Continued operational improvement over prior quarter 3rd Quarter
EPS of $0.02 per diluted share 3rd Quarter Non-GAAP EPS of $0.18
per diluted share 3rd Quarter Adjusted EBITDA of $56.3 million
STAMFORD, Conn., Nov. 11 /PRNewswire-FirstCall/ -- Cenveo, Inc.
(NYSE: CVO) today announced results for the three and nine months
ended October 3, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20070618/CENVEOLOGO) For the
three months ended October 3, 2009, net sales were $448.0 million,
as compared to $522.7 million for the same period in the previous
year. For the three months ended October 3, 2009, the Company
reported net income of $1.1 million, or $0.02 per share, as
compared to net income of $12.3 million, or $0.23 per share, for
the three months ended September 27, 2008. On a Non-GAAP basis,
income from continuing operations was $9.9 million, or $0.18 per
diluted share for the three months ended October 3, 2009. Non-GAAP
income from continuing operations excludes integration, acquisition
and other charges, stock-based compensation provision,
restructuring, impairment and other charges, (gain) loss on early
extinguishment of debt and adjusts income taxes to reflect an
estimated cash tax rate. Adjusted EBITDA for the three months ended
October 3, 2009 was $56.3 million. Adjusted EBITDA is defined as
earnings before interest, taxes, depreciation and amortization,
integration, acquisition and other charges, stock-based
compensation provision, restructuring, impairment and other
charges, (gain) loss on early extinguishment of debt, and income
(loss) from discontinued operations, net of taxes. An explanation
of the Company's use of Non-GAAP measures and Adjusted EBITDA is
detailed below. For the nine months ended October 3, 2009, net
sales were $1.3 billion, as compared to $1.6 billion for the same
period in the previous year. For the nine months ended October 3,
2009, the Company reported a net loss of $21.5 million, or $0.39
per share, as compared to net income of $11.6 million, or $0.22 per
share, for the nine months ended September 27, 2008. On a Non-GAAP
basis, income from continuing operations was $10.4 million or $0.19
per diluted share for the first nine months of 2009. Adjusted
EBITDA for the first nine months of 2009 was $140.9 million. Robert
G. Burton, Chairman and Chief Executive Officer stated: "Our
business continued to improve throughout the third quarter, as we
delivered stronger performance across our operations. Our continued
focus on being proactive in managing our cost structure combined
with modest strengthening across our revenue stream led to improved
results for the quarter. Revenues remained in line with our
expectations, as we experienced market strengthening that enabled
us to achieve sequential revenue growth over the second quarter.
Despite limited sales visibility, we were once again able to match
our cost structure with our revenue stream, delivering a Non-GAAP
operating income margin of 9.0%. We continue to focus on generating
strong cash flows which has allowed us to reduce our debt by $94
million over the past twelve months." Mr. Burton concluded: "The
third quarter marked an important period for the Company as we
continue to see stabilization in the key product markets we serve,
including labels, packaging, journals, envelopes and print. This
market improvement, combined with the cost actions we implemented
earlier this year and the completion of our previously announced
acquisition of Nashua, has Cenveo well positioned to weather this
economic storm and be poised for future growth. We will continue to
invest in these key product markets via prudent capital investments
and highly strategic and accretive acquisitions to strengthen our
leadership position. "As we prepare to exit 2009, I am proud of the
hard work and efforts of our entire organization, in light of the
many economic challenges we faced. We have performed as well as we
could in this recessionary environment, never losing our focus on
our customers and shareholders. As I've also said before, Cenveo's
short and long term success is built around having an experienced
management team that knows how to deliver results in the diverse
niche businesses we operate. Going forward, I believe that our
fourth quarter results will show continued improvement over the
third quarter and that 2010 will be significantly stronger than
2009 from a revenue and profitability standpoint." Conference Call:
Cenveo will host a conference call tomorrow, Thursday, November 12,
2009, at 10:00 a.m. Eastern Time. The conference call will be
available via webcast, which can be accessed via the Internet at
http://www.cenveo.com/. Cenveo, Inc. and Subsidiaries Condensed
Consolidated Statements of Operations (in thousands, except per
share data) (unaudited) Three Months Ended Nine Months Ended
October September October September 3, 2009 27, 2008 3, 2009 27,
2008 Net sales $448,039 $522,705 $1,257,783 $1,581,534 Cost of
sales 359,343 406,908 1,028,024 1,260,612 Selling, general and
administrative expenses 52,570 58,455 153,455 184,821 Amortization
of intangible assets 2,587 2,293 7,258 6,747 Restructuring,
impairment and other charges 8,537 6,873 49,300 22,047 ----- -----
------ ------ Operating income 25,002 48,176 19,746 107,307
Interest expense, net 29,037 26,795 79,389 79,948 (Gain) loss on
early extinguishment of debt - (371) (16,917) 3,871 Other (income)
expense, net 266 (695) (2,320) 429 --- ---- ------ --- Income
(loss) from continuing operations before income taxes (4,301)
22,447 (40,406) 23,059 Income tax (benefit) expense 4,131 10,060
(9,946) 10,349 ----- ------ ------ ------ Income (loss) from
continuing operations (8,432) 12,387 (30,460) 12,710 Income (loss)
from discontinued operations, net of taxes 9,505 (59) 8,970 (1,114)
----- --- ----- ------ Net income (loss) $1,073 $12,328 $(21,490)
$11,596 ====== ====== ======== ======= Income (loss) per share -
basic: Continuing operations $(0.15) $0.23 $(0.55) $0.24
Discontinued operations 0.17 - 0.16 (0.02) ==== === ==== ===== Net
income (loss) $0.02 $0.23 $(0.39) $0.22 ===== ===== ====== =====
Income (loss) per share-diluted: Continuing operations $(0.15)
$0.23 $(0.55) $0.23 Discontinued operations 0.17 - 0.16 (0.02) ====
==== ==== ===== Net income (loss) $0.02 $0.23 $(0.39) $0.21 =====
===== ===== ===== Weighted average shares: Basic 55,911 53,897
54,978 53,796 Diluted 55,911 54,174 54,978 53,994 Cenveo, Inc. and
Subsidiaries Reconciliation of Income (Loss) from Continuing
Operations to Non-GAAP Income from Continuing Operations and
Related Per Share Data (in thousands, except per share data)
(unaudited) Three Months Ended Nine Months Ended October September
October September 3, 2009 27, 2008 3, 2009 27, 2008 Income (loss)
from continuing operations $(8,432) $12,387 $(30,460) $12,710
Integration, acquisition and other charges 2,822 1,797 8,851 7,830
Stock-based compensation provision 3,961 5,979 10,817 12,940
Restructuring, impairment and other charges 8,537 6,873 49,300
22,047 (Gain) loss on early extinguishment of debt - (371) (16,917)
3,871 Income tax benefit (expense) 2,963 6,020 (11,168) 2,677
Non-GAAP income from continuing operations $9,851 $32,685 $10,423
$62,075 Income per share - diluted: Continuing operations $(0.15)
$0.23 $(0.55) $0.23 Integration, acquisition and other charges 0.05
0.03 0.16 0.15 Stock-based compensation provision 0.07 0.11 0.20
0.24 Restructuring, impairment and other charges 0.15 0.13 0.89
0.41 (Gain) loss on early extinguishment of debt - (0.01) (0.31)
0.07 Income tax benefit (expense) 0.06 0.11 (0.20) 0.05 Non-GAAP
continuing operations $0.18 $0.60 $0.19 $1.15 Weighted average
shares-diluted 56,113 54,174 55,109 53,994 Cenveo, Inc. and
Subsidiaries Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in thousands) (unaudited) Three Months Ended Nine Months Ended
October September October September 3, 2009 27, 2008 3, 2009 27,
2008 Net income (loss) $1,073 $12,328 $(21,490) $11,596 Interest
expense, net 29,037 26,795 79,389 79,948 Income tax (benefit)
expense 4,131 10,060 (9,946) 10,349 Depreciation 13,659 16,721
42,615 48,768 Amortization of intangible assets 2,587 2,293 7,258
6,747 Integration, acquisition and other charges 2,822 1,797 8,851
7,830 Stock-based compensation provision 3,961 5,979 10,817 12,940
Restructuring, impairment and other charges 8,537 6,873 49,300
22,047 (Gain) loss on early extinguishment of debt - (371) (16,917)
3,871 (Income) loss from discontinued operations, net of taxes
(9,505) 59 (8,970) 1,114 Adjusted EBITDA, as defined $56,302
$82,534 $140,907 $205,210 Cenveo, Inc. and Subsidiaries
Reconciliation of Operating Income to Non-GAAP Operating Income (in
thousands) (unaudited) Three Months Ended Nine Months Ended October
September October September 3, 2009 27, 2008 3, 2009 27, 2008
Operating income $25,002 $48,176 $19,746 $107,307 Integration,
acquisition and other charges 2,822 1,797 8,851 7,830 Stock-based
compensation provision 3,961 5,979 10,817 12,940 Restructuring,
impairment and other charges 8,537 6,873 49,300 22,047 Non-GAAP
operating income $40,322 $62,825 $88,714 $150,124 CENVEO, INC., AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
(Unaudited) October 3, January 3, 2009 2009 ---- ---- Assets
Current assets: Cash and cash equivalents $12,119 $10,444 Accounts
receivable, net 281,316 270,145 Inventories 149,585 159,569 Prepaid
and other current assets 81,675 74,890 ------ ------ Total current
assets 524,695 515,048 Property, plant and equipment, net 414,082
420,457 Goodwill 334,710 311,183 Other intangible assets, net
298,572 276,944 Other assets, net 29,126 28,482 ------ ------ Total
assets $1,601,185 $1,552,114 ========== ========== Liabilities and
Shareholders' Deficit Current liabilities: Current maturities of
long-term debt $21,445 $24,314 Accounts payable 174,890 174,435
Accrued compensation and related liabilities 32,515 37,319 Other
current liabilities 92,429 88,870 ------ ------ Total current
liabilities 321,279 324,938 Long-term debt 1,260,202 1,282,041
Deferred income taxes 36,428 26,772 Other liabilities 162,249
139,318 Shareholders' deficit: Preferred stock - - Common stock 619
542 Paid-in capital 327,175 271,821 Retained deficit (468,456)
(446,966) Accumulated other comprehensive loss (38,311) (46,352)
------- ------- Total shareholders' deficit (178,973) (220,955)
-------- -------- Total liabilities and shareholders' deficit
$1,601,185 $1,552,114 ========== ========== CENVEO, INC., AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) (Unaudited) Nine Months Ended ----------------- October
September 3, 2009 27, 2008 ------- -------- Cash flows from
operating activities: Net income (loss) $(21,490) $11,596
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Income (loss) from discontinued operations,
net of taxes (8,970) 1,114 Depreciation and amortization, excluding
non-cash interest expense 49,873 55,515 Non-cash interest expense,
net 1,700 1,305 (Gain) loss on early extinguishment of debt
(16,917) 3,871 Stock-based compensation provision 10,817 12,940
Non-cash restructuring, impairment and other charges 23,786 5,124
Deferred income taxes (12,676) 6,709 Gain on sale of assets (3,876)
(4,378) Other non-cash charges, net 5,772 6,599 Changes in
operating assets and liabilities, excluding the effects of acquired
businesses: Accounts receivable 11,209 35,590 Inventories 29,497
(125) Accounts payable and accrued compensation and related
liabilities (25,945) 5,718 Other working capital changes (9,762)
13,351 Other, net 316 (5,515) --- --- Net cash provided by
operating activities 33,334 149,414 ------ ------- Cash flows from
investing activities: Capital expenditures (23,519) (37,782) Cost
of business acquisitions, net of cash acquired (3,189) (47,151)
Proceeds from sale of property, plant and equipment 5,709 18,258
Proceeds from sale of investment 4,032 - Acquisition payments -
(3,653) --- ------ Net cash used in investing activities (16,967)
(70,328) ------- ------- Cash flows from financing activities:
Repayment of 83/8% senior subordinated notes (23,024) - Repayment
of term loans (22,839) (5,400) Payment of amendment and debt
issuance costs (7,296) (5,297) Repayments of other long-term debt
(6,979) (16,535) Repayment of 77/8% senior subordinated notes
(4,295) - Repayment of 101/2% senior notes (3,250) - Purchase and
retirement of common stock upon vesting of RSUs (2,028) (1,055)
Payment of fees on repurchase and retirement of debt (94) -
Borrowings (repayments) under revolving credit facility, net 55,250
(65,200) Proceeds from exercise of stock options 98 1,873 Repayment
of senior unsecured loan - (175,000) Tax liability from stock-based
compensation - (873) Proceeds from issuance of 101/2% senior notes
- 175,000 Proceeds from issuance of other long-term debt - 11,338
--- ------ Net cash provided by (used in) financing activities
(14,457) (81,149) ------- ------- Effect of exchange rate changes
on cash and cash equivalents (235) - ---- --- Net increase
(decrease) in cash and cash equivalents 1,675 (2,063) Cash and cash
equivalents at beginning of period 10,444 15,882 ------ ------ Cash
and cash equivalents at end of period $12,119 $13,819 =======
======= In addition to results presented in accordance with
accounting principles generally accepted in the U.S. ("GAAP"),
included in this release are certain Non-GAAP financial measures,
including Adjusted EBITDA, Non-GAAP income (loss) from continuing
operations, Non-GAAP operating income, and Non-GAAP operating
income margin. Non-GAAP operating income is defined as operating
income excluding integration, acquisition and other charges,
stock-based compensation provision, and restructuring, impairment
and other charges. Non-GAAP operating income margin is calculated
by dividing Non-GAAP operating income into net sales. These
Non-GAAP financial measures are defined herein, and should be read
in conjunction with GAAP financial measures. A reconciliation of
income (loss) from continuing operations to Non-GAAP income from
continuing operations and operating income to Non-GAAP operating
income is presented in the attached tables. These Non-GAAP
financial measures are not presented as an alternative to cash
flows from operations, as a measure of our liquidity or as an
alternative to reported net income (loss) as an indicator of our
operating performance. The Non-GAAP financial measures as used
herein may not be comparable to similarly titled measures reported
by competitors. We believe the use of Adjusted EBITDA, Non-GAAP
income (loss) from continuing operations, Non-GAAP operating income
and Non-GAAP operating income margin along with GAAP financial
measures enhances the understanding of our operating results and
may be useful to investors in comparing our operating performance
with that of our competitors and estimating our enterprise value.
Adjusted EBITDA is also a useful tool in evaluating the core
operating results of the Company given the significant variation
that can result from, for example, the timing of capital
expenditures, the amount of intangible assets recorded or the
differences in assets' lives. We also use Adjusted EBITDA
internally to evaluate the operating performance of our segments,
to allocate resources and capital to such segments, to measure
performance for incentive compensation programs, and to evaluate
future growth opportunities. The Non-GAAP financial measures
included in this press release are reconciled to their most
directly comparable GAAP financial measures in the tables included
herein. Cenveo (NYSE:CVO), headquartered in Stamford, Connecticut,
is a leader in the management and distribution of print and related
products and services. The Company provides its customers with
low-cost solutions within its core businesses of labels and forms
manufacturing, packaging and publisher offerings, envelope
production, and printing; supplying one-stop services from design
through fulfillment. Cenveo delivers everyday for its customers
through a network of production, fulfillment, content management,
and distribution facilities across the globe. Statements made in
this release, other than those concerning historical financial
information, may be considered "forward-looking statements," which
are based upon current expectations and involve a number of
assumptions, risks and uncertainties that could cause actual
results to differ materially from such forward-looking statements.
In view of such uncertainties, investors should not place undue
reliance on our forward-looking statements. Such statements speak
only as of the date of this release, and we undertake no obligation
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Factors that could cause actual results to differ materially from
management's expectations include, without limitation: (i) a
decline of our consolidated or individual reporting units operating
performance as a result of the current economic environment could
affect the results of our operations and financial position,
including the impairment of our goodwill and other long-lived
assets; (ii) our substantial indebtedness could impair our
financial condition and prevent us from fulfilling our business
obligations; (iii) our ability to service or refinance our debt;
(iv) the terms of our indebtedness imposing significant
restrictions on our operating and financial flexibility; (v)
additional borrowings are available to us that could further
exacerbate our risk exposure from debt; (vi) our ability to
successfully integrate acquisitions; (vii) intense competition in
our industry; (viii) the general absence of long-term customer
agreements in our industry, subjecting our business to quarterly
and cyclical fluctuations; (ix) factors affecting the U.S. postal
services impacting demand for our products; (x) the availability of
the Internet and other electronic media affecting demand for our
products; (xi) increases in paper costs and decreases in its
availability; (xii) our labor relations; (xiii) our compliance with
environmental rules and regulations; and (xiv) our dependence on
key management personnel. This list of factors is not exhaustive,
and new factors may emerge or changes to the foregoing factors may
occur that would impact our business. Additional information
regarding these and other factors can be found in Cenveo, Inc.'s
periodic filings with the SEC, which are available at
http://www.cenveo.com/. Inquiries from analysts and investors
should be directed to Robert G. Burton, Jr. at (203) 595-3005.
http://www.newscom.com/cgi-bin/prnh/20070618/CENVEOLOGO
http://photoarchive.ap.org/ DATASOURCE: Cenveo, Inc. CONTACT:
Robert G. Burton, Jr. of Cenveo, Inc., +1-203-595-3005 Web Site:
http://www.cenveo.com/
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