Multi-Color Corp. Announces Q1 Core EPS Increase of 12 Percent to $0.91
CINCINNATI—August 11, 2015—Multi-Color Corp. announced that first quarter core earnings per share increased 12 percent to $0.91 per diluted share from $0.81 in the prior year quarter.
- Organic growth at 4 percent with strong growth in Asia and South America
- Gross margin up 0.4 percent over Q1 last year, to 21.5 percent
- New acquisitions in first half of calendar 2015 in Ireland, England and France meeting expectations
- Lower effective tax rate expected for FY16
- Acquisition of Southeast Asian 'Super Label Group' expected to close this week, with annual revenues of approximately $36 million with operations in Malaysia, China, Indonesia, Thailand and the Philippines servicing MCC core markets in Home and Personal Care, Food and Beverage and Specialty labels provides additional organic growth potential.
"Stronger performance in Wine and Spirit markets and lower tax jurisdictions was partially offset by poor performance in Mexico and higher corporate expenses year over year. We are encouraged by our opportunities for improvement in the remainder of FY16," said Nigel Vinecombe, president and CEO of Multi-Color Corp.
Fiscal 2016 highlights:
- Net revenues increased 7 percent to $217.9 million compared to $203.1 million in the prior year quarter. Acquisitions occurring after the beginning of fiscal 2015 account for 8 percent of the increase or $17.3 million. Organic revenues increased 4 percent. Foreign exchange rates, primarily driven by depreciation of the Euro and the Australian dollar, led to a 5 percent decrease in revenues quarter over quarter.
- Gross profit increased $4.0 million or 9 percent compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2015 contributed $3.8 million to the increase. Organic gross profit improvement of $2.0 million was largely offset by foreign exchange movements. Core gross profit, excluding the impact of inventory purchase accounting charges, increased 10 percent or $4.1 million. Core gross margins increased to 21.5 percent of sales revenues for the current year quarter compared to 21.1 percent in the prior year quarter primarily due to improved operating efficiencies in the United States, South America and Asia Pacific.
- Selling, general and administrative (SG&A) expenses increased $3.9 million or 23 percent compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2015 contributed $2.0 million to the increase, partially offset by a decrease of $1.0 million due to the favorable impact of foreign exchange rates. The remaining increase in core SG&A primarily relates to professional fees and compensation expenses. Core SG&A as a percentage of sales was 8.5 percent in the current year quarter compared to 8.1 percent in the prior year quarter. Non-core items relate to acquisition and integration expenses in both quarters and were $2.0 million in fiscal 2016 compared to $0.2 million in fiscal 2015.
- During the current year quarter, the Company recorded facility closure expenses related to the previously announced closures of manufacturing facilities in Norway, Michigan and Watertown, Wisconsin of $0.3 million. During the prior year quarter, facility closure expenses were $0.1 million, related to the closure of the Company's manufacturing facility located in El Dorado Hills, California.
- Operating income was $26.1 million for both the current and prior year quarters. Core operating income increased $2.0 million or 8 percent to $28.4 million compared to $26.4 million in the prior year quarter primarily due to recent acquisitions. Acquisitions occurring after the beginning of fiscal 2015 contributed $1.8 million to the increase. Non-core items in fiscal 2016 relate to acquisition expenses of $1.9 million, facility closure expenses of $0.3 million, integration expenses of $0.1 million and an inventory purchase accounting charge of $0.1 million.
- Interest expense increased $0.6 million or 11 percent compared to the prior year quarter. The increase is primarily due to an increase in debt borrowings to finance acquisitions. The Company had $507.1 million of debt at June 30, 2015 compared to $466.7 million at June 30, 2014.
- The effective tax rate decreased to 33 percent in the current quarter from 34 percent in the prior year quarter primarily due to a favorable geographical mix of worldwide earnings partially offset by non-deductible acquisition expenses. The effective tax rate on core net income was 30 percent in the current year quarter compared to 34 percent in the prior year quarter primarily due to the geographical mix of worldwide earnings. The Company expects its annual effective tax rate to be approximately 31 percent in fiscal 2016.
- Net income was $13.3 million in both the current and prior year quarters. Core net income increased to $15.4 million from $13.5 million in the prior year quarter primarily due to acquisitions occurring after the beginning of fiscal 2015 and a lower effective tax rate.
- Diluted earnings per share (EPS) decreased 1 percent to $0.79 per diluted share from $0.80 in the prior year quarter. Excluding the impact of the non-core items noted below, core EPS increased 12 percent to $0.91 per diluted share from $0.81 per diluted share 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 fiscal 2016 and fiscal 2015. 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 and effective tax rate between reported GAAP and Non-GAAP results. The sum of the Earnings Per Share amounts may not equal the totals due to rounding.
Cincinnati, Ohio-based Multi-Color Corp. (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 over 3,800 associates across 37 operations globally and is a public company trading on the NASDAQ Global Select Market (company symbol: LABL).