Multi Packaging Solutions International Limited (NYSE: MPSX),
(“MPS” or the “Company”), a global leader in value-added print and
packaging solutions for the branded consumer, healthcare, and
multi-media markets, today announced results for its third quarter
ended March 31, 2017.
3Q FY 2017 vs. 3Q FY
2016:
- GAAP net sales of $382.6 million vs.
$399.2 million
- Negative foreign exchange impact of
$16.1 million
- GAAP operating income of $19.1 million
vs. $26.0 million
- GAAP net income attributable to MPS of
$10.8 million vs. $3.8 million
- GAAP net income attributable to MPS of
$0.14 per share vs. $0.05 per share
- Non GAAP net income attributable to MPS
of $9.9 million vs. $8.8 million
- Non GAAP net income attributable to MPS
of $0.13 per share vs. $0.11 per share
- Adjusted EBITDA of $52.9 million vs.
$58.4 million
- Negative foreign exchange impact of
$1.8 million
- Adjusted EBITDA margin of 13.8% vs.
14.6%
YTD FY 2017 vs. YTD FY
2016:
- GAAP net sales of $1,176.6 million vs.
$1,287.6 million
- Negative foreign exchange impact of
$54.3 million
- GAAP operating income of $71.7 million
vs. $73.8 million
- GAAP net income attributable to MPS of
$22.9 million vs. $8.9 million
- GAAP net income attributable to MPS of
$0.29 per share vs. $0.12 per share
- Non GAAP net income attributable to MPS
of $34.5 million vs. $45.8 million
- Non GAAP net income attributable to MPS
of $0.45 per share vs. $0.64 per share
- Adjusted EBITDA of $170.5 million vs.
$205.0 million
- Negative foreign exchange impact of
$6.5 million
- Adjusted EBITDA margin of 14.5% vs.
15.9%
3Q and Recent Activity
- Completed acquisition of Paris Art
Label in April
- Approximate annual revenue of $26
million
- Announced closure of Montargis, France
plant
- Received shareholder approval for the
Agreement and Plan of Merger with WestRock
Marc Shore, Chief Executive Officer, commented, “Although we
continued to face headwinds in our fiscal 3rd quarter, we are
beginning to see progress as a result of the steps we have taken to
drive organic growth and operational improvements, which includes
new customer contracts. We completed the acquisition of Paris Art
Label which enhances our offering to our customers and part of our
strategic goals. Finally, we are excited about the previously
announced and currently pending merger with WestRock which is
expected to take place in the fourth quarter.”
Discussion of Fiscal 2017 Third Quarter
Results
GAAP net sales for 3Q FY 2017 were $382.6 million vs. net sales
for 3Q FY 2016 of $399.2 million, which includes negative foreign
exchange effects in 3Q FY 2017 of $16.1 million when compared to
the prior year period. On a segment basis, North American sales
decreased $8.4 million from the prior year principally due to the
decline in the multi-media market and some weakness in the
healthcare market. European sales decreased $9.4 million
principally due to foreign exchange. Sales in Europe decreased by
$3.7 million for tobacco customers, which was offset by stronger
healthcare sales, which on a constant currency basis increased
approximately $7.0 million. Asia sales increased $1.2 million
principally due to increased demand from certain customers, offset
partially by negative foreign exchange effects.
Gross profit percentage in 3Q FY 2017 was 20.8% compared to
21.7% in the prior year. The decline is principally due to
incremental restructuring charges recorded in the current period
associated with the announced closure of the Montargis facility,
the mix of sales and lower sales impacting absorption in the
current quarter as compared to the prior year period.
GAAP operating income for 3Q FY 2017 was $19.1 million vs. $26.0
million for 3Q FY 2016. Operating income in the current year period
was most significantly impacted by incremental transaction related
expenses to the planned merger with WestRock and the aforementioned
charges associated with Montargis.
Cash balances as of March 31, 2017 were $63.5 million. Total
debt, net of cash, was $845.2 million including deferred finance
fees and debt discount of $14.7 million. At March 31, 2017,
trailing twelve months acquisition adjusted pro forma EBITDA was
$222.3 million, and the pro forma leverage ratio was 3.9.
Acquisition by WestRock
Company
On January 24, 2017, the Company and WestRock Company announced
that a definitive agreement was reached for WestRock to acquire all
of the outstanding shares of MPS for $18.00 per share in cash and
the assumption of the Company’s net debt, for a total enterprise
value of approximately $2.3 billion. The transaction was approved
by MPS’ shareholders at a special meeting on April 5, 2017 and is
expected to close in the Company’s fourth fiscal quarter, subject
to the receipt of applicable regulatory approvals and other
customary closing conditions.
Non GAAP Financial
Measures
The historical financial information included in this
presentation includes financial information that is not presented
in accordance with generally accepted accounting principles in the
United States (“GAAP”), including Adjusted Net Income, Adjusted
Operating Income, Adjusted EBITDA, Free Cash Flow, Adjusted Free
Cash Flow and proforma Adjusted EBITDA. Management uses these non
GAAP financial measures in the analysis of financial and operating
performance because they assist in the evaluation of underlying
trends in our business. Our use of the terms Adjusted Net Income,
Adjusted Operating Income, Adjusted EBITDA, Free Cash Flow,
Adjusted Free Cash Flow and proforma Adjusted EBITDA may differ
from that of others in our industry. These items should not be
considered as alternatives to net income (loss), operating income
(loss), or any other performance measures prepared in accordance
with GAAP as measures of operating performance or operating cash
flows or as measures of liquidity. Adjusted Net Income, Adjusted
Operating Income, Adjusted EBITDA, Free Cash Flow, Adjusted Free
Cash Flow and proforma Adjusted EBITDA have important limitations
as analytical tools and should be considered in conjunction with,
and not as substitutes for, our results as reported under GAAP.
This presentation includes a reconciliation of certain non GAAP
financial measures with the most directly comparable financial
measures calculated in accordance with GAAP.
About Multi Packaging
Solutions
Multi Packaging Solutions is a leading global provider of
value-added packaging solutions to a diverse customer base across
the healthcare, consumer and multi-media markets. MPS provides its
customers with an extensive array of print-based specialty
packaging solutions, including premium folding cartons, inserts,
labels and rigid packaging across a variety of substrates and
finishes. MPS has manufacturing locations across North America,
Europe and Asia.
Cautionary Statement Concerning
Forward-Looking Statements
This release contains certain forward-looking statements
regarding MPS and its subsidiaries. All of these statements are
based on management’s expectations as well as estimates and
assumptions prepared by management that, although they believe to
be reasonable, are inherently uncertain. These statements involve
risks and uncertainties, including, but not limited to, economic,
competitive, governmental and technological factors outside of MPS’
control that may cause its business, industry, strategy, financing
activities or actual results to differ materially. MPS undertakes
no obligation to update or revise any of the forward looking
statements contained herein, whether as a result of new
information, future events or otherwise.
MPSX-IR
Multi Packaging Solutions International
Limited And Subsidiaries
Condensed Consolidated Balance
Sheets
(in thousands, except share
amounts)
March 31, June 30, 2017 2016
(unaudited)
Current assets Cash and cash equivalents $
63,450 $ 44,769 Accounts receivable, net 240,475 237,179
Inventories 153,872 165,617 Prepaid expenses and other current
assets 24,614 30,742 Total current assets
482,411 478,307
Property, plant and equipment
Land 48,904 52,093 Buildings and improvements 70,007 65,827
Machinery and equipment 379,016 393,206 Furniture and fixtures
16,012 15,580 Construction in progress 23,397 12,689
Total 537,336 539,395 Less: Accumulated depreciation
(167,644) (155,700) Total property, plant and equipment, net
369,692 383,695
Other assets Intangible
assets, net 302,379 340,858 Goodwill 475,911 464,714 Deferred
income taxes 6,897 7,210 Other assets 32,428 32,806
Total assets
$
1,669,718
$
1,707,590
Current liabilities Accounts payable $ 147,893 $
171,935 Payroll and benefits 34,313 36,977 Other current
liabilities 37,483 40,892 Current portion of long-term debt 25,652
7,307 Income taxes payable 5,530 4,489 Total current
liabilities 250,871 261,600 Long-term debt, less current
portion 883,012 900,516 Deferred income taxes 62,736 72,625 Other
long-term liabilities 30,948 29,955 Total liabilities
1,227,567 1,264,696
Shareholders’
equity Authorized share capital – $1.00 par value,
1,000,000,000 shares authorized Preference shares – no shares
issued — — Common shares – 77,697,792 and 77,452,946 issued 77,698
77,453 Additional paid-in capital 475,020 469,698 Accumulated
deficit (20,355) (43,233) Accumulated other comprehensive loss
(90,591) (63,290) Total Multi Packaging Solutions
International Limited shareholders’ equity 441,772 440,628
Noncontrolling interest 379 2,266 Total shareholders’
equity 442,151 442,894
Total liabilities and
shareholders’ equity $ 1,669,718 $ 1,707,590
Multi Packaging Solutions International
Limited And Subsidiaries
Condensed Consolidated Statements of
Operations and Comprehensive Income
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended Nine
Months Ended March 31, March 31, 2017 2016 2017 2016
Net
sales $ 382,633 $ 399,184 $ 1,176,584 $ 1,287,592
Cost of goods sold 302,977 312,437
929,951 1,005,779 Gross profit 79,656 86,747
246,633 281,813
Selling, general and
administrative expenses Selling, general and administrative
expenses 57,199 60,259 169,179 178,149 Stock based and deferred
compensation expense 726 104 2,260 27,064 Transaction related
expenses 2,655 371 3,477 2,785 Total
selling, general and administrative expenses 60,580
60,734 174,916 207,998
Operating income
19,076 26,013 71,717 73,815
Other income (expense), net 1,898 (1,262) 7,805 (4,797) Debt
extinguishment charges — (64) (16,569) (3,931) Interest expense
(11,927) (14,896) (39,472) (49,641)
Total other expense, net (10,029) (16,222)
(48,236) (58,369)
Income before income taxes
9,047 9,791 23,481 15,446 Income tax (expense) benefit
1,234 (6,178) (1,861) (6,753)
Consolidated net income 10,281 3,613 21,620 8,693 Net
loss attributable to noncontrolling interest 473 170
1,258 180
Net income attributable to
shareholders ofMulti Packaging Solutions International
Limited $ 10,754 $ 3,783 $ 22,878 $ 8,873 Net income
attributable to shareholders ofMulti Packaging Solutions
International Limited per share: Basic $ 0.14 $ 0.05 $ 0.29 $ 0.12
Diluted $ 0.14 $ 0.05 $ 0.29 $ 0.12 Weighted-average number
of common shares outstanding: Basic 77,696 77,452 77,583 71,076
Diluted 77,696 77,452 77,583 71,076
Other comprehensive
income (loss) Cumulative foreign currency translation
adjustment $ 10,272 $ (1,192) $ (26,225) $ (22,764) Adjustment on
available-for-sale securities 19 111 7 89 Pension adjustments
181 (3,541) (1,083) (2,087)
Total
other comprehensive loss 10,472 (4,622)
(27,301) (24,762)
Comprehensive income (loss)
20,753 (1,009) (5,681) (16,069) Comprehensive loss (income)
attributable to non-controlling interests 473 —
1,258 (17)
Comprehensive income (loss)
attributable to shareholders ofMulti Packaging Solutions
International Limited $ 21,226 $ (1,009) $ (4,423) $ (16,086)
Multi Packaging Solutions International
Limited And Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(in thousands)
(unaudited)
Nine Months Ended March 31, 2017 2016
Operating Activities Net income $ 21,620 $ 8,693 Adjustments
to reconcile net income to net cash and cash equivalents provided
by operating activities: Depreciation expense 48,587 55,825
Amortization expense 37,798 41,665 Amortization of deferred
financing fees 3,073 3,102 Debt extinguishment non-cash charges
3,296 3,931 Deferred income taxes (7,751) (4,496) Stock
compensation 1,939 26,044 Unrealized foreign currency (gain) loss
(4,554) 2,818 Other (3,991) 1,837 Change in assets and liabilities:
Accounts receivable (6,533) (11,887) Inventories 7,793 5,231
Prepaid expenses and other current assets 5,529 355 Other assets
(1,604) (7,201) Accounts payable (19,560) (13,495) Payroll and
benefits (1,908) (13,110) Other current liabilities (5,339)
(10,010) Income taxes payable 876 2,205 Other long-term liabilities
(2,007) (2,590) Net cash and cash equivalents
provided by operating activities 77,264 88,917
Investing Activities Additions to property, plant and
equipment (41,396) (36,719) Additions to intangible assets (104)
(265) Proceeds from sale of assets 4,298 2,616 Acquisitions of
businesses, net of cash acquired (26,765) (10,685)
Net cash and cash equivalents used in investing activities
(63,967) (45,053)
Financing Activities
Proceeds from initial public offering — 186,424 Payments of
offering costs — (7,024) Proceeds from issuance of long-term debt
218,900 — Proceeds from short-term borrowings 41,317 44,502
Payments on short-term borrowings (24,317) (43,755) Payments on
long-term debt (224,509) (235,627) Debt issuance costs
(3,985) — Net cash and cash equivalents provided by (used
in) financing activities 7,406 (55,480)
Effect of exchange rate changes on cash and cash equivalents
(2,022) 2,492
Increase (decrease) in cash and cash
equivalents 18,681 (9,124)
Cash and cash
equivalents—beginning 44,769 55,675
Cash and
cash equivalents—ending $ 63,450 $ 46,551
Multi Packaging Solutions International
Limited And Subsidiaries
Reconciliation of Non‐GAAP
Results
Adjusted EBITDA, Adjusted Operating
Income and Adjusted Net Income
Non-GAAP Adjusted
EBITDA Three Months Ended Nine Months Ended March 31, March 31,
(amounts in thousands) 2017 2016 2017 2016 Consolidated net
income $ 10,281 $ 3,613 $ 21,620 $ 8,693 Depreciation and
amortization 28,242 31,452 86,385 97,490 Interest expense 11,927
14,896 39,472 49,641 Income tax expense (1,234) 6,178
1,861 6,753 EBITDA 49,216 56,139
149,338 162,577
Adjustments related
to operating income
Transaction related expenses 2,655 371 3,477 2,785 Stock based and
deferred compensation expenses 726 104 2,260 27,064 Purchase
accounting adjustments 372 255 722 878 Restructuring related costs
4,254 693 10,907 4,269 (Gain) loss on sale of fixed assets (1,471)
236 (2,454) 598 Other adjustments to operating income
(1,045) (773) (2,608) (2,179) Adjustments
related to operating income (A) 5,491 886
12,304 33,415
Adjustments related
to non-operating income
Foreign currency (gains) losses (1,355) 510 (6,070) 3,850 Debt
extinguishment charges — 64 16,569 3,931 Other adjustments to
non-operating income (494) 752 (1,686)
1,180 Adjustments related to non-operating income (1,849)
1,326 8,813 8,961 Total adjustments (B)
3,642 2,212 21,117 42,376
Adjusted EBITDA $ 52,858 $ 58,351 $ 170,455 $ 204,953
Pre-acquisition Adjusted EBITDA — 868
1,800 1,590 Proforma Adjusted EBITDA $ 52,858 $ 59,219 $
172,255 $ 206,543
Non-GAAP Adjusted Operating
Income Three Months Ended Nine Months Ended March 31, March 31,
(amounts in thousands) 2017 2016 2017 2016 Operating income
$ 19,076 $ 26,013 $ 71,717 $ 73,815 Adjustments related to
operating income (A) 5,491 886 12,304
33,415 Adjusted operating income $ 24,567 $ 26,899 $ 84,021 $
107,230
Non-GAAP Adjusted Net
Income Three Months Ended Nine Months Ended March 31, March 31,
(amounts in thousands, except per share data) 2017 2016 2017
2016 Consolidated net income $ 10,281 $ 3,613 $ 21,620 $ 8,693
Adjustments related to net income (B) 3,642 2,212 21,117 42,376 Tax
impact of adjusting entries (4,514) 2,813
(9,467) (5,445) Adjusted net income 9,409 8,638 33,270
45,624 Net loss attributable to noncontrolling interest
473 170 1,258 180 Adjusted net income
attributable to shareholders ofMulti Packaging Solutions
International Limited $ 9,882 $ 8,808 $ 34,528 $ 45,804
Weighted average number ofcommon shares outstanding – diluted
77,696 77,452 77,583 71,076
Adjusted net income per share $ 0.13 $ 0.11 $ 0.45 $ 0.64
Multi Packaging Solutions International
Limited And Subsidiaries
Net Sales by Segment and Market
Three Months Ended March 31,
(amounts in thousands) 2017 2016 North
America Consumer $ 88,339 $ 87,926 Healthcare 72,507 76,977
Multi-Media 24,610 28,963 $ 185,456 $ 193,866
Europe Consumer $ 89,078 $ 96,691 Healthcare 83,071 83,949
Multi-Media 2,979 3,852 $ 175,128 $ 184,492
Asia Consumer $ 16,918 $ 14,961 Healthcare 5,131
5,865 $ 22,049 $ 20,826
Total $ 382,633 $
399,184
Nine Months Ended
March 31, (amounts in thousands) 2017
2016 North America Consumer $ 249,926 $ 255,513
Healthcare 208,419 219,889 Multi-Media 97,820 135,441
$ 556,165 $ 610,843
Europe Consumer $ 300,362 $
350,391 Healthcare 234,099 238,602 Multi-Media 17,447
17,883 $ 551,908 $ 606,876
Asia Consumer $ 52,009 $
53,760 Healthcare 16,502 16,113 $ 68,511 $ 69,873
Total $ 1,176,584 $ 1,287,592
Multi Packaging Solutions International
Limited And SubsidiariesFree Cash Flow and Adjusted Free
Cash Flow Reconciliation
The Company defines Free Cash Flow as cash provided by operating
activities (a GAAP measure) less capital expenditures, plus
proceeds from sale of assets. The Company views Free Cash Flow as
an important measure because it is one factor in evaluating the
amount of cash available for discretionary investments and
repayment of outstanding borrowings. For the nine and trailing
twelve months ended March 31, 2017 and 2016, Free Cash Flow was
calculated as follows:
Nine MonthsEnded
March 31, Trailing 12 MonthsEnded March 31,
(amounts in
thousands) 2017 2016 2017 2016 Net cash and cash
equivalents provided by operating activities $ 77,264 $ 88,917 $
121,019 $ 132,313 Additions to property, plant and equipment
(41,396) (36,719) (63,631) (58,576) Proceeds from sale of assets
4,298 2,616 5,908 3,561 Free Cash Flow
$ 40,166 $ 54,814 $ 63,296 $ 77,298
As supplemental information, the Company also provides Adjusted
Free Cash Flow, which is defined as Adjusted EBITDA less capital
expenditures, plus proceeds from sale of assets, less cash interest
paid, cash tax paid, core working capital changes (accounts
receivable, accounts payable, inventory) and payments made related
to the funding of the UK Field pension plan. The Company views
Adjusted Free Cash Flow as an important measure because it is one
factor in evaluating the amount of cash generated by the core
business operations.
Nine MonthsEnded
March 31, Trailing 12 MonthsEnded March 31,
(amounts in
thousands) 2017 2016 2017 2016 Adjusted EBITDA $ 170,455
$ 204,953 $ 219,805 $ 258,967 Less: Capital Expenditures (41,396)
(36,719) (63,631) (58,576) Plus: Proceeds from sale of assets 4,298
2,616 5,908 3,561 Less: Cash Interest (36,398) (46,547) (50,333)
(64,555) Less: Cash Taxes (10,651) (10,035) (13,184) (12,087) Less:
Change in Core Working Capital (1) (18,300) (20,151) (2,432) 17,831
Less: Pension Payments (2) (1,312) (6,732)
(3,460) (8,977) Adjusted Free Cash Flow $ 66,696 $ 87,385 $
92,673 $ 136,164
(1)
Represents the impact of total cash flows
associated with the change in accounts receivable, inventory and
accounts payable, as per the Consolidated Statements of Cash
Flows
(2)
Represents cash payments made for the
Field Group Pension Plan in the United Kingdom
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170511006268/en/
Multi Packaging SolutionsRichard Zubek, 646-885-0165Investor
Relationsir@multipkg.com
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