Q3 FY15 Earnings 8-K


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________

Form 8-K
___________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): April 29, 2015

__________________________________________

Cimpress N.V.
(Exact Name of Registrant as Specified in Its Charter)

__________________________________________

The Netherlands
 
000-51539
 
98-0417483
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
Hudsonweg 8
 
 
Venlo
 
5928 LW
The Netherlands
 
(Zip Code)
(Address of Principal Executive Offices)
 
 
Registrant’s telephone number, including area code: 31-77-850-7700

Not applicable
(Former Name or Former Address, if Changed Since Last Report)
__________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
  o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
  o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
  o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
  o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 





Item 2.02.    Results of Operations and Financial Condition
 
On April 29, 2015, Cimpress N.V. issued a press release announcing its financial results for the third quarter ended March 31, 2015. The full text of the press release is furnished as Exhibit 99.1 to this report.
The information in this Item 2.02 and the exhibit to this report are not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor are they incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such a filing.
 
Item 9.01.    Financial Statements and Exhibits

(d)    Exhibits

See the Exhibit Index attached to this report.







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
Date: April 29, 2015
CIMPRESS N.V.
 
 
 
 
By:
/s/Sean E. Quinn
 
 
Sean E. Quinn
 
 
Vice President and Chief Accounting Officer







EXHIBIT INDEX
Exhibit  
 
 
No.
 
Description
99.1
 
Press release dated April 29, 2015 entitled “Cimpress Reports Third Quarter Fiscal Year 2015 Financial Results”




Q3_FY15 Earnings Release


        Contacts:
Investor Relations:
Meredith Burns
ir@cimpress.com
+1.781.652.6480
Media Relations:
Cheryl Wadsworth
mediarelations@cimpress.com
                                

Cimpress Reports Third Quarter Fiscal Year 2015 Financial Results

Revenue grew 19 percent year over year to $339.9 million
Revenue grew 11 percent year over year excluding the impact of currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months
GAAP net income per diluted share increased to $0.25, compared with $0.04 in the same quarter last year
Non-GAAP adjusted net income per diluted share increased 200 percent year over year to $0.72

Venlo, the Netherlands, April 29, 2015 -- Cimpress N.V. (Nasdaq: CMPR), the world leader in mass customization, today announced financial results for the three month period ended March 31, 2015, the third quarter of its 2015 fiscal year.

“Our Vistaprint brand continues to show positive customer loyalty momentum in the wake of significant and on-going improvements to its customer value proposition,” said Robert Keane, president and chief executive officer. “This includes continued reductions to traditional Vistaprint practices such as aggressive cross-selling, which create on-going revenue headwinds in all Vistaprint geographic markets. However, Vistaprint’s net growth rate continues to improve in geographies where the value proposition improvements are most advanced because the force of long-term loyalty tailwinds is overcoming that of the revenue headwinds.”

Page 1 of 16




Keane added, “We also continue to invest heavily in our vision to build a common mass customization platform that we bring to market via multiple, focused brands; in new product development; and in building foundational capabilities in potentially large and valuable geographic markets such as India, Japan and Brazil.

“As we pass the anniversary of the Pixartprinting and Printdeal acquisitions, we have been pleased with their sustained revenue and bottom-line performance,” Keane continued. “Subsequent to the end of the quarter we closed the acquisitions of Exagroup and Druck.at, which together represent an initial investment of over €110 million. As we integrate these firms into Cimpress over the coming years, we expect them to bring strong operational capabilities that we will incorporate into our mass customization platform and focused brands that will operate as part of our growing portfolio of brands.”

Ernst Teunissen, executive vice president and chief financial officer, added, “This quarter, we completed a Senior Notes debt offering which we believe adds to our ability to deploy capital to the type of investments described above. Turning to our third quarter results, revenue was in line with expectations, and our non-GAAP net income was moderately ahead of expectations. Our third quarter GAAP net income was significantly higher than expected due to below-the-line currency movements caused by a material change in the value of the Swiss Franc relative to the U.S. Dollar following January 28, 2015, the date we last issued guidance. This impact is non-cash and non-operational, and is excluded from our non-GAAP results.”

Consolidated Financial Metrics:
Revenue for the third quarter of fiscal year 2015 was $339.9 million, a 19 percent increase compared to revenue of $286.2 million reported in the same quarter a year ago. The year-over-year strengthening of the U.S. Dollar has negatively impacted the U.S. Dollar value of our revenues generated from countries other than the United States. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, total revenue grew 11 percent year over year in the third quarter, in line with our expectations.
Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the third quarter was 63.1 percent, down from 64.7 percent in the same quarter a year ago. The year-over-year reduction in gross margin was primarily due to the mix effect of our

Page 2 of 16



acquisitions of Printdeal and Pixartprinting, which have lower gross margins than our Vistaprint-branded business. Excluding the businesses we acquired during the past twelve months, our gross margin increased moderately year over year driven by efficiency gains and currency fluctuations.
Operating income in the third quarter was $4.3 million, or 1.3 percent of revenue, a decrease in both absolute dollars and as a percent of revenue compared to $5.2 million, or 1.8 percent of revenue, in the same quarter a year ago. This operating margin compression was largely driven by a $7.5 million impact of acquisition-related earn-outs.
GAAP net income for the third quarter was $8.6 million, or 2.5 percent of revenue, compared to $1.4 million, or 0.5 percent of revenue in the same quarter a year ago. The impact of acquisition-related earn-outs was offset by below-the-line currency movements that created significant gains in the current period.
GAAP net income per diluted share for the third quarter was $0.25, versus $0.04 in the same quarter a year ago.
Non-GAAP adjusted net income for the third quarter, which excludes amortization expense for acquisition-related intangible assets, tax charges related to the alignment of acquisition-related intellectual property with our operational structure, the impact of acquisition-related earn-outs and related currency gains, unrealized currency gains and losses on derivative instruments and intercompany financing arrangements included in net income, share-based compensation expense, and the related income tax effect of these items, was $25.1 million, or 7.4 percent of revenue, representing a 203 percent increase compared to $8.3 million, or 2.9 percent of revenue, in the same quarter a year ago.
Non-GAAP adjusted net income per diluted share for the third quarter, as defined above, was $0.72, versus $0.24 in the same quarter a year ago.
Capital expenditures in the third quarter were $15.2 million, or 4.5 percent of revenue.
During the third quarter, the company generated $1.6 million of cash from operations and a loss of $17.5 million in free cash flow, defined as cash from operations less purchases of property, plant and equipment, purchases of intangible assets not related to acquisitions, and capitalization of software and website development costs, plus payment of contingent consideration in excess of acquisition-date fair value. This negative free cash flow for the quarter was primarily due to the seasonality of accruals in our second quarter that pay out in the third quarter.

Page 3 of 16



As of March 31, 2015, the company had $134.2 million in cash and cash equivalents and $430.5 million of debt. After considering debt covenant limitations, as of March 31, 2015 the company had $609.7 million available for borrowing under its committed credit facility.

Operating metrics are provided as a table-based supplement to this press release. The acquisitions of Printdeal, Pixartprinting, and FotoKnudsen and the investment in Printi are not yet incorporated into our customer metrics.

Fiscal 2015 Outlook as of April 29, 2015:
Ernst Teunissen noted, “Our outlook for fiscal year 2015 constant currency revenue growth excluding fourth quarter acquisitions remains consistent with our expectations set throughout the year. We are making some adjustments to our revenue outlook for currency, which has a negative impact on this year, and to include the acquisitions of Exagroup and Druck.at. Our GAAP and non-GAAP EPS ranges have been adjusted upward for underlying operational improvements, and our new GAAP EPS range reflects further non-cash and non-operational currency benefits since last quarter.”

Financial Guidance as of April 29, 2015:
The following guidance incorporates completed acquisitions and share repurchases, and outstanding debt obligations, as of April 29, 2015. Based on current and anticipated levels of demand, the company expects the following financial results:

Fiscal Year 2015 Revenue
The company expects revenue of approximately $1,460 million to $1,480 million, or 15 percent to 17 percent growth year over year in reported terms and 21 percent to 22 percent growth on a constant-currency basis. Constant-currency growth expectations assume a recent 30-day currency exchange rate for all currencies.
The drivers of this revenue guidance relative to the guidance we gave on January 28, 2015 are:
The addition of recent acquisitions Exagroup and Druck.at, which we expect will deliver about $30 million in revenue during the fourth quarter.

Page 4 of 16



A negative impact of about $20 million at the high end of the prior range due to recent weakening of currencies against the US dollar, particularly European currencies.

Fiscal Year 2015 GAAP Net Income Per Diluted Share
The company expects GAAP net income per diluted share of approximately $2.72 to $2.92, which assumes 33.6 million weighted average diluted shares outstanding.
Based on a recent 30-day currency exchange rate for relevant currencies, we estimate that realized net gains on currency forward contracts as well as natural hedges will largely offset the currency impact to revenue in our full-year net income results.
However, we are increasing our GAAP EPS guidance range versus the guidance we last gave on January 28, 2015 in large part due to Swiss Franc movements previously described, which have a non-cash, non-operational impact on a US dollar denominated intercompany loan. If the USD to CHF exchange rates remain the same as a recent 30-day average, we expect a small fourth quarter loss, and a full year gain on the intercompany loans we have recorded in our GAAP net income. This projected full year gain is excluded from our non-GAAP EPS expectation below.
Our fiscal 2015 GAAP EPS guidance range reflects improved underlying operational performance in our business.
The GAAP EPS guidance also reflects the addition of our fourth quarter acquisitions of Exagroup and Druck.at. We expect approximately $2.5 million of dilution to GAAP net income ($0.07 per diluted share), inclusive of transaction fees of $0.7 million already incurred in the third quarter of 2015.

Fiscal Year 2015 Non-GAAP Adjusted Net Income Per Diluted Share
The company expects non-GAAP adjusted net income per diluted share of approximately $4.00 to $4.20, which excludes our expectations for the following items inclusive of their tax effects:
Acquisition-related amortization of intangible assets of approximately $23.7 million or approximately $0.70 per diluted share.
Share-based compensation expense of approximately $22.5 million or approximately $0.66 per diluted share.
The impact of acquisition-related earn-outs of approximately $14.9 million or approximately $0.44 per diluted share.

Page 5 of 16



Currency (gains) related to the acquisition-related earn-outs of approximately $(2.3) million or approximately $(0.07) per diluted share.
Tax charges related to the alignment of acquisition-related intellectual property with global operations of approximately $2.2 million, or $0.06 per diluted share.
A non-cash, non-operational currency (gain) on U.S. Dollar denominated intercompany loans of $(11.4) million, or $(0.34) per diluted share, based on a recent 30-day currency exchange rate for relevant currencies.
Changes in unrealized (gains) on currency forward contracts of $(5.3) million, or $(0.16) per diluted share, based on a recent 30-day currency exchange rate for relevant currencies.
This guidance assumes a non-GAAP weighted average diluted share count of approximately 34.0 million shares.
The acquisitions of Exagroup and Druck.at are expected to be neutral to our fiscal year 2015 non-GAAP EPS.

Fiscal Year 2015 Depreciation and Amortization and Capital Expenditures
The company expects depreciation and amortization expense to be approximately $95 million to $100 million. This includes the amortization of acquisition-related intangible assets described above in our non-GAAP earnings per share expectations, as well as our expectations for capitalized software development costs.
The company expects to make capital expenditures of approximately $80 million to $90 million. The majority of planned capital investments are designed to support the planned long-term growth of the business. This fiscal year, we expect to invest about $20 million to build a new manufacturing facility in Japan as part of our joint venture there and about $20 million in the expansion of our product lines and other new manufacturing capabilities.

The above guidance incorporates estimates for the impact of the fourth quarter acquisitions of Exagroup and Druck.at. These estimates are preliminary and subject to change based on the completion of purchase accounting during the fourth quarter ending June 30, 2015. The foregoing guidance supersedes any guidance previously issued by the company. All such previous guidance should no longer be relied upon.


Page 6 of 16



Cimpress has posted an end-of-quarter presentation with accompanying prepared remarks at ir.cimpress.com. On Thursday, April 30, 2015 at 7:30 a.m. (EDT) the company will host a live Q&A conference call with management to discuss the financial results, which will be available via web cast at ir.cimpress.com and via dial-in at +1 (866) 953-6857, access code 33138716. A replay of the Q&A session will be available on the company’s Web site following the call on April 30, 2015.

Important Reminder of Cimpress’ Three Priorities
We ask investors and potential investors in Cimpress to understand the three upper-most priorities by which we endeavor to make all decisions, including investment decisions. Often we make decisions in service of these priorities that could be considered non-optimal were they to be evaluated based on other criteria such as (but not limited to) near- and mid- term cash flow, EBITDA, EPS, and non-GAAP EPS.

Our three priorities are:
Leadership: being the world leader in mass customization.
Long-termism: multi-decade, mutual success for the benefit of the following stakeholders: customers, team members, society and long-term investors.
Intrinsic value per share: the free cash flow per share that, in our best judgment, will occur between now and the long-term future, appropriately discounted to reflect our cost of capital.

About non-GAAP financial measures
To supplement Cimpress’ consolidated financial statements presented in accordance with U.S. generally accepted accounting principles, or GAAP, Cimpress has used the following measures defined as non-GAAP financial measures by Securities and Exchange Commission, or SEC, rules: non-GAAP adjusted net income, non-GAAP adjusted net income per diluted share, free cash flow, constant-currency revenue growth and constant-currency revenue growth excluding revenue from acquisitions made in fiscal 2014 and 2015. The items excluded from the non-GAAP adjusted net income measurements are share-based compensation expense, amortization of acquisition-related intangibles, tax charges related to the alignment of acquisition-related intellectual property with global operations, changes in unrealized gains and losses on derivative instruments, non-cash currency gains and losses on intercompany financing arrangements, the charge for the disposal of our minority investment in China, the

Page 7 of 16



impact of acquisition-related earn-outs and related currency impact, and the related income tax effect of these items. Free cash flow is defined as net cash provided by operating activities less purchases of property, plant and equipment, purchases of intangible assets not related to acquisitions, and capitalization of software and website development costs, plus payment of contingent consideration in excess of acquisition-date fair value. Constant-currency revenue growth is estimated by translating all non-U.S. dollar denominated revenue generated in the current period using the prior year period’s average exchange rate for each currency to the U.S. dollar and excludes the impact of gains and losses on effective currency hedges recognized in revenue in the prior year periods. Constant-currency revenue growth excluding revenue from acquisitions made in fiscal 2014 and 2015 excludes the impact of currency as defined above and revenue from Printdeal, Pixartprinting, FotoKnudsen, Printi, and in future quarters Exagroup and Druck.at.

The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of Non-GAAP Financial Measures” included at the end of this release. The tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliation between these financial measures. 

Cimpress’ management believes that these non-GAAP financial measures provide
meaningful supplemental information in assessing our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, which could be non-cash charges or discrete cash charges that are infrequent in nature. These non-GAAP financial measures also have facilitated management’s internal comparisons to Cimpress’ historical performance and our competitors’ operating results.

About Cimpress
Cimpress N.V. (Nasdaq: CMPR) is the world leader in mass customization. For 20 years, the company has focused on developing software and manufacturing capabilities that transform traditional markets in order to make customized products accessible and affordable to everyone.  Cimpress’ portfolio of brands includes Vistaprint, Albelli, Drukwerkdeal, Exaprint, Pixartprinting and others. That portfolio serves multiple customer segments across many applications for

Page 8 of 16



mass customization. The company produces more than 80 million unique products a year via its network of computer integrated manufacturing facilities. To learn more, visit www.cimpress.com.

Cimpress and the Cimpress logo are trademarks of Cimpress N.V. or its subsidiaries. All other brand and product names appearing on this announcement may be trademarks or registered trademarks of their respective holders.

This press release contains statements about our future expectations, plans and prospects of our business that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, including but not limited to our expectations for the growth, development, and profitability of our business and our recent acquisitions, the results of our investments in our business and our acquisitions, and our financial outlook and guidance set forth under the headings “Fiscal 2015 Outlook as of April 29, 2015” and “Financial Guidance as of April 29, 2015.” Forward-looking projections and expectations are inherently uncertain, are based on assumptions and judgments by management, and may turn out to be wrong. Our actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including but not limited to flaws in the assumptions and judgments upon which our forecasts are based; our failure to execute our strategy; our inability to make the investments in our business that we plan to make; the failure of our strategy, investments, and efforts to reposition the Vistaprint brand to have the effects that we expect; our failure to promote and strengthen our brands; our failure to acquire new customers and enter new markets, retain our current customers and sell more products to current and new customers; our failure to identify and address the causes of our revenue weakness in some of our markets; our failure to manage the growth and complexity of our business and expand our operations; costs and disruptions caused by acquisitions and strategic investments; the failure of the businesses we acquire or invest in to perform as expected; the willingness of purchasers of marketing services and products to shop online; the failure of our current and new marketing channels to attract customers; currency fluctuations that affect our revenues and costs including the impact of currency hedging strategies and intercompany transactions; unanticipated changes in our markets, customers, or business; competitive pressures; interruptions in or failures of our websites, network infrastructure or manufacturing operations; our failure to retain key employees; our failure to maintain compliance with the covenants in our revolving credit facility and Senior Notes or to pay our debts when due; costs and judgments resulting from litigation; changes in the laws and

Page 9 of 16



regulations or in the interpretations of laws or regulations to which we are subject, including tax laws, or the institution of new laws or regulations that affect our business; general economic conditions; and other factors described in our Form 10-Q for the fiscal quarter ended December 31, 2014 and the other documents we periodically file with the U.S. Securities and Exchange Commission.

In addition, the statements and projections in this press release represent our expectations and beliefs as of the date of this press release, and subsequent events and developments may cause these expectations, beliefs, and projections to change. We specifically disclaim any obligation to update any forward-looking statements. These forward-looking statements should not be relied upon as representing our expectations or beliefs as of any date subsequent to the date of this press release.

Operational Metrics & Financial Tables to Follow

Page 10 of 16




CIMPRESS N.V.
CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share and per share data)

 
March 31,
2015
 
June 30,
2014
Assets
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
134,212

 
$
62,508

Marketable securities
7,987

 
13,857

Accounts receivable, net of allowances of $286 and $212, respectively
22,028

 
23,515

Inventory
13,334

 
12,138

Prepaid expenses and other current assets
44,587

 
45,923

Total current assets
222,148

 
157,941

Property, plant and equipment, net
391,761

 
352,221

Software and web site development costs, net
18,645

 
14,016

Deferred tax assets
12,646

 
8,762

Goodwill
283,567

 
317,187

Intangible assets, net
80,488

 
110,214

Other assets
31,861

 
28,644

Total assets
$
1,041,116

 
$
988,985

Liabilities, noncontrolling interests and shareholders’ equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
46,321

 
$
52,770

Accrued expenses
142,526

 
121,177

Deferred revenue
25,229

 
26,913

Deferred tax liabilities
830

 
2,178

Short-term debt
11,884

 
37,575

Other current liabilities
7,851

 
888

Total current liabilities
234,641

 
241,501

Deferred tax liabilities
24,462

 
30,846

Lease financing obligation
70,587

 
18,117

Long-term debt
418,594

 
410,484

Other liabilities
44,207

 
44,420

Total liabilities
792,491

 
745,368

 
 
 
 
Redeemable noncontrolling interests
12,698

 
11,160

Shareholders’ equity:
 

 
 

Preferred shares, par value €0.01 per share, 100,000,000 shares authorized; none issued and outstanding

 

Ordinary shares, par value €0.01 per share, 100,000,000 shares authorized; 44,080,627 shares issued; and 32,790,444 and 32,329,244 shares outstanding, respectively
615

 
615

Treasury shares, at cost, 11,290,183 and 11,751,383 shares, respectively
(408,220
)
 
(423,101
)
Additional paid-in capital
320,270

 
309,990

Retained earnings
438,754

 
342,840

Accumulated other comprehensive (loss) income
(116,475
)
 
2,113

Total shareholders’ equity attributable to Cimpress N.V.
234,944

 
232,457

Noncontrolling interest
983

 

Total shareholders' equity
235,927

 
232,457

Total liabilities, noncontrolling interests and shareholders’ equity
$
1,041,116

 
$
988,985


Page 11 of 16



CIMPRESS N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited in thousands, except share and per share data)

 
Three Months Ended
March 31,
 
Nine Months Ended March 31,
 
2015
 
2014
 
2015
 
2014
Revenue
$
339,901

 
$
286,185

 
$
1,113,738

 
$
932,081

Cost of revenue (1)
125,540

 
100,903

 
412,381

 
317,482

Technology and development expense (1)
48,311

 
42,434

 
138,841

 
127,555

Marketing and selling expense (1)
120,795

 
109,118

 
371,680

 
335,679

General and administrative expense (1)
40,914

 
28,491

 
109,748

 
85,195

Income from operations
4,341

 
5,239

 
81,088

 
66,170

Other income (expense), net
8,291

 
(116
)
 
30,282

 
(8,151
)
Interest expense, net
(3,131
)
 
(1,725
)
 
(9,508
)
 
(4,868
)
Income before income taxes and loss in equity interests
9,501

 
3,398

 
101,862

 
53,151

Income tax provision
1,576

 
999

 
7,658

 
7,819

Loss in equity interests

 
1,058

 

 
2,704

Net income
7,925

 
1,341

 
94,204

 
42,628

Add: Net loss attributable to noncontrolling interests
686

 
34

 
1,710

 
34

Net income attributable to Cimpress N.V.
$
8,611

 
$
1,375

 
$
95,914

 
$
42,662

Basic net income per share attributable to Cimpress N.V.
$
0.26

 
$
0.04

 
$
2.95

 
$
1.30

Diluted net income per share attributable to Cimpress N.V.
$
0.25

 
$
0.04

 
$
2.85

 
$
1.24

Weighted average shares outstanding — basic
32,694,354

 
33,249,419

 
32,537,940

 
32,921,016

Weighted average shares outstanding — diluted
34,180,563

 
34,356,990

 
33,637,567

 
34,425,288

____________________________________________
(1) Share-based compensation is allocated as follows:
 
Three Months Ended
March 31,
 
Nine Months Ended March 31,
 
2015
 
2014
 
2015
 
2014
Cost of revenue
$
17

 
$
55

 
$
62

 
$
193

Technology and development expense
1,032

 
1,022

 
2,961

 
5,900

Marketing and selling expense
465

 
876

 
1,437

 
4,153

General and administrative expense
5,124

 
3,639

 
14,304

 
11,604




Page 12 of 16



CIMPRESS N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)
 
Three Months Ended March 31,
 
Nine Months Ended March 31,
 
2015
 
2014
 
2015
 
2014
Operating activities
 
 
 
 
 

 
 

Net income
$
7,925

 
$
1,341

 
$
94,204

 
$
42,628

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

 
 

 
 

Depreciation and amortization
22,402

 
16,881

 
69,756

 
49,346

Share-based compensation expense
6,638

 
5,592

 
18,764

 
21,850

Excess tax benefits derived from share-based compensation awards
(1,344
)
 
(3,480
)
 
(2,686
)
 
(5,467
)
Deferred taxes
(424
)
 
(3,360
)
 
(8,666
)
 
(10,954
)
Loss in equity interests

 
1,058

 

 
2,704

Unrealized (gain) loss on derivative instruments included in net income
(3,953
)
 
(1,046
)
 
(7,435
)
 
2,655

Change in fair value of contingent consideration
7,512

 

 
14,890

 

Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency
2,665

 
(1,885
)
 
(15,932
)
 
983

Other non-cash items
1,354

 
406

 
3,126

 
729

Changes in operating assets and liabilities excluding the effect of business acquisitions:
 
 
 
 
 

 
 

Accounts receivable
6,086

 
3,707

 
(855
)
 
2,293

Inventory
1,055

 
915

 
(2,201
)
 
352

Prepaid expenses and other assets
3,326

 
3,648

 
18,064

 
(9,217
)
Accounts payable
(26,660
)
 
3,228

 
(5,049
)
 
7,979

Accrued expenses and other liabilities
(25,012
)
 
(23,863
)
 
16,434

 
(7,835
)
Net cash provided by operating activities
1,570

 
3,142

 
192,414

 
98,046

Investing activities
 
 
 
 
 

 
 

Purchases of property, plant and equipment
(15,153
)
 
(11,830
)
 
(50,105
)
 
(53,999
)
Proceeds from sale of assets

 



 
137

Business acquisitions, net of cash acquired

 

 
(22,997
)
 

Purchases of intangible assets
(56
)
 
(83
)
 
(201
)
 
(202
)
Purchase of available-for-sale securities

 
(4,629
)
 

 
(4,629
)
Capitalization of software and website development costs
(5,068
)
 
(2,920
)
 
(12,517
)
 
(7,339
)
Investment in equity interests

 

 

 
(4,994
)
Net cash used in investing activities
(20,277
)
 
(19,462
)
 
(85,820
)
 
(71,026
)
Financing activities
 
 
 
 
 

 
 

Proceeds from borrowings of debt
79,000

 
42,000

 
218,500

 
109,000

Proceeds from issuance of senior notes
275,000

 

 
275,000

 

Payments of debt
(270,500
)
 
(44,546
)
 
(512,251
)
 
(145,796
)
Payments of debt issuance costs
(4,858
)
 
(1,000
)
 
(6,373
)
 
(1,354
)
Payment of contingent consideration included in acquisition-date fair value
(7,021
)
 

 
(7,021
)
 

Payments of withholding taxes in connection with share awards
(1,533
)
 
(4,459
)
 
(4,297
)
 
(8,400
)
Payments of capital lease obligations
(1,473
)
 

 
(4,315
)
 

Excess tax benefits derived from share-based compensation awards
1,344

 
3,480

 
2,686

 
5,467

Proceeds from issuance of ordinary shares
6,185

 
111

 
10,967

 
4,274

Capital contribution from noncontrolling interest
4,160

 
4,821

 
4,160

 
4,821

Issuance of dividend to noncontrolling interest
(26
)
 

 
(118
)
 

Net cash provided by (used in) financing activities
80,278

 
407

 
(23,062
)
 
(31,988
)
Effect of exchange rate changes on cash and cash equivalents
(5,240
)
 
148

 
(11,828
)
 
1,448

Net increase (decrease) in cash and cash equivalents
56,331

 
(15,765
)
 
71,704

 
(3,520
)
Cash and cash equivalents at beginning of period
77,881

 
62,310

 
62,508

 
50,065

Cash and cash equivalents at end of period
$
134,212

 
$
46,545

 
$
134,212

 
$
46,545


Page 13 of 16



CIMPRESS N.V.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(Unaudited in thousands, except share and per share data)

 
Three Months Ended
March 31,
 
Nine Months Ended
March 31,
 
 
2015
 
2014
 
2015
 
2014
 
Non-GAAP adjusted net income reconciliation:
 
 
 
 
 
 
 
 
Net income attributable to Cimpress N.V.
$
8,611

 
$
1,375

 
$
95,914

 
$
42,662

 
 
 
 
 
 
 
 
 
 
Add back inclusive of tax effect:
 
 
 
 
 
 
 
 
Share-based compensation expense
6,006

 
5,773

 
17,172

 
22,411


Amortization of acquisition-related intangible assets
4,650

 
2,228

 
16,564

 
6,677

 
Tax cost of transfer of intellectual property
274

 
312

 
2,055

 
1,843

 
Change in fair value of contingent consideration
7,512

 

 
14,890

 

 
Currency (gain) loss on contingent consideration liability*
(1,183
)
 

 
(2,278
)
 

 
Changes in unrealized (gain) loss on derivative instruments included in net income
(3,953
)
 
(1,131
)
 
(7,435
)
 
2,570

 
Non-cash currency (gain) loss on intercompany loans
3,178

 
(283
)
 
(12,013
)
 
880

 
Non-GAAP adjusted net income
$
25,095

 
$
8,274

 
$
124,869

 
$
77,043

 
 
 
 
 
 
 
 
 
 
Non-GAAP adjusted net income per diluted share reconciliation:
 
 
 
 
Net income per diluted share attributable to Cimpress N.V.
$
0.25

 
$
0.04

 
$
2.85

 
$
1.24

 
 
 
 
 
 
 
 
 
 
Add back inclusive of tax effect:
 
 
 
 
 
 
 
 
Share-based compensation expense
0.17

 
0.17

 
0.50

 
0.64

 
Amortization of acquisition-related intangible assets
0.13

 
0.06

 
0.48

 
0.19

 
Tax cost of transfer of intellectual property
0.01

 
0.01

 
0.06

 
0.04

 
Change in fair value of contingent consideration
0.22

 

 
0.43

 

 
Currency (gain) loss on contingent consideration liability*
(0.04
)
 

 
(0.07
)
 

 
Changes in unrealized (gain) loss on derivative instruments included in net income
(0.11
)
 
(0.03
)
 
(0.23
)
 
0.07

 
Non-cash currency (gain) loss on intercompany loans
0.09

 
(0.01
)
 
(0.36
)
 
0.02

 
Non-GAAP adjusted net income per diluted share
$
0.72

 
$
0.24

 
$
3.66

 
$
2.20

 
 
 
 
 
 
 
 
 
 
Non-GAAP adjusted weighted average shares reconciliation:
 
 
 
 
 
 
 
GAAP weighted average shares outstanding - diluted
34,180,563

 
34,356,990

 
33,637,567

 
34,425,288

 
Add:
 
 
 
 
 
 
 
 
Additional shares due to unamortized share-based compensation
460,922

 
500,289

 
471,785

 
566,045

 
Non-GAAP adjusted weighted average shares outstanding - diluted
34,641,485
 
34,857,279

 
34,109,352
 
34,991,333
 
 
*Our non-GAAP results for the three and nine months ended March 31, 2015 have been recast to exclude the currency (gain)/loss on our contingent consideration liability.



Page 14 of 16



CIMPRESS N.V.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (CONTINUED)
(Unaudited in thousands, except share and per share data)
 
Three Months Ended
March 31,
 
Nine Months Ended
March 31,
 
2015
 
2014
 
2015
 
2014
Free cash flow reconciliation:
 
 
 
 
 
 
 
Net cash provided by operating activities
$
1,570

 
$
3,142

 
$
192,414

 
$
98,046

Purchases of property, plant and equipment
(15,153
)
 
(11,830
)
 
(50,105
)
 
(53,999
)
Purchases of intangible assets not related to acquisitions
(56
)
 
(83
)
 
(201
)
 
(202
)
Capitalization of software and website development costs
(5,068
)
 
(2,920
)
 
(12,517
)
 
(7,339
)
Payment of contingent consideration in excess of acquisition-date fair value
1,249

 

 
1,249

 

Free cash flow
$
(17,458
)
 
$
(11,691
)
 
$
130,840

 
$
36,506

 
GAAP Revenue
 
 
 
 
 
 
 
 
 
Constant - currency excluding acquisitions
 
Three Months Ended
March 31,
 
 
 
Currency
Impact:
 
Constant-
Currency
 
Impact of Acquisitions
 
 
2015
 
2014
 
% Change
 
(Favorable)/ Unfavorable
 
Revenue Growth
 
(Favorable)/ Unfavorable
 
Revenue Growth
Revenue growth reconciliation by region:
 
 
 
 
 
 
 
 
 
 
North America 
$
189,761

 
$
166,118

 
14%
 
1%
 
15%
 
—%
 
15%
Europe
133,241

 
104,177

 
28%
 
16%
 
44%
 
(39)%
 
5%
Other
16,899

 
15,890

 
6%
 
15%
 
21%
 
(7)%
 
14%
Total revenue
$
339,901

 
$
286,185

 
19%
 
7%
 
26%
 
(15)%
 
11%
 
GAAP Revenue
 
 
 
 
 
 
 
 
 
Constant- Currency revenue growth
 
Nine Months Ended March 31,
 
 
 
Currency
Impact:
 
Constant-
Currency
 
Impact of Acquisitions
 
 
2015
 
2014
 
% Change
 
(Favorable)/ Unfavorable
 
Revenue Growth
 
(Favorable)/ Unfavorable
 
Excluding acquisitions
Revenue growth reconciliation by region:
 
 
 
 
 
 
 
 
 
 
North America 
$
574,000

 
$
520,339

 
10%
 
1%
 
11%
 
—%
 
11%
Europe
480,209

 
359,912

 
33%
 
8%
 
41%
 
(38)%
 
3%
Other
59,529

 
51,830

 
15%
 
9%
 
24%
 
(11)%
 
13%
Total revenue
$
1,113,738

 
$
932,081

 
19%
 
4%
 
23%
 
(15)%
 
8%
 
GAAP Revenue
 
 
 
 
 
 
 
 
 
Constant- Currency revenue growth
 
Three Months Ended
March 31,
 
 
 
Currency
Impact:
 
Constant-
Currency
 
Impact of Acquisitions
 
 
2015
 
2014
 
%
Change
 
(Favorable)/ Unfavorable
 
Revenue Growth
 
(Favorable)/ Unfavorable
 
Excluding acquisitions
Revenue growth reconciliation by reportable segment:
 
 
 
 
 
 
 
 
Vistaprint Business Unit
$
280,577

 
$
267,706

 
5%
 
6%
 
11%
 
—%
 
11%
All Other Business Units
59,324

 
18,479

 
221%
 
16%
 
237%
 
(227)%
 
10%
Total revenue
$
339,901

 
$
286,185

 
19%
 
7%
 
26%
 
(15)%
 
11%
 
GAAP Revenue
 
 
 
 
 
 
 
 
 
Constant- Currency revenue growth
 
Nine Months Ended March 31,
 
 
 
Currency
Impact:
 
Constant-
Currency
 
Impact of Acquisitions
 
 
2015
 
2014
 
%
Change
 
(Favorable)/ Unfavorable
 
Revenue Growth
 
(Favorable)/ Unfavorable
 
Excluding acquisitions
Revenue growth reconciliation by reportable segment:
 
 
 
 
 
 
 
 
Vistaprint Business Unit
$
908,521

 
$
868,351

 
5%
 
3%
 
8%
 
—%
 
8%
All Other Business Units
205,217

 
63,730

 
222%
 
7%
 
229%
 
(223)%
 
6%
Total revenue
$
1,113,738

 
$
932,081

 
19%
 
4%
 
23%
 
(15)%
 
8%
Impact of acquisitions considers acquisitions and joint ventures from fiscal 2014 and fiscal 2015.

Page 15 of 16




 
CIMPRESS N.V.
 
 
Supplemental Financial Information and Operating Metrics
 
 
 
 
 
Q3 FY2014
Q4 FY2014
FY2014
 
Q1 FY2015
Q2 FY2015
Q3 FY2015
YTD FY2015
 
 
 
 
 
 
 
 
 
 
 
 
1 

 New Customer Orders (millions) - excludes acquisitions made since Q4 FY 2014
 
2.4

2.2

9.7

 
2.1

2.7

2.2

7.1

 
   y/y growth
 
(8
)%
 %
(8
)%
 
(5
)%
(7
)%
(8
)%
(6
)%
 
 
 
 
 
 
 
 
 
 
 
 
2 

 Total Order Volume (millions) - excludes acquisitions made since Q4 2014
 
7.3

7.0

30.5

 
6.8

8.8

7.2

22.8

 
  y/y growth
 
(6
)%
(1
)%
(4
)%
 
(4
)%
(3
)%
(1
)%
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
3 

 Average Order Value - excludes acquisitions made since Q4 2014 ($USD)
 
$
40.14

$
42.50

$
40.74

 
$
43.32

$
43.55

$
42.08

$
43.02

 
   y/y growth
 
7
 %
9
 %
10
 %
 
10
 %
6
 %
5
 %
7
 %
 
 
 
 
 
 
 
 
 
 
 
 
4 

 TTM Unique Active Customer Count - excludes acquisitions made since Q4 2014 (millions)
 
16.8

16.7

 
 
16.7

16.6

16.7



 
  y/y growth
 
(1
)%
(2
)%
 
 
(2
)%
(2
)%
(1
)%
 
 
 
TTM new customer count (millions)
 
9.8

9.7

 
 
9.6

9.4

9.3

 
 
 
TTM repeat customer count (millions)
 
7.0

7.0

 
 
7.1

7.2

7.4

 
 
 
 
 
 
 
 
 
 
 
 
 
5 

 TTM Average Bookings per Unique Active Customer - excludes acquisitions made since Q4 2014
 
$
73

$
74

 
 
$
75

$
76

$
77



 
  y/y growth
 
7
 %
7
 %
 
 
7
 %
6
 %
5
 %
 
 
 
TTM average bookings per new customer (approx.)
 
$
53

$
54

 
 
$
55

$
56

$
56

 
 
 
TTM average bookings per repeat customer (approx.)
 
$
101

$
102

 
 
$
103

$
103

$
103

 
 
 
 
 
 
 
 
 
 
 
 
 
6 

 Advertising & Commissions Expense - excluding acquisitions made since Q4 2014 (millions)
 
$
65.9

$
55.7

$
266.4

 
$
62.2

$
83.1

$
70.5

$
215.8

 
  as % of revenue
 
23.0
 %
18.9
 %
21.7
 %
 
21.3
 %
21.8
 %
23.7
 %
22.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
7 

 Advertising & Commissions Expense - Consolidated (millions)
 
$
65.9

$
57.1

$
267.7

 
$
63.9

$
85.6

$
72.1

$
221.6

 
  as % of revenue
 
23.0
 %
16.9
 %
21.1
 %
 
19.1
 %
19.5
 %
21.2
 %
19.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 Revenue - Consolidated as Reported ($ millions)
 
$
286.2

$
338.2

$
1,270.2

 
$
333.9

$
439.9

$
339.9

$
1,113.7

 
   y/y growth
 
(1
)%
21
 %
9
 %
 
21
 %
19
 %
19
 %
19
 %
 
   y/y growth in constant currency
 
(1
)%
19
 %
8
 %
 
21
 %
23
 %
26
 %
23
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 North America ($ millions)
 
$
166.1

$
179.9

$
700.2

 
$
177.7

$
206.5

$
189.8

$
574.0

 
   y/y growth
 
2
 %
6
 %
9
 %
 
8
 %
9
 %
14
 %
10
 %
 
   y/y growth in constant currency
 
3
 %
7
 %
9
 %
 
8
 %
10
 %
15
 %
11
 %
 
   as % of revenue
 
58
 %
53
 %
55
 %
 
53
 %
47
 %
56
 %
52
 %
 
 Europe ($ millions)
 
$
104.2

$
142.2

$
502.1

 
$
138.4

$
208.6

$
133.2

$
480.2

 
   y/y growth
 
(4
)%
50
 %
11
 %
 
46
 %
30
 %
28
 %
33
 %
 
   y/y growth in constant currency
 
(7
)%
43
 %
7
 %
 
45
 %
41
 %
44
 %
41
 %
 
   as % of revenue
 
36
 %
42
 %
40
 %
 
42
 %
47
 %
39
 %
43
 %
 
 Other Regions ($ millions)
 
$
15.9

$
16.1

$
67.9

 
$
17.8

$
24.8

$
16.9

$
59.5

 
   y/y growth
 
(3
)%
3
 %
(4
)%
 
14
 %
22
 %
6
 %
15
 %
 
   y/y growth in constant currency
 
10
 %
8
 %
6
 %
 
13
 %
27
 %
21
 %
24
 %
 
   as % of revenue
 
6
 %
5
 %
5
 %
 
5
 %
6
 %
5
 %
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
8 

Physical printed products and other ($ millions)
 
$
266.4

$
318.7

$
1,189.9

 
$
315.1

$
422.1

$
322.6

$
1,059.8

 
Digital products/services ($ millions)
 
$
19.7

$
19.5

$
80.3

 
$
18.8

$
17.8

$
17.3

$
53.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 Headcount at end of period
 
4,494

5,127

 
 
5,336

5,859

5,839


 
 
Full-time employees
 
4,370

4,901

 
 
5,040

5,203

5,534

 
 
 
Temporary employees
 
124

226

 
 
296

656

305

 
 
Notes:
Some numbers may not add due to rounding. Metrics are unaudited and where noted, approximate.
 
 
 
Printi, Printdeal, Pixartprinting and FotoKnudsen are not included in the customer metrics above.
 
1 
Orders from first-time customers in period, excluding Printi, Printdeal, Pixartprinting and FotoKnudsen
 
2 
Total order volume in period, excluding Printi, Printdeal, Pixartprinting and FotoKnudsen
 
3 
Total bookings, including shipping and processing, divided by total orders, excluding Printi, Printdeal, Pixartprinting and FotoKnudsen
 
4 
Number of individual customers who purchased from us in a given period, with no regard to frequency of purchase, excluding Printi, Printdeal, Pixartprinting and FotoKnudsen
 
5 
Total bookings for a trailing twelve month period, including shipping and processing, divided by number of unique customers in the same period, excluding Printi, Printdeal, Pixartprinting and FotoKnudsen
 
6 
External advertising and commissions expense, excluding Printi, Printdeal, Pixartprinting and FotoKnudsen
 
7 
External advertising and commissions expense for the consolidated business
 
8 
Other revenue includes miscellaneous items which account for less than 1% of revenue
 

Page 16 of 16