UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2018
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-16148
Multi-Color Corporation
(Exact name of Registrant as specified in its charter)
OHIO | 31-1125853 | |
(State or Other Jurisdiction of | (IRS Employer | |
Incorporation or Organization) | Identification No.) |
4053 Clough Woods Dr.
Batavia, Ohio 45103
(Address of Principal Executive Offices)
Registrants Telephone Number (513) 381-1480
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated Filer | ☒ | Accelerated Filer | ☐ | |||||
Non-accelerated Filer | ☐ | Smaller reporting company | ☐ | |||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date.
Common shares, no par value 20,496,727 (as of July 31, 2018)
FORM 10-Q
CONTENTS
2
Forward-Looking Statements
This report contains certain statements that are not historical facts that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and that are intended to be covered by the safe harbors created by that Act. All statements contained in this Form 10-Q other than statements of historical fact are forward-looking statements. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words may, continue, estimate, intend, plan, will, believe, project, expect, anticipate and similar expressions (as well as the negative versions thereof) may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. With respect to the forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Such forward-looking statements speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made.
Statements concerning expected financial performance, on-going business strategies, and possible future actions which the Company intends to pursue in order to achieve strategic objectives constitute forward-looking information. Implementation of these strategies and the achievement of such financial performance are each subject to numerous conditions, uncertainties and risk factors. Factors which could cause actual performance by the Company to differ materially from these forward-looking statements include, without limitation: factors discussed in conjunction with a forward-looking statement; changes in global economic and business conditions; changes in business strategies or plans; raw material cost pressures; availability of raw materials; availability to pass raw material cost increases to our customers; interruption of business operations; changes in, or the failure to comply with, government regulations, legal proceedings and developments, including, but not limited to, tax law changes; acceptance of new product offerings, services and technologies; new developments in packaging; our ability to effectively manage our growth and execute our long-term strategy; our ability to manage foreign operations and the risks involved with them, including compliance with applicable anti-corruption laws; currency exchange rate fluctuations; tariffs and tradewars; our ability to manage global political uncertainty; terrorism and political unrest; increases in general interest rate levels and credit market volatility affecting our interest costs; competition within our industry; our ability to consummate and successfully integrate acquisitions; our ability to recognize the benefits of acquisitions, including potential synergies and cost savings; failure of an acquisition or acquired company to achieve its plans and objectives generally; risk that proposed or consummated acquisitions may disrupt operations or pose difficulties in employee retention or otherwise affect financial or operating results; risk that some of our goodwill may be or later become impaired; the success and financial condition of our significant customers; our ability to maintain our relationship with our significant customers; dependence on information technology; our ability to market new products; our ability to maintain an effective system of internal control; ongoing claims, lawsuits and governmental proceedings, including environmental proceedings; availability, terms and developments of capital and credit; dependence on key personnel; quality of management; our ability to protect our intellectual property and the potential for intellectual property litigation; employee benefit costs; and risk associated with significant leverage. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition to the factors described in this paragraph and Part II, Item 1A of this Quarterly Report on Form 10-Q, Part I, Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2018 contains a list and description of uncertainties, risks and other matters that may affect the Company.
3
Item 1. | Condensed Consolidated Financial Statements (unaudited) |
MULTI-COLOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
Three Months Ended | ||||||||
June 30, 2018 |
June 30, 2017 |
|||||||
Net revenues |
$ | 456,131 | $ | 242,440 | ||||
Cost of revenues |
368,121 | 192,983 | ||||||
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Gross profit |
88,010 | 49,457 | ||||||
Selling, general and administrative expenses |
42,768 | 23,589 | ||||||
Facility closure expenses |
27 | 34 | ||||||
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Operating income |
45,215 | 25,834 | ||||||
Interest expense |
19,199 | 6,335 | ||||||
Other expense, net |
1,044 | 1,199 | ||||||
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Income before income taxes |
24,972 | 18,300 | ||||||
Income tax expense |
6,880 | 4,158 | ||||||
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Net income |
18,092 | 14,142 | ||||||
Less: Net income (loss) attributable to noncontrolling interests |
(47 | ) | 36 | |||||
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|
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Net income attributable to Multi-Color Corporation |
$ | 18,139 | $ | 14,106 | ||||
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Weighted average shares and equivalents outstanding: |
||||||||
Basic |
20,439 | 16,943 | ||||||
Diluted |
20,545 | 17,152 | ||||||
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|
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Basic earnings per common share |
$ | 0.89 | $ | 0.83 | ||||
Diluted earnings per common share |
$ | 0.88 | $ | 0.82 | ||||
Dividends per common share |
$ | 0.05 | $ | 0.05 | ||||
|
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|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
4
MULTI-COLOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands)
Three Months Ended | ||||||||
June 30, 2018 |
June 30, 2017 |
|||||||
Net income |
$ | 18,092 | $ | 14,142 | ||||
Other comprehensive income (loss): |
||||||||
Unrealized foreign currency translation gain (loss) (1) |
(83,933 | ) | 19,064 | |||||
Unrealized gain on derivative contracts, net of tax (2) |
16,758 | | ||||||
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|
|
|
|||||
Total other comprehensive income (loss) |
(67,175 | ) | 19,064 | |||||
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|
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Comprehensive income (loss) |
(49,083 | ) | 33,206 | |||||
Less: comprehensive loss attributable to noncontrolling interests |
(1,460 | ) | (30 | ) | ||||
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|
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Comprehensive income (loss) attributable to Multi-Color Corporation |
$ | (47,623 | ) | $ | 33,236 | |||
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|
(1) | The amounts for the three months ended June 30, 2018 and 2017 include tax impacts of $2,541 and $(284), respectively, related to the settlement of foreign currency denominated intercompany loans. |
(2) | Amount is net of tax of $(5,608) for the three months ended June 30, 2018. |
See accompanying Notes to Condensed Consolidated Financial Statements.
5
MULTI-COLOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except per share data)
June 30, 2018 | March 31, 2018 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 59,878 | $ | 67,708 | ||||
Accounts receivable, net of allowance of $2,945 and $2,704 at June 30, 2018 and March 31, 2018, respectively |
301,184 | 306,542 | ||||||
Other receivables |
24,014 | 16,589 | ||||||
Inventories, net |
143,682 | 167,950 | ||||||
Prepaid expenses |
21,193 | 24,926 | ||||||
Other current assets |
44,527 | 17,468 | ||||||
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|
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Total current assets |
594,478 | 601,183 | ||||||
Property, plant and equipment, net of accumulated depreciation of $245,932 and $235,980 at June 30, 2018 and March 31, 2018, respectively |
503,470 | 510,002 | ||||||
Goodwill |
1,140,614 | 1,196,634 | ||||||
Intangible assets, net |
564,648 | 580,233 | ||||||
Other non-current assets |
13,094 | 12,097 | ||||||
Deferred income tax assets |
2,739 | 2,827 | ||||||
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Total assets |
$ | 2,819,043 | $ | 2,902,976 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 22,771 | $ | 20,864 | ||||
Accounts payable |
185,341 | 192,341 | ||||||
Accrued expenses and other liabilities |
93,820 | 114,022 | ||||||
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Total current liabilities |
301,932 | 327,227 | ||||||
Long-term debt |
1,581,974 | 1,577,821 | ||||||
Deferred income tax liabilities |
152,544 | 149,950 | ||||||
Other liabilities |
68,028 | 87,605 | ||||||
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Total liabilities |
2,104,478 | 2,142,603 | ||||||
Commitments and contingencies |
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Stockholders equity: |
||||||||
Preferred stock, no par value, 1,000 shares authorized, no shares outstanding |
| | ||||||
Common stock, no par value, stated value of $0.10 per share; 40,000 shares authorized, 20,804 and 20,753 shares issued at June 30, 2018 and March 31, 2018, respectively |
1,406 | 1,403 | ||||||
Paid-in capital |
403,984 | 402,252 | ||||||
Treasury stock, 309 and 307 shares at cost at June 30, 2018 and March 31, 2018, respectively |
(11,655 | ) | (11,528 | ) | ||||
Retained earnings |
404,477 | 384,671 | ||||||
Accumulated other comprehensive loss |
(85,003 | ) | (19,241 | ) | ||||
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|
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Total stockholders equity attributable to Multi-Color Corporation |
713,209 | 757,557 | ||||||
Noncontrolling interests |
1,356 | 2,816 | ||||||
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Total stockholders equity |
714,565 | 760,373 | ||||||
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Total liabilities and stockholders equity |
$ | 2,819,043 | $ | 2,902,976 | ||||
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See accompanying Notes to Condensed Consolidated Financial Statements.
6
MULTI-COLOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(unaudited)
(in thousands)
Accumulated | ||||||||||||||||||||||||||||||||
Common Stock | Other | |||||||||||||||||||||||||||||||
Shares Issued |
Amount | Paid-In Capital |
Treasury Stock |
Retained Earnings |
Comprehensive Loss |
Noncontrolling Interests |
Total | |||||||||||||||||||||||||
March 31, 2018 |
20,753 | $ | 1,403 | $ | 402,252 | $ | (11,528 | ) | $ | 384,671 | $ | (19,241 | ) | $ | 2,816 | $ | 760,373 | |||||||||||||||
Net income |
18,139 | (47 | ) | 18,092 | ||||||||||||||||||||||||||||
Topic 606 transition adjustment |
2,701 | | | 2,701 | ||||||||||||||||||||||||||||
Other comprehensive income |
(65,762 | ) | (1,413 | ) | (67,175 | ) | ||||||||||||||||||||||||||
Issuance of common stock |
27 | 3 | 598 | 601 | ||||||||||||||||||||||||||||
Restricted stock grant |
12 | | ||||||||||||||||||||||||||||||
Conversion of restricted share units |
12 | | ||||||||||||||||||||||||||||||
Stock-based compensation |
1,134 | 1,134 | ||||||||||||||||||||||||||||||
Shares acquired under employee plans |
(127 | ) | (127 | ) | ||||||||||||||||||||||||||||
Common stock dividends |
(1,034 | ) | (1,034 | ) | ||||||||||||||||||||||||||||
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June 30, 2018 |
20,804 | $ | 1,406 | $ | 403,984 | $ | (11,655 | ) | $ | 404,477 | $ | (85,003 | ) | $ | 1,356 | $ | 714,565 | |||||||||||||||
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See accompanying Notes to Condensed Consolidated Financial Statements.
7
MULTI-COLOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended | ||||||||
June 30, 2018 | June 30, 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 18,092 | $ | 14,142 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
17,902 | 8,492 | ||||||
Amortization of intangible assets |
10,410 | 3,604 | ||||||
Amortization of deferred financing costs |
1,275 | 404 | ||||||
Net (gain)/loss on disposal of property, plant and equipment |
(754 | ) | 223 | |||||
Net (gain) on derivative contracts |
(243 | ) | | |||||
Stock-based compensation expense |
1,134 | 910 | ||||||
Deferred income taxes, net |
(58 | ) | 191 | |||||
Changes in assets and liabilities, net of acquisitions: |
||||||||
Accounts receivable |
(9,234 | ) | 239 | |||||
Inventories |
(3,592 | ) | (5,053 | ) | ||||
Prepaid expenses and other assets |
(6,652 | ) | 3,049 | |||||
Accounts payable |
11,279 | (4,092 | ) | |||||
Accrued expenses and other liabilities |
(15,831 | ) | (6,964 | ) | ||||
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Net cash provided by operating activities |
23,728 | 15,145 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Capital expenditures |
(33,955 | ) | (10,272 | ) | ||||
Proceeds from sale of property, plant and equipment |
1,138 | 195 | ||||||
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Net cash used in investing activities |
(32,817 | ) | (10,077 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Borrowings under revolving lines of credit |
120,135 | 58,539 | ||||||
Payments under revolving lines of credit |
(108,303 | ) | (63,279 | ) | ||||
Repayment of long-term debt |
(4,169 | ) | (706 | ) | ||||
Payment of acquisition related deferred payments |
(964 | ) | | |||||
Proceeds from issuance of common stock |
475 | 1,080 | ||||||
Dividends paid |
(1,022 | ) | (1,126 | ) | ||||
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Net cash provided by/(used in) financing activities |
6,152 | (5,492 | ) | |||||
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Effect of foreign exchange rate changes on cash |
(4,893 | ) | 1,086 | |||||
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Net increase/(decrease) in cash and cash equivalents |
(7,830 | ) | 662 | |||||
Cash and cash equivalents, beginning of period |
67,708 | 25,229 | ||||||
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Cash and cash equivalents, end of period |
$ | 59,878 | $ | 25,891 | ||||
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See accompanying Notes to Condensed Consolidated Financial Statements.
See Note 15 for supplemental cash flow disclosures.
8
MULTI-COLOR CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in thousands, except for statistical and per share data)
1. Description of Business and Significant Accounting Policies
The Company
Multi-Color Corporation (Multi-Color, MCC, we, us, our or the Company), headquartered near Cincinnati, Ohio, is a leader in global label solutions supporting a number of the worlds most prominent brands including leading producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in the North American, Latin American, EMEA (Europe, Middle East and Africa) and Asia Pacific regions with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed, and Aluminum Labels.
Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures are adequate to make the information presented not misleading. A description of the Companys significant accounting policies is included in the Companys Annual Report on Form 10-K for the year ended March 31, 2018 (the 2018 10-K). These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the 2018 10-K.
The information furnished in these condensed consolidated financial statements reflects all estimates and adjustments which are, in the opinion of management, necessary to present fairly the results for the interim periods reported.
The condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain prior period balances have been reclassified to conform to current year classifications.
Use of Estimates in Financial Statements
In preparing financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
New Accounting Pronouncements
In the first quarter of fiscal 2019, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all related amendments, which provides revised guidance for revenue recognition. We adopted this guidance using the modified retrospective transition method, which means that periods beginning in fiscal 2019 are reported under this guidance while prior periods continue to be reported under previous guidance. See Note 2.
In February 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220), which permits the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the Tax Act) from accumulated other comprehensive income (AOCI) to retained earnings. This new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. Early adoption is permitted, and the update must be applied either at the beginning of the period of adoption or retrospectively to each period in which the effects of the Tax Act related to items remaining in AOCI are recognized. The Company is currently evaluating the impact of this update on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other, which simplifies the accounting for goodwill impairment. This update removes step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting units carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, which for the Company is any annual or interim goodwill impairment tests performed after April 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of this update on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, Business Combinations, which revises the definition of a business. The FASBs new framework assists entities in evaluating whether a set (integrated set of assets and activities) should be accounted for as an acquisition of a business or a group of assets. The framework adds an initial screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen is met, the set is not a business. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2018. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Companys consolidated financial statements.
9
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The specific issues addressed include debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination and separately identifiable cash flows and application of the predominance principle. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2018. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Companys consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases, which requires that lessees recognize almost all leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, leases will be classified as either finance leases or operating leases. This update is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. The Company is currently evaluating the impact of this standard on its consolidated financial statements, which will include an increase in both assets and liabilities relating to its leasing activities.
No other new accounting pronouncement issued or effective during the three months ended June 30, 2018 had or is expected to have a material impact on the condensed consolidated financial statements.
Supply Chain Financing
The Company has entered into supply chain financing agreements with certain customers and factoring arrangements with certain banks. The receivables for the agreements are sold without recourse to the customers banks and are accounted for as sales of accounts receivable. Losses on the sale of these receivables are included in selling, general and administrative expenses in the condensed consolidated statements of income, and losses of $510 and $235 were recorded for the three months ended June 30, 2018 and 2017, respectively.
2. Revenue Recognition
On April 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all related amendments, which provides revised guidance for revenue recognition. The standards core principle is that an entity should recognize the revenue for transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard defines a five-step process to recognize revenue and requires more judgment and estimates within the revenue recognition process than required under previous U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation.
We adopted the standard by applying the modified retrospective method to all contracts that were not completed as of the adoption date. The aggregate effect of any modifications to those contracts was reflected in identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the price to the satisfied and unsatisfied performance obligations as of the adoption date. Accordingly, the comparative statement of income and comparative balance sheet have not been restated.
Adjustments due to ASU 2014-09 were as follows:
Balance at March 31, 2018 |
Adjustments | Balance at April 1, 2018 |
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Assets: |
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Accounts receivable, net |
$ | 306,542 | $ | 253 | $ | 306,795 | ||||||
Inventories, net |
167,950 | (18,286 | ) | 149,664 | ||||||||
Other current assets |
17,468 | 21,657 | 39,125 | |||||||||
Liabilities and Stockholders Equity: |
||||||||||||
Accrued expenses and other liabilities |
$ | 114,022 | $ | (215 | ) | $ | 113,807 | |||||
Deferred income tax liabilities |
149,950 | 1,125 | 151,075 | |||||||||
Accumulated other comprehensive loss |
(19,241 | ) | 13 | (19,228 | ) | |||||||
Retained earnings |
384,671 | 2,701 | 387,372 |
Revenue is generated through the sale of products created to meet the packaging needs of our customers, culminating in a single performance obligation to produce labels with no alternate use, and revenue is recorded in an amount that reflects the net consideration that we expect to receive. Prices for our products are based on agreed upon rates with customers and do not include financing components or noncash consideration. The amount of consideration we receive and revenue we recognize is variable for certain customers and is impacted by incentives, including rebates, which are generally tied to achievement of certain sales volume levels.
10
We recognize revenue when obligations under the terms of a contract with our customer are satisfied, in an amount that reflects the consideration we expect to receive in exchange for the product. Depending on the terms of the agreement with the customer, we recognize revenue either at a point-in-time (at shipment or delivery depending on agreed upon terms) or over-time when the Company has an enforceable right to payment for performance completed to date.
We believe the costs incurred method is the best method to recognize our over-time revenue as costs incurred are proportionate to progress achieved in satisfying our performance obligations.
The Company also has bill and hold arrangements with certain customers. For these arrangements, control over the product occurs when the product is ready for physical transfer to the customer, as we have a present right to payment, the customer can direct the use of the product (i.e., request shipment to its facility), and legal title has passed to the customer. Revenue is recognized at the time the product is produced and we have transferred control to the customer.
Payment terms typically range from 30-90 days, based upon agreed upon terms with the customer.
Taxes assessed by a governmental authority that we collect from our customers that are both imposed on and concurrent with our revenue producing activities (such as sales tax, value-added tax, and excise taxes) are excluded from revenue. Shipping and handling costs incurred after control of the product is transferred to our customers are treated as fulfillment costs and not a separate performance obligation.
MCC records contract assets when revenue is recognized but we have not yet invoiced the customer. This occurs when costs are incurred for the production of labels for over-time customers but the associated revenues have not been billed to the customer or when prepress costs related to fulfillment and completion of labels are incurred but the associated revenues for those labels have not been billed to the customer. Contract liabilities are recorded for expected shipping and handling charges for revenue recognized from over-time customers and billings to customers for prepress items to be utilized in the fulfilment and completion of labels that have not yet been fully utilized in the production process.
Balance sheet location |
June 30, 2018 | April 1, 2018 | ||||||||
Contract assets |
Other current assets | $ | 32,948 | $ | 31,001 | |||||
Contract liabilities |
Accrued expenses and other liabilities | (8,112 | ) | (7,442 | ) | |||||
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Net contract assets and liabilities |
$ | 24,836 | $ | 23,559 | ||||||
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MCC recognized revenues of $4,445 during the three months ended June 30, 2018 that were included in contract liabilities as of March 31, 2018 and fully expects the $8,112 of contract liabilities as of June 30, 2018 to be recognized as revenue within six months.
We elected the practical expedient to disregard the possible existence of a significant financing component related to payment on contracts as part of the adoption of ASU 2014-09, as we expect that customers will pay for the products within one year. Additionally, as all contracts are expected to have an original duration of one year or less, we elected the practical expedient to exclude disclosure of information regarding the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period.
The following table summarizes the June 30, 2018 condensed consolidated statement of income and condensed consolidated balance sheet as if ASU 2014-09 had not been adopted and the adjustment required upon adoption of ASU 2014-09.
11
Three Months Ended June 30, 2018 | ||||||||||||
As Reported | Adjustments | Previous Standard | ||||||||||
Condensed Consolidated Statement of Income: |
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Net revenues |
$ | 456,131 | $ | (958 | ) | $ | 455,173 | |||||
Cost of revenues |
368,121 | (776 | ) | 367,345 | ||||||||
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Gross profit |
88,010 | (182 | ) | 87,828 | ||||||||
Selling, general and administrative expenses |
42,768 | (19 | ) | 42,749 | ||||||||
Operating income |
45,215 | (163 | ) | 45,052 | ||||||||
Income tax expense |
6,880 | (41 | ) | 6,839 | ||||||||
Net income |
18,092 | (122 | ) | 17,970 |
As of June 30, 2018 | ||||||||||||
As Reported | Adjustments | Previous Standard | ||||||||||
Condensed Consolidated Balance Sheet: |
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Assets: |
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Accounts receivable, net |
$ | 301,184 | $ | (293 | ) | $ | 300,891 | |||||
Inventories, net |
143,682 | 19,051 | 162,733 | |||||||||
Other current assets |
44,527 | (22,470 | ) | 22,057 | ||||||||
Liabilities and Stockholders Equity: |
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Accrued expenses and other liabilities |
$ | 93,820 | $ | 287 | $ | 94,107 | ||||||
Deferred income tax liabilities |
152,544 | (1,166 | ) | 151,378 | ||||||||
Accumulated other comprehensive loss |
(85,003 | ) | (10 | ) | (85,013 | ) | ||||||
Retained earnings |
404,477 | (2,823 | ) | 401,654 |
The following table presents our net revenues disaggregated by region and timing of revenue recognition for the three months ended June 30, 2018.
June 30, 2018 | ||||||||
Point-in-time | Over-time | |||||||
North America |
$ | 148,764 | $ | 58,065 | ||||
Europe |
180,275 | 1,053 | ||||||
Asia Pacific and Africa |
60,832 | 735 | ||||||
South America |
6,407 | | ||||||
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Total |
$ | 396,278 | $ | 59,853 | ||||
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3. Earnings Per Common Share
Basic earnings per common share (EPS) is computed by dividing net income attributable to Multi-Color Corporation by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Multi-Color Corporation by the sum of the weighted average number of common shares outstanding during the period plus, if dilutive, potential common shares outstanding during the period. Potential common shares outstanding during the period consist of restricted shares, restricted share units, and the incremental common shares issuable upon the exercise of stock options and are reflected in diluted EPS by application of the treasury stock method.
The following is a reconciliation of the number of shares used in the basic EPS and diluted EPS computations:
Three Months Ended | ||||||||||||||||
June 30, 2018 | June 30, 2017 | |||||||||||||||
Per Share | Per Share | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Basic EPS |
20,439 | $ | 0.89 | 16,943 | $ | 0.83 | ||||||||||
Effect of dilutive securities |
106 | (0.01 | ) | 209 | (0.01 | ) | ||||||||||
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Diluted EPS |
20,545 | $ | 0.88 | 17,152 | $ | 0.82 | ||||||||||
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12
The Company excluded 279 and 21 options to purchase shares in the three months ended June 30, 2018 and 2017, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect.
4. Inventories
The Companys inventories consisted of the following:
June 30, 2018 | March 31, 2018 | |||||||
Finished goods |
$ | 58,501 | $ | 80,845 | ||||
Work-in-process |
20,853 | 21,156 | ||||||
Raw materials |
64,328 | 65,949 | ||||||
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Total inventories, net |
$ | 143,682 | $ | 167,950 | ||||
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5. Debt
The components of the Companys debt consisted of the following:
June 30, 2018 | March 31, 2018 | |||||||||||||||||||||||
Unamortized | Debt Less | Unamortized Debt | Debt Less | |||||||||||||||||||||
Debt Issuance | Unamortized Debt | Issuance | Unamortized Debt | |||||||||||||||||||||
Principal | Costs | Issuance Costs | Principal | Costs | Issuance Costs | |||||||||||||||||||
6.125% Senior Notes (1) |
$ | 250,000 | $ | (2,979 | ) | $ | 247,021 | $ | 250,000 | $ | (3,148 | ) | $ | 246,852 | ||||||||||
4.875% Senior Notes (1) |
600,000 | (9,379 | ) | 590,621 | 600,000 | (9,699 | ) | 590,301 | ||||||||||||||||
New Credit Agreement |
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Term Loan A Facility (2) |
146,250 | (3,779 | ) | 142,471 | 148,125 | (3,996 | ) | 144,129 | ||||||||||||||||
Term Loan B Facility (3) |
497,500 | (6,041 | ) | 491,459 | 498,750 | (6,280 | ) | 492,470 | ||||||||||||||||
U.S. Revolving Credit Facility (4) |
64,380 | (5,145 | ) | 59,235 | 56,945 | (5,442 | ) | 51,503 | ||||||||||||||||
Australian Revolving Sub-Facility (4) |
33,706 | (572 | ) | 33,134 | 33,033 | (605 | ) | 32,428 | ||||||||||||||||
Capital leases |
33,886 | | 33,886 | 36,288 | | 36,288 | ||||||||||||||||||
Other subsidiary debt |
6,918 | | 6,918 | 4,714 | | 4,714 | ||||||||||||||||||
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Total debt |
1,632,640 | (27,895 | ) | 1,604,745 | 1,627,855 | (29,170 | ) | 1,598,685 | ||||||||||||||||
Less current portion of debt |
(22,771 | ) | | (22,771 | ) | (20,864 | ) | | (20,864 | ) | ||||||||||||||
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Total long-term debt |
$ | 1,609,869 | $ | (27,895 | ) | $ | 1,581,974 | $ | 1,606,991 | $ | (29,170 | ) | $ | 1,577,821 | ||||||||||
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(1) | The 6.125% Senior Notes are due on December 1, 2022. The 4.875% Senior Notes are due on November 1, 2025. |
(2) | Under the New Credit Agreement, the Company is required to make mandatory principal payments on the outstanding borrowings under the Term Loan A Facility. The principal payments are due on the last day of March, June, September and December of each year, commencing on March 31, 2018 through the maturity date of October 31, 2022. |
(3) | Under the New Credit Agreement, the Company is required to make mandatory principal payments on the outstanding borrowings under the Term Loan B Facility. The principal payments are due on the last day of March, June, September and December of each year, commencing on March 31, 2018 through the maturity date of October 31, 2024. |
(4) | Borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility, which were issued under the New Credit Agreement, mature on October 31, 2022. |
The carrying value of debt under the New Credit Agreement approximates fair value. The fair value of the Senior Notes is based on observable inputs, including quoted market prices (Level 2). The fair values of the 4.875% Senior Notes and 6.125% Senior Notes were approximately $556,500 and $255,625, respectively, as of June 30, 2018. The fair values of the 4.875% Senior Notes and 6.125% Senior Notes were approximately $564,000 and $258,750, respectively, as of March 31, 2018.
The following is a schedule of future annual principal payments as of June 30, 2018:
13
Debt | Capital Leases | Total | ||||||||||
July 2018 - June 2019 |
$ | 18,946 | $ | 3,825 | $ | 22,771 | ||||||
July 2019 - June 2020 |
14,546 | 3,388 | 17,934 | |||||||||
July 2020 - June 2021 |
18,268 | 3,002 | 21,270 | |||||||||
July 2021 - June 2022 |
23,870 | 1,855 | 25,725 | |||||||||
July 2022 - June 2023 |
450,622 | 1,963 | 452,585 | |||||||||
Thereafter |
1,072,502 | 19,853 | 1,092,355 | |||||||||
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Total |
$ | 1,598,754 | $ | 33,886 | $ | 1,632,640 | ||||||
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Senior Secured Credit Facility
In conjunction with the Constantia Labels acquisition, effective October 31, 2017 the Company entered into a credit agreement (the New Credit Agreement) with various lenders. The New Credit Agreement replaced the Companys previous credit agreement and consists of (i) a senior secured first lien term loan A facility (the Term Loan A Facility) in an aggregate principal amount of $150,000 with a five year maturity, (ii) a senior secured first lien term loan B facility (the Term Loan B Facility) in an aggregate principal amount of $500,000 with a seven year maturity, and (iii) a senior secured first lien revolving credit facility (the Revolving Credit Facility) in an aggregate principal amount up to $400,000, comprised of a $360,000 U.S. revolving credit facility (the U.S. Revolving Credit Facility) and a $40,000 U.S. Dollar equivalent Australian sub-facility (the Australian Revolving Sub-Facility), each with a five year maturity.
The New Credit Agreement contains customary mandatory and optional prepayment provisions and customary events of default. The New Credit Agreements Term Loan A Facility, Term Loan B Facility and U.S. Revolving Credit Facility (together, the U.S. facilities) are guaranteed by substantially all of the Companys direct and indirect wholly owned domestic subsidiaries, and such guarantors pledged substantially all their assets as collateral to secure the U.S. facilities. The Australian Revolving Sub-Facility is secured by substantially all of the assets of the Australian borrower and its direct and indirect subsidiaries.
The New Credit Agreement can be used for working capital, capital expenditures and other corporate purposes and to fund permitted acquisitions (as defined in the New Credit Agreement). Loans under the New Credit Agreement bear interest at variable rates plus a margin, based on the Companys consolidated secured net leverage ratio.
The weighted average interest rates on the Companys borrowings are as follows:
June 30, 2018 | March 31, 2018 | |||||||
Term Loan A Facility |
4.09 | % | 4.13 | % | ||||
Term Loan B Facility |
4.34 | % | 4.13 | % | ||||
U.S. Revolving Credit Facility |
4.06 | % | 4.42 | % | ||||
Australian Revolving Sub-Facility |
4.07 | % | 4.13 | % |
The New Credit Agreement contains customary representations and warranties as well as customary negative and affirmative covenants, which require the Company to maintain the following financial covenants at the end of each quarter: (i) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.50 to 1.00 for the fiscal quarters ended during the period of March 31, 2017 through, and including June 30, 2019 and (ii) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.25 to 1.00 for the fiscal quarters ended during the period of September 30, 2019 and thereafter.
The New Credit Agreement, the indenture governing the 4.875% Senior Notes (the 4.875% Senior Notes Indenture) and the indenture governing the 6.125% Senior Notes (the 6.125% Senior Notes Indenture and together with the 4.875% Senior Notes Indenture, the Indentures) limit the Companys ability to incur additional indebtedness. Additional covenants contained in the New Credit Agreement and the Indentures, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, make restricted payments, create liens, make equity or debt investments, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Under the New Credit Agreement and the Indentures, certain changes in control of the Company could result in the occurrence of an Event of Default. In addition, the New Credit Agreement limits the ability of the Company to modify terms of the Indentures. As of June 30, 2018, the Company was in compliance with the covenants in the New Credit Agreement and the Indentures.
Available borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility were $289,418 and $6,294, respectively, at June 30, 2018. The Company also has various other uncommitted lines of credit available at June 30, 2018 in the aggregate amount of $21,888.
14
4.875% Senior Notes
The $600,000 aggregate principal amount of 4.875% Senior Notes due 2025 (the 4.875% Senior Notes) were issued in October 2017 to fund the acquisition of Constantia Labels. The 4.875% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 4.875% Senior Notes on May 1st and November 1st of each year beginning May 1, 2018 until the maturity date of November 1, 2025. The Companys obligations under the 4.875% Senior Notes are guaranteed by certain of the Companys existing direct and indirect wholly-owned domestic subsidiaries.
6.125% Senior Notes
The $250,000 aggregate principal amount of 6.125% Senior Notes due 2022 (the 6.125% Senior Notes) were issued in November 2014. The 6.125% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 6.125% Senior Notes on June 1st and December 1st of each year beginning June 1, 2015 until the maturity date of December 1, 2022. The Companys obligations under the 6.125% Senior Notes are guaranteed by certain of the Companys existing direct and indirect wholly-owned domestic subsidiaries.
Debt Issuance Costs
In conjunction with the issuance of the New Credit Agreement, the Company incurred $16,331 in debt issuance costs, which are being deferred and amortized over the term of the Term A Loan Facility, Term Loan B Facility and Revolving Credit Facility. In conjunction with terminating the Companys prior credit agreement, $660 in unamortized debt issuance costs related to a debt extinguishment were written-off to interest expense during the three months ended December 31, 2017. The remaining unamortized fees under the prior credit agreement related to a debt modification and are being amortized over the term of the Revolving Credit Facility.
The Company incurred $10,338 in debt issuance costs associated with the issuance of the 4.875% Senior Notes, which are being deferred and amortized over the term of the 4.875% Senior Notes.
The Company recorded $1,275 and $404 in interest expense in the three months ended June 30, 2018 and 2017, respectively, in the condensed consolidated statements of income to amortize deferred financing costs.
Capital Leases
The present value of the net minimum payments on the capitalized leases is as follows:
June 30, 2018 | March 31, 2018 | |||||||
Total minimum lease payments |
$ | 45,961 | $ | 49,521 | ||||
Less amount representing interest |
(12,075 | ) | (13,233 | ) | ||||
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Present value of net minimum lease payments |
33,886 | 36,288 | ||||||
Current portion |
(3,825 | ) | (4,191 | ) | ||||
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Capitalized lease obligations, less current portion |
$ | 30,061 | $ | 32,097 | ||||
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The capitalized leases carry interest rates from 0.97% to 12.47% and mature from fiscal 2019 to fiscal 2032.
6. Major Customers
During the three months ended June 30, 2018 and 2017, sales to major customers (those exceeding 10% of the Companys net revenues in one or more of the periods presented) approximated 9% and 17%, respectively, of the Companys consolidated net revenues. All of these sales were made to The Procter & Gamble Company.
In addition, accounts receivable balances from The Procter & Gamble Company approximated 3% of the Companys total accounts receivable balance at June 30, 2018 and March 31, 2018. The loss or substantial reduction of the business of this major customer could have a material adverse impact on the Companys results of operations and cash flows.
7. Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, various foreign jurisdictions, and various state and local jurisdictions where the statutes of limitations generally range from three to five years. At June 30, 2018, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2015. The Company is no longer subject to state and local examinations by tax authorities for years before fiscal 2014. In foreign jurisdictions, the Company is no longer subject to examinations by tax authorities for years before fiscal 1999.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U.S.
15
corporate income tax rates and implementing a territorial tax system. As the Company has a March 31 fiscal year-end, a U.S. statutory federal rate of 21% applies to fiscal year beginning April 1, 2018. The Tax Act eliminates the domestic manufacturing deduction and implements certain transitional impacts to the Company.
The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The Company made an estimate at March 31, 2018 on the impact of the Tax Act. There were no changes to that provisional estimate during the first quarter ended June 30, 2018.
The benefits of tax positions are not recorded unless it is more likely than not that the tax position would be sustained upon challenge by the appropriate tax authorities. Tax benefits that are more likely than not to be sustained are measured at the largest amount of benefit that is cumulatively greater than a 50% likelihood of being realized.
As of June 30, 2018 and March 31, 2018, the Company had liabilities of $7,296 and $7,038, respectively, recorded for unrecognized tax benefits for U.S. federal, state and foreign tax jurisdictions. During the three months ended June 30, 2018 and 2017, the Company recognized $138 and $(56), respectively, of interest and penalties in income tax expense in the condensed consolidated statements of income. The liability for the gross amount of interest and penalties at June 30, 2018 and March 31, 2018 was $2,868 and $2,641, respectively. The liability for unrecognized tax benefits is classified in other noncurrent liabilities on the condensed consolidated balance sheets for the portion of the liability where payment of cash is not anticipated within one year of the balance sheet date. The Company believes that it is reasonably possible that $4,542 of unrecognized tax benefits as of June 30, 2018 could be released within the next 12 months due to the lapse of statute of limitations and settlements of certain foreign and domestic income tax matters. The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate are $6,742.
8. Risk Management Activities and Financial Instruments
The Company is exposed to market risks, both directly and indirectly, such as currency fluctuations and interest rate movement. To the extent the Company deems it to be appropriate, derivative instruments and hedging activities are used as a risk management tool to mitigate the potential impact of certain risks, primarily foreign currency exchange risk and interest rate risk.
The Company uses various types of derivative instruments including, but not limited to, forward contracts and swaps. The Company formally assesses, designates, and documents as a hedge of an underlying exposure each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, the Company assesses, both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transactions are effective at offsetting changes in either the fair values or cash flows of the underlying exposures.
Interest Rate Risk Management
The Company uses interest rate swap agreements (the Swaps) to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Swaps involve the exchange of fixed and variable rate interest payments and do not represent an actual exchange of the underlying notional amounts between the two parties.
In conjunction with entering into the New Credit Agreement (see Note 5), the Company entered into two spot non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps became effective October 2017, expire in October 2018, and will result in interest payments of 1.5625% plus the applicable margin per the requirements in the New Credit Agreement. The Company also entered into two forward starting non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps will become effective in October 2018, will expire in October 2022, and will result in interest payments of 2.1345% plus the applicable margin per the requirements in the New Credit Agreement.
Upon inception, the Swaps were designated as cash flow hedges under ASU 2017-12, with gains and losses, net of tax, measured on an ongoing basis, recorded in accumulated other comprehensive income (loss) (AOCI).
Foreign Currency Risk Management
Foreign currency exchange risk arises from our international operations as well as from transactions with customers or suppliers denominated in currencies other than the U.S. Dollar. The functional currency of each of the Companys subsidiaries is generally the currency of the country in which the subsidiary operates or the U.S. Dollar. At times, the Company uses foreign currency forward contracts to minimize the impact of fluctuations in currency exchange rates.
The Company periodically enters into foreign currency forward contracts to fix the purchase price of foreign currency denominated firm commitments. In addition, the Company periodically enters into short-term foreign currency forward contracts to fix the U.S. Dollar value of certain intercompany loan payments, which typically settle in the following quarter. During the three months ended June 30, 2018 and
16
2017, certain of the Companys forward contracts were not designated as hedging instruments; therefore, changes in the fair value of the contracts were immediately recognized in other income and expense in the consolidated statements of income.
The Company periodically enters into foreign exchange forward contracts to fix the purchase price in U.S. Dollars of a foreign currency denominated firm commitment to purchase presses. Certain of these forward contracts are designated as fair value hedges and changes in the fair value of the contracts are recorded in other income and expense in the consolidated statements of income in the same period during which the related hedged items affect the consolidated statements of income.
In June 2018, the Company entered into foreign exchange forward contracts to fix the purchase price in U.S. Dollars of foreign currency denominated firm commitments to purchase various raw materials. These forward contracts are designated as cash flow hedges with gains and losses, net of tax, measured on an ongoing basis, recorded in AOCI.
Net Investment Hedging
In September 2017, as a means of managing foreign currency risk related to our significant operations in Europe, the Company executed four fixed-for-fixed cross currency swaps, in which the Company will pay Euros and receive U.S. Dollars with a combined notional amount of 400,000, which mature in November 2025. This will effectively convert U.S. Dollar denominated debt to Euro denominated debt. The Company designated 205,000 of swap notional as a net investment hedge of the Companys net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. Changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in AOCI to offset changes in the values of the net investments being hedged.
The remaining 195,000 of swap notional was not designated as an accounting hedge in September 2017. Therefore, changes in fair value of the derivative instruments were recognized in other income and expense in the consolidated statements of income. In November 2017, the Company formally designated the remaining 195,000 of swap notional as a net investment hedge under ASU 2017-12, bringing the total designated notional value to 400,000. Effective November 1, 2017, hedge accounting was applied to the newly designated swap notional of 195,000.
Disclosures about Derivative Instruments
All of the Companys derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. The Company determines the fair values of its derivatives based on valuation models which project future cash flows and discount the future amounts to a present value using market based observable inputs including interest rate curves, foreign currency rates, futures and basis point spreads, as applicable. The fair values of qualifying and non-qualifying instruments used in hedging transactions as of June 30, 2018 are as follows:
Fair Value | ||||||||||
Derivatives Designated as Hedging Instruments |
Balance Sheet Location |
June 30, 2018 | March 31, 2018 | |||||||
Assets: |
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Cross currency swaps (Net investment hedges) |
Other current assets | $ | 6,713 | $ | 4,295 | |||||
Interest rate swaps (Cash flow hedges) |
Other current assets | 1,213 | 920 | |||||||
Foreign exchange forward contracts (Fair value hedges) |
Other current assets | 53 | 127 | |||||||
Foreign exchange forward contracts (Cash flow hedges) |
Other current assets | 215 | | |||||||
Interest rate swaps (Cash flow hedges) |
Other long-term assets | 6,327 | 4,956 | |||||||
Liabilities: |
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Interest rate swaps (Cash flow hedges) |
Other current liabilities | $ | 25 | $ | | |||||
Foreign exchange forward contracts (Fair value hedges) |
Other current liabilities | 198 | 190 | |||||||
Foreign exchange forward contracts (Cash flow hedges) |
Other current liabilities | 330 | | |||||||
Cross currency swaps (Net investment hedges) |
Other long-term liabilities | 31,352 | 50,019 |
Fair Value | ||||||||||
Derivatives Not Designated as Hedging Instruments |
Balance Sheet Location |
June 30, 2018 | March 31, 2018 | |||||||
Assets: |
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Foreign exchange forward contracts |
Other current assets | $ | 239 | $ | | |||||
Liabilities: |
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Foreign exchange forward contracts |
Other current liabilities | 19 | 127 |
The amounts of gains and (losses) recognized in AOCI net of reclassifications into earnings, during the three months ended June 30, 2018 and 2017 are as follows:
17
Derivatives Designated as Hedging Instruments |
June 30, 2018 | June 30,2017 | ||||||
Cross currency swaps (Net investment hedges) (1) |
$ | 15,643 | $ | | ||||
Interest rate swaps |
1,230 | | ||||||
Foreign exchange forward contracts |
(115 | ) | |
(1) | The net gain of $15,643 recognized in OCI on the cross currency swaps in a net investment hedge as of June 30, 2018 is comprised of an excluded component gain of $11,769 and an undiscounted spot gain of $9,073 net of tax of $(5,199). |
The amounts of gains reclassified from AOCI into earnings for the three months ended June 30, 2018 and 2017 are as follows:
Derivatives Designated as Hedging Instruments |
June 30, 2018 | June 30, 2017 | ||||||
Cross currency swaps (1) |
$ | 2,325 | $ | | ||||
Interest rate swaps (2) |
271 | |
(1) | The Company had a $2,325 excluded component gain in AOCI which was recognized into income during the three months ended June 30, 2018. |
(2) | During the next 12 months, $1,196 of gains included in the June 30, 2018 AOCI balance are expected to be reclassified into interest expense. |
The amounts of gains and (losses) included in earnings from qualifying and non-qualifying financial instruments used in hedging transactions for the three months ended June 30, 2018 and 2017 are as follows:
Derivatives Not Designated as Hedging Instruments |
Statement of Income Location |
June 30, 2018 | June 30, 2017 | |||||||
Foreign currency contracts-Other |
Other income (expense), net | $ | 5,033 | $ | 367 | |||||
Gain (loss) on underlying hedged items |
Other income (expense), net | (4,963 | ) | (367 | ) | |||||
Cross currency swaps |
Interest expense | 243 | | |||||||
Derivatives Designated as Hedging Instruments |
Statement of Income Location |
June 30, 2018 | June 30, 2017 | |||||||
Foreign exchange forward contracts (Fair value hedges) |
Other income (expense), net | $ | 167 | $ | | |||||
Gain (loss) on underlying hedged items |
Other income (expense), net | (167 | ) | |
9. Accrued Expenses and Other Liabilities
The Companys accrued expenses and other liabilities consisted of the following:
June 30, 2018 | March 31, 2018 | |||||||
Accrued payroll and benefits |
$ | 41,250 | $ | 45,418 | ||||
Accrued income taxes |
8,810 | 13,838 | ||||||
Professional fees |
1,554 | 1,965 | ||||||
Accrued taxes other than income taxes |
4,313 | 4,682 | ||||||
Accrued interest |
5,087 | 16,480 | ||||||
Customer rebates |
3,038 | 2,578 | ||||||
Exit and disposal costs related to facility closures |
50 | 457 | ||||||
Deferred payments |
8,524 | 9,735 | ||||||
Deferred revenue |
11,701 | 11,887 | ||||||
Derivative liabilities |
572 | 317 | ||||||
Other |
8,921 | 6,665 | ||||||
|
|
|
|
|||||
Total accrued expenses and other liabilities |
$ | 93,820 | $ | 114,022 | ||||
|
|
|
|
10. Acquisitions
Constantia Labels Summary
18
On October 31, 2017, the Company completed its acquisition pursuant to the Sale and Purchase Agreement (as amended) with Constantia Flexibles Germany GmbH, Constantia Flexibles International GmbH, Constantia Flexibles Group GmbH and GPC Holdings B.V. (collectively, Constantia Flexibles), acquiring 100% of the Labels Division of Constantia Flexibles (Constantia Labels). Constantia Labels, headquartered in Vienna, Austria, is a leader in label solutions serving the food, beverage and consumer packaging goods industries. Constantia Labels has approximately 2,800 employees globally and 24 production plants across 14 countries, with major operations across Europe, Asia and North America. The acquisition included a 75% controlling interest in certain label operations in South Africa.
The Company believes the combination of Constantia Labels food & beverage business with Multi-Colors existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, will create a company with significant scale and geographic, end-market, customer and product diversification and additional growth opportunities. The results of Constantia Labels operations were included in the Companys consolidated financial statements beginning on October 31, 2017.
The purchase price for Constantia Labels consisted of the following:
Cash from proceeds of borrowings |
$ | 1,048,656 | ||
MCC common stock issued |
237,820 | |||
Deferred payments |
3,901 | |||
Contingent consideration |
9,026 | |||
|
|
|||
Purchase price, before cash acquired |
1,299,403 | |||
Net cash acquired |
(16,115 | ) | ||
|
|
|||
Total purchase price |
$ | 1,283,288 | ||
|
|
The Company issued 3,383 shares of its common stock to Constantia Flexibles as part of the consideration for the purchase of Constantia Labels. The Sale and Purchase Agreement provides for restrictions on the transfer of the shares issued to Constantia Flexibles and certain registration rights with respect to the shares. The fair value of the shares issued of $237,820 was calculated using the Company share price of $82.70, which was the closing price on October 31, 2017, discounted to reflect the temporary lack of liquidity.
The cash portion of the purchase price was funded through the 4.875% Senior Notes due 2025 and funds from the New Credit Agreement (see Note 5). The purchase price included deferred payments with a total fair value of $3,901, estimated as of the acquisition date, of which $807 was paid during the three months ended June 30, 2018 with the remaining to be paid out within 90 days after December 31, 2018, 2019 and 2020. In addition, the purchase price includes future performance based earnouts with a total fair value of $9,026, estimated as of the acquisition date. The future value of the earnouts is dependent upon whether the Verstraete in Mould Labels N.V. (Verstraete) business, which was acquired in conjunction with the Constantia Labels acquisition, meets or exceeds certain agreed upon EBITA (earnings before interest, taxes, and amortization) metrics over the three to five year period following the acquisition. The earnouts have a minimum future payout of zero, and the maximum amount of the future payout is based on the amount of EBITA growth achieved relative to calendar 2017. The earnouts may be paid out within 90 days after December 31, 2020, 2021 or 2022. Net cash acquired includes $49,647 of cash acquired less $33,532 of assumed bank debt and capital leases. The Company spent $17,484 in acquisition expenses related to the Constantia Labels acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income as follows: $18 in the third quarter of fiscal 2017, $744 in the first quarter of fiscal 2018, $3,545 in the second quarter of fiscal 2018, $11,299 in the third quarter of fiscal 2018, $632 in the fourth quarter of fiscal 2018 and $1,246 in the first quarter of fiscal 2019.
Purchase Price Allocation and Other Items
The determination of the purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Constantia Labels. The purchase price allocation may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles, accounts payable, accrued liabilities, debt and non-controlling interests) and the valuation of the related tax assets and liabilities are completed. Based on fair value estimates, the purchase price for Constantia Labels has been allocated to individual assets acquired and liabilities assumed as follows:
19
Constantia Labels | ||||
Assets Acquired: |
||||
Net cash acquired |
$ | 16,115 | ||
Accounts receivable |
118,020 | |||
Inventories |
84,811 | |||
Property, plant and equipment |
216,721 | |||
Intangible assets |
410,000 | |||
Goodwill |
707,624 | |||
Other assets |
16,949 | |||
|
|
|||
Total assets acquired |
1,570,240 | |||
|
|
|||
Liabilities Assumed: |
||||
Accounts payable |
93,860 | |||
Accrued income taxes payable |
7,975 | |||
Accrued expenses and other liabilities |
39,375 | |||
Deferred tax liabilities |
128,527 | |||
|
|
|||
Total liabilities assumed |
269,737 | |||
|
|
|||
Net assets acquired |
1,300,503 | |||
|
|
|||
Noncontrolling interests |
(1,100 | ) | ||
|
|
|||
Net assets acquired attributable to Multi-Color Corporation |
$ | 1,299,403 | ||
|
|
The liabilities assumed in the Constantia Labels acquisition included a contingent liability of $9,671, estimated as of the acquisition date based on the Companys best estimate. The contingent liability, payable to the pre-Constantia Flexibles owners of the respective entities, was based on future earnings of certain entities acquired. In the fourth quarter of fiscal 2018, $7,523 of the contingent liability was paid. The remaining contingent liability may be paid no later than December 31, 2020.
The fair value of the noncontrolling interests for Constantia Labels was estimated based on market valuations performed by an independent third party using a combination of: (i) an income approach based on expected future discounted cash flows; and (ii) an asset approach.
During the first quarter of fiscal 2019, goodwill increased by $291 related to measurement period adjustments for the Constantia Labels acquisition. The measurement period adjustments primarily consisted of a $2,538 and $261 increase in the valuation of other assets and accrued expenses, respectively, offset by a $2,507 and $151 decrease in the valuation of inventory and property, plant and equipment, respectively.
The estimated fair value of identifiable intangible assets acquired and their estimated useful lives are as follows:
Constantia Labels | ||||||||
Fair Value |
Useful Lives |
|||||||
Customer relationships |
$ | 390,000 | 19 years | |||||
Technology |
20,000 | 4 years | ||||||
|
|
|||||||
Total identifiable intangible assets |
$ | 410,000 | ||||||
|
|
Identifiable intangible assets are amortized over their useful lives based upon a number of assumptions including the estimated period of economic benefit and utilization. The weighted-average amortization period for identifiable intangible assets acquired in the Constantia Labels acquisition is 18 years.
The goodwill for Constantia Labels is attributable to combining Constantia Labels food & beverage business with Multi-Colors existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, thereby creating additional growth opportunities for both businesses utilizing the expanded global footprint and the acquired workforce. Goodwill arising from the Constantia Labels acquisition is not deductible for income tax purposes.
The accounts receivable acquired as part of the Constantia Labels acquisition had a fair value of $118,020 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $119,883 and the estimated contractual cash flows that are not expected to be collected are $1,863.
20
Pro Forma Information
The following table provides the unaudited pro forma results of operations for the three months ended June 30, 2017 as if Constantia Labels had been acquired as of the beginning of fiscal year 2018. However, pro forma results do not include any anticipated synergies from the combination of the companies, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the dates indicated or that may result in the future.
Three Months Ended | ||||
June 30, 2017 | ||||
Net revenues |
$ | 422,767 | ||
Net income attributable to Multi-Color |
20,399 | |||
Diluted earnings per share |
0.99 |
The following is a reconciliation of actual net revenues and net income attributable to Multi-Color Corporation to unaudited pro forma net revenues and net income:
Three Months Ended | ||||||||
June 30, 2017 | ||||||||
Net revenues | Net income attributable to Multi-Color |
|||||||
Multi-Color Corporation actual results |
$ | 242,440 | $ | 14,106 | ||||
Constantia Labels actual results (1) |
180,327 | 15,883 | ||||||
Pro forma adjustments |
| (9,590 | ) | |||||
|
|
|
|
|||||
Pro forma results |
$ | 422,767 | $ | 20,399 | ||||
|
|
|
|
(1) | Constantia Labels actual results include the three months pre-acquisition in fiscal 2018. |
The following table identifies the unaudited pro forma adjustments:
Three Months Ended | ||||
June 30, 2017 | ||||
Constantia Labels financing costs |
$ | 4,193 | ||
Acquisition transaction costs |
744 | |||
Incremental depreciation and amortization costs |
(6,382 | ) | ||
Incremental interest costs |
(12,454 | ) | ||
Tax effect of adjustments |
4,309 | |||
|
|
|||
Pro forma adjustments |
$ | (9,590 | ) | |
|
|
Other Acquisition Activity
On October 11, 2017, the Company acquired 100% of TP Label Limited, the labels business of Tanzania Printers Limited (Tanzania Printers), and TP Kenya Limited (collectively, TP Label), which is located in Dar es Salaam, Tanzania with a sales and distribution center located in Nairobi, Kenya, for $15,929 less net cash acquired of $397. The purchase price included $9,557, which was retained by MCC at closing and was used to repay the indebtedness of TP Label Limited and Tanzania Printers during the three months ended March 31, 2018. The purchase price also included an indemnification holdback of $1,593 to fund certain potential obligations of the sellers with respect to the transaction, which is deferred for one year after the closing date. TP Label is primarily a pressure sensitive and cut and stack label business, serving customers in the food and beverage market.
On August 3, 2017, the Company acquired 100% of GEWA Etiketten GmbH (GEWA), including the remaining 2.4% of the common shares of GIP (see below), for $21,846 plus net debt assumed of $5,228. Upon closing, $2,185 of the purchase price was deposited into an escrow account and is to be released to the seller on the 18-month anniversary of the closing date in accordance with the purchase agreement. The escrow amount is to fund certain potential indemnification obligations of the seller with respect to the transaction. GEWA is located in Bingen am Rhein, Germany and specializes in producing pressure sensitive labels for the wine and spirits market.
21
The determination of the final purchase price allocation to specific assets acquired and liabilities assumed is incomplete for TP Label and GEWA. The purchase price allocations may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles and debt) and the valuation of the related tax assets and liabilities are completed.
On January 3, 2017, the Company acquired 100% of Graphix Labels and Packaging Pty Ltd. (Graphix) for $17,261. The purchase price included $1,631 that is deferred for two years after the closing date. Graphix is located in Melbourne, Victoria, Australia and specializes in producing labels for both the food & beverage and wine & spirits markets.
In January 2017, the Company acquired an additional 67.6% of the common shares of GIP for $2,084 plus net debt assumed of $862. The purchase price included a deferred payment of $208 that was paid during the three months ended March 31, 2018. The Company acquired 30% of GIP as part of the Barat acquisition in fiscal 2016. Immediately prior to obtaining a controlling interest in GIP, the Company recognized a gain of $690 as a result of re-measuring our equity interest to its fair value of $771 based on the most recent share activity. In August 2017, the Company acquired the remaining 2.4% of the common shares of GIP in conjunction with the GEWA acquisition (see above). GIP is located in the Bordeaux region of France and specializes in producing labels for the wine & spirits market.
On July 6, 2016, the Company acquired 100% of Industria Litografica Alessandrina S.r.l. (I.L.A.) for $6,301 plus net debt assumed of $3,547. The purchase price included $819 that is deferred for three years after the closing date. I.L.A. is located in the Piedmont region of Italy and specializes in production of premium self-adhesive and wet glue labels primarily for the wine & spirits market and also services the food industry.
On July 1, 2016, the Company acquired 100% of Italstereo Resin Labels S.r.l. (Italstereo) for $3,342 less net cash acquired of $181. The purchase price included a deferred payment of $201 that was paid in the three months ended September 30, 2017 and a deferred payment of $133 that is due two years after the closing date. Italstereo is located near Lucca, Italy and specializes in producing pressure sensitive adhesive resin coated labels, seals and emblems.
The results of operations of the acquisitions described above within this Other Acquisition Activity section have been included in the condensed consolidated financial statements since the respective dates of acquisition and have been determined to be immaterial for purposes of additional disclosure.
Sale of Southeast Asian durables business
On July 3, 2017, the Company sold its 60% controlling interest in its Southeast Asian durables business to its minority shareholders for $3,620 in net cash proceeds. The Company recognized a loss of $512 on the sale of the business, which was recognized in other expense in the consolidated statements of income.
11. Accumulated Other Comprehensive Loss
The changes in the Companys accumulated other comprehensive loss by component consisted of the following:
Foreign | Gains and (losses) | Defined benefit | ||||||||||||||
currency | on derivative | pension | ||||||||||||||
items | contracts | items | Total | |||||||||||||
Balance at March 31, 2018 |
$ | 6,335 | $ | (25,408 | ) | $ | (168 | ) | $ | (19,241 | ) | |||||
OCI before reclassifications |
(82,520 | ) | 18,706 | | (63,814 | ) | ||||||||||
Amounts reclassified from AOCI |
| (1,948 | ) | | (1,948 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net current period OCI |
(82,520 | ) | 16,758 | | (65,762 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at June 30, 2018 |
$ | (76,185 | ) | $ | (8,650 | ) | $ | (168 | ) | $ | (85,003 | ) | ||||
|
|
|
|
|
|
|
|
Reclassifications out of accumulated other comprehensive loss consisted of the following:
Three Months Ended | ||||
June 30, 2018 | ||||
Cross currency swaps (1) |
$ | (2,325 | ) | |
Interest rate swaps (1) |
(271 | ) | ||
Tax |
648 | |||
|
|
|||
Net of tax |
$ | (1,948 | ) | |
|
|
(1) | Reclassified from AOCI into interest expense in the condensed consolidated statements of income. See Note 8. |
22
12. Goodwill and Intangible Assets
The changes in the Companys goodwill consisted of the following:
Balance at March 31, 2018: |
||||
Goodwill, gross |
$ | 1,210,179 | ||
Accumulated impairment losses |
(13,545 | ) | ||
|
|
|||
Goodwill, net |
1,196,634 | |||
Activity during the year: |
||||
Adjustments to prior year acquisitions |
(291 | ) | ||
Currency translation |
(55,729 | ) | ||
Balance at June 30, 2018: |
||||
Goodwill, gross |
1,153,120 | |||
Accumulated impairment losses |
(12,506 | ) | ||
|
|
|||
Goodwill, net |
$ | 1,140,614 | ||
|
|
The Companys intangible assets consisted of the following:
June 30, 2018 | March 31, 2018 | |||||||||||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||||||||||||
Customer relationships |
$ | 640,921 | $ | (94,387 | ) | $ | 546,534 | $ | 648,273 | $ | (87,560 | ) | $ | 560,713 | ||||||||||
Technologies |
21,656 | (4,794 | ) | 16,862 | 21,721 | (3,586 | ) | 18,135 | ||||||||||||||||
Trademarks |
138 | (115 | ) | 23 | 99 | (66 | ) | 33 | ||||||||||||||||
Non-compete agreements |
3,854 | (2,625 | ) | 1,229 | 3,880 | (2,528 | ) | 1,352 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 666,569 | $ | (101,921 | ) | $ | 564,648 | $ | 673,973 | $ | (93,740 | ) | $ | 580,233 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The amortization expense of intangible assets for the three months ended June 30, 2018 and 2017 was $10,410 and $3,604, respectively.
13. Facility Closures
Merignac, France
During the three months ended September 30, 2017, the Company announced plans to consolidate our manufacturing facility located in Merignac, France into our existing facility in Libourne, France. The transition was substantially completed in the third quarter of fiscal 2018.
Below is a summary of the total contractual termination benefits and exit and disposal costs related to the closure of the Merignac facility:
Total costs expected to be incurred |
Total costs incurred | Cumulative costs incurred as of June 30, 2018 |
||||||||||||||
Three Months Ended June 30, 2018 |
Three Months Ended June 30, 2017 |
|||||||||||||||
Severance and other termination benefits |
$ | 703 | $ | | $ | | $ | 703 | ||||||||
Other associated costs |
450-750 | 27 | | 374 |
Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities, and ongoing costs related to the leased facility until expiration or early termination of the related lease agreement.
Below is a reconciliation of the beginning and ending liability balances related to the contractual termination benefits and exit and disposal costs:
23
Balance at March 31, 2018 |
Amounts Expensed |
Amounts Paid |
Balance at June 30, 2018 |
|||||||||||||
Severance and other termination benefits |
$ | 457 | | (407 | ) | $ | 50 | |||||||||
Other associated costs |
| 27 | (27 | ) | |
The cumulative costs incurred in conjunction with the closure as of June 30, 2018 are $1,142, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal costs above as well as $125 in non-cash impairment charges and $42 in net loss on the sale related to property, plant and equipment at the Merignac facility, which were recorded in facility closure expenses during the three months ended March 31, 2018. In addition, the Company reversed $102 in accrued pension related to employees that were terminated in conjunction with the closure, which were recorded to facility closure expenses during the three months ended March 31, 2018.
Dormans, France
During the three months ended June 30, 2017, the Company announced plans to close our manufacturing facility located in Dormans, France. Production at the facility ceased during the first quarter of fiscal 2018.
Below is a summary of the exit and disposal costs related to the closure of the Dormans facility:
Total costs expected to be incurred |
Total costs incurred | Cumulative costs incurred as of June 30, 2018 |
||||||||||||||
Three Months Ended June 30, 2018 |
Three Months Ended June 30, 2017 |
|||||||||||||||
Severance and other termination benefits |
$ | 106 | $ | | $ | 34 | $ | 106 | ||||||||
Other associated costs |
23 | | | 23 |
Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities.
The cumulative costs incurred in conjunction with the closure as of June 30, 2018 are $260, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal costs above as well as non-cash impairment charges of $25 related to the land and building that was previously held for sale at the Dormans facility, which was recorded in facility closure expenses during the three months ended December 31, 2017. In addition, the Company recorded a net loss on the disposal of property, plant and equipment of $59 related to assets in Dormans that were not transferred to other facilities and were sold or abandoned and wrote-off $47 in raw materials that were not transferred to other facilities during the three months ended March 31, 2018.
14. Commitments and Contingencies
Litigation
The Company is subject to various legal claims and contingencies that arise out of the normal course of business, including claims related to commercial transactions, product liability, health and safety, taxes, environmental matters, employee matters and other matters. Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on our financial condition, results of operations and cash flows.
24
15. Supplemental Cash Flow Disclosures
Supplemental disclosures with respect to cash flow information and non-cash operating, investing and financing activities are as follows:
Three Months Ended | ||||||||
June 30, 2018 | June 30, 2017 | |||||||
Supplemental Disclosures of Cash Flow Information: |
||||||||
Interest paid |
$ | 33,679 | $ | 9,801 | ||||
Income taxes paid, net of refunds |
7,862 | 2,083 | ||||||
Supplemental Disclosures of Non-Cash Activities: |
||||||||
Capital expenditures incurred but not yet paid |
$ | 8,533 | $ | 1,715 | ||||
Change in derivative contract fair value - asset position |
4,462 | | ||||||
Change in derivative contract fair value - liability position |
18,412 | | ||||||
Business combinations accounted for as a purchase: |
||||||||
Assets acquired (excluding cash) |
$ | (387 | ) | $ | (22 | ) | ||
Liabilities assumed |
387 | 22 | ||||||
|
|
|
|
|||||
Net cash paid |
$ | | $ | | ||||
|
|
|
|
25
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Information included in this Quarterly Report on Form 10-Q contains certain forward-looking statements that involve potential risks and uncertainties. Multi-Color Corporations future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed herein and those discussed in Part I, Item 1A of the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (the 2018 10-K). Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date thereof. Results for interim periods may not be indicative of annual results.
Refer to Forward-Looking Statements following the index in this Form 10-Q. In the discussion that follows, all amounts are in thousands (both tables and text), except statistical data, per share data and percentages.
Following is a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of the Companys financial condition and results of operations:
Executive Overview
We are a leader in global label solutions supporting a number of the worlds most prominent brands including leading producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in the North American, Latin American, EMEA (Europe, Middle East and Africa) and Asia Pacific regions with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed and Aluminum Labels.
Results of Operations
Three Months Ended June 30, 2018 compared to the Three Months Ended June 30, 2017:
Net Revenues
$ | % | |||||||||||||||
2018 | 2017 | Change | Change | |||||||||||||
Net revenues |
$ | 456,131 | $ | 242,440 | $ | 213,691 | 88 | % |
Net revenues increased 88% to $456,131 compared to $242,440 in the prior year quarter. Acquisitions occurring after the beginning of fiscal 2018 accounted for an 80% increase in revenues, net of the sale of the Southeast Asian Durables business. Organic revenue increased by 6% and was broadly based across geographies and markets. Foreign exchange rates, primarily driven by appreciation of the Euro, led to a 2% increase in revenues quarter over quarter.
Cost of Revenues and Gross Profit
$ | % | |||||||||||||||
2018 | 2017 | Change | Change | |||||||||||||
Cost of revenues |
$ | 368,121 | $ | 192,983 | $ | 175,138 | 91 | % | ||||||||
% of Net revenues |
80.7 | % | 79.6 | % | ||||||||||||
Gross profit |
$ | 88,010 | $ | 49,457 | $ | 38,553 | 78 | % | ||||||||
% of Net revenues |
19.3 | % | 20.4 | % |
Cost of revenues increased 91% or $175,138 compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2018, net of divestitures, contributed 84% or $162,424. Organic revenue growth, net of operating improvements, increased cost of revenues by 5% or $8,876. The remaining increase of 2% or $3,838 related to the unfavorable effects of foreign exchange.
Gross profit increased 78% or $38,553 compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2018, net of divestitures, contributed 61% or $30,317 to gross profit. Strong, broadly based organic growth and improved operating performance primarily in North America led to an organic gross profit increase of 15% or $7,267. The remaining increase of 2% or $969 related to the favorable effects of foreign exchange. Gross margins were 19% of net revenues for the current year quarter including the impact of inventory purchase accounting charges of $131 in the current year quarter.
26
Selling, General and Administrative Expenses and Facility Closure Expenses
2018 | 2017 | $ Change |
% Change |
|||||||||||||
Selling, general and administrative expenses |
$ | 42,768 | $ | 23,589 | $ | 19,179 | 81 | % | ||||||||
% of Net revenues |
9.4 | % | 9.7 | % | ||||||||||||
Facility closure expenses |
$ | 27 | $ | 34 | $ | (7 | ) | (21 | %) | |||||||
% of Net revenues |
0.0 | % | 0.0 | % |
Selling, general and administrative expenses increased 81% or $19,179 compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2018, net of divestitures, and unfavorable foreign exchange contributed $15,130, and $438, to the increase, respectively. In the current year quarter, the Company incurred $4,220 of acquisition and integration expenses compared to $906 in the prior year quarter. Acquisition and integration expenses in the current year quarter included $4,173 related to the Constantia Labels acquisition. The remaining increase of $297 primarily relates to legal and professional fees.
Facility closure expenses were $27 in the current year quarter compared to $34 in the prior year quarter.
Interest Expense and Other Expense, Net
2018 | 2017 | $ Change |
% Change |
|||||||||||||
Interest expense |
$ | 19,199 | $ | 6,335 | $ | 12,864 | 203 | % | ||||||||
Other expense, net |
$ | 1,044 | $ | 1,199 | $ | (155 | ) | (13 | %) |
Interest expense increased 203% or $12,864 compared to the prior year quarter primarily due to the increase in debt borrowings to finance the acquisition of Constantia Labels.
Other expense was $1,044 in the current year quarter primarily related to unfavorable foreign exchange resulting from remeasurement of trade payables primarily in Latin America and South Africa in the current year quarter. This compares to expense of $1,199 in the prior year quarter primarily related to the release of a foreign indemnification receivable of $1,124 for which an offsetting tax liability was also relieved reducing the prior year quarter effective tax rate.
Income Tax Expense
2018 | 2017 | $ Change |
% Change |
|||||||||||||
Income tax expense |
$ | 6,880 | $ | 4,158 | $ | 2,722 | 65 | % |
Income tax expense increased 65% or $2,722 in the current year quarter compared to the prior year quarter primarily due to higher taxable income resulting from a combination of improved organic operating performance and earnings from acquisitions occurring after the beginning of fiscal 2018, and a higher effective tax rate. The effective tax rate was 28% for the current year quarter compared to 23% in the prior year quarter including the release of a tax liability related to a foreign indemnification receivable related to previous acquisitions for $1,124 in the prior year quarter.
Liquidity and Capital Resources
Comparative Cash Flow Analysis
Through the three months ended June 30, 2018, net cash provided by operating activities was $23,728 compared to $15,145 in the same period of the prior year. Net income adjusted for non-cash expenses consisting primarily of depreciation, amortization of intangible assets and amortization of deferred financing fees was $47,758 in the current period compared to $27,966 in the same period of the prior year. Our use of operating assets and liabilities of $24,030 in the current period increased from a use of $12,821 in the same period of the prior year.
Through the three months ended June 30, 2018, net cash used in investing activities was $32,817 compared to $10,077 in the same period of the prior year. Capital expenditures, primarily funded by cash flows from operations totaled $33,955 in the current period compared to
27
$10,272 in the same period of the prior year. Proceeds from the sale of property, plant and equipment totaled $1,138 in the current period compared to $195 in the same period of the prior year.
Through the three months ended June 30, 2018, net cash provided by financing activities was $6,152, which included $7,663 of net debt borrowings, dividends paid to shareholders of Multi-Color Corporation of $1,022 and $475 of proceeds from the issuance of common stock. Cash provided by financing activities also included $964 in deferred payments related to the Constantia Labels acquisition.
Through the three months ended June 30, 2017, net cash used in financing activities was $5,492, which included $5,446 of net debt payments and dividends paid of $1,126, offset by $1,080 of proceeds from the issuance of common stock. Dividends paid includes $847 to shareholders of Multi-Color Corporation and $279 to the minority shareholders of our 60% owned legal entity in Malaysia.
Capital Resources
In conjunction with the Constantia Labels acquisition, effective October 31, 2017 the Company entered into a credit agreement (the New Credit Agreement) with various lenders. The New Credit Agreement replaced the Companys previous credit agreement and consists of (i) a senior secured first lien term loan A facility (the Term Loan A Facility) in an aggregate principal amount of $150,000 with a five year maturity, (ii) a senior secured first lien term loan B facility (the Term Loan B Facility) in an aggregate principal amount of $500,000 with a seven year maturity, and (iii) a senior secured first lien revolving credit facility (the Revolving Credit Facility) in an aggregate principal amount up to $400,000, comprised of a $360,000 U.S. revolving credit facility (the U.S. Revolving Credit Facility) and a $40,000 U.S. Dollar equivalent Australian sub-facility (the Australian Revolving Sub-Facility), each with a five year maturity.
The New Credit Agreement contains customary mandatory and optional prepayment provisions and customary events of default. The New Credit Agreements Term Loan A Facility, Term Loan B Facility and U.S. Revolving Credit Facility (together, the U.S. facilities) are guaranteed by substantially all of the Companys direct and indirect wholly owned domestic subsidiaries, and such guarantors pledged substantially all their assets as collateral to secure the U.S. facilities. The Australian Revolving Sub-Facility is secured by substantially all of the assets of the Australian borrower and its direct and indirect subsidiaries.
The New Credit Agreement can be used for working capital, capital expenditures and other corporate purposes and to fund permitted acquisitions (as defined in the New Credit Agreement). Loans under the New Credit Agreement bear interest at variable rates plus a margin, based on the Companys consolidated secured net leverage ratio.
The New Credit Agreement contains customary representations and warranties as well as customary negative and affirmative covenants, which require the Company to maintain the following financial covenants at the end of each quarter: (i) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.50 to 1.00 for the fiscal quarters ended during the period of March 31, 2017 through, and including June 30, 2019 and (ii) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.25 to 1.00 for the fiscal quarters ended during the period of September 30, 2019 and thereafter.
The New Credit Agreement, the indenture governing the 4.875% Senior Notes (the 4.875% Senior Notes Indenture) and the indenture governing the 6.125% Senior Notes (the 6.125% Senior Notes Indenture and together with the 4.875% Senior Notes Indenture, the Indentures) limit the Companys ability to incur additional indebtedness. Additional covenants contained in the New Credit Agreement and the Indentures, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, make restricted payments, create liens, make equity or debt investments, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Under the New Credit Agreement and the Indentures, certain changes in control of the Company could result in the occurrence of an Event of Default. In addition, the New Credit Agreement limits the ability of the Company to modify terms of the Indentures. As of June 30, 2018, the Company was in compliance with the covenants in the New Credit Agreement and the Indentures.
Available borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility were $289,418 and $6,294, respectively, at June 30, 2018. The Company also has various other uncommitted lines of credit available at June 30, 2018 in the aggregate amount of $21,397.
The $600,000 aggregate principal amount of 4.875% Senior Notes due 2025 (the 4.875% Senior Notes) were issued in October 2017 to fund the acquisition of Constantia Labels. The 4.875% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 4.875% Senior Notes on May 1st and November 1st of each year beginning May 1, 2018 until the maturity date of November 1, 2025. The Companys obligations under the 4.875% Senior Notes are guaranteed by certain of the Companys existing direct and indirect wholly-owned domestic subsidiaries.
The $250,000 aggregate principal amount of 6.125% Senior Notes due 2022 (the 6.125% Senior Notes) were issued in November 2014. The 6.125% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 6.125% Senior Notes on June 1st and December 1st of each year beginning June 1, 2015 until the maturity date of December 1, 2022. The Companys obligations under the 6.125% Senior Notes are guaranteed by certain of the Companys existing direct and indirect wholly-owned domestic subsidiaries
28
Contractual Obligations
The following table summarizes the Companys contractual obligations as of June 30, 2018:
Total | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | More than 5 years |
||||||||||||||||||||||
Long-term debt |
$ | 1,598,754 | $ | 18,946 | $ | 14,546 | $ | 18,268 | $ | 23,870 | $ | 450,622 | $ | 1,072,502 | ||||||||||||||
Capital leases |
33,886 | 3,825 | 3,388 | 3,002 | 1,855 | 1,963 | 19,853 | |||||||||||||||||||||
Interest on long-term debt (1) |
416,677 | 72,960 | 71,440 | 69,698 | 68,704 | 55,517 | 78,358 | |||||||||||||||||||||
Rent due under operating leases |
85,099 | 23,737 | 18,090 | 12,787 | 10,843 | 6,790 | 12,852 | |||||||||||||||||||||
Unconditional purchase obligations |
25,952 | 25,414 | 265 | 181 | 82 | 10 | | |||||||||||||||||||||
Pension obligations |
382 | 9 | 15 | 22 | 29 | 37 | 270 | |||||||||||||||||||||
Unrecognized tax benefits (2) |
| | | | | | | |||||||||||||||||||||
Contingent liability acquired |
1,382 | | | 1,382 | | | | |||||||||||||||||||||
Deferred purchase price |
23,573 | 8,692 | 2,030 | 4,907 | 1,168 | 6,776 | | |||||||||||||||||||||
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Total contractual obligations |
$ | 2,185,705 | $ | 153,583 | $ | 109,774 | $ | 110,247 | $ | 106,551 | $ | 521,715 | $ | 1,183,835 | ||||||||||||||
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(1) | Interest on floating rate debt was estimated using projected forward London Interbank Offered Rate (LIBOR) and Bank Bill Swap Bid Rates (BBSY) as of June 30, 2018. |
(2) | The table excludes $7,296 of liabilities related to unrecognized tax benefits as the timing and extent of such payments are not determinable. |
Critical Accounting Policies and Estimates
The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We continually evaluate our estimates, including, but not limited to, those related to revenue recognition, bad debts, inventories and any related reserves, income taxes, fixed assets, goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the facts and circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Our critical accounting policies and estimates are discussed in the Critical Accounting Policies and Estimates section of Managements Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2018 10-K. In addition, our significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements included in our 2018 10-K.
29
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
(in thousands, except for percentages)
The Company has no material changes to the disclosures made in the Companys Annual Report on Form 10-K for the year ended March 31, 2018.
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Companys management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the Companys disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of June 30, 2018. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures were effective as of June 30, 2018.
Changes in Internal Control Over Financial Reporting
During the quarter ended June 30, 2018, the Company enacted additional controls associated with the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). There were no further changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 1A. | Risk Factors |
The Company had no material changes to the Risk Factors disclosed in the Companys Annual Report on Form 10-K for the year ended March 31, 2018.
Item 6. | Exhibits |
31.1 | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
30
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Multi-Color Corporation | ||||||
(Registrant) | ||||||
Date: August 9, 2018 | By: | /s/ Sharon E. Birkett | ||||
Sharon E. Birkett | ||||||
Vice President, Chief Financial Officer, Secretary |
31
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Michael J. Henry, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Multi-Color Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 9, 2018
|
By: | /s/ Michael J. Henry | ||||
Michael J. Henry | ||||||
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Sharon E. Birkett, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Multi-Color Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 9, 2018
|
By: | /s/ Sharon E. Birkett | ||||
Sharon E. Birkett | ||||||
Vice President, Chief Financial Officer, Secretary |
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Michael J. Henry, President and Chief Executive Officer of Multi-Color Corporation (the Company), certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) | the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2018 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 9, 2018
|
By: | /s/ Michael J. Henry | ||||
Michael J. Henry | ||||||
President and Chief Executive Officer |
A signed original of this written statement will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Sharon E. Birkett, Vice President, Chief Financial Officer, Secretary of Multi-Color Corporation (the Company), certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) | the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2018 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 9, 2018 | By: | /s/ Sharon E. Birkett | ||||
Sharon E. Birkett | ||||||
Vice President, Chief Financial Officer, Secretary |
A signed original of this written statement will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 31, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | LABL | |
Entity Registrant Name | MULTI COLOR Corp | |
Entity Central Index Key | 0000819220 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 20,496,727 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||
Net revenues | $ 456,131 | $ 242,440 |
Cost of revenues | 368,121 | 192,983 |
Gross profit | 88,010 | 49,457 |
Selling, general and administrative expenses | 42,768 | 23,589 |
Facility closure expenses | 27 | 34 |
Operating income | 45,215 | 25,834 |
Interest expense | 19,199 | 6,335 |
Other expense, net | 1,044 | 1,199 |
Income before income taxes | 24,972 | 18,300 |
Income tax expense | 6,880 | 4,158 |
Net income | 18,092 | 14,142 |
Less: Net income (loss) attributable to noncontrolling interests | (47) | 36 |
Net income attributable to Multi-Color Corporation | $ 18,139 | $ 14,106 |
Weighted average shares and equivalents outstanding: | ||
Basic | 20,439 | 16,943 |
Diluted | 20,545 | 17,152 |
Basic earnings per common share | $ 0.89 | $ 0.83 |
Diluted earnings per common share | 0.88 | 0.82 |
Dividends per common share | $ 0.05 | $ 0.05 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
||||||
Statement of Comprehensive Income [Abstract] | |||||||
Net income | $ 18,092 | $ 14,142 | |||||
Other comprehensive income (loss): | |||||||
Unrealized foreign currency translation gain (loss) | [1] | (83,933) | 19,064 | ||||
Unrealized gain on derivative contracts, net of tax | [2] | 16,758 | |||||
Total other comprehensive income (loss) | (67,175) | 19,064 | |||||
Comprehensive income (loss) | (49,083) | 33,206 | |||||
Less: comprehensive loss attributable to noncontrolling interests | (1,460) | (30) | |||||
Comprehensive income (loss) attributable to Multi-Color Corporation | $ (47,623) | $ 33,236 | |||||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Unrealized gain (loss) on interest rate swaps, tax | $ 2,541 | $ (284) |
Unrealized foreign currency translation gain (loss), tax impact related to settlement of foreign currency denominated intercompany loans | $ (5,608) | $ 0 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 2,945 | $ 2,704 |
Accumulated depreciation | $ 245,932 | $ 235,980 |
Preferred stock, no par value | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, no par value | ||
Common stock, stated value per share | $ 0.1 | $ 0.1 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 20,804,000 | 20,753,000 |
Treasury stock, shares | 309,000 | 307,000 |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY - 3 months ended Jun. 30, 2018 - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock |
Paid-In Capital |
Treasury Stock |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Noncontrolling Interests |
---|---|---|---|---|---|---|---|
Balance at Mar. 31, 2018 | $ 760,373 | $ 1,403 | $ 402,252 | $ (11,528) | $ 384,671 | $ (19,241) | $ 2,816 |
Balance, shares at Mar. 31, 2018 | 20,753 | ||||||
Net income | 18,092 | 18,139 | (47) | ||||
Topic 606 transition adjustment | 2,701 | 2,701 | |||||
Other comprehensive income | (67,175) | (65,762) | (1,413) | ||||
Issuance of common stock | 601 | $ 3 | 598 | ||||
Issuance of common stock, shares | 27 | ||||||
Restricted stock grant | 0 | $ 0 | 0 | 0 | 0 | 0 | 0 |
Restricted stock grant, shares | 12 | ||||||
Conversion of restricted share units | 12 | ||||||
Stock-based compensation | 1,134 | 1,134 | |||||
Shares acquired under employee plans | (127) | (127) | |||||
Common stock dividends | (1,034) | (1,034) | |||||
Balance at Jun. 30, 2018 | $ 714,565 | $ 1,406 | $ 403,984 | $ (11,655) | $ 404,477 | $ (85,003) | $ 1,356 |
Balance, shares at Jun. 30, 2018 | 20,804 |
Description of Business and Significant Accounting Policies |
3 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Significant Accounting Policies | 1. Description of Business and Significant Accounting Policies The Company Multi-Color Corporation (Multi-Color, MCC, we, us, our or the Company), headquartered near Cincinnati, Ohio, is a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in the North American, Latin American, EMEA (Europe, Middle East and Africa) and Asia Pacific regions with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed, and Aluminum Labels. Basis of Presentation The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures are adequate to make the information presented not misleading. A description of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018 (the “2018 10-K”). These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the 2018 10-K. The information furnished in these condensed consolidated financial statements reflects all estimates and adjustments which are, in the opinion of management, necessary to present fairly the results for the interim periods reported. The condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain prior period balances have been reclassified to conform to current year classifications. Use of Estimates in Financial Statements In preparing financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. New Accounting Pronouncements In the first quarter of fiscal 2019, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all related amendments, which provides revised guidance for revenue recognition. We adopted this guidance using the modified retrospective transition method, which means that periods beginning in fiscal 2019 are reported under this guidance while prior periods continue to be reported under previous guidance. See Note 2. In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220),” which permits the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income (AOCI) to retained earnings. This new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. Early adoption is permitted, and the update must be applied either at the beginning of the period of adoption or retrospectively to each period in which the effects of the Tax Act related to items remaining in AOCI are recognized. The Company is currently evaluating the impact of this update on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other,” which simplifies the accounting for goodwill impairment. This update removes step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, which for the Company is any annual or interim goodwill impairment tests performed after April 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of this update on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations,” which revises the definition of a business. The FASB’s new framework assists entities in evaluating whether a set (integrated set of assets and activities) should be accounted for as an acquisition of a business or a group of assets. The framework adds an initial screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen is met, the set is not a business. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2018. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Company’s consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The specific issues addressed include debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination and separately identifiable cash flows and application of the predominance principle. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2018. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires that lessees recognize almost all leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, leases will be classified as either finance leases or operating leases. This update is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. The Company is currently evaluating the impact of this standard on its consolidated financial statements, which will include an increase in both assets and liabilities relating to its leasing activities. No other new accounting pronouncement issued or effective during the three months ended June 30, 2018 had or is expected to have a material impact on the condensed consolidated financial statements. Supply Chain Financing The Company has entered into supply chain financing agreements with certain customers and factoring arrangements with certain banks. The receivables for the agreements are sold without recourse to the customers’ banks and are accounted for as sales of accounts receivable. Losses on the sale of these receivables are included in selling, general and administrative expenses in the condensed consolidated statements of income, and losses of $510 and $235 were recorded for the three months ended June 30, 2018 and 2017, respectively. |
Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | 2. Revenue Recognition On April 1, 2018, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all related amendments, which provides revised guidance for revenue recognition. The standard’s core principle is that an entity should recognize the revenue for transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard defines a five-step process to recognize revenue and requires more judgment and estimates within the revenue recognition process than required under previous U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. We adopted the standard by applying the modified retrospective method to all contracts that were not completed as of the adoption date. The aggregate effect of any modifications to those contracts was reflected in identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the price to the satisfied and unsatisfied performance obligations as of the adoption date. Accordingly, the comparative statement of income and comparative balance sheet have not been restated. Adjustments due to ASU 2014-09 were as follows:
Revenue is generated through the sale of products created to meet the packaging needs of our customers, culminating in a single performance obligation to produce labels with no alternate use, and revenue is recorded in an amount that reflects the net consideration that we expect to receive. Prices for our products are based on agreed upon rates with customers and do not include financing components or noncash consideration. The amount of consideration we receive and revenue we recognize is variable for certain customers and is impacted by incentives, including rebates, which are generally tied to achievement of certain sales volume levels. We recognize revenue when obligations under the terms of a contract with our customer are satisfied, in an amount that reflects the consideration we expect to receive in exchange for the product. Depending on the terms of the agreement with the customer, we recognize revenue either at a point-in-time (at shipment or delivery depending on agreed upon terms) or over-time when the Company has an enforceable right to payment for performance completed to date. We believe the costs incurred method is the best method to recognize our over-time revenue as costs incurred are proportionate to progress achieved in satisfying our performance obligations. The Company also has bill and hold arrangements with certain customers. For these arrangements, control over the product occurs when the product is ready for physical transfer to the customer, as we have a present right to payment, the customer can direct the use of the product (i.e., request shipment to its facility), and legal title has passed to the customer. Revenue is recognized at the time the product is produced and we have transferred control to the customer. Payment terms typically range from 30-90 days, based upon agreed upon terms with the customer. Taxes assessed by a governmental authority that we collect from our customers that are both imposed on and concurrent with our revenue producing activities (such as sales tax, value-added tax, and excise taxes) are excluded from revenue. Shipping and handling costs incurred after control of the product is transferred to our customers are treated as fulfillment costs and not a separate performance obligation. MCC records contract assets when revenue is recognized but we have not yet invoiced the customer. This occurs when costs are incurred for the production of labels for over-time customers but the associated revenues have not been billed to the customer or when prepress costs related to fulfillment and completion of labels are incurred but the associated revenues for those labels have not been billed to the customer. Contract liabilities are recorded for expected shipping and handling charges for revenue recognized from over-time customers and billings to customers for prepress items to be utilized in the fulfilment and completion of labels that have not yet been fully utilized in the production process.
MCC recognized revenues of $4,445 during the three months ended June 30, 2018 that were included in contract liabilities as of March 31, 2018 and fully expects the $8,112 of contract liabilities as of June 30, 2018 to be recognized as revenue within six months. We elected the practical expedient to disregard the possible existence of a significant financing component related to payment on contracts as part of the adoption of ASU 2014-09, as we expect that customers will pay for the products within one year. Additionally, as all contracts are expected to have an original duration of one year or less, we elected the practical expedient to exclude disclosure of information regarding the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period. The following table summarizes the June 30, 2018 condensed consolidated statement of income and condensed consolidated balance sheet as if ASU 2014-09 had not been adopted and the adjustment required upon adoption of ASU 2014-09.
The following table presents our net revenues disaggregated by region and timing of revenue recognition for the three months ended June 30, 2018.
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Earnings Per Common Share | 3. Earnings Per Common Share Basic earnings per common share (EPS) is computed by dividing net income attributable to Multi-Color Corporation by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Multi-Color Corporation by the sum of the weighted average number of common shares outstanding during the period plus, if dilutive, potential common shares outstanding during the period. Potential common shares outstanding during the period consist of restricted shares, restricted share units, and the incremental common shares issuable upon the exercise of stock options and are reflected in diluted EPS by application of the treasury stock method. The following is a reconciliation of the number of shares used in the basic EPS and diluted EPS computations:
The Company excluded 279 and 21 options to purchase shares in the three months ended June 30, 2018 and 2017, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect. |
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Inventories | 4. Inventories The Company’s inventories consisted of the following:
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | 5. Debt The components of the Company’s debt consisted of the following:
The carrying value of debt under the New Credit Agreement approximates fair value. The fair value of the Senior Notes is based on observable inputs, including quoted market prices (Level 2). The fair values of the 4.875% Senior Notes and 6.125% Senior Notes were approximately $556,500 and $255,625, respectively, as of June 30, 2018. The fair values of the 4.875% Senior Notes and 6.125% Senior Notes were approximately $564,000 and $258,750, respectively, as of March 31, 2018. The following is a schedule of future annual principal payments as of June 30, 2018:
Senior Secured Credit Facility In conjunction with the Constantia Labels acquisition, effective October 31, 2017 the Company entered into a credit agreement (the “New Credit Agreement”) with various lenders. The New Credit Agreement replaced the Company’s previous credit agreement and consists of (i) a senior secured first lien term loan A facility (the “Term Loan A Facility”) in an aggregate principal amount of $150,000 with a five year maturity, (ii) a senior secured first lien term loan B facility (the “Term Loan B Facility”) in an aggregate principal amount of $500,000 with a seven year maturity, and (iii) a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount up to $400,000, comprised of a $360,000 U.S. revolving credit facility (the “U.S. Revolving Credit Facility“) and a $40,000 U.S. Dollar equivalent Australian sub-facility (the “Australian Revolving Sub-Facility”), each with a five year maturity. The New Credit Agreement contains customary mandatory and optional prepayment provisions and customary events of default. The New Credit Agreement’s Term Loan A Facility, Term Loan B Facility and U.S. Revolving Credit Facility (together, the “U.S. facilities”) are guaranteed by substantially all of the Company’s direct and indirect wholly owned domestic subsidiaries, and such guarantors pledged substantially all their assets as collateral to secure the U.S. facilities. The Australian Revolving Sub-Facility is secured by substantially all of the assets of the Australian borrower and its direct and indirect subsidiaries. The New Credit Agreement can be used for working capital, capital expenditures and other corporate purposes and to fund permitted acquisitions (as defined in the New Credit Agreement). Loans under the New Credit Agreement bear interest at variable rates plus a margin, based on the Company’s consolidated secured net leverage ratio. The weighted average interest rates on the Company’s borrowings are as follows:
The New Credit Agreement contains customary representations and warranties as well as customary negative and affirmative covenants, which require the Company to maintain the following financial covenants at the end of each quarter: (i) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.50 to 1.00 for the fiscal quarters ended during the period of March 31, 2017 through, and including June 30, 2019 and (ii) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.25 to 1.00 for the fiscal quarters ended during the period of September 30, 2019 and thereafter. The New Credit Agreement, the indenture governing the 4.875% Senior Notes (the “4.875% Senior Notes Indenture”) and the indenture governing the 6.125% Senior Notes (the “6.125% Senior Notes Indenture” and together with the 4.875% Senior Notes Indenture, the “Indentures”) limit the Company’s ability to incur additional indebtedness. Additional covenants contained in the New Credit Agreement and the Indentures, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, make restricted payments, create liens, make equity or debt investments, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Under the New Credit Agreement and the Indentures, certain changes in control of the Company could result in the occurrence of an Event of Default. In addition, the New Credit Agreement limits the ability of the Company to modify terms of the Indentures. As of June 30, 2018, the Company was in compliance with the covenants in the New Credit Agreement and the Indentures. Available borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility were $289,418 and $6,294, respectively, at June 30, 2018. The Company also has various other uncommitted lines of credit available at June 30, 2018 in the aggregate amount of $21,888. 4.875% Senior Notes The $600,000 aggregate principal amount of 4.875% Senior Notes due 2025 (the “4.875% Senior Notes”) were issued in October 2017 to fund the acquisition of Constantia Labels. The 4.875% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 4.875% Senior Notes on May 1st and November 1st of each year beginning May 1, 2018 until the maturity date of November 1, 2025. The Company’s obligations under the 4.875% Senior Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries. 6.125% Senior Notes The $250,000 aggregate principal amount of 6.125% Senior Notes due 2022 (the “6.125% Senior Notes”) were issued in November 2014. The 6.125% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 6.125% Senior Notes on June 1st and December 1st of each year beginning June 1, 2015 until the maturity date of December 1, 2022. The Company’s obligations under the 6.125% Senior Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries. Debt Issuance Costs In conjunction with the issuance of the New Credit Agreement, the Company incurred $16,331 in debt issuance costs, which are being deferred and amortized over the term of the Term A Loan Facility, Term Loan B Facility and Revolving Credit Facility. In conjunction with terminating the Company’s prior credit agreement, $660 in unamortized debt issuance costs related to a debt extinguishment were written-off to interest expense during the three months ended December 31, 2017. The remaining unamortized fees under the prior credit agreement related to a debt modification and are being amortized over the term of the Revolving Credit Facility. The Company incurred $10,338 in debt issuance costs associated with the issuance of the 4.875% Senior Notes, which are being deferred and amortized over the term of the 4.875% Senior Notes. The Company recorded $1,275 and $404 in interest expense in the three months ended June 30, 2018 and 2017, respectively, in the condensed consolidated statements of income to amortize deferred financing costs. Capital Leases The present value of the net minimum payments on the capitalized leases is as follows:
The capitalized leases carry interest rates from 0.97% to 12.47% and mature from fiscal 2019 to fiscal 2032. |
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Risks and Uncertainties [Abstract] | |
Major Customers | 6. Major Customers During the three months ended June 30, 2018 and 2017, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 9% and 17%, respectively, of the Company’s consolidated net revenues. All of these sales were made to The Procter & Gamble Company. In addition, accounts receivable balances from The Procter & Gamble Company approximated 3% of the Company’s total accounts receivable balance at June 30, 2018 and March 31, 2018. The loss or substantial reduction of the business of this major customer could have a material adverse impact on the Company’s results of operations and cash flows. |
Income Taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, various foreign jurisdictions, and various state and local jurisdictions where the statutes of limitations generally range from three to five years. At June 30, 2018, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2015. The Company is no longer subject to state and local examinations by tax authorities for years before fiscal 2014. In foreign jurisdictions, the Company is no longer subject to examinations by tax authorities for years before fiscal 1999. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. As the Company has a March 31 fiscal year-end, a U.S. statutory federal rate of 21% applies to fiscal year beginning April 1, 2018. The Tax Act eliminates the domestic manufacturing deduction and implements certain transitional impacts to the Company. The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The Company made an estimate at March 31, 2018 on the impact of the Tax Act. There were no changes to that provisional estimate during the first quarter ended June 30, 2018. The benefits of tax positions are not recorded unless it is more likely than not that the tax position would be sustained upon challenge by the appropriate tax authorities. Tax benefits that are more likely than not to be sustained are measured at the largest amount of benefit that is cumulatively greater than a 50% likelihood of being realized. As of June 30, 2018 and March 31, 2018, the Company had liabilities of $7,296 and $7,038, respectively, recorded for unrecognized tax benefits for U.S. federal, state and foreign tax jurisdictions. During the three months ended June 30, 2018 and 2017, the Company recognized $138 and $(56), respectively, of interest and penalties in income tax expense in the condensed consolidated statements of income. The liability for the gross amount of interest and penalties at June 30, 2018 and March 31, 2018 was $2,868 and $2,641, respectively. The liability for unrecognized tax benefits is classified in other noncurrent liabilities on the condensed consolidated balance sheets for the portion of the liability where payment of cash is not anticipated within one year of the balance sheet date. The Company believes that it is reasonably possible that $4,542 of unrecognized tax benefits as of June 30, 2018 could be released within the next 12 months due to the lapse of statute of limitations and settlements of certain foreign and domestic income tax matters. The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate are $6,742. |
Risk Management Activities and Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management Activities and Financial Instruments | 8. Risk Management Activities and Financial Instruments The Company is exposed to market risks, both directly and indirectly, such as currency fluctuations and interest rate movement. To the extent the Company deems it to be appropriate, derivative instruments and hedging activities are used as a risk management tool to mitigate the potential impact of certain risks, primarily foreign currency exchange risk and interest rate risk. The Company uses various types of derivative instruments including, but not limited to, forward contracts and swaps. The Company formally assesses, designates, and documents as a hedge of an underlying exposure each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, the Company assesses, both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transactions are effective at offsetting changes in either the fair values or cash flows of the underlying exposures. Interest Rate Risk Management The Company uses interest rate swap agreements (the “Swaps”) to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Swaps involve the exchange of fixed and variable rate interest payments and do not represent an actual exchange of the underlying notional amounts between the two parties. In conjunction with entering into the New Credit Agreement (see Note 5), the Company entered into two spot non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps became effective October 2017, expire in October 2018, and will result in interest payments of 1.5625% plus the applicable margin per the requirements in the New Credit Agreement. The Company also entered into two forward starting non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps will become effective in October 2018, will expire in October 2022, and will result in interest payments of 2.1345% plus the applicable margin per the requirements in the New Credit Agreement. Upon inception, the Swaps were designated as cash flow hedges under ASU 2017-12, with gains and losses, net of tax, measured on an ongoing basis, recorded in accumulated other comprehensive income (loss) (“AOCI”). Foreign Currency Risk Management Foreign currency exchange risk arises from our international operations as well as from transactions with customers or suppliers denominated in currencies other than the U.S. Dollar. The functional currency of each of the Company’s subsidiaries is generally the currency of the country in which the subsidiary operates or the U.S. Dollar. At times, the Company uses foreign currency forward contracts to minimize the impact of fluctuations in currency exchange rates. The Company periodically enters into foreign currency forward contracts to fix the purchase price of foreign currency denominated firm commitments. In addition, the Company periodically enters into short-term foreign currency forward contracts to fix the U.S. Dollar value of certain intercompany loan payments, which typically settle in the following quarter. During the three months ended June 30, 2018 and 2017, certain of the Company’s forward contracts were not designated as hedging instruments; therefore, changes in the fair value of the contracts were immediately recognized in other income and expense in the consolidated statements of income. The Company periodically enters into foreign exchange forward contracts to fix the purchase price in U.S. Dollars of a foreign currency denominated firm commitment to purchase presses. Certain of these forward contracts are designated as fair value hedges and changes in the fair value of the contracts are recorded in other income and expense in the consolidated statements of income in the same period during which the related hedged items affect the consolidated statements of income. In June 2018, the Company entered into foreign exchange forward contracts to fix the purchase price in U.S. Dollars of foreign currency denominated firm commitments to purchase various raw materials. These forward contracts are designated as cash flow hedges with gains and losses, net of tax, measured on an ongoing basis, recorded in AOCI. Net Investment Hedging In September 2017, as a means of managing foreign currency risk related to our significant operations in Europe, the Company executed four fixed-for-fixed cross currency swaps, in which the Company will pay Euros and receive U.S. Dollars with a combined notional amount of €400,000, which mature in November 2025. This will effectively convert U.S. Dollar denominated debt to Euro denominated debt. The Company designated €205,000 of swap notional as a net investment hedge of the Company’s net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. Changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in AOCI to offset changes in the values of the net investments being hedged. The remaining €195,000 of swap notional was not designated as an accounting hedge in September 2017. Therefore, changes in fair value of the derivative instruments were recognized in other income and expense in the consolidated statements of income. In November 2017, the Company formally designated the remaining €195,000 of swap notional as a net investment hedge under ASU 2017-12, bringing the total designated notional value to €400,000. Effective November 1, 2017, hedge accounting was applied to the newly designated swap notional of €195,000. Disclosures about Derivative Instruments All of the Company’s derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. The Company determines the fair values of its derivatives based on valuation models which project future cash flows and discount the future amounts to a present value using market based observable inputs including interest rate curves, foreign currency rates, futures and basis point spreads, as applicable. The fair values of qualifying and non-qualifying instruments used in hedging transactions as of June 30, 2018 are as follows:
The amounts of gains and (losses) recognized in AOCI net of reclassifications into earnings, during the three months ended June 30, 2018 and 2017 are as follows:
The amounts of gains reclassified from AOCI into earnings for the three months ended June 30, 2018 and 2017 are as follows:
The amounts of gains and (losses) included in earnings from qualifying and non-qualifying financial instruments used in hedging transactions for the three months ended June 30, 2018 and 2017 are as follows:
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Accrued Expenses and Other Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities | 9. Accrued Expenses and Other Liabilities The Company’s accrued expenses and other liabilities consisted of the following:
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Acquisitions |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | 10. Acquisitions Constantia Labels Summary On October 31, 2017, the Company completed its acquisition pursuant to the Sale and Purchase Agreement (as amended) with Constantia Flexibles Germany GmbH, Constantia Flexibles International GmbH, Constantia Flexibles Group GmbH and GPC Holdings B.V. (collectively, “Constantia Flexibles”), acquiring 100% of the Labels Division of Constantia Flexibles (“Constantia Labels”). Constantia Labels, headquartered in Vienna, Austria, is a leader in label solutions serving the food, beverage and consumer packaging goods industries. Constantia Labels has approximately 2,800 employees globally and 24 production plants across 14 countries, with major operations across Europe, Asia and North America. The acquisition included a 75% controlling interest in certain label operations in South Africa. The Company believes the combination of Constantia Labels’ food & beverage business with Multi-Color’s existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, will create a company with significant scale and geographic, end-market, customer and product diversification and additional growth opportunities. The results of Constantia Labels’ operations were included in the Company’s consolidated financial statements beginning on October 31, 2017. The purchase price for Constantia Labels consisted of the following:
The Company issued 3,383 shares of its common stock to Constantia Flexibles as part of the consideration for the purchase of Constantia Labels. The Sale and Purchase Agreement provides for restrictions on the transfer of the shares issued to Constantia Flexibles and certain registration rights with respect to the shares. The fair value of the shares issued of $237,820 was calculated using the Company share price of $82.70, which was the closing price on October 31, 2017, discounted to reflect the temporary lack of liquidity. The cash portion of the purchase price was funded through the 4.875% Senior Notes due 2025 and funds from the New Credit Agreement (see Note 5). The purchase price included deferred payments with a total fair value of $3,901, estimated as of the acquisition date, of which $807 was paid during the three months ended June 30, 2018 with the remaining to be paid out within 90 days after December 31, 2018, 2019 and 2020. In addition, the purchase price includes future performance based earnouts with a total fair value of $9,026, estimated as of the acquisition date. The future value of the earnouts is dependent upon whether the Verstraete in Mould Labels N.V. (Verstraete) business, which was acquired in conjunction with the Constantia Labels’ acquisition, meets or exceeds certain agreed upon EBITA (earnings before interest, taxes, and amortization) metrics over the three to five year period following the acquisition. The earnouts have a minimum future payout of zero, and the maximum amount of the future payout is based on the amount of EBITA growth achieved relative to calendar 2017. The earnouts may be paid out within 90 days after December 31, 2020, 2021 or 2022. Net cash acquired includes $49,647 of cash acquired less $33,532 of assumed bank debt and capital leases. The Company spent $17,484 in acquisition expenses related to the Constantia Labels acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income as follows: $18 in the third quarter of fiscal 2017, $744 in the first quarter of fiscal 2018, $3,545 in the second quarter of fiscal 2018, $11,299 in the third quarter of fiscal 2018, $632 in the fourth quarter of fiscal 2018 and $1,246 in the first quarter of fiscal 2019. Purchase Price Allocation and Other Items The determination of the purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Constantia Labels. The purchase price allocation may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles, accounts payable, accrued liabilities, debt and non-controlling interests) and the valuation of the related tax assets and liabilities are completed. Based on fair value estimates, the purchase price for Constantia Labels has been allocated to individual assets acquired and liabilities assumed as follows:
The liabilities assumed in the Constantia Labels acquisition included a contingent liability of $9,671, estimated as of the acquisition date based on the Company’s best estimate. The contingent liability, payable to the pre-Constantia Flexibles owners of the respective entities, was based on future earnings of certain entities acquired. In the fourth quarter of fiscal 2018, $7,523 of the contingent liability was paid. The remaining contingent liability may be paid no later than December 31, 2020. The fair value of the noncontrolling interests for Constantia Labels was estimated based on market valuations performed by an independent third party using a combination of: (i) an income approach based on expected future discounted cash flows; and (ii) an asset approach. During the first quarter of fiscal 2019, goodwill increased by $291 related to measurement period adjustments for the Constantia Labels acquisition. The measurement period adjustments primarily consisted of a $2,538 and $261 increase in the valuation of other assets and accrued expenses, respectively, offset by a $2,507 and $151 decrease in the valuation of inventory and property, plant and equipment, respectively. The estimated fair value of identifiable intangible assets acquired and their estimated useful lives are as follows:
Identifiable intangible assets are amortized over their useful lives based upon a number of assumptions including the estimated period of economic benefit and utilization. The weighted-average amortization period for identifiable intangible assets acquired in the Constantia Labels acquisition is 18 years. The goodwill for Constantia Labels is attributable to combining Constantia Labels’ food & beverage business with Multi-Color’s existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, thereby creating additional growth opportunities for both businesses utilizing the expanded global footprint and the acquired workforce. Goodwill arising from the Constantia Labels acquisition is not deductible for income tax purposes. The accounts receivable acquired as part of the Constantia Labels acquisition had a fair value of $118,020 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $119,883 and the estimated contractual cash flows that are not expected to be collected are $1,863.
Pro Forma Information The following table provides the unaudited pro forma results of operations for the three months ended June 30, 2017 as if Constantia Labels had been acquired as of the beginning of fiscal year 2018. However, pro forma results do not include any anticipated synergies from the combination of the companies, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the dates indicated or that may result in the future.
The following is a reconciliation of actual net revenues and net income attributable to Multi-Color Corporation to unaudited pro forma net revenues and net income:
The following table identifies the unaudited pro forma adjustments:
Other Acquisition Activity On October 11, 2017, the Company acquired 100% of TP Label Limited, the labels business of Tanzania Printers Limited (Tanzania Printers), and TP Kenya Limited (collectively, “TP Label”), which is located in Dar es Salaam, Tanzania with a sales and distribution center located in Nairobi, Kenya, for $15,929 less net cash acquired of $397. The purchase price included $9,557, which was retained by MCC at closing and was used to repay the indebtedness of TP Label Limited and Tanzania Printers during the three months ended March 31, 2018. The purchase price also included an indemnification holdback of $1,593 to fund certain potential obligations of the sellers with respect to the transaction, which is deferred for one year after the closing date. TP Label is primarily a pressure sensitive and cut and stack label business, serving customers in the food and beverage market. On August 3, 2017, the Company acquired 100% of GEWA Etiketten GmbH (GEWA), including the remaining 2.4% of the common shares of GIP (see below), for $21,846 plus net debt assumed of $5,228. Upon closing, $2,185 of the purchase price was deposited into an escrow account and is to be released to the seller on the 18-month anniversary of the closing date in accordance with the purchase agreement. The escrow amount is to fund certain potential indemnification obligations of the seller with respect to the transaction. GEWA is located in Bingen am Rhein, Germany and specializes in producing pressure sensitive labels for the wine and spirits market.
The determination of the final purchase price allocation to specific assets acquired and liabilities assumed is incomplete for TP Label and GEWA. The purchase price allocations may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles and debt) and the valuation of the related tax assets and liabilities are completed. On January 3, 2017, the Company acquired 100% of Graphix Labels and Packaging Pty Ltd. (Graphix) for $17,261. The purchase price included $1,631 that is deferred for two years after the closing date. Graphix is located in Melbourne, Victoria, Australia and specializes in producing labels for both the food & beverage and wine & spirits markets. In January 2017, the Company acquired an additional 67.6% of the common shares of GIP for $2,084 plus net debt assumed of $862. The purchase price included a deferred payment of $208 that was paid during the three months ended March 31, 2018. The Company acquired 30% of GIP as part of the Barat acquisition in fiscal 2016. Immediately prior to obtaining a controlling interest in GIP, the Company recognized a gain of $690 as a result of re-measuring our equity interest to its fair value of $771 based on the most recent share activity. In August 2017, the Company acquired the remaining 2.4% of the common shares of GIP in conjunction with the GEWA acquisition (see above). GIP is located in the Bordeaux region of France and specializes in producing labels for the wine & spirits market. On July 6, 2016, the Company acquired 100% of Industria Litografica Alessandrina S.r.l. (I.L.A.) for $6,301 plus net debt assumed of $3,547. The purchase price included $819 that is deferred for three years after the closing date. I.L.A. is located in the Piedmont region of Italy and specializes in production of premium self-adhesive and wet glue labels primarily for the wine & spirits market and also services the food industry. On July 1, 2016, the Company acquired 100% of Italstereo Resin Labels S.r.l. (Italstereo) for $3,342 less net cash acquired of $181. The purchase price included a deferred payment of $201 that was paid in the three months ended September 30, 2017 and a deferred payment of $133 that is due two years after the closing date. Italstereo is located near Lucca, Italy and specializes in producing pressure sensitive adhesive resin coated labels, seals and emblems. The results of operations of the acquisitions described above within this “Other Acquisition Activity” section have been included in the condensed consolidated financial statements since the respective dates of acquisition and have been determined to be immaterial for purposes of additional disclosure. Sale of Southeast Asian durables business On July 3, 2017, the Company sold its 60% controlling interest in its Southeast Asian durables business to its minority shareholders for $3,620 in net cash proceeds. The Company recognized a loss of $512 on the sale of the business, which was recognized in other expense in the consolidated statements of income. |
Accumulated Other Comprehensive Loss |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | 11. Accumulated Other Comprehensive Loss The changes in the Company’s accumulated other comprehensive loss by component consisted of the following:
Reclassifications out of accumulated other comprehensive loss consisted of the following:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | 12. Goodwill and Intangible Assets The changes in the Company’s goodwill consisted of the following:
The Company’s intangible assets consisted of the following:
The amortization expense of intangible assets for the three months ended June 30, 2018 and 2017 was $10,410 and $3,604, respectively. |
Facility Closures |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Facility Closures | 13. Facility Closures Merignac, France During the three months ended September 30, 2017, the Company announced plans to consolidate our manufacturing facility located in Merignac, France into our existing facility in Libourne, France. The transition was substantially completed in the third quarter of fiscal 2018. Below is a summary of the total contractual termination benefits and exit and disposal costs related to the closure of the Merignac facility:
Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities, and ongoing costs related to the leased facility until expiration or early termination of the related lease agreement. Below is a reconciliation of the beginning and ending liability balances related to the contractual termination benefits and exit and disposal costs:
The cumulative costs incurred in conjunction with the closure as of June 30, 2018 are $1,142, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal costs above as well as $125 in non-cash impairment charges and $42 in net loss on the sale related to property, plant and equipment at the Merignac facility, which were recorded in facility closure expenses during the three months ended March 31, 2018. In addition, the Company reversed $102 in accrued pension related to employees that were terminated in conjunction with the closure, which were recorded to facility closure expenses during the three months ended March 31, 2018. Dormans, France During the three months ended June 30, 2017, the Company announced plans to close our manufacturing facility located in Dormans, France. Production at the facility ceased during the first quarter of fiscal 2018. Below is a summary of the exit and disposal costs related to the closure of the Dormans facility:
Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities. The cumulative costs incurred in conjunction with the closure as of June 30, 2018 are $260, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal costs above as well as non-cash impairment charges of $25 related to the land and building that was previously held for sale at the Dormans facility, which was recorded in facility closure expenses during the three months ended December 31, 2017. In addition, the Company recorded a net loss on the disposal of property, plant and equipment of $59 related to assets in Dormans that were not transferred to other facilities and were sold or abandoned and wrote-off $47 in raw materials that were not transferred to other facilities during the three months ended March 31, 2018. |
Commitments and Contingencies |
3 Months Ended |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Litigation The Company is subject to various legal claims and contingencies that arise out of the normal course of business, including claims related to commercial transactions, product liability, health and safety, taxes, environmental matters, employee matters and other matters. Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on our financial condition, results of operations and cash flows. |
Supplemental Cash Flow Disclosures |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Disclosures | 15. Supplemental Cash Flow Disclosures Supplemental disclosures with respect to cash flow information and non-cash operating, investing and financing activities are as follows:
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Description of Business and Significant Accounting Policies (Policies) |
3 Months Ended |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | The Company Multi-Color Corporation (Multi-Color, MCC, we, us, our or the Company), headquartered near Cincinnati, Ohio, is a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in the North American, Latin American, EMEA (Europe, Middle East and Africa) and Asia Pacific regions with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed, and Aluminum Labels. |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures are adequate to make the information presented not misleading. A description of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018 (the “2018 10-K”). These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the 2018 10-K. The information furnished in these condensed consolidated financial statements reflects all estimates and adjustments which are, in the opinion of management, necessary to present fairly the results for the interim periods reported. The condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain prior period balances have been reclassified to conform to current year classifications. |
Use of Estimates in Financial Statements | Use of Estimates in Financial Statements In preparing financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
New Accounting Pronouncements | New Accounting Pronouncements In the first quarter of fiscal 2019, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all related amendments, which provides revised guidance for revenue recognition. We adopted this guidance using the modified retrospective transition method, which means that periods beginning in fiscal 2019 are reported under this guidance while prior periods continue to be reported under previous guidance. See Note 2. In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220),” which permits the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income (AOCI) to retained earnings. This new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. Early adoption is permitted, and the update must be applied either at the beginning of the period of adoption or retrospectively to each period in which the effects of the Tax Act related to items remaining in AOCI are recognized. The Company is currently evaluating the impact of this update on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other,” which simplifies the accounting for goodwill impairment. This update removes step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, which for the Company is any annual or interim goodwill impairment tests performed after April 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of this update on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations,” which revises the definition of a business. The FASB’s new framework assists entities in evaluating whether a set (integrated set of assets and activities) should be accounted for as an acquisition of a business or a group of assets. The framework adds an initial screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen is met, the set is not a business. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2018. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Company’s consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The specific issues addressed include debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination and separately identifiable cash flows and application of the predominance principle. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2018. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires that lessees recognize almost all leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, leases will be classified as either finance leases or operating leases. This update is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. The Company is currently evaluating the impact of this standard on its consolidated financial statements, which will include an increase in both assets and liabilities relating to its leasing activities. No other new accounting pronouncement issued or effective during the three months ended June 30, 2018 had or is expected to have a material impact on the condensed consolidated financial statements. |
Supply Chain Financing | Supply Chain Financing The Company has entered into supply chain financing agreements with certain customers and factoring arrangements with certain banks. The receivables for the agreements are sold without recourse to the customers’ banks and are accounted for as sales of accounts receivable. Losses on the sale of these receivables are included in selling, general and administrative expenses in the condensed consolidated statements of income, and losses of $510 and $235 were recorded for the three months ended June 30, 2018 and 2017, respectively. |
Revenue Recognition (Tables) |
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Summary of Condensed Consolidated Statement of Income and Condensed Consolidated Balance sheet as If ASU 2014-09 Has Not Been Adopted and Adjustment Required Upon Adoption of ASU 2014-09. | The following table summarizes the June 30, 2018 condensed consolidated statement of income and condensed consolidated balance sheet as if ASU 2014-09 had not been adopted and the adjustment required upon adoption of ASU 2014-09.
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Summary of Net Contract Assets and Liabilities | Contract liabilities are recorded for expected shipping and handling charges for revenue recognized from over-time customers and billings to customers for prepress items to be utilized in the fulfilment and completion of labels that have not yet been fully utilized in the production process.
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Summary of Net Revenues Disaggregated by Region and Timing of Revenue Recognition | The following table presents our net revenues disaggregated by region and timing of revenue recognition for the three months ended June 30, 2018.
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Accounting Standards Update 2014-09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Condensed Consolidated Statement of Income and Condensed Consolidated Balance sheet as If ASU 2014-09 Has Not Been Adopted and Adjustment Required Upon Adoption of ASU 2014-09. | Adjustments due to ASU 2014-09 were as follows:
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Earnings Per Common Share (Tables) |
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Reconciliation of Number of Shares Used in Basic and Diluted Earnings Per Share Computations | The following is a reconciliation of the number of shares used in the basic EPS and diluted EPS computations:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | The Company’s inventories consisted of the following:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Debt | The components of the Company’s debt consisted of the following:
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Schedule of Future Annual Principal Payments | The following is a schedule of future annual principal payments as of June 30, 2018:
|
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Schedule of Weighted Average Interest Rates | The weighted average interest rates on the Company’s borrowings are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Minimum Payments on Capitalized Leases | The present value of the net minimum payments on the capitalized leases is as follows:
|
Risk Management Activities and Financial Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value of Qualifying and Non-qualifying Instruments Used in Hedging Transactions | The fair values of qualifying and non-qualifying instruments used in hedging transactions as of June 30, 2018 are as follows:
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts of Gains and (Losses) Recognized in AOCI Net of Reclassifications Into Earnings | The amounts of gains and (losses) recognized in AOCI net of reclassifications into earnings, during the three months ended June 30, 2018 and 2017 are as follows:
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Amounts of Gains Reclassified from AOCI into Earnings | The amounts of gains reclassified from AOCI into earnings for the three months ended June 30, 2018 and 2017 are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts of Gains and (Losses) Included in Earnings from Qualifying and Non-qualifying Financial Instruments Used in Hedging Transactions | The amounts of gains and (losses) included in earnings from qualifying and non-qualifying financial instruments used in hedging transactions for the three months ended June 30, 2018 and 2017 are as follows:
|
Accrued Expenses and Other Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Expenses and Other Liabilities | The Company’s accrued expenses and other liabilities consisted of the following:
|
Acquisitions (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price Allocation | Based on fair value estimates, the purchase price for Constantia Labels has been allocated to individual assets acquired and liabilities assumed as follows:
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Estimated Fair Value of Identifiable Intangible Assets Acquired and Estimated Useful Lives | The estimated fair value of identifiable intangible assets acquired and their estimated useful lives are as follows:
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Schedule of Pro Forma Information | The following table provides the unaudited pro forma results of operations for the three months ended June 30, 2017 as if Constantia Labels had been acquired as of the beginning of fiscal year 2018. However, pro forma results do not include any anticipated synergies from the combination of the companies, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the dates indicated or that may result in the future.
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Reconciliation of Actual Net Revenues and Net Income Attributable to Multi-Color Corporation to Pro Forma Net Revenues and Net Income | The following is a reconciliation of actual net revenues and net income attributable to Multi-Color Corporation to unaudited pro forma net revenues and net income:
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Pro Forma Adjustments | The following table identifies the unaudited pro forma adjustments:
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Constantia Labels | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price | The purchase price for Constantia Labels consisted of the following:
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Accumulated Other Comprehensive Loss (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Loss by Component | The changes in the Company’s accumulated other comprehensive loss by component consisted of the following:
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Schedule of (Gains) and Losses Reclassified from AOCI | Reclassifications out of accumulated other comprehensive loss consisted of the following:
|
Goodwill and Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | The changes in the Company’s goodwill consisted of the following:
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Intangible Assets | The Company’s intangible assets consisted of the following:
|
Facility Closures (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Merignac France | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Exit and Disposal Costs Related to Closure | Below is a summary of the total contractual termination benefits and exit and disposal costs related to the closure of the Merignac facility:
|
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Reconciliation of the Beginning and Ending Liability Balances Related to the Contractual Termination Benefits and Exit and Disposal Costs | Below is a reconciliation of the beginning and ending liability balances related to the contractual termination benefits and exit and disposal costs:
|
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Dormans France | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Exit and Disposal Costs Related to Closure | Below is a summary of the exit and disposal costs related to the closure of the Dormans facility:
|
Supplemental Cash Flow Disclosures (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities | Supplemental disclosures with respect to cash flow information and non-cash operating, investing and financing activities are as follows:
|
Description of Business and Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Selling, General and Administrative Expenses | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Losses on sale of receivables | $ 510 | $ (235) |
Revenue Recognition - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Other Revenues [Line Items] | ||
Contract with customer, liability, revenue recognized | $ 8,112 | $ 4,445 |
Minimum | Accounting Standards Update 2014-09 | ||
Other Revenues [Line Items] | ||
Customer payment terms | 30 days | |
Maximum | Accounting Standards Update 2014-09 | ||
Other Revenues [Line Items] | ||
Customer payment terms | 90 days |
Revenue Recognition - Summary of Net Contract Assets and Liabilities (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Apr. 01, 2018 |
---|---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net contract assets and liabilities | $ 24,836 | $ 23,559 |
Other current assets | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Contract assets | 32,948 | 31,001 |
Accrued Expenses and Other Liabilities | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Contract liabilities | $ (8,112) | $ (7,442) |
Earnings Per Common Share - Reconciliation of Number of Shares Used in Basic and Diluted Earnings Per Share Computations (Detail) - $ / shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||
Basic EPS, Shares | 20,439 | 16,943 |
Effect of dilutive securities, Shares | 106 | 209 |
Diluted EPS, Shares | 20,545 | 17,152 |
Basic EPS, Per Share Amount | $ 0.89 | $ 0.83 |
Effect of dilutive securities, Per Share Amount | (0.01) | (0.01) |
Diluted EPS, Per Share Amount | $ 0.88 | $ 0.82 |
Earnings Per Common Share - Additional Information (Detail) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||
Anti-dilutive shares | 279 | 21 |
Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 58,501 | $ 80,845 |
Work-in-process | 20,853 | 21,156 |
Raw materials | 64,328 | 65,949 |
Total inventories, net | $ 143,682 | $ 167,950 |
Debt - Components of Debt (Parenthetical) (Detail) |
3 Months Ended |
---|---|
Jun. 30, 2018 | |
6.125% Notes, due December 1, 2022 | Senior Notes | |
Debt Instrument [Line Items] | |
Debt instrument, interest rate | 6.125% |
Debt instrument, maturity date | Dec. 01, 2022 |
4.875% Notes, due November 1, 2025 | Senior Notes | |
Debt Instrument [Line Items] | |
Debt instrument, interest rate | 4.875% |
Debt instrument, maturity date | Nov. 01, 2025 |
Term Loan A Facility, mature October 31, 2022 | |
Debt Instrument [Line Items] | |
Debt instrument, maturity date | Oct. 31, 2022 |
Term Loan B Facility, mature October 31, 2024 | |
Debt Instrument [Line Items] | |
Debt instrument, maturity date | Oct. 31, 2024 |
Revolving Credit Facility | U.S. Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt instrument, maturity date | Oct. 31, 2022 |
Revolving Credit Facility | Australian Revolving Sub-Facility | |
Debt Instrument [Line Items] | |
Debt instrument, maturity date | Oct. 31, 2022 |
Debt - Schedule of Future Annual Principal Payments (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
July 2018 - June 2019 | $ 22,771 | |
July 2019 - June 2020 | 17,934 | |
July 2020 - June 2021 | 21,270 | |
July 2021 - June 2022 | 25,725 | |
July 2022 - June 2023 | 452,585 | |
Thereafter | 1,092,355 | |
Total | 1,632,640 | $ 1,627,855 |
Debt | ||
Debt Instrument [Line Items] | ||
July 2018 - June 2019 | 18,946 | |
July 2019 - June 2020 | 14,546 | |
July 2020 - June 2021 | 18,268 | |
July 2021 - June 2022 | 23,870 | |
July 2022 - June 2023 | 450,622 | |
Thereafter | 1,072,502 | |
Total | 1,598,754 | |
Capital Leases | ||
Debt Instrument [Line Items] | ||
July 2018 - June 2019 | 3,825 | |
July 2019 - June 2020 | 3,388 | |
July 2020 - June 2021 | 3,002 | |
July 2021 - June 2022 | 1,855 | |
July 2022 - June 2023 | 1,963 | |
Thereafter | 19,853 | |
Total | $ 33,886 | $ 36,288 |
Debt - Schedule of Weighted Average Interest Rates (Detail) - New Credit Agreement |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Term Loan A Facility, mature October 31, 2022 | ||
Debt Instrument [Line Items] | ||
Weighted average interest rates | 4.09% | 4.13% |
Term Loan B Facility, mature October 31, 2024 | ||
Debt Instrument [Line Items] | ||
Weighted average interest rates | 4.34% | 4.13% |
U.S. Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Weighted average interest rates | 4.06% | 4.42% |
Australian Revolving Sub-Facility | ||
Debt Instrument [Line Items] | ||
Weighted average interest rates | 4.07% | 4.13% |
Debt - Net Minimum Payments on Capitalized Leases (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Capital Leases, Future Minimum Payments, Net Present Value [Abstract] | ||
Total minimum lease payments | $ 45,961 | $ 49,521 |
Less amount representing interest | (12,075) | (13,233) |
Present value of net minimum lease payments | 33,886 | 36,288 |
Current portion | (3,825) | (4,191) |
Capitalized lease obligations, less current portion | $ 30,061 | $ 32,097 |
Major Customers - Additional Information (Detail) - Customer Concentration Risk - Procter And Gamble Company |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Sales Revenue, Net | ||||
Concentration Risk [Line Items] | ||||
Percentage from major customers | 9.00% | 17.00% | ||
Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Percentage from major customers | 3.00% | 3.00% |
Risk Management Activities and Financial Instruments - Amounts of Gains and (Losses) Recognized in AOCI Net of Reclassifications Into Earnings (Parenthetical) (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Unrealized gain (loss) on interest rate swaps, tax | $ (2,541) | $ 284 | |||
Cross Currency Swaps | Net Investment Hedges | Derivatives designated as hedging instruments | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative instruments, amount of gain (loss) recognized in AOCI | [1] | 15,643 | |||
Derivative instruments, amount of gain (loss) recognized in AOCI | [1] | (15,643) | |||
Unrealized gain (loss) on interest rate swaps, tax | (5,199) | ||||
Cross Currency Spot Swaps | Net Investment Hedges | Derivatives designated as hedging instruments | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative instruments, amount of gain (loss) recognized in AOCI | (9,073) | ||||
Derivative instruments, amount of gain (loss) recognized in AOCI | $ 9,073 | ||||
|
Risk Management Activities and Financial Instruments - Amounts of Gains Reclassified from AOCI into Earnings (Detail) - Cash Flow Hedging $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
| ||||||
Cross Currency Swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative instruments, amounts of gains and (losses) reclassified from AOCI into earnings | $ 2,325 | [1] | ||||
Interest Rate Swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative instruments, amounts of gains and (losses) reclassified from AOCI into earnings | $ 271 | [2] | ||||
|
Risk Management Activities and Financial Instruments - Amounts of Gains Reclassified from AOCI into Earnings (Parenthetical) (Detail) - Cash Flow Hedging $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
| ||||||
Cross Currency Swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Excluded component gain in AOCI which was recognized into income | $ 2,325 | |||||
Derivative instruments, amounts of gains and (losses) reclassified from AOCI into interest expense | 2,325 | [1] | ||||
Interest Rate Swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative instruments, amounts of gains and (losses) reclassified from AOCI into interest expense | 271 | [2] | ||||
Interest Rate Swaps | Interest expense | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative instruments, amounts of gains and (losses) reclassified from AOCI into interest expense | $ 1,196 | |||||
|
Risk Management Activities and Financial Instruments - Amounts of Gains and (Losses) Included in Earnings from Qualifying and Non-qualifying Financial Instruments used in Hedging Transactions (Detail) - Other income (expense), net - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Derivatives not designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on underlying hedged items | $ (4,963) | $ (367) |
Derivatives not designated as hedging instruments | Foreign Currency Forward Contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives | 5,033 | $ 367 |
Derivatives not designated as hedging instruments | Cross Currency Swaps | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives | 243 | |
Derivatives designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on underlying hedged items | (167) | |
Derivatives designated as hedging instruments | Foreign Exchange Contract | Fair Value Hedges | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives | $ 167 |
Accrued Expenses and Other Liabilities - Summary of Accrued Expenses and Other Liabilities (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued payroll and benefits | $ 41,250 | $ 45,418 |
Accrued income taxes | 8,810 | 13,838 |
Professional fees | 1,554 | 1,965 |
Accrued taxes other than income taxes | 4,313 | 4,682 |
Accrued interest | 5,087 | 16,480 |
Customer rebates | 3,038 | 2,578 |
Exit and Disposal costs related to facility closures | 50 | 457 |
Deferred payments | 8,524 | 9,735 |
Deferred revenue | 11,701 | 11,887 |
Derivative liabilities | 572 | 317 |
Other | 8,921 | 6,665 |
Total accrued expenses and other liabilities | $ 93,820 | $ 114,022 |
Acquisitions - Additional Information (Detail) |
3 Months Ended | 12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2017
USD ($)
Country
Plant
$ / shares
shares
|
Oct. 11, 2017
USD ($)
|
Aug. 03, 2017
USD ($)
|
Jan. 03, 2017
USD ($)
|
Jul. 06, 2016
USD ($)
|
Jul. 01, 2016
USD ($)
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
|
Jan. 31, 2017
USD ($)
|
|
Business Acquisition [Line Items] | ||||||||||||||
Goodwill, increased due to purchase price | $ 291,000 | |||||||||||||
Gironde Imprimerie Publicite | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 67.60% | |||||||||||||
Deferred payment | $ 208,000 | |||||||||||||
Net debt assumed | 862,000 | |||||||||||||
Purchase price, before debt assumed | $ 2,084,000 | |||||||||||||
Senior Notes | 4.875% Notes, due November 1, 2025 | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Debt instrument, interest rate | 4.875% | |||||||||||||
Debt instrument, maturity date | Nov. 01, 2025 | |||||||||||||
Constantia Labels | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 100.00% | |||||||||||||
Number of employees | 2,800 | |||||||||||||
Number of plants | Plant | 24 | |||||||||||||
Number of countries operated | Country | 14 | |||||||||||||
Number of shared issued for acquisition | shares | 3,383 | |||||||||||||
Fair value of the shares issued | $ 237,820,000 | |||||||||||||
Price per share | $ / shares | $ 82.70 | |||||||||||||
Deferred payment | $ 3,901,000 | $ 807,000 | ||||||||||||
Deferred payment period | 90 days | |||||||||||||
Future performance based earnout included in purchase price | $ 9,026,000 | |||||||||||||
Future performance based earnouts future payout, minimum | $ 0 | |||||||||||||
Future performance based earnouts future payout period, maximum | 90 days | |||||||||||||
Cash acquired, allocated to purchase price | $ 49,647,000 | |||||||||||||
Bank debt assumed | 33,532,000 | |||||||||||||
Acquisition expenses | 17,484,000 | |||||||||||||
Liabilities assumed, contingent liability | $ 9,671,000 | |||||||||||||
Contingent liability paid | $ 7,523,000 | |||||||||||||
Goodwill, decrease due to preliminary valuation of inventory | 2,507,000 | |||||||||||||
Goodwill, decrease due to preliminary valuation of property plant and equipment | 151,000 | |||||||||||||
Weighted-average amortization period for identifiable intangible assets acquired | 18 years | |||||||||||||
Accounts receivable acquired, fair value | $ 118,020,000 | |||||||||||||
The gross contractual value of receivables | 119,883,000 | |||||||||||||
Estimated contractual cash flows not expected to be collected | 1,863,000 | |||||||||||||
Purchase price, before cash acquired | 1,048,656,000 | |||||||||||||
Total purchase price | $ 1,283,288,000 | |||||||||||||
Constantia Labels | Selling, General and Administrative Expenses | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Acquisition expenses | $ 1,246,000 | $ 632,000 | $ 11,299,000 | $ 3,545,000 | $ 744,000 | $ 18,000 | ||||||||
Constantia Labels | South Africa | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 75.00% | |||||||||||||
Constantia Labels | Senior Notes | 4.875% Notes, due November 1, 2025 | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Debt instrument, interest rate | 4.875% | |||||||||||||
Debt instrument, maturity date | Nov. 01, 2025 | |||||||||||||
Barat Group | Gironde Imprimerie Publicite | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Minority interest, percentage | 30.00% | |||||||||||||
Fair value of equity interest | $ 771,000 | |||||||||||||
Gain recognized as a result of re-measuring the fair value of equity interest | $ 690,000 | |||||||||||||
Tanzania Printers | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 100.00% | |||||||||||||
Deferred payment period | 3 months | 1 year | ||||||||||||
Cash acquired, allocated to purchase price | $ 397,000 | |||||||||||||
Date of acquisition | Oct. 11, 2017 | |||||||||||||
Purchase price, before cash acquired | 15,929,000 | |||||||||||||
Indemnification Asset | $ 1,593,000 | |||||||||||||
GEWA Etiketten GmbH | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 100.00% | |||||||||||||
Date of acquisition | Aug. 03, 2017 | |||||||||||||
Total purchase price | $ 21,846,000 | |||||||||||||
Net debt assumed | 5,228,000 | |||||||||||||
Amount held in escrow account | $ 2,185,000 | |||||||||||||
Period for releasing escrow deposit | 18 months | |||||||||||||
GEWA Etiketten GmbH | Gironde Imprimerie Publicite | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Minority interest, percentage | 2.40% | |||||||||||||
Graphix Labels and Packaging Pty Ltd | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 100.00% | |||||||||||||
Deferred payment | $ 1,631,000 | |||||||||||||
Deferred payment period | 2 years | |||||||||||||
Date of acquisition | Jan. 03, 2017 | |||||||||||||
Total purchase price | $ 17,261,000 | |||||||||||||
Industria Litografica Alessandrina S.r.l. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 100.00% | |||||||||||||
Deferred payment | $ 819,000 | |||||||||||||
Deferred payment period | 3 years | |||||||||||||
Net debt assumed | $ 3,547,000 | |||||||||||||
Purchase price, before debt assumed | $ 6,301,000 | |||||||||||||
Italstereo Resin Labels S.r.l. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Equity interest acquired | 100.00% | |||||||||||||
Cash acquired, allocated to purchase price | $ 181,000 | |||||||||||||
Purchase price, before cash acquired | 3,342,000 | |||||||||||||
Italstereo Resin Labels S.r.l. | Year One | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Purchase price, before cash acquired | $ 201,000 | |||||||||||||
Italstereo Resin Labels S.r.l. | Year Two | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Deferred payment period | 2 years | |||||||||||||
Purchase price, before cash acquired | $ 133,000 |
Acquisitions - Purchase Price (Detail) - Constantia Labels - USD ($) $ in Thousands |
Oct. 31, 2017 |
Jun. 30, 2018 |
---|---|---|
Business Acquisition [Line Items] | ||
Cash from proceeds of borrowings | $ 1,048,656 | |
MCC common stock issued | 237,820 | |
Deferred payments | 3,901 | $ 807 |
Contingent consideration | 9,026 | |
Purchase price, before cash acquired | 1,299,403 | |
Net cash acquired | (16,115) | |
Total purchase price | $ 1,283,288 |
Acquisitions - Purchase Price Allocation (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 31, 2018 |
Oct. 31, 2017 |
---|---|---|---|
Assets Acquired: | |||
Goodwill | $ 1,140,614 | $ 1,196,634 | |
Constantia Labels | |||
Assets Acquired: | |||
Net cash acquired | $ 16,115 | ||
Accounts receivable | 118,020 | ||
Inventories | 84,811 | ||
Property, plant and equipment | 216,721 | ||
Intangible assets | 410,000 | ||
Goodwill | 707,624 | ||
Other assets | 16,949 | ||
Total assets acquired | 1,570,240 | ||
Liabilities Assumed: | |||
Accounts payable | 93,860 | ||
Accrued income taxes payable | 7,975 | ||
Accrued expenses and other liabilities | 39,375 | ||
Deferred tax liabilities | 128,527 | ||
Total liabilities assumed | 269,737 | ||
Net assets acquired | 1,300,503 | ||
Noncontrolling interests | (1,100) | ||
Net assets acquired attributable to Multi-Color Corporation | $ 1,299,403 |
Acquisitions - Estimated Fair Value of Identifiable Intangible Assets Acquired and Estimated Useful Lives (Detail) - Constantia Labels $ in Thousands |
Oct. 31, 2017
USD ($)
|
---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 410,000 |
Useful Lives | 18 years |
Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 390,000 |
Useful Lives | 19 years |
Technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 20,000 |
Useful Lives | 4 years |
Acquisitions - Schedule of Pro Forma Information (Detail) $ / shares in Units, $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
$ / shares
| |
Business Combinations [Abstract] | |
Net revenues | $ 422,767 |
Net income attributable to Multi-Color | $ 20,399 |
Diluted earnings per share | $ / shares | $ 0.99 |
Acquisitions - Reconciliation of Actual Net Revenues and Net Income Attributable to Multi-Color Corporation to Pro Forma Net Revenues and Net Income (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
||||
Business Acquisition, Pro Forma Information [Line Items] | |||||
Multi-Color Corporation actual results, Net Income | $ 18,139 | $ 14,106 | |||
Pro forma adjustments, Net Income | (9,590) | ||||
Pro forma results, Net Income | 20,399 | ||||
Multi-Color Corporation actual results, Net Revenues | $ 456,131 | 242,440 | |||
Pro forma adjustments, Net Revenues | 0 | ||||
Pro forma results, Net Revenues | 422,767 | ||||
Constantia Labels | |||||
Business Acquisition, Pro Forma Information [Line Items] | |||||
Constantia Labels actual results, Net Income | [1] | 15,883 | |||
Constantia Labels actual results, Net Revenues | [1] | $ 180,327 | |||
|
Acquisitions - Pro Forma Adjustments (Detail) $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Pro forma adjustments | $ (9,590) |
Financing Costs | Constantia Labels | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Pro forma adjustments | 4,193 |
Acquisition Transaction Costs | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Pro forma adjustments | 744 |
Incremental Depreciation and Amortization Costs | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Pro forma adjustments | (6,382) |
Incremental Interest Costs | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Pro forma adjustments | (12,454) |
Tax Effect of Adjustments | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Pro forma adjustments | $ 4,309 |
Accumulated Other Comprehensive Loss - Schedule of Changes in Accumulated Other Comprehensive Loss by Component (Detail) $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | $ 757,557 |
Ending balance | 713,209 |
Foreign currency items | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | 6,335 |
OCI before reclassifications | (82,520) |
Total other comprehensive income (loss) | (82,520) |
Ending balance | (76,185) |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (25,408) |
OCI before reclassifications | 18,706 |
Amounts reclassified from AOCI | (1,948) |
Total other comprehensive income (loss) | 16,758 |
Ending balance | (8,650) |
Defined benefit pension items | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (168) |
Ending balance | (168) |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (19,241) |
OCI before reclassifications | (63,814) |
Amounts reclassified from AOCI | (1,948) |
Total other comprehensive income (loss) | (65,762) |
Ending balance | $ (85,003) |
Accumulated Other Comprehensive Loss - Schedule of (Gains) and Losses Reclassified from AOCI (Detail) - Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2018
USD ($)
| ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amounts reclassified from AOCI | $ (1,948) | |||
Gains and (losses) reclassified from AOCI | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amounts reclassified from AOCI, tax | 648 | [1] | ||
Amounts reclassified from AOCI | (1,948) | |||
Gains and (losses) reclassified from AOCI | Cross Currency Swaps | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amounts reclassified from AOCI, before tax | (2,325) | |||
Gains and (losses) reclassified from AOCI | Interest Rate Swaps | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amounts reclassified from AOCI, before tax | $ (271) | [1] | ||
|
Goodwill and Intangible Assets - Goodwill (Detail) $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, gross, Beginning balance | $ 1,210,179 |
Accumulated impairment losses, Beginning balance | (13,545) |
Goodwill, net, Beginning balance | 1,196,634 |
Acquisitions | 0 |
Adjustments to prior year acquisitions | (291) |
Currency translation | (55,729) |
Sale of Southeast Asian durables business | 0 |
Goodwill, gross, Ending Balance | 1,153,120 |
Accumulated impairment losses, Ending balance | (12,506) |
Goodwill, net, Ending balance | $ 1,140,614 |
Goodwill and Intangible Assets - Intangible Assets (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 666,569 | $ 673,973 |
Accumulated Amortization | (101,921) | (93,740) |
Net Carrying Amount | 564,648 | 580,233 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 640,921 | 648,273 |
Accumulated Amortization | (94,387) | (87,560) |
Net Carrying Amount | 546,534 | 560,713 |
Technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 21,656 | 21,721 |
Accumulated Amortization | (4,794) | (3,586) |
Net Carrying Amount | 16,862 | 18,135 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 138 | 99 |
Accumulated Amortization | (115) | (66) |
Net Carrying Amount | 23 | 33 |
Non-compete Agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,854 | 3,880 |
Accumulated Amortization | (2,625) | (2,528) |
Net Carrying Amount | $ 1,229 | $ 1,352 |
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense of intangible assets | $ 10,410 | $ 3,604 |
Facility Closures - Summary of Exit and Disposal Costs Related to Closure (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Severance and other termination benefits | Merignac France | ||
Restructuring Cost and Reserve [Line Items] | ||
Total costs expected to be incurred | $ 703 | |
Cumulative costs incurred | 703 | |
Severance and other termination benefits | Dormans France | ||
Restructuring Cost and Reserve [Line Items] | ||
Total costs incurred | $ 34 | |
Cumulative costs incurred | 106 | |
Severance and other termination benefits | Dormans France | Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Total costs expected to be incurred | 106 | |
Other associated costs | Merignac France | ||
Restructuring Cost and Reserve [Line Items] | ||
Total costs incurred | 27 | |
Cumulative costs incurred | 374 | |
Other associated costs | Merignac France | Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Total costs expected to be incurred | 450 | |
Other associated costs | Merignac France | Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Total costs expected to be incurred | 750 | |
Other associated costs | Dormans France | ||
Restructuring Cost and Reserve [Line Items] | ||
Cumulative costs incurred | 23 | |
Other associated costs | Dormans France | Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Total costs expected to be incurred | $ 23 |
Facility Closures - Reconciliation of Beginning and Ending Liability Balances Related to Exit and Disposal Costs (Detail) - Merignac France $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Severance and other termination benefits | |
Restructuring Cost and Reserve [Line Items] | |
Beginning balance | $ 457 |
Amounts Paid | (407) |
Ending balance | 50 |
Other associated costs | |
Restructuring Cost and Reserve [Line Items] | |
Amounts Expensed | 27 |
Amounts Paid | $ (27) |
Facility Closures - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
Jun. 30, 2018 |
|
Merignac France | |||
Restructuring Cost and Reserve [Line Items] | |||
Reversed accrued pension related to employees | $ 102 | ||
Cumulative costs | $ 1,142 | ||
Gain (loss) on sale of property, plant and equipment | 42 | ||
Cumulative costs | 1,142 | ||
Merignac France | Facility closure expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Facility closure expenses related to impairment loss on fixed assets | 125 | ||
Facility closure expenses related to impairment loss on fixed assets | 125 | ||
Dormans France | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative costs | 260 | ||
Gain (loss) on sale of property, plant and equipment | 59 | ||
Cumulative costs | $ 260 | ||
Raw materials written off | $ 47 | ||
Dormans France | Facility closure expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Facility closure expenses related to impairment loss on fixed assets | $ 25 | ||
Facility closure expenses related to impairment loss on fixed assets | $ 25 |
Supplemental Cash Flow Disclosures - Supplemental Disclosures of Cash Flow Information and Non-Cash Activities (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Supplemental Disclosures of Cash Flow Information: | ||
Interest paid | $ 33,679 | $ 9,801 |
Income taxes paid, net of refunds | 7,862 | 2,083 |
Supplemental Disclosures of Non-Cash Activities: | ||
Capital expenditures incurred but not yet paid | 8,533 | 1,715 |
Change in derivative contract fair value - asset position | 4,462 | |
Change in derivative contract fair value - liability position | 18,412 | |
Business combinations accounted for as a purchase: | ||
Assets acquired (excluding cash) | (387) | (22) |
Liabilities assumed | 387 | 22 |
Net cash paid | $ 0 | $ 0 |
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