Multi-Color Corporation (LABL)

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Multi-Color Corporation (LABL)

Q4 2008 Earnings Call

May 16, 2008 11:00 am ET


Frank Gerace – President & CEO

Dawn Bertsche – Sr. VP Finance & CFO

James Reynolds – Corporate Controller & CAO


Casey Flavin – CJS Securities

Megan Friedman – William Blair & Company

Jonathan Lecture – Feroda and Company

Steve O’Neill – Hilliard Lyons Inc.

[Larry Rader – Long Management]



Good day ladies and gentlemen and welcome to the Multi-Color Corporation fiscal 2008 fourth quarter and year-end conference call webcast. (Operator Instructions) I would now like to turn the call over to your host for today, Mr. Frank Gerace, President and CEO; please proceed.

Frank Gerace

Welcome to Multi-Color Corporation’s fiscal 2008 fourth quarter conference call and webcast for the period ending March 31, 2008. We are also broadcasting this live over the internet accessible through the Multi-Color website at on our Investor Relations page. 

Good morning I’m Frank Gerace, President and CEO of Multi-Color and I’m joined today with Dawn Bertsche our CFO and Jim Reynolds our Corporate Controller. We are pleased to report to you on another successful quarter and year and to use this opportunity to communicate with you in a direct and open forum. Jim would you please review our Safe Harbor Statement with the participants. 

James H. Reynolds 

Thanks Frank. Before we discuss our results, I want to call your attention to the Safe Harbor Statement that was displayed on the registration page you viewed right after you logged onto our webcast and remind you that in accordance with the Private Securities Litigation Act of 1995, this presentation may contain some forward-looking statements that involve both known and unknown risks that may affect the outcome of our results. This Safe Harbor statement is also included in our earnings release and in our filings with the SEC. 

I also want to call your attention to the special items that were included in our financial results for both 2008 and 2007 as reported in our earnings release this morning. During the quarter ended March 31, 2008 we recorded a pre-tax gain of $8.6 million and other income and expenses to reflect the change in fair value of foreign currency forward contracts associated with our acquisition of Collotype. In order to protect ourselves from a weakening dollar, we entered into these forward contracts to purchase Australian dollars and these contracts were then settled upon completion of the transaction in February.

Also during the quarter we recorded a pre-tax and one-time charge of $560,000 in accordance with financial accounts standard 141 business combinations due to our acquisition of Collotype. And lastly we incurred $172,000 of expenses related to our previously announced manufacturing expansion plan. Combined and on an after-tax basis these items increased EPS by $0.47 per diluted share.

As previously announced I want to remind you that we sold our packaging services business, Quick Pak, on July 2, 2007. As a result the operations of Quick Pak are presented as discontinued operations in our consolidated financial statements for all periods and we no longer report any segment results.

Frank Gerace

Thank you Jim. So this conference call will follow the same format as in the past, I will begin with a brief overview of how our company performed this quarter and then Dawn will follow up a detailed analysis of our financial results and then I will conclude with some final comments and then we’ll take your questions.

As stated in our earnings release fiscal 2008 was a record year, although the fourth quarter did not meet our expectations. Although we started out the fourth quarter with a strong order level, as the quarter progressed we experienced a significant pull-back from two customers in the homecare market. We believe the pull-back was caused by inventory builds earlier in the year for the new concentrated laundry detergent launch which these customers began working off in the fourth quarter. Thus far this quarter, one of those customers has returned to normal order levels and we expect the other customer to resume normal order patterns in the next 30 to 60 days.

Now some of you may be wondering what impact the current economic slowdown could be having on our business. Although current economic data suggests that there has been a decline in consumer spending, and I have read reports of the potential for consumers to move to lower cost private label alternatives, I do not have any confirmation that this has had any impact on our fourth quarter results. In fact, we experienced gains from several consumer product customers during our last quarter but the gains did not offset the declines from the two customers mentioned earlier.

The completion of the Collotype acquisition during the quarter was a transformational event for Multi-Color. We are very excited about the growth opportunities as a result of this acquisition. Nigel Vinecombe and his international business unit team are continuing to grow and improve their existing businesses. And in addition we have many worldwide opportunities we are examining in the marketplace. Our North American business unit led by Donald Kneir, is moving forward with the expansion plans in Batavia, Ohio. Consolidating two plants into the new facility is progressing as planned albeit with the types of start-up challenges you would normally expect in a project of this magnitude.

So during the quarter we did have some operational inefficiencies as we installed new presses, brought them up to speed and trained new operators. We are expecting these changes to normalize towards the end of the current quarter. To provide more details of our fourth quarter results, I’ll now turn the call over to our CFO, Dawn Bertsche.

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