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Multi-Color Announces 30 Percent Increase in 4Q Core EPS



Published August 16, 2013
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Multi-Color Corporation's fourth quarter core earnings per share increased 30% to $0.56 per diluted share from $0.43 in the prior year quarter. Fiscal 2013 core earnings per share increased 9% to $2.02 from $1.85 in the prior year. Diluted net earnings per share increased to $1.86 from $1.32 in the prior year. Non-core items (consisting of integration expenses, acquisition expenses, plant consolidation expenses, and purchase accounting charges) decreased to $0.16 per share from $0.53 per share in the prior year.

"Revenues at $660 million and organic growth at 4% met our targets set for the fiscal year. Gross margin trend has been positive in the second half of the fiscal year and SG&A ratio stable, delivering a core EPS breaking through the $2 mark," said Nigel Vinecombe, president and CEO of Multi-Color Corporation.

Fiscal 2013 highlights:
• Net revenues increased 29% to $659.8 million from $510.2 million in the prior year. Acquisitions and start-ups occurring after the beginning of fiscal 2012 account for 27% of the 29% increase or $139.7 million. Of this acquisition-related revenue increase, $114.7 million is attributable to the acquisition of York Label Group. Organic net revenues excluding foreign exchange impact increased 4% in the current year comprised of a 2% increase in sales volumes and a 2% favorable impact of sales mix. The impact of foreign exchange rates compared to the prior year was an unfavorable 2% change primarily driven by the depreciation of the euro.
• Gross profit increased $28.0 million or 29% compared to the prior year. Acquisitions and start-ups occurring after the beginning of fiscal 2012 contributed $19.0 million or 20% to the gross profit increase. The remaining 9% increase was due to higher organic sales volumes and favorable sales mix. Core gross profit, excluding the impact of inventory purchase accounting charges, increased 27% or $27.0 million. Core gross margins decreased to 19% of sales revenues compared to 20% the prior year primarily due to operating inefficiencies in the first half of the fiscal year related to the York Label Group acquisition.
• Selling, general and administrative (SG&A) expenses increased $2.6 million or 5% compared to the prior year. SG&A increased $9.2 million due primarily to the impact of acquisitions occurring after the beginning of fiscal 2012 partially offset by a decrease of $6.6 million in integration and acquisition expenses compared to the prior year. Core SG&A, as a percent of sales, decreased to 8% of sales from 9% of sales in the prior year.
• In fiscal 2013, the company incurred $1.5 million of expenses related to the consolidation of its manufacturing facilities located in Montreal, Canada and Kansas City, Missouri. In connection with the closure of the Kansas City facility, the company incurred a charge of $1.2 million in the fourth quarter of fiscal 2012 comprised of employee severance and other termination benefits, non-cash charges related to asset impairments and relocation and other costs.
• Operating income increased $25.1 million or 55% compared to the prior year. Acquisitions and start-ups occurring after the beginning of fiscal 2012 contributed $8.2 million to the operating income increase. The remaining increase is due primarily to the impact of higher sales volumes, favorable sales mix impact, lower integration expenses and other cost decreases. Core operating income increased 32% to $74.2 million from $56.4 million in the prior year. Non-core items for fiscal 2013 include $1.5 million related to the closure of the Kansas City, Missouri facility and the consolidation of the Montreal, Canada plants.
• Core interest expense increased $7.7 million compared to the prior year. The increase is due primarily to a full year of interest on the debt used to finance the acquisitions of the York Label Group and Labelgraphics.
• The company had $402.9 million of debt at March 31, 2013 compared to $402.1 million at March 31, 2012. In April 2012, the company borrowed $42.3 million to finance the Labelgraphics acquisition and fund the deferred payment on the York Label Group acquisition. During fiscal 2013, the company paid down $41.5 million of the additional borrowings.
• Diluted earnings per share (EPS) increased 41% to $1.86 per diluted share from $1.32 in the prior year. Excluding the impact of the non-core items noted below, core EPS increased 9% to $2.02 per diluted share from $1.85 per diluted share in the prior year.
• Net income attributable to Multi-Color Corporation increased to $30.3 million from $19.7 million in the prior year. Core net income attributable to Multi-Color Corporation increased to $33.0 million from $27.6 million in the prior year.
• On April 2, 2012, Multi-Color acquired Labelgraphics for a total purchase price of $25.3 million. Labelgraphics, based in Glasgow, Scotland, supplies labels to the spirit & wine markets bottled in the UK. These markets are experiencing growth through spirit shipments to developing markets and imported wine shipments bottled in the UK.

"We remain focused on delivering improved organic performance in fiscal 2014 as our first priority. In addition, we expect renewed acquisition activity in our core premium label markets," Mr. Vinecombe reported.

Fourth Quarter highlights:
• Net revenues increased 5% to $168.0 million from $160.6 million compared to the prior year quarter. Of the 5% increase, 3% is due to the Labelgraphics acquisition. The remaining increase was primarily due to increases in North America, partially offset by decreased sales in Europe and South America.
• Gross profit increased $3.1 million or 10% compared to the three months ended March 31, 2012. Acquisitions and start-ups occurring after March 31, 2012 contributed $0.6 million or 2% to the gross profit increase. The remaining 8% increase was due to increased volume and sales mix. Gross margins increased to 21% of sales revenues compared to 20% the prior year quarter.
• Selling, general and administrative expenses (SG&A) decreased $3.2 million compared to the prior year quarter. Non-core items included in SG&A expenses in the fourth quarter of fiscal 2012 consisted of $1.9 million of integration expenses related to the York Label Group acquisition and $0.4 million of acquisition related expenses. Core SG&A, as a percent of sales, decreased to 8% from 9% in the prior year quarter.
• Operating income increased $7.5 million to $21.2 million compared to $13.7 million in the three months ended March 31, 2012. Core operating income increased 23% to $21.2 million from $17.2 million in the prior year quarter. The increase is due primarily to lower SG&A expenses and an increase in sales volume in the current quarter.
• Diluted earnings per share (EPS) increased to $0.56 per diluted share from $0.28 per diluted share in the three months ended March 31, 2012. Excluding the impact of the non-core items noted below, the core EPS increased 30% to $0.56 per diluted share from $0.43 per diluted share in the prior year quarter. Net income attributable to Multi-Color Corporation increased to $9.2 million from $4.5 million in the prior year quarter. Core net income attributable to Multi-Color Corporation increased to $9.2 million from $6.9 million in the prior year quarter.


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