Business services provider Cimpress N.V. (NASDAQ:CMPR) reported lackluster third-quarter fiscal 2017 results with a wider GAAP loss and revenues missing estimates. GAAP loss for the quarter was $42.7 million or $1.38 per share compared with loss of $32.7 million or $1.04 per share in the year-ago quarter. Despite higher revenues, results were affected by higher operating costs in the quarter. The reported loss was wider than the Zacks Consensus Estimate of loss of 68 cents.
Cimpress N.V Price, Consensus and EPS Surprise
Cimpress N.V Price, Consensus and EPS Surprise | Cimpress N.V Quote
Inside the Headlines
Total revenue in fiscal third quarter jumped 26% year over year to $550.6 million but missed the Zacks Consensus Estimate of $554 million. Excluding foreign currency translation impact and inorganic growth during the past 12 months, revenues increased 11% year over year. The improvement in revenues was primarily due to superior performance in the Upload and Print segment, partially offset by a decline in the Vistaprint segment and All Other segment due to the winding down of two partnerships.
Revenues from the Vistaprint segment came in at $321.3 million, down from $289.9 million in the year-ago quarter.
Revenues from the Upload and Print segment increased significantly to $142.5 million from $116.4 million in the year-earlier quarter. Revenues from All Other Business declined 8% year over year to $28.0 million from $30.6 million in the prior-year quarter.
Gross margin in the reported quarter contracted to 51.2% from 54.9% in the year-ago period. The fall was primarily due to the increased weighting of lower margin Upload and Print businesses, lower Vistaprint gross margins due to planned investments in projects, currency headwinds and production inefficiencies.
Adjusted net operating profit after tax in the reported quarter was $9.2 million, considerably down from $24 million in the year-ago period.
Decentralized Organizational Structure
Management decided to implement a radical change in the organizational structure by decentralizing operations in order to improve accountability for customer satisfaction and capital returns, simplify decision-making and improve the speed of execution. With operations in about 50 locations spanning 30 countries across six continents, decentralized decision making will enable the company to be nimble and entrepreneurial. The evolved corporate structure will likely lead to more accountability as the company expands its wings in new geographical boundaries and markets to strengthen its position as a leading provider of mass customization business products.
As part of the reorganization, which was announced in Jan 2017, several groups which were previously part of the company’s corporate and global functions, including significant portions of its technology, manufacturing and supply chain, finance, legal and other related groups, have been decentralized into operating segments. Most of the groups transferred into the operating segments became part of the Vistaprint business and the Upload and Print business units. The company revised adjusted net operating profit for all prior periods to reflect its revised segment reporting.
Balance Sheet & Cash Flow
As of Mar 31, 2017, the company had $43.5 million in cash and cash equivalents and long-term debt of $860.2 million. At the quarter end, the company had $220.6 million of borrowing capacity available under its committed credit facility.
Capital expenditures in the reported quarter were $20.7 million or 3.8% of revenues. During the quarter, the company generated $9 million of cash from operations compared with $32.9 million in the year-ago quarter.
Cimpress currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the include Genpact Limited (NYSE:G) , US Ecology, Inc. (NASDAQ:ECOL) and ABM Industries Incorporated (NYSE:ABM) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Genpact has a long-term earnings growth expectation of 12.5% and is currently trading at a forward P/E of 17.1x.
US Ecology has a long-term earnings growth expectation of 5% and is currently trading at a forward P/E of 27x.
ABM Industries has a long-term earnings growth expectation of 8% and is currently trading at a forward P/E of 23.5%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
ABM Industries Incorporated (ABM): Free Stock Analysis Report
Cimpress N.V (CMPR): Free Stock Analysis Report
Genpact Limited (G): Free Stock Analysis Report
US Ecology, Inc. (ECOL): Free Stock Analysis Report
Original post