Multi-Color Corp. Announces Results for Fiscal 2012

CINCINNATI—May 21, 2012—Multi-Color Corp. (NASDAQ: LABL) today announced fiscal 2012 results including four percent organic growth (excluding foreign exchange), stable 20 percent gross margins and progress with the York Label Group acquisition integration.

“Total revenues grew 51 percent to over $500 million in fiscal 2012 and revenues, including the full year impact of acquisitions occurring in fiscal 2012, are expected to exceed $650 million in fiscal 2013. Organic revenue growth was four percent (excluding foreign exchange) and operational improvements helped us achieve a 14 percent organic operating income improvement (excluding foreign exchange) for fiscal 2012,” said Nigel Vinecombe, president and CEO of Multi-Color Corp.

Fiscal 2012 highlights:

• Net revenues increased 51 percent to $510.2 million from $338.3 million in the prior year. Net revenues increased 45 percent or $151.4 million due to acquisitions and start-ups occurring after the beginning of fiscal 2011. Of this acquisition-related revenue increase, $109.9 million is attributable to the acquisition of York Label Group. In addition, organic net revenues, excluding the impact of foreign exchange, increased four percent in the current year comprised of a two percent increase in sales volumes and a two percent favorable impact of sales mix. The impact of foreign exchange rates compared to the prior year was two percent primarily driven by the appreciation in the Australian dollar.
• Gross profit increased $30.3 million or 45 percent compared to the prior year. Adjusted for special items, gross profit increased $31.4 million or 46 percent. Acquisitions and start-ups occurring after the beginning of fiscal 2011 contributed 31 percent to the adjusted gross profit increase. The remaining 15 percent increase was due to the impact of foreign exchange rates, higher sales volumes and favorable sales mix impacts in the current year. Gross margins, adjusted for special items, were steady at 20 percent of sales revenues compared to the prior year.
• Selling, general and administrative (SG&A) expenses increased $18.4 million compared to the prior year due to the impact of acquisitions of $12.3 million, integration expenses related to the acquisition of York Label Group of $5.6 million and an increase in acquisition-related expenses of $1.2 million, 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 50 percent compared to the prior year due primarily to the impact of new acquisitions mentioned above. Special items included in SG&A expenses in the year ended March 31, 2012 consisted of $5.6 million of integration expenses related to the York Label Group acquisition and $2.5 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 year ended March 31, 2011 consisted of $1.7 million of severance and accelerated stock compensation expenses, $1.3 million in acquisition related expenses and $1.3 million of legal fees and other items. Adjusted SG&A, as a percent of sales, was steady at 8.5 percent in the current year.
• In January 2012, the Company announced plans to consolidate its manufacturing facility located in Kansas City, MO into its other existing facilities. In connection with the consolidation of the Kansas City facility, the Company incurred a charge of $1.2 million in the fourth quarter of fiscal 2012 primarily for employee severance and other termination benefits, non-cash charges related to asset impairments and relocation and other costs. The Company expects the transition from the Kansas City facility to be complete by the end of the first quarter of fiscal 2013.
• As previously disclosed, in the fourth quarter of fiscal 2011, the Company recorded a charge of $2.8 million ($1.8 million after tax) related to the settlement of a legal dispute with the John Henry Company.
• Operating income increased $13.3 million or 41 percent compared to the prior year. Adjusted for special items, operating income increased 43 percent to $56.4 million from $39.5 million. Acquisitions and start-ups occurring after the beginning of fiscal 2011 contributed 27 percent to the adjusted operating income increase. The remaining increase is due to the impact of favorable foreign exchange rates, higher sales volumes, favorable sales mix impact and other cost decreases.
• Interest expense increased by $8 million compared to the prior year. Adjusted for special items, interest expense increased by $7.5 million compared to the prior year. 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 Company had $402.1 million of debt at March 31, 2012 compared to $127.3 million at March 31, 2011.
• The effective tax rate was 37 percent in fiscal 2012 compared to 28 percent in the prior year due primarily to a higher percentage of income in higher tax jurisdictions and an increase in valuation allowances recorded in certain foreign jurisdictions. The Company expects its annual effective tax rate to be approximately 37 percent in fiscal 2013 reflecting a higher percentage of income in North America.
• Diluted earnings per share (EPS) decreased to $1.32 per diluted share from $1.40 in the prior year. Excluding the impact of the special items noted below, adjusted EPS increased five percent to $1.85 per diluted share from $1.76. Net income attributable to Multi-Color Corp. increased to $19.7 million from $18.4 million in the prior year. Adjusted for special items, net income attributable to Multi-Color Corp. increased to $27.6 million from $23.1 million in the prior year.
• On October 3, 2011, Multi-Color Corp. acquired York Label Group and its joint venture in Chile for $329.2 million in stock and cash plus net debt assumed of $9.9 million, subject to certain post closing adjustments. York Label Group is a home & personal care, food & beverage, wine & spirit and healthcare label printing company headquartered in Omaha, Nebraska. On July 1, 2011, the Company acquired Warszawski Dom Handlowy, a consumer products and spirit label company located in Warsaw, Poland for $7.8 million, plus net debt assumed of $4 million. On April 1, 2011, Multi-Color Corp. acquired La Cromografica S.R.L. in Italy for $9.9 million including net debt assumed.
• On April 2, 2012, Multi-Color acquired Labelgraphics Holdings (“Labelgraphics”) for $26.4 million less net debt plus a future performance based earn-out. Labelgraphics, based in Glasgow, Scotland, supplies spirit & wine markets bottled in the United Kingdom. These markets are experiencing growth through spirit shipments to developing markets and imported wine shipments bottled in the United Kingdom.

Nigel Vinecombe said, “The York Label Group integration continues to progress in the fourth quarter. The Kansas City and Montreal sheet-fed plants have closed as of May 2012 and all of the work has been successfully transferred to other plants. The York North American integration is on track in terms of synergy savings and timing of expected completion. The York Chilean operation is improving but still significantly below expectations. The Chilean revenues represent less than five percent of total revenues for fiscal 2013. Also, fourth quarter revenues were higher compared to the seasonably lower third quarter, as expected. Revenues were $160.6 million for the quarter and exclude the impact of our latest acquisition in Scotland which will add approximately $20 million annually in revenues. Adjusted gross margin returned to our target range in the fourth quarter.”

About Multi-Color
Cincinnati-based Multi-Color Corp. (MCC), established in 1916, is a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home and personal care, wine and spirit, food and beverage and specialty consumer products. MCC serves international brand owners in North, Central and South America, Europe, Australia, New Zealand, South Africa and China with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve and Heat Transfer. MCC employs approximately 2,700 associates across 28 operations globally and is a public company trading on the NASDAQ Global Select Market (company symbol: LABL).

Source: Multi-Color Corp.