) reported net income of $23.0 million or 66 cents per share in
the second quarter of fiscal 2013 (ended Dec 31, 2012) compared
with $31.7 million or 82 cents in the year-earlier quarter.
Although earnings decreased on a year-over-year basis, it was
well above the Zacks Consensus Estimate of 49 cents.
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Excluding one-time items, non-GAAP adjusted earnings were $35.9
million or $1.02 per share compared with $37.9 million or 97
cents in the year-ago quarter. Total revenue increased 16% year
over year to $348.3 million. The healthy top-line growth was
largely attributable to strong performances in the consumer and
holiday business around the world and the superior execution of
operational plans in North America.
Behind the Headline Numbers
In the reported quarter, gross margin rose to 67.2% compared with
66.8% in the year-ago quarter. Operating income increased
marginally to $33.0 million from $32.5 million in the prior-year
quarter. However, operating margin dipped to 9.5% in the quarter
from 10.9% in the corresponding period in the previous year.
Balance Sheet & Cash Flow
The company exited the quarter with $64.7 million in cash and
cash equivalents. Long-term debt stood at $230.5 million, with
$157.0 million available under its credit facility. Vistaprint
purchased 827,346 shares for $24.8 million in the quarter, as
part of the share repurchase program.
The company generated $88.5 million of cash from operations and
$58.7 million in free cash flow, which is defined as cash from
operations less purchases of property, plant and equipment,
purchases of intangible assets not related to acquisitions, and
capitalization of software and website development costs.
Although the European operations remain a cause of concern,
Vistaprint expects to benefit from a solid execution of its
strategy in North America and strong manufacturing results around
the world. For fiscal 2013, the company expects earnings in the
range of 50 cents - 70 cents per share. Adjusted earnings are
expected in the range of $1.79-$1.99 per share. Revenues are
expected in the range of $1,145.0 million - $1,175.0 million.
For the third quarter of fiscal 2013, revenues are expected in
the range of $275 million -$290 million.
Vistaprint's solid long-term prospects along with the focus on
inorganic growth and international expansion make us optimistic
on the stock. The company's Asian and North American operations
are delivering strongly.
However, 2013 could prove to be a challenging year for Vistaprint
as there are a few planned investments, which are likely to weigh
on its bottom line. Moreover, the lackluster business environment
in Europe remains a concern given Vistaprint's huge exposure to
the European region.
In addition, the company needs to be wary of the other players in
the industry such as
Portfolio Recovery Associates Inc.
Fidelity National Information Services, Inc.
), each carrying a Zacks Rank #2 (Buy). Vistaprint currently
retains a Zacks Rank #3 (Hold).