Image source: Cimpress.
Before we dig deeper, though, let's take a closer look at Cimpress' headline numbers:
Cimpress results: The raw numbers
| Metric |
Fiscal Q2 2016 Actuals |
Fiscal Q2 2015 Actuals |
Growth (YOY) |
|---|---|---|---|
|
Revenue |
$496.3 million |
$439.9 million |
12.8% |
|
GAAP Net Income |
$58.4 million |
$63.6 million |
(8.2%) |
|
GAAP EPS |
$1.80 |
$1.89 |
(4.8%) |
Data source: Cimpress.
What happened this quarter?
- Adjusted net operating profit after tax (NOPAT) rose 23% year over year to $82.5 million
- Revenue growth continued to be held back by foreign currency pressure. On a currency-neutral basis, sales would have climbed 20% year over year.
- Revenue grew 10% year over year excluding both currencies and the contributions of acquired businesses.
- Generated $134 million in operating cash flow, down from $138.2 million in fiscal Q2 last year.
- Generated free cash flow of $109.1 million, which was down from $116 million in the year-ago period, but in line with expectations and investment plans
- GAAP net income declines were largely due to increased interest expenses from Cimpress' March 2015 senior notes offering.
- Vistaprint business-unit revenue climbed 3% on a reported basis (8% at constant currency) to $354.8 million.
- Upload and print business-unit revenue increased 112% (118% on a constant currency basis) to $93.3 million.
- "Other" business-unit revenue fell 4% (but increased 8% on a constant currency basis) to $48.2 million,
- Repurchased 26,585 ordinary Cimpress shares for $2 million, or $74.97 per share.
- Paid down $100 million in debt
- Announced agreement to acquire German web-to-print specialist WIRmachenDRUCK for 140 million euros (approximately $153 million), net of any cash acquired. The deal is expected to close in February, and includes a potential performance-based earn-out of up to 40 million euros (approximately $44 million) payable in early 2018. While it will be "slightly dilutive" to GAAP net income upon closing, it should increase fiscal 2016 revenue, adjusted NOPAT, adjusted EBITDA, and free cash flow relative to current expectations.
What management had to say
CEO Robert Keane stated: "Our second quarter results reflect successful execution in pursuit of long-term value creation. In line with the objectives that we discussed in detail during our August 2015 investor day, we deployed significant capital and resources across a broad group of long-term investments that we believe are expanding our foundation for future success."
CFO Sean Quinn elaborated:
Our financial results this quarter reflected strong holiday sales in the Vistaprint Business Unit, continued success in the Upload and Print segment, and a slower-than-anticipated decline of partnership-related revenue. Despite increased investments in key areas, our operating income and adjusted NOPAT grew year over year. This was due to strength across the business as well as the recovery of $2 million of insurance proceeds included in cost of goods sold related to a previously described fire in our Dutch production facility that affected first-quarter results.
Looking forward
Recall that as it implements its long-term plans to maximize intrinsic value per share, Cimpress no longer provides specific financial guidance. Rather, according to a letter written by Keane to investors last year, management will offer annual updates on the company's "general view of potential organic growth rates," "how we think about value creation," and discretionary growth spending plans for each upcoming fiscal year.
Similar to last quarter, management offered no significant changes to Cimpress' overall outlook. But to build on Keane's prepared statement above, they did confirm that the organic investment spending outlined at its last investor day is "largely on track" so far in fiscal 2016, "though a little lower than expected particularly in capital expenditures." Going forward, Cimpress plans to continue strategically investing to pursue long-term shareholder value creation.
Of course, that won't do much to help analysts who still insist on attempting to accurately forecast Cimpress' financial results. But even putting aside its relative outperformance in this seasonally strong quarter -- consensus estimates predicted lower revenue of $489.2 million and earnings of $1.67 per share -- I think investors should be more than pleased that Cimpress continues to make progress implementing its shareholder-friendly way forward.
