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cmpr-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

Form 10-Q


(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	March 31, 2022
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 000-51539

_________________________________

Cimpress plc

(Exact Name of Registrant as Specified in Its Charter)

_________________________________


Ireland									98-0417483
(State or Other Jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)

Building D, Xerox Technology Park A91 H9N9,

Dundalk, Co. Louth

Ireland

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: 353 42 938 8500

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Exchange on Which Registered

Ordinary Shares, nominal value of €0.01 per share

CMPR

NASDAQ Global Select Market

______________________________

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No þ

As of April 25, 2022, there were 26,105,813 Cimpress plc ordinary shares outstanding.

CIMPRESS PLC

QUARTERLY REPORT ON FORM 10-Q

For the Three and Nine Months Ended March 31, 2022

TABLE OF CONTENTS


						Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)						1
Consolidated Balance Sheets as of March 31, 2022 and June 30, 2021						1
Consolidated Statements of Operations for the three and nine months ended March 31, 2022 and 2021						2
Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2022 and 2021						3
Consolidated Statements of Shareholders' Deficit for the three and nine months ended March 31, 2022 and 2021						4
Consolidated Statements of Cash Flows for the nine months ended March 31, 2022 and 2021						8
Notes to Consolidated Financial Statements						10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations						34
Item 3. Quantitative and Qualitative Disclosures About Market Risk						48
Item 4. Controls and Procedures						49

PART II OTHER INFORMATION
Item 1A. Risk Factors						49
Item 6. Exhibits						50
Signatures						51

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CIMPRESS PLC

CONSOLIDATED BALANCE SHEETS

(unaudited in thousands, except share and per share data)


	March 31, 2022		June 30, 2021
Assets
Current assets:
Cash and cash equivalents	$	161,512	$	183,023
Marketable securities	95,637		152,248
Accounts receivable, net of allowances of $6,614 and $9,404, respectively	66,702		50,679
Inventory	97,919		70,044
Prepaid expenses and other current assets	108,740		72,504

Total current assets	530,510		528,498
Property, plant and equipment, net	298,827		328,679
Operating lease assets, net	79,051		87,626
Software and website development costs, net	92,266		87,690
Deferred tax assets	113,059		149,618
Goodwill	787,572		726,979
Intangible assets, net	171,813		186,744
Marketable securities, non-current	12,116		50,713
Other assets	38,296		35,951
Total assets	$	2,123,510	$	2,182,498
Liabilities, noncontrolling interests and shareholders’ deficit
Current liabilities:
Accounts payable	$	229,774	$	199,831
Accrued expenses	262,620		247,513
Deferred revenue	59,556		50,868
Short-term debt	10,922		9,895
Operating lease liabilities, current	28,293		26,551
Other current liabilities	27,206		103,515

Total current liabilities	618,371		638,173
Deferred tax liabilities	30,682		27,433
Long-term debt	1,699,434		1,732,511

Operating lease liabilities, non-current	55,888		66,222
Other liabilities	62,753		96,410
Total liabilities	2,467,128		2,560,749
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests	119,834		71,120
Shareholders’ deficit:
Preferred shares, nominal value €0.01 per share, 100,000,000 shares authorized; none issued and outstanding	—		—
Ordinary shares, nominal value €0.01 per share, 100,000,000 shares authorized; 44,080,627 shares issued; 26,104,993 and 26,035,910 shares outstanding, respectively	615		615
Deferred ordinary shares, nominal value €1.00 per share, 25,000 shares authorized, none and 25,000 issued and outstanding, respectively	—		28
Treasury shares, at cost, 17,975,634 and 18,044,717 shares, respectively	(1,363,956)		(1,368,595)
Additional paid-in capital	488,149		459,904
Retained earnings	461,363		530,159
Accumulated other comprehensive loss	(49,623)		(71,482)


Total shareholders' deficit	(463,452)		(449,371)
Total liabilities, noncontrolling interests and shareholders’ deficit	$	2,123,510	$	2,182,498

See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited in thousands, except share and per share data)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Revenue	$	657,412	$	573,362	$	2,164,727	$	1,940,766
Cost of revenue (1)	347,452		296,533		1,110,378		976,115
Technology and development expense (1)	75,291		62,572		212,835		186,097
Marketing and selling expense (1)	194,618		154,472		577,931		474,944
General and administrative expense (1)	50,888		62,358		144,162		147,149
Amortization of acquired intangible assets	14,180		13,506		41,520		40,264
Restructuring expense	3,420		(382)		3,418		1,714


(Loss) income from operations	(28,437)		(15,697)		74,483		114,483
Other income (expense), net	12,321		9,785		38,330		(16,167)
Interest expense, net	(24,247)		(29,002)		(75,304)		(89,659)

(Loss) income before income taxes	(40,363)		(34,914)		37,509		8,657
Income tax expense	29,529		3,927		56,208		23,675
Net loss	(69,892)		(38,841)		(18,699)		(15,018)
Add: Net (income) attributable to noncontrolling interest	(1,925)		(209)		(5,027)		(2,500)
Net loss attributable to Cimpress plc	$	(71,817)	$	(39,050)	$	(23,726)	$	(17,518)
Basic net loss per share attributable to Cimpress plc	$	(2.75)	$	(1.50)	$	(0.91)	$	(0.67)
Diluted net loss per share attributable to Cimpress plc	$	(2.75)	$	(1.50)	$	(0.91)	$	(0.67)
Weighted average shares outstanding — basic	26,102,610		26,003,675		26,090,460		25,984,300
Weighted average shares outstanding — diluted	26,102,610		26,003,675		26,090,460		25,984,300

____________________________________________

(1) Share-based compensation is allocated as follows:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Cost of revenue	$	137	$	99	$	380	$	233
Technology and development expense	3,397		2,284		9,655		5,690
Marketing and selling expense	2,961		1,808		8,436		4,247
General and administrative expense	6,209		5,354		17,744		12,901

See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited in thousands)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Net loss	$	(69,892)	$	(38,841)	$	(18,699)	$	(15,018)
Other comprehensive loss, net of tax:
Foreign currency translation (losses) gains, net of hedges	(4,281)		(14,571)		(922)		192
Net unrealized gains on derivative instruments designated and qualifying as cash flow hedges	7,222		5,809		2,799		13,447
Amounts reclassified from accumulated other comprehensive loss to net loss on derivative instruments	4,401		(3,085)		17,715		(8,382)


Gain (loss) on pension benefit obligation, net	—		—		444		(336)
Comprehensive (loss) income	(62,550)		(50,688)		1,337		(10,097)
Add: Comprehensive (income) loss attributable to noncontrolling interests	(1,563)		1,260		(3,204)		(3,720)
Total comprehensive loss attributable to Cimpress plc	$	(64,113)	$	(49,428)	$	(1,867)	$	(13,817)

See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT

(unaudited in thousands)


	Ordinary Shares			Deferred Ordinary Shares			Treasury Shares
	Number of Shares Issued	Amount		Number of Shares Issued	Amount		Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Deficit
Balance at June 30, 2020	44,080	$	615	25	$	28	(18,195)	$	(1,376,496)	$	438,616	$	618,437	$	(88,676)	$	(407,476)
Restricted share units vested, net of shares withheld for taxes	—	—		—	—		118	7,773		(13,366)		—		—		(5,593)

Share-based compensation expense	—	—		—	—		—	—		8,577		—		—		8,577
Net loss attributable to Cimpress plc	—	—		—	—		—	—		—		(10,755)		—		(10,755)
Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges	—	—		—	—		—	—		—		—		1,765		1,765
Foreign currency translation, net of hedges	—	—		—	—		—	—		—		—		(609)		(609)
Unrealized loss on pension benefit obligation, net of tax	—	—		—	—		—	—		—		—		(336)		(336)
Balance at September 30, 2020	44,080	$	615	25	$	28	(18,077)	$	(1,368,723)	$	433,827	$	607,682	$	(87,856)	$	(414,427)



Share-based compensation expense	—	—		—	—		—	—		5,036		—		—		5,036
Net income attributable to Cimpress plc	—	—		—	—		—	—		—		32,287		—		32,287
Redeemable noncontrolling interest accretion to redemption value	—	—		—	—		—	—		—		(1,086)		—		(1,086)

Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges	—	—		—	—		—	—		—		—		576		576
Foreign currency translation, net of hedges	—	—		—	—		—	—		—		—		12,683		12,683

Balance at December 31, 2020	44,080	$	615	25	$	28	(18,077)	$	(1,368,723)	$	438,863	$	638,883	$	(74,597)	$	(364,931)

See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (CONTINUED)

(unaudited in thousands)


	Ordinary Shares			Deferred Ordinary Shares			Treasury Shares
	Number of Shares Issued	Amount		Number of Shares Issued	Amount		Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Deficit
Balance at December 31, 2020	44,080	$	615	25	$	28	(18,077)	$	(1,368,723)	$	438,863	$	638,883	$	(74,597)	$	(364,931)
Restricted share units vested, net of shares withheld for taxes	—	—		—	—		—	2		(3)		—		—		(1)

Share-based compensation expense	—	—		—	—		—	—		9,572		—		—		9,572
Net loss attributable to Cimpress plc	—	—		—	—		—	—		—		(39,050)		—		(39,050)
Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges	—	—		—	—		—	—		—		—		(13,102)		(13,102)
Foreign currency translation, net of hedges	—	—		—	—		—	—		—		—		2,724		2,724

Balance at March 31, 2021	44,080	$	615	25	$	28	(18,077)	$	(1,368,721)	$	448,432	$	599,833	$	(84,975)	$	(404,788)
See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (CONTINUED)

(unaudited in thousands)


	Ordinary Shares			Deferred Ordinary Shares			Treasury Shares
	Number of Shares Issued	Amount		Number of Shares Issued	Amount		Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Deficit
Balance at June 30, 2021	44,080	$	615	25	$	28	(18,045)	$	(1,368,595)	$	459,904	$	530,159	$	(71,482)	$	(449,371)
Restricted share units vested, net of shares withheld for taxes	—	—		—	—		54	3,516		(6,095)		—		—		(2,579)
Share-based compensation expense	—	—		—	—		—	—		11,129		—		—		11,129
Net loss attributable to Cimpress plc	—	—		—	—		—	—		—		(6,698)		—		(6,698)
Redeemable noncontrolling interest accretion to redemption value	—	—		—	—		—	—		—		(7,592)		—		(7,592)
Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges	—	—		—	—		—	—		—		—		3,621		3,621
Foreign currency translation, net of hedges	—	—		—	—		—	—		—		—		674		674
Balance at September 30, 2021	44,080	$	615	25	$	28	(17,991)	$	(1,365,079)	$	464,938	$	515,869	$	(67,187)	$	(450,816)


Restricted share units vested, net of shares withheld for taxes	—	—		—	—		11	743		(1,062)		—		—		(319)

Share-based compensation expense	—	—		—	—		—	—		12,398		—		—		12,398
Net income attributable to Cimpress plc	—	—		—	—		—	—		—		54,789		—		54,789
Redeemable noncontrolling interest accretion to redemption value	—	—		—	—		—	—		—		(8,444)		—		(8,444)
Purchase of noncontrolling interest	—	—		—	—		—	—		(272)		—		—		(272)
Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges	—	—		—	—		—	—		—		—		5,270		5,270
Foreign currency translation, net of hedges	—	—		—	—		—	—		—		—		4,146		4,146
Unrealized gain on pension benefit obligation, net of tax	—	—		—	—		—	—		—		—		444		444

Balance at December 31, 2021	44,080	$	615	25	$	28	(17,980)	$	(1,364,336)	$	476,002	$	562,214	$	(57,327)	$	(382,804)

See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (CONTINUED)

(unaudited in thousands)


	Ordinary Shares			Deferred Ordinary Shares			Treasury Shares
	Number of Shares Issued	Amount		Number of Shares Issued	Amount		Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Deficit
Balance at December 31, 2021	44,080	$	615	25	$	28	(17,980)	$	(1,364,336)	$	476,002	$	562,214	$	(57,327)	$	(382,804)

Restricted share units vested, net of shares withheld for taxes	—	—		—	—		4	380		(580)		—		—		(200)

Purchase and cancellation of deferred ordinary shares	—	—		(25)	(28)		—	—		—		—		—		(28)
Share-based compensation expense	—	—		—	—		—	—		12,727		—		—		12,727
Net loss attributable to Cimpress plc	—	—		—	—		—	—		—		(71,817)		—		(71,817)
Redeemable noncontrolling interest accretion to redemption value	—	—		—	—		—	—		—		(29,034)		—		(29,034)

Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges	—	—		—	—		—	—		—		—		11,623		11,623
Foreign currency translation, net of hedges	—	—		—	—		—	—		—		—		(3,919)		(3,919)

Balance at March 31, 2022	44,080	$	615	—	$	—	(17,976)	$	(1,363,956)	$	488,149	$	461,363	$	(49,623)	$	(463,452)

See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited in thousands)


	Nine Months Ended March 31,
	2022		2021
Operating activities
Net loss	$	(18,699)	$	(15,018)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	133,397		128,696

Share-based compensation expense	36,215		23,071
Impairment of long-lived assets	—		19,882
Deferred taxes	26,636		2,513




Unrealized (gain) loss on derivatives not designated as hedging instruments included in net loss	(25,639)		18,280
Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency	(5,847)		2,537

Other non-cash items	(8,204)		2,149

Changes in operating assets and liabilities:
Accounts receivable	(17,764)		(9,651)
Inventory	(31,964)		4,982
Prepaid expenses and other assets	(18,776)		(5,242)
Accounts payable	35,860		10,590
Accrued expenses and other liabilities	26,501		36,159
Net cash provided by operating activities	131,716		218,948
Investing activities
Purchases of property, plant and equipment	(42,142)		(22,736)

Business acquisitions, net of cash acquired	(75,258)		(36,395)

Capitalization of software and website development costs	(49,875)		(45,321)

Proceeds from the sale of assets	27,466		3,574

Proceeds from maturity of held-to-maturity investments	93,679		—

Payments for settlement of derivatives designated as hedging instruments	(1,880)		—
Other investing activities	(617)		(269)
Net cash used in investing activities	(48,627)		(101,147)
Financing activities
Proceeds from borrowings of debt	—		534,051




Payments of debt	(11,149)		(639,519)



Payments of debt issuance costs	(1,440)		(2,461)
Payments of purchase consideration included in acquisition-date fair value	(43,647)		(1,205)
Payments of withholding taxes in connection with equity awards	(3,098)		(5,593)
Payments of finance lease obligations	(35,099)		(5,486)
Purchase of noncontrolling interests	(324)		(5,063)



Distribution to noncontrolling interest	(3,963)		(4,599)
Other financing activities	(26)		(310)
Net cash used in financing activities	(98,746)		(130,185)


Effect of exchange rate changes on cash	(5,854)		3,727

Net decrease in cash and cash equivalents	(21,511)		(8,657)
Cash and cash equivalents at beginning of period	183,023		45,021
Cash and cash equivalents at end of period	$	161,512	$	36,364

See accompanying notes.

CIMPRESS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(unaudited in thousands)


	Nine Months Ended March 31,
	2022		2021
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	63,498	$