CSS Industries Inc. reported unaudited consolidated earnings results for the second quarter and six months ended September 30, 2017. For the quarter, the company reported net sales of $101,397,000 compared to $101,291,000 a year ago. Operating income was $3,393,000 compared to $10,679,000 a year ago. Income before income taxes was $3,515,000 compared to $11,070,000 a year ago. Net income was $3,013,000 compared to $6,992,000 a year ago. Net income per common share basic and diluted was $0.33 compared to $0.77 a year ago. Adjusted diluted income per share was $0.65 compared to $0.73 a year ago. Adjusted EBITDA was $10.1 million for the quarter compared to $12.8 million in the prior year quarter.

For the six months, the company reported net sales of $149,721,000 compared to $146,609,000 a year ago. Operating loss was $5,491,000 compared to income of $5,402,000 a year ago. Loss before income taxes was $5,156,000 compared to income of $5,973,000 a year ago. Net loss was $4,051,000 compared to income of $3,706,000 a year ago. Net loss per common share basic and diluted was $0.45 compared to earnings per share was $0.41 a year ago. Net cash used for operating activities was $34,162,000 compared to $42,026,000 a year ago. Purchase of property, plant and equipment was $2,021,000 compared to $2,831,000 a year ago.

The Company is adjusting its outlook for fiscal 2018 full year net sales, net income and adjusted EBITDA to reflect the addition of Simplicity, partially offset by continued softness in the base business. Net sales are now expected to be in the range of $367 million to $379 million, an increase of 14% to 18% over the prior fiscal year. The primary drivers of growth will be the full year impact of the McCall acquisition and the partial year impact of the Simplicity acquisition. Excluding these acquisitions, sales are expected to be flat to down slightly from the prior year. The Company expects to generate a full year net loss of $2 million to $5 million. The large reduction in reported net income compared to fiscal 2017 net income of $28.5 million will be largely attributable to bargain purchase gains of $20.0 million recorded in fiscal 2017, primarily the result of the write-up of McCall acquired inventory to fair value (estimated net sales price less selling costs), and the corresponding sale of that inventory at little to no gross margin throughout fiscal 2018. In addition, the Company also expects to write up the value of Simplicity inventory to fair value and will also incur transaction and integration costs. Adjusted EBITDA for fiscal 2018 is now expected to be in the range of $28 million to $32 million, compared to $25.1 million in fiscal 2017. The expected growth in adjusted EBITDA reflects the contributions from acquisitions and cost reductions, partially offset by a lower margin sales mix and the impact of lower manufacturing volumes resulting from the Company's efforts to reduce inventory levels.