CSS Industries, Inc. reported unaudited consolidated earnings results for the third quarter and nine months ended December 31, 2017. For the quarter, the company reported, net sales of $130,642,000, operating income of $8,321,000, income before income taxes of $7,878,000, net income of $5,952,000, compared to net sales of $117,153,000, operating income of $14,482,000, income before income taxes of $34,217,000, net income of $29,969,000, for the same period a year ago. Basic and diluted earnings per share were $0.65 against diluted income per share of $3.29 a year ago. Adjusted operating income was $16.6 million compared to $16.4 million in the prior year quarter. Adjusted net income was $14.0 million compared to $11.5 million in the prior year quarter. Adjusted diluted earnings per share were $1.52 compared to $1.26 a year ago. Adjusted EBITDA was $19.5 million for the quarter compared to $18.5 million in the prior year quarter

For the nine months, the company reported, net sales of $280,363,000, operating income of $2,830,000, income before income taxes of $2,722,000, net income of $1,901,000, compared to net sales of $263,762,000, operating income of $19,884,000, income before income taxes of $40,190,000, net income of $33,675,000, for the same period a year ago. Basic and diluted earnings per share were $0.21 against diluted income per share of $3.70 a year ago. Net cash used for operating activities was $10,405,000 against $25,602,000 a year ago. Purchase of property, plant and equipment was $3,964,000 against $4,037,000 a year ago. Adjusted diluted income per share was $1.65 against $1.63 a year ago. Adjusted ebitda was $26,387,000 against $28,147,000 a year ago. Adjusted operating income was $19,242,000 against $21,820,000 a year ago. Adjusted net income was $15,078,000 against $14,827,000 a year ago.

The company is adjusting its outlook for fiscal 2018 full year net sales, net income and adjusted EBITDA to reflect continued softness in its base business, primarily in the craft ribbon business. Net sales are now expected to be in the range of $356 million to $362 million, an increase of 10% to 12% over the prior fiscal year. Excluding these acquisitions, sales are expected to be down 5% to 7% compared to the prior year. The company expects to generate a full year net loss of $9.1 million to $11.3 million, compared to net income of $28.5 million in the prior year. The large reduction in reported net income compared to fiscal 2017 will be largely attributable to bargain purchase gains of $20.0 million recorded in fiscal 2017, primarily resulting from the step-up to fair value (estimated net sales price less selling costs), of inventory acquired as part of the McCall acquisition, and the corresponding sale of that inventory throughout fiscal 2018 at little to no gross margin. In addition, the company's fiscal 2018 net income will be adversely impacted by the step-up to fair value of inventory acquired as part of the Simplicity acquisition, and Simplicity transaction and integration costs. The company adjusted EBITDA is to be in the range of $23 million to $26 million, which is down from prior guidance of $28 million to $32 million. The Incremental EBITDA contribution from Simplicity and McCall will be more than offset by lower earnings in the base business, resulting from the lower sales volumes and an unfavorable sales mix. The expected incremental adjusted EBITDA attributable to McCall and Simplicity are expected to be mostly offset by lower sales and manufacturing volumes, and an unfavorable sales mix, in the Company's other businesses. The expected GAAP effective tax rate to be approximately 25% and tax rate on adjusted income is expected to be 21%.