Cimpress Reports Q4 and Y/Y Growth
Monday, August 03, 2015
Press release from the issuing company
VENLO, Netherlands - Cimpress N.V. (Nasdaq: CMPR), the world leader in mass customization, today announced financial results for the three month period ended June 30, 2015, the fourth quarter of its 2015 fiscal year.
"Our fourth quarter and full year fiscal 2015 performance reflects the great strides made in service of the strategy we communicated at our August 2014 investor meeting," said Robert Keane, president and chief executive officer. "We gained initial traction on our multi-year project to integrate our production technology and operations via a common mass customization platform. In our Vistaprint business unit the constant currency revenue growth doubled in fiscal 2015 compared to fiscal 2014 reflecting net positive returns from the many improvements we have made to reposition the Vistaprint customer value proposition toward "higher expectations" customers, even as many of those investments continue to create short-term revenue headwinds. Over the past year we allocated capital to the acquisition of several high-quality businesses that we believe will bring important additional capabilities to our future mass customization platform as well as brands with which we can go to market via distinct and differentiated customer value propositions. In Japan and Indiawe continued to build foundations for growth and we entered the market in Brazil via an equity investment of just under 50%. Across our company we broadened product offerings in categories such as signage, apparel and soft goods, flyers and promotional products."
Keane added, "As we begin the next fiscal year, we reiterate our strategic objective of being the world leader in mass customization, and our financial objective of maximizing our intrinsic value per share."
Ernst Teunissen, chief financial officer, noted, "Our fourth quarter results were in line with expectations. Our GAAP net income results continue to be impacted by non-operational, non-cash currency items, which caused GAAP EPS to be at the lower end of our previous guidance range."
Acquisitions Completed During the Fourth Quarter
Cimpress completed the following acquisitions during the fourth quarter:
- Exagroup SAS, a leading web-to-print business in Europe that focuses on serving French graphic arts professionals and printers
- druck.at Druck- und Handelsgesellschaft mbH (druck.at), a leading web-to-print business in Austria
- FL Print SAS, which does business as Easyflyer in France, a small but rapidly growing French web-to-print start-up company
Our fourth quarter consolidated results include a partial quarter of the operations of these businesses.
Consolidated Financial Metrics:
- Revenue for the fourth quarter of fiscal year 2015 was $380.5 million, a 13 percent increase compared to revenue of $338.2 million reported in the same quarter a year ago. The year-over-year strengthening of the U.S. Dollar has negatively impacted the U.S. Dollar value of our revenues generated from countries other than the United States. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, total revenue grew 13 percent year over year in the fourth quarter, in line with our expectations. For the full year, total consolidated revenue grew 18 percent year over year and 23 percent in constant currencies. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, revenue for the full year grew 9 percent.
- Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the fourth quarter was 58.9 percent, down from 60.5 percent in the same quarter a year ago. For the full fiscal year, gross margin was 61.9 percent compared to 64.5 percent in fiscal year 2014. The year-over-year reduction in gross margin was primarily due to the mix effect of our acquisitions in the upload and print space that have lower gross margins than our Vistaprint business unit.
- Operating income in the fourth quarter was $15.2 million, or 4.0 percent of revenue, a decrease in both absolute dollars and as a percent of revenue compared to $19.7 million, or 5.8 percent of revenue, in the same quarter a year ago. For the full fiscal year, operating income was $96.3 million, or 6.4 percent of revenue, a 12 percent increase compared to operating income of $85.9 million, or 6.8 percent of revenue, in the prior fiscal year. Operating income in the fourth quarter and year was negatively impacted by currency fluctuations that were offset by realized hedging gains below the line in Other income (expense), net.
- GAAP net loss for the fourth quarter was $(3.7) million, or (1.0) percent of revenue, compared to GAAP net income of $1.0 million, or 0.3 percent of revenue in the same quarter a year ago. This was influenced by additional interest expense related to the senior unsecured notes offering completed in the third quarter, as well as non-operational, non-cash currency impacts. For the full fiscal year, GAAP net income attributable to Cimpress was $92.2 million, or 6.2 percent of revenue, a 111 percent increase compared to GAAP net income of $43.7 million, or 3.4 percent of revenue, in the prior fiscal year.
- GAAP net loss per diluted share for the fourth quarter was $(0.11), versus GAAP net income per diluted share of $0.03 in the same quarter a year ago. For the full fiscal year, GAAP net income per diluted share was $2.73, versus $1.28 in the prior full fiscal year.
- Non-GAAP adjusted net income for the fourth quarter, which is defined at the end of this press release, was $22.8 million, or 6.0 percent of revenue, down 10.4 percent compared to $25.5 million, or 7.6 percent of revenue, in the same quarter a year ago. For the full fiscal year, non-GAAP adjusted net income was $147.7 million, or 9.9 percent of revenue, a 44 percent increase compared to non-GAAP adjusted net income of $102.5 million, or 8.1 percent of revenue, in the prior fiscal year.
- Non-GAAP adjusted net income per diluted share for the fourth quarter, as defined at the end of this press release, was $0.66, versus $0.75 in the same quarter a year ago. For the 2015 full fiscal year, non-GAAP adjusted net income per diluted share was $4.31, versus $2.95 in the prior fiscal year.
- Capital expenditures in the fourth quarter were $25.7 million, or 6.8 percent of revenue. During the full fiscal year capital expenditures were $75.8 million or 5.1 percent of revenue.
- During the fourth quarter, the company generated $36.5 million of cash from operations and $12.7 million in free cash flow, which is defined at the end of this press release. During the full fiscal year, the company generated $228.9 million of cash from operations and $143.5 million in free cash flow.
- As of June 30, 2015, the company had $103.6 million in cash and cash equivalents and $522.5 millionof debt. After considering debt covenant limitations, as of June 30, 2015 the company had $589.6 million available for borrowing under its committed credit facility.
Operating metrics are provided as a table-based supplement to this press release. The acquisitions of Printdeal, Pixartprinting, FotoKnudsen, Exagroup, Easyflyer, and druck.at, and the investment in Printi and the Digipri contribution to our joint venture in Japan are not incorporated into these metrics.
As described in Robert Keane's letter to investors posted on ir.cimpress.com, we are evolving our investor communications to better align with the way we view and manage our business today. We will no longer provide detailed annual guidance for our revenue, GAAP, and non-GAAP earnings per share results. We have provided our expectations of fiscal year 2016 spending on several discretionary long-term investments in the letter to investors and in our publicly available fourth quarter and fiscal 2015 presentation and commentary.
Cimpress has posted that presentation with accompanying prepared remarks at ir.cimpress.com. On Thursday, July 30, 2015 at 7:30 a.m. (EDT) the company will host a live Q&A conference call with management to discuss the financial results, which will be available via webcast at ir.cimpress.com and via dial-in at +1 (866) 510-0707, access code 83274467. A replay of the Q&A session will be available on the company’s website following the call on July 30, 2015.
Important Reminder of Cimpress’ Priorities
We ask investors and potential investors in Cimpress to understand the upper-most objectives by which we endeavor to make all decisions, including investment decisions. Often we make decisions in service of these priorities that could be considered non-optimal were they to be evaluated based on other criteria such as (but not limited to) near- and mid- term cash flow, EBITDA, EPS, and non-GAAP EPS.
Our priorities are:
- Strategic Objective: To be the world leader in mass customization. By mass customization, we mean producing, with the reliability, quality and affordability of mass production, small individual orders where each and every one embodies the personal relevance inherent to customized physical products.
- Financial Objective: To maximize intrinsic value per share, defined as (a) the unlevered free cash flow per share that, in our best judgment, will occur between now and the long-term future, appropriately discounted to reflect our cost of capital, minus (b) net debt per share.
To understand these objectives and their implications, Cimpress encourages investors to read Robert Keane’s letter to investors (PDF) published on July 29, 2015 and to attend (in person or by webcast) the company’s upcoming investor day meeting on August 5, 2015.
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