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Cimpress(CMPR) - 2023 Q2 - Quarterly Report
CMPRCimpress(CMPR)2023-01-25 16:00
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Revenue Performance - Total external revenue for the six months ended December 31, 2022, was 1,548,617,comparedto1,548,617, compared to 1,507,315 for the same period in 2021[164] - North America contributed 765,518tototalexternalrevenueforthesixmonthsendedDecember31,2022,whileEuropecontributed765,518 to total external revenue for the six months ended December 31, 2022, while Europe contributed 698,136[165] - The Print Group segment reported revenue of 166,159forthesixmonthsendedDecember31,2022,comparedto166,159 for the six months ended December 31, 2022, compared to 162,950 in the same period in 2021[164] - National Pen segment revenue was 202,287forthesixmonthsendedDecember31,2022,upfrom202,287 for the six months ended December 31, 2022, up from 193,981 in the same period in 2021[164] - All Other Businesses segment revenue increased to 111,825forthesixmonthsendedDecember31,2022,from111,825 for the six months ended December 31, 2022, from 105,590 in the same period in 2021[164] - Constant-currency revenue increased by 10% (9% excluding acquired companies) for the twelve months ended December 31, 2022[178] - Revenue increased by 3% to 1,548.6millionforthetwelvemonthsendedDecember31,2022[150]−TotalrevenueforthethreemonthsendedDecember31,2022,was1,548.6 million for the twelve months ended December 31, 2022[150] - Total revenue for the three months ended December 31, 2022, was 845.2 million, a 1% decrease year over year, with constant-currency revenue growth of 6%[183] - Reported revenue for the three months ended December 31, 2022 was flat year over year at 89.3million,witha189.3 million, with a 1% decrease compared to the prior year period[205][228] - Constant-currency revenue growth for the Print Group was 11% and 17% for the three and six months ended December 31, 2022, respectively, driven by price increases to address inflationary costs[228] - All Other Businesses' constant-currency revenue growth was 3% and 6% for the three and six months ended December 31, 2022, respectively, with BuildASign's signage products growing at double-digit rates[231] - National Pen's revenue for the three months ended December 31, 2022, was 120.6 million, a 3% decrease compared to 124.7millioninthesameperiodin2021[252]−NationalPen′srevenueforthesixmonthsendedDecember31,2022,was124.7 million in the same period in 2021[252] - National Pen's revenue for the six months ended December 31, 2022, was 202.3 million, a 4% increase compared to 194.0millioninthesameperiodin2021[252]−NationalPen′sconstant−currencyrevenuegrowthforthethreeandsixmonthsendedDecember31,2022,was3194.0 million in the same period in 2021[252] - National Pen's constant-currency revenue growth for the three and six months ended December 31, 2022, was 3% and 11%, respectively, driven by price increases and volume growth in new product categories[252] - Revenue remained flat at 845.2 million for the three months ended December 31, 2022[299] - Vista's organic constant-currency revenue growth was 2% and 5% for the three and six months ended December 31, 2022, respectively[197] - Total external revenue for the three months ended December 31, 2022, was 845.2million,withNorthAmericacontributing845.2 million, with North America contributing 406.3 million, Europe 395.3million,andOtherregions395.3 million, and Other regions 43.6 million[25] Segment Performance - The Print Group segment reported revenue of 166,159forthesixmonthsendedDecember31,2022,comparedto166,159 for the six months ended December 31, 2022, compared to 162,950 in the same period in 2021[164] - National Pen segment revenue was 202,287forthesixmonthsendedDecember31,2022,upfrom202,287 for the six months ended December 31, 2022, up from 193,981 in the same period in 2021[164] - All Other Businesses segment revenue increased to 111,825forthesixmonthsendedDecember31,2022,from111,825 for the six months ended December 31, 2022, from 105,590 in the same period in 2021[164] - Vista's segment EBITDA declined by 35.6millionforthethreemonthsand35.6 million for the three months and 71.8 million for the six months ended December 31, 2022, due to cost inflation and unfavorable product mix[224] - PrintBrothers' constant-currency revenue growth was 20% for the three months and 22% for the six months ended December 31, 2022, driven by new products and price increases[226] - The Print Group's segment EBITDA decreased by 16% for both the three and six months ended December 31, 2022, negatively impacted by currency exchange fluctuations of 1.7millionand1.7 million and 3.9 million, respectively[228][229] - National Pen's segment EBITDA for the three months ended December 31, 2022, was 24.8million,a2224.8 million, a 22% decrease compared to 31.6 million in the same period in 2021[252] - National Pen's segment EBITDA for the six months ended December 31, 2022, was 23.5million,flatcomparedto23.5 million, flat compared to 23.6 million in the same period in 2021[252] - National Pen's segment EBITDA was negatively impacted by 5.2millionand5.2 million and 5.4 million for the three and six months ended December 31, 2022, respectively, due to currency impacts[253] - Consolidated segment EBITDA decreased by 39% and 46% for the three and six months ended December 31, 2022, respectively, with segment EBITDA as a percentage of revenue declining from 20% to 13% and 11%[246] Financial Position and Debt - The company's long-lived assets totaled 490,668asofDecember31,2022,withtheUnitedStatesholdingthelargestportionat490,668 as of December 31, 2022, with the United States holding the largest portion at 83,937[169] - The company's Term Loan B consists of a 795,000trancheanda€300,000tranche,withinterestratestiedtoLIBORandEURIBOR,respectively[122]−TheRevolvingCreditFacilityhasa795,000 tranche and a €300,000 tranche, with interest rates tied to LIBOR and EURIBOR, respectively[122] - The Revolving Credit Facility has a 250,000 limit with interest rates ranging from LIBOR plus 2.50% to 3.00% depending on the company's First Lien Leverage Ratio[122] - The company's First Lien Leverage Ratio must not exceed 3.25 to 1.00 if any loans under the Revolving Credit Facility are outstanding on the last day of any fiscal quarter[152] - Total debt outstanding, net, was 1,689,277asofDecember31,2022,withlong−termdebtat1,689,277 as of December 31, 2022, with long-term debt at 1,679,059[151] - The company had 111.3millionofcashandcashequivalents,111.3 million of cash and cash equivalents, 102.2 million of marketable securities, and 1,707.0millionofdebtasofDecember31,2022[259]−Thecompany′sCreditAgreementhas1,707.0 million of debt as of December 31, 2022[259] - The company's Credit Agreement has 243.7 million unused as of December 31, 2022[240] - As of December 31, 2022, the carrying value of the company's debt was 1,706,972,withafairvalueof1,706,972, with a fair value of 1,530,471, determined using Level 2 inputs under the fair value hierarchy[3] Expenses and Costs - Technology and development expenses increased by 7.5million(117.5 million (11%) for the three months ended December 31, 2022, driven by higher customer demand and compensation costs[187][188] - General and administrative expenses increased by 3.1 million (7%) for the three months ended December 31, 2022, due to higher headcount and inflation-adjusted merit cycles[190] - Restructuring expenses surged to 11,207forthethreemonthsendedDecember31,2022,a3,55011,207 for the three months ended December 31, 2022, a 3,550% increase compared to the prior year period[187] - Interest expense, net, increased by 3.2 million for the three months ended December 31, 2022, primarily due to a 2.1millionaccretionadjustment[193]−Costofrevenueincreasedby2.1 million accretion adjustment[193] - Cost of revenue increased by 31.5 million for the three months and 70.2millionforthesixmonthsendedDecember31,2022,primarilyduetoglobalsupplychainchallenges[186]−Operatingexpensesincreasedby70.2 million for the six months ended December 31, 2022, primarily due to global supply chain challenges[186] - Operating expenses increased by 6.1 million for the three months and 10.6millionforthesixmonthsendedDecember31,2022,duetogrowthinvestmentsandinflation−adjustedmeritincreases[198]−Vista′sadvertisingexpenseincreasedby10.6 million for the six months ended December 31, 2022, due to growth investments and inflation-adjusted merit increases[198] - Vista's advertising expense increased by 3.5 million for the three months and 23.5millionforthesixmonthsendedDecember31,2022,drivenbyhighermid−andupper−funneladvertising[224]−Marketingandsellingexpensesdecreasedby23.5 million for the six months ended December 31, 2022, driven by higher mid- and upper-funnel advertising[224] - Marketing and selling expenses decreased by 3.5 million for the three months ended December 31, 2022, but increased by 22.8millionforthesixmonthsendedDecember31,2022,primarilyduetohigheradvertisingspend[215]−Centralandcorporatecostsincreasedby22.8 million for the six months ended December 31, 2022, primarily due to higher advertising spend[215] - Central and corporate costs increased by 0.9 million and 0.5millionforthethreeandsixmonthsendedDecember31,2022,respectively,duetocompensationincreasesandvolume−relatedtechnologycosts[235]−Costofrevenueincreasedto0.5 million for the three and six months ended December 31, 2022, respectively, due to compensation increases and volume-related technology costs[235] - Cost of revenue increased to 455.4 million (53.9% of revenue) for the three months ended December 31, 2022, up from 423.9million(49.9423.9 million (49.9% of revenue) in the prior year[211] - Restructuring charges of 10.9 million were recognized, primarily related to exiting businesses in Japan and China[296] Cash Flow and Liquidity - Cash from operations decreased by 124.0millionyearoveryear,with124.0 million year over year, with 77.6 million attributed to decreased working capital cash flows[181] - Net cash provided by operating activities for the six months ended December 31, 2022 was 55.9million,asignificantdecreasefrom55.9 million, a significant decrease from 179.9 million in the prior year period[257] - Adjusted free cash flow decreased year over year by 121.1millionforthesixmonthsendedDecember31,2022[208]−Totalpurchasesofproperty,plant,andequipmentdecreasedto121.1 million for the six months ended December 31, 2022[208] - Total purchases of property, plant, and equipment decreased to 14.7 million for the three months ended December 31, 2022, down from 17.9millionintheprioryear[298]TaxesandValuationAllowances−Dilutednetlosspershareincreasedduetoa17.9 million in the prior year[298] Taxes and Valuation Allowances - Diluted net loss per share increased due to a 108.8 million income tax expense, driven by a valuation allowance against Swiss deferred tax assets[206] - Income tax expense increased due to a 116.7millionvaluationallowanceonSwissdeferredtaxassets[220]−Thecompany′seffectivetaxratewas(1,016.3)116.7 million valuation allowance on Swiss deferred tax assets[220] - The company's effective tax rate was (1,016.3)% and (487.6)% for the three and six months ended December 31, 2022, respectively, compared to 23.6% and 34.3% in the prior year periods[243] Commitments and Obligations - Unrecorded commitments under contract totaled 235,619 as of December 31, 2022, including 87,452forthird−partycloudservicesand87,452 for third-party cloud services and 69,588 for inventory and digital service purchases[170] - Total contractual obligations as of December 31, 2022, amounted to 2.59billion,with2.59 billion, with 304.4 million due within one year[238] - The company had unrecorded purchase commitments of 235.6millionasofDecember31,2022,including235.6 million as of December 31, 2022, including 87.5 million for third-party cloud services and 69.6millionforinventoryandfulfillment[239]CurrencyandExchangeRates−Constant−currencyrevenueincreasedby1069.6 million for inventory and fulfillment[239] Currency and Exchange Rates - Constant-currency revenue increased by 10% (9% excluding acquired companies) for the twelve months ended December 31, 2022[178] - Total revenue for the three months ended December 31, 2022, was 845.2 million, a 1% decrease year over year, with constant-currency revenue growth of 6%[183] - Constant-currency revenue growth for the Print Group was 11% and 17% for the three and six months ended December 31, 2022, respectively, driven by price increases to address inflationary costs[228] - All Other Businesses' constant-currency revenue growth was 3% and 6% for the three and six months ended December 31, 2022, respectively, with BuildASign's signage products growing at double-digit rates[231] - National Pen's constant-currency revenue growth for the three and six months ended December 31, 2022, was 3% and 11%, respectively, driven by price increases and volume growth in new product categories[252] - Adjusted EBITDA decreased year over year, with a currency benefit of approximately 6.5millionforthethreemonthsendedDecember31,2022[179]−Ahypothetical106.5 million for the three months ended December 31, 2022[179] - A hypothetical 10% decrease in currency exchange rates would have resulted in a 10.5 million impact on income before taxes for the three months ended December 31, 2022[290] - Currency-related gains, net, were 6.2millionforthethreemonthsendedDecember31,2022,upfrom6.2 million for the three months ended December 31, 2022, up from 5.6 million in the prior year[192] Investments and Fair Value - The company purchased an additional 10% to 11% equity interests in three PrintBrothers businesses for a total of 90,841duringthesecondquarteroffiscalyear2023[156]−Thecompanyholdsinvestmentsclassifiedasheld−to−maturity,primarilyinU.S.TreasurysecuritiesandU.S.governmentagencysecurities,withmaturitiesoftwoyearsorless[8]−ThecompanyappliedthetransitionguidancefromASU2022−06toitstwoTermSOFRinterestrateswapcontracts,withnomaterialimpactonconsolidatedfinancialstatements[15]−TherewerenosignificanttransfersinoroutofLevel1,Level2,andLevel3classificationsduringthesixmonthsendedDecember31,2022[1]−Thecompanyusesathree−levelvaluationhierarchyformeasuringfairvalue,withLevel1beingquotedpricesinactivemarkets,Level2includingobservableinputs,andLevel3involvingunobservableinputs[18]OtherFinancialMetrics−Thecompanyrecognizedaliabilityof90,841 during the second quarter of fiscal year 2023[156] - The company holds investments classified as held-to-maturity, primarily in U.S. Treasury securities and U.S. government agency securities, with maturities of two years or less[8] - The company applied the transition guidance from ASU 2022-06 to its two Term SOFR interest rate swap contracts, with no material impact on consolidated financial statements[15] - There were no significant transfers in or out of Level 1, Level 2, and Level 3 classifications during the six months ended December 31, 2022[1] - The company uses a three-level valuation hierarchy for measuring fair value, with Level 1 being quoted prices in active markets, Level 2 including observable inputs, and Level 3 involving unobservable inputs[18] Other Financial Metrics - The company recognized a liability of 6,838 as of December 31, 2022, related to deferred payments for acquisitions, primarily for Depositphotos[171] - The company estimates that $8,207 will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending December 31, 2023[23] - Weighted average shares outstanding, basic for the three months ended December 31, 2022, was 26,234,747, compared to 26,096,786 for the same period in 2021[14]