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Cimpress (CMPR) Q4 Loss Wider than Expected, Revenues Beat

Business services provider Cimpress N.V. CMPR reported a wider GAAP loss for the fourth-quarter of fiscal 2017.

GAAP net loss for the quarter was $34.7 million or $1.11 per share against net income of $16.9 million or 51 cents per share in the year-ago quarter. The results were affected by the year-over-year impact of non-operational and non-cash currency on the quarter. The significant year-over-year decline in earnings despite top-line growth was primarily attributable to high operating expenses. The reported loss was wider than the Zacks Consensus Estimate of a loss of 1 cent.

For full fiscal 2017, GAAP net loss was $71.7 million or $2.29 per share against net income of $54.3 million or $1.64 per share in fiscal 2016.

Inside the Headlines

Total revenue in fiscal fourth quarter jumped 18% year over year to $564.3 million, beating the Zacks Consensus Estimate of $559.7 million. Excluding fluctuations from currency exchange rate and revenues from acquisitions during the past one year, revenues increased 9% year over year. For the full fiscal, the company recorded revenues of $2,135.4 million compared with $1,788 million in fiscal 2016. The improvement was primarily owing to better performance in the Upload and Print segment, partially offset by a decline in certain partner revenues.

Cimpress N.V Price, Consensus and EPS Surprise

Segmental Revenues

Revenues from the Vistaprint segment came in at $319.2 million, up from $305 million in the year-ago quarter. The Upload and Print segment’s revenues increased significantly to $161.8 million from $146.5 million in the year-earlier quarter. Revenues from All Other Business increased 6.1% year over year to $29.4 million from $27.7 million in the prior-year quarter.

Gross margin in the reported quarter contracted to 50.5% from 53.7% in the year-ago period. The fall in margin was attributable to lower Vistaprint gross margins due to planned investments and unfavorable currency changes.

Adjusted net operating profit after tax in the reported quarter was $9.6 million, considerably down from $16.9 million in the year-ago quarter.

The company recently entered into an agreement to divest its Albumprinter business, including its FotoKnudsen subsidiary. The company expects the sale to be completed in the first quarter of fiscal 2018.

Balance Sheet and Cash Flow

As of Jun 30, 2017, Cimpress had $25.7 million in cash and cash equivalents and long-term debt of $847.7 million. At quarter end, the company had $211.8 million of borrowing capacity available under its committed credit facility.

In fiscal year 2017, Cimpress had cash and cash equivalents of $77.4 million and long-term debt of $656.8 million.

Capital expenditures in the reported quarter were $17.2 million or 3.1% of revenues. During the quarter, the company generated $33.1 million of cash from operations. The company generated $156.7 million of cash from operations during the full fiscal year. For the full fiscal year, capital expenditures came in at $74.2 million or 3.5% of revenues.

Moving Forward

For fiscal-year 2018, the company is focused on delivering impressive returns from past investment spend. The company expects to invest significantly against its organic growth opportunities which are expected to bring higher unlevered free cash flow in fiscal year 2018.

Cimpress currently has a Zacks Rank #1 (Strong Buy). A few other stocks to consider from the same space are Allegion PLC (ALLE), A. O. Smith Corporation (AOS) and Donaldson Company, Inc. (DCI).

Allegion PLC ALLE, which delivered an average positive earnings surprise of 2.01% in the last four quarters, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Smith (A.O.) Corporation AOS carries a Zacks Rank #2 and delivered an average positive earnings surprise of 4.88% in the last four quarters.

Donaldson Company, Inc. DCI carries a Zacks Rank #2 and came up with an average positive earnings surprise of 3.94% in the last four quarters.

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