Cimpress plc — FY2022 Form 10-K Summary
Reporting period: Fiscal year ended June 30, 2022. This is an annual report, not a calendar fourth-quarter filing; comparisons are primarily with the fiscal year ended June 30, 2021. Cimpress operates mass-customization businesses selling print, promotional, design and related products, across five reportable segments: Vista, PrintBrothers, The Print Group, National Pen and All Other Businesses.
Key financial results
| Metric | FY2022 | FY2021 | Change / context |
|---|---|---|---|
| Revenue | $2,887.6 million | $2,576.0 million | Up 12% reported; up 15% at constant currency and 13% excluding acquisitions/divestitures on a constant-currency basis. |
| Gross margin | 48.3% | 49.5% | Cost of revenue rose to 51.7% of revenue from 50.5%, reflecting inflation and supply-chain costs. |
| Operating income | $47.3 million | $123.5 million | Down $76.2 million; operating margin declined to about 1.6% from 4.8%. |
| Net loss attributable to Cimpress | $54.3 million | $85.2 million | Loss per diluted share was $2.08 versus $3.28. |
| Adjusted EBITDA | $281.1 million | $349.1 million | Down $68.1 million; non-GAAP measure. |
| Cash from operations | $219.5 million | $265.2 million | Down $45.7 million. |
| Adjusted free cash flow | $100.2 million | $165.8 million | Down $65.6 million; non-GAAP measure. |
Liquidity and debt: At June 30, 2022, cash and cash equivalents were $277.1 million and marketable securities were $50.0 million. Current assets of $626.3 million were below current liabilities of $692.5 million. Reported debt principal was $1,705.4 million; the balance-sheet carrying amount, net of debt issuance costs and discounts, was $1,685.9 million. The $250 million revolving facility had no borrowings and $243.6 million of unused availability, subject to covenants. Debt covenants were reported in compliance. The company had a shareholders’ deficit of $494.9 million.
Material changes versus FY2021
- Revenue recovery and acquisitions, particularly Depositphotos, supported growth; lower face-mask sales partly offset it. Face-mask revenue declined $85.3 million overall.
- Operating income and adjusted EBITDA fell as Vista investment and advertising increased, while inflationary costs were not fully offset by pricing. Restructuring expense rose to $13.6 million from $1.6 million.
- Vista revenue grew 6% reported, but segment EBITDA fell 39% to $195.3 million. PrintBrothers revenue rose 25% and EBITDA 55%; The Print Group revenue rose 20% and EBITDA 36%; National Pen revenue rose 9% and EBITDA 131%. All Other Businesses EBITDA declined 27%.
- Interest expense decreased by $19.9 million following the FY2021 debt refinancing. Other income included $61.5 million of net gains, primarily derivative gains, contributing to the difference between operating performance and pretax results.
- The FY2022 net loss included a $29.6 million partial valuation allowance on Swiss deferred tax assets. The reported effective tax rate was 642%, which management attributed chiefly to this charge and the low pretax-income base.
- The filing revised FY2021 comparative results for an immaterial intercompany-hedge accounting error, reducing reported other income and increasing the FY2021 net loss by $7.5 million. It also revised FY2021 revenue and cost of revenue downward by $16.6 million for 99designs one-to-one design services.
Outlook, management commentary and risks
Management emphasizes long-term intrinsic value per share and accepts near-term financial volatility to fund investments. No specific consolidated revenue, earnings or cash-flow guidance is provided in the supplied filing text. Management expects elevated input costs and supply constraints to persist, but cannot predict their duration. Pricing increases and Cimpress’ scale and supplier relationships have helped mitigate, but have not fully offset, cost inflation.
- Vista is in a multi-year transformation involving technology, customer experience, brand integration and design services. Management said the investments weighed on current-period profitability; unsuccessful execution could impair customer growth, market share and earnings.
- In the fourth quarter, Cimpress decided to exit its Japan operations and YSD in China, with exits expected in early FY2023. National Pen is moving European production from Ireland to the Czech Republic, with further restructuring costs possible.
- Key risks include inflation and supply disruption, weaker demand or recession, competition and pricing pressure, seasonal operating demands, foreign-exchange and variable-interest-rate exposure, cybersecurity and privacy threats, acquisition execution, and hiring and retention.
- Several noncontrolling-interest put options could be exercised in FY2023; estimated redemption value was $103.6 million at year-end, including $99.7 million for PrintBrothers interests. Timing depends on holders’ decisions.
- Management reported effective disclosure controls; the auditor issued an unqualified opinion on the financial statements and internal controls. Goodwill was $766.6 million, with no impairment recorded after annual testing; the auditor identified goodwill valuation as a critical audit matter.
Important facts for investors to verify
- Whether Vista’s transformation and higher advertising and technology spending produce improved customer growth, margins and cash generation.
- Whether inflation, shipping and material costs remain elevated, and how effectively pricing and operational efficiencies offset them.
- Debt repayment capacity, variable-rate exposure, covenant headroom and the potential cash impact of FY2023 noncontrolling-interest puts.
- The assumptions supporting goodwill valuations and Swiss deferred tax assets, including the possibility of further valuation allowances.
- Execution, costs and timing of the Japan and YSD exits and the National Pen production relocation; also confirm the status of the remaining Depositphotos deferred payment.