NEW YORK--MAy 11,2017 ---- 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:
GAAP net sales of $382.6 million vs. $399.2 million
Negative foreign exchange impact of $16.1 million
GAAP operating income of $19.1 million vs. $26.0 million
GAAP net income attributable to MPS of $10.8 million vs. $3.8 million
GAAP net income attributable to MPS of $0.14 per share vs. $0.05 per share
Non GAAP net income attributable to MPS of $9.9 million vs. $8.8 million
Non GAAP net income attributable to MPS of $0.13 per share vs. $0.11 per share
Adjusted EBITDA of $52.9 million vs. $58.4 million
Negative foreign exchange impact of $1.8 million
Adjusted EBITDA margin of 13.8% vs. 14.6%
YTD FY 2017 vs. YTD FY 2016:
GAAP net sales of $1,176.6 million vs. $1,287.6 million
Negative foreign exchange impact of $54.3 million
GAAP operating income of $71.7 million vs. $73.8 million
GAAP net income attributable to MPS of $22.9 million vs. $8.9 million
GAAP net income attributable to MPS of $0.29 per share vs. $0.12 per share
Non GAAP net income attributable to MPS of $34.5 million vs. $45.8 million
Non GAAP net income attributable to MPS of $0.45 per share vs. $0.64 per share
Adjusted EBITDA of $170.5 million vs. $205.0 million
Negative foreign exchange impact of $6.5 million
Adjusted EBITDA margin of 14.5% vs. 15.9%
3Q and Recent Activity
Completed acquisition of Paris Art Label in April
Approximate annual revenue of $26 million
Announced closure of Montargis, France plant
Received shareholder approval for the Agreement and Plan of Merger with WestRock
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.
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