Cimpress Reports First Quarter Fiscal Year 2016 Financial Results
-
First quarter 2016 results:
-
Revenue grew 13 percent year over year to
$375.7 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 was
$0.30 in the first quarter of 2016 versus GAAP net income per diluted share of$0.71 in the year ago period -
Adjusted net operating profit after tax was
$16.4 million versus$22.6 million in the year ago period.
-
Revenue grew 13 percent year over year to
VENLO,
"Fiscal year 2016 is off to a solid start with continued execution
against our long-term objectives," said
Keane added, "As we have said many times, we believe that a significant
portion of our intrinsic value per share will come from intelligent
capital allocation. In the first quarter we are pleased to have executed
to plan and in line with the strategy and objectives we described in
detail at our
As described previously, we are making increased investments this year in our mass customization platform, product expansion, our Most of World business unit, acquisition integration, VBU advertising, and other key areas. As we had planned, first quarter operating income, Adjusted NOPAT (defined below), net income, operating cash flow and free cash flow were lower year over year due in part to these investment increases. Additionally, a portion of the year-over-year decline in operating income, adjusted NOPAT, and free cash flow was caused by a fire in one of our production facilities during the quarter, for which we have received some, but not yet all, insurance recovery payments. To the extent we are successful in recovering additional losses, these payments would be recorded in future periods.
Consolidated Financial Metrics:
-
Revenue for the first quarter of fiscal year 2016 was
$375.7 million , a 13 percent increase compared to revenue of$333.9 million reported in the same quarter a year ago. The year-over-year strengthening of the U.S. Dollar negatively impacted our revenue growth rate. Excluding the estimated impact from currency exchange rate fluctuations, revenue growth was 21 percent, and excluding both currency impact and revenue from businesses acquired during the past twelve months, revenue grew 11 percent year over year in the first quarter. - Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the first quarter was 58.1 percent, down from 61.0 percent in the same quarter a year ago due primarily to the increased weighting of our Upload and Print businesses.
-
Adjusted net operating profit after tax for the first quarter, which
is defined at the end of this press release, was
$16.4 million , or 4.4 percent of revenue, down from$22.6 million , or 6.8 percent of revenue, in the same quarter a year ago. -
Operating income in the first quarter was
$12.1 million , or 3.2 percent of revenue, a decrease in both absolute dollars and as a percent of revenue compared to$16.9 million , or 5.0 percent of revenue, in the same quarter a year ago. -
GAAP net income for the first quarter was
$10.0 million , or 2.7 percent of revenue, compared to GAAP net income of$23.7 million , or 7.1 percent of revenue in the same quarter a year ago. In addition to increased investment levels described above, this decrease in net income was influenced by increased interest expense related to the senior unsecured notes offering completed in the third quarter of last fiscal year, as well as year-over-year non-operational, non-cash currency impacts. -
GAAP net income per diluted share for the first quarter was
$0.30 , versus$0.71 in the same quarter a year ago. -
Capital expenditures in the first quarter were
$24.4 million , or 6.5 percent of revenue. -
During the first quarter, the company generated
$25.7 million of cash from operations and$(1.9) million in free cash flow, which is defined at the end of this press release. -
As of
September 30, 2015 , the company had$93.8 million in cash and cash equivalents and$655.3 million of debt net of issuance costs. After considering debt covenant limitations, as ofSeptember 30, 2015 the company had$430.7 million available for borrowing under its committed credit facility. -
During the quarter, the company purchased 1,976,250 of its ordinary
shares for
$140.2 million , inclusive of transaction costs, at an average per-share cost of$70.95 , as part of the share repurchase program authorized by the Supervisory Board inDecember 2014 .
"Although it is still early in the year and we have much left to
accomplish, our investments are on track with the plans we previously
communicated," said
Important Reminder of Cimpress’ Priorities
We ask investors and potential investors in
Our priorities are:
- Strategic Objective: To be the world leader in mass customization. By mass customization, we mean producing, with the reliability, quality and affordability of mass production, small individual orders where each and every one embodies the personal relevance inherent to customized physical products.
- Financial Objective: To maximize intrinsic value per share, defined as (a) the unlevered 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, minus (b) net debt per share.
To understand these objectives and their implications,
About non-GAAP financial measures
To supplement Cimpress’ consolidated financial statements presented in
accordance with U.S. generally accepted accounting principles, or GAAP,
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
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 and development of our business, our
planned investments in our business, and the anticipated effects of
those investments. 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; our failure to manage the growth
and complexity of our business and expand our operations; our failure to
develop our mass customization platform or to realize the anticipated
benefits of such a platform; 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;
unanticipated changes in our markets, customers, or business;
competitive pressures; our failure to maintain compliance with the
covenants in our revolving credit facility and senior notes or to pay
our debts when due; general economic conditions; and other factors
described in our Form 10-K for the fiscal year ended
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 |
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CIMPRESS N.V. |
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CONSOLIDATED BALANCE SHEETS |
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(unaudited in thousands, except share and per share data) | |||||||||
September 30, 2015 |
June 30, 2015 |
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Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 93,816 | $ | 103,584 | |||||
Marketable securities | 5,745 | 6,910 | |||||||
Accounts receivable, net of allowances of $351 and $372, respectively | 38,699 | 32,145 | |||||||
Inventory | 19,835 | 18,356 | |||||||
Prepaid expenses and other current assets¹ | 59,274 | 55,103 | |||||||
Total current assets | 217,369 | 216,098 | |||||||
Property, plant and equipment, net | 495,097 | 467,511 | |||||||
Software and web site development costs, net | 23,332 | 22,109 | |||||||
Deferred tax assets | 19,016 | 17,172 | |||||||
Goodwill | 408,767 | 400,629 | |||||||
Intangible Assets, net | 155,471 | 151,063 | |||||||
Other assets¹ | 24,621 | 25,213 | |||||||
Total assets | $ | 1,343,673 | $ | 1,299,795 | |||||
Liabilities and shareholders’ equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 65,768 | $ | 65,875 | |||||
Accrued expenses | 179,155 | 172,826 | |||||||
Deferred revenue | 23,378 | 23,407 | |||||||
Deferred tax liabilities | 1,752 | 1,043 | |||||||
Short-term debt¹ | 18,001 | 21,057 | |||||||
Other current liabilities | 23,889 | 21,470 | |||||||
Total current liabilities | 311,943 | 305,678 | |||||||
Deferred tax liabilities | 49,970 | 48,007 | |||||||
Other liabilities | 62,019 | 52,073 | |||||||
Lease financing obligation | 107,233 | 93,841 | |||||||
Long-term debt¹ | 637,316 | 493,039 | |||||||
Total liabilities | 1,168,481 | 992,638 | |||||||
Commitments and contingencies | |||||||||
Redeemable noncontrolling interests |
65,120 | 57,738 | |||||||
Shareholders’ equity: | |||||||||
Preferred shares, par value €0.01 per share, 100,000,000 shares
authorized; none issued and |
— | — | |||||||
Ordinary shares, par value €0.01 per share, 100,000,000 shares
authorized; 44,080,627 shares |
615 | 615 | |||||||
Treasury shares, at cost, 12,692,401 and 10,877,562 shares, respectively | (547,448 | ) | (412,132 | ) | |||||
Additional paid-in capital | 324,370 | 324,281 | |||||||
Retained earnings | 442,804 | 435,052 | |||||||
Accumulated other comprehensive loss | (110,653 | ) | (98,909 | ) | |||||
Total shareholders’ equity attributable to Cimpress N.V. | 109,688 | 248,907 | |||||||
Non controlling interest | 384 | 512 | |||||||
Total Shareholders Equity | $ | 110,072 | $ | 249,419 | |||||
Total liabilities and shareholders’ equity | $ | 1,343,673 | $ | 1,299,795 |
¹In Q1 FY16 we early adopted a new accounting standard to present our capitalized debt issuance costs asset net of the related debt obligation. Previously, these capitalized costs were classified as other current and long-term assets. We have applied this change retroactively for all periods presented.
CIMPRESS N.V. |
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CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(unaudited in thousands, except share and per share data) | |||||||||||
Three Months Ended |
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2015 | 2014 | ||||||||||
Revenue | $ | 375,748 | $ | 333,932 | |||||||
Cost of revenue (1) | 157,283 | 130,220 | |||||||||
Technology and development expense (1) | 51,086 | 43,905 | |||||||||
Marketing and selling expense (1) | 122,135 | 111,827 | |||||||||
General and administrative expense (1) | 33,159 | 31,121 | |||||||||
Income from operations | 12,085 | 16,859 | |||||||||
Other income, net | 9,242 | 12,135 | |||||||||
Interest expense, net | (8,126 | ) | (3,345 | ) | |||||||
Income before income taxes | 13,201 | 25,649 | |||||||||
Income tax provision | 3,940 | 2,232 | |||||||||
Net income | 9,261 | 23,417 | |||||||||
Add: Net loss attributable to noncontrolling interest | 749 | 277 | |||||||||
Net income attributable to Cimpress N.V. | 10,010 | 23,694 | |||||||||
Basic net income per share attributable to Cimpress N.V. | $ | 0.31 | $ | 0.73 | |||||||
Diluted net income per share attributable to Cimpress N.V. | $ | 0.30 | $ | 0.71 | |||||||
Weighted average shares outstanding — basic | 32,528,583 | 32,386,820 | |||||||||
Weighted average shares outstanding — diluted | 33,534,808 | 33,154,436 | |||||||||
(1) Share-based compensation is allocated as follows: |
Three Months Ended |
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2015 | 2014 | ||||||||||||
Cost of revenue |
$ | 26 | $ | 31 | |||||||||
Technology and development expense | 1,330 | 927 | |||||||||||
Marketing and selling expense | 411 | 914 | |||||||||||
General and administrative expense | 4,423 | 3,870 |
CIMPRESS N.V. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(unaudited, in thousands) | ||||||||||
Three Months Ended |
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2015 | 2014 | |||||||||
Operating activities | ||||||||||
Net income | $ | 9,261 | $ | 23,417 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 30,258 | 24,459 | ||||||||
Share-based compensation expense | 6,190 | 5,742 | ||||||||
Excess tax benefits derived from share-based compensation awards | (1,709 | ) | (319 | ) | ||||||
Deferred taxes | (3,644 | ) | (4,157 | ) | ||||||
Unrealized gain on derivative instruments included in net income | (2,052 | ) | (3,468 | ) | ||||||
Change in fair value of contingent consideration | — | 3,677 | ||||||||
Effect of exchange rate changes on monetary assets and liabilities
denominated in non-functional |
(7,793 | ) | (10,112 | ) | ||||||
Other non-cash items | 887 | 541 | ||||||||
Gain on proceeds from insurance | (1,587 | ) | — | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (5,943 | ) | (2,566 | ) | ||||||
Inventory | (1,710 | ) | (497 | ) | ||||||
Prepaid expenses and other assets | 3,157 | 16,787 | ||||||||
Accounts payable | 10,520 | 6,452 | ||||||||
Accrued expenses and other liabilities | (10,118 | ) | (7,336 | ) | ||||||
Net cash provided by operating activities | 25,717 | 52,620 | ||||||||
Investing activities | ||||||||||
Purchases of property, plant and equipment | (24,393 | ) | (16,684 | ) | ||||||
Business acquisitions, net of cash acquired | (22,815 | ) | (25,907 | ) | ||||||
Purchases of intangible assets | (357 | ) | (85 | ) | ||||||
Capitalization of software and website development costs | (4,910 | ) | (3,539 | ) | ||||||
Proceeds from insurance | 2,075 | — | ||||||||
Net cash used in investing activities | (50,400 | ) | (46,215 | ) | ||||||
Financing activities | ||||||||||
Proceeds from borrowings of debt | 214,999 | 100,000 | ||||||||
Payments of debt and debt issuance costs | (73,318 | ) | (103,012 | ) | ||||||
Payments of withholding taxes in connection with equity awards | (2,741 | ) | (1,511 | ) | ||||||
Payments of capital lease obligations | (2,183 | ) | (1,261 | ) | ||||||
Excess tax benefits derived from share-based compensation awards | 1,709 | 319 | ||||||||
Purchase of ordinary shares | (127,793 | ) | — | |||||||
Proceeds from issuance of ordinary shares | 282 | 845 | ||||||||
Capital contribution from noncontrolling interest | 5,141 | — | ||||||||
Other financing activities | (85 | ) | — | |||||||
Net cash provided by (used in) financing activities | 16,011 | (4,620 | ) | |||||||
Effect of exchange rate changes on cash | (1,096 | ) | (3,372 | ) | ||||||
Net decrease in cash and cash equivalents | (9,768 | ) | (1,587 | ) | ||||||
Cash and cash equivalents at beginning of period | 103,584 | 62,508 | ||||||||
Cash and cash equivalents at end of period | $ | 93,816 | $ | 60,921 | ||||||
CIMPRESS N.V. |
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RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES |
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(unaudited, in thousands) |
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Three Months Ended |
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2015 | 2014 | |||||||||
Adjusted net operating profit after tax reconciliation: | ||||||||||
GAAP Operating Income | $ | 12,085 | $ | 16,859 | ||||||
Less: Cash taxes attributable to current period (see below) | (6,833 | ) | (5,313 | ) | ||||||
Less: Interest expense associated with Waltham lease | (350 | ) | — | |||||||
Exclude expense (benefit) impact of: | ||||||||||
Change in fair value of contingent consideration (earn-out related charges¹) |
289 | 3,677 | ||||||||
Acquisition-related amortization and depreciation | 9,782 | 6,908 | ||||||||
Share-based compensation related to investment consideration | 802 | 497 | ||||||||
Restructuring Costs |
271 | — | ||||||||
Include: Realized gain (loss) on currency forward contracts not included in operating income |
316 | (17 | ) | |||||||
Adjusted NOPAT | $ | 16,362 | $ | 22,611 | ||||||
Cash taxes paid in the current period | $ | 4,709 | $ | 5,296 | ||||||
Less: cash taxes related to prior periods | 359 | (2,860 | ) | |||||||
Plus: cash taxes attributable to the current period but not yet paid |
921 | 936 | ||||||||
Plus: cash impact of excess tax benefit on equity awards attributable to current period | 1,709 | 2,796 | ||||||||
Less: installment payment related to the transfer of IP in a prior year | (865 | ) | (855 | ) | ||||||
Cash taxes attributable to current period | $ | 6,833 | $ | 5,313 |
Three Months Ended |
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2015 | 2014 | |||||||||
Free cash flow reconciliation: | ||||||||||
Net cash provided by operating activities | $ | 25,717 | $ | 52,620 | ||||||
Purchases of property, plant and equipment | (24,393 | ) | (16,684 | ) | ||||||
Purchases of intangible assets not related to acquisitions | (357 | ) | (85 | ) | ||||||
Capitalization of software and website development costs | (4,910 | ) | (3,539 | ) | ||||||
Proceeds from insurance | 2,075 | — | ||||||||
Free cash flow | $ | (1,868 | ) | $ | 32,312 | |||||
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¹Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to earn-out mechanisms dependent upon continued employment.
CIMPRESS N.V. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands) |
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GAAP Revenue |
Constant- |
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Three Months Ended |
Currency Impact: |
Constant- Currency |
Impact of |
||||||||||||||
2015 | 2014 |
% Change |
(Favorable)/ |
Revenue |
(Favorable)/ |
Excluding |
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Revenue growth reconciliation by reportable segment: | |||||||||||||||||
Vistaprint | $ | 265,190 | $ | 260,057 | 2% | 6% | 8% | —% |
8% |
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Upload and Print | 76,538 | 38,729 | 98% | 20% | 118% | (87)% | 31% | ||||||||||
All Other | 34,020 | 35,146 | (3)% | 13% | 10% | (4)% | 6% | ||||||||||
Total revenue | $ | 375,748 | $ | 333,932 | 13% | 8% | 21% | (10)% |
11% |
Supplemental Financial and Operating Information | |||||||||||||||||||||||||||||||||||
In $ millions, except where noted | FY2014 | Q1 FY2015 | Q2 FY2015 | Q3 FY2015 | Q4 FY2015 | FY2015 | Q1 FY2016 | ||||||||||||||||||||||||||||
Revenue - Consolidated as Reported | $ | 1,270.2 | $ | 333.9 | $ | 439.9 | $ | 339.9 | $ | 380.5 | $ | 1,494.2 | $ | 375.7 | |||||||||||||||||||||
y/y growth | 9 | % | 21 | % | 19 | % | 19 | % | 13 | % | 16 | % | 13 | % | |||||||||||||||||||||
y/y growth in constant currency | 8 | % | 21 | % | 23 | % | 26 | % | 22 | % | 23 | % | 21 | % | |||||||||||||||||||||
Vistaprint | $ | 1,097.6 | $ | 260.1 | $ | 344.2 | $ | 267.6 | $ | 273.4 | $ | 1,145.1 | $ | 265.2 | |||||||||||||||||||||
y/y growth | n/a | 6 | % | 3 | % | 4 | % | 5 | % | 4 | % | 2 | % | ||||||||||||||||||||||
y/y growth in constant currency | n/a | 5 | % | 7 | % | 11 | % | 11 | % | 9 | % | 8 | % | ||||||||||||||||||||||
as % of revenue | 86 | % | 78 | % | 78 | % | 79 | % | 72 | % | 77 | % | 71 | % | |||||||||||||||||||||
Upload and Print | $ | 43.6 | $ | 38.7 | $ | 44.0 | $ | 38.7 | $ | 75.7 | $ | 197.1 | $ | 76.5 | |||||||||||||||||||||
y/y growth | n/a | n/a | n/a | n/a | 74 | % | 352 | % | 98 | % | |||||||||||||||||||||||||
y/y growth in constant currency | n/a | n/a | n/a | n/a | 100 | % | 352 | % | 118 | % | |||||||||||||||||||||||||
as % of revenue | 3 | % | 12 | % | 10 | % | 11 | % | 20 | % | 13 | % | 20 | % | |||||||||||||||||||||
All Other | $ | 129.0 | $ | 35.1 | $ | 51.8 | $ | 33.7 | $ | 31.4 | $ | 152.0 | $ | 34.0 | |||||||||||||||||||||
y/y growth | n/a | 20 | % | 40 | % | 13 | % | (5 | )% | 18 | % | (3 | )% | ||||||||||||||||||||||
y/y growth in constant currency | n/a | 21 | % | 47 | % | 25 | % | 7 | % | 19 | % | 10 | % | ||||||||||||||||||||||
as % of revenue | 10 | % | 11 | % | 12 | % | 10 | % | 8 | % | 10 | % | 9 | % | |||||||||||||||||||||
Physical printed products and other |
$ | 1,189.9 | $ | 315.1 | $ | 422.1 | $ | 322.6 | $ | 363.3 | $ | 1,423.1 | $ | 360.1 | |||||||||||||||||||||
Digital products/services | $ | 80.3 | $ | 18.8 | $ | 17.8 | $ | 17.3 | $ | 17.2 | $ | 71.1 | $ | 15.6 | |||||||||||||||||||||
Advertising & Commissions Expense - Consolidated |
$ | 267.7 | $ | 63.9 | $ | 85.6 | $ | 72.1 | $ | 64.8 | $ | 286.4 | $ | 70.2 | |||||||||||||||||||||
as % of revenue | 21.1 | % | 19.0 | % | 19.0 | % | 21.0 | % | 17.0 | % | 19.2 | % | 19.0 | % | |||||||||||||||||||||
TTM Bookings - Vistaprint | |||||||||||||||||||||||||||||||||||
% Bookings from repeat orders | 72 | % | 72 | % | 72 | % | 73 | % | 73 | % | 73 | % | |||||||||||||||||||||||
% Bookings from first-time orders | 28 | % | 28 | % | 28 | % | 27 | % | 27 | % | 27 | % | |||||||||||||||||||||||
Advertising & Commissions Expense- Vistaprint |
$ | 256.5 | $ | 56.4 | $ | 75.7 | $ | 64.8 | $ | 59.1 | $ | 256.0 | $ | 62.4 | |||||||||||||||||||||
as % of revenue | 23 | % | 22 | % | 22 | % | 24 | % | 22 | % | 22 | % | 24 | % | |||||||||||||||||||||
Headcount at end of period | 5,127 | 5,336 | 5,859 | 5,839 | 6,552 | 6,836 | |||||||||||||||||||||||||||||
Full-time employees | 4,901 | 5,040 | 5,203 | 5,534 | 6,168 | 6,447 | |||||||||||||||||||||||||||||
Temporary employees | 226 | 296 | 656 | 305 | 384 | 389 | |||||||||||||||||||||||||||||
Some numbers may not add due to rounding. Metrics are unaudited. | |||||||||||||||||||||||||||||||||||
¹For the three months ended September 30, 2015, constant-currency revenue growth excluding acquisitions excludes the impact of currency and revenue from druck.at, Easyflyer, Exagroup, Printi, Alcione and Tradeprint. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20151028006522/en/
Source:
Cimpress N.V.
Investor Relations:
Meredith Burns,
+1-781-652-6480
ir@cimpress.com
or
Media
Relations:
Cheryl Wadsworth
mediarelations@cimpress.com