Multi-Color Corp. Announces Results for Q3 of Fiscal Year 2012

Year-to-date highlights included:

• Net revenues increased 41 percent to $349.7 million from $248.1 million compared to the nine months ended December 31, 2010. Net revenues increased 36 percent or $88.4 million in the nine months ended December 31, 2011 due to acquisitions and start-ups occurring after the beginning of the prior year period. Of this acquisition-related revenue increase, $52.8 million is attributable to the acquisition of the York Label Group. In addition, net revenues increased due to a three percent favorable impact of foreign exchange rates primarily driven by the strengthening Australian dollar and Euro, a one percent increase in sales volumes and a one percent favorable impact of pricing and sales mix.
• Gross profit increased $17.2 million or 35 percent compared to the three months ended December 31, 2010. Adjusted for special items, gross profit increased $18.3 million or 37 percent. Acquisitions and start-ups occurring after the beginning of the prior year period contributed 26 percent to the adjusted gross profit increase. The remaining 11 percent increase was due to the impact of foreign exchange rates, higher sales volumes and favorable pricing and sales mix impacts in the current year. Gross margins, adjusted for special items, remained steady at 20 percent of sales revenues compared to the prior year.
• Selling, general and administrative (SG&A) expenses increased $10.8 million compared to the nine months ended December 31, 2010 due the impact of acquisitions of $7.6 million, integration expenses related to the acquisition of York Label Group of $3.7 partially offset by $1.7 million of one-time severance and accelerated stock compensation charges in the prior year. Adjusted for special items, SG&A expenses increased by 39 percent compared to the prior year quarter primarily due primarily to the impact of new acquisitions mentioned above. Special items included in SG&A expenses in the nine months ended December 31, 2011 consisted of $3.7 million of integration expenses related to the York Label Group acquisition and $2.1 million of acquisition related expenses. The integration expense consisted primarily of severance and other termination benefits and professional fees. Special items included in SG&A expenses in the nine months ended December 31, 2010 consisted of $1.7 million of severance and accelerated stock compensation expenses, $1.3 million in acquisition related expenses and $0.2 million of other items. Adjusted SG&A, as a percent of sales, decreased from 8.5 percent to 8.3 percent in the current year.
• Operating income increased $6.5 million or 25 percent compared to the nine months ended December 31, 2010. Adjusted for special items, operating income increased 35 percent to $39.1 million from $28.9 million. Acquisitions and start-ups occurring after the beginning of the prior year period contributed 18 percent to the adjusted operating income increase. The remaining increase is due to the impact of favorable foreign exchange rates, higher sales volumes, favorable pricing and sales mix impact and other cost decreases.
• Interest expense increased by $4.4 million or 84 percent compared to the nine months ended December 31, 2010. Adjusted for special items, interest expense increased 74 percent compared to the prior year period. The special charge of $0.5 million is a write-off certain deferred financing fees in conjunction with the debt modification to the Company’s credit facility related to the York Label Group acquisition. The remaining increase is due primarily to an increase in debt borrowings to finance acquisitions, primarily the York Label Group acquisition, and the impact of foreign exchange rates.
• The effective tax rate was 31 percent for the nine months ending December 31, 2011 compared to 30 percent in the comparable prior year period due primarily to acquisition costs incurred in fiscal 2012 that are not deductible for tax purposes partially offset by certain discrete tax benefits recorded in the first quarter of fiscal 2012 and the release of reserves for uncertain tax positions whose statute of limitations have expired. The Company expects its annual effective tax rate to be approximately 31 percent in fiscal year 2012.
• Diluted earnings per share (EPS) decreased to $1.05 per diluted share from $1.10 in the nine months ended December 31, 2010. Excluding the impact of the special items noted below, adjusted EPS increased 12 percent to $1.43 per diluted share from $1.28. Net income attributable to Multi-Color Corporation increased to $15.2 million from $14.3 million in the prior year period. Adjusted for special items, net income attributable to Multi-Color Corporation increased to $20.7 million from $16.7 million in the prior year period.