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Multi-Color Announces Results for 3Q of Fiscal Year 2013



Published February 5, 2013
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Multi-Color Corporation announced a 35% increase in third quarter adjusted EPS compared to the prior year quarter after the first anniversary of the York acquisition.

"The December quarter saw adjusted gross margin, as a percent of revenues, rebound with a 2% increase over the prior year quarter to 19%. The return to higher gross margin is now across a much larger revenue base and primarily reflects benefits of York acquisition synergies," said Nigel Vinecombe, president and CEO of Multi-Color Corporation.

Third quarter highlights:
• Net revenues increased 7% to $157 million from $146.4 million compared to the three months ended December 31, 2011. Net revenues increased 4% or $5.8 million due to acquisitions occurring after Dec, 31, 2011 and 3% due to higher sales volumes.
• Gross profit increased $6.9 million or 29% compared to the three months ended Dec. 31, 2011. Adjusted for special items, gross profit increased $5.4 million or 21% compared to the prior year quarter. The increase is primarily due to higher sales volumes in the current quarter and acquisitions occurring after Dec. 31, 2011. Gross margins, adjusted for special items, increased to 19% of net revenues compared to 17% of net revenues in the three months ended Dec. 31, 2011. This increase in adjusted gross margins is due primarily to improvements in operations in North and Latin America related to the completion of most of the integration of the York Label Group acquisition.
• Selling, general and administrative (SG&A) expenses decreased $1.2 million compared to the prior year quarter due primarily to lower integration expenses related to the acquisition of the York Label Group compared to the prior year partially offset by the impact of acquisitions occurring after the beginning of the prior year period and costs related to the consolidation and relocation of plants. Adjusted for special items, SG&A expenses increased by 13% compared to the prior year quarter due primarily to the impact of new acquisitions.
• Operating income increased $8.1 million compared to the prior year quarter. Adjusted for special items, operating income increased 30% to $16.3 million from $12.5 million. The increase was due primarily to acquisitions occurring after Dec. 31, 2011, higher North American sales volumes and improvements in the operations in North and Latin America related to the completion of most of the integration of the York Label Group acquisition.
• Interest expense increased by 5% compared to the prior year quarter. The increase is due primarily to a 1% increase in the interest rate on $125 million of variable rate debt swapped to fixed rate debt starting Oct. 3, 2012 and a higher debt balance in the current period. The company had $416.8 million of debt at Dec. 31, 2012 compared to $409.9 million at Dec. 31, 2011.
• Diluted earnings per share (EPS) increased to $0.36 per diluted share from $0.10 in the prior year quarter. Excluding the impact of the special items noted below, adjusted EPS increased 35% to $0.42 per diluted share from $0.31 in the prior year quarter. Net income attributable to Multi-Color Corporation increased to $5.9 million from $1.6 million in the prior year. Adjusted for special items, net income attributable to Multi-Color Corporation increased to $6.8 million from $5 million in the prior year quarter.

"We consolidated our Montreal plants in the December quarter and plan to complete our current integration plans with the consolidation of our Omaha plants in the March quarter,” Mr. Vinecombe said. “We also see improved operations in Chile and China. We look forward to our positive momentum continuing into fiscal 2014 and creating scope for further acquisitions."

Year-to-date highlights:
• Net revenues increased 41% to $491.8 million from $349.7 million compared to the nine months ended Dec. 31, 2011. Net revenues increased 39% or $134.3 million due to acquisitions occurring after the beginning of the prior year period. Net revenues increased by 3% compared to the prior year due to higher sales volumes and 1% due to a favorable impact of pricing and sales mix. Net revenues decreased 2% compared to the prior year due to the unfavorable impact of foreign exchange rates primarily driven by depreciation in the Australian dollar and the euro at the beginning of fiscal 2013.
• Gross profit increased $25 million or 37% compared to the nine months ended Dec. 31, 2011. Adjusted for special items, gross profit increased $23.9 million or 35% compared to the prior year. The increase is primarily due to acquisitions occurring after the beginning of the prior year period partially offset by a decrease related to the unfavorable impact of foreign exchange rates in the current year. Gross margins, adjusted for special items, decreased to 19% of net revenues compared to 20% of net revenues in the nine months ended Dec. 31, 2011. This reduction in adjusted gross margins is due primarily to integration inefficiencies in North and Latin America.
• Selling, general and administrative (SG&A) expenses increased $7.3 million compared to the nine months ended December 31, 2011 due to the impact of acquisitions and costs related to the consolidation and relocation of plants of $1.5 million partially offset by lower integration expenses related to the York Label group acquisition and the impact of foreign exchange rates in the current year. Adjusted for special items, SG&A expenses increased by 35% compared to the nine months ended Dec. 31, 2011 due primarily to the impact of new acquisitions.
• Operating income increased $17.7 million or 56% compared to the nine months ended Dec. 31, 2011. Adjusted for special items, operating income increased 35% to $52.9 million from $39.1 million. The increase was due primarily to acquisitions occurring after the beginning of the prior year period 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 $7.2 million compared to the nine months ended Dec. 31, 2011. The increase is due primarily to an increase in debt borrowings to finance acquisitions, including the York Label Group acquisition and higher interest rates. Adjusted for special items, interest expense increased $7.7 million compared to the prior year. The company had $416.8 million of debt at Dec. 31, 2012 compared to $409.9 million at December 31, 2011.
• Diluted earnings per share (EPS) increased to $1.29 per diluted share from $1.05 in the nine months ended December 31, 2011. Excluding the impact of the special items noted below, adjusted EPS increased 2% to $1.46 per diluted share from $1.43 in the prior year. Net income attributable to Multi-Color Corporation increased to $21.1 million from $15.2 million in the prior year. Adjusted for special items, net income attributable to Multi-Color Corporation increased to $23.9 million from $20.7 million in the prior year.


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