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): July 26, 2017 |
__________________________________________
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)) | |||
Indicate by check mark whether the registrant is an emerging growth company, as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12.b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition
On July 26, 2017, Cimpress N.V. issued a press release announcing its financial results for the fourth quarter and year ended June 30, 2017 and posted on its web site (ir.cimpress.com) a presentation and script discussing its fourth quarter and fiscal year financial results. The full text of the press release is furnished as Exhibit 99.1 to this report, and the presentation with the script is furnished as Exhibit 99.2.
The information in this Item 2.02 and the exhibits 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.
July 26, 2017 Cimpress N.V.
By: | /s/ Sean E. Quinn | |
Sean E. Quinn | ||
Executive Vice President and Chief Financial Officer | ||
EXHIBIT INDEX
Exhibit | ||
No. | Description | |
99.1 | Press release dated July 26, 2017 entitled “Cimpress Reports Fourth Quarter and Fiscal Year 2017 Financial Results” | |
99.2 | Presentation and script dated July 26, 2017 entitled "Cimpress N.V. Q4 and Fiscal Year 2017 Earnings presentation, commentary & financial results supplement" | |
Contacts:Investor Relations:
Jenna Berg
ir@cimpress.com
+1.781.652.6480
Media Relations:
Paul McKinlay
mediarelations@cimpress.com
Cimpress Reports Fourth Quarter and Fiscal Year 2017 Financial Results
• | Fourth quarter 2017 results: |
◦ | Revenue grew 18 percent year over year to $564.3 million |
◦ | Revenue grew 9 percent year over year excluding the impact of currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months |
◦ | GAAP loss from operations was $9.7 million in the current period versus income from operations of $16.0 million in the year-ago period, largely due to acquisition-related charges and planned increases in investments, partially offset by restructuring savings |
◦ | GAAP net loss per diluted share was $1.11 in the fourth quarter of 2017 versus GAAP net income per diluted share of $0.51 in the year-ago period due to the items above as well as significant non-cash currency-related losses |
◦ | Adjusted net operating profit after tax (adjusted NOPAT) was $9.6 million versus $16.9 million in the year-ago period |
• | Fiscal year 2017 results: |
◦ | Revenue grew 19 percent year over year to $2,135.4 million |
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◦ | Revenue grew 8 percent year over year excluding the impact of currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months |
◦ | GAAP loss from operations was $45.7 million in the current fiscal year versus GAAP income from operations of $78.2 million in the year-ago period, primarily due to planned increases in investments, acquisition-related charges, previously announced loss of certain partner profits, net restructuring costs, and unfavorable currency impacts, partially offset by reduced impairment charges |
◦ | GAAP net loss per diluted share was $2.29 in fiscal 2017 versus GAAP net income per diluted share of $1.64 in the year-ago period due to the operating items above, and significant year-over-year changes in non-operational currency impacts, partially offset by a GAAP tax benefit |
◦ | Adjusted net operating profit after tax (adjusted NOPAT) was $64.6 million versus $139.8 million in the year-ago period |
Venlo, the Netherlands, July 26, 2017 -- Cimpress N.V. (Nasdaq: CMPR), the world leader in mass customization, today announced financial results for the fourth quarter and fiscal year ended June 30, 2017.
"Fiscal year 2017 was important in terms of the evolution of Cimpress," said Robert Keane, president and chief executive officer. "We decentralized our operations, delivered many new capabilities and product offerings, began using our mass customization platform, made strong investments in organic growth opportunities, and completed our largest acquisition to date. Additionally, we continue to improve our understanding of and approach to capital allocation, pushing this understanding deeper into our organization. I describe these subjects in detail in my annual letter to investors which was published simultaneously with this earnings announcement on ir.cimpress.com. We also plan to highlight our progress and fiscal year 2018 plans at our upcoming investor day on August 8, 2017."
Sean Quinn, chief financial officer, said, "Fourth quarter revenue growth decelerated, in line with our expectations. As mentioned last quarter, the timing shift of the Easter holiday from the third quarter in 2016 to the fourth quarter in 2017 created much of this dynamic. Looking at the full year which removes typical quarterly fluctuations, our revenue growth by segment was in line with our commentary at the beginning of the year. As described throughout the year, we
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continue to see pressure on Vistaprint's gross profit from shipping price reductions and the rapid expansion of product selection and design services as we have prioritized launching and learning about demand levels ahead of in-year profits. We often note that we are not targeting absolute gross margin or even contribution margin increases; we seek to maximize our cash flows over long periods of time. With that said, the Vistaprint business sees opportunities to optimize costs and pricing starting in the upcoming year as we scale these offerings and realize the operational benefits of our recent reorganization."
The following year-over-year items negatively influenced GAAP operating income in the fourth quarter and full year:
• | Increased organic investments in fiscal year 2017 compared to fiscal year 2016, which materially weigh on profitability. These investments include costs that impact our gross profit such as shipping price reductions, expanded design services, and new product introductions. For the full year, the increase in organic investments impacted operating income by approximately $45 million. |
• | Restructuring charges related to the reorganization announced on January 25, 2017. The year-over-year increase was $0.8 million for the fourth quarter and $26.3 million for the full year. In our full-year results, the savings we realized from the restructuring partially offset the restructuring charges. |
• | A year-over-year increase in acquisition-related charges as follows: First, earn-out related charges primarily associated with the prior year acquisition of WIRmachenDRUCK of $10.5 million for the fourth quarter and $34.0 million for the full year. This increase brings the fair value of the earn-out to the maximum amount of €40 million, with a small time-based discount. Second, an increase in acquisition-related amortization of intangible assets of $2.2 million for the quarter and $5.6 million for the year. Third, the acceleration of the vesting of equity awards from two unrelated acquisition-related employment contracts led to a year-over-year increase in share-based compensation costs of $3.4 million in the fourth quarter and $4.8 million for the full-year. The full-year acquisition-related impacts are partially offset by a year-over-year decrease in impairment charges of $21.3 million related to acquisitions. |
• | An increase in share-based compensation expense due to the implementation of our previously described long-term incentive program at the beginning of fiscal year 2017. The year-over-year increase was $3.9 million for the fourth quarter and $13.7 million for the full year, excluding share-based compensation related to restructuring and |
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acquisition-related investment consideration, which are included in the respective impacts listed above.
• | A profit decline due to the termination of two partner contracts as previously described. The year-over-year impact of this was approximately $1 million for the fourth quarter, and $18 million for the full year. |
• | Unfavorable year-over-year currency fluctuations that were offset below the line by year-over-year changes in realized gains from hedging contracts in other income, net. |
Quinn added, "Including the currency impact, the items listed above weigh on our operating income by over $100 million in fiscal year 2017 compared to fiscal year 2016. We do not ask our shareholders to ignore these costs, but it is important to understand them in order to analyze the underlying operating trends in our business."
For fiscal year 2018, Cimpress expects to achieve year-over-year savings from its recent restructuring, net of charges, as follows: approximately $35 million on a free cash flow basis, and approximately $50 million on an operating income basis. These savings estimates do not include the annualized savings related to the reduction in previously planned hiring that we have achieved in fiscal year 2017 since they do not impact the actual year-over-year savings.
Quinn added, "As we look ahead to fiscal year 2018, we are on track to recognize the financial benefits of our recent restructuring in line with our past commentary. Our businesses are focused on delivering strong returns from past investment spend and, as outlined in detail in our letter to investors dated July 26, 2017, we expect to continue to invest significantly against our organic growth opportunities, albeit at a more modest amount relative to fiscal year 2017. These are among the factors that we expect to result in higher unlevered free cash flow in fiscal year 2018."
Anticipated Sale of Albumprinter Business:
Cimpress has recently entered into a definitive agreement to divest its Albumprinter business, including its FotoKnudsen subsidiary. Although Albumprinter’s capabilities clearly fall within the sphere of mass customization, Cimpress believes it can more attractively invest the capital it will free up as a result of this transaction. We expect the sale of Albumprinter to be completed in the first quarter of fiscal year 2018. The assets and liabilities are "held for sale" on our balance sheet as of June 30, 2017.
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Consolidated Financial Metrics:
• | Revenue for the fourth quarter of fiscal year 2017 was $564.3 million, an 18 percent increase compared to revenue of $479.2 million in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, revenue grew 9 percent year over year in the fourth quarter. For the full year, total consolidated revenue grew 19 percent year over year. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, revenue for the full year grew 8 percent. Revenue growth for the fourth quarter, and even more so for the full year, was negatively impacted by the loss of certain partner revenue. These terminated partner relationships will not impact our year-over-year growth rates in future quarters because more than four quarters have now passed since the cessation of revenue from these sources. |
• | Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the fourth quarter was 50.5 percent, down from 53.7 percent in the same quarter a year ago due to lower Vistaprint gross margins as a result of planned investments, as well as unfavorable currency changes. For the full fiscal year, gross margin was 51.4 percent compared to 56.7 percent in fiscal year 2016, due to the same reasons described above for the quarter, as well as a year-over-year mix impact from recent acquisitions. |
• | Contribution margin (revenue minus the cost of revenue, the cost of advertising and payment processing as a percent of total revenue) in the fourth quarter was 32.9 percent, down from 36.1 percent in the same quarter a year ago. For the full fiscal year, contribution margin was 32.8 percent compared to 37.9 percent in the prior fiscal year. Advertising as a percent of revenue was flat year over year for both the fourth quarter and full year; therefore the contribution margin trend was driven by the decline in gross margin as described above. |
• | GAAP operating loss in the fourth quarter was $9.7 million, or 1.7 percent of revenue, compared to operating income of $16.0 million, or 3.3 percent of revenue, in the same quarter a year ago. GAAP operating loss for fiscal year 2017 was $45.7 million, or 2.1 percent of revenue, compared to operating income of $78.2 million, or 4.4 percent of revenue, in the prior fiscal year. The drivers of this significant loss are described above, before the "Anticipated Sale of Albumprinter Business" section of this release. |
• | Adjusted NOPAT for the fourth quarter, which is defined at the end of this press release, was $9.6 million, or 1.7 percent of revenue, down from $16.9 million, or 3.5 percent of revenue, in the same quarter a year ago. For the full fiscal year, adjusted NOPAT was |
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$64.6 million, or 3.0 percent of revenue, down from $139.8 million, or 7.8 percent of revenue, in fiscal year 2016. The profit impacts described above that also impacted adjusted NOPAT were the increased organic investments, the increase in share-based compensation related to our new long-term incentive program, and the reduction in partner profits. Because the restructuring charges are excluded from adjusted NOPAT, there is a positive impact from restructuring savings during the quarter and year.
• | GAAP net loss attributable to Cimpress for the fourth quarter was $34.7 million, or 6.2 percent of revenue, compared to net income of $16.9 million, or 3.5 percent of revenue in the same quarter a year ago. For the full fiscal year, GAAP net loss attributable to Cimpress was $71.7 million, or 3.4 percent of revenue, compared to GAAP net income of $54.3 million, or 3.0 percent of revenue, in the prior fiscal year. In addition to the impacts described above, GAAP net loss was negatively influenced by year-over-year non-operational, non-cash currency impacts, and positively influenced by a significant reduction in our tax provision in the current period compared to the year-ago period due to our consolidated losses as well as favorable discrete items during the quarter and year. |
• | GAAP net loss per diluted share for the fourth quarter was $1.11, versus net income of $0.51 in the same quarter a year ago. For fiscal year 2017, GAAP net loss per diluted share was $2.29, versus net income per diluted share of $1.64 in the prior full fiscal year. |
• | Capital expenditures in the fourth quarter were $17.2 million, or 3.1 percent of revenue, versus $17.8 million, or 3.7 percent of revenue in the same quarter a year ago. During the full fiscal year capital expenditures were $74.2 million or 3.5 percent of revenue, compared to $80.4 million or 4.5 percent of revenue in fiscal year 2016. |
• | During the fourth quarter, the company generated $33.1 million of cash from operations and $7.1 million in free cash flow, a non-GAAP financial measure, which is defined at the end of this press release. During the full fiscal year, the company generated $156.7 million of cash from operations and $45.1 million in free cash flow. |
• | As of June 30, 2017, the company had $37.7 million of cash and cash equivalents (including $12.0 million of cash held for sale related to the planned Albumprinter divestiture) and $876.7 million of debt, net of issuance costs. After considering debt covenant limitations, as of June 30, 2017 the company had $211.8 million available for borrowing under its committed credit facility. Based on Cimpress' debt covenant definitions, its total leverage ratio was 3.45 as of June 30, 2017. The company continues to expect to reduce its leverage ratio approximately to, or below, its long-term target of 3 |
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times trailing twelve month EBITDA by the end of calendar year 2017 through a combination of debt repayment and EBITDA expansion. As recently announced, Cimpress amended and increased the size of its credit facility in July for long-term flexibility.
• | Cimpress did not repurchase shares during the fourth quarter. For the full year, Cimpress purchased 593,763 shares for $50.0 million inclusive of transaction costs, at an average price per share of $84.22. |
Supplemental Materials and July 27, 2017 Conference Call Information
Cimpress has posted an end-of-year presentation with accompanying prepared remarks, as well as our annual letter to investors at ir.cimpress.com. On Thursday, July 27, 2017 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 webcast at ir.cimpress.com and via dial-in at +1 (844) 778-4144, conference ID 36574151. A replay of the Q&A session will be available on the company’s website following the call on July 27, 2017.
Important Reminder of Cimpress’ Priorities
We ask investors and potential investors in Cimpress to understand the upper-most objectives 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 net income, operating income, EPS, cash flow, EBITDA, and adjusted NOPAT.
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, Cimpress encourages investors to read Robert Keane’s letter to investors published on July 26, 2017 at ir.cimpress.com and to review
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materials that will be presented at our upcoming annual investor day meeting on August 8, 2017.
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: adjusted net operating profit after tax, free cash flow, unlevered free cash flow, constant-currency revenue growth and constant-currency revenue growth excluding revenue from acquisitions made in the last twelve months:
• | Adjusted net operating profit after tax is defined as GAAP operating income, less cash taxes attributable to current period operations and interest expense associated with our Waltham, Massachusetts lease, excluding M&A related items such as acquisition-related amortization and depreciation, changes in the fair value of contingent consideration, and expense for deferred payments or equity awards that are treated as compensation expense, plus the impact of certain unusual items such as discontinued operations, restructuring charges, or impairments, plus realized gains or losses on currency derivatives that are not included in operating income. |
• | 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, plus gains on proceeds from insurance. |
• | Unlevered free cash flow is defined as free cash flow as described above, plus the cash paid during the period for interest, minus the interest expense associated with our Waltham, Massachusetts lease. |
• | 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. |
• | Fourth quarter constant-currency revenue growth excluding revenue from acquisitions made during the past twelve months excludes the impact of currency as defined above and revenue from National Pen. |
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These non-GAAP financial measures are provided to enhance investors' understanding of our current operating results from the underlying and ongoing business for the same reasons they are used by management. For example, as we have become more acquisitive over recent years we believe excluding the costs related to the purchase of a business (such as amortization of acquired intangible assets, contingent consideration, or impairment of goodwill) provides further insight into the performance of the underlying acquired business in addition to that provided by our GAAP operating income. As another example, as we do not apply hedge accounting for our currency forward contracts, we believe inclusion of realized gains and losses on these contracts that are intended to be matched against operational currency fluctuations provides further insight into our operating performance in addition to that provided by our GAAP operating income. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared 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.
About Cimpress
Cimpress N.V. (Nasdaq: CMPR) is the world leader in mass customization. For more than 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 brings its products to market via a portfolio of more than 20 brands including Vistaprint, Drukwerkdeal, Pixartprinting, Exaprint, WIRmachenDRUCK, National Pen and many others. That portfolio serves multiple customer segments across many applications for mass customization. The company produces more than 46 million unique ordered items a year. To learn more, visit http://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
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provisions under the Private Securities Litigation Reform Act of 1995, including our expectations for the growth and development of our business, cash flows, and revenue, the expected savings from our recent organizational changes, and the expected sale of our Albumprinter business. Forward-looking projections and expectations are inherently uncertain, are based on assumptions and judgments by management, and may turn out to be wrong. The sale of our Albumprinter business may be delayed or may not close at all if either Cimpress or the buyer fails to satisfy the conditions to close the transaction. Our actual results may differ materially from those indicated by the forward-looking statements in this press release as a result of various important factors, including but not limited to our failure to execute our strategy; our inability to make the investments in our business that we plan to make or the failure of those investments to achieve the results we expect; our failure to develop our mass customization platform or the failure of the platform to drive the efficiencies and competitive advantage we expect; our ability to accurately forecast the savings and charges relating to our organizational changes; unanticipated changes in our markets, customers, or business; our loss of key personnel; our failure to reposition our Vistaprint brand and to promote and strengthen all of our brands; our failure to attract new customers and retain our current customers; our failure to manage the growth and complexity of our business and expand our operations; the failure of the businesses we acquire or invest in to perform as expected; the willingness of purchasers of customized products and services to shop online; competitive pressures; general economic conditions; and other factors described in our Form 10-Q for the fiscal quarter ended March 31, 2017 and the other documents we periodically file with the U.S. SEC.
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.
CONSOLIDATED BALANCE SHEETS
(unaudited in thousands, except share and per share data)
June 30, 2017 | June 30, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 25,697 | $ | 77,426 | |||
Marketable securities | — | 7,893 | |||||
Accounts receivable, net of allowances of $3,590 and $490, respectively | 48,630 | 32,327 | |||||
Inventory | 46,563 | 18,125 | |||||
Prepaid expenses and other current assets | 78,835 | 64,997 | |||||
Assets held for sale | 46,276 | — | |||||
Total current assets | 246,001 | 200,768 | |||||
Property, plant and equipment, net | 511,947 | 493,163 | |||||
Software and web site development costs, net | 48,470 | 35,212 | |||||
Deferred tax assets | 48,004 | 26,093 | |||||
Goodwill | 514,963 | 466,005 | |||||
Intangible assets, net | 275,924 | 216,970 | |||||
Other assets | 34,560 | 25,658 | |||||
Total assets | $ | 1,679,869 | $ | 1,463,869 | |||
Liabilities, noncontrolling interests and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 127,386 | $ | 86,682 | |||
Accrued expenses | 175,567 | 178,987 | |||||
Deferred revenue | 30,372 | 25,842 | |||||
Short-term debt | 28,926 | 21,717 | |||||
Other current liabilities | 78,435 | 22,635 | |||||
Liabilities held for sale | 8,797 | — | |||||
Total current liabilities | 449,483 | 335,863 | |||||
Deferred tax liabilities | 60,743 | 69,430 | |||||
Lease financing obligation | 106,606 | 110,232 | |||||
Long-term debt | 847,730 | 656,794 | |||||
Other liabilities | 94,683 | 60,173 | |||||
Total liabilities | 1,559,245 | 1,232,492 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interests | 45,412 | 65,301 | |||||
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 31,415,503 and 31,536,732 shares outstanding, respectively | 615 | 615 | |||||
Treasury shares, at cost,12,665,124 and 12,543,895 shares, respectively | (588,365 | ) | (548,549 | ) | |||
Additional paid-in capital | 361,376 | 335,192 | |||||
Retained earnings | 414,771 | 486,482 | |||||
Accumulated other comprehensive loss | (113,398 | ) | (108,015 | ) | |||
Total shareholders’ equity attributable to Cimpress N.V. | 74,999 | 165,725 | |||||
Noncontrolling interests | 213 | 351 | |||||
Total shareholders' equity | 75,212 | 166,076 | |||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ | 1,679,869 | $ | 1,463,869 | |||
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CIMPRESS N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited in thousands, except share and per share data)
Three Months Ended June 30, | Year ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | $ | 564,256 | $ | 479,205 | $ | 2,135,405 | $ | 1,788,044 | |||||||
Cost of revenue (1) | 279,077 | 222,097 | 1,036,975 | 773,640 | |||||||||||
Technology and development expense (1) | 64,702 | 57,546 | 243,230 | 210,080 | |||||||||||
Marketing and selling expense (1) | 159,622 | 133,707 | 610,932 | 508,502 | |||||||||||
General and administrative expense (1) | 57,098 | 39,376 | 207,569 | 145,844 | |||||||||||
Amortization of acquired intangibles | 12,603 | 10,449 | 46,145 | 40,563 | |||||||||||
Restructuring expense (1) | 810 | — | 26,700 | 381 | |||||||||||
Impairment of goodwill and acquired intangible assets | — | — | 9,556 | 30,841 | |||||||||||
(Loss) income from operations | (9,656 | ) | 16,030 | (45,702 | ) | 78,193 | |||||||||
Other (expense) income, net | (11,473 | ) | 18,169 | 10,362 | 26,098 | ||||||||||
Interest expense, net | (12,858 | ) | (9,819 | ) | (43,977 | ) | (38,196 | ) | |||||||
(Loss) income before income taxes | (33,987 | ) | 24,380 | (79,317 | ) | 66,095 | |||||||||
Income tax (benefit) provision | 526 | 7,211 | (7,118 | ) | 15,684 | ||||||||||
Net (loss) income | (34,513 | ) | 17,169 | (72,199 | ) | 50,411 | |||||||||
Add: Net loss (income) attributable to noncontrolling interest | (189 | ) | (239 | ) | 488 | 3,938 | |||||||||
Net (loss) income attributable to Cimpress N.V. | $ | (34,702 | ) | $ | 16,930 | $ | (71,711 | ) | $ | 54,349 | |||||
Basic net (loss) income per share attributable to Cimpress N.V. | $ | (1.11 | ) | $ | 0.54 | $ | (2.29 | ) | $ | 1.72 | |||||
Diluted net (loss) income per share attributable to Cimpress N.V. | $ | (1.11 | ) | $ | 0.51 | $ | (2.29 | ) | $ | 1.64 | |||||
Weighted average shares outstanding — basic | 31,195,625 | 31,418,823 | 31,291,581 | 31,656,234 | |||||||||||
Weighted average shares outstanding — diluted | 31,195,625 | 32,996,473 | 31,291,581 | 33,049,454 | |||||||||||
____________________________________________
(1) Share-based compensation is allocated as follows:
Three Months Ended June 30, | Year ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of revenue | $ | 80 | $ | 15 | $ | 289 | $ | 72 | |||||||
Technology and development expense | 2,158 | 1,534 | 8,724 | 5,892 | |||||||||||
Marketing and selling expense | 1,315 | 368 | 4,857 | 1,591 | |||||||||||
General and administrative expense | 9,429 | 3,702 | 28,500 | 16,273 | |||||||||||
Restructuring expense | — | — | 6,257 | — | |||||||||||
Note: During the third quarter of fiscal 2017, we changed the presentation of amortization expense for acquired intangible assets. The expense was previously classified within each of the respective expense lines of our consolidated statement of operations and now is presented as a separate financial statement line item, "Amortization of acquired intangible assets". Prior period results have been recast to reflect this change.
Also, given the significance of our third quarter restructuring charges we are presenting these expenses as a separate financial statement line item, "Restructuring expense", in our consolidated statement of operations. Prior period results have been recast to reflect this change.
Page 12 of 16
CIMPRESS N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Three Months Ended June 30, | Year ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating activities | |||||||||||||||
Net (loss) income | $ | (34,513 | ) | $ | 17,169 | $ | (72,199 | ) | $ | 50,411 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 42,616 | 35,401 | 158,400 | 131,918 | |||||||||||
Impairment of goodwill and acquired intangible assets | — | — | 9,556 | 30,841 | |||||||||||
Share-based compensation expense | 12,982 | 5,619 | 48,627 | 23,772 | |||||||||||
Deferred taxes | (3,509 | ) | (4,741 | ) | (41,358 | ) | (15,922 | ) | |||||||
Abandonment of long-lived assets | 678 | 1,216 | 2,408 | 10,979 | |||||||||||
Change in contingent earn-out liability | 12,013 | — | 39,377 | — | |||||||||||
Gain on sale of available-for-sale securities | — | — | (2,268 | ) | — | ||||||||||
Unrealized loss (gain) on derivatives not designated as hedging instruments included in net (loss) income | 14,974 | (9,142 | ) | 15,813 | (8,163 | ) | |||||||||
Payment of contingent consideration in excess of acquisition date fair value | — | (8,613 | ) | — | (8,613 | ) | |||||||||
Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency | 1,525 | (6,027 | ) | (5,690 | ) | (9,199 | ) | ||||||||
Other non-cash items | 493 | 2,989 | 2,886 | 5,784 | |||||||||||
Gain on proceeds from insurance | — | — | — | (3,136 | ) | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 1,267 | 4,396 | 4,701 | 6,766 | |||||||||||
Inventory | (1,563 | ) | 1,305 | (8,699 | ) | (11 | ) | ||||||||
Prepaid expenses and other assets | (1,868 | ) | (3,399 | ) | 521 | (7,668 | ) | ||||||||
Accounts payable | 15,424 | 13,174 | 25,332 | 25,670 | |||||||||||
Accrued expenses and other liabilities | (27,427 | ) | 2,791 | (20,671 | ) | 13,929 | |||||||||
Net cash provided by operating activities | 33,092 | 52,138 | 156,736 | 247,358 | |||||||||||
Investing activities | |||||||||||||||
Purchases of property, plant and equipment | (17,241 | ) | (17,794 | ) | (74,157 | ) | (80,435 | ) | |||||||
Business acquisitions, net of cash acquired | — | (1,972 | ) | (204,875 | ) | (164,412 | ) | ||||||||
Purchases of intangible assets | (87 | ) | (23 | ) | (197 | ) | (476 | ) | |||||||
Capitalization of software and website development costs | (8,629 | ) | (8,140 | ) | (37,307 | ) | (26,324 | ) | |||||||
Proceeds from sale of available-for-sale securities | — | — | 6,346 | — | |||||||||||
Proceeds from the sale of assets | 282 | — | 4,513 | — | |||||||||||
Proceeds from insurance related to investing activities | — | — | — | 3,624 | |||||||||||
Other investing activities | 1,392 | 1,710 | 3,888 | 2,485 | |||||||||||
Net cash used in investing activities | (24,283 | ) | (26,219 | ) | (301,789 | ) | (265,538 | ) | |||||||
Financing activities | |||||||||||||||
Proceeds from borrowings of debt | 125,071 | 82,000 | 737,075 | 598,008 | |||||||||||
Payments of debt and debt issuance costs | (141,860 | ) | (98,501 | ) | (540,142 | ) | (430,692 | ) | |||||||
Payment of purchase consideration included in acquisition-date fair value | — | (2,980 | ) | (539 | ) | (7,330 | ) | ||||||||
Payments of withholding taxes in connection with equity awards | (3,752 | ) | (1,699 | ) | (14,568 | ) | (7,467 | ) | |||||||
Payments of capital lease obligations | (3,858 | ) | (3,796 | ) | (15,887 | ) | (13,933 | ) | |||||||
Purchase of ordinary shares | — | — | (50,008 | ) | (153,467 | ) | |||||||||
Purchase of noncontrolling interests | — | — | (20,230 | ) | — | ||||||||||
Proceeds from issuance of ordinary shares | 5,861 | 1,326 | 6,192 | 4,705 | |||||||||||
Capital contribution from noncontrolling interest | — | — | 1,404 | 5,141 | |||||||||||
Other financing activities | — | — | 1,281 | (303 | ) | ||||||||||
Net cash provided by (used in) financing activities | (18,538 | ) | (23,650 | ) | 104,578 | (5,338 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 4,001 | (1,569 | ) | 788 | (2,640 | ) | |||||||||
Increase in cash held for sale | 12,042 | — | 12,042 | — | |||||||||||
Net (decrease) increase in cash and cash equivalents | (17,770 | ) | 700 | (51,729 | ) | (26,158 | ) | ||||||||
Cash and cash equivalents at beginning of period | 43,467 | 76,726 | 77,426 | 103,584 | |||||||||||
Cash and cash equivalents at end of period | $ | 25,697 | $ | 77,426 | $ | 25,697 | $ | 77,426 | |||||||
Page 13 of 16
CIMPRESS N.V.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands)
Three Months Ended June 30, | Year ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Adjusted net operating profit after tax reconciliation: | |||||||||||||||
GAAP operating (loss) income | $ | (9,656 | ) | $ | 16,030 | $ | (45,702 | ) | $ | 78,193 | |||||
Less: Cash taxes attributable to current year (see below) | (12,283 | ) | (12,649 | ) | (31,104 | ) | (32,236 | ) | |||||||
Exclude expense impact of: | |||||||||||||||
Acquisition-related amortization and depreciation | 12,662 | 10,518 | 46,402 | 40,834 | |||||||||||
Earn-out related charges¹ | 12,245 | 1,793 | 40,384 | 6,378 | |||||||||||
Share-based compensation related to investment consideration | 4,559 | 1,130 | 9,638 | 4,835 | |||||||||||
Certain impairments² | — | 1,216 | 9,556 | 41,820 | |||||||||||
Restructuring related charges | 810 | — | 26,700 | 381 | |||||||||||
Less: Interest expense associated with Waltham lease | (1,904 | ) | (1,961 | ) | (7,727 | ) | (6,287 | ) | |||||||
Include: Realized gains on currency derivatives not included in operating income | 3,156 | 837 | 16,474 | 5,863 | |||||||||||
Adjusted NOPAT3 | $ | 9,589 | $ | 16,914 | $ | 64,621 | $ | 139,781 | |||||||
Cash taxes paid in the current year4 | $ | 13,375 | $ | 8,661 | $ | 49,342 | $ | 19,750 | |||||||
Less: cash taxes received (paid) and related to prior years4 | 1,867 | (1,722 | ) | (10,319 | ) | 934 | |||||||||
Plus: cash taxes attributable to the current year but not yet (received) paid | (3,320 | ) | 5,316 | (5,650 | ) | 9,298 | |||||||||
Plus: cash impact of excess tax benefit on equity awards attributable to current year | 3,353 | 1,224 | 8,003 | 5,574 | |||||||||||
Less: cash tax (paid) received related to NOPAT exclusion items | 856 | — | (681 | ) | — | ||||||||||
Less: cash taxes paid related to the transfer of IP | (3,848 | ) | (830 | ) | (9,591 | ) | (3,320 | ) | |||||||
Cash taxes attributable to current year | $ | 12,283 | $ | 12,649 | $ | 31,104 | $ | 32,236 | |||||||
¹Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to earn-out mechanisms dependent upon continued employment.
2Includes the impact of certain impairments of goodwill and other long-lived assets as defined by ASC 350 - "Intangibles - Goodwill and Other".
3Adjusted NOPAT will include the impact of discontinued operations as defined by ASC 205-20 in periods in which they occur.
4For the quarter and year ended June 30, 2016, cash taxes paid in the current period includes a cash tax refund of $8,479, which is subsequently eliminated from cash taxes attributable to the current period as it relates to a refund of a prior years' taxes generated as a result of a prior year excess share-based compensation deduction. Therefore, the impact is not included in adjusted NOPAT for the current period.
Three Months Ended June 30, | Year ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Free cash flow reconciliation: | |||||||||||||||
Net cash provided by operating activities | $ | 33,092 | $ | 52,138 | $ | 156,736 | $ | 247,358 | |||||||
Purchases of property, plant and equipment | (17,241 | ) | (17,794 | ) | (74,157 | ) | (80,435 | ) | |||||||
Purchases of intangible assets not related to acquisitions | (87 | ) | (23 | ) | (197 | ) | (476 | ) | |||||||
Capitalization of software and website development costs | (8,629 | ) | (8,140 | ) | (37,307 | ) | (26,324 | ) | |||||||
Payment of contingent consideration in excess of acquisition-date fair value | — | 8,613 | — | 8,613 | |||||||||||
Proceeds from insurance related to investing activities | — | — | — | 3,624 | |||||||||||
Free cash flow | $ | 7,135 | $ | 34,794 | $ | 45,075 | $ | 152,360 | |||||||
Plus: cash paid during the period for interest | 17,845 | 14,741 | 45,275 | 37,623 | |||||||||||
Less: interest expense for Waltham lease | (1,904 | ) | (1,961 | ) | (7,727 | ) | (6,287 | ) | |||||||
Unlevered free cash flow | $ | 23,076 | $ | 47,574 | $ | 82,623 | $ | 183,696 | |||||||
Page 14 of 16
CIMPRESS N.V.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (CONT.) AND SEGMENT INFORMATION
(unaudited in thousands)
GAAP Revenue | |||||||||||||||||
Three Months Ended June 30, | Currency Impact: | Constant- Currency | Impact of Acquisitions: | Constant- Currency revenue growth | |||||||||||||
2017 | 2016 | % Change | (Favorable)/Unfavorable | Revenue Growth | (Favorable)/Unfavorable | Excluding acquisitions | |||||||||||
Revenue growth reconciliation by reportable segment: | |||||||||||||||||
Vistaprint | $ | 319,195 | $ | 305,008 | 5% | 1% | 6% | —% | 6% | ||||||||
Upload and Print | 161,792 | 146,468 | 11% | 3% | 14% | —% | 14% | ||||||||||
National Pen | 53,884 | — | 100% | —% | 100% | (100)% | —% | ||||||||||
All Other Businesses | 29,385 | 27,729 | 6% | 1% | 7% | —% | 7% | ||||||||||
Total revenue | $ | 564,256 | $ | 479,205 | 18% | 2% | 20% | (11)% | 9% | ||||||||
GAAP Revenue | |||||||||||||||||
Year ended June 30, | Currency Impact: | Constant- Currency | Impact of Acquisitions: | Constant- Currency revenue growth | |||||||||||||
2017 | 2016 | % Change | (Favorable)/Unfavorable | Revenue Growth | (Favorable)/Unfavorable | Excluding acquisitions | |||||||||||
Revenue growth reconciliation by reportable segment: | |||||||||||||||||
Vistaprint | $ | 1,305,285 | $ | 1,217,162 | 7% | 2% | 9% | —% | 9% | ||||||||
Upload and Print | 588,613 | 432,638 | 36% | 3% | 39% | (26)% | 13% | ||||||||||
National Pen | 112,712 | — | 100% | —% | 100% | (100)% | —% | ||||||||||
All Other Businesses | 128,795 | 138,244 | (7)% | —% | (7)% | —% | (7)% | ||||||||||
Total revenue | $ | 2,135,405 | $ | 1,788,044 | 19% | 2% | 21% | (13)% | 8% | ||||||||
Three Months Ended June 30, | Year ended June 30, | ||||||||||||||
Adjusted net operating profit (loss) by reportable segment: | 2017 | 2016 | 2017 | 2016 | |||||||||||
Vistaprint | $ | 37,149 | $ | 47,677 | $ | 165,193 | $ | 213,027 | |||||||
Upload and Print | 20,118 | 17,448 | 63,833 | 58,643 | |||||||||||
National Pen | 1,001 | — | (2,225 | ) | — | ||||||||||
All Other Businesses | (9,222 | ) | (10,768 | ) | (30,747 | ) | (8,924 | ) | |||||||
Total | 49,046 | 54,357 | 196,054 | 262,746 | |||||||||||
Corporate and global functions | (30,330 | ) | (25,631 | ) | (116,803 | ) | (96,592 | ) | |||||||
Acquisition-related amortization and depreciation | (12,662 | ) | (10,518 | ) | (46,402 | ) | (40,834 | ) | |||||||
Earn-out related charges¹ | (12,245 | ) | (1,793 | ) | (40,384 | ) | (6,378 | ) | |||||||
Share-based compensation related to investment consideration | (4,559 | ) | (1,130 | ) | (9,638 | ) | (4,835 | ) | |||||||
Certain impairments | — | (1,216 | ) | (9,556 | ) | (41,820 | ) | ||||||||
Restructuring related charges | (810 | ) | — | (26,700 | ) | (381 | ) | ||||||||
Interest expense for Waltham lease | 1,904 | 1,961 | 7,727 | 6,287 | |||||||||||
Total (loss) income from operations | $ | (9,656 | ) | $ | 16,030 | $ | (45,702 | ) | $ | 78,193 | |||||
¹Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to earn-out mechanisms dependent upon continued employment.
Note: As part of the reorganization announced in January 2017, several groups that previously were part of our corporate and global functions, including significant portions of our technology, manufacturing and supply chain, finance, legal and other related groups, have been decentralized into our operating segments. The majority of the groups transferred into our operating segments joined Vistaprint and to a smaller extent our Upload and Print businesses.
During the fourth quarter of fiscal 2017, we identified errors related to our unaudited segment profitability disclosures that were recast and reported during the third quarter of fiscal 2017. As part of this process we transferred, in error, certain costs from our Corporate and global functions cost center to our Vistaprint segment. This resulted in the understatement of Vistaprint's adjusted net operating profit of $5,591 and $7,998 for the nine months ended March 31, 2017 and 2016, respectively and $2,727 for the three months ended March 31, 2016. This also resulted in an offsetting understatement of the costs of our corporate and global functions for the same amounts for the periods included above. The impacts of these errors have been revised within our results for the years ended June 30, 2017 and 2016. We have determined that these errors were not material, individually or in the aggregate, to any of the previously issued financial statements.
Page 15 of 16
CIMPRESS N.V.
Supplemental Information
(unaudited, in thousands)
In $ millions, except where noted | Q2 FY2016 | Q3 FY2016 | Q4 FY2016 | FY2016 | Q1 FY2017 | Q2 FY2017 | Q3 FY2017 | Q4 FY2017 | FY2017 | |||||||||||
Revenue - Consolidated as Reported | $496.3 | $436.8 | $479.2 | $1,788.0 | $443.7 | $576.9 | $550.6 | $564.3 | $2,135.4 | |||||||||||
y/y growth | 13 | % | 29 | % | 26 | % | 20 | % | 18 | % | 16 | % | 26 | % | 18 | % | 19 | % | ||
y/y growth in constant currency | 20 | % | 31 | % | 26 | % | 24 | % | 19 | % | 18 | % | 28 | % | 20 | % | 21 | % | ||
Vistaprint (1) | $354.8 | $289.9 | $305.0 | $1,217.2 | $285.4 | $379.4 | $321.3 | $319.2 | $1,305.3 | |||||||||||
y/y growth | 3 | % | 8 | % | 11 | % | 6 | % | 7 | % | 7 | % | 11 | % | 5 | % | 7 | % | ||
y/y growth in constant currency | 8 | % | 10 | % | 12 | % | 10 | % | 8 | % | 9 | % | 12 | % | 6 | % | 9 | % | ||
as % of revenue | 71 | % | 66 | % | 64 | % | 68 | % | 64 | % | 66 | % | 58 | % | 57 | % | 61 | % | ||
Upload and Print | $93.3 | $116.4 | $146.5 | $432.6 | $132.0 | $152.4 | $142.5 | $161.8 | $588.6 | |||||||||||
y/y growth | 112 | % | 201 | % | 94 | % | 120 | % | 72 | % | 63 | % | 22 | % | 11 | % | 36 | % | ||
y/y growth in constant currency | 128 | % | 203 | % | 92 | % | 127 | % | 73 | % | 66 | % | 27 | % | 14 | % | 39 | % | ||
as % of revenue | 19 | % | 27 | % | 30 | % | 24 | % | 30 | % | 26 | % | 26 | % | 29 | % | 28 | % | ||
National Pen | N/A | N/A | N/A | N/A | N/A | N/A | $58.8 | $53.9 | $112.7 | |||||||||||
y/y growth | N/A | N/A | N/A | N/A | N/A | N/A | 100 | % | 100 | % | 100 | % | ||||||||
y/y growth in constant currency | N/A | N/A | N/A | N/A | N/A | N/A | 100 | % | 100 | % | 100 | % | ||||||||
as % of revenue | N/A | N/A | N/A | N/A | N/A | N/A | 11 | % | 10 | % | 5 | % | ||||||||
All Other Businesses (1) | $48.2 | $30.6 | $27.7 | $138.2 | $26.3 | $45.0 | $28.0 | $29.4 | $128.8 | |||||||||||
y/y growth | (4 | )% | (7 | )% | (8 | )% | (6 | )% | (17 | )% | (7 | )% | (8 | )% | 6 | % | (7 | )% | ||
y/y growth in constant currency | 8 | % | (3 | )% | (8 | )% | 2 | % | (19 | )% | (7 | )% | (9 | )% | 7 | % | (7 | )% | ||
as % of revenue | 10 | % | 7 | % | 6 | % | 8 | % | 6 | % | 8 | % | 5 | % | 5 | % | 6 | % | ||
Physical printed products and other | $480.2 | $421.4 | $464.0 | $1,724.6 | $428.7 | $562.2 | $536.0 | $549.7 | $2,076.6 | |||||||||||
Digital products/services | $16.1 | $15.4 | $15.2 | $63.4 | $15.0 | $14.6 | $14.6 | $14.6 | $58.8 | |||||||||||
Advertising & commissions expense - consolidated | $85.0 | $74.3 | $76.4 | $305.9 | $78.3 | $94.1 | $100.4 | $91.1 | $363.9 | |||||||||||
as % of revenue | 17 | % | 17 | % | 16 | % | 17 | % | 18 | % | 16 | % | 18 | % | 16 | % | 17 | % | ||
TTM Bookings - Vistaprint (1) | ||||||||||||||||||||
% TTM Bookings from repeat orders (1) | 74 | % | 74 | % | 74 | % | 75 | % | 75 | % | 75 | % | 76 | % | ||||||
% TTM Bookings from first-time orders (1) | 26 | % | 26 | % | 26 | % | 25 | % | 25 | % | 25 | % | 24 | % | ||||||
Advertising & commissions expense - Vistaprint | $73.3 | $64.5 | $65.3 | $265.5 | $68.6 | $79.6 | $73.1 | $68.8 | $290.1 | |||||||||||
as % of revenue | 21 | % | 22 | % | 21 | % | 22 | % | 24 | % | 21 | % | 23 | % | 22 | % | 22 | % | ||
Headcount at end of period | 7,463 | 7,585 | 7,995 | 8,522 | 11,312 | 10,909 | 11,639 | |||||||||||||
Full-time employees | 6,845 | 7,226 | 7,468 | 8,066 | 9,923 | 10,323 | 10,704 | |||||||||||||
Temporary employees | 618 | 359 | 527 | 456 | 1,389 | 586 | 935 | |||||||||||||
Some numbers may not add due to rounding. Metrics are unaudited. | ||||||||||||||||||||
(1) In Q2 2016, revenue and TTM bookings from the Corporate Solutions business was recast to reflect a change in the calculation approach, resulting in an immaterial change to historical revenue for the Vistaprint and All Other Businesses reportable segments, as well as TTM bookings from repeat and first-time orders. | ||||||||||||||||||||
Page 16 of 16
This document is Cimpress’ fourth quarter and fiscal year 2017 earnings commentary. This document contains
slides and accompanying comments in the “notes” section below each slide.
1Cimpress N.V. Q4 FY2017 Earnings Presentation
Please read the above safe harbor statement. Additionally, a detailed reconciliation of GAAP and non-GAAP
measures is posted in the appendix of the Q4 and fiscal 2017 earnings presentation that accompanies these
remarks.
2Cimpress N.V. Q4 FY2017 Earnings Presentation
This presentation is organized into the categories shown on the left-hand side of this slide.
Robert Keane, CEO, and Sean Quinn, CFO, will host a live question and answer conference call tomorrow, July
27, 2017 at 7:30 a.m. U.S. Eastern daylight time which you can access through a link at ir.cimpress.com.
Please note that starting with our first quarter fiscal year 2018 results, we will be reporting our quarterly earnings
results one week later than we have historically.
3Cimpress N.V. Q4 FY2017 Earnings Presentation
As a reminder and as context for the initiatives and examples discussed in the remainder of this presentation,
Cimpress' uppermost priorities are described above. Extending our history of success into the next decade and
beyond in line with these top-level priorities is important to us. Even as we report results on a quarterly basis it is
important for investors to understand that we manage to a much longer-term time horizon and that we explicitly
forgo short-term actions and metrics except to the extent those short-term actions and metrics support our long-
term goals.
4Cimpress N.V. Q4 FY2017 Earnings Presentation
We delivered another year of strong revenue growth, due to organic growth and acquisitions. Our compound
annual growth rate from our IPO in fiscal 2006 to 2017 has been 27%.
Our long history of the organic portion of our revenue growth reflects our success to date in disrupting markets via
mass customization. As proud as we are of this track record, we continue to believe we are in the early stages of
this market transformation, and our overall revenue share is small compared to the large, hyper-fragmented global
market for mass customized products.
5Cimpress N.V. Q4 FY2017 Earnings Presentation
In fiscal year 2017 operating cash flow and unlevered free cash flow declined compared to the prior year in line
with our expectations from the beginning of the fiscal year. We don't target consistent growth in this measure from
one year to the next due to our belief that organic investment can drive strong future returns that increase our
intrinsic value per share. We believe that FY17 represents just such a year, in which our substantial organic
investments laid foundations for future success. We believe we have strong underlying, or "steady state" cash
flows as a result of our competitive advantages and the investments we have made to further strengthen our
business.
Since our IPO in September 2005, we have reduced our share count substantially. We believe we have
purchased our shares at prices below our intrinsic value per share, and have thus enhanced the intrinsic value per
share of the remaining shares outstanding. The chart on the right shows our weighted average shares outstanding
(GAAP) from FY06 to FY16. Please note that for fiscal year 2017 we are required to present our basic weighted
average shares outstanding because we had a GAAP loss in this year. If calculated using the same weighted
average methodology including dilutive shares, we would show 32.6 million shares for FY17 in the right hand
chart above.
For more information about how we view the importance of these measures, please see our letter to investors
dated July 26, 2017 at ir.cimpress.com.
6Cimpress N.V. Q4 FY2017 Earnings Presentation
Total revenue for the fourth quarter was $564.3 million, reflecting an 18% increase year over year in USD and a
20% increase in constant currencies. Excluding the revenue from the addition of our acquisitions in the past four
quarters, constant-currency revenue growth was 9%. Our fourth quarter consolidated constant currency revenue
growth decelerated versus growth in the third quarter in line with expectations, primarily as a result of the year-
over-year timing of the Easter holiday. Our year-over-year revenue growth continued to be negatively impacted by
the loss of partner revenue as previously anticipated although to a lesser extent than prior quarters in this fiscal
year, and by the reduction of Vistaprint shipping pricing which we have described in the past.
Our Q4 GAAP operating income declined significantly year over year with headwinds from planned increases in
organic investment spend, an increase in the earn-out liability for the WIRmachenDRUCK acquisition resulting
from its continued strong performance, increased share-based compensation including acquisition-related costs in
the quarter, the loss of certain partner revenue and profits previously described, and unfavorable changes in
currency that were offset by year-over-year changes in realized gains on our hedging program presented in other
income, net. These impacts were partially offset by net restructuring savings from our previously announced
actions. Our Q4 adjusted NOPAT was influenced by many of the same trends in operating income but the year-
over-year decline was less pronounced since the earn-out impact and the acquisition-related share-based
compensation costs are excluded from adjusted NOPAT and realized gains from our hedging program are
included in adjusted NOPAT.
For the full year, our operating income declined predominantly due to the same items described above for the
quarter except for the commentary on our restructuring where, for the full year, the savings we realized only
partially offset the restructuring charges. The decline in operating income was partially offset by a reduction in
impairment charges.
Please see additional detail later in this presentation for the drivers of our GAAP operating and net income.
7Cimpress N.V. Q4 FY2017 Earnings Presentation
For our Vistaprint business, this quarter we continued our multi-year effort to improve the value proposition of Vistaprint beyond its previous
orientation toward the most price- and discount-sensitive customers (a market segment we refer to as "price primary") toward micro-
businesses that seek a variety of value drivers such as quality, reliability, pricing transparency and broader selection (a market segment we
refer to as "higher expectations").
• Fourth quarter Vistaprint revenue grew 5% in reported terms and 6% in constant-currency terms year over year. This deceleration in
growth rates was primarily due to the shift in timing of the easter holiday, along with other quarterly fluctuations.
• For the full year, Vistaprint's revenue grew 7% in reported terms and 9% in constant currencies. This is in line with the commentary
shared at the beginning of the fiscal year in our investor letter and August 2016 investor day.
• As you can see from the first chart above, repeat bookings as a percent of total bookings has been slowly but steadily increasing and
we continue to see positive trends in repeat rates. On a constant-currency basis, repeat bookings grew at high single-digit rates. We
attribute this growth trend to a combination of our efforts to improve our customer value proposition and retention, as well as changes
we have made in the past to deemphasize deep-discount acquisition offers that had previously cast a wide new customer acquisition
net for relatively low-value customers. New customer bookings grew at single-digit rates, as new customer count grew year over year
for the fifth quarter in a row.
• Gross profit per customer in constant currencies was down slightly year over year as our gross margins have come down with
investments like shipping price reductions, design services and new product introductions. However, this is largely offset as we
continue to acquire higher-value customers and our repeat rates improve. We continue to see stable to improving customer loyalty
scores. Please note that this metric is reflective of products sold on the main tab of Vistaprint's website. The promotional products tab
(Columbus offering) recently moved under Vistaprint management as a result of our reorganization. This set of products will be
reflected in Vistaprint metrics beginning in FY18.
• Vistaprint is executing well in our focus product areas. Signage, marketing materials, promotional products and apparel continue to
grow faster than our average Vistaprint growth. This quarter, we continued to materially expand product selection. This quarter's
product launches do not contribute materially to revenue as they take a little time to optimize and scale the offering.
We conclude from the combination of these trends that Vistaprint continues to strengthen as a result of the many changes and investments
we have made over the past several years. We are optimistic about the progress we're making in Vistaprint and remain focused on achieving
strong returns on the capital invested over the last several years. We also expect growth rates to fluctuate as we continue to make further
investments that we believe will improve the value proposition to Vistaprint customers, often at the expense of higher near-term revenue,
gross margin and/or profit.
One such investment is the previously described shipping price reductions. To date, we have rolled out such reductions in the UK, France,
Germany, U.S. and the Netherlands, and we have tested in Europe's smaller markets. Based on the data collected since these changes, we
believe the shipping price reductions have improved customer satisfaction, repeat rates and conversion rates. The shipping price changes
hurt revenue growth, gross margin and profits in Q4 and FY17. For the full fiscal year, the absolute profit impact was roughly $19 million, and
the year-over-year profit impact was roughly $16 million. For fiscal year 2018, we expect that there will be a small year-over-year increase in
shipping-price-reduction investment as compared to the investment made in fiscal year 2017.
Vistaprint advertising spend as a percent of revenue was up 10 basis points year over year for the fourth quarter, with typical fluctuations in
advertising spend. The chart above reflects a greater increase due to rounding. For the full year, Vistaprint advertising as a percent of
revenue was flat year over year.
8Cimpress N.V. Q4 FY2017 Earnings Presentation
Our Upload and Print segment met our expectations during the year and fourth quarter.
• Q4 segment revenue grew 11% in reported terms and 14% in constant currencies. Our growth in
constant currencies has moderated as we passed the anniversary of some of the slower-growing
acquisitions, and we also have seen some moderation in the growth rates of prior-year acquisitions,
as generally expected. The shift in timing of the easter holiday also weighed on growth rates this
quarter as previously described. We remain confident in our ability to drive strong returns in this
segment overall.
• For the full year, revenue in this segment grew 13% in constant currencies excluding acquisitions for
all periods for which there was not a full year-over-year comparison. Inclusive of M&A in the past
year, segment revenue grew 36% in reported terms and 39% in constant currencies.
• As a reminder, Q4 was the first quarter that WIRmachenDRUCK results were included in the
organic number.
The performance across the Upload and Print group varies, with some businesses performing above
the expectations built into the original deal models, some performing in line, and two for which we have
reset expectations and therefore impaired in previous periods. To date the aggregate free cash flow of
the full portfolio of Upload and Print businesses has exceeded our aggregate deal model plans, and we
expect it to continue to do so in the future.
9Cimpress N.V. Q4 FY2017 Earnings Presentation
As previously announced, the National Pen acquisition closed on December 30, 2016.
Revenue during the fourth quarter was $53.9 million. We did not own this business in the year-ago
period. On a pro forma basis, revenue declined 5% year-over-year in US dollars, and 2% in constant
currencies. National Pen discontinued a small portion of its business before the acquisition closed,
which had a negative impact on revenue growth the past two quarters. Adjusting for the discontinued
operations, revenue grew 1% in constant currencies year over year. For the six months we have owned
National Pen, revenue declined 6% in US dollars, 4% in constant currencies including the discontinued
operations, and 1% in constant currencies excluding the discontinued operations. We expect National
Pen's revenue growth to be suppressed in the near term as the management team has made changes
to its marketing team and approach, which we believe are the right value-creating economic decisions
even though they hurt near-term revenue growth.
In this second quarter of ownership, we kept National Pen focused on delivering against its plan and
the financial results in our deal model. As noted on our February 2, 2017 webcast regarding National
Pen, there are a few targeted areas where synergies are straightforward and compelling enough to act
on quickly, for example, in the area of shipping expenses. We have made good progress against these
goals, and we expect to share more details at our upcoming investor day on August 8, 2017.
As described last quarter, some of the near and longer-term revenue and cost synergies we expect
from this acquisition will enhance our financial results in other segments. As an example, revenue from
National Pen products sold by Vistaprint and our Upload and Print businesses will be reported in those
respective segments.
10Cimpress N.V. Q4 FY2017 Earnings Presentation
Our All Other Businesses segment includes Albumprinter, Most of World businesses in Japan, India,
Brazil and China, and our Corporate Solutions business, which is focused on partnerships with third-
party merchants and mid-sized businesses.
For the fourth quarter, segment revenue grew 6% in reported terms and 7% in constant currencies after
five consecutive quarters of constant-currency revenue declines. For the full year, revenue for this
segment decreased 7% in both reported terms and in constant currencies.
As described previously, two meaningful partnerships ended in FY16 (one in Corporate Solutions
business and one in Albumprinter) and drove the year-over-year revenue decline in this segment for
the full year. The fourth quarter impact was not as pronounced, which allowed underlying growth in
other parts of this segment to start to show. We will not have any further headwinds from the loss of
these two partners as we have passed the anniversary of each partner loss.
Corporate Solutions continues to build foundations for new growth opportunities and remains early in
this process. The Most of World businesses continue strong growth off a relatively small base. Our
objective in both of these young businesses remains the same: to build foundations for the long term in
these large and heterogeneous markets. In both of these businesses we continue to operate at a
significant operating loss as previously described and as planned, and expect to continue to do so in
the next several years.
Cimpress has recently entered into a definitive agreement to divest its Albumprinter business. Please
refer to slide 14 for further discussion.
11Cimpress N.V. Q4 FY2017 Earnings Presentation
Our Cimpress Technology team continues to build and deploy our mass customization platform (MCP),
which is a growing set of software services and standards that deliver business and customer
functionality to our various businesses. The objective of MCP is to build, over time, a large collection of
services that:
• Increase selection (i.e., the breadth and depth of delivery speed options, substrate choices, product
formats, special finishes, etc. which we offer to our customers)
• Improve conformance (i.e., the degree to which we deliver products to customers as specified, on
time)
• Reduce cost (i.e., the total cost of delivering any given selection in conformance with specification)
• Enhance the quality of customer experience
As part of its review of the evolution of our overall strategy, our letter to investors dated July 26, 2017
describes in more detail the current priorities and objectives we have for the mass customization
platform. In short, as part of our decentralization, we narrowed the organizational focus of the central
team dedicated to the development of our platform, moving many team members that were previously
part of the central MCP team into businesses where they can better respond to customer needs. The
team that remains central is focused purely on technology and standards, and continues to make
steady progress against our plans.
We remain early in the journey toward our vision for MCP, but we are encouraged by the steady
progress we are making. We will provide examples of recent successes and areas of future MCP
investment in our investor day on August 8, 2017.
12Cimpress N.V. Q4 FY2017 Earnings Presentation
Please note the following in regard to adjusted Net Operating Profit (NOP) by segment:
• Year-over-year currency fluctuations have an impact on these numbers, especially since we do not allocate the gains from hedging contracts to the segment level
like we do for consolidated adjusted NOPAT. These gains were material for this fiscal year.
• In Q3 2017, our reorganization to decentralize our business resulted in a change in the classification of many costs that were previously part of corporate or central
technology teams. Our reorganization has significantly improved the cross-segment comparability of these numbers and as of Q3 2017, we have recast prior-period
results to reflect the transfer of these costs. The Vistaprint business was the primary recipient of these cost centers, though there were smaller changes in other
segments. In April we published a document on ir.cimpress.com which shows these changes going back to Q1 2015 for convenience in updating your models. The
numbers on the slide above show adjusted NOP by segment post reorganization.
• Please note that the by-segment NOP remains only our best approximation. We expect to continue to refine operating unit reporting over the coming year as our
post-reorganization operating routines and reporting systems are further developed and improved. This may necessitate some changes in the allocation of costs.
The performance of each segment was broadly in line with our expectations.
Q4 adjusted Net Operating Profit by segment is as follows:
• Vistaprint: down by $10.5 million year over year primarily due to the roll-out of planned investments including shipping price reductions, expanded design services
and new product introduction, which account for much of the profit drag year over year. These negative impacts were partly offset by savings from our recent
reorganization for teams that were moved into Vistaprint. Adjusted NOP margin decreased from 16% to 12% year over year. New product and service introductions
carry both start-up costs, as well as a mix shift toward lower-than-average gross margin products. We see opportunity to learn and optimize related costs as we
begin to scale these offerings over time.
• Upload and Print: up by $2.7 million year over year due to improved profits in several businesses, partially offset by increased investments in group management,
technology, and marketing. Adjusted NOP margin for this segment was flat year over year.
• National Pen: adjusted NOP was $1.0 million, or 2% of revenue. We expect National Pen to continue its pre-acquisition seasonal profit pattern that means most
profits are made in the December quarter.
• All Other Businesses: up by $1.5 million year over year due primarily to Albumprinter profit growth. The year-over-year reduction of certain partner profits was
approximately $1 million for the quarter, which is a smaller impact than in previous quarters. Adjusted NOP margin improved from (39)% to (31)% year over year.
Q4 corporate and global functions expenses were up by $4.7 million year over year, primarily due to planned increases in software development resources, as well as
the $3.9 million year-over-year accounting impact of our performance share units, which is booked centrally in our segment reporting. This was partially offset by lower
ongoing operating costs in these functions as a result of the restructuring announced in January.
For the full year, Adjusted Net Operating Profit by segment is as follows:
• Vistaprint: down by $47.8 million year over year primarily due to planned increases in investments and negative currency impacts, as well as inefficient production
during our second quarter as announced at the time. Adjusted NOP margin decreased year over year from 18% to 13%.
• Upload and Print: up by $5.2 million year over year due to increased profits in multiple businesses, and a full year of profits from WIRmachenDRUCK, partially offset
by increases in planned investments. Though adjusted NOP grew in absolute dollars, adjusted NOP margin decreased from 14% to 11% year over year.
• National Pen: adjusted NOP was a loss of $2.2 million for the first six months of ownership. Adjusted NOP margin was (2)%.
• All Other Businesses: down by $21.8 million year over year due primarily to a reduction of certain partner profits of approximately $18 million for the year, as well as
increased planned investments in Corporate Solutions and Albumprinter. This was partially offset by a reduction in the net investment in our Most of World
businesses. Adjusted NOP margin declined from (6)% to (24)% year over year.
Full year corporate and global functions expenses were up by $20.2 million year over year, primarily due to planned increases in software development resources, as
well as the $13.7 million year-over-year accounting impact of our performance share units, which is booked centrally in our segment reporting, partially offset by savings
related to our recent restructuring in the back half of the year. As a percent of revenue, corporate and global functions expenses were 5% in FY17, the same as in FY16,
despite the increased cost of our performance share units held centrally.
13Cimpress N.V. Q4 FY2017 Earnings Presentation
We recently entered into several agreements that impact our capital structure, balance sheet and/or
financial results:
• As announced via 8-K on July 14, 2017, subsequent to the end of the fourth quarter, we amended
and increased our credit agreement for long-term flexibility. Our prior agreement was set to expire in
2019. The new credit facility is $1.045 billion (a $745 million revolving credit facility and a $300
million term loan), due July 2022. The key terms are listed on slide 22, mainly unchanged versus the
previous agreement.
• We have recently entered into a definitive agreement to divest our Albumprinter business, including
its FotoKnudsen subsidiary. Although Albumprinter’s capabilities clearly fall within the sphere of
mass customization, we believe we can more attractively invest the capital it will take out of the
transaction. We expect the sale of Albumprinter to be completed in the first quarter of fiscal year
2018. The asset is "held for sale" on our balance sheet as of June 30, 2017. We expect to receive
approximately €92 million of total cash proceeds from this divestiture during the quarter ending
September 30, 2017, prior to any fees and pre-closing dividends.
• In the quarter ending June 30, 2017 we signed a definitive agreement with two co-founders of Printi
by which we deferred a previously agreed contractual call-right that would have otherwise increased
our shareholding to 90% in the second half of fiscal year 2018. Under the revised agreement, we
agreed to move to slightly more than 50% ownership in fiscal year 2018 and deferred a 100%
ownership position to as late as 2023. As a result of the new agreement, the co-founders will remain
as co-CEOs of Printi, whereas under the prior agreement they would most likely have left the
company within a year of Cimpress moving to 90% ownership. We believe that retaining these
highly talented leaders as co-owners will engage and motivate themselves and the Printi team in a
way which will translate into greater returns to capital and greater customer value than if we had not
forgone our right to increase our share to 90% of Printi next year.
14Cimpress N.V. Q4 FY2017 Earnings Presentation
For the past two years, Robert Keane has written a letter to investors describing our top level
objectives, strategy, capital philosophy, plans and results. Today we published a new letter reporting
our fiscal year 2017 investment spend and describing planned spending for fiscal year 2018. We
strongly encourage you to read this document. It describes our strategy to achieve our uppermost
objectives to be the world leader in mass customization and to maximize intrinsic value per share. It
includes important detail that is not part of this earnings presentation or our earnings press release,
including all of our forward-looking commentary about revenue growth expectations by reportable
segment and our investment plans for fiscal year 2018. A significant portion of our upcoming investor
day on August 8, 2017 will be spent reviewing these investments as well.
15Cimpress N.V. Q4 FY2017 Earnings Presentation
No notes here - transition slide
16Cimpress N.V. Q4 FY2017 Earnings Presentation
The quarterly trends for reported revenue, constant-currency revenue growth, and constant-currency
growth excluding recent acquisitions are illustrated above. As noted earlier, the consolidated growth is
positively impacted by our acquisitions for which we do not have a full year-over-year comparison. The
organic growth is negatively impacted by the loss of partner revenue as previously anticipated, and the
reduction of Vistaprint shipping pricing. During the third quarter, our businesses benefited from the net
impact of the year-over-year timing of the Easter holiday, and as anticipated, this benefit became a
headwind for year-over-year growth in the fourth quarter.
17Cimpress N.V. Q4 FY2017 Earnings Presentation
On a reported basis, the consolidated two-year stacked growth was 44% for the total of Q4 FY16 and
Q4 FY17 versus approximately 39% for Q4 FY15 and Q4 FY16. The stacked growth rate for constant-
currency organic revenue was approximately 20% for the total of Q4 FY16 plus Q4 FY17 compared to
approximately 24% for the total of Q4 FY15 and Q4 FY16. The general trend in this number over time
is encouraging to us as we believe it is a reflection of improving returns on past investments in our
business - though it continues to be impacted by the loss of certain partner revenue, Vistaprint shipping
price reductions, and other items.
18Cimpress N.V. Q4 FY2017 Earnings Presentation
The quarterly trends for various measures of income and profit are illustrated above. For the past several years, up until and including fiscal year 2017, adjusted
NOPAT was the measure that we used to assess our near-term financial performance relative to near-term budgets. Internally, we have changed the primary
financial metric that we use to set our annual budgets from adjusted NOPAT to unlevered free cash flow ("UFCF"). In our external reporting, we will no longer
provide adjusted NOPAT on a consolidated basis; however, our primary measure of profitability will continue to be adjusted net operation profit as we use for our
segments today.
The following year-over-year items negatively influenced GAAP operating income in the fourth quarter and full year:
• Increased organic investments in fiscal year 2017 compared to fiscal year 2016, which materially weigh on profitability. These investments include costs that
impact our gross profit such as shipping price reductions, expanded design services, and new product introductions. For the full year, the increase in organic
investments impacted operating income by $45 million.
• Restructuring charges related to the reorganization announced on January 25, 2017. The year-over-year increase was $0.8 million for the fourth quarter and
$26.3 million for the full year. In our full-year results, the savings we realized from the restructuring partially offset the restructuring charges.
• A year-over-year increase in acquisition-related charges as follows: First, earn-out related charges primarily associated with the prior year acquisition of
WIRmachenDRUCK of $10.5 million for the fourth quarter and $34.0 million for the full year. This increase brings the fair value of the earn-out to the
maximum amount of €40 million, with a small time-based discount. Second, an increase in acquisition-related amortization of intangible assets of $2.2 million
for the quarter and $5.6 million for the year. Finally, the acceleration of the vesting of equity awards from two unrelated acquisition-related employment
contracts led to a year-over-year increase in share-based compensation costs of $3.4 million in the fourth quarter and $4.8 million for the full-year. The full-
year acquisition-related impacts are partially offset by a year-over year decrease in impairment charges of $21.3 million related to acquisitions.
• An increase in share-based compensation expense due to the implementation of our previously described long-term incentive program at the beginning of
fiscal year 2017. The year-over-year increase was $3.9 million for the fourth quarter and $13.7 million for the full year, excluding share-based compensation
related to restructuring and acquisition-related investment consideration, which are included in the respective impacts listed above.
• A profit decline due to the termination of two partner contracts as previously described. The year-over-year impact of this was approximately $1 million for the
fourth quarter, and $18 million for the full year.
• Unfavorable year-over-year currency fluctuations that were offset below the line by year-over-year changes in realized gains from hedging contracts in other
income, net.
The profit impacts described above that also impact adjusted NOPAT are the increased organic investments, the increase in share-based compensation related
to our new long-term incentive program, and the reduction in partner profits. Because the restructuring charges are excluded from adjusted NOPAT, there is a
positive impact from restructuring savings during the quarter and year. Cash taxes attributable to the current year were relatively flat year over year for the quarter
and year.
In the year and the quarter, the following below-the-line non-operational items also influenced our GAAP net income:
Our "Other income (expense), net" was a net gain of $10.4 million for the full year and a net loss of $11.5 million for the quarter.
• The vast majority of this was currency related. Please see the next slide for a detailed explanation of the underlying currency drivers.
"Total interest expense, net" was $44 million for the full year and $12.9 million in the quarter.
• The accounting treatment of our leased office facility in Massachusetts results in a portion of the lease payments flowing through our interest expense line.
These expenses replace those of the lease from our former leased facility at a similar total expense, but the former lease was 100% booked in operating
expenses. The new lease payments started in September 2015, so we have passed the anniversary of this different accounting treatment, and there is no
longer a year-over-year impact (the cost was $1.9 million in Q4 FY17 and $2.0 million in Q4 FY16). We include this lease-related interest expense in our
adjusted NOPAT calculation.
• The remaining portion of $11.0 million in the quarter is primarily related to our Senior Unsecured Notes and borrowings under our credit facility.
19Cimpress N.V. Q4 FY2017 Earnings Presentation
Below is additional color on the impact of currency movements on our P&L this quarter.
First, the currency impacts that affect both GAAP results and adjusted NOPAT:
• Our year-over-year revenue growth rate expressed in USD was negatively impacted by about 200
basis points for both the fourth quarter and full year. Our largest currency exposure for revenue is
the Euro, though the significant movement in the British Pound year over year is the major driver of
the currency impact.
• There are many natural expense offsets in our business, and therefore the net currency exposure to
our bottom line is less pronounced than it is to revenue.
• For certain currencies where we do have a net exposure because revenue and certain costs are not
well matched, we enter into currency derivative contracts to hedge the risk. Realized gains or losses
from these hedges are recorded in Other income (expense), net and offset some of the impact of
currency elsewhere in our P&L. The realized gain on hedging contracts was $3.2 million for the
fourth quarter and $16.5 million for the full year.
Second, the currency impacts that further impact our GAAP results but that are excluded from our
adjusted NOPAT are:
• Other net currency losses of approximately $15 million for the fourth quarter and approximately $10
million for the full year, primarily related to unrealized non-cash net losses on intercompany loans
and currency hedges.
20Cimpress N.V. Q4 FY2017 Earnings Presentation
Cash and cash equivalents were approximately $37.7 million (inclusive of $12.0 million of cash held for sale related to the
planned Albumprinter divestiture) as of June 30, 2017. As a reminder, during the first quarter for FY 2017, Cimpress
implemented a notional cash pool, which allows the company to keep less cash on hand to fund operations of certain
subsidiaries, thereby making more cash available to fund investments and/or repay debt.
For the full year, we generated $156.7 million in cash from operations, compared with $247.4 million in fiscal 2016 due to
increased investments in strategic growth initiatives, the $15.0 million cash portion of our restructuring charge (offset by
related savings), the loss of certain partner profits, cash interest paid that was $7.7 million higher, and cash taxes that were
$29.6 million higher than in FY 2016. Cash from operations was also negatively impacted by unfavorable working capital
timing related to the changes in our compensation programs. These were partially offset by the full year of profits from our
WIRmachenDRUCK acquisition. Free cash flow was $45.1 million compared to $152.4 million for FY 2016. In addition to the
operating cash flow trends, free cash flow was impacted year over year by decreased capex spending of $6.3 million in FY
2017 compared to FY 2016 and additional capitalized software costs of $11.0 million.
For the fourth quarter, we generated $33.1 million in cash from operations, compared with $52.1 million in the fourth quarter of
fiscal 2016. Free cash flow was $7.1 million in the fourth quarter compared to $34.8 million in the same period a year ago. The
year-over-year decrease in operating cash flow was primarily due to the same drivers listed above for the full year. The cash
portion of our restructuring charge for the fourth quarter was $7.5 million, and cash taxes were up $4.7 million year over year.
For free cash flow, the impact of the year-over-year change in capital expenditures and capitalized software costs was
minimal (decreased capex spending of $0.6 million in Q4 FY2017 compared to Q4 FY2016, and additional capitalized
software costs of $0.5 million).
On a trailing twelve-month basis, adjusted return on invested capital (ROIC) as of June 30, 2017 decreased versus the year-
ago TTM period to approximately 7%. Adjusted ROIC is materially affected by the fact that the numerator is not yet benefiting
from a full year of National Pen operating results, which are highly seasonal, yet the increased debt from National Pen is fully
included in the denominator. This impact is exacerbated by the increased accounting cost of our new performance share
units, our significant organic investments this fiscal year, and the loss of the two partners, as previously discussed, all of which
we see a full-year impact of in the most recent TTM period.
The GAAP operating measures which we use as a basis to calculate ROIC are total debt and operating income. The year-
over-year trend in total debt was up and operating income was down.
21Cimpress N.V. Q4 FY2017 Earnings Presentation
We provide commentary on EBITDA for our debt investors. Please note that we do not manage our overall business performance to
EBITDA; however, we actively monitor it for purposes of ensuring compliance with debt covenants.
Based on our debt covenant definitions, our total leverage ratio was 3.45 as of June 30, 2017, and our senior secured leverage ratio (which
is senior secured debt to trailing twelve month EBITDA) was 2.38. Our debt covenants give pro forma effect for acquired businesses that
closed within the trailing twelve month period ending June 30, 2017. As often described, we are willing to temporarily go above our long-term
total leverage ratio target of 3x TTM EBITDA for the right opportunity and with a path to de-lever below that target within a reasonable period
of time. We continue to expect to manage our leverage back to approximately 3x TTM EBITDA or below by the end of calendar 2017, and
we made some progress on that front in the fourth quarter compared to the third quarter. We anticipate that when our divestiture of
Albumprinter closes in the first quarter of FY 2018, we will put a substantial portion of the net proceeds toward debt repayment.
As announced via 8-K on July 14, 2017, subsequent to the end of the quarter, we amended and increased our credit agreement for long-
term flexibility. Our prior agreement was set to expire in 2019. The new credit facility is $1.045 billion (a $745 million revolving credit facility
and a $300 million term loan), due July 2022. The key terms are listed below, mainly unchanged versus the previous agreement.
When including all acquired company EBITDA only as of the dates of acquisition, our adjusted EBITDA for Q4 FY2017 was $59.2 million, up
1.0% from Q4 FY2016 and our TTM adjusted EBITDA was $238.4 million, down 16.0% from the year-ago TTM period. This compares to the
trends in operating income discussed on slide 19, in which increased organic investments are weighing down profitability this year. In
addition to the exclusion of depreciation and amortization (including acquisition-related amortization of intangible assets) which was up
significantly year over year in the TTM period, the TTM EBITDA metrics exclude goodwill and other impairment charges, restructuring
charges, as well as the share-based compensation costs that are included in our TTM GAAP operating income.
During the quarter, we did not repurchase any Cimpress shares. During the full year, we repurchased 593,763 Cimpress shares for $50.0
million inclusive of transaction costs, at an average price per share of $84.22.
We have various covenants that prevent us from borrowing up to the maximum size of the credit facility as of June 30, 2017.
Purchases of our ordinary shares, payments of dividends, and corporate acquisitions and dispositions are subject to more restrictive
consolidated leverage ratio thresholds than our financial covenants when calculated on a pro forma basis in certain scenarios. Also,
regardless of our leverage ratio, the credit agreement limits the amount of purchases of our ordinary shares, payments of dividends,
corporate acquisitions and dispositions, investments in joint ventures or minority interests, and consolidated capital expenditures that we may
make. These limitations can include annual limits that vary from year to year and aggregate limits over the term of the credit facility.
Therefore, our ability to make desired investments may be limited during the term of our credit facility.
We are currently in compliance with all of our debt covenants. Key financial covenants pertaining to our senior secured credit facility are:
• Total leverage ratio not to exceed 4.5x TTM EBITDA (this steps up temporarily to 4.75x for 12 months after a material acquisition)
• Senior leverage ratio not to exceed 3.25x TTM EBITDA (this steps up temporarily to 3.5x for 12 months after a material acquisition)
• Interest coverage ratio of at least 3.0x TTM EBITDA
22Cimpress N.V. Q4 FY2017 Earnings Presentation
In summary, FY17 was a strong year for the reasons outlined above.
We believe the capital we are allocating across our business and the organizational and strategic
changes we have implemented in fiscal year 2017 are solidifying our leadership position in mass
customization and continuing to increase our intrinsic value per share.
At our investor day on August 8, 2017, we plan to share more details about the progress we've made in
fiscal 2017, as well as our plans for fiscal 2018. We hope you will be able to attend in person or via
webcast.
23Cimpress N.V. Q4 FY2017 Earnings Presentation
Cimpress N.V. Q4 FY2017 Earnings Presentation
Q&A Session
Please go to ir.cimpress.com
for the live Q&A call at
7:30 am EST on July 27, 2017
Q4 & Fiscal Year 2017 Financial and Operating Results Supplement
Cimpress N.V. Q4 FY2017 Earnings Presentation
26(1) Please see non-GAAP reconciliation to reported revenue growth rates at the end of this presentation.
Revenue Growth Rates Consolidated
FY15 FY16 FY17
Consolidated, constant-currency growth 23% 24% 21%
Constant-currency growth excluding TTM Acquisitions 9% 11% 8%
27
Reported Revenue by Segment
Quarterly, USD in millions
Q4 FY2017
Vistaprint
57% of total revenue
5% y/y growth
6% y/y constant currency growth
Upload and Print
29% of total revenue
11% y/y growth
14% y/y constant currency growth
National Pen
9% of total revenue
100% y/y growth
100% y/y constant currency growth
All Other Businesses
5% of total revenue
6% y/y growth
7% y/y constant currency growth
(1) For a description of acquisition and joint ventures that are excluded from constant currency growth, please see reconciliation to reported revenue growth rates at the end of this presentation.
$576.9
Cimpress N.V. Q4 FY2017 Earnings Presentation
28
Reported Revenue Growth
(1) National Pen was acquired on December 30, 2016, and therefore reported revenue growth cannot be calculated as a percentage since we did not own this business in the year-ago period.
29
Organic Constant Currency Revenue Growth (excl. TTM acquisitions)
N/A N/A
(1) National Pen was acquired on December 30, 2016, and therefore organic constant currency revenue growth cannot be calculated as a percentage since we did not own this business in the year-ago period.
Cimpress N.V. Q4 FY2017 Earnings Presentation
30
Quarterly, USD in millions
Share-Based Compensation
Note: Share-based compensation excludes SBC-related tax adjustment. Q4 FY17 includes incremental expense for the accelerated vesting of the Printi shares due to current period amendment to the arrangement. In
Q3FY17 there was a $6.3M acceleration of share-based compensation expense related to our restructuring activities undertaken in that period. Q1 FY17 includes modification expense related to the RSA granted as part of
the Tradeprint acquisition. Starting in Q1 FY17 results include the effect of our new shareholder-approved LTI program which includes performance share units which have a different accounting treatment than restricted
share units.
Consolidated
FY15 $24.1 FY16 $23.8 FY17 $48.6
31
Balance Sheet Highlights
Balance sheet highlights, USD in millions, at period end 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017
Total assets $1,463.9 $1,456.3 $1,663.9 $1,637.9 $1,679.9
Cash and cash equivalents $77.4 $53.6 $49.6 $43.5 $25.7
Total current assets $200.8 $175.2 $242.0 $216.8 $246.0
Property, plant and equipment, net $493.2 $495.2 $505.3 $513.1 $511.9
Goodwill and intangible assets $683.0 $680.2 $821.5 $796.1 $790.9
Total liabilities $1,232.5 $1,243.9 $1,522.3 $1,510.6 $1,559.2
Current liabilities $335.9 $331.7 $436.0 $429.5 $449.5
Long-term debt $656.8 $654.3 $830.0 $860.2 $847.7
Shareholders’ Equity attributable to Cimpress NV $165.7 $147.2 $99.5 $84.4 $75.0
Treasury shares (in millions) 12.5 12.4 13.0 12.9 12.7
Consolidated
Note: June 30, 2017 cash and cash equivalents excludes $12.0M of cash classified as part of "held for sale"
Cimpress N.V. Q4 FY2017 Earnings Presentation
Appendix
Including a Reconciliation of GAAP to Non-GAAP
Financial Measures
33
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: adjusted EBITDA, free cash flow, unlevered free cash flow, trailing twelve month return on
invested capital, adjusted NOPAT, constant-currency revenue growth and constant-currency revenue growth excluding revenue
from acquisitions and joint ventures from the past twelve months. Please see the next two slides for definitions of these items.
• These non-GAAP financial measures are provided to enhance investors' understanding of our current operating results from the
underlying and ongoing business for the same reasons they are used by management. For example, as we have become more
acquisitive over recent years we believe excluding the costs related to the purchase of a business (such as amortization of
acquired intangible assets, contingent consideration, or impairment of goodwill) provides further insight into the performance of
the underlying acquired business in addition to that provided by our GAAP operating income. As another example, as we do not
apply hedge accounting for our currency forward contracts, we believe inclusion of realized gains and losses on these contracts
that are intended to be matched against operational currency fluctuations provides further insight into our operating performance
in addition to that provided by our GAAP operating income. We do not, nor do we suggest that investors should, consider such
non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared 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 N.V. Q4 FY2017 Earnings Presentation
34
Non-GAAP Financial Measures Definitions
Non-GAAP Measure Definition
Free Cash Flow FCF = Cash flow from operations – capital expenditures – purchases of intangible assets not related to acquisitions – capitalized software expenses + payment of contingent consideration in excess of acquisition-date fair value + gains on proceeds from insurance
Unlevered Free Cash Flow Unlevered Free Cash Flow = Free Cash Flow as defined above + cash paid during the period for interest - interest expense associated with Waltham lease
Adjusted Net Operating Profit After Tax (Adjusted NOPAT) Adjusted NOPAT = GAAP operating income - cash taxes attributable to the current period (see definition below) + the impact of M&A related items including acquisition-related amortization and depreciation, the change in fair value of contingent consideration, and expense for deferred payments or equity awards that are treated as compensation expense + the impact of unusual items such asdiscontinued operations, restructuring related charges, and impairments - interest expense related to our Waltham office lease + realized gains or losses from currency derivatives that are not included in operating income as we do not apply hedge accounting
Cash Taxes Attributable to the Current
Period included in Adjusted NOPAT As part of our calculation of adjusted NOPAT, we subtract the cash taxes attributable to the current period operations, which we define as the actual cash taxes paid or to be paid adjusted for any non-operational items and excluding the excess tax benefit from equity awards.
Adjusted NOP by Segment (1) Adjusted Net Operating Profit as defined above in adjusted NOPAT definition, less cash taxes and realized gains/losses from currency derivatives which are not allocated to segments.
Trailing Twelve Month Return on Invested Capital ROIC = adjusted NOPAT / (debt + redeemable non-controlling interest + total shareholders equity – excess cash)Adjusted NOPAT is defined above.Excess cash is cash and equivalents > 5% of last twelve month revenues; if negative, capped at zeroOperating leases have not been converted to debt
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
Adjusted EBITDA = Operating Income + depreciation and amortization (excluding depreciation and amortization related to our Waltham office lease) + share-based compensation expense + proceeds from insurance + earn-out related charges + certain impairments + restructuring related charges + realized gains or losses on currency derivatives - interest expense related to our Waltham office lease
Constant-Currency Revenue Growth 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
Constant Currency Revenue Growth, excluding TTM Acquisitions Constant-currency revenue growth excluding revenue from trailing twelve month acquisitions excludes the impact of currency as defined above and revenue from acquisitions for which there is not a full-quarter year-over-year comparison.
Two-year stacked constant-currency organic revenue growth Two-year stacked growth is computed by adding the revenue growth from the current period referenced and that of the same fiscal period ended twelve months prior. Constant-currency revenue growth excluding revenue from trailing twelve month acquisitions is defined directly above.
(1) As defined by SEC rules, Adjusted Net Operating Profit by segment is our segment profitability measure, therefore is not considered a non-GAAP measure.
We include the reconciliation here for clarity.
35
Reconciliation: Free Cash Flow
Q4 FY16 Q4 FY17
Net cash provided by operating activities $52,138 $33,092
Purchases of property, plant and equipment ($17,794) ($17,241)
Purchases of intangible assets not related to acquisitions ($23) ($87)
Capitalization of software and website development costs ($8,140) ($8,629)
Payment of contingent consideration in excess of acquisition-date fair value $8,613 $—
Proceeds from insurance related to investing activities $— $—
Free cash flow $34,794 $7,135
Quarterly, In thousands
Reference:
Value of capital leases $291 $2,323
Cimpress N.V. Q4 FY2017 Earnings Presentation
36
Reconciliation: Free Cash Flow
TTM, In thousands
TTM Q4FY15 TTM Q1FY16 TTM Q2FY16 TTM Q3FY16 TTM Q4FY16 TTM Q1FY17 TTM Q2FY17 TTM Q3FY17 TTM Q4FY17
Net cash provided by operating
activities $242,022 $216,509 $212,151 $242,142 $247,358 $229,532 $199,702 $175,782 $156,736
Purchases of property, plant and
equipment ($75,813) ($83,522) ($84,410) ($88,349) ($80,435) ($75,361) ($73,146) ($74,710) ($74,157)
Purchases of intangible assets
not related to acquisitions ($250) ($522) ($507) ($502) ($476) ($145) ($162) ($133) ($197)
Capitalization of software and
website development costs ($17,323) ($18,694) ($22,001) ($22,990) ($26,324) ($29,726) ($33,307) ($36,818) ($37,307)
Payment of contingent
consideration in excess of acquisition-date fair value $8,055 $8,055 $8,055 $6,806 $8,613 $8,613 $8,613 $8,613 $—
Proceeds from insurance related
to investing activities $— $2,075 $3,624 $3,624 $3,624 $1,549 $— $— $—
Free cash flow $156,691 $123,901 $116,912 $140,731 $152,360 $134,462 $101,700 $72,734 $45,075
Reference:
Value of capital leases $13,193 $12,385 $6,449 $11,301 $7,535 $7,219 $9,430 $12,390 $14,422
37
Reconciliation: Free Cash Flow and Unlevered Free Cash Flow
Annual, In thousands
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Net cash provided by operating activities $34,637 $54,377 $89,032 $129,654 $159,973 $165,149 $146,749 $141,808 $153,739 $242,022 $247,358 $156,736
Purchases of property, plant and equipment ($24,929) ($62,982) ($62,740) ($76,286) ($101,326) ($37,405) ($46,420) ($78,999) ($72,122) ($75,813) ($80,435) ($74,157)
Purchases of intangible assets not related to acquisitions $— $— ($1,250) $— $— ($205) ($239) ($750) ($253) ($250) ($476) ($197)
Capitalization of software and website development costs ($2,656) ($4,189) ($5,696) ($7,168) ($6,516) ($6,290) ($5,463) ($7,667) ($9,749) ($17,323) ($26,324) ($37,307)
Payment of contingent consideration in excess of acquisition-date fair value $— $— $— $— $— $— $— $— $— $8,055 $8,613 $—
Proceeds from insurance related to investing activities $— $— $— $— $— $— $— $— $— $— $3,624 $—
Free cash flow $7,052 ($12,794) $19,346 $46,200 $52,131 $121,249 $94,627 $54,392 $71,615 $156,691 $152,360 $45,075
Plus: cash paid during the period for interest $1,089 $1,789 $1,635 $1,391 $883 $219 $1,487 $4,762 $6,446 $8,520 $37,623 $45,275
Less: interest expense for Waltham lease $— $— $— $— $— $— $— $— $— $— ($6,287) ($7,727)
Unlevered Free Cash Flow $8,141 ($11,005) $20,981 $47,591 $53,014 $121,468 $96,114 $59,154 $78,061 $165,211 $183,696 $82,623
Reference:
Value of capital leases $— $— $— $— $— $— $— $— $300 $13,193 $7,535 $14,422
Cimpress N.V. Q4 FY2017 Earnings Presentation
38
Reconciliation: Adjusted NOPAT
Quarterly, In thousands
Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
GAAP operating (loss) income $15,236 $12,085 $67,609 ($17,531) $16,030 ($27,808) $33,705 ($41,943) ($9,656)
Less: Cash taxes attributable to current year (see below) ($7,656) ($6,833) ($4,362) ($8,392) ($12,649) ($7,419) ($6,704) ($4,698) ($12,283)
Exclude expense (benefit) impact of:
Acquisition-related amortization and depreciation $7,374 $9,782 $9,655 $10,879 $10,518 $10,213 $10,019 $13,508 $12,662
Earn-out related charges (1) $385 $289 $3,413 $883 $1,793 $16,247 $7,010 $4,882 $12,245
Share-based compensation related to investment consideration $473 $802 $1,735 $1,168 $1,130 $4,103 $601 $375 $4,559
Certain impairments (2) $— $— $3,022 $37,582 $1,216 $— $— $9,556 $—
Restructuring related charges $2,528 $271 $110 $— $— $— $1,100 $24,790 $810
Less: Interest expense associated with Waltham lease $— ($350) ($2,001) ($1,975) ($1,961) ($1,970) ($1,956) ($1,897) ($1,904)
Include: Realized gains on currency derivatives not included in operating
income $1,487 $316 $3,319 $1,391 $837 $1,888 $6,839 $4,591 $3,156
Adjusted NOPAT $19,827 $16,362 $82,500 $24,005 $16,914 ($4,746) $50,614 $9,164 $9,589
(1) Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment.
(2) Includes the impact of impairments or abandonments of goodwill and other long-lived assets as defined by ASC 350 - "Intangibles-Goodwill and Other" or ASC 360- "Property, plant, and equipment."
(3) For Q3 FY16, cash taxes paid in the current period includes a cash tax refund of $8,479, which is subsequently eliminated from cash taxes attributable to the current period as it relates to a refund of prior years' taxes generated as a
result of prior year excess share-based compensation deduction. Therefore the impact is not included in adjusted NOPAT for the current period.
Cash taxes paid in the current period (3) $3,639 $4,709 $6,036 $344 $8,661 $8,555 $11,754 $15,658 $13,375
Less: cash taxes (paid) received and related to prior periods (3) ($925) $359 ($2,463) $4,760 ($1,722) ($4,227) ($5,097) ($2,862) $1,867
Plus: cash taxes attributable to the current year but not yet (received) paid $3,703 $921 $718 $2,343 $5,316 ($350) $528 ($2,508) ($3,320)
Plus: cash impact of excess tax benefit on equity awards attributable to current year $2,094 $1,709 $936 $1,705 $1,224 $4,264 $342 $44 $3,353
Less: cash tax (paid) received related to NOPAT exclusion items $— $— $— $— $— $— $— ($1,537) $856
Less: cash taxes paid related to the transfer of IP ($855) ($865) ($865) ($760) ($830) ($823) ($823) ($4,097) ($3,848)
Cash taxes attributable to current period $7,656 $6,833 $4,362 $8,392 $12,649 $7,419 $6,704 $4,698 $12,283
39
(1) Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment.
(2) Includes the impact of impairments or abandonments of goodwill and other long-lived assets as defined by ASC 350- "Intangibles-Goodwill and Other" or ASC 360- "Property, plant, and equipment."
(3) For TTM Q3FY16, Q4FY16, Q1FY17, and Q2FY17 cash taxes paid in the current period includes a cash tax refund of $8,479, which is subsequently eliminated from cash taxes attributable to the current period as it relates to a refund
of prior years' taxes generated as a result of prior year excess share-based compensation deduction. Therefore the impact is not included in adjusted NOPAT for the current period.
Reconciliation: Adjusted NOPAT
TTM, In thousands
TTM Q4FY15 TTM Q1FY16 TTM Q2FY16 TTM Q3FY16 TTM Q4FY16 TTM Q1FY17 TTM Q2FY17 TTM Q3FY17 TTM Q4FY17
GAAP operating (loss) income $96,324 $91,550 $99,271 $77,399 $78,193 $38,300 $4,396 ($20,016) ($45,702)
Less: Cash taxes attributable to current year (see below) ($24,988) ($26,508) ($23,517) ($27,243) ($32,236) ($32,822) ($35,164) ($31,470) ($31,104)
Exclude expense (benefit) impact of:
Acquisition-related amortization and depreciation $24,264 $27,138 $31,325 $37,690 $40,834 $41,265 $41,629 $44,258 $46,402
Earn-out related charges (1) $15,275 $11,887 $11,599 $4,970 $6,378 $22,336 $25,933 $29,932 $40,384
Share-based compensation related to investment consideration $3,569 $3,874 $4,509 $4,178 $4,835 $8,136 $7,002 $6,209 $9,638
Certain impairments (2) $— $— $3,022 $40,604 $41,820 $41,820 $38,798 $10,772 $9,556
Restructuring related charges $3,202 $3,473 $3,429 $2,909 $381 $110 $1,100 $25,890 $26,700
Less: Interest expense associated with Waltham lease $0 ($350) ($2,351) ($4,326) ($6,287) ($7,907) ($7,862) ($7,784) ($7,727)
Include: Realized gains on currency derivatives not included in operating income $7,450 $7,783 $6,924 $6,513 $5,863 $7,435 $10,955 $14,155 $16,474
Adjusted NOPAT $125,096 $118,847 $134,211 $142,694 $139,781 $118,673 $86,787 $71,946 $64,621
Cash taxes paid in the current period (3) $14,285 $13,698 $17,473 $14,728 $19,750 $23,596 $29,314 $44,628 $49,342
Less: cash taxes (paid) received and related to prior periods (3) ($5,476) ($2,257) ($4,132) $1,731 $934 ($3,652) ($6,286) ($13,908) ($10,319)
Plus: cash taxes attributable to the current period but not yet paid $6,667 $6,652 $6,762 $7,685 $9,298 $8,027 $7,837 $2,986 ($5,650)
Plus: cash impact of excess tax benefit on equity awards attributable to current period
$12,932 $11,845 $6,854 $6,444 $5,574 $8,129 $7,535 $5,874 $8,003
Plus: cash tax impact of NOPAT exclusion items $— $— $— $— $— $— $— ($1,537) ($681)
Less: installment payment related to the transfer of IP in a prior year ($3,420) ($3,430) ($3,440) ($3,345) ($3,320) ($3,278) ($3,236) ($6,573) ($9,591)
Cash taxes attributable to current period $24,988 $26,508 $23,517 $27,243 $32,236 $32,822 $35,164 $31,470 $31,104
Cimpress N.V. Q4 FY2017 Earnings Presentation
40
Adjusted NOP by segment may be different than the major investment assessment that we publish via letter to investors at year end, where we do estimate and allocate some of the costs included in the
“Corporate and global functions” expense category.
(1) Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment.
(2) Includes the impact of impairments or abandonments of goodwill and other long-lived assets as defined by ASC 350- "Intangibles-Goodwill and Other" or ASC 360- "Property, plant, and equipment."
Note: As part of the reorganization announced in January 2017, several groups that previously were part of our corporate and global functions, including significant portions of our technology, manufacturing
and supply chain, finance, legal and other related groups, have been decentralized into our operating segments. The majority of the groups transferred into our operating segments joined Vistaprint and to a
smaller extent our Upload and Print businesses. During the fourth quarter of fiscal 2017, we identified errors related to our unaudited segment profitability disclosures that were recast and reported during the
third quarter of fiscal 2017. As part of this process we transferred, in error, certain costs from our Corporate and global functions cost center to our Vistaprint segment. We have revised our adjusted net
operating profit for all prior periods presented. We have determined that these errors were not material, individually or in the aggregate, to any of the previously issued financial statements.
Reconciliation: Adjusted NOP by Segment
Quarterly, In thousands
Adjusted Net Operating Profit (NOP): Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17
Vistaprint $37,775 $35,658 $84,541 $45,151 $47,677 $24,648 $66,393 $37,003 $37,149
Upload and Print $11,073 $10,652 $14,986 $15,557 $17,448 $13,612 $16,959 $13,144 $20,118
National Pen N/A N/A N/A N/A N/A N/A N/A ($3,226) $1,001
All Other Businesses ($620) ($1,112) $6,851 ($3,895) ($10,768) ($9,612) ($1,968) ($9,945) ($9,222)
Total $48,228 $45,198 $106,378 $56,813 $54,357 $28,648 $81,384 $36,976 $49,046
Corporate and global functions ($22,231) ($22,319) ($22,835) ($25,807) ($25,631) ($27,863) ($30,905) ($27,705) ($30,330)
Acquisition-related amortization and depreciation ($7,374) ($9,782) ($9,655) ($10,879) ($10,518) ($10,213) ($10,019) ($13,508) ($12,662)
Earn-out related charges (1) ($386) ($289) ($3,413) ($883) ($1,793) ($16,247) ($7,010) ($4,882) ($12,245)
Share-based compensation related to investment consideration ($473) ($802) ($1,735) ($1,168) ($1,130) ($4,103) ($601) ($375) ($4,559)
Certain impairments (2) $— $— ($3,022) ($37,582) ($1,216) $— $— ($9,556) $—
Restructuring related charges ($2,528) ($271) ($110) $— $— $— ($1,100) ($24,790) ($810)
Interest expense for Waltham lease $— $350 $2,001 $1,975 $1,961 $1,970 $1,956 $1,897 $1,904
Total (loss) income from operations $15,236 $12,085 $67,609 ($17,531) $16,030 ($27,808) $33,705 ($41,943) ($9,656)
41
Reconciliation: ROIC
(1) Excess cash is cash and equivalents > 5% of last twelve month revenues; if negative, capped at zero.
(2) Average invested capital represents a four quarter average of total debt, redeemable non-controlling interests and total shareholder equity, less excess cash
TTM, In thousands except percentages
Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Total Debt $514,095 $655,317 $547,726 $696,647 $678,511 $682,521 $876,113 $891,453 $876,656
Redeemable Non-Controlling Interest $57,738 $65,120 $64,833 $64,871 $65,301 $64,949 $41,824 $42,604 $45,412
Total Shareholders Equity $249,419 $110,072 $158,054 $151,783 $166,076 $147,488 $99,819 $84,725 $75,212
Excess Cash (1) ($28,874) ($33,271) $— $— $— $— $— $— $—
Invested Capital $792,378 $797,238 $770,613 $913,301 $909,888 $894,958 $1,017,756 $1,018,782 $997,280
Average Invested Capital (2) $680,412 $712,325 $742,206 $818,383 $847,760 $872,190 $933,976 $960,346 $982,194
TTM Q4FY15 TTM Q1FY16 TTM Q2FY16 TTM Q3FY16 TTM Q4FY16 TTM Q1FY17 TTM Q2FY17 TTM Q3FY17 TTM Q4FY17
TTM Adjusted NOPAT $125,096 $118,847 $134,211 $142,694 $139,781 $118,673 $86,787 $71,946 $64,621
Average Invested Capital (2) (From above) $680,412 $712,325 $742,206 $818,383 $847,760 $872,190 $933,976 $960,346 $982,194
TTM Adjusted ROIC 18% 17% 18% 17% 16% 14% 9% 7% 7%
Cimpress N.V. Q4 FY2017 Earnings Presentation
42
Reconciliation: Adjusted EBITDA
Quarterly, In thousands
Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17
GAAP Operating income (loss) $15,236 $12,085 $67,609 ($17,531) $16,030 ($27,808) $33,705 ($41,943) ($9,656)
Depreciation and amortization $27,808 $30,226 $31,805 $34,561 $35,527 $35,541 $36,977 $44,522 $42,616
Waltham lease depreciation adjustment $— ($328) ($1,045) ($1,030) ($1,030) ($1,030) ($1,030) ($1,030) ($1,030)
Share-based compensation expense $2,783 $5,919 $5,956 $5,897 $5,619 $11,571 $11,277 $6,541 $12,982
Proceeds from Insurance $— $1,584 $1,553 $— $824 $650 $— $157 $—
Interest expense associated with Waltham lease $— ($350) ($2,001) ($1,975) ($1,961) ($1,970) ($1,956) ($1,897) ($1,904)
Earn-out related charges $386 $289 $3,413 $883 $1,793 $16,247 $7,010 $4,882 $12,245
Certain Impairments $— $— $3,022 $37,582 $1,216 $— $— $9,556 $—
Restructuring related charges $2,528 $271 $110 $— $— $— $1,100 $24,790 $810
Realized gains on currency derivatives not included in operating income $1,487 $316 $3,319 $1,391 $837 $1,888 $6,839 $4,591 $3,156
Adjusted EBITDA (1,2) $50,228 $50,012 $113,741 $59,778 $58,855 $35,089 $93,922 $50,168 $59,219
Note: In Q3 FY16 the definition of adjusted EBITDA used in external reporting was modified to include certain impairment charges and adjust for depreciation related to our Waltham lease resulting in a
change to adjusted EBITDA for Q1 and Q2 FY16. Also note that for Q3 FY17, the SBC expense listed here excludes the portion included in restructuring-related charges to avoid double counting.
(1) This presentation uses the definition of adjusted EBITDA as outlined above and therefore does not include the pro-forma impact of acquisitions; however, the senior unsecured notes' covenants allow for
the inclusion of pro-forma impacts to adjusted EBITDA.
(2) Adjusted EBITDA includes 100% of the results of our consolidated subsidiaries and therefore does not give effect to adjusted EBITDA attributable to non-controlling interests. This is to most closely align
to our debt covenant and cash flow reporting.
43
Reconciliation: Adjusted EBITDA
TTM, In thousands
TTM Q4FY15 TTM Q1FY16 TTM Q2FY16 TTM Q3FY16 TTM Q4FY16 TTM Q1FY17 TTM Q2FY17 TTM Q3FY17 TTM Q4FY17
GAAP Operating income (loss) $96,324 $91,550 $99,271 $77,399 $78,193 $38,300 $4,396 ($20,016) ($45,702)
Depreciation and amortization $97,487 $103,254 $112,164 $124,400 $132,119 $137,434 $142,606 $152,567 $159,656
Waltham lease depreciation adjustment $— ($328) ($1,373) ($2,403) ($3,433) ($4,135) ($4,120) ($4,120) ($4,120)
Share-based compensation expense $21,547 $21,724 $21,296 $20,555 $23,391 $29,043 $34,364 $35,008 $42,371
Proceeds from Insurance $— $1,584 $3,137 $3,137 $3,961 $3,027 $1,474 $1,631 $807
Interest expense associated with Waltham lease $— ($350) ($2,351) ($4,326) ($6,287) ($7,907) ($7,862) ($7,784) ($7,727)
Earn-out related charges $15,276 $11,888 $11,600 $4,971 $6,378 $22,336 $25,933 $29,932 $40,384
Certain Impairments $— $— $3,022 $40,604 $41,820 $41,820 $38,798 $10,772 $9,556
Restructuring related charges $2,528 $2,799 $2,909 $2,909 $381 $110 $1,100 $25,890 $26,700
Realized gains on currency derivatives not included in operating income $7,450 $7,783 $6,924 $6,513 $5,863 $7,435 $10,955 $14,155 $16,474
Adjusted EBITDA (1,2) $240,612 $239,904 $256,599 $273,759 $282,386 $267,463 $247,644 $238,034 $238,398
Note: In Q3 FY16 the definition of adjusted EBITDA used in external reporting was modified to include certain impairment charges and adjust for depreciation related to our Waltham lease resulting in a
change to adjusted EBITDA for Q1 and Q2 FY16. Also note that for Q3 FY17 (and Q4 FY17), the SBC expense listed here excludes the portion included in restructuring-related charges to avoid double
counting.
(1) This deck uses the definition of adjusted EBITDA as outlined above and therefore does not include the pro-forma impact of acquisitions; however, the senior unsecured notes' covenants allow for the
inclusion of pro-forma impacts to adjusted EBITDA.
(2) Adjusted EBITDA includes 100% of the results of our consolidated subsidiaries and therefore does not give effect to adjusted EBITDA attributable to non-controlling interests. This is to most closely align
to our debt covenant and cash flow reporting.
Cimpress N.V. Q4 FY2017 Earnings Presentation
44
Reconciliation: Constant-Currency/ex. TTM Acquisitions Revenue Growth Rates
Quarterly
Vistaprint Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Reported revenue growth (1) 5% 2% 3% 8% 11% 7% 7% 11% 5%
Currency Impact 6% 6% 5% 2% 1% 1% 2% 1% 1%
Revenue growth in constant currency 11% 8% 8% 10% 12% 8% 9% 12% 6%
Upload and Print Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Reported revenue growth 74% 98% 112% 201% 94% 72% 63% 22% 11%
Currency Impact 26% 21% 16% 2% (2)% 1% 3% 5% 3%
Revenue growth in constant currency 100% 118% 128% 203% 92% 73% 66% 27% 14%
Impact of TTM Acquisitions (66)% (87)% (97)% (178)% (71)% (61)% (55)% (14)% —%
Revenue growth in constant currency excl. TTM
acquisitions 34% 31% 31% 25% 21% 12% 11% 13% 14%
All Other Businesses Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Reported revenue growth (5)% (6)% (4)% (7)% (8)% (17)% (7)% (8)% 6%
Currency Impact 12% 14% 12% 4% —% (2)% —% (1)% 1%
Revenue growth in constant currency 7% 7% 8% (3)% (8)% (19)% (7)% (9)% 7%
Impact of TTM Acquisitions (11)% (4)% —% —% —% —% —% —% —%
Revenue growth in constant currency excl. TTM acquisitions (4)% 4% 8% (3)% (8)% (19)% (7)% (9)% 7%
Note: In Q4 FY2015, we recognized deferred revenue related to group buying activities, a net $3.7 million headwind to Vistaprint year-over-year growth rate in Q4FY16.
45
Reconciliation: Constant-Currency/ex. Discontinued Operations Revenue Growth Rates
Quarterly
National Pen Q3FY17 Q4FY17 FY 2017 (six months)
Reported revenue growth (1) 100% 100% 100%
Impact of acquisition (100)% (100)% (100)%
Year-over-year growth without the acquisition —% —% —%
Impact of pro forma actual revenue growth (8)% (5)% (6)%
Pro forma revenue growth in U.S. dollars (8)% (5)% (6)%
Currency Impact 3% 3% 2%
Pro forma revenue growth in constant currency (5)% (2)% (4)%
Impact of discontinued operations 3% 3% 3%
Pro forma revenue growth in constant currency, excluding discontinued operations (2)% 1% (1)%
(1) National Pen's reported revenue growth was 100% since we did not own this business in the year-ago period.
Cimpress N.V. Q4 FY2017 Earnings Presentation
46
Quarterly
Reconciliation: Constant-Currency/ex. TTM Acquisition Revenue Growth Rates
Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Reported Revenue
Growth 21% 19% 19% 13% 13% 13% 29% 26% 18% 16% 26% 18%
Currency Impact —% 4% 7% 9% 8% 7% 2% —% 1% 2% 2% 2%
Revenue Growth in
Constant Currency 21% 23% 26% 22% 21% 20% 31% 26% 19% 18% 28% 20%
Impact of TTM
Acquisitions & JVs (15)% (16)% (15)% (9)% (10)% (10)% (21)% (15)% (13)% (10)% (17)% (11)%
Revenue growth in
constant currency ex. TTM acquisitions & JVs 6% 7% 11% 13% 11% 10% 10% 11% 6% 8% 11% 9%
Reported revenue
growth rate ex. TTM acquisitions & JVs 6% 3% 4% 3% 3% 3% 8% 11% 6% 6% 9% 7%
Note: Q4 FY2017 total company revenue growth in constant currency excluding TTM acquisitions and joint ventures excludes the impact of currency and revenue from National Pen.
47
Annual
Reconciliation: Constant-Currency/ex. TTM Acquisition Revenue Growth Rates
Total Company FY14 FY15 FY16 FY17
Reported Revenue Growth 9% 18% 20% 19%
Currency Impact (1)% 5% 4% 2%
Revenue Growth in Constant Currency 8% 23% 24% 21%
Impact of TTM Acquisitions & JVs (4)% (14)% (13)% (13)%
Revenue growth in constant currency ex. TTM acquisitions & JVs 4% 9% 11% 8%
FY2017, by Reportable Segments Vistaprint Upload & Print National Pen All Other Businesses
Reported Revenue Growth 7% 36% 100% (7)%
Currency Impact 2% 3% —% —%
Revenue Growth in Constant Currency 9% 39% 100% (7)%
Impact of TTM Acquisitions & JVs - (26)% (100)% —%
Revenue growth in constant currency ex. TTM acquisitions & JVs 9% 13% —% (7)%
Cimpress N.V. Q4 FY2017 Earnings Presentation
48
Reconciliation: Two-year Stacked Constant-Currency Organic Revenue Growth
Quarterly
Q4FY1
3
Q1FY1
4
Q2FY1
4
Q3FY1
4
Q4FY1
4
Q1FY1
5
Q2FY1
5
Q3FY1
5
Q4FY1
5
Q1FY1
6
Q2FY1
6
Q3FY1
6
Q4FY1
6
Q1FY1
7
Q2FY1
7
Q3FY1
7
Q4FY1
7
Reported Revenue
Growth 12% 9% 6% (1)% 21% 21% 19% 19% 13% 13% 13% 29% 26% 18% 16% 26% 18%
Currency Impact —% —% —% —% (2)% —% 4% 7% 9% 8% 7% 2% —% 1% 2% 2% 2%
Revenue Growth
in Constant Currency 12% 9% 6% (1)% 19% 21% 23% 26% 22% 21% 20% 31% 26% 19% 18% 28% 20%
Impact of TTM
Acquisitions & JVs —% —% —% —% (15)% (15)% (16)% (15)% (9)% (10)% (10)% (21)% (15)% (13)% (10)% (17)% (11)%
Revenue growth in
constant currency ex. TTM acquisitions & JVs 12% 9% 6% (1)% 4% 6% 7% 11% 13% 11% 10% 10% 11% 6% 8% 11% 9%
2 Year Stacked
Q4'13+
Q4'14
Q1'14+
Q1'15
Q2'14+
Q2'15
Q3'14+
Q3'15
Q4'14+
Q4'15
Q1'15+
Q1'16
Q2'15+
Q2'16
Q3'15+
Q3'16
Q4'15+
Q4'16
Q1'16+
Q1'17
Q2'16+
Q2'17
Q3'16+
Q3'17
Q4'16+
Q4'17
Year 1 12% 9% 6% (1)% 4% 6% 7% 11% 13% 11% 10% 10% 11%
Year 2 4% 6% 7% 11% 13% 11% 10% 10% 11% 6% 8% 11% 9%
Year 1 + Year 2 16% 15% 13% 10% 17% 17% 17% 21% 24% 17% 18% 21% 20%
Note: Q4 FY2017 total company revenue growth in constant currency excluding TTM acquisitions and joint ventures excludes the impact of currency and revenue from National Pen.