2012-02-08 14:32:06 -
CINCINNATI, OHIO, February 8, 2012 - Multi-Color Corporation (NASDAQ: LABL)
today announced third quarter results including organic growth and progress with
the York Label Group acquisition integration.
"Organic revenue growth was 7% in the current quarter compared to the prior year
quarter. The former York Label Group third quarter revenues were on par with
the prior year quarter in North America, but lower in Chile. The third quarter
is traditionally the former York Label Group's lowest quarter for revenue and
earnings. After our first quarter of owning the former York Label business we
maintain our expectations for the acquisition to be accretive in fiscal 2013,
based on adjusted earnings per share," said Nigel Vinecombe, President and CEO
of Multi-Color Corporation.
Third quarter highlights included:
* On October 3, 2011, Multi-Color
Corporation acquired 100% of the shares of
York Label Group and their joint venture in Chile for $356 million in stock
and cash, less net debt, 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. This
acquisition strengthens our presence in our core markets and customer base
in North America and establishes a leadership position in Chile.
* Net revenues increased 76% to $146.4 million from $83.4 million compared to
the three months ended December 31, 2010. Net revenues increased 69% or
$57.7 million in the three months ended December 31, 2011 due to
acquisitions and start-ups that occurred after December 31, 2010. Of this
acquisition-related revenue increase, $52.8 million is attributable to the
acquisition of the York Label Group. The remaining increase was due to a
5% increase in sales volumes, primarily in North America, and a 2% favorable
impact of sales mix.
* Gross profit increased $7.3 million or 45% compared to the three months
ended December 31, 2010. Adjusted for special items, gross profit increased
$8.9 million or 55%. Acquisitions and start-ups occurring after December
31, 2010 contributed 45% to the adjusted gross profit increase. The
remaining 10% increase was due to higher sales volumes and the favorable
impact of sales mix in the current quarter. Gross margins, adjusted for
special items, decreased from 19% to 17% of sales revenues compared to the
prior year quarter due primarily to lower revenues and operational
inefficiencies in the new Chilean operations acquired with the York Label
Group.
* Selling, general and administrative (SG&A) expenses increased $8.5 million
compared to the three months ended December 31, 2010 due primarily to the
impact of acquisitions of $4.6 million and integration expenses related to
the acquisition of York Label Group of $3.7 million. Adjusted for special
items, SG&A expenses increased by 71% compared to the prior year quarter due
primarily to the impact of acquisitions. Special items included in SG&A
expenses in the third quarter of fiscal 2012 consisted of $3.7 million of
integration expenses related to the York Label Group acquisition and $0.2
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 third quarter of fiscal
2011 consisted of $0.5 million in legal fees and $0.3 million in acquisition
related expenses, partially offset by $0.3 million of facility closure
income. Adjusted SG&A, as a percent of sales, decreased from 8.8% to 8.6%
in the current quarter.
* Operating income decreased $1.2 million to $7.1 million compared to $8.3
million in the three months ended December 31, 2010. Adjusted for special
items, operating income increased 42% to $12.5 million from $8.8 million.
Acquisitions and start-ups occurring after December 31, 2010 contributed
32% to the adjusted operating income increase. The remaining increase is
due primarily to higher sales volumes and the favorable impact of sales mix
in the current quarter.
* Interest expense increased $3.4 million compared to the three months ended
December 31, 2010 due primarily to an increase in debt borrowings to finance
the acquisition of York Label Group. The Company had $409.9 million of debt
at December 31, 2011 compared to $131.3 million of debt at December
31, 2010.
* The effective tax rate was 13% for the third quarter of fiscal 2012 compared
to 25% in the prior year quarter due primarily to the release of reserves
for uncertain tax positions whose statute of limitations have expired,
partially offset by acquisition costs incurred in fiscal 2012 that are not
deductible for tax purposes. The Company expects its annual effective tax
rate to be approximately 31% in fiscal year 2012.
* Diluted earnings per share (EPS) decreased to $0.10 cents per diluted share
from $0.36 cents in the three months ended December 31, 2010. Excluding the
impact of the special items noted below, adjusted EPS decreased to $0.31
cents per diluted share from $0.38 cents in the prior year quarter. Net
income attributable to Multi-Color Corporation decreased to $1.6 million
from $4.8 million in the prior year quarter. Adjusted for special items,
net income attributable to Multi-Color Corporation decreased to $5 million
from $5.1 million in the prior year quarter.
* In January 2012, the Company announced plans to consolidate its
manufacturing facility located in Kansas City, Missouri into its other
existing facilities. The transition will begin immediately with final plant
closure within the next several months. In connection with the closure of
the Kansas City facility, the Company expects to record a charge in the
range of $1 to $2 million in the fourth quarter of fiscal 2012 for employee
severance and other termination benefits, non-cash charges related to asset
impairments and relocation and other costs.
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 ended December 31, 2011 and 2010. 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:
Three Months Ended
---------------------------------------------------------------
12/31/11 12/31/10
(in 000's) EPS (in 000's) EPS
---------------------------------------------------------------
Net Income
Attributable to
Multi-Color
Corporation and
EPS, as reported $ 1,558 $ 0.10 $ 4,786 $ 0.36
Acquisition
Expense, Net of -
Tax 97 221 0.02
York Label Group
Integration Expense, Net
of Tax 2,376 0.15 -
-
Facility Closure
Income, Net of -
Tax - (192)
(0.02)
Napa Legal Fees, -
Net of Tax - 304 0.02
Inventory
Purchase
Accounting
Charge, Net of
Tax 923 0.06 -
-
---------------------------------------------------------------
Adjusted Net
Income
Attributable to
Multi-Color
Corporation and
EPS, (Non-GAAP) $ 4,954 $ 0.31 $ 5,119 $ 0.38
---------------------------------------------------------------
Nigel Vinecombe said, "During the third quarter, we successfully integrated York
management and sales teams, consolidated three plants into one in Chile,
restructured our operations in California and renegotiated key supply
arrangements. Most importantly, customer satisfaction levels have been
maintained or enhanced with key customer contracts being extended."
Year-to-date highlights included:
* Net revenues increased 41% to $349.7 million from $248.1 million compared to
the nine months ended December 31, 2010. Net revenues increased 36% or
$88.4 million in the nine months ended December 31, 2011 due to acquisitions
and start-ups occurring after the beginning of the prior year period. Of
this acquisition-related revenue increase, $52.8 million is attributable to
the acquisition of the York Label Group. In addition, net revenues
increased due to a 3% favorable impact of foreign exchange rates primarily
driven by the strengthening Australian dollar and Euro, a 1% increase in
sales volumes and a 1% favorable impact of pricing and sales mix.
* Gross profit increased $17.2 million or 35% compared to the three months
ended December 31, 2010. Adjusted for special items, gross profit increased
$18.3 million or 37%. Acquisitions and start-ups occurring after the
beginning of the prior year period contributed 26% to the adjusted gross
profit increase. The remaining 11% increase was due to the impact of
foreign exchange rates, higher sales volumes and favorable pricing and sales
mix impacts in the current year. Gross margins, adjusted for special items,
remained steady at 20% of sales revenues compared to the prior year.
* Selling, general and administrative (SG&A) expenses increased $10.8 million
compared to the nine months ended December 31, 2010 due the impact of
acquisitions of $7.6 million, integration expenses related to the
acquisition of York Label Group of $3.7 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 39% compared
to the prior year quarter primarily due primarily to the impact of new
acquisitions mentioned above. Special items included in SG&A expenses in
the nine months ended December 31, 2011 consisted of $3.7 million of
integration expenses related to the York Label Group acquisition and $2.1
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 nine months ended December
31, 2010 consisted of $1.7 million of severance and accelerated stock
compensation expenses, $1.3 million in acquisition related expenses and $0.2
million of other items. Adjusted SG&A, as a percent of sales, decreased
from 8.5% to 8.3% in the current year.
* Operating income increased $6.5 million or 25% compared to the nine months
ended December 31, 2010. Adjusted for special items, operating income
increased 35% to $39.1 million from $28.9 million. Acquisitions and start-
ups occurring after the beginning of the prior year period contributed 18%
to the adjusted operating income increase. The remaining increase is due to
the impact of favorable foreign exchange rates, higher sales volumes,
favorable pricing and sales mix impact and other cost decreases.
* Interest expense increased by $4.4 million or 84% compared to the nine
months ended December 31, 2010. Adjusted for special items, interest
expense increased 74% compared to the prior year period. 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 effective tax rate was 31% for the nine months ending December 31, 2011
compared to 30% in the comparable prior year period due primarily to
acquisition costs incurred in fiscal 2012 that are not deductible for tax
purposes partially offset by certain discrete tax benefits recorded in the
first quarter of fiscal 2012 and the release of reserves for uncertain tax
positions whose statute of limitations have expired. The Company expects
its annual effective tax rate to be approximately 31% in fiscal year 2012.
* Diluted earnings per share (EPS) decreased to $1.05 per diluted share from
$1.10 in the nine months ended December 31, 2010. Excluding the impact of
the special items noted below, adjusted EPS increased 12% to $1.43 per
diluted share from $1.28. Net income attributable to Multi-Color
Corporation increased to $15.2 million from $14.3 million in the prior year
period. Adjusted for special items, net income attributable to Multi-Color
Corporation increased to $20.7 million from $16.7 million in the prior year
period.
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 nine months ended December 31, 2011 and 2010. 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:
Nine Months Ended
-----------------------------------------------------------
12/31/11 12/31/10
(in 000's) EPS (in 000's) EPS
-----------------------------------------------------------
Net Income
Attributable to
Multi-Color
Corporation and EPS,
as reported $ 15,206 $ 1.05 $ 14,283 $ 1.10
Acquisition Expense,
Net of Tax 1,865 0.13 889
0.06
York Label Group
Integration Expense,
Net of Tax 2,376 0.17 -
-
Severance and
Accelerated Stock
Compensation Expense,
Net of Tax - - 1,138
0.09
Deferred Financing
Fee Charge, Net of
Tax 300 0.02 -
-
Facility Closure
Income, Net of Tax - - (192)
(0.01)
Napa Legal Fees, Net
of Tax - - 304
0.02
Inventory Purchase
Accounting Charge,
Net of Tax 923 0.06 289
0.02
-----------------------------------------------------------
Adjusted Net Income
Attributable to
Multi-Color
Corporation and EPS,
(Non-GAAP) $ 20,670 $ 1.43 $ 16,711 $ 1.28
-----------------------------------------------------------
Nigel Vinecombe said, "Fiscal 2012 results will be diluted by the former York
Label business. We expect to achieve adjusted operating income to revenues after
integration is largely complete in fiscal 2013, consistent with recent MCC
results prior to the York acquisition."
Fiscal Year 2012 Third Quarter Earnings Conference Call and Webcast
The Company will hold a conference call on February 8, 2012 at 11:00 a.m. (ET)
to discuss the news release. For domestic access to the conference call, please
dial 1-888-713-4211 (participant code 23809955 or for international access,
please dial 1-617-213-4864 (participant code 23809955) by 10:45 a.m. (ET). A
replay of the conference call will be available at 1:00 p.m. (ET) on February
8, 2012 through 11:59 p.m. (ET) on February 15, 2012 by calling 1-888-286-8010
(participant code 81027291) or for international access, please call
1-617-801-6888 (participant code 81027291). In addition, the call will be
broadcast over the Internet and can be accessed from a link on the Company's
home page atwww.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
www.theconferencingservice.com/prereg/key.process?key=P49CUWWH6 (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
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 (
www.streetevents.com).
Safe Harbor Statement
The Company believes certain statements contained in this report that are not
historical facts constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, and are intended to be covered
by the safe harbors created by that Act. 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. Any forward-
looking statement speaks 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 are each subject to numerous conditions, uncertainties and risk
factors. 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
general economic and business conditions; the ability to consummate and
successfully integrate acquisitions; 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; ability to manage foreign operations; currency exchange rate
fluctuations; the success and financial condition of the Company's significant
customers; competition; acceptance of new product offerings; changes in business
strategy or plans; quality of management; the Company's ability to maintain an
effective system of internal control; availability, terms and development of
capital and credit; cost and price changes; raw material cost pressures;
availability of raw materials; ability to pass raw material cost increases to
its customers; business abilities and judgment of personnel; changes in, or the
failure to comply with, government regulations, legal proceedings and
developments; risk associated with significant leverage; increases in general
interest rate levels affecting the Company's interest costs; ability to manage
global political uncertainty; and terrorism and political unrest. 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 (
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 28
operations globally and is a public company trading on the NASDAQ Global Select
Market Exchange (company symbol: LABL).
For additional information on Multi-Color, please visit
www.mcclabel.com.
#
Exhibit A
Multi-Color Corporation
Condensed Consolidated Statements of Income
(in 000's except per share data)
Unaudited
Three Months Nine Months
Ended Ended
December December December
December 31, 2011 31, 2010 31, 2011 31, 2010
------------------- -------------- -------------- -------------
Net Revenues $ 146,400 $ 83,379 $ 349,661 $ 248,149
Cost of Goods
Sold 122,872 67,198 282,871 198,577
------------------- -------------- -------------- -------------
Gross Profit 23,528 16,181 66,790 49,572
Gross Margin 16% 19% 19%
20%
Selling, General
& Administrative 16,394 7,885 34,986
24,218
------------------- -------------- -------------- -------------
Operating Income 7,134 8,296 31,804
25,354
Interest Expense 5,392 2,015 9,678
5,271
Other (Income)
Expense (39) (139) 56 (222)
------------------- -------------- -------------- -------------
Income before
Taxes 1,781 6,420 22,070
20,305
Income Tax
Expense 223 1,634 6,896
6,022
------------------- -------------- -------------- -------------
Net Income 1,558 4,786 15,174
14,283
Income Attributable to
Noncontrolling - -
-
Interests 32
--------------- -------------- -------------- -------------
Net Income
Attributable to
Multi-Color
Corporation $ 1,558 $ 4,786 $ 15,206 $ 14,283
--------------- -------------- -------------- -------------
Basic Earnings Per
Share $ 0.10 $ 0.36 $ 1.07 $ 1.11
Diluted Earnings Per
Share $ 0.10 $ 0.36 $ 1.05 $ 1.10
Basic shares
Outstanding 15,960 13,267 14,191 12,914
Diluted Shares
Outstanding 16,225 13,430 14,439 13,037
Selected Balance Sheet Information
(in 000's)
Unaudited
December 31, 2011 March 31, 2011
--------------------- --------------------
Current Assets $ 157,802 $ 102,628
Total Assets $ 796,391 $ 411,829
Current Liabilities $ 123,967 $ 72,271
Total Liabilities $ 553,779 $ 220,003
Stockholders' Equity $ 242,612 $ 191,826
Total Debt $ 409,882 $ 127,331
Certain prior year amounts have been reclassified to conform to current year
reporting.
Exhibit B
Non-GAAP Measurements: The Company reports its financial results in accordance
with generally accepted accounting principles in the U.S. (GAAP). In order to
provide investors with additional information and more meaningful 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 non-GAAP measures are not in accordance with, nor are they a substitute
for, GAAP measures. The information can also be used to perform trend analysis
and to better identify operating trends that may otherwise be masked or
distorted by these types of items. Finally, the Company believes it provides a
higher degree of transparency of certain items.
The following tables show adjustments made to Gross Profit, Operating Income,
SG&A expenses and Interest Expense between reported GAAP and Non-GAAP results
for the three and nine months ended December 31, 2011 and 2010:
Adjusted Gross Profit:
Three Months Ended Nine Months Ended
-------------------------- -----------------------------
12/31/11 12/31/10 12/31/11 12/31/10
(in
000's) (in 000's) (in 000's) (in
000's)
----------- -------------- ------------- ---------------
Gross Profit, as
reported $ 23,528 $ 16,181 $ 66,790 $ 49,572
Inventory Purchase
Accounting
Charge 1,530 - 1,530
424
----------- -------------- ------------- ---------------
Adjusted Gross
Profit, (Non-GAAP) $ 25,058 $ 16,181 $ 68,320 $ 49,996
----------- -------------- ------------- ---------------
Adjusted Gross
Profit, (Non-GAAP)
as a % of
Revenues 17.1 % 19.4 % 19.5 % 20.1
%
Adjusted Operating Income:
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
12/31/11 12/31/10 12/31/11 12/31/10
(in 000's) (in 000's) (in 000's) (in
000's)
-------------- ------------- ------------- -------------
Operating Income,
as reported $ 7,134 $ 8,296 $ 31,804 $ 25,354
Acquisition
Expense 159 297 2,135 1,272
York Label Group
Integration
Expense 3,679 - 3,679 -
Severance and
Accelerated Stock
Compensation
Expense - - - 1,658
Inventory
Purchase
Accounting Charge 1,530 - 1,530 424
-
Napa Legal Fees - 487 487
Facility Closure
Income - (258) - (258)
-------------- ------------- ------------- -------------
Adjusted
Operating Income,
(Non-GAAP) $ 12,502 $ 8,822 $ 39,148 $ 28,937
-------------- ------------- ------------- -------------
Adjusted
Operating Income,
as a %
of Revenues
(Non-GAAP) 8.5 % 10.6 % 11.2 % 11.7 %
Adjusted SG&A Expenses:
Three Months Ended Nine Months Ended
----------------------------- ----------------------------
12/31/11 12/31/10 12/31/11 12/31/10
(in 000's) (in 000's) (in 000's) (in
000's)
-------------- -------------- ------------- --------------
SG&A Expenses, as
reported $ 16,394 $ 7,885 $ 34,986 $ 24,218
Severance and
Accelerated Stock
Compensation - -
Expense -
1,658
Acquisition
Expense 159 297 2,135
1,272
York Label Group
Integration -
Expense 3,679 3,679 -
Facility Closure -
Income (258) -
(258)
-
Napa Legal Fees 487 - 487
-------------- -------------- ------------- --------------
Adjusted SG&A
Expenses, (Non-
GAAP) $ 12,556 $ 7,359 $ 29,172 $ 21,059
-------------- -------------- ------------- --------------
Adjusted SG&A
Expenses, as a %
of Revenues,
(Non-GAAP) 8.6 % 8.8 % 8.3 % 8.5 %
Adjusted Interest Expense:
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
12/31/11 12/31/10 12/31/11 12/31/10
(in 000's) (in 000's) (in 000's) (in
000's)
--------------- -------------- --------------- --------------
Interest
Expense, as
reported $ 5,392 $ 2,015 $ 9,678 $ 5,271
Deferred
Financing Fee
Charge - - 490
-
--------------- -------------- --------------- --------------
Adjusted
Interest
Expense, (Non-
GAAP) $ 5,392 $ 2,015 $ 9,188 $ 5,271
--------------- -------------- --------------- --------------
For more information, please contact: Sharon E. Birkett
Vice president and Chief Financial Officer
Multi-Color Corporation, (513) 345-5311
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Multi-Color Corporation via Thomson Reuters ONE
[HUG#1583523]
