Multi-Color Corp. Announces Higher Organic Growth, Margin Results for Fiscal 2015

CINCINNATI—June 8, 2015—Multi-Color Corp. fourth quarter core earnings per share increased 9 percent to $0.74 per diluted share from $0.68 in the prior year quarter.

Fiscal 2015 highlights:
Commenting on the company's fiscal 2015 highlights, Nigel Vinecombe, president and CEO of Multi-Color Corp. said, "Fiscal 2015 achieved 4 percent organic growth and a 2 percent of revenues improvement in margins to 21 percent core gross margin and 13 percent core operating margin. Core EPS increased to $3.20, up 50 percent over the prior year. We have seen benefits from prior year improvement and integration activities. This has resulted in a new minimum level of performance on which to build in fiscal 2016. Plus stronger cash flow and lower leverage positions us well to further develop our label markets."

• Net revenues increased 15 percent to $810.8 million from $706.4 million in the prior year. Acquisitions occurring after the beginning of fiscal 2014 accounted for a 13 percent increase in revenue. Organic revenues increased 4 percent, 3 percent in volume and 1 percent due to the favorable impact of sales mix and pricing. Foreign exchange rates, primarily driven by the depreciation of the Australian dollar, the Euro and Latin American currencies, led to a 2 percent decrease in revenues year over year.

• Gross profit increased $41.2 million or 31 percent compared to the prior year. Acquisitions occurring after the beginning of fiscal 2014 contributed $19.9 million to the increase. Core gross profit, excluding the impact of inventory purchase accounting charges, increased 31 percent or $41.1 million. Core gross margins increased to 21 percent of sales revenues for fiscal 2015 compared to 19 percent in the prior year primarily due to improved operating efficiencies in North America, South America and Asia Pacific.

• Selling, general and administrative (SG&A) expenses increased $10.7 million or 19 percent compared to the prior year. SG&A increased $7.5 million due primarily to the impact of acquisitions occurring after the beginning of fiscal 2014, partially offset by a decrease of $1.5 million due to the favorable impact of foreign exchange rates, primarily driven by depreciation in the Australian dollar and the Euro. 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 percent in fiscal 2015 and fiscal 2014. Non-core items relate to acquisition and integration expenses in both periods and were $1.8 million in fiscal 2015 compared to $2.3 million in fiscal 2014.

• In November 2014, the Company announced plans to consolidate its manufacturing facilities located in Norway, Michigan and Watertown, Wisconsin into its other existing facilities. During fiscal 2015, the Company recorded facility closure expenses, primarily in connection with these closures, of $7.4 million, including $0.1 million in the fourth quarter. These expenses include a non-cash impairment charge of $5.2 million booked in the second quarter of fiscal 2015 related primarily to consolidation of the Company's manufacturing facilities located in Norway, Michigan and Watertown, Wisconsin into its other existing facilities. During fiscal 2014, facility closure expenses were $1.2 million related to the closure of the Company's manufacturing facility located in El Dorado Hills, California facility.

• Operating income increased $36.8 million or 61 percent compared to the prior year. Core operating income increased 39 percent to $107.1 million from $77.3 million in the prior year. Core operating income increased due to improved operating efficiencies in North America, South America and Asia Pacific and a strong contribution from fiscal 2014 acquisitions. Acquisitions occurring after the beginning of fiscal 2014 contributed $12.5 million to the increase. Non-core items in fiscal 2015 relate to acquisition expenses of $1.8 million, facility closure expenses of $7.4 million and a goodwill impairment loss of $1 million related to finalization of the 2014 estimate for the Latin America Wine & Spirit reporting unit.

• Interest expense increased $4.6 million or 21 percent compared to the prior year, including the write-off of $2.0 million of deferred financing fees as a result of debt refinancing in fiscal 2015. Core interest expense increased $1.8 million or 8 percent compared to the prior year primarily due to an increase in debt borrowings to finance fiscal 2014 acquisitions. The Company had $458.5 million of debt at March 31, 2015 compared to $478.2 million at March 31, 2014.

• Other income, net was $0.3 million in fiscal 2015 compared to $5.9 million in the prior year. Core other income, net was $0.3 million in fiscal 2015. Non-core items in fiscal 2014 related to supplemental purchase price adjustments for businesses acquired in fiscal 2013 and 2014 for $2.5 million, income of $3.8 million related to settlement of a legal claim, and a loss on currency repatriation of $0.3 million.

• The effective tax rate decreased to 35 percent in fiscal 2015 from 36 percent in the prior year. The effective tax rate on core net income was 35 percent in both fiscal 2015 and fiscal 2014. The Company expects its annual effective tax rate to be approximately 35 percent in fiscal 2016.

• Diluted earnings per share (EPS) increased 59 percent to $2.71 per diluted share from $1.70 in the prior year. Excluding the impact of the non-core items noted below, core EPS increased 50 percent to $3.20 per diluted share from $2.14 per diluted share in the prior year.

• Net income increased 62 percent to $45.7 million from $28.2 million in the prior year. Core net income increased 52 percent to $54.0 million from $35.6 million in the prior year.

The following table shows adjustments made to Net Income and Diluted EPS between reported GAAP and Non-GAAP results for fiscal 2015 and fiscal 2014. Refer to the tables in Exhibit A for a reconciliation of adjustments made to gross profit, SG&A expenses, operating income, EBITDA, interest expense, other income (expense), income before income taxes and effective tax rate between reported GAAP and Non-GAAP results. The sum of the Earnings Per Share amounts may not equal the totals due to rounding.

Fourth Quarter highlights:
• Net revenues increased 6 percent to $205.5 million from $193.5 million compared to the prior year quarter. Net revenues increased $14.4 million or 7 percent due to acquisitions occurring after the beginning of the fourth quarter of fiscal 2014. Organic revenues increased 3 percent in volume and 1 percent due to the favorable impact of sales mix and pricing. Foreign exchange rates, primarily driven by the depreciation of the Australian dollar and the Euro, led to a decrease of 5 percent in revenues year over year.

• Gross profit increased $5.2 million or 13 percent compared to the three months ended March 31, 2014. Acquisitions occurring after the beginning of fiscal 2014 contributed $2.1 million to the increase. Core gross profit, excluding the impact of inventory purchase accounting charges, increased 13 percent or $5.1 million. Core gross margins increased to 22 percent of sales revenues compared to 20 percent in the prior year quarter primarily due to improved operating efficiencies in North America, South America, and Asia Pacific.

• Selling, general and administrative (SG&A) expenses increased $3.8 million or 24 percent compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2014 contributed $1.8 million to the increase. Core SG&A, as a percentage of sales, was 9.0 percent for the current year quarter compared to 8.0 percent in the prior year quarter. Non-core items included in SG&A expenses in the three months ended March 31, 2015 and 2014 consisted of acquisition expenses of $1.0 million and $0.2 million, respectively.

• During the three months ended March 31, 2015, facility closure expenses were $0.1 million related primarily to the closure of the Company's manufacturing facilities in Norway, Michigan and Watertown, Wisconsin.

• Operating income increased by $14.5 million to $24.7 million in the three months ended March 31, 2014 which included a goodwill impairment loss related to the Latin America Wine & Spirit reporting unit of $13.5 million in the prior period. Core operating income increased 9 percent to $25.9 million from $23.8 million in the prior year quarter primarily due to improved operating efficiencies in North America, South America and Asia Pacific. Non-core items in the three months ended March 31, 2015 relate to acquisition expenses, facility closure expenses, and purchase accounting charges. Non-core items in the three months ended March 31, 2014 relate to goodwill impairment loss, acquisition expenses, facility closure expenses, and charges related to inventory purchase accounting. Acquisitions occurring after the beginning of fiscal 2014 contributed $0.3 million to the increase.

• Other income, net was $0.1 million in the three months ended March 31, 2015 compared to $2.4 million in the prior year quarter. During the fourth quarter of 2014, other income included $2.5 million to increase the supplemental purchase price accruals owed to the sellers of businesses acquired in fiscal 2013 and 2014 to management's best estimate of the liability. Core other income, net was $0.1 million in the three months ended March 31, 2015 compared to expense of $0.1 million in the prior year quarter.

• The effective tax rate was 36 percent in the three months ended March 31, 2015 compared to 55 percent in the prior year quarter due primarily to the impact of goodwill impairment that was non-deductible for tax purposes in the prior year quarter. The effective tax rate on core net income was 35 percent in the three months ended March 31, 2015 compared to 34 percent in the prior year quarter.

• Diluted earnings per share (EPS) increased to $0.69 per diluted share in the three months ended March 31, 2015 from $0.18 per diluted share in the prior year quarter. Excluding the impact of the non-core items noted below, core EPS increased 9 percent to $0.74 per diluted share from $0.68 per diluted share in the prior year quarter. Net income increased to $11.6 million from $3.1 million in the prior year quarter due primarily to non-core items including goodwill impairment loss of $13.5 million in relation to the Latin America Wine & Spirit reporting unit in the prior year quarter. Core net income increased 11 percent to $12.6 million from $11.3 million in the prior year quarter primarily due to stronger operating performance in North America, South America and Asia Pacific.

The following table shows adjustments made to Net Income and Diluted EPS between reported GAAP and Non-GAAP results for the three months ended March 31, 2015 and 2014. Refer to the tables in Exhibit A for a reconciliation of adjustments made to gross profit, SG&A expenses, operating income, EBITDA, interest expense, other income (expense), income before income taxes, and effective tax rate between reported GAAP and Non-GAAP results. The sum of the Earnings Per Share amounts may not equal the totals due to rounding.

About Multi-Color Corp.
Cincinnati-based Multi-Color Corporation (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 over 3,700 associates across 37 operations globally and is a public company trading on the NASDAQ Global Select Market (company symbol: LABL).

Source: Multi-Color.