Cimpress Announces Significant Growth for Q4 and Fiscal Year 2016 Results
VENLO, Netherlands — July 28, 2016 — Cimpress N.V., the world leader in mass customization, has announced financial results for the fourth quarter and fiscal year ended June 30, 2016.
"In fiscal year 2016 we made significant progress against our strategic initiatives outlined at the beginning of the year," explains Robert Keane, president and CEO. "We are entering the new fiscal year with strong momentum and optimism for our business. In light of this, we have established plans to increase our level of organic investment in fiscal 2017."
Keane continues, "Our philosophy and approach to allocating capital and tracking the return on such investments remains consistent with last year. I encourage investors to review my letter to investors published today on our investor relations website. That letter focuses on Cimpress' capital allocation philosophy, a financially oriented view of our investments past and future, and our views as to the underlying 'steady state' cash generation capabilities of our company. We will also review those subjects and provide a qualitative view into our strategy and operations at our upcoming investor day on August 10th which will be webcast live at ir.cimpress.com."
Sean Quinn, CFO adds, "Turning to our financial results, top-line growth for the fourth quarter was 26% in both reported and constant currency terms, reflecting an acceleration of growth in the Vistaprint business unit, solid performance from our faster growing Upload and Print portfolio of brands, and a decline in our All Other business units segment which was impacted by the previously described wind-down of two partnerships. Excluding the impacts of currency and acquisitions made in the trailing twelve months, our fourth quarter organic revenue grew 11% versus a tough comparison in the fourth quarter of 2015, as the net year-over-year revenue impacts of the release of deferred revenue related to group buying activities for Vistaprint was a headwind of $3.7 million. We are starting to see the financial benefit of years of past investments in our Vistaprint value proposition.
"Our GAAP operating income, net income and adjusted NOPAT results for the fourth quarter reflect increased profits in our Vistaprint and Upload and Print business units, which includes profits from companies we acquired in the last year," Quinn continues. "These metrics were also influenced by a negative profit impact of roughly $5 million from the wind-down of two partnerships mentioned earlier, as well as planned higher investment spending versus fiscal 2015. Additionally, our fourth quarter GAAP net income was positively impacted by year-over-year swings in unrealized currency gains and losses. Please refer to our fourth quarter and fiscal year 2016 earnings presentation for an update on our outlook for the business and planned levels of investment for fiscal year 2017."
Consolidated Financial Metrics:
- Revenue for the fourth quarter of fiscal year 2016 was $479.2 million, a 26% increase compared to revenue of $380.5 million in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past 12 months, revenue grew 11% year over year in the fourth quarter. For the full year, total consolidated revenue grew 20% year over year. The year-over-year strengthening of the U.S. dollar negatively impacted the company's revenue growth rate for the full year. Excluding the estimated impact from currency exchange rate fluctuations revenue growth was 24%. Excluding the estimated impact from both currency exchange rate fluctuations and revenue from businesses acquired during the past 12 months, revenue for the full year grew 11%.
- Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the fourth quarter was 53.5%, down from 58.9% in the same quarter a year ago due primarily to the increased weighting of its Upload and Print business units. For the full fiscal year, gross margin was 56.7% compared to 61.9% in fiscal year 2015, due to the weighting of the company's Upload and Print business units, as well as impairment charges of $11.0 million related to write-downs of proprietary technology investments during the year.
- Operating income in the fourth quarter was $16.0 million, or 3.3% of revenue, an increase in absolute dollars but a decrease as a percent of revenue compared to operating income of $15.2 million, or 4.0% of revenue, in the same quarter a year ago. For the full fiscal year, operating income was $78.2 million, or 4.4% of revenue, down from operating income of $96.3 million, or 6.4% of revenue, in the prior fiscal year.
- Adjusted NOPAT for the fourth quarter, which is defined at the end of this press release, was $16.9 million, or 3.5% of revenue, down from $19.8 million, or 5.2% of revenue, in the same quarter a year ago. For the full fiscal year, adjusted NOPAT was $139.8 million, up from $125.1 million in fiscal year 2015.
- GAAP net income attributable to Cimpress for the fourth quarter was $16.9 million, or 3.5% of revenue, compared to a GAAP net loss of $(3.7) million, or (1.0)% of revenue in the same quarter a year ago. GAAP net loss in the prior year quarter was significantly impacted by year-over-year non-operational, non-cash currency impacts. The net impact of the release of previously deferred revenue in the fourth quarter of fiscal 2015 related to unredeemed group buying vouchers was a year-over-year headwind of $3.7 million to revenue growth, operating income, net income and adjusted NOPAT in the current period. For the full fiscal year, GAAP net income attributable to Cimpress was $54.3 million, or 3.0% of revenue, down 41% compared to GAAP net income of $92.2 million, or 6.2% of revenue, in the prior fiscal year. For the full year both operating income and GAAP net income were significantly influenced by a goodwill impairment charge of $30.8 million related to one of its acquired businesses in Europe discussed in detail in its Q3 FY16 earnings materials, as well as impairment charges of $11.0 million related to write-downs of proprietary technology investments during the year, included in cost of goods sold.
- GAAP net income per diluted share for the fourth quarter was $0.51, versus a net loss of $(0.11) in the same quarter a year ago. This was heavily influenced by year-over-year non-operational, non-cash currency impacts. For fiscal year 2016, GAAP net income per diluted share was $1.64, versus $2.73 in the prior full fiscal year.
- Capital expenditures in the fourth quarter were $17.8 million, or 3.7% of revenue. During the full fiscal year capital expenditures were $80.4 million or 4.5% of revenue.
- During the fourth quarter, the company generated $52.1 million of cash from operations and $34.8 million in free cash flow, a non-GAAP measure, which is defined at the end of this press release. During the full fiscal year, the company generated $247.4 million of cash from operations and $152.4 million in free cash flow.
- As of June 30, 2016, the company had $77.4 million in cash and cash equivalents and $678.5 million of debt, net of issuance costs. After considering debt covenant limitations, as of June 30, 2016, the company had $427.5 million available for borrowing under its committed credit facility.
- Cimpress did not repurchase shares during the fourth quarter. For the full year, Cimpress purchased 2,159,613 shares for $153.5 million inclusive of transaction costs, an average price per share of $71.06.
Important Reminder of Cimpress’ Priorities
Cimpress asks investors and potential investors to understand the upper-most objectives by which the company endeavors to make all decisions, including investment decisions. Often Cimpress makes decisions in service of these priorities that could be considered non-optimal were they to be evaluated based on other criteria such as (but not limited to) near- and mid-term net income, operating income, EPS, cash flow, EBITDA, and adjusted NOPAT.
Cimpress' priorities are:
- Strategic Objective: To be the world leader in mass customization. By mass customization, Cimpress means producing, with the reliability, quality and affordability of mass production, small individual orders where each and every one embodies the personal relevance inherent to customized physical products.
- Financial Objective: To maximize intrinsic value per share, defined as (a) the unlevered free cash flow per share that, in our best judgment, will occur between now and the long-term future, appropriately discounted to reflect our cost of capital, minus (b) net debt per share.
Cimpress N.V. (Nasdaq: CMPR) is the world leader in mass customization. For more than 20 years, the company has been producing, with the reliability, quality and affordability of mass production, small individual orders where each and every one embodies the personal relevance inherent to customized physical products. The company produces more than 46 million uniquely designed items a year. Cimpress’ portfolio of brands includes Vistaprint, Albelli, Drukwerkdeal, Pixartprinting, Exaprint and others. That portfolio serves multiple customer segments across many applications for mass customization.