Labeling company Multi-Color Corporation (NASDAQ:LABL), a company I recently highlighted as a potential small-cap winner, reported first-quarter earnings on Thursday of $0.17 per share, a penny ahead of revised guidance but $0.08 per share lower than a year ago, on essentially flat sales of $28.8 million. I don't really care for flat finishes (I am a satin finish kind of guy), but the market reacted well, sending the stock up 2.7% to $15.96.

Two things bugged me about the report, though.

First, a major customer postponed $1.2 million of sales. Although that is not a huge number (4% of the quarter's sales), it is still disconcerting. Forty-six percent of the firm's sales come from Procter and Gamble (NYSE:PG) and Limited Brands (NYSE:LTD) (36% and 10%, respectively). The last thing Multi-Color wants is a slow pullback of sales from either of these major customers. I would expect more information about this situation during the conference call.

Secondly, the new gravure press at the company's Scottsburg, Ind., plant is more than a month behind on its installation schedule. It was estimated to be ready in June. CEO Frank Gerace did say he saw orders pick up in the back part of the quarter, but I have to wonder whether the new press not being ready contributed to the postponement. Was there a capacity issue given the company is looking for productivity gains from the new press? I don't think this was the case, but I do not like to see reduced sales and plant issues in the same press release.

Despite these issues, I did see a very positive signal in the press release. The company is back on the strategic acquisition hunt again. In my previous analysis, I noted the 94% reduction in acquisition spending as Multi-Color used capital to solve the Las Vegas problem and install the new press. The fact that the company is back to making acquisitions can mean that it sees enough cash flow to pick the acquisition pace up.

The reason I think this is a good signal is that consolidating a fragmented industry is a great catalyst for growth. In Competitive Strategy, Michael Porter devoted a whole chapter to the topic, and Tyco (NYSE:TYC) is the poster child for doing this well.

Although the improvements are coming slower than I would like, I think they are progressing in the right direction. I want to learn more about the cash flows from the next 10-Q, but I still think the future looks as bright as the labels they supply.

Fool contributor David Meier does not own any of the stocks mentioned.