Multi Packaging Solutions Announces 4Q 2016 Results

Multi Packaging Solutions International Limited (MPS), a global leader in value-added print and packaging solutions for the branded consumer, healthcare, and multi-media markets, announced results for 4Q and fiscal year 2016.
 
GAAP net sales for 4Q FY 2016 and fiscal year 2016 were $373.8 million and $1,661.4 million vs. net sales for 4Q FY 2015 and fiscal year 2015 of $402.5 million and $1,617.6 million. 4Q FY 2016 and fiscal year 2016 include negative foreign exchange effects of $6.0 million and $77.2 million when compared to the prior period.
 
“We had a very successful 2016, notwithstanding some significant challenges,” said CEO Marc Shore. “EBITDA was a record $254.3 million despite a negative foreign exchange impact of $12.4 million. EBITDA margin grew by 100 basis points over the prior year to 15.3%. The business also generated approximately $109 million of free cash flow, which allowed us to make early debt repayments of $60 million. In addition to the challenges of foreign exchange, we were disappointed with top-line sales. This was due to the fact that a number of our core customers’ businesses are below expectations in the current fiscal year.
 
“As we enter fiscal 2017, we are enthusiastic about our prospects,” Shore noted. “Our facility improvement plan is gaining traction and other measures that we have taken to enhance profitability are also being implemented. The company also remains committed to sourcing strategic and accretive acquisitions and there are several opportunities in the pipeline. However, foreign exchange will continue to be a significant negative impact in fiscal 2017. The Brexit vote has resulted in a meaningful devaluation of the GBP and this will again impact both sales and EBITDA.”
 
On an end market basis, Consumer, Healthcare and Media comprised 48.4%, 44.3% and 7.3% of total net sales in 4Q FY 2016 respectively, and 50.6%, 38.5% and 10.9% of total net sales for the fiscal year ended 2016, respectively.
 
Net sales in the quarter and for the year to date period were impacted principally due to the foreign exchange effects noted above, as well as a decline in non-toy media sales compared to the prior year ($4.8 million and $36.8 million, respectively), the decline in sales of a Disney toy project where Disney has exited the business ($10.4 million and $30.8 million, respectively), and the decline in UK tobacco sales due to UK tobacco legislation ($3.3 million and $14.2 million, respectively).
 
For the full fiscal year, gross margins continue to improve. Gross margin for the quarter and for the year to date period were 19.4% and 21.3% respectively, vs 20.6% and 20.5% in the corresponding prior year periods.
 
The improvement is principally due to the company’s operational focus on plant manufacturing metrics, previously announced and achieved acquisition synergy targets, and appropriate cost savings capital investments.
 
GAAP operating income for 4Q FY 2016 was $10.3 million, vs. $9.5 million for 4Q 2015. GAAP operating income for fiscal 2016 was $84.1 million vs. $71.0 million for fiscal 2015.
 
Adjusted EBITDA for 4Q FY 2016 was $49.4 million (13.2%) vs. $54.0 million (13.4%) in 4Q FY 2015. Adjusted EBITDA for the fiscal year 2016 was $254.3 million (15.3%) vs. $231.0 million (14.3%) in fiscal year 2015.
 
Cash balances as of June 30, 2016 were $44.8 million. Total debt net of cash was $863.1 million including deferred finance fees and debt discount of $16.1 million.