Multi Packaging Solutions Announces Record Net Income in Fiscal 1Q 2016

NEW YORK--()--Multi Packaging Solutions International Limited (NYSE:MPSX), (“MPS”; “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 1Q 2016.

First Fiscal Quarter 2016 Highlights:

  • Net sales increased $65.0 million, or 16.5%, to $459.1 million vs. 1Q 2015
  • Net income attributable to MPS increased $6.0 million, or 85.6%, to $13.0 million vs. 1Q 2015
  • Earnings per share on a fully diluted basis increased to $0.21 per share vs. $0.11 per share for 1Q 2015
  • Adjusted EBITDA increased $16.0 million, or 26.2%, to $77.2 million vs. $61.2 million for 1Q 2015
  • Achieved Adjusted EBITDA margin of 16.8% vs. 15.5% for 1Q 2015
  • Completed acquisition of BP Media Ltd. on July 1, 2015
  • Made voluntary early repayments of $25.0 million on outstanding term loan on October 7, 2015
  • Completed initial public offering (“IPO”) on October 27, 2015, using net proceeds to prepay $182.4 million of outstanding term loans on October 29, 2015

Marc Shore, Chief Executive Officer, commented, “We are pleased with our first quarter results. Adjusted EBITDA shows the strength of our strategy to operate consistently at the highest level within our global footprint. We strive for excellence in all areas, whether it’s serving our customers, operating our factories, streamlining supply chain, providing unique packaging solutions or investing in new technology. These attributes, and the commitment of our employees, have contributed to our record first quarter. While the IPO was a significant event, our focus remains on operating the business and delivering long term shareholder value.”

First Quarter Fiscal 2016 Results

During 1Q 2016, MPS reported net sales of $459.1 million, up $65.0 million, or 16.5%, vs. $394.1 million for 1Q 2015. This increase was due primarily to acquisitions made in fiscal 2015. On a constant currency basis, sales for 1Q 2016 would have been $493.5 million.

Adjusted for acquisitions in fiscal 2015, net sales for 1Q 2016 were down $62.2 million vs. 1Q 2015. This decrease was due to several factors: the impact of unfavorable foreign exchange rates of $34.4 million, an anticipated decline in multi-media sales and a delay in certain consumer product launches.

Gross margin for 1Q 2016 was 21.6%, up 70 basis points, vs. 20.9% for 1Q 2015. This increase reflects the Company’s facility improvement programs and $4.6 million of realized synergies from acquisitions, partially offset by restructuring charges for the announced Melrose Park closure. The Company expects to realize an additional $7.4 million in synergies related to acquisitions in the next three quarters.

Net income attributable to MPS for 1Q 2016 was $13.0 million, or $0.21 per diluted share, vs. $7.0 million, or $0.11 per diluted share, for 1Q 2015. During the quarter, the Company recorded restructuring charges of $2.8 million due primarily to the announced closure of the Company’s Melrose Park facility, as well as unrealized foreign exchange losses of $2.9 million.

Adjusted EBITDA for 1Q 2016 was $77.2 million, up $16.0 million, or 26.2%, vs. $61.2 million in 1Q 2015. Adjusted EBITDA margin of 16.8% was driven by the Company’s capital programs, plant improvement initiatives, purchasing and cost savings programs. On a pro forma basis, adjusted EBITDA increased $6.8 million, or 9.6%, vs. $70.4 million in 1Q 2015. This increase includes a $6.4 million negative impact from foreign exchange rates.

Cash balances as of September 30, 2015 were $75.3 million. There were no amounts outstanding under our revolving credit facility. Total debt net of cash was $1,104.7 million including deferred debt discount of $19.1 million. In October 2015 the Company used $182.4 million of the net proceeds from the IPO and $25.0 from existing cash balances to prepay a portion of its term loans. This reduced total debt, net of cash, to $922.3 million including deferred debt discount of $19.1 million.

Plant Reorganizations

The Company announced the closure of Melrose Park on September 1, 2015, with an anticipated completion date of February 2016. The Company recorded restructuring expenses of approximately $2.8 million in the quarter ending September 30, 2015, due primarily to the announced closure. The underlying facility is leased on a month-to-month basis.

Initial Public Offering

On October 27, 2015, the Company completed an IPO of 16,500,000 shares of common stock at a price of $13.00 per share. In connection with the offering, certain of the selling shareholders sold 1,000,000 common shares. In addition, the underwriters exercised their right to purchase an additional 2,475,000 common shares from certain of the selling shareholders at the public offering price. The Company did not receive any of the proceeds from the underwriters’ exercise of this option.

First Quarter Earnings Conference Call and Webcast

The Company will host a conference call on November 12, 2015 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 November 19, 2015, accessible by dialing 877-870-5176 (domestic), or 858-384-5517 (international). The passcode for the replay is 13624625.

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 constant currency net sales growth 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 constant currency net sales growth and Adjusted EBITDA may differ from that of others in our industry. Constant currency net sales growth and Adjusted EBITDA should not be considered as alternatives to net sales, net income (loss), income (loss) before operations or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Constant currency net sales growth 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)

 
 

September 30,
2015

 

June 30,
2015

(unaudited)
 
Current assets
Cash and cash equivalents $ 75,279 $ 55,675
Accounts receivable, net 273,214 240,110
Inventories 167,905 171,836
Prepaid expenses and other current assets 28,544 26,892
Deferred income taxes   6,642     8,454  
 
 
Total current assets   551,584     502,967  
 
 
Property, plant and equipment
Land 56,441 58,316
Buildings and improvements 59,035 58,368
Machinery and equipment 363,455 373,639
Furniture and fixtures 14,209 13,056
Construction in progress   22,770     12,255  
 
Total 515,910 515,634
Less: Accumulated depreciation   (99,098 )   (86,691 )
 
Total property, plant and equipment, net   416,812     428,943  
 
 
Other assets
Intangible assets, net 404,909 419,733
Goodwill 471,934 474,901
Deferred financing costs, net 4,095 4,311
Deferred income taxes 14,568 14,568
Other assets   37,801     36,702  
 
 
Total assets $ 1,901,703   $ 1,882,125  
 
Current liabilities
Accounts payable $ 196,178 $ 176,431
Payroll and benefits 50,975 51,606
Other current liabilities 46,487 46,097
Short-term foreign borrowings 4,732 3,488
Current portion of long-term debt 36,097 11,740
Income taxes payable   10,016     6,022  
 
 
Total current liabilities 344,485 295,384
 
Long-term debt, less current portion 1,139,160 1,173,161
Deferred income taxes 91,061 93,061
Other long-term liabilities   34,554     31,829  
 
 
Total liabilities   1,609,260     1,593,435  
 
 
Commitments and Contingencies
 
Shareholders’ equity

Contributed Capital, $1.00 par value, 1,000,000,000 shares authorized, 61,939,432 issued and outstanding

at September 30, 2015 and June 30, 2015

61,939 61,939
 
Paid in capital 278,281 278,695
Accumulated deficit (32,358 ) (45,365 )
Accumulated other comprehensive loss   (22,145 )   (13,287 )
 
 
Total Multi Packaging Solutions International Limited shareholders’ equity 285,717 281,982
Noncontrolling interest   6,726     6,708  
 
 
Total shareholders’ equity   292,443     288,690  
 
 
Total liabilities and shareholders’ equity $ 1,901,703   $ 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
September 30,

2015   2014
 
Net sales $ 459,051 $ 394,082
 
Cost of goods sold   359,710     311,699  
 
 
Gross margin   99,341     82,383  
 
 
Selling, general and administrative expenses
Selling, general and administrative expenses 58,312 55,459
Transaction related expenses   350     721  
 
 
Total selling, general and administrative expenses   58,662     56,180  
 
 
Operating income   40,679     26,203  
 
 
Other income (expense)
Other (expense) income, net (3,635 ) 3,319
Interest expense   (18,729 )   (18,540 )
 
 
Total other expense, net   (22,364 )   (15,221 )
 
 
Income before income taxes 18,315 10,982
 
Income tax expense   5,231     3,694  
 
 
Net income   13,084     7,288  
 
 
Less : Net income attributable to noncontrolling interest   77     281  
 
 
Net income attributable to Multi Packaging Solutions International Limited   13,007     7,007  
 
 
Earnings per share
Basic $ 0.21   $ 0.11  
 
Diluted $ 0.21   $ 0.11  
 
 
Weighted-average number of common shares outstanding:
Basic
Diluted   61,939,432     61,939,432  
 
  61,939,432     61,939,432  
 
 
Other comprehensive income (loss)
 
Cumulative foreign currency translation adjustment $ (9,692 ) $ (18,195 )
Adjustment on available-for-sale securities (17 ) 19
Pension adjustments   792     (339 )
 
 
Total other comprehensive loss $ (8,917 ) $ (18,515 )
 
 
Comprehensive income (loss) $ 4,090 $ (11,508 )
Less: Comprehensive income attributable to non-controlling interests   12     83  
 
 
Comprehensive income attributable to Multi Packaging Solutions International Limited $ 4,078   $ (11,591 )
 
 

Multi Packaging Solutions International Limited And Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 
 

Three months ended
September 30,

2015   2014
Operating Activities
Net income $ 13,084 $ 7,288
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation expense 19,247 19,415
Amortization expense 15,285 14,428
Deferred income taxes (697 ) (1,513 )
Stock compensation (414 ) 291
Equity in earnings of unconsolidated subsidiary (39 )
Unrealized foreign currency loss (gain) 1,183 (4,787 )
Other 1,255 1,638
Change in assets and liabilities:
Accounts receivable (29,546 ) (45,801 )
Inventories 933 2,295
Prepaid expenses and other current assets (859 ) (936 )
Other assets (4,496 ) (753 )
Accounts payable 15,724 (167 )
Payroll and benefits (348 ) (3,498 )
Other current liabilities (101 ) 10,106
Income taxes payable 3,957 4,695
Other long-term liabilities   (1,188 )   (814 )
 
 
Net cash and cash equivalents provided by operating activities   33,019     1,848  
 
 
Investing Activities
Additions to property, plant and equipment (12,321 ) (10,486 )
Additions to intangible assets (28 ) (67 )
Proceeds from sale of assets 325 660
Acquisitions of businesses, net of cash acquired   (2,749 )   (8,621 )
 
 
Net cash and cash equivalents used in investing activities $ (14,773 ) $ (18,514 )
 
 
 
Financing Activities
Proceeds from issuance of long-term debt $ $ 1,951
Proceeds from short-term borrowings 26,483 54,104
Payments on short-term borrowings (24,965 ) (46,376 )
Payments on long-term debt   (4,094 )   (4,054 )
 
 
Net cash and cash equivalents (used in) provided by financing activities   (2,576 )   5,625  
 
 
Effect of exchange rate changes on cash and cash equivalents   3,934     495  
 
 
Increase (decrease) in cash and cash equivalents 19,604 (10,546 )
 
Cash and cash equivalents—beginning   55,675     27,533  
 
 
Cash and cash equivalents—ending $ 75,279   $ 16,987  
 
 

Multi Packaging Solutions International Limited And Subsidiaries
Reconciliation of Non‐GAAP Results
(in thousands)

 

MPS GAAP Adjusted EBITDA Reconciliation

         
Successor Successor
(Dollars in thousands) Notes 1Q 2016   1Q 2015
 
Adjusted EBITDA $ 77,196 $ 61,170
Transaction costs (1) (350 ) (721 )
Stock based and deferred compensation (2) 272 (431 )
Purchase accounting adjustments (3) (331 ) (476 )
Restructuring charges (4) (2,826 ) (704 )
Gain (Loss) on sale of fixed assets (5) (194 ) 64
Impairment charges (6) (245 ) -
Other Adjustments (7)   (3,167 )     3,667  
EBITDA 70,355 62,569
Depreciation and Amortization (8) 33,311 33,047
Interest Expense 18,729 18,540
Income Taxes   5,231      

3,694

 
Net Income (loss) $ 13,084     $ 7,288  
 
 
Notes:
(1)   Costs related to change in equity ownership, mergers and acquisitions.
(2) Expense related to equity compensation, and deferred compensation agreements from certain acquisitions.
(3)

Amortization of purchase price/inventory adjustments in connection with purchase accounting fair valuation, amortization of deferred revenue related to government grants and fair value lease amortization as of the applicable acquisition date balance sheet.

(4) Costs related to reorganization and plant closures.
(5) Gains or losses incurred due to the sale for fixed assets.
(6) Impairment losses on decommissioned and non saleable fixed assets.
(7) Currency gains or (losses), gains or (losses) on derivatives, other interest costs and contract amortization.
(8) Does not include deferred finance costs included in interest expense.
 

Contacts

Multi Packaging Solutions
Richard Zubek, 646-885-0165
Investor Relations
ir@multipkg.com

Contacts

Multi Packaging Solutions
Richard Zubek, 646-885-0165
Investor Relations
ir@multipkg.com