CSS Industries, Inc. :CSS-US: Earnings Analysis: Q3, 2017 By the Numbers : March 13, 2017

CSS Industries, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of CSS Industries, Inc. – Deluxe Corporation, 3M Company, Wal-Mart Stores, Inc., Shutterfly, Inc. and ACCO Brands Corporation (DLX-US, MMM-US, WMT-US, SFLY-US and ACCO-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 117.15 million, Net Earnings of USD 29.97 million.
  • Gross margins narrowed from 33.65% to 31.56% compared to the same period last year, operating (EBITDA) margins now 14.39% from 16.49%.
  • Year-on-year change in operating cash flow of -54.36% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 117.15 101.29 45.32 56.74 104.57
Revenue Growth (%YOY) 12.04 -9.14 2.46 5.66 -0.4
Earnings (mil) 29.97 6.99 -3.29 -0.59 9.66
Earnings Growth (%YOY) 210.11 -37.73 -7.11 55.91 -1.06
Net Margin (%) 25.58 6.9 -7.25 -1.04 9.24
EPS 3.29 0.77 -0.36 -0.06 1.06
Return on Equity (%) 41.89 10.39 -4.89 -0.86 14.32
Return on Assets (%) 34.91 8.9 -4.26 -0.74 11.97

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Market Share Versus Profits

Revenues History
Earnings History

CSS-US‘s change in revenue this period compared to the same period last year of 12.04% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that CSS-US is holding onto its market share. Also, for comparison purposes, revenues changed by 15.66% and earnings by 328.62% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 31.56% to 33.65% for the same period last year, while operating margins (EBITDA margins) went from 14.39% to 16.49% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

CSS-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 149.01 days from 170.17 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

CSS-US‘s change in operating cash flow of -54.36% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s operating (EBIT) margins contracted from 14.56% to 12.63%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from 14.53% to 29.21%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

CSS Industries, Inc. engages in the design, manufacture, procurement, and sale of seasonal and all occasion social expression products, principally to mass market retailers in the United States and Canada. Its seasonal and occasion products include decorative ribbons and bows, boxed greeting cards, gift tags, gift wrap, gift bags, gift boxes, gift card holders, decorative tissue paper, decorations, classroom exchange valentines, decorative ribbons and bows, floral accessories, halloween masks, costumes, make-up and novelties, easter egg dyes and novelties, craft and educational products, stickers, memory books, stationery, journals, note cards, infant and wedding photo albums, scrapbooks and gift items. The company was founded in 1923 and is headquartered in Philadelphia, PA.

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