Cimpress Cites Improving Revenues, Profits In Financial Update
Cimpress, the Dutch parent company of Waltham, Massachusetts-based distributor Vistaprint (PPAI 565755, D4), and San Diego, California-based distributor National Pen Co. LLC (PPAI 107176, D12), has released an update on its fourth quarter 2020 fiscal results. The timing of the release, coming at approximately the mid-point between its earnings announcements for the quarters ending March and June, is irregular, which the company attributes to the COVID-19 pandemic.
“Although we expect a lengthy and possibly non-linear recovery from the effects of the pandemic, Cimpress’ recent revenue and profit trends have been more favorable than we expected,” says Robert Keane, founder, chairman and CEO of Cimpress. “We are supporting small businesses as they begin to get back to business and augmenting our traditional product lines with offerings that address the needs of customers during the pandemic. Many of our businesses have produced and/or donated face shields and masks to hospitals and front-line workers, and our largest business, Vistaprint, is donating 10 percent of replaceable filter mask revenues to aid small businesses and communities which are impacted by the pandemic. Vistaprint has already donated $1 million to the Save Small Business Fund it co-founded with the U.S. Chamber of Commerce Foundation and $500,000 to the NAACP to support Black-owned small businesses.”
In April, Cimpress’ consolidated bookings declined approximately 51 percent year-over-year, and all segments' bookings performance improved in the second half of April relative to the first half. Bookings is an internal metric the company uses. It differs from GAAP revenue due to orders not yet shipped, refunds and credits, and changes in currency rates compared to the U.S. dollar.
While there is continued week-to-week volatility, the company says the improvement registered in the second half of April continued for all segments through the month of May, with the year-over-year decline in consolidated bookings lessening to approximately 25 percent. Cimpress attributes these trends to its shift in focus to products and product content templates that customers need in the current environment, as well as the gradual relaxing of government restrictions to restart economic activity in some markets. For the two weeks ended Saturday, June 13, consolidated bookings also declined an average of approximately 24 percent year-over-year.
Underneath the consolidated bookings numbers, the impact of the pandemic across Cimpress continues to vary significantly by business, country, product line and week. Vistaprint’s booking performance in April 2020 was down 51 percent compared to the same month in 2019, while for May 2020, it was down only 18 percent, year-over-year. For the quarter through May, Vistaprint was down 37 percent. National Pen was down 65 percent in April 2020 compared to April 2019, and down 43 percent in May 2020 compared to May 2019. National Pen’s quarter through May was down 56 percent.
Cimpress says that it continues to manage its variable costs approximately in line with demand. Advertising as a percentage of revenue was nine percent quarter-to-date through May 2020 compared to 12 percent in the same period last year. While fixed cost reductions for the fourth quarter 2020 are on track, given the financial flexibility afforded by the better-than-anticipated trends in revenue and profitability, Cimpress has selectively restarted recruiting. Furthermore, effective July 1, it is suspending its salary restructuring program whereby a portion of quarterly compensation for select team members was replaced by a grant of restricted share units.
Cimpress had pro-forma liquidity—cash plus available committed credit facility—of $437 million as of March 31. Liquidity remains at approximately that same level driven by positive Adjusted EBITDA and offset by cash outflows from working capital, capital expenditures, capitalized software, cash taxes and cash interest expense.