Cimpress (asi/162149), parent company of National Pen and Vistaprint, has reported that its third quarter revenue increased to $550.6 million. The tally for the three months ended March 31 represented a 26% rise over the same quarter the prior year. Netherlands-headquartered Cimpress noted that the quarter-over-quarter revenue gain was 11% when excluding the impact of currency exchange rate fluctuations and revenue from businesses acquired in the last 12 months, including National Pen.
“Revenue growth accelerated in line with our expectations, both in aggregate due to the addition of National Pen, as well as on an organic constant-currency basis, even though revenue continues to be pressured in the near term by the loss of certain partner revenue and the reduction of shipping prices to Vistaprint customers,” said Cimpress Chief Financial Officer Sean Quinn.
As Quinn’s comment suggests, Cimpress’ third quarter wasn’t all roses, despite the rise in revenue. Adjusted net operating profit after tax was $9.2 million, down from $24 million during the same quarter the prior year. Increased investments and a $24.8 million restructuring charge related to a far-reaching organizational decentralization plan contributed to a loss from operations of $41.9 million and a loss in earnings-per-share.
Among other factors, operating income was negatively impacted by a $6.8 million loss in Cimpress’ recently acquired National Pen business– a drop driven by amortization of acquired intangible assets and anticipated operating loss for the quarter. “This was our first full quarter of ownership of National Pen, and our integration efforts to achieve targeted synergies are underway,” said Robert Keane, president and chief executive officer.
Looking forward, Cimpress executives are excited about the prospects presented by the continued implementation of the decentralization initiative. “We believe this will improve accountability for customer satisfaction and capital returns, simplify decision-making, improve the speed of execution, further develop our cadre of general managers, and preserve and release entrepreneurial energy,” said Keane. “We see early indications that this reorganization is helping us move faster and free-up capital.”
Quinn said that Cimpress expects that the restructuring will ultimately lead to annual savings of $55 million to $60 million. “For fiscal year 2017, we expect the restructuring costs to offset in-year savings, but as we look forward we expect both these savings and the organizational changes to increase our estimated range of steady state free cash flow,” he said.