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Multi-Color Announces Core Earnings Of $0.93 Per Share For September Quarter

The following excerpt is from the company's SEC filing.

CINCINNATI, OHIO, November 9, 2015 Multi-Color Corporation (NASDAQ: LABL) announces: second quarter core earnings per share of $0.93 per diluted share for the fiscal quarter ended September 30, 2015.

Q2 Highlights:

Q2 earnings were resilient, despite FX and organic growth headwinds. Earnings per share growth is still forecasted for the second half as FX headwinds are expected to ease, less impact from price/volume declines, with stronger recent acquisition contributions and added capacity in developing markets, said Nigel Vinecombe, President and CEO of Multi-Color Corporation.

Q2 Develo pments

Key Home and Personal Care customer contracts renewed.

Legacy low margin Food and Beverage customer volumes declined.

FX year over year headwinds reduced organic growth by 6% and $0.04 EPS.

Capex installations in developing markets.

Q3 Developments

Vadis Rodato Promoted to President and Chief Executive Officer and Nigel Vinecombe To Become Executive Chairman.

Australian Wine Label acquisition October 2015, $6 million annual revenues.

North Carolina plant consolidation in second half of FY16 will reduce costs in FY17.

Announcements

Multi-Color Corporation announced today that Vadis Rodato, Global Chief Operating Officer for Wine & Spirit, will succeed Nigel Vinecombe as Multi-Colors President and Chief Executive Officer, effective January 1, 2016. On January 1, 2016, Mr. Vinecombe will become Multi-Colors Executive Chairman. In this role, Mr. Vinecombe will retain direct responsibility for mergers and acquisitions and investor relations activities. Robert Buck, the current Chairman of the Board and a member of the Board since 2003, will continue as a member of the Companys Board.

Mr. Buck said, We thank Nigel Vinecombe for leading Multi-Color since 2010 through unprecedented revenue growth, expansion through acquisitions and improvements in operations. Financial and operating results are strong and sustainable.

Mr. Rodato has global experience running Multi-Color businesses in the USA, Australia, South America and Europe. Mr. Rodato is already based at Multi-Colors headquarters in Cincinnati, Ohio USA and all global executive management roles will report to him.

I asked Vadis to join our group 21 years ago and have watched him succeed in many roles at Multi-Color. He knows our business as well as anyone in our company and has experience

integrating many acquisitions. He is highly respected throughout our global business and we are strongly aligned in the cultural and strategic leadership for the company, said Mr. Vinecombe.

Mr. Rodato will also be appointed to the Companys Board of Directors. In connection with Mr. Rodatos appointment to President and Chief Executive Officer, current North American President for Wine & Spirit, David Buse, has been appointed Chief Operating Officer for Wine & Spirit. Mr. Buse has run the largest Wine & Spirit label business in North America for the last decade and has been with the Multi-Color Group since 2002. He will continue to be based in California.

These changes provide Multi-Color more resources to support both significant growth and improvement plans for the future, while providing continuity in our culture and strategies, said Mr. Vinecombe.

Australian Wine Label acquisition October 2015.

We are pleased to report the 100% acquisition of Supa Stik Labels in Perth, Western Australia from October 1, 2015. Western Australia is a growing independent wine and industrial region requiring local operations. We are delighted General Manager Peter Holywell and team will continue to run the business from their current facility.

Second quarter 2016 highlights:

Net revenues increased 3% to $219.8 million compared to $213.0 million in the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2015 generated an 11% increase or $22.8 million, offset by an organic revenue decrease of 2% primarily due to lower sales in our North American consumer products markets. Foreign exchange rates, primarily driven by depreciation of the Euro and the Australian dollar, led to a 6% decrease in revenues quarter over quarter.

Gross profit increased 2% or $1.0 million compared to the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2015 contributed $4.2 million to the increase partially offset by unfavorable foreign exchange of $1.9 million and lower sales in the quarter. Core gross margins were 21.4% of sales revenues for the current year quarter compared to 21.7% in the prior year quarter.

Selling, general and administrative (SG&A) expenses increased $2.4 million or 15% compared to the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2015 contributed $3.3 million to the increase, partially offset by a decrease of $0.9 million due to the favorable impact of foreign exchange rates. Core SG&A as a percentage of sales was 8.1% in the current year quarter compared to 7.5% in the prior year quarter. Non-core items relate to acquisition and integration expenses in both quarters and were $0.6 million in the current quarter compared to $0.1 million in the prior year quarter.

In October 2015, the Company announced plans to consolidate its manufacturing facilities located in Greensboro, North Carolina into its other existing facilities. The transition has begun and final plant closure is expected within the next several months. In connection with the closure of the Greensboro facility, the Company recorded a $0.7 million non-cash charge related to asset impairments in the current quarter. During the current year quarter and prior year quarters, the Company also recorded facility closure expenses related to the previously announced closures of manufacturing facilities in Norway, Michigan and Watertown, Wisconsin of $(0.3) million and $5.2 million, respectively.

Operating income increased $4.4 million or 18% to $28.2 million compared to $23.9 million in the prior year quarter. Core operating income decreased $0.9 million or 3% to $29.3 million compared to $30.2 million in the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2015 contributed $0.9 million to operating income. Core

operating profit in the current quarter was impacted by unfavorable foreign exchange of $0.9 million and lower gross profit primarily due to lower sales in North America. Non-core items in the current quarter relate to acquisition and integration expenses of $0.6 million and facility closure expenses of $0.5 million.

Interest expense increased $0.7 million or 12% compared to the prior year quarter. The increase is primarily due to an increase in debt borrowings to finance acquisitions. The Company had $522.2 million of debt at September 30, 2015 compared to $459.8 million at September 30, 2014.

The effective tax rate decreased to 24% in the current year quarter from 38% in the prior year quarter primarily due to a non-core item relating to the release of a valuation allowance on a foreign deferred tax asset of $1.7 million. The effective tax rate on core net income was 31% in the current year quarter compared to 37% in the prior year quarter primarily due to the geographical mix of worldwide earnings. The Company expects its annual core effective tax rate to be approximately 30% in fiscal 2016.

Net income attributable to Multi-Color increased 47% to $16.6 million in current year quarter compared to $11.3 million in the prior year quarter. Core net income increased to...


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