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Cimpress Offers Senior Notes, to Use Funds for Repaying Debt

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Cimpress plc CMPR, on Feb 10, announced that it has initiated a private offering of Senior Notes (notes), per market conditions. As communicated by the company, the offerings comprise $200 million in total principal amount of its 7.0% notes set to mature in 2026.

Notably, the company will perform the offerings per terms of the indenture binding the notes as of Jun 15, 2018. It’s worth mentioning here that earlier Cimpress had offered another $400 million in total principal amount of its 7.0% notes due 2026.

Funds raised from the notes offering are likely to be used by Cimpress for repaying part of outstanding debt under its revolving credit facility apart from paying all related fees and expenditures.

We believe the offering will increase the company’s debts and in turn, might raise its financial obligations and hurt profitability. However, repayment of debts using the offering proceeds is likely to be a relief.

Debt Profile

Cimpress has a highly leveraged balance sheet. Its long-term debt jumped roughly 13.5% (CAGR) in the last fiscal five years (2015-2019). Exiting second-quarter fiscal 2020 (ended Dec 31, 2019), the company had long-term debt of approximately $1,296.5 million, up 37.6% year over year. Also, in the first six months of fiscal 2020, the company’s net interest expenses totaled $30.8 million, up 0.7% on a year-over-year basis.

Solid Prospects

Cimpress has approximately $3.1 billion market capitalization. It is poised to benefit from acquired assets and solid products portfolio. Also, the company’s evolved corporate structure is likely to lead to more accountability as it expands into new regions and markets to strengthen its position as a leading provider of mass customization business products.

Trend in Estimates Revisions

In the past 30 days, earnings estimates for Cimpress have jumped. The Zacks Consensus Estimate for its earnings is pegged at $10.03 for fiscal 2020 (ending June 2020) and $5.98 for fiscal 2021 (ending June 2021), up 121.4% and 26.7%, respectively, from the 30-day-ago figures.

Zacks Rank & Price Performance

Over the past year, the Zacks Rank #1 (Strong Buy) stock has returned 45.5% against the industry’s decline of 0.6%.

Other Stocks to Consider

Some other top-ranked stocks from the Zacks Consumer Discretionary sector are Cable One, Inc. CABO, Netflix, Inc. NFLX and Sonos, Inc. SONO. While Cable One currently sports a ZacksRank #1, Netflix and Sonos carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cable One’s earnings surprise in the last reported quarter was 5.21%.

Netflix pulled off positive earnings surprise of 57.62%, on average, in the trailing four quarters.

Sonos delivered positive earnings surprise of 18.74%, on average, in the trailing four quarters.

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