Multi-Color fares well in challenging third quarter
Label converter Multi-Color Corporation announced financial results for the third quarter ended December 31, 2008, noting increased revenues and gross profits – due to the recent acquisition of Collotype – along with a reduction in net income from continuing operations from $2 million to $1.6 million.
The company’s president described the third quarter as “very challenging,” in which Multi-Color experienced reduced sales.
Net revenues increased 30 percent to $62.6 million from $48.3 million. The increase in revenues was due to the Collotype acquisition completed in February 2008, which generated $21.9 million in revenues for the quarter, partially offset by a $7.5 million or 16 percent reduction in North American organic revenues.
Gross profit increased 20 percent to $10.3 million due to the Collotype acquisition, partially offset by a reduction in gross profit due to the shortfall in North American organic revenues.
Diluted Earnings Per Share (EPS) from continuing operations decreased to 13 cents per diluted share from 19 cents.
“We experienced a very challenging third quarter as a result of reduced sales activity, wine industry seasonality and foreign currency fluctuations,” says Frank Gerace, president and CEO of Multi-Color Corporation. “Our North American customers are feeling the impact of dramatic inventory adjustments at the retail and household levels. Although we expect seasonal improvement with wine customers toward the end of our fiscal year, we are not able to predict when sales activity with our North American consumer product customers will improve. Aggressive sales and operational plans have been implemented to mitigate the impact of the lower sales activity.”
For the nine month period ended December 31, 2008, Multi-Color’s net revenues of $222.7 million increased 46 percent compared to the prior year. The increase in revenues was due to Collotype, which added $84.4 million in revenue, partially offset by a $14.3 million or 9 percent reduction in North American organic revenues. Income from continuing operations increased 10 percent to $8.6 million, while EPS from continuing operations decreased to 69 cents per diluted share from 75 cents.
“As a result of unprecedented worldwide economic conditions, it has become increasingly difficult to predict our customers’ demand. Accordingly, we will continue to focus on the elements that are within our control. We expect to emerge from the current cycle with a lower cost structure, broader customer base, improved asset utilization and stronger company,” Gerace adds.