Multi-Color announces results for FY2010, pleased with current position
Friday, May 21, 2010
Press release from the issuing company
Cincinnati - Multi-Color Corporation today announced financial results for the fourth quarter and full year ended March 31, 2010, compared with the same periods a year ago.
The Company generated $1.16 in diluted earnings per share (EPS) during fiscal 2010, an increase of 25% compared to $0.93 cents in the prior year. In addition, the Company generated Income from Continuing Operations of $14.3 million.
Fiscal 2010 highlights included:
- Diluted EPS from continuing operations increased 25% to $1.16 per diluted share from $0.93 cents. Excluding the impacts of the special charges noted below, adjusted diluted EPS from continuing operations increased 3% to $1.14 per diluted share from $1.11. Adjusted income from continuing operations increased 2% to $14.0 million compared to $13.7 million in the prior year.
- Net revenues decreased 4% to $276.8 million from $289.8 million. The decrease was due to a 6% decline in organic sales partially offset by a 2% favorable foreign exchange impact. The organic sales decline was comprised of a $14.2 million or 5% decrease in sales volume and mix and $4 million or 1% of lower pricing. The 5% sales volume decline is primarily related to lower sales volumes to our top two customers.
- Gross profit margins remained steady at 18% of sales revenues compared to the prior year.
- Selling, general and administrative (SG&A) expenses, adjusted for special charges, decreased by 4% compared to the prior year. The special charges included in SG&A expenses for fiscal 2010 were primarily comprised of $1.1 million in severance charges and $940,000 for non-cash fixed asset impairments.
- On February 12, 2010, the Company entered into a supply agreement to fulfill gravure cylinder requirements. As a part of the agreement, the Company sold certain assets associated with the manufacturing of gravure cylinders for $4.3 million in cash. The Company recorded an after-tax gain of $2.1 million on the sale in its fourth quarter fiscal 2010 financial results.
- As previously reported, the Company recorded facility closure expenses of $1.2 million ($959,000 after-tax) in connection with the relocation of its corporate headquarters which reduced diluted earnings per share (EPS) by 8 cents.
- Operating income was steady compared to the prior year at $22.9 million. Excluding the impact of the special items from both periods, adjusted operating income decreased 12% to $23.1 million from $26.4 million due primarily to the decrease in North American organic sales.
- Interest expense decreased to $4.8 million from $6.8 million due to a $17 million or 16% reduction in bank debt and lower interest rates.
- The Company's effective tax rate was 23% in 2010 compared to 30% in 2009 due to income in lower tax jurisdictions and a recognized tax benefit related to a foreign exchange loss on intercompany loans and other items, resulting in a $1 million benefit to income tax expense in the fourth quarter of fiscal 2010. The Company expects its annual effective tax rate to be approximately 30% in fiscal year 2011.
Frank Gerace, President and CEO of Multi-Color Corporation stated, "In spite of an extremely challenging economic environment which negatively impacted revenues and the implementation of significant transition plans, I am pleased with our ability to increase adjusted income and earnings per share for the year. I am confident that Multi-Color is well-positioned financially and strategically to take advantage of new growth opportunities. I want to thank our associates for their commitment and dedication in getting through a very difficult year."
Fourth Quarter Results
- Diluted EPS from continuing operations increased to $0.38 cents per diluted share from $0.23 cents. Excluding the impacts of the special charges noted below, adjusted diluted EPS from continuing operations decreased to $0.25 cents per diluted share from $0.28 cents due primarily to reduced North American revenues.
- Net revenues increased 3% to $69.2 million from $67.0 million in the prior year as a 7% favorable foreign exchange impact was partially offset by a 4% organic sales decline primarily with our second largest customer. Approximately one-half of the organic sales decline was due to pricing while the remaining one-half was due to lower sales volume and mix.
- Gross profit decreased 11% or $1.4 million due primarily to the impact of the decrease in North American revenues.
- Selling, general and administrative expenses increased by 43% compared to the prior year quarter due primarily to $920,000 in severance charges, $940,000 for non-cash fixed asset impairments and foreign exchange. Adjusted for special charges and foreign exchange, SG&A expenses as a percent of sales were steady at 9% for both periods. - On February 12, 2010, the Company entered into a supply agreement to fulfill gravure cylinder requirements. As a part of the agreement, the Company sold certain assets associated with the manufacturing of gravure cylinders for $4.3 million in cash. The Company recorded an after-tax gain of $2.1 million on the sale in its fourth quarter fiscal 2010 financial results.
- The Company's income tax expense for the fourth quarter of fiscal 2010 includes a recognized tax benefit related to a foreign exchange loss on intercompany loans and other items, resulting in a $1.0 million benefit to income tax expense. In the fourth quarter of fiscal 2009, the Company realized a tax benefit of $1.0 million related to the finalization of the acquisition tax structure for its international operations. The tax benefit increased EPS by $0.08.
Nigel Vinecombe, Chief Operating Officer, said that transitional plans are now moving toward completion: "This June quarter will mark the end of our significant transition plans over the last two years in our North American business. These plans started with our new Batavia plant two years ago, then our Framingham HTL plant closure one year ago, plus in the last year, our sale of certain gravure cylinder assets and our corporate office relocation. The management team continues to focus on improving customer service, improving operational effectiveness and efficiencies and reducing overhead costs."
In relation to the outlook for the year ahead, Mr. Vinecombe says, "In fiscal 2011, our goal is to deliver earnings growth from our existing businesses as a result of our lower cost base and continue to pursue selected acquisitions."