Multi-Color Corporation Announces Q2: Sales increased to $31.7 million
Monday, October 25, 2004
CINCINNATI, Oct. 22 -- Multi-Color Corporation announced financial results for the second quarter of fiscal 2005, ending September 30, 2004, compared with the same period a year ago. Second-quarter highlights included: - Net Sales increased to $31.7 million, slightly higher than last year's second quarter. - Net Income of $1.7 million was also up slightly from the same period a year ago. - Earnings Per Share (EPS) were $0.25 per diluted share, the same as the prior-year quarter. The Company reported that second quarter sales reflected the recovery of orders that a major customer had postponed in the first quarter, offset by reduced demand from a major beverage customer and from personal care customers. Frank Gerace, President and CEO of Multi-Color Corporation, stated that "We saw an improvement in sales in our second quarter compared to the first quarter this year, however our sales growth compared with the second quarter last year was less robust than we anticipated." Second-quarter sales in the Company's Packaging Services division increased 14% from the second quarter a year ago as a result of strong seasonal business with existing customers. Second-quarter sales in the Decorating Solutions division were 3% less than the prior-year quarter, but 2% better than the first quarter of fiscal 2005. "Our Packaging Services division continued to perform above expectations as our customers rewarded us with new business in their strong retail segments," Gerace said. "Our Decorating Solutions division, however, did not achieve its 8% historical organic growth rate in the first or second quarter. As a result, we have made significant changes in that division's sales organization. We believe that those changes, along with stronger demand, will contribute to improving organic growth from the Decorating Solutions division in the second half of our fiscal year." The Company also reported that gross margins improved over the first quarter as a result of excellent operating performance in the Packaging Services division, coupled with the impact of increased sales volume. During the quarter, however the Company's Decorating Solutions division began receiving raw material price increase notifications from key suppliers. The Company intends on recovering these increases through price increases on affected products. The Company's SG&A expenses were up 3% compared to the prior year due to increased recruiting and relocation costs incurred during the quarter. Multi-Color's interest expense declined $105,000 compared to a year ago, a result of the Company's continuing reductions in long-term debt, and the November 2003 purchase of the Scottsburg, IN plant which was previously leased under a capitalized lease. In addition, the Company's effective tax rate was lower this quarter than in the same period a year ago due to a lower estimated effective state tax rate. For the six-month period ending September 30, 2004, Multi-Color's net sales of $60.5 million were flat compared to the prior year. Net income declined 15 percent to $2.8 million, and diluted earnings per share were 42 cents, down from 50 cents in the first half of fiscal 2004. "Our team devoted significant attention during the second quarter toward initiatives that will make us stronger and more competitive in the years to come," Gerace said. "We have strengthened our management team with new talent in several key positions, brought our new gravure press in Scottsburg on-line, and continued our exploration of strategic opportunities for growth within the packaging industry. As we execute these and other initiatives, I remain confident that Multi-Color is poised to restore the growth and earnings trends that our shareholders have come to expect," said Gerace.