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Jun 30, 2020
Cimpress Q4 2020 Earnings Report
Revenue declined due to the pandemic, but proactive measures led to positive operating cash flow and adjusted free cash flow.
Key Takeaways
Cimpress experienced a 36% revenue decline in Q4 due to the COVID-19 pandemic. However, proactive measures such as cost reductions and advertising efficiency improvements helped maintain gross margins and preserve liquidity, resulting in positive operating cash flow and adjusted free cash flow.
Consolidated bookings improved in June, down 19% compared to a 51% decline in April, and July bookings are expected to be down roughly 5% compared to July 2019.
Gross margins remained flat year-over-year despite a 36% revenue decline.
Operating costs were significantly reduced, and advertising efficiency improved.
Operating cash flow was $54.4 million, and adjusted free cash flow was $34.4 million for the quarter.
Revenue by Segment
Forward Guidance
If the current level of revenue including historical seasonality continued for FY2021 and assuming Cimpress does not choose to make material increases in organic growth investment levels beyond current plans for FY2021, operating income and adjusted EBITDA should be roughly back to the results delivered in the trailing-twelve- month period through December 2019, in other words operating income of approximately $226.0 million and adjusted EBITDA of approximately $471.1 million.
Positive Outlook
- Expect some continued benefit of government incentives in the first quarter of FY2021, but at much lower levels based on recent demand trends.
- Expect to increase advertising spend levels in the first quarter of FY2021 assuming current demand levels are sustained, though expect advertising spend in the first quarter of FY2021 to be lower as a percent of revenue than the year-ago period as a result of improvements in efficiency of spend.
- Expect the impact of temporary fixed cost reductions in FY2021 to be a benefit of approximately $20 million
- Expect the impact of permanent fixed cost reductions, inclusive of the technology restructuring described earlier in this document and the sale of our investment in VIDA, to be a benefit of approximately $30 million.
- Expect cash taxes to remain low in FY2021 relative to past years' trends helped by refunds from net operating loss carry-backs in the U.S. as a result of the CARES Act.
Challenges Ahead
Revenue & Expenses
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Historical Earnings Impact
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