income mix in domestic and foreign jurisdictions. The Company expects its annual effective tax rate to be approximately 33% in fiscal year 2013 reflecting a higher percentage of income in North America.
Diluted earnings per share (EPS) decreased to $0.49 cents per diluted share from $0.66 cents in the prior year quarter. Excluding the impact of the special items noted below, adjusted EPS decreased 17% to $0.55 cents per diluted share from $0.66 cents in the prior year quarter. Net income attributable to Multi-Color Corporation decreased to $7.9 million from $8.9 million in the prior year. Adjusted for special items, net income attributable to Multi-Color Corporation decreased to $8.9 million from $9 million in the prior year quarter.
On April 2, 2012, Multi-Color acquired Labelgraphics Holdings ("Labelgraphics") for $24.6 million less net debt including 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 the three months ending June 30, 2012 and 2011.
Nigel Vinecombe said, "The first quarter reflects positive execution of integration activities to date. Integration plans of new acquisitions occurring in fiscal 2012 are now past the half way point and the transition of work to consolidated sites is expected to be more efficient going forward."
Fiscal Year 2013 First Quarter Earnings Conference Call and Webcast
The Company will hold a conference call on August 7, 2012 at 11:00 a.m. (ET) to discuss the news release. For domestic access to the conference call, please dial 1-888-713-4216 (participant code 50405468) or for international access, please dial 1-617-213-4868 (participant code 50405468) by 10:45 a.m. (ET). A replay of the conference call will be available at 1:00 p.m. (ET) on August 7, 2012 through 11:59 p.m. (ET) on August 14, 2012 by calling 1-888-286-8010 (participant code 66732255) or for international access, please call 1-617-801-6888 (participant code 66732255). 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.
Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PNGB9KNVG (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists). Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.
The webcast is also being distributed over the Thomson Reuters' Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Reuters' individual investor center at http://www.fulldisclosure.com/ or by visiting any of the investor sites in Thomson Reuters' Individual Investor Network. Institutional investors can access the call via Thomson Reuters' password-protected event management site, StreetEvents (http://www.streetevents.com).
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 spirit, food and beverage and specialty consumer products. MCC serves international brand owners in North, Central and South America, Europe, Australia, New Zealand, South Africa and China with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve and Heat Transfer. MCC employs approximately 2,700 associates across 27 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/.