Multi Packaging Solutions Announces Record Second Quarter Results

Non GAAP net income per share of $0.26 versus $0.10 for the quarter and $0.55 versus $0.21 for the year to date

NEW YORK--()--Multi Packaging Solutions International Limited (NYSE:MPSX), (“MPS” or “the Company”), a global leader in value-added print and packaging solutions for the branded consumer, healthcare, and multi-media markets, today announced results for 2Q 2016.

2Q FY 2016 vs 2Q FY 2015 Highlights:

  • GAAP sales of $429.4 million vs $404.8 million
    • Negative foreign exchange impact of $23.6 million
  • GAAP net income (loss) attributable to MPS of $(7.9) million vs $(2.4) million
  • GAAP income (loss) attributable to MPS of $(0.11) per share vs $(0.04) per share
  • Non GAAP net income attributable to MPS of $18.9 million vs $6.1 million
  • Non GAAP net income attributable to MPS per share of $0.26 vs $0.10
  • Non GAAP EBITDA of $69.4 million vs $58.5 million ($63.0 million in the prior year pro forma for acquisitions)
  • Non GAAP EBITDA margin of 16.2% vs 14.4% (13.2% in the prior year pro forma for acquisitions)

YTD FY 2016 vs YTD FY 2015 Highlights:

  • GAAP sales of $888.4 million vs $798.9 million
    • Negative foreign exchange impact of $58.0 million
  • GAAP net income attributable to MPS of $5.1 million vs $4.6 million
  • GAAP income attributable to MPS of $0.08 per share vs $0.07 per share
  • Non GAAP net income attributable to MPS of $37.0 million vs $12.8 million
  • Non GAAP net income attributable to MPS of $0.55 per share vs $0.21 per share
  • Non GAAP EBITDA of $146.6 million vs $119.6 million ($133.4 million in the prior year pro forma for acquisitions).
  • Non GAAP EBITDA margin of 16.5% vs 15.0% (13.3% pro forma in the prior year for acquisitions).

Marc Shore, Chief Executive Officer, commented, “We are pleased to have achieved record adjusted EBITDA and adjusted EBITDA margins despite the challenging global economy and the negative effects of foreign exchange. Our financial results continue to improve as we execute our global strategy. MPS continues to make significant improvement in operating efficiencies. We are also gaining traction in supplying our customers with a wide variety of products to meet their comprehensive needs on both a regional and global basis. Adjusted EBITDA for the trailing twelve months ending December 31, 2015 was $259.2 million. Due to continued strong cash generation, our pro forma leverage has dropped to 3.49x.”

Discussion of Second Quarter Fiscal 2016 Results

GAAP net sales for 2Q FY 2016 and YTD 2016 were $429.4 million and $888.4 million vs GAAP net sales for 2Q FY2015 and YTD 2015 of $404.8 million and $798.9 million. 2Q FY 2016 and YTD 2016 include negative foreign exchange effects of $23.6 million and $58.0 million. Adjusted for acquisitions in fiscal 2015, net sales for 2Q 2016 were down $49.2 million vs. 2Q 2015. This decrease was due to several factors: the impact of unfavorable foreign exchange rates, the anticipated and continuing decline in multi-media sales and reduced sales related to certain consumer product companies.

Gross margin for 2Q 2016 was 22.3%, up 200 basis points, vs. 20.3% for 2Q 2015. This increase reflects the Company’s improved manufacturing efficiencies in our facilities, returns from our targeted capital spending programs, and $4.9 million of realized synergies from acquisitions, partially offset by restructuring charges for the Melrose Park facility closure. The Company expects to realize an additional $2.5 million in synergies related to acquisitions in the next two quarters.

GAAP net income (loss) attributable to MPS for 2Q FY 2016 and YTD 2016 were $(7.9) million and $5.1 million vs GAAP net income (loss) for 2Q FY 2015 and YTD 2015 of $(2.4) million and $4.6 million. 2Q FY 2016 and YTD 2016 include negative foreign exchange effects of $4.2 million and $10.6 million. During the quarter, besides the foreign exchange impacts noted, the Company recorded stock compensation costs associated with the Company’s initial public offering of $26.9 million and debt extinguishment costs associated with the related early payment of term loans of $3.9 million, as well as restructuring charges. These charges were partially offset by $2.7 million of reduced income taxes associated with the enactment of “UK Finance (No. 2) Act 2015” on November 18, 2015.

Non GAAP net income attributable to MPS for 2Q FY 2016 and YTD 2016 were $18.9 million and $37.0 million vs non GAAP net income attributable to MPS for 2Q FY 2015 and YTD 2015 of $6.1 million and $12.8 million.

Non GAAP EBITDA for 2Q 2016 was $69.4 million, up $10.9 million, or 18.7%, vs. $58.5 million in 2Q 2015. Non GAAP EBITDA margin of 16.2% was driven by the Company’s targeted capital spending programs, plant improvement initiatives, and purchasing and cost savings programs. Pro forma for acquisitions, non GAAP EBITDA increased $6.4 million, or 10.1%, vs. $63.0 million in 2Q 2015.

Cash balances as of December 31, 2015 were $59.0 million. There were no amounts outstanding under our revolving credit facility. Total debt net of cash was $903.8 million including deferred debt discount of $15.1 million. At December 31, 2015, trailing twelve months pro forma adjusted EBITDA was $259.2 million, and the pro forma leverage ratio was 3.49x.

Second Quarter Earnings Conference Call and Webcast

The Company will host a conference call on February 11, 2016 at 5:00pm ET, which can be accessed by dialing 877-705-6003 (domestic) or 201-493-6725 (international).

Supplemental materials for today’s call can also be found on the investor relations portion of the Company’s website.

The Company will also host a live webcast of its conference call which may be accessed on the Investor Relations section of the Company's website at multipkg.com.

A replay will be available approximately three hours after the call, through February 18, 2016, accessible by dialing 877-870-5176 (domestic), or 858-384-5517 (international). The passcode for the replay is 13629434.

Non-GAAP Financial Measures

The historical financial information included in this presentation includes financial information that is not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), including Adjusted Net Income, Adjusted Operating Income, and Adjusted EBITDA. Management uses these non-GAAP financial measures in the analysis of financial and operating performance because they assist in the evaluation of underlying trends in our business. Our use of the terms Adjusted Net Income, Adjusted Operating Income, and Adjusted EBITDA may differ from that of others in our industry. Adjusted Net Income, Adjusted Operating Income and Adjusted EBITDA should not be considered as alternatives to net income (loss), operating income (loss), or any other performance measures prepared in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Adjusted Net Income, Adjusted Operating Income, and Adjusted EBITDA have important limitations as analytical tools and should be considered in conjunction with, and not as substitutes for, our results as reported under GAAP. This presentation includes a reconciliation of certain non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP.

About Multi Packaging Solutions

Multi Packaging Solutions is a leading global provider of value-added packaging solutions to a diverse customer base across the healthcare, consumer and multi-media markets. MPS provides its customers with an extensive array of print-based specialty packaging solutions, including premium folding cartons, inserts, labels and rigid packaging across a variety of substrates and finishes. MPS has manufacturing locations across North America, Europe and Asia.

Cautionary Statement Concerning Forward-Looking Statements

This release contains certain forward-looking statements regarding MPS and its subsidiaries. All of these statements are based on management’s expectations as well as estimates and assumptions prepared by management that, although they believe to be reasonable, are inherently uncertain. These statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of MPS’ control that may cause its business, industry, strategy, financing activities or actual results to differ materially. MPS undertakes no obligation to update or revise any of the forward looking statements contained herein, whether as a result of new information, future events or otherwise.

MPSX-IR

       
Multi Packaging Solutions International Limited And Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
 
December 31,
2015
June 30,
2015
(unaudited)
 
Current assets
Cash and cash equivalents $ 59,045 $ 55,675
Accounts receivable, net 248,185 240,110
Inventories 163,849 171,836
Prepaid expenses and other current assets 28,180 26,892
Deferred income taxes   7,758     8,454  
 
 
Total current assets   507,017     502,967  
 
Property, plant and equipment
Land 55,792 58,316
Buildings and improvements 57,793 58,368
Machinery and equipment 375,518 373,639
Furniture and fixtures 14,784 13,056
Construction in progress   10,582     12,255  
 
Total 514,469 515,634
Less: Accumulated depreciation   (112,331 )   (86,691 )
 
Total property, plant and equipment, net   402,138     428,943  
 
Other assets
Intangible assets, net 386,280 419,733
Goodwill 468,144 474,901
Deferred financing costs, net 3,191 4,311
Deferred income taxes 14,322 14,568
Other assets   32,681     36,702  
 
 
Total assets $ 1,813,773   $ 1,882,125  
 
Current liabilities
Accounts payable $ 168,529 $ 176,431
Payroll and benefits 38,469 51,606
Other current liabilities 43,590 46,097
Short-term foreign borrowings 4,501 3,488
Current portion of long-term debt 10,167 11,740
Income taxes payable   5,308     6,022  
 
 
Total current liabilities 270,564 295,384
Long-term debt, less current portion 948,220 1,173,161
Deferred income taxes 86,245 93,061
Other long-term liabilities   31,439     31,829  
 
 
Total liabilities   1,336,468     1,593,435  
 
Commitments and contingencies
 
Shareholders’ equity

Contributed Capital, $1.00 par value, 1,000,000,000 shares authorized, 77,448,304 and 61,939,432 issued
and outstanding at December 31, 2015 and June 30, 2015, respectively

77,448 61,939
 
Paid in capital 470,510 278,695
Accumulated deficit (40,275 ) (45,365 )
Accumulated other comprehensive loss   (33,439 )   (13,287 )
 
 
Total Multi Packaging Solutions International Limited shareholders’ equity 474,244 281,982
Noncontrolling interest   3,061     6,708  
 
Total shareholders’ equity   477,305     288,690  
 
 
Total liabilities and shareholders’ equity $ 1,813,773   $ 1,882,125  
 
       
Multi Packaging Solutions International Limited And Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except share and per share amounts)
(unaudited)
 
Three Months Ended

December 31,

  Six Months Ended

December 31,

2015   2014   2015   2014
Net sales $ 429,357   $ 404,827 $ 888,408   $ 798,909
 
Cost of goods sold   333,632     322,493     693,342     634,192  
 
Gross margin   95,725     82,334     195,066     164,717  
 
Selling, general and administrative expenses
Selling, general and administrative expenses 59,306 61,955 117,890 116,983
Stock based and deferred compensation expense 27,232 455 26,960 886
Transaction related expenses   2,064     3,463     2,414     4,184  
 
Total selling, general and administrative expenses   88,602     65,873     147,264     122,053  
 
Operating income   7,123     16,461     47,802     42,664  
Other (expense) income, net 100 (1,776 ) (3,535 ) 1,543
Debt extinguishment charges (3,867 ) - (3,867 ) -
Interest expense   (16,016 )   (17,871 )   (34,745 )   (36,411 )
 
Total other expense, net   (19,783 )   (19,647 )   (42,147 )   (34,868 )
 
Income (loss) before income taxes (12,660 ) (3,186 ) 5,655 7,796
 

Income tax expense (benefit)

  (4,656 )   (791 )   575     2,903  
 
Net (loss) income (8,004 ) (2,395 ) 5,080 4,893

 

Less: Net income (loss) attributable to noncontrolling interest

  (87 )   37     (10 )   318  
 

Net (loss) income attributable to Multi Packaging
Solutions International Limited

$ (7,917 ) $ (2,432 ) $ 5,090   $ 4,575  
(Loss) Earnings per share
Basic (.11 ) (.04 ) .08 .07
Diluted (.11 ) (.04 ) .08 .07
 
Weighted-average number of common shares outstanding:
Basic 73,825,723 61,939,432 67,817,268 61,939,432
Diluted 73,825,723 61,939,432 67,817,268 61,939,432
 
Other comprehensive income (loss)
Cumulative foreign currency translation adjustment (11,880 ) (30,421 ) (21,572 ) (40,113 )
Adjustment on available-for-sale securities (5 ) 4 (22 ) (13 )
Pension adjustments   662     (154 )   1,454   638
 
Total other comprehensive loss   (11,223 )   (30,571 )   (20,140 )   (39,488 )
 
Comprehensive income (loss) (19,227 ) (32,966 ) (15,060 ) (34,595 )
 

Comprehensive (income) loss attributable to non-controlling interests

  --     (101 )   (17 )   (113 )

Comprehensive income (loss) attributable to Multi Packaging
Solutions International Limited

$ (19,227 )   ($33,067 ) $ (15,077 ) $ (34,708 )
 
       
Multi Packaging Solutions International Limited And Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Six months ended
December 31,
2015 2014
Operating Activities
Net income $ 5,080 $ 4,893
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation expense 37,930 38,737
Amortization expense 30,335 28,952
Debt extinguishment charges 3,867 --
Deferred income taxes (5,243 ) (2,031 )
Stock compensation 25,962 606
Equity in earnings of unconsolidated subsidiary -- (39 )
Unrealized foreign currency loss (gain) 1,715 (4,524 )
Other 850 4,258
Change in assets and liabilities:
Accounts receivable (8,273 ) (16,233 )
Inventories 2,421 6,445
Prepaid expenses and other current assets 369 (3,751 )
Other assets (4,239 ) 2,534
Accounts payable (8,572 ) (14,472 )
Payroll and benefits (12,160 ) (272 )
Other current liabilities (4,789 ) 8,097
Income taxes payable (894 ) 2,195
Other long-term liabilities   (1,543 )   (14,352 )
 
 
Net cash and cash equivalents provided by operating activities   62,816     41,043  
 
 
Investing Activities
Additions to property, plant and equipment (24,507 ) (24,206 )
Additions to intangible assets (68 ) (131 )
Proceeds from sale of assets 1,003 601
Acquisitions of businesses, net of cash acquired   (2,496 )   (123,273 )
 
 
Net cash and cash equivalents used in investing activities $ (26,068 ) $ (147,009 )
 
 
Financing Activities
Proceeds from initial public offering $ 186,424 $ --
Payments of offering costs (6,125 ) --
Proceeds from issuance of long-term debt -- 136,906
Proceeds from short-term borrowings 41,619 103,825
Payments on short-term borrowings (40,876 ) (103,937 )
Payments on long-term debt (216,809 ) (10,133 )
Deferred financing costs   --     (4,442 )
 
 
Net cash and cash equivalents (used in) provided by financing activities   (35,767 )   122,219  
 
 
Effect of exchange rate changes on cash and cash equivalents   2,389     (117 )
 
 
Increase in cash and cash equivalents 3,370 16,136
 
Cash and cash equivalents—beginning   55,675     27,533  
 
 
Cash and cash equivalents—ending $ 59,045   $ 43,669  
 
             
Multi Packaging Solutions International Limited And Subsidiaries
Reconciliation of Non‐GAAP Results
Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income
 

Non GAAP Adjusted EBITDA

 

 

 

 

 
2Q FY 2016 2Q FY 2015 YTD FY 2016 YTD FY 2015

Trailing 12
months Dec
2015

(Dollars in thousands)
 
Net Income (loss) $ (8,004 ) $ (2,395 ) $ 5,080 $ 4,893 $ 7,213
 
Depreciation and Amortization 32,727 32,533 66,038 65,580 132,161
Interest Expense 16,016 17,871 34,745 36,411 73,771
Income Taxes   (4,656 )   (791 )   575     2,903     (4,208 )
EBITDA   36,083     47,218     106,438     109,787     208,937  

Adjustments relating to operating income

Transaction costs 2,064 3,463 2,414 4,184 11,860
Stock based and deferred compensation 27,232 455 26,960 886 31,796
Purchase accounting adjustments 292 377 623 853 2,864
Restructuring and severance costs 750 3,086 3,576 3,790 6,205
(Gain) Loss on sale of fixed assets 168 472 362 408 538
Other adjustments to operating income   (951 )   1,144  

 

  (1,406 )   649  

 

  (4,007 )

Adjustments relating to operating income (A)

  29,555     8,997  

 

  32,529     10,770  

 

  49,256  

Adjustments relating to non-operating income

Foreign currency (gains) loss 473 222 3,340 (4,576 ) (4,255 )
Debt extinguishment costs 3,867 - 3,867 - 4,886
Other Adjustments to non-operating income   (572 )   2,023  

 

  428     3,649  

 

  (914 )
Adjustments relating to non-operating income   3,768     2,245  

 

  7,635     (927 )

 

  (283 )
         

Total Adjustments (B)

  33,323     11,242  

 

  40,164     9,843  

 

  48,973  
         
Adjusted EBITDA   69,406     58,460  

 

  146,602     119,630  

 

  257,910  
Pre-acquisition adjusted EBITDA   -     4,559  

 

  -     13,810  

 

  1,323  
Proforma Adjusted EBITDA $ 69,406   $ 63,019   $ 146,602   $ 133,440   $ 259,233  

 

Non GAAP Adjusted Operating Income

       

(Dollars in thousands)

2Q FY 2016 2Q FY 2015

 

YTD FY 2016 YTD FY 2015

 

Operating Income $ 7,123 $ 16,461 $ 47,802 $ 42,664

Adjustments relating to operating income (A)

  29,555     8,997     32,529     10,770  

Adjusted Operating Income

  36,678     25,458     80,331     53,434  
 

Non GAAP Adjusted Net Income

 

 

 

 

 

 

(Dollars in thousands)

2Q FY 2016 2Q FY 2015

 

YTD FY 2016 YTD FY 2015

 

Net Income (loss)

$ (8,004 ) $ (2,395 )

 

$ 5,080 $ 4,893

 

Adjustments relating to net income (B)

33,323 11,242

 

40,164 9,843

 

Tax impact of adjusting items   (6,515 )   (2,672 )   (8,258 )   (1,596 )
Adjusted Net Income (loss) 18,804 6,175

 

36,986 13,140

 

Less: net income attributable to noncontrolling interest

  (87 )   37     (10 )   318  

Adjusted net income (loss) attributable to Multi
Packaging Solutions International Limited

  18,891     6,138     36,996     12,822  

 

 
Weighted average number of diluted shares outstanding   73,825,723     61,939,432     67,817,268     61,939,432  
 
Adjusted net income per share $ 0.26   $ 0.10   $ 0.55   $ 0.21  
 

Contacts

Multi Packaging Solutions
Paul Hatty, VP Finance - Investor Relations
Richard Zubek, Investor Relations
646-885-0005
ir@multipkg.com

Contacts

Multi Packaging Solutions
Paul Hatty, VP Finance - Investor Relations
Richard Zubek, Investor Relations
646-885-0005
ir@multipkg.com