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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.
Cimpress
Cimpress
Cimpress Revenue by Segment
Revenue by Segment
Vista Revenue
CapyFin.comPrintBrothers Revenue
CapyFin.comThe Print Group Revenue
CapyFin.comNational Pen Revenue
CapyFin.comAll Other Businesses Revenue
CapyFin.com 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
- Cannot forecast how long a full revenue recovery will take, or whether further declines in demand will occur because of the pandemic, evolving government responses or macro economic conditions.
- Approximately $50 million of supplier, indirect tax, payroll tax, and lease payments that were delayed through June 30, 2020 are expected to be paid mostly in the first six months of FY2021 with the majority expected to be paid in the first quarter.
- Expect the year-over-year EBITDA impact from currency to be negative due to less favorable average contracted rates on currency hedges relative to FY2020.
- Cash interest expense is expected to increase in FY2021 versus FY2020, with a full year of our $200 million 7% senior unsecured notes add on completed in February 2020, as well as our $300 million of 12% second lien notes completed in May 2020 that replaced lower-cost debt outstanding on our revolving credit facility.
- There is uncertainty of the shape and timing of a sustained full demand recovery.
Revenue & Expenses
Visualization of income flow from segment revenue to net income