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Multi-Color Corporation Announces Record Core EPS in Q2

Monday, November 10, 2014

Press release from the issuing company

CINCINNATI, OHIO, November 7, 2014 - Multi-Color Corporation (NASDAQ: LABL) today announced second quarter fiscal 2015 results.

"Our September quarter shows improved organic revenue growth and operating efficiencies, both contributing to better earnings.  We see these improvements as broadly based and sustainable.  We are now focused on further organic revenue and earnings growth potential for next fiscal year, as well as acquisition opportunities," said Nigel Vinecombe, President and CEO of Multi-Color Corporation.

Second quarter highlights:

  • Net revenues increased 21% to $213.0 million from $176.6 million compared to the prior year quarter.  Net revenues increased 16% or $28.0 million due to acquisitions occurring after the beginning of fiscal 2014, 4% due to higher sales volumes led by North America and Europe, and 1% due to pricing sales/mix.  
  • Gross profit increased $12.6 million or 38% compared to the prior year quarter. Gross margins increased to 22% of sales revenues primarily due to improved operating efficiencies in North America and South America and a strong contribution from acquisitions occurring after the beginning of fiscal 2014, which contributed $6.9 million to the increase.
  • Selling, general and administrative (SG&A) expenses increased $2.6 million or 19% compared to the prior year quarter.  Acquisitions occurring after the beginning of fiscal 2014 contributed $1.9 million to the increase.  Core SG&A, as a percent of sales, was 7.5% for the current year quarter compared to 7.4% in the prior year quarter. Non-core items included in SG&A expenses in fiscal 2015 consisted of $0.1 million of acquisition expenses.  Non-core items included in SG&A expenses in fiscal 2014 consisted of $0.3 million of acquisition expenses and $0.1 million of costs related to integration expenses for the plant acquired from the Labelmakers Wine Division during fiscal 2014.  
  • In November 2014, the Company announced plans to consolidate its manufacturing facilities located in Norway, Michigan and Watertown, Wisconsin into its other existing facilities.  The transition will begin immediately with final plant closures expected within the next several months.  In connection with the closures of the Norway and Watertown facilities, the Company recorded a $5.2 million non-cash charge related to asset impairments in the current quarter and expects to record a charge in the range of $2.3 to $2.8 million in the third quarter of fiscal 2015, primarily for employee severance and other termination benefits. During the quarter, the Company also recorded $0.1 million in severance expenses related to the fiscal 2014 closure of the Company's plant in El Dorado Hills, California.
  • During the quarter, the Company finalized the fiscal 2014 impairment estimate for the Latin America Wine & Spirit reporting unit and recorded an additional non-cash goodwill impairment charge of $1 million primarily in relation to an increase in the value of net assets following the completion of external valuations.
  • Operating income increased 19% to $23.9 million from $20.1 million in the prior year quarter.  Core operating income increased $9.8 million or 48% compared to the prior year quarter. Operating income increased primarily due to improved operating efficiencies in North America and South America and recent acquisitions, partially offset by non-core expenses.  Acquisitions occurring after the beginning of fiscal 2014 contributed $5 million of increased operating income.  
  • Interest expense increased $0.6 million or 10% compared to the prior year quarter.  The increase is primarily due to an increase in debt borrowings to finance fiscal 2014 acquisitions. The Company had $459.8 million of debt at September 30, 2014 compared to $428.7 million at September 30, 2013.  
  • The effective tax rate increased to 38% in the current year quarter from 34% in the prior year quarter.  The effective tax rate on core net income was 37% in the current year quarter compared to 33% in the prior year quarter.  The Company expects its annual effective tax rate to be approximately 35% in fiscal 2015.  
  • Diluted earnings per share (EPS) increased 16% to $0.67 cents per diluted share from $0.58 cents in the prior year quarter.  Excluding the impact of the non-core items noted below, core EPS increased 52% to $0.93 cents per diluted share from $0.61 cents in the prior year quarter.  
  • Net income increased to $11.3 million from $9.6 million in the prior year quarter.  Core net income increased to $15.5 million from $10.1 million in the prior year quarter, primarily due to improved operating efficiencies in North America and South America and a strong contribution from acquisitions occurring after the beginning of fiscal 2014. 

Full Release

 

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