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Multi-Color Corp. announces Q3 results



Published February 6, 2013
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Multi-Color Corporation has announced a 35% increase in third quarter adjusted EPS compared to the prior year quarter after the first anniversary of the company's acquisition of York Label.

“The December quarter saw adjusted gross margin, as a percent of revenues, rebound with a 2% increase over the prior year quarter to 19%. The return to higher gross margin is now across a much larger revenue base and primarily reflects benefits of York acquisition synergies,” says Nigel Vinecombe, president and CEO of Multi-Color Corporation.

Third quarter highlights include:

• Net revenues increased 7% to $157 million from $146.4 million compared to the three months ended December 31, 2011. Net revenues increased 4% or $5.8 million due to acquisitions occurring after December 31, 2011 and 3% due to higher sales volumes.

• Gross profit increased $6.9 million or 29% compared to the three months ended December 31, 2011. Adjusted for special items, gross profit increased $5.4 million or 21% compared to the prior year quarter. The increase is primarily due to higher sales volumes in the current quarter and acquisitions occurring after December 31, 2011. Gross margins, adjusted for special items, increased to 19% of net revenues compared to 17% of net revenues in the three months ended December 31, 2011. This increase in adjusted gross margins is due primarily to improvements in operations in North and Latin America related to the completion of most of the integration of the York Label Group acquisition.

• Selling, general and administrative (SG&A) expenses decreased $1.2 million compared to the prior year quarter due primarily to lower integration expenses related to the acquisition of the York Label Group compared to the prior year partially offset by the impact of acquisitions occurring after the beginning of the prior year period and costs related to the consolidation and relocation of plants. Adjusted for special items, SG&A expenses increased by 13% compared to the prior year quarter due primarily to the impact of new acquisitions. Special items included in SG&A expenses in the three months ended December 31, 2012 consisted of $0.5 million of costs related to the consolidation and relocation of plants and $0.6 million of integration expenses related to the York Label Group acquisition. Adjusted SG&A, as a percentage of sales, was 9% in the current quarter compared to 8.6% in the prior year quarter.

• Operating income increased $8.1 million compared to the prior year quarter. Adjusted for special items, operating income increased 30% to $16.3 million from $12.5 million. The increase was due primarily to acquisitions occurring after December 31, 2011, higher North American sales volumes and improvements in the operations in North and Latin America related to the completion of most of the integration of the York Label Group acquisition.

• Interest expense increased by 5% compared to the prior year quarter. The increase is due primarily to a 1% increase in the interest rate on $125 million of variable rate debt swapped to fixed rate debt starting October 3, 2012 and a higher debt balance in the current period. The Company had $416.8 million of debt at December 31, 2012 compared to $409.9 million at December 31, 2011.

• The effective tax rate was 36% for the third quarter of fiscal 2013 compared to 13% in the prior year quarter due primarily to an increase in income mix between domestic and foreign jurisdictions and due to a higher tax benefit in the prior year quarter related to the release of reserves for uncertain tax positions whose statutes of limitations had expired. The Company expects its annual effective tax rate to be approximately 36% in fiscal year 2013 reflecting a higher percentage of income in North America.

• Diluted earnings per share (EPS) increased to $0.36 per diluted share from $0.10 in the prior year quarter. Excluding the impact of the special items noted below, adjusted EPS increased 35% to $0.42 per diluted share from $0.31 in the prior year quarter. Net income attributable to Multi-Color Corporation increased to $5.9 million from $1.6 million in the prior year. Adjusted for special items, net income attributable to Multi-Color Corporation increased to $6.8 million from $5 million in the prior year quarter.


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