Multi-Color Corporation Investor Update November 2018 Nasdaq: LABL www.mcclabel.com
Safe Harbor Statement SAFE HARBOR STATEMENT The Company believes certain statements contained in this report that are not historical facts that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and that are intended to be covered by the safe harbors created by that Act. All statements contained herein other than statements of historical fact are forward-looking statements. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words may, continue, estimate, intend, plan, will, believe, project, expect, anticipate and similar expressions (as well as the negative versions thereof) may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. With respect to the forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Such forward-looking statements speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made. Statements concerning expected financial performance, on-going business strategies, and possible future actions which the Company intends to pursue in order to achieve strategic objectives constitute forward-looking information. Implementation of these strategies and the achievement of such financial performance is each subject to numerous conditions, uncertainties and risk factors. Factors which could cause actual performance by the Company to differ materially from these forward-looking statements include, without limitation: factors discussed in conjunction with a forward-looking statement; changes in global economic and business conditions; changes in business strategies or plans; raw material cost pressures; availability of raw materials; availability to pass raw material cost increases to our customers; interruption of business operations; changes in, or the failure to comply with, government regulations, legal proceedings and developments, including but not limited to, tax law changes; acceptance of new product offerings, services and technologies; new developments in packaging; our ability to effectively manage our growth and execute our long-term strategy; our ability to manage foreign operations and the risks involved with them, including compliance with applicable anti-corruption laws; currency exchange rate fluctuations; tariffs and tradewars; our ability to manage global political uncertainty; terrorism and political unrest; increases in general interest rate levels and credit market volatility affecting our interest costs; competition within our industry; our ability to consummate and successfully integrate acquisitions; our ability to recognize the benefits of acquisitions, including potential synergies and cost savings; failure of an acquisition or acquired company to achieve its plans and objectives generally; risk that proposed or consummated acquisitions may disrupt operations or pose difficulties in employee retention or otherwise affect financial or operating results; risk that some of our goodwill may be or later become impaired; the success and financial condition of our significant customers; our ability to maintain our relationships with our significant customers; dependence on information technology; our ability to market new products; our ability to maintain an effective system of internal control; ongoing claims, lawsuits and governmental proceedings, including environmental proceedings; availability, terms and developments of capital and credit; dependence on key personnel; quality of management; our ability to protect our intellectual property and the potential for intellectual property litigation; employee benefit costs; and risk associated with significant leverage. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition to the factors described in this paragraph, Part I, Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2018 contains a list and description of uncertainties, risks and other matters that may affect the Company. 1
Strategic Vision Create high growth global industry consolidator to maximize shareholder value. Grow our base business organically Drive operational excellence & efficiency Pursue additional growth via a disciplined approach to M&A 2
Multi-Color Snapshot Key Figures Business Highlights Net Revenue Mix ~$1.8 billion World s second-largest label producer Net Revenues Established in 1916 3-4% Headquartered near Cincinnati, Ohio Organic Revenue Growth By Region Latin America 7% Asia Pacific 11% North America 39% $0.3 billion Pro Forma Adj. EBITDA 16-18% EBITDA Margin ~$100 million FCF Guidance 8,400 Employees 72 Manufacturing Facilities 27 Countries Broad product portfolio Comprehensive range of label technologies Pressure sensitive, glue-applied (cut & stack and wraps), shrink sleeve, in-mold, and heat transfer labels Full range of substrates, promotional and security labels, and the ability to self-coat Leading positions across core segments #1 supplier in the Global Wine & Spirits market #1 supplier in the Global Beverage market #1 supplier in the Global In-Mold market #2 supplier in the Home & Personal Care market EMEA 43% Shrink Sleeve 3% Heat Transfer 4% Durables and Others 4% In-Mold 14% Wraps 6% Cut & Stack 11% Home & Personal Care 20% By Technology By Market HLC & Specialty 10% Beer 15% Aluminum 3% Pressure Sensitive 55% Food & Beverage 29% Wine & Spirits 26% 3
Comprehensive Labels Product Offering Pressure Sensitive Cut & Stack Shrink Sleeve In-Mold Heat Transfer Roll-Fed 4
Global Capabilities Serving a Blue Chip Customer Base Home & Personal Care Food & Beverage Wine & Spirits Healthcare & Specialty 5
History of Multi-Color s Acquisitions 29 acquisitions with $1.2+ billion in acquired net revenues Net Revenues ($ in billions) $1.7 27 bolt-ons and 2 transformational acquisitions Proven consolidation platform Pro Forma for Constantia Labels $1.3 $0.7 $0.7 $0.8 $0.9 $0.9 $0.5 $0.3 $0.3 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 2010 2011 2012 2013 2014 2015 2016 2017 Tag Label Imprimerie Champenoise Labels 6
Global Printed Labels - $35 Billion Market Growing at 5% Annually By Geography By End Market By Product North America 25% Latin America 6% EMEA 31% Asia Pacific 38% Healthcare 10% Wine & Spirits 10% Home & Personal Care 16% Specialty 9% Food & Beverage 55% In-Mold 4% Durables 5% Shrink Sleeve 6% Cut & Stack and Wraps 16% All Other 1% Pressure Sensitive 68% 7 Source: Smithers Pira Future of Label Printed Materials to 2019.
Label Industry Growth Drivers Shelf Appeal & Consumer Preferences Label Industry Trends Increasing importance of labels in generating consumer interest and influencing purchasing decisions Proliferation of SKU s, packaging types, shorter graphics cycle, promotional / interactive labels Product Information & Disclosure Increasing product information / disclosure requirements Greater concern over product safety and security Streamlined Inventory Management Demand for tracking systems facilitated by labels Just-in-time supply trend reducing inventory, while allowing differentiation Growth of 5% per annum Pressure to Consolidate Consolidation of label vendor base by large CPGs Significant benefits to scale (best practice sharing, innovations, procurement) Technological Developments Greater sophistication in printing, allowing more complex graphics / premiumization Support reductions in waste and set ups for lower cost and better productivity Substitution of legacy format labels with higher quality products (cut & stack substitution by pressure sensitive) 8
Strategically Positioned to Take Advantage of Market Fundamentals Proven Consolidator in a Highly Fragmented Industry Global Labels Market Share 5% 5% 5% 2% #3 - #5 Competitors #6 - #10 Competitors We expect to continue to be acquisitive in a fragmented market. 22 Countries 29 Acquisitions 9 Years Category Leader in Growing, Stable End Markets % Global Footprint to Serve Global Customers 44% North America 17 Facilities Multi-Color Facility Europe 30 Facilities We have achieved growth and diversification through targeted acquisitions and organic investments in existing markets. 37% South America 2 Facilities Africa 5 Facilities Represents Multi-Color 7% Revenue Exposure Australia 7 Facilities Integration and Optimization Benefits Asia Pacific 11 Facilities 12% #1 Global Wine & Spirits Label Supplier #1 In-Mold Label Supplier #1 Beer Label Supplier #2 Home and Personal Care supplier Supply Chain Operational Best Practice Access to Global Brand Owners Our key end markets remain stable during recession years. Our ongoing integration and optimization efforts allow us to continuously maximize value add. 9 Source: Smithers Pira Future of Label Printed Materials to 2019.
Consistent Growth Trajectory Across All Metrics ($ in millions, except per share metrics) Net Revenue Core EBITDA Core EPS $1,301 +350bps Core EBITDA margin $3.61 $3.76 41% $3.20 $3.22 $510 $660 29% $706 7% $811 15% $871 7% $923 6% $2.02 $1.85 $1.76 $2.14 $277 $338 22% 51% $1.14 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 % Reflects YoY Growth % Reflects YoY Growth 10 Note: Financials as reported.
Delivering on Expectations (by Quarter) ($ in millions, except per share metrics) Net Revenue Core EBITDA Core EPS 17.6% 16.7% 17.1% 15.4% 17.6% 16.0% 17.1% 17.1% 15.4% Organic Growth: 2% % Reflects Margin 11
Multi-Color MULTI-COLOR S Growth EARNINGS and Value ACCRETION Creation OVER TIME Strong Track Record of Growth Core EPS LABL Share Price Share Price +484% 2010 2018 $3.20 $3.22 $3.61 $3.76 Core EPS +230% 2010 2018 $1.76 $1.85 $2.02 $2.14 $1.14 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 12
Free 2019 GUIDANCE Cash Flow Drives Deleveraging Strong Track Record of Deleveraging While Pursuing M&A Fiscal Year 2019 Free Cash Flow Guidance (Year-End Net Debt / Pro Forma Core EBITDA) ($ in millions) Net Cash Provided by Operating Activities ~$190 5.0x Less: Capital Expenditures ~($90) Free Cash Flow (Non-GAAP) ~$100 Near term Capital Allocation Priority: Pay down debt # of Acquisitions Per Annum 1 0 2 4 1 6 7 1 3 4 3 0 Target Leverage < 4x 13
Priorities for FY19 Organic growth Operational improvements Debt reduction 14
Thank you for your interest In Multi-Color Corporation Nasdaq: LABL www.mcclabel.com
Profiles Nigel Vinecombe Executive Chairman Over 30 years label industry experience. Elected to the Board of Directors of Multi-Color Corporation in 2008 and named Executive Chairman in January 2016 with direct responsibility for M&A and Investor Relations. He served as MCC President & CEO from 2010 until 2016 and as President of the International Business Unit of MCC from 2008 until 2009. Age 55. Bachelor of Business and MBA from University of South Australia. Disclosure Mr. Vinecombe is the beneficial owner of over 400,000 MCC shares. Mike Henry CEO Appointed President, Chief Executive Officer effective January 1, 2018, and elected Director effective May 30, 2018. Prior to joining MCC, he served as a member of the Executive Board of Constantia Flexibles and Executive Vice President Labels from July 2014 until MCC s acquisition of Constantia Labels Division in October 2017. He was responsible for the global label activities of Constantia with revenues of 600 million over 25 sites. He also led the integration of the ten label companies that make up the Constantia Labels Division including the acquisitions of Pemara and Afripack. He has also served on the board of various industrial companies, including Marling Industries PLC and Norbain PLC. Age 52. Bachelor s degree in Accounting and Finance from Kingston University, UK and is a Chartered Accountant. Sharon E. Birkett Vice President and CFO Appointed Vice President and Chief Financial and Accounting Officer in July 2010. Joined Multi-Color Corporation as part of the Collotype acquisition in 2008. At that time, Sharon served as Collotype s Chief Financial Officer, a position she held since joining the company in 2003. Prior to Collotype, from 1998 to 2003, she served as Director of Finance of Avery Dennison Materials Pty Ltd., a subsidiary of Avery Dennison Corporation. Age 52. Bachelor of Arts in Accountancy from University of South Australia and an MBA from University of Adelaide. 16
Appendix Reconciliations between Reported GAAP and Non GAAP Results
Reconciliation of Adjusted Net Income and EPS to Reported Net Income and Reported EPS Reconciliation of Adjusted Net Income and EPS to Reported Net Income and Reported EPS 2010 2011 2012 2013 2014 2015 2016 2017 2018 (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS Net Income Attributable to Multi-Color Corporation and EPS, as reported $ 14,268 $ 1.16 $ 18,411 $ 1.40 $ 19,700 $ 1.32 $ 30,300 $ 1.86 $ 28,224 $ 1.70 $ 45,716 $ 2.71 $ 47,739 $ 2.82 $ 60,996 $ 3.58 $ 71,951 $ 3.84 Inventory purchase accounting charges, net of tax - - 289 0.02 923 0.06 344 0.02 120 0.01 67-488 0.03 256 0.02 4,439 0.23 Acquisition and integration expenses, net of tax 127 0.01 926 0.07 5,970 0.41 1,164 0.07 1,918 0.12 1,497 0.09 3,649 0.22 1,070 0.06 15,267 0.82 Severance and accelerated stock compensation expense, net of tax 648 0.05 1,138 0.09 - - - - - - - - - - - - - - Deferred financing fee charge, net of tax - - - - 300 0.02 - - - - - - - - - - - - Deferred loan fee write off, net of tax - - - - - - - - - - 1,225 0.07 - - - - - - Facility closure expenses (income), net of tax 1,149 0.09 (192) (0.01) 715 0.04 1,194 0.07 738 0.04 4,533 0.27 3,708 0.22 706 0.04 945 0.05 Foreign currency loss on acquisition, net of derivatives and related debt, net of tax - - - - - - - - - - - - - - - - 8,855 0.44 Net foreign currency gain on acquisition structuring loans, net of tax - - - - - - - - - - - - - - - - (2,910) (0.15) Pre-acquisition financing costs and deferred loan fees, net of tax - - - - - - - - - - - - - - - - 4,857 0.25 Impact of US tax reform - - - - - - - - - - - - - - - - (18,268) (0.93) Impact of Belgian tax reform - - - - - - - - - - - - - - - - (15,164) (0.78) Legal settlement and related legal fees, net of tax - - 2,418 0.18 - - - - (3,800) (0.23) - - - - - - - - Gain on sale of certain cylinder assets, net of tax (2,141) (0.17) - - - - - - - - - - - - - - - - Goodwill impairment loss, net of tax - - - - - - - - 13,475 0.81 951 0.06 - - - - - - Supplemental purchase price adjustments, net of tax - - - - - - - - (2,451) (0.15) - - - - (887) (0.05) - - Release of reserves for uncertain tax positions, net of tax - - - - - - - - (2,981) (0.18) - - (1,079) (0.06) - - - - Loss on swaps on acquisition debt - - - - - - - - - - - - - - - - - - Other special items, net of tax (83) (0.01) 146 0.01 - - - - 312 0.02 - - - - - - - - (Gains) losses on purchases/sales of businesses, supplemental purchase price adjustments and settlement of other related accruals - - - - - - - - - - - - - - (690) (0.04) (69) - Adjusted Net Income Attributable to Multi-Color Corporation and EPS, (Non-GAAP) $ 13,968 $ 1.13 $ 23,136 $ 1.76 $ 27,608 $ 1.85 $ 33,002 $ 2.02 $ 35,555 $ 2.14 $ 53,989 $ 3.20 $ 54,505 $ 3.22 $ 61,451 $ 3.61 $69,903 $ 3.76 Note: EPS may not add total due to rounding (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS (in 000 s) EPS Net Income Attributable to Multi-Color Corporation and EPS, as reported $15,190 $0.88 $20,532 $1.06 $22,123 $1.08 $18,139 $0.88 $23,755 $1.16 Inventory purchase accounting charge, net of tax 291 0.02 3,588 0.18 560 0.03 92 30 Acquisition and integration expenses, net of tax 4,084 0.24 10,165 0.52 400 0.02 3,514 0.17 1,677 0.08 Facility closure expenses (income), net of tax 63 507 0.03 352 0.02 18 76 Foreign currency loss on acquisition, net of derivatives and related debt, net of tax (1,893) (0.11) 9,465 0.49 1,283 0.06 Net foreign currency gain on acquisition structuring loans, net of tax (3,686) (0.19) 776 0.04 Pre-acquisition financing costs and deferred loan fees, net of tax 4,857 0.25 Impact of US tax reform (16,186) (0.83) (2,082) (0.10) (328) (0.02) Impact of Belgian tax reform (15,409) (0.79) 245 0.01 (918) (0.04) (Gains) losses on purchases/sales of businesses, supplemental purchase price adjustments and settlement of other related accruals Q2 FY18 Q3 FY18 Q4 FY18 512 0.03 (581) (0.03) Adjusted Net Income Attributable to Multi-Color Corporation and EPS, (Non-GAAP) $18,247 $1.06 $13,833 $0.71 $23,076 $1.12 $21,763 $1.06 $24,292 $1.18 Note: EPS may not add total due to rounding Q1 FY19 Q2 FY19 18
Reconciliation of Adjusted Operating Income and EBITDA to Reported Operating Income and Reported EBITDA Reconciliation of Adjusted Operating Income and EBITDA to Reported Operating Income and Reported EBITDA 2010 2011 2012 2013 2014 2015 2016 2017 2018 2Q18 3Q18 4Q18 1Q19 2Q19 Revenue 276,821 338,284 510,247 659,815 706,432 810,772 870,825 923,295 1,300,912 256,034 352,699 449,739 456,131 434,913 Gross Margin, as reported 48,601 67,978 98,284 126,351 132,057 173,274 181,626 196,809 246,600 51,774 57,302 88,067 88,010 86,785 Inventory purchase accounting charges 424 1,530 458 190 78 632 362 6,284 448 5,002 834 131 43 Core Gross Margin 48,601 68,402 99,814 126,809 132,247 173,352 182,258 197,171 252,884 52,222 62,304 88,901 88,141 86,828 % of sales 17.6% 20.2% 19.6% 19.2% 18.7% 21.4% 20.9% 21.4% 19.4% 20.4% 17.7% 19.8% 19.3% 20.0% Operating Income, as reported 22,911 32,260 45,551 70,705 60,123 96,912 94,428 110,966 115,580 26,479 15,022 48,245 45,215 47,480 Adjustments: Inventory purchase accounting charges 424 1,530 458 190 78 632 362 6,284 448 5,002 834 131 43 Acquisition & integration expenses 1,213 1,334 8,121 1,465 2,317 1,787 3,683 1,101 19,901 4,087 12,021 2,887 4,220 2,254 Severance and accelerated stock compensation expense 1,658 Facility closure expenses (income) 1,479 (258) 1,182 1,531 1,166 7,399 5,200 921 1,419 95 761 529 27 114 Legal settlement and related legal fees 3,869 Gain on sale of certain cylinder assets (3,451) Goodw ill impairment 13,475 951 Other special items 940 239 Core Operating Income 23,092 39,526 56,384 74,159 77,271 107,127 103,943 113,350 143,184 31,109 32,806 52,495 49,593 49,891 % of sales 8.3% 11.7% 11.1% 11.2% 10.9% 13.2% 11.9% 12.3% 11.0% 12.2% 9.3% 11.7% 10.9% 11.5% Cap Ex 6,317 13,102 23,008 28,638 30,365 29,153 34,892 46,146 60,105 15,990 17,864 15,979 33,955 19,986 Depreciation 11,266 13,173 20,718 26,851 27,995 29,828 31,295 33,480 46,913 8,914 13,317 16,190 17,902 10,537 Amortization 1,832 3,321 6,456 9,493 9,823 11,541 13,178 14,425 26,009 3,831 8,124 10,450 10,410 12,253 Total D&A 13,098 16,494 27,174 36,344 37,818 41,369 44,473 47,905 72,922 12,745 21,441 26,640 28,312 22,790 Core EBITDA 36,190 56,020 83,558 110,503 115,089 148,496 148,416 161,255 216,106 43,854 54,247 79,135 77,905 72,681 Core EBITDA Margin 13.1% 16.6% 16.4% 16.7% 16.3% 18.3% 17.0% 17.5% 16.6% 17.1% 15.4% 17.6% 17.1% 16.7% Pro Forma Acquisitions* 10,800 2,900 14,000 3,300 6,600 3,000 73,043 Total Pro Forma Core EBITDA* 36,190 56,020 94,358 113,403 129,089 151,796 155,016 164,255 289,149 *Unaudited 19