Multi-Color Corporation Announces Core EPS at $0.91 for June Quarter
Tuesday, August 11, 2015
Press release from the issuing company
CINCINNATI, OHIO - Multi-Color Corporation (NASDAQ: LABL) announces first quarter core earnings per share increased 12% to $0.91 per diluted share from $0.81 in the prior year quarter.
- Organic growth at 4% with strong growth in Asia and South America
- Gross margin up 0.4% over Q1 last year, to 21.5%
- New acquisitions in first half of calendar 2015 in Ireland, England and France meeting expectations
- Lower effective tax rate expected for FY16
- Acquisition of Southeast Asian 'Super Label Group' expected to close this week, with annual revenues of approximately $36 million with operations in Malaysia, China, Indonesia, Thailand and the Philippines servicing MCC core markets in Home & Personal Care, Food & Beverage and Specialty labels provides additional organic growth potential.
"Stronger performance in Wine & Spirit markets and lower tax jurisdictions was partially offset by poor performance in Mexico and higher corporate expenses year over year. We are encouraged by our opportunities for improvement in the remainder of FY16," said Nigel Vinecombe, President and CEO of Multi-Color Corporation.
Fiscal 2016 highlights:
Net revenues increased 7% to $217.9 million compared to $203.1 million in the prior year quarter. Acquisitions occurring after the beginning of fiscal 2015 account for 8% of the increase or $17.3 million. Organic revenues increased 4%. Foreign exchange rates, primarily driven by depreciation of the Euro and the Australian dollar, led to a 5% decrease in revenues quarter over quarter.
Gross profit increased $4.0 million or 9% compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2015 contributed $3.8 million to the increase. Organic gross profit improvement of $2.0 million was largely offset by foreign exchange movements. Core gross profit, excluding the impact of inventory purchase accounting charges, increased 10% or $4.1 million. Core gross margins increased to 21.5% of sales revenues for the current year quarter compared to 21.1% in the prior year quarter primarily due to improved operating efficiencies in the United States, South America and Asia Pacific.
Selling, general and administrative (SG&A) expenses increased $3.9 million or 23% compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2015 contributed $2.0 million to the increase, partially offset by a decrease of $1.0 million due to the favorable impact of foreign exchange rates. The remaining increase in core SG&A primarily relates to professional fees and compensation expenses. Core SG&A as a percentage of sales was 8.5% in the current year quarter compared to 8.1% in the prior year quarter. Non-core items relate to acquisition and integration expenses in both quarters and were $2.0 million in fiscal 2016 compared to $0.2 million in fiscal 2015.
During the current year quarter, the Company recorded facility closure expenses related to the previously announced closures of manufacturing facilities in Norway, Michigan and Watertown, Wisconsin of $0.3 million. During the prior year quarter, facility closure expenses were $0.1 million, related to the closure of the Company's manufacturing facility located in El Dorado Hills, California.
Operating income was $26.1 million for both the current and prior year quarters. Core operating income increased $2.0 million or 8% to $28.4 million compared to $26.4 million in the prior year quarter primarily due to recent acquisitions. Acquisitions occurring after the beginning of fiscal 2015 contributed $1.8 million to the increase. Non-core items in fiscal 2016 relate to acquisition expenses of $1.9 million, facility closure expenses of $0.3 million, integration expenses of $0.1 million and an inventory purchase accounting charge of $0.1 million.
Interest expense increased $0.6 million or 11% compared to the prior year quarter. The increase is primarily due to an increase in debt borrowings to finance acquisitions. The Company had $507.1 million of debt at June 30, 2015 compared to $466.7 million at June 30, 2014.
The effective tax rate decreased to 33% in the current quarter from 34% in the prior year quarter primarily due to a favorable geographical mix of worldwide earnings partially offset by non-deductible acquisition expenses. The effective tax rate on core net income was 30% in the current year quarter compared to 34% in the prior year quarter primarily due to the geographical mix of worldwide earnings. The Company expects its annual effective tax rate to be approximately 31% in fiscal 2016.
Net income was $13.3 million in both the current and prior year quarters. Core net income increased to $15.4 million from $13.5 million in the prior year quarter primarily due to acquisitions occurring after the beginning of fiscal 2015 and a lower effective tax rate.
Diluted earnings per share (EPS) decreased 1% to $0.79 per diluted share from $0.80 in the prior year quarter. Excluding the impact of the non-core items noted below, core EPS increased 12% to $0.91 per diluted share from $0.81 per diluted share in the prior year quarter.
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