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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Multi Packaging Solutions International Limited | NYSE:MPSX | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 18.00 | 0.00 | 01:00:00 |
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 its third quarter ended March 31, 2017.
3Q FY 2017 vs. 3Q FY 2016:
YTD FY 2017 vs. YTD FY 2016:
3Q and Recent Activity
Marc Shore, Chief Executive Officer, commented, “Although we continued to face headwinds in our fiscal 3rd quarter, we are beginning to see progress as a result of the steps we have taken to drive organic growth and operational improvements, which includes new customer contracts. We completed the acquisition of Paris Art Label which enhances our offering to our customers and part of our strategic goals. Finally, we are excited about the previously announced and currently pending merger with WestRock which is expected to take place in the fourth quarter.”
Discussion of Fiscal 2017 Third Quarter Results
GAAP net sales for 3Q FY 2017 were $382.6 million vs. net sales for 3Q FY 2016 of $399.2 million, which includes negative foreign exchange effects in 3Q FY 2017 of $16.1 million when compared to the prior year period. On a segment basis, North American sales decreased $8.4 million from the prior year principally due to the decline in the multi-media market and some weakness in the healthcare market. European sales decreased $9.4 million principally due to foreign exchange. Sales in Europe decreased by $3.7 million for tobacco customers, which was offset by stronger healthcare sales, which on a constant currency basis increased approximately $7.0 million. Asia sales increased $1.2 million principally due to increased demand from certain customers, offset partially by negative foreign exchange effects.
Gross profit percentage in 3Q FY 2017 was 20.8% compared to 21.7% in the prior year. The decline is principally due to incremental restructuring charges recorded in the current period associated with the announced closure of the Montargis facility, the mix of sales and lower sales impacting absorption in the current quarter as compared to the prior year period.
GAAP operating income for 3Q FY 2017 was $19.1 million vs. $26.0 million for 3Q FY 2016. Operating income in the current year period was most significantly impacted by incremental transaction related expenses to the planned merger with WestRock and the aforementioned charges associated with Montargis.
Cash balances as of March 31, 2017 were $63.5 million. Total debt, net of cash, was $845.2 million including deferred finance fees and debt discount of $14.7 million. At March 31, 2017, trailing twelve months acquisition adjusted pro forma EBITDA was $222.3 million, and the pro forma leverage ratio was 3.9.
Acquisition by WestRock Company
On January 24, 2017, the Company and WestRock Company announced that a definitive agreement was reached for WestRock to acquire all of the outstanding shares of MPS for $18.00 per share in cash and the assumption of the Company’s net debt, for a total enterprise value of approximately $2.3 billion. The transaction was approved by MPS’ shareholders at a special meeting on April 5, 2017 and is expected to close in the Company’s fourth fiscal quarter, subject to the receipt of applicable regulatory approvals and other customary closing conditions.
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, Adjusted EBITDA, Free Cash Flow, Adjusted Free Cash Flow and proforma 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, Adjusted EBITDA, Free Cash Flow, Adjusted Free Cash Flow and proforma Adjusted EBITDA may differ from that of others in our industry. These items 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, Adjusted EBITDA, Free Cash Flow, Adjusted Free Cash Flow and proforma 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, except share amounts)
March 31, June 30, 2017 2016 (unaudited) Current assets Cash and cash equivalents $ 63,450 $ 44,769 Accounts receivable, net 240,475 237,179 Inventories 153,872 165,617 Prepaid expenses and other current assets 24,614 30,742 Total current assets 482,411 478,307 Property, plant and equipment Land 48,904 52,093 Buildings and improvements 70,007 65,827 Machinery and equipment 379,016 393,206 Furniture and fixtures 16,012 15,580 Construction in progress 23,397 12,689 Total 537,336 539,395 Less: Accumulated depreciation (167,644) (155,700) Total property, plant and equipment, net 369,692 383,695 Other assets Intangible assets, net 302,379 340,858 Goodwill 475,911 464,714 Deferred income taxes 6,897 7,210 Other assets 32,428 32,806Total assets
$
1,669,718
$
1,707,590
Current liabilities Accounts payable $ 147,893 $ 171,935 Payroll and benefits 34,313 36,977 Other current liabilities 37,483 40,892 Current portion of long-term debt 25,652 7,307 Income taxes payable 5,530 4,489 Total current liabilities 250,871 261,600 Long-term debt, less current portion 883,012 900,516 Deferred income taxes 62,736 72,625 Other long-term liabilities 30,948 29,955 Total liabilities 1,227,567 1,264,696 Shareholders’ equity Authorized share capital – $1.00 par value, 1,000,000,000 shares authorized Preference shares – no shares issued — — Common shares – 77,697,792 and 77,452,946 issued 77,698 77,453 Additional paid-in capital 475,020 469,698 Accumulated deficit (20,355) (43,233) Accumulated other comprehensive loss (90,591) (63,290) Total Multi Packaging Solutions International Limited shareholders’ equity 441,772 440,628 Noncontrolling interest 379 2,266 Total shareholders’ equity 442,151 442,894 Total liabilities and shareholders’ equity $ 1,669,718 $ 1,707,590
Multi Packaging Solutions International Limited And Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended March 31, March 31, 2017 2016 2017 2016 Net sales $ 382,633 $ 399,184 $ 1,176,584 $ 1,287,592 Cost of goods sold 302,977 312,437 929,951 1,005,779 Gross profit 79,656 86,747 246,633 281,813 Selling, general and administrative expenses Selling, general and administrative expenses 57,199 60,259 169,179 178,149 Stock based and deferred compensation expense 726 104 2,260 27,064 Transaction related expenses 2,655 371 3,477 2,785 Total selling, general and administrative expenses 60,580 60,734 174,916 207,998 Operating income 19,076 26,013 71,717 73,815 Other income (expense), net 1,898 (1,262) 7,805 (4,797) Debt extinguishment charges — (64) (16,569) (3,931) Interest expense (11,927) (14,896) (39,472) (49,641) Total other expense, net (10,029) (16,222) (48,236) (58,369) Income before income taxes 9,047 9,791 23,481 15,446 Income tax (expense) benefit 1,234 (6,178) (1,861) (6,753) Consolidated net income 10,281 3,613 21,620 8,693 Net loss attributable to noncontrolling interest 473 170 1,258 180 Net income attributable to shareholders ofMulti Packaging Solutions International Limited $ 10,754 $ 3,783 $ 22,878 $ 8,873 Net income attributable to shareholders ofMulti Packaging Solutions International Limited per share: Basic $ 0.14 $ 0.05 $ 0.29 $ 0.12 Diluted $ 0.14 $ 0.05 $ 0.29 $ 0.12 Weighted-average number of common shares outstanding: Basic 77,696 77,452 77,583 71,076 Diluted 77,696 77,452 77,583 71,076 Other comprehensive income (loss) Cumulative foreign currency translation adjustment $ 10,272 $ (1,192) $ (26,225) $ (22,764) Adjustment on available-for-sale securities 19 111 7 89 Pension adjustments 181 (3,541) (1,083) (2,087) Total other comprehensive loss 10,472 (4,622) (27,301) (24,762) Comprehensive income (loss) 20,753 (1,009) (5,681) (16,069) Comprehensive loss (income) attributable to non-controlling interests 473 — 1,258 (17) Comprehensive income (loss) attributable to shareholders ofMulti Packaging Solutions International Limited $ 21,226 $ (1,009) $ (4,423) $ (16,086)Multi Packaging Solutions International Limited And Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended March 31, 2017 2016 Operating Activities Net income $ 21,620 $ 8,693 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: Depreciation expense 48,587 55,825 Amortization expense 37,798 41,665 Amortization of deferred financing fees 3,073 3,102 Debt extinguishment non-cash charges 3,296 3,931 Deferred income taxes (7,751) (4,496) Stock compensation 1,939 26,044 Unrealized foreign currency (gain) loss (4,554) 2,818 Other (3,991) 1,837 Change in assets and liabilities: Accounts receivable (6,533) (11,887) Inventories 7,793 5,231 Prepaid expenses and other current assets 5,529 355 Other assets (1,604) (7,201) Accounts payable (19,560) (13,495) Payroll and benefits (1,908) (13,110) Other current liabilities (5,339) (10,010) Income taxes payable 876 2,205 Other long-term liabilities (2,007) (2,590) Net cash and cash equivalents provided by operating activities 77,264 88,917 Investing Activities Additions to property, plant and equipment (41,396) (36,719) Additions to intangible assets (104) (265) Proceeds from sale of assets 4,298 2,616 Acquisitions of businesses, net of cash acquired (26,765) (10,685) Net cash and cash equivalents used in investing activities (63,967) (45,053) Financing Activities Proceeds from initial public offering — 186,424 Payments of offering costs — (7,024) Proceeds from issuance of long-term debt 218,900 — Proceeds from short-term borrowings 41,317 44,502 Payments on short-term borrowings (24,317) (43,755) Payments on long-term debt (224,509) (235,627) Debt issuance costs (3,985) — Net cash and cash equivalents provided by (used in) financing activities 7,406 (55,480) Effect of exchange rate changes on cash and cash equivalents (2,022) 2,492 Increase (decrease) in cash and cash equivalents 18,681 (9,124) Cash and cash equivalents—beginning 44,769 55,675 Cash and cash equivalents—ending $ 63,450 $ 46,551Multi Packaging Solutions International Limited And Subsidiaries
Reconciliation of Non‐GAAP Results
Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income
Non-GAAP Adjusted EBITDA Three Months Ended Nine Months Ended March 31, March 31, (amounts in thousands) 2017 2016 2017 2016 Consolidated net income $ 10,281 $ 3,613 $ 21,620 $ 8,693 Depreciation and amortization 28,242 31,452 86,385 97,490 Interest expense 11,927 14,896 39,472 49,641 Income tax expense (1,234) 6,178 1,861 6,753 EBITDA 49,216 56,139 149,338 162,577Adjustments related to operating income
Transaction related expenses 2,655 371 3,477 2,785 Stock based and deferred compensation expenses 726 104 2,260 27,064 Purchase accounting adjustments 372 255 722 878 Restructuring related costs 4,254 693 10,907 4,269 (Gain) loss on sale of fixed assets (1,471) 236 (2,454) 598 Other adjustments to operating income (1,045) (773) (2,608) (2,179) Adjustments related to operating income (A) 5,491 886 12,304 33,415Adjustments related to non-operating income
Foreign currency (gains) losses (1,355) 510 (6,070) 3,850 Debt extinguishment charges — 64 16,569 3,931 Other adjustments to non-operating income (494) 752 (1,686) 1,180 Adjustments related to non-operating income (1,849) 1,326 8,813 8,961 Total adjustments (B) 3,642 2,212 21,117 42,376 Adjusted EBITDA $ 52,858 $ 58,351 $ 170,455 $ 204,953 Pre-acquisition Adjusted EBITDA — 868 1,800 1,590 Proforma Adjusted EBITDA $ 52,858 $ 59,219 $ 172,255 $ 206,543 Non-GAAP Adjusted Operating Income Three Months Ended Nine Months Ended March 31, March 31, (amounts in thousands) 2017 2016 2017 2016 Operating income $ 19,076 $ 26,013 $ 71,717 $ 73,815 Adjustments related to operating income (A) 5,491 886 12,304 33,415 Adjusted operating income $ 24,567 $ 26,899 $ 84,021 $ 107,230 Non-GAAP Adjusted Net Income Three Months Ended Nine Months Ended March 31, March 31, (amounts in thousands, except per share data) 2017 2016 2017 2016 Consolidated net income $ 10,281 $ 3,613 $ 21,620 $ 8,693 Adjustments related to net income (B) 3,642 2,212 21,117 42,376 Tax impact of adjusting entries (4,514) 2,813 (9,467) (5,445) Adjusted net income 9,409 8,638 33,270 45,624 Net loss attributable to noncontrolling interest 473 170 1,258 180 Adjusted net income attributable to shareholders ofMulti Packaging Solutions International Limited $ 9,882 $ 8,808 $ 34,528 $ 45,804 Weighted average number ofcommon shares outstanding – diluted 77,696 77,452 77,583 71,076 Adjusted net income per share $ 0.13 $ 0.11 $ 0.45 $ 0.64Multi Packaging Solutions International Limited And Subsidiaries
Net Sales by Segment and Market
Three Months Ended March 31, (amounts in thousands) 2017 2016 North America Consumer $ 88,339 $ 87,926 Healthcare 72,507 76,977 Multi-Media 24,610 28,963 $ 185,456 $ 193,866 Europe Consumer $ 89,078 $ 96,691 Healthcare 83,071 83,949 Multi-Media 2,979 3,852 $ 175,128 $ 184,492 Asia Consumer $ 16,918 $ 14,961 Healthcare 5,131 5,865 $ 22,049 $ 20,826 Total $ 382,633 $ 399,184Nine Months Ended
March 31, (amounts in thousands) 2017 2016 North America Consumer $ 249,926 $ 255,513 Healthcare 208,419 219,889 Multi-Media 97,820 135,441 $ 556,165 $ 610,843 Europe Consumer $ 300,362 $ 350,391 Healthcare 234,099 238,602 Multi-Media 17,447 17,883 $ 551,908 $ 606,876 Asia Consumer $ 52,009 $ 53,760 Healthcare 16,502 16,113 $ 68,511 $ 69,873 Total $ 1,176,584 $ 1,287,592Multi Packaging Solutions International Limited And SubsidiariesFree Cash Flow and Adjusted Free Cash Flow Reconciliation
The Company defines Free Cash Flow as cash provided by operating activities (a GAAP measure) less capital expenditures, plus proceeds from sale of assets. The Company views Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments and repayment of outstanding borrowings. For the nine and trailing twelve months ended March 31, 2017 and 2016, Free Cash Flow was calculated as follows:
Nine MonthsEnded March 31, Trailing 12 MonthsEnded March 31, (amounts in thousands) 2017 2016 2017 2016 Net cash and cash equivalents provided by operating activities $ 77,264 $ 88,917 $ 121,019 $ 132,313 Additions to property, plant and equipment (41,396) (36,719) (63,631) (58,576) Proceeds from sale of assets 4,298 2,616 5,908 3,561 Free Cash Flow $ 40,166 $ 54,814 $ 63,296 $ 77,298As supplemental information, the Company also provides Adjusted Free Cash Flow, which is defined as Adjusted EBITDA less capital expenditures, plus proceeds from sale of assets, less cash interest paid, cash tax paid, core working capital changes (accounts receivable, accounts payable, inventory) and payments made related to the funding of the UK Field pension plan. The Company views Adjusted Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash generated by the core business operations.
Nine MonthsEnded March 31, Trailing 12 MonthsEnded March 31, (amounts in thousands) 2017 2016 2017 2016 Adjusted EBITDA $ 170,455 $ 204,953 $ 219,805 $ 258,967 Less: Capital Expenditures (41,396) (36,719) (63,631) (58,576) Plus: Proceeds from sale of assets 4,298 2,616 5,908 3,561 Less: Cash Interest (36,398) (46,547) (50,333) (64,555) Less: Cash Taxes (10,651) (10,035) (13,184) (12,087) Less: Change in Core Working Capital (1) (18,300) (20,151) (2,432) 17,831 Less: Pension Payments (2) (1,312) (6,732) (3,460) (8,977) Adjusted Free Cash Flow $ 66,696 $ 87,385 $ 92,673 $ 136,164(1)
Represents the impact of total cash flows associated with the change in accounts receivable, inventory and accounts payable, as per the Consolidated Statements of Cash Flows
(2)
Represents cash payments made for the Field Group Pension Plan in the United Kingdom
View source version on businesswire.com: http://www.businesswire.com/news/home/20170511006268/en/
Multi Packaging SolutionsRichard Zubek, 646-885-0165Investor Relationsir@multipkg.com
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