Multi Packaging Solutions International, a global leader in value-added print and packaging solutions for the branded consumer, healthcare, and multi-media markets, announced results for 4Q and Fiscal Year 2016.
4Q FY 2016 vs 4Q FY 2015:
GAAP sales of $373.8 million vs $402.5 million
Negative foreign exchange impact of $6.0 million
GAAP operating income of $10.3 million vs $9.5 million
GAAP net loss attributable to MPS of $6.7 million vs $4.9 million
GAAP net loss attributable to MPS of $0.09 per share vs $0.08 per share
Non GAAP net income attributable to MPS of $2.2 million vs $5.1 million
Non GAAP net income attributable to MPS per share of $0.03 vs $0.08
Adjusted EBITDA of $49.4 million vs $54.0 million
Negative foreign exchange impact of $0.2 million
Adjusted EBITDA margin of 13.2% vs 13.4%
Early debt repayment of $20.0 million in June 2016
FY 2016 vs FY 2015:
GAAP sales of $1.66 billion vs $1.62 billion
Negative foreign exchange impact of $77.2 million
GAAP operating income of $84.1 million vs $71.0 million
GAAP net income attributable to MPS of $2.1 million vs $6.5 million
GAAP net income attributable to MPS of $0.03 per share vs $0.10 per share
Non GAAP net income attributable to MPS of $48.0 million vs $21.7 million
Non GAAP net income attributable to MPS of $0.66 per share vs $0.35 per share
Adjusted EBITDA of $254.3 million vs $231.0 million.
Negative foreign exchange impact of $12.4 million
Adjusted EBITDA margin of 15.3% vs 14.3%.
Early debt repayments totaling $60.0 million in 2016, excluding debt repayments from the IPO proceeds
Marc Shore, Chief Executive Officer, commented, “We had a very successful 2016, notwithstanding some significant challenges. EBITDA was a record $254.3 million despite a negative foreign exchange impact of $12.4 million. EBITDA margin grew by 100 basis points over the prior year to 15.3%.
"The business also generated approximately $109 million of free cash flow which allowed us to make early debt repayments of $60 million. In addition to the challenges of foreign exchange, we were disappointed with top-line sales. This was due to the fact that a number of our core customers’ businesses are below expectations in the current fiscal year."
As we enter fiscal 2017, we are enthusiastic about our prospects. Our facility improvement plan is gaining traction and other measures that we have taken to enhance profitability are also being implemented. The company also remains committed to sourcing strategic and accretive acquisitions and there are several opportunities in the pipeline. However, foreign exchange will continue to be a significant negative impact in fiscal 2017. The Brexit vote has resulted in a meaningful devaluation of the GBP and this will again impact both sales and EBITDA.”
Discussion of Fourth Quarter and Fiscal Year 2016 Results
GAAP net sales for 4Q FY 2016 and fiscal year 2016 were $373.8 million and $1,661.4 million vs net sales for 4Q FY 2015 and fiscal year 2015 of $402.5 million and $1,617.6 million. 4Q FY 2016 and fiscal year 2016 include negative foreign exchange effects of $6.0 million and $77.2 million when compared to the prior period.
On an end market basis, Consumer, Healthcare and Media comprised 48.4%, 44.3% and 7.3% of total net sales in 4Q FY 2016 respectively, and 50.6%, 38.5% and 10.9% of total net sales for the fiscal year ended 2016, respectively.
Net sales in the quarter and for the year to date period were impacted principally due to the foreign exchange effects noted above, as well as a decline in non-toy media sales compared to the prior year ($4.8 million and $36.8 million, respectively), the decline in sales of a Disney toy project where Disney has exited the business ($10.4 million and $30.8 million, respectively), and the decline in UK tobacco sales due to UK tobacco legislation ($3.3 million and $14.2 million, respectively).
The effect of the year over year Disney toy project and the UK tobacco decline is winding down and expected to impact year over year comparisons in 2017 by approximately $11.0 million and $5.9 million, respectively.
For the full fiscal year, gross margins continue to improve. Gross margin for the quarter and for the year to date period were 19.4% and 21.3% respectively, vs 20.6% and 20.5% in the corresponding prior year periods. Included in the 19.4% margin is approximately 170 basis points representing restructuring and plant closure costs.
The improvement is principally due to the Company’s operational focus on plant manufacturing metrics, previously announced and achieved acquisition synergy targets, and appropriate cost savings capital investments.
GAAP operating income for 4Q FY 2016 was $10.3 million, vs $9.5 million for 4Q 2015. GAAP operating income for fiscal 2016 was $84.1 million vs $71.0 million for fiscal 2015. Included in the current fiscal period is approximately $27.0 million of stock compensation recorded in connection with the vesting of shares from the Company’s initial public offering. Excluding this charge, operating income for fiscal 2016 would have been $111.1 million, an increase of $40.1 million or approximately 230 basis points when compared to the same period in the prior year.
GAAP net loss attributable to MPS for 4Q FY 2016 was $6.7 million as compared to $4.9 million for 4Q FY 2015. GAAP net income attributable to MPS for the Fiscal Years 2016 and 2015 were $2.1 million and $6.5 million respectively. GAAP net income in 4Q FY 2016 and Fiscal Year 2016 include negative foreign exchange effects of $0.2 million and $12.4 million. In addition, GAAP net income for YTD 2016 includes the previously mentioned stock compensation expense.
Non GAAP net income attributable to MPS for 4Q FY 2016 and fiscal year 2016 were $2.2 million and $48.0 million vs non GAAP net income attributable to MPS for 4Q FY 2015 and fiscal year 2015 of $5.1 million and $21.7 million.
Adjustments to non GAAP net income are principally net of tax adjustments related to stock compensation expense, restructuring charges associated with plant closures, foreign exchange, expenses associated with acquisition transactions and debt extinguishment related costs.
Adjusted EBITDA for 4Q FY 2016 was $49.4 million (13.2%) vs. $54.0 million (13.4%) in 4Q FY 2015. Adjusted EBITDA for the fiscal year 2016 was $254.3 million (15.3%) vs. $231.0 million (14.3%) in fiscal year 2015.
Adjusted EBITDA margin was driven by the Company’s operational focus on plant manufacturing metrics, previously announced and achieved acquisition synergy targets, and appropriate cost savings capital investments.
Cash balances as of June 30, 2016 were $44.8 million. There were no amounts outstanding under our revolving credit facility. Total debt net of cash was $863.1 million including deferred finance fees and debt discount of $16.1 million. At June 30, 2016, trailing twelve months acquisition adjusted pro forma EBITDA was $255.2 million, and the pro forma leverage ratio was 3.46.
