Multi-Color (LABL) on Q4 2017 Results - Earnings Call Transcript

| About: Multi-Color Corporation (LABL)

Multi-Color Corporation (NASDAQ:LABL)

Q4 2017 Earnings Conference Call

May 30, 2017, 10:00 AM ET

Executives

Sharon Birkett - VP and CFO

Nigel Vinecombe - Executive Chairman of the Board

Analysts

Ghansham Panjabi - Robert W. Baird & Co.

Roger Spitz - Bank of America Merrill Lynch

Mark Wilde - BMO Capital Markets

Adam Josephson - KeyBanc Capital Markets Inc.

David Stratton - Great Lakes Review

Greg Eisen - Singular Research

Spencer Joyce - Hilliard Lyons

Operator

Good day, ladies and gentlemen, and welcome to the Fiscal Year 2017 Earnings Conference Call and webcast. My name is Sally; and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this call is being recorded for replay purposes.

I'd now like to hand the call over to Sharon Birkett, Vice President and Chief Financial Officer. Please go ahead.

Sharon Birkett

Thank you, Sally. Welcome to Multi-Color Corporation's fiscal 2017 fourth quarter conference call and webcast for the period ending March 31, 2017. We are also broadcasting this live over the Internet accessible through our Multi-Color Web site at www.mcclabel.com on our Investor Relations page.

I’m Sharon Birkett, Vice President and CFO of Multi-Color. I'll be leading today's call and I’m joined by Nigel Vinecombe, our Executive Chairman. I'll begin with an overview of how our Company performed this period and provide a detailed analysis of our financial results. Nigel will conclude with final comments and then we will take your questions.

Before we discuss our results, I want to call your attention to the Safe Harbor statement that was displayed on the registration page you viewed right after you logged on to the webcast and remind you that in accordance with the Private Securities Litigation Act of 1995, this presentation may contain some forward-looking statements that involve both known and unknown risks that may affect the outcome of our results. This Safe Harbor statement is also included in our earnings release and in our filings with the SEC.

For those of you who are listening and viewing our webcast via the Internet, please take a look at Slide number 2, net revenues. In the fourth quarter of fiscal 2017, net revenues increased 7% to $244 million compared to $227.1 million in the prior year quarter. Acquisitions accounted for 3% increase in revenues led by increases in volume in North America, Latin America, and Australia. Organic revenues increased 5%.

Foreign exchange rates, primarily driven by the depreciation of the British pound, the euro, and the Mexican peso, led to a 1% decrease in revenues quarter-over-quarter. In addition, revenues for fiscal 2017 increased 6% to $923.3 million from $870.8 million in the prior year.

Acquisitions accounted for a 5% increase in revenues. Organic revenues increased 3%, primarily due to increased volumes in North America, Latin America, and Australia. Foreign exchange rates, primarily driven by depreciation in the British pound and the Mexican peso, led to a 2% decrease in revenues year-over-year.

Please turn to Slide number 3, gross profit and margin. Core gross profit including the impact of -- excluding the impact of inventory purchase accounting charges, increased 11% or $5.2 million, compared to the prior year quarter. Acquisitions contributed $1.2 million to core gross profit, partially offset by the effect of unfavorable foreign exchange rates of $0.3 million, increased volume, and improved operating efficiencies primarily in North America led to an organic gross profit improvement of 9% or $4.3 million compared to the prior year quarter.

Gross profit margins were 22% of sales for the current year quarter compared to 21.4% in the prior year quarter. Core gross profit, excluding the impact of inventory purchase accounting charges increased 8% or $14.9 million for the year.

Acquisitions contributed $10.2 million to core gross margin, partially offset by the effect of unfavorable foreign exchange rates of $1.2 million, increased volume, and improved operating efficiencies primarily in North America led to an organic core gross margin improvement of 4% or $5.9 million compared to the prior year. Core gross margins were 21.4% of sales revenues for fiscal 2017 compared to 20.9% in fiscal 2016.

Please turn to Slide number 4, operating income and margin. Core operating income increased 21% or $5.5 million compared to the prior year quarter. Acquisitions contributed $0.6 million to core operating income. Non-core items in the current year quarter relate to inventory purchase accounting charges of $0.2 million, acquisition and integration expenses of $0.3 million, and facility closure expenses of $0.3 million.

Core SG&A decreased $0.3 million in the current year quarter compared to the prior year quarter. Acquisitions contributed $0.6 million of SG&A expense in the current year quarter, partially offset by a decrease of $0.3 million due to the favorable impact of foreign exchange rates.

The remaining decrease primarily relates to a reduction in external compliance costs, net of increase in compensation costs for internal compliance resources and incentive accruals related to the Company's performance in fiscal 2017. Core SG&A as a percentage of sales was 8.9% in the current year quarter compared to 9.7% in the prior year quarter.

Core operating income increased 9% or $9.4 million compared to the prior year, including $5.4 million from acquisitions. Non-core items in fiscal 2017 relate to inventory purchase accounting charges of $0.4 million, acquisition and integration expenses of $1.1 million, and facility closure expenses of $0.9 million.

Core SG&A increased 7% or $5.5 million compared to the prior year, including $4.9 million related to acquisitions, partially offset by a decrease of $0.9 million due to the favorable impact of foreign exchange rates. The remaining increase primarily relates to increase in compensation costs including internal compliance resources and increased incentive accruals related to the Company's performance in fiscal 2017. Core SG&A increased as a percentage of sales to 9.1% from 9% in the prior year.

Please turn to Slide number 5, net income attributable to MCC. In the fourth quarter of fiscal 2017, core net income increased 41% or $4.8 million compared to the prior year quarter. Core net income increased 13% to $61.5 million from $54.5 million in the prior year.

The effective tax rate on core net income was 36% in the current year quarter compared to 34% in the prior year quarter, primarily due to the mix of income in foreign and local jurisdictions. The effective tax rate on core net income was 31% for the fiscal 2017 compared to 28% in the prior year.

The tax rate in fiscal 2016 was impacted by the release of valuation allowances on deferred tax assets held in certain foreign jurisdictions and other discrete items recognized during that period that reduced tax expense compared to the current year. The Company expects its annual core effective tax rate to be approximately 32% in fiscal 2018.

Please advance to Slide number 6, diluted earnings per share. Excluding the impact of non-core items, core EPS increased 40% to $0.98 per diluted share compared to $0.70 in the prior year quarter. For fiscal 2017, core EPS increased 12% to $3.61 per diluted share from $3.22 in the prior year period.

Please turn to Slide number 7, free cash flow. Free cash flow for the fourth quarter of fiscal 2017, consisting of cash provided by operating activities less capital expenditures was $23.8 million compared to $22 million in the prior year quarter. Free cash flow for fiscal 2017 was $61.1 million compared to $64.5 million in the prior year, primarily due to the growth in net income offset by a higher capital expenditure.

Please turn to Slide number 8, core EBITDA. This slide shows core EBITDA for the quarter and year-to-date period. Core EBITDA is defined as core operating income plus depreciation and amortization. Core EBITDA increased 17% to $44.1 million in the current year quarter. Core EBITDA increased 9% to $161.3 million for fiscal 2017 compared to the prior year.

Please advance to Slide number 9, capital expenditures. Our fourth quarter capital expenditure were $12.1 million compared to $6.7 million in the prior year quarter. For fiscal 2017, our capital expenditures were $46.1 million compared to $34.9 million in the prior year. The projected amount of capital expenditures for fiscal 2018 is $48 million.

Please advance to Slide number 10, depreciation and amortization. Our total depreciation and amortization was $12.2 million for the quarter of fiscal 2014 (sic) [2017] compared to $11.2 in the prior year quarter. The total depreciation and amortization expense for fiscal 2017 was $47.9 million compared to $44.5 million in the prior year.

Please turn to Slide number 11, debt. The Company had $481.5 million in debt as at March 31, 2017 compared to $506.3 million at March 2016. During the last four quarters, the Company paid down $57.8 million in debt and borrowed including acquired debt of $33 million in relation to acquisitions. During the last four quarters, Multi-Color has made acquisitions in Australia and France.

Now I'd like to turn the presentation over to Nigel.

Nigel Vinecombe

Thank you, Sharon, and thank you everyone for joining us. So we finished the year in line with our $0.40 forecast that we had at the start of the fiscal year, better on our Q3 forecast, primarily due to higher sales of organic and acquisitions in the quarter and better operational performance. Has organic growth of 5% as for Q4, remained the best case scenario for fiscal '18. But we do not recommend or envisage using this for fiscal '18 forecasting, but rather stick to the middle of the road 3% past of rate. And in our worst years, we’ve had a 1% past of rate. So, 3% is between our worst case scenario at 1% and our best case scenario at 5% consistent with what we did for fiscal '17 overall. Although we have that slightly stronger growth rates in some of the quarters.

Secondly, core gross margin reported 22%. It's an improvement in Q4. We do believe that there is scope to beat fiscal '17 core gross margin of 21.4% in fiscal '18. So in terms of fiscal '18, we continue to forecast circa $0.40 core EPS growth to a total of $4, and we can get to $4 by firstly achieving 3% organic growth, which will add circa $0.20, and secondly improving core gross margins by 50 basis points from 21.4 at fiscal '17, which we’ve actually done end of the fourth quarter, adding a further $0.20.

In addition to that, our acquisition pipeline remains very healthy, and we’re confident of delivering on some acquisition activity in fiscal '18. And with our leverage, the lowest in five years, we don’t expect to do some smaller deals on an ongoing basis, primarily in the regional one spirit space, but we’re also actively looking at larger deals in the home and personal care, healthcare, and food and beverage segments that make up all four key focus segments.

So with that, happy to open up for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Your first question comes from the line of Ghansham Panjabi from Baird. Please go ahead.

Ghansham Panjabi

Hey, guys. Good morning. How are you?

Nigel Vinecombe

Good morning. [Multiple speakers] well, thank you.

Sharon Birkett

Good morning.

Ghansham Panjabi

Good morning, Nigel and Sharon. Hey, I guess, first off on the 3% to 5% core sales growth, Nigel understanding what you said about the 3% versus the 5%, but what’s underlying that sort of the progression on a quarterly during 2018? You called out a timeline, the timeline of Easter shift that boosted 4Q, will that have the opposite effect for your fiscal 1Q?

Nigel Vinecombe

Yes, I think so. April was soft, because we had Easter in April this year. And I’d say that for Q4 that 5% organic growth benefited 1% from the combination of the Q3 falling over into Q4 and no Easter in Q4. So, we -- I think we had a good percentage improvement on what we would normally see and so that’s why we would advocate a run rate in the 3% plus range, not 5% as we look at fiscal '18.

Ghansham Panjabi

Okay. And then just in terms of your end markets, a lot of your peers impacting -- have been impacted by weakness in food volumes, particularly the portion that sells in the processed food. Can you just give us a sense as to how big that end market is for you at current and what are you seeing from a demand perspective there?

Nigel Vinecombe

Food and beverage combined is relatively small market segment for us. So it would be under 20% of our total revenues and food would be a portion of that. We don’t have the food and beverage split. So it's relatively small in terms of food in the scheme of things. And we are not seeing anything unusual in terms of growth rates in that segment versus our other segments, but we don’t play particularly much in that segment, so we don’t have as much visibility perhaps as others do or as much exposures as others do.

Ghansham Panjabi

Okay. And just one final one, maybe for Sharon. Sharon, I heard the CapEx sort of guidance for 2018. Can you aggregate that to a free cash flow guidance? I’m sorry if I missed that. Thanks so much.

Sharon Birkett

Sure. I still think it will be in that 60 to 70 range.

Ghansham Panjabi

Okay. Thank you very much.

Operator

Thank you. Your next question comes from the line of Roger Spitz from Bank of America ML.

Roger Spitz

Thank you. Good morning. So, fiscal Q4 '16 was -- '17 was stronger earnings and free cash flow than you expected on your prior call. Can you say what the main upside -- drivers to the upside surprise was?

Nigel Vinecombe

If you look at it in terms of $0.10 of size from the 3.50 that we’ve stated at the end of Q3, half of that $0.10 would be sales. I’d say half of that really organic and half of that the acquisitions that we made at the start of fourth quarter and the other $0.05 would be operational improvement.

Roger Spitz

Okay. Just making note here. And can you say which end markets really drove the growth? Maybe you said it during the presentation, which I apologize, I might have missed it, but I mean you’ve pointed out North America, Latin, Australia, I don’t know if one of those were larger or more important. And then, in terms of end markets, was it wine or beer or something else?

Nigel Vinecombe

Sure. So in North America, it was really home and personal care, and in Latin America and Australia it was wine.

Roger Spitz

Okay. And you may have just said it, and I missed it again, what is your CapEx guidance for the year ahead, please?

Sharon Birkett

$48 million, roughly [indiscernible], yes. So strategically [ph] we’re 4% to 5% of sales and we’re at the higher end of that range for FY18.

Roger Spitz

Got it. And in terms of the larger deals as far as the bolt-ons that you might be considering, can you give any sort of size -- maybe in a broad range, but how should we think -- how big would you be thinking about for a larger deal?

Nigel Vinecombe

Okay. Well, I guess, a large deal in my mind would be $100 million in revenues and a medium-sized deal would be say $50 million to $100 million, and a smaller deal under $50 million. So, we’re looking at deals that are $100 million in revenues and up. We have nothing signed up, but we certainly are keenly evaluating deals of that size and larger.

Roger Spitz

Thank you very much.

Operator

Thank you. Your next question comes from the line of Mark Wilde from BMO Capital. Please go ahead.

Mark Wilde

Good morning, Nigel. Good morning, Sharon.

Nigel Vinecombe

Good morning.

Sharon Birkett

Good morning.

Mark Wilde

Nigel, just a kind of come back to this strength that you saw in the fourth quarter, you mentioned kind of home and personal care in North America and wine in Australia. Was any of that sort of new business wins or is that just sort of better volume with existing customers?

Nigel Vinecombe

Both. So, we are seeing new business with existing customers as well as some volume growth in some of their brands. So I would say a lot of it is new brands with existing customers.

Mark Wilde

Okay, right. And then just in terms of sort of priorities, in terms of acquisitions, can you just remind us again of sort of the focus areas for you?

Nigel Vinecombe

Yes. Home and personal care remains our highest priority market. It's a $350 million, $400 million business for us today and we want to get that to a $1 billion over time. So that we still see a lot of opportunity there and it's a healthy segment in terms of size and margins. Secondly, in wine and spirits, we are circa $400 million, we want to get that to $500 million. That's going to be a handful of smaller regional plays mainly in Europe to flesh that out, and then we’re pretty much done in that space. And then the focus is on opportunities in healthcare and opportunities in food and beverage.

Mark Wilde

Okay.

Nigel Vinecombe

And those are -- healthcare is a very decent size segment with extremely attractive margins and food and beverage is by far the largest segment globally.

Mark Wilde

Okay. And any color you can give us on just how valuations are looking in the markets right now?

Nigel Vinecombe

They’re higher than they were a year or two ago. So we went for many years, I think with pretty consistent multiples. Multiples are now higher than they were.

Mark Wilde

Okay. And then, would you assume kind of across these four buckets that you’ve identified, would healthcare multiples be significantly higher than you’ve seen in the other areas?

Nigel Vinecombe

We're not saying that now. We're seeing that the multiple continues to be really related to the size and the quality of the business, not to the segment, the geography, or the customer base.

Mark Wilde

Okay, right. That's helpful. I will turn it over.

Nigel Vinecombe

Thanks.

Operator

Thank you. Your next question comes from the line of Adam Josephson from KeyBanc. Please go ahead.

Adam Josephson

Nigel, and Sharon, good morning.

Nigel Vinecombe

Good morning, Adam.

Sharon Birkett

Good morning.

Adam Josephson

Nigel, I wanted to follow-up to Mark's question about multiples. Obviously, multiples are higher than what you are accustomed to seeing. Does that give you any more hesitation about doing decent size deals, given whatever it is you would be paying for them or not necessarily?

Nigel Vinecombe

Yes. I mean, the multiples followed by the synergies are the two most impactful issues for us financially. So we'll continue to look at what we think is important for us strategically and what makes sense for us financially. And we are probably walking away from more deals at the moment than we’ve in the past.

Adam Josephson

And how would you compare -- yes.

Nigel Vinecombe

I would say, a good number of deals out there that we think are viable and attractive for us.

Adam Josephson

And how do you compare the multiples you are seeing to what you saw in, say '07, '08?

Nigel Vinecombe

Well, if you look at the color part business, that was both in '07, '08. You look at something today, you’re talking about at least the multiple more.

Adam Josephson

Okay. And then just back to the questions about the beat in 4Q, you talked about I think half of the $0.10, beat Nigel coming from better operations. Can you just help us understand a little bit better whatever it is you might be referring to? Because it's just -- it's hard to know what it is you're talking about there exactly.

Nigel Vinecombe

In terms operational improvement, well, Q4 of last year was very ordinary for us. We had very poor operational performance of our own making and we didn’t see anything like that in Q4 of this year. So it wasn’t that Q4 this year was particularly good, it was the Q4 last year was particularly bad.

Adam Josephson

But you had previously said you do 3.50 this year, right, last quarter and you see $0.10 better than what you expected, right?

Nigel Vinecombe

Yes. So, $0.05 of that is operational improvement above and beyond what we had expected.

Adam Josephson

Then that gets to my question. Well, I appreciate that your operations were better than last year, but they were better than what you expected three months ago as well, right?

Nigel Vinecombe

That’s right.

Adam Josephson

And what was that related to? Like can you just help us understand where it is you were more efficient or whatever it is you were?

Nigel Vinecombe

I think some of our hotspot, some of our underperformers improved a bit faster than we had expected them to. We still expect further improvement. Hence, we still expect we had to grow our gross margins in '18 over '17. But we have more of those things go better in Q4 than we have anticipated at the start of the quarter.

Adam Josephson

Okay. And -- thanks, Nigel. And just on the -- in terms of a regional sales break down, can you help us either for the quarter, for the year in North America versus other 3% organic growth for the year, what was North America et cetera?

Nigel Vinecombe

Sure. So we define North America as the U.S., Canada, and Mexico, because there is quite a lot of business that moves between those three areas. So collectively they’re 60% of our sales and we had low single-digit growth for the year there. In Europe, 23% of our sales basically flat, and in developing markets 17% of our sales we’ve had mid to high single digit growth for the year.

Adam Josephson

Okay. And the North America, up low single digits, Nigel, is that any -- I mean we track the CPG company volumes pretty closely and they were flat to down in many cases in North America. So it seems as if you outperformed many of your customers in the quarter, am I mistaken in thinking that?

Nigel Vinecombe

That’s for the year.

Adam Josephson

Well, for both the years, yes and for both the year and the quarter, I mean, it also for the year many of the large U.S CPGs had flat volume at best. So I’m just wondering where does you think you’re outgrowing the market, if in fact you’re?

Nigel Vinecombe

Well, in terms of the growth in North America, if you exclude the beer [indiscernible] that still affected us in the first half of fiscal '17. We would actually have mid single-digit organic growth in the year. We see that we are growing well with our existing customers and we are, I think, being awarded more brands. So that is effectively taking a bit of market share.

Adam Josephson

Got it. Thanks very much, Nigel.

Nigel Vinecombe

Okay.

Operator

Thank you. And your next question comes from the line of David Stratton from Great Lakes Review. Please go ahead, David.

David Stratton

Good morning. Thanks for taking the question. The follow-up on the previous conversation, when we look at maybe taking share a little bit, what is the impact on the overall competitive environment and particularly pricing?

Nigel Vinecombe

We see the pricing, it's pretty stable. And we also see that raw material input costs are pretty stable, which we understand is somewhat different to the packaging space in general. So we don't see anything unusual happening in either of those scenarios in terms of selling prices or raw material cost inputs in recent times or in the near future.

David Stratton

And is competitor pricing an issue or is that not impactful at this point?

Nigel Vinecombe

No more [indiscernible] unusual. So [multiple speakers].

David Stratton

All right. Okay. And then, did have FX impact projection for fiscal '18?

Nigel Vinecombe

Yes. It's a similar rate what we’re experiencing at the moment, so the 1% to 2% not significant.

David Stratton

All right. Thank you.

Operator

Thank you. Your next question comes from the line of Greg Eisen from Singular Research. Please go ahead, Greg.

Greg Eisen

Thank you. Good morning, Nigel and Sharon. Going back to the pricing, and I guess, Nigel I’ve asked this question before on prior quarters about pricing. In the past you’ve had certain contracts that have renewed and you had a kind of a lagging effect for a few quarters on repricing of some of your business. Are there any significant -- is there any significant piece of your business that comes up for repricing with the existing customer that could affect your organic growth rate for next year?

Nigel Vinecombe

Well, in any given year there is likely to be 1 or 2 or 3 of our top 10 customers. I think we have one coming up in fiscal '18, contract renewal. So that will be [technical difficulty] for us to work out or navigate our way through, but probably fiscal '18 is going to be a bit lighter year than some in the recent past in terms of contract renewals.

Greg Eisen

Well that's encouraging. Going back to the acquisition question. It looks, by my count and tell me if I'm wrong, your announced deals had an annualized sales for deals that you announced -- acquired during this fiscal year of about $28 million, which is on the low end of, obviously, the appetite that you have expressed in the past. Is there any specific size that you hope to achieve in the new fiscal year? Is there kind of range of how much you want to accomplish in annualized sales or is that really off the table, because of the pricing environment?

Nigel Vinecombe

It's definitely not off the table. We are still keen to look at $100 million in revenues a year and I still think that’s doable for '18.

Greg Eisen

Okay. Well, good luck with that. And I understand what you said about pricing, it sounds [multiple speakers]?

Nigel Vinecombe

If you put acquisitions in context, if we make $50 million in acquisition revenue in the year at an average of 15% EBITDA, so $7.5 million in EBITDA, that would generate, say, $0.15 and if we get our $100 million at $15 million in EBITDA, that would generate another $0.30 in the full-year. So we understand that can be very attractive thing for us to do financially and strategically. And so, we are continuing to want to do that.

Greg Eisen

Good, good. Understood. The acquisitions that you announced at the beginning of January, do you have any comments on those, have you completed integration of those? Are there any integration issues that might carry over to next quarter?

Nigel Vinecombe

One quarter in, we are happy with how they are going. It's the larger acquisition in Melbourne, there is no real integration issues outstanding. We are not relocating anything. The initial savings in terms of synergies have been achieved, that we hope to get will be relatively modest. And the French -- smaller French acquisition is going very well for us in terms of the revenue is sticking there and we have a small amount of plant integration activity within the Bordeaux region happening during the course of this calendar year. But its same employee, same gear, and we see it as a very straightforward small scale process. So no issues on the downside, either of those, and happy that they’re performing as advertised so far.

Greg Eisen

Great. Thanks for answering my questions.

Nigel Vinecombe

Pleasure.

Operator

Thank you. Your next question comes from the line of Spencer Joyce from Hilliard Lyons. Please go ahead.

Spencer Joyce

Nigel and Sharon, good morning. Thanks for taking the call.

Nigel Vinecombe

Hi.

Spencer Joyce

Want to start first just very quickly again on the M&A side. I know a lot of questions have been asked and answered about valuations, but my question deals with how you all are better prepared or maybe better prepared internally to approach some of these larger deals versus where you may have been over the course of the past few years?

Nigel Vinecombe

Yes, good question, important question for us. So, we feel that in the last 12 months not having done a lot on the acquisition front that we have been able to address a number of underperforming internal areas, and that those are behind us now. And so, we feel in better shape in terms of our current book of business than perhaps we have done for sometime going into new acquisitions. And secondly, I think that we have deliberately created more resources to help with acquisition integration on a go-forward basis. So I think generally our business is better placed and secondly we are better resourced to integrate going forward.

Spencer Joyce

Thank you. That's very helpful and good to hear. Want to parse guidance a little bit, Nigel, correct me if I’m misheard, but of the $0.40 or so that we could see next year, I believe you attributed it to about $0.20 of revenue growth and about another $0.20 of gross margin expansion. And maybe that's a little simplistic, but I guess part two of my question would be, if acquisitions could perhaps bring some upside risks to that $0.40 or if that's perhaps a bit -- perhaps being a little too optimistic?

Nigel Vinecombe

Acquisition should add to that, that's true.

Spencer Joyce

Okay. And then the $0.20 each from revenue growth and gross margin expansion, that was correct?

Nigel Vinecombe

Correct. And that’s a continuation, really of where we are at, 3% organic growth, and 23% gross margins.

Spencer Joyce

Okay. Final question for me just here at year-end, I was wondering if you all could provide just an overview or kind of a recap of where the P&G relationship stands and just any particular new product lines? I know it's been a little bit tougher organic environment for some of the package goods companies, perhaps any qualitative shifts in that relationship, and again if nothing stands out don’t spend too much time, but just here at year-end would be interested to get your take on that relationship.

Nigel Vinecombe

We like to think it, it continues to be very strong. We continue to get new opportunities with P&G, both in North America where we already have a significant share of their spend, but also in the rest of the world where we’ve footprint. So as we grow, we continue to grow at least as strongly, if not more strongly with P&G than we do with our business overall. So, I think that we are -- well I know that we are investing in quite a lot of CapEx this year in North America and a lot of that is for P&G.

Spencer Joyce

Okay. Very helpful. Congrats on a good year. Thanks.

Nigel Vinecombe

Thank you.

Operator

Thank you. That was the last question that was in the queue. I'd now like to turn the call back to Nigel Vinecombe for closing remarks.

Nigel Vinecombe

Thank you, and thank everyone for joining us this morning. We feel well-placed for fiscal '18 and feel if we are able to deliver on the $0.40 to get $4, and in addition, deliver on some acquisition, meaningful acquisition activities during the course of the year. So we look forward to that and look forward to talking to you next month. Thank you.

Operator

Thank you both, ladies and gentlemen. That concludes your conference call for today. You may now disconnect. Thank you for joining.

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