Strong operational performance highlighted by record financial
results across a number of metrics STAMFORD, Conn., March 16
/PRNewswire-FirstCall/ -- Cenveo, Inc. (NYSE: CVO) today announced
results for the three months and full year ended January 3, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070618/CENVEOLOGO) For
the fourth quarter ended January 3, 2009, net sales were $517.2
million compared to $584.4 million for the same period in the
previous year. For the quarter ended January 3, 2009, the Company
recorded a net loss of $309.6 million, or ($5.71) per share,
compared to net income of $18.8 million, or $0.34 per diluted
share, in the quarter ended December 29, 2007. The fourth quarter
2008 results include non-cash goodwill impairment charges of $372.8
million resulting from reductions in the fair value of reporting
units in connection with the Company's annual impairment test. On a
non-GAAP basis, income from continuing operation was $26.0 million,
or $0.48 per diluted share. Non-GAAP income from continuing
operations excludes restructuring, impairment and other charges,
integration, acquisition and other charges, stock-based
compensation provision, (gain) loss on early extinguishment of
debt, (gain) loss on sale of non-strategic business and income tax
expense (benefit). A reconciliation of income from continuing
operations to non-GAAP income from continuing operations for these
adjustments is presented in the attached tables. Adjusted EBITDA in
the fourth quarter of 2008 was $75.1 million. Adjusted EBITDA is
defined as earnings before interest, taxes, depreciation and
amortization, excluding integration, acquisition and other charges,
stock-based compensation provision, restructuring, impairment and
other charges, (gain) loss on early extinguishment of debt, (gain)
loss on sale of non-strategic business and income (loss) from
discontinued operations, net of taxes. An explanation of the
Company's use of Adjusted EBITDA is detailed below and a
reconciliation of net income to Adjusted EBITDA is provided in the
attached tables. For the year ended January 3, 2009, net sales
increased 2.5% to $2.1 billion compared to $2.0 billion in the
previous year. For the year ended January 3, 2009, the Company
recorded a net loss of $298.0 million, or ($5.53) per diluted
share, compared to net income of $40.8 million, or $0.75 per
diluted share, in the year ended December 29, 2007. The 2008
results include non-cash goodwill impairment charges of $372.8
million. On a non-GAAP basis, income from continuing operations was
$88.1 million, or $1.63 per diluted share, for the year ended
January 3, 2009. Adjusted EBITDA for the full year of 2008 was
$280.3 million. In 2008 the Company generated cash flows from
continuing operations of $209.8 million compared to $86.2 million
in 2007, representing a 143.4% increase. During the fourth quarter
of 2008, the Company repurchased an aggregate $48.5 million
principal amount of its outstanding 7 7/8% Senior Subordinated
Notes due 2013 and its 8 3/8% Senior Subordinated Notes due 2014
(collectively the "Notes"). In connection with these repurchases of
the Notes, the Company recognized a gain of approximately $18.5
million in the fourth quarter of 2008, representing the difference
between the net carrying amount and the total repurchase price of
the Notes. Financial highlights: -- For the full year cash flow
from continuing operations was $209.8 million, up $123.6 million
from the full year of 2007 -- Non-GAAP operating income margin was
9.8% for the full year -- Total debt decreased $138.3 million for
2008 and $69.6 million in the quarter to $1.3 billion -- At the end
of the quarter, approximately 90% of the Company's debt was subject
to fixed interest rates resulting in a quarterly weighted interest
rate of 7.3% Robert G. Burton, Chairman and Chief Executive Officer
stated: "Despite the most challenging economic and market
conditions that I have encountered in my entire business career,
Cenveo was able to deliver strong operational performance
highlighted by record financial results across a number of key
metrics. By matching our costs with our revenue stream, and
focusing on our customers' needs, we were able to grow our revenues
2.5%, deliver non-GAAP operating margin of 9.8%, and increased our
Adjusted EBITDA to $280.3 million. We continue to generate strong
cash flow from operations. For the full year of 2008, we generated
$209.8 million of cash flows from continuing operations, up 143.4%
from the same period last year. In 2008, we were able to pay down
almost $140 million in debt, while at the same time growing the
Company through small strategic acquisitions and prudent
investments of capital. These strong operating results and market
share gains have shown that our operational game plan is working
and demonstrates that our business can outperform the competition
even in the most difficult of times." Capital Structure: "We are in
compliance with all of our debt covenants, as we ended 2008, with a
reasonable level of debt-covenant cushion. Our management team is
implementing a game plan to allow the Company to remain in
compliance with our covenants going forward. However after much
deliberation, and given the unprecedented uncertainty in the
financial markets coupled with limited sales visibility, we have
decided that exploring an amendment to our credit agreement is a
prudent course of action. We are currently in discussions with our
lead bank about modifying the terms of our credit facility to give
the Company flexibility during this period of unprecedented
economic uncertainty and volatility." Mr. Burton concluded: "One of
my primary responsibilities is to build an exceptional company -
well-managed, well-equipped to thrive in any environment,
regardless of economic or industry conditions. I believe we are
well on our way to achieving that goal. With that being said and
given the economic realities of today, we will use financial
discipline to focus on rightsizing our cost and manufacturing
platform. We continue to strive to be a low-cost provider of
products and services, while at the same time delivering for our
customers. We will also continue to invest in our diverse and
specialized product offerings which focus on the custom and
short-run end markets. Our goal for these markets remains the same:
we want to be in the strongest competitive position in each of our
niche markets and to grow and expand our diversified customer base.
These factors combined with our seasoned management team that
understands today's industry dynamics will allow us to better
weather this storm than the competition. In 2009, we are
capitalizing on these strengths and look to grow in our markets
when our competition is unable to do so." Conference Call: Cenveo
will host a conference call tomorrow, Tuesday, March 17, 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 Consolidated
Statements of Operations (in thousands, except per share data)
(Unaudited) Three Months Ended Year Ended January December January
December 3, 2009 29, 2007 3, 2009 29, 2007 Net sales $517,160
$584,441 $2,098,694 $2,046,716 Cost of sales 410,573 457,844
1,671,185 1,628,706 Selling, general and administrative 58,160
61,788 242,981 229,961 Amortization of intangible assets 2,261
3,168 9,008 10,413 Restructuring, impairment and other charges
377,019 7,992 399,066 40,086 Operating income (loss) (330,853)
53,649 (223,546) 137,550 Gain on sale of non-strategic business - -
- (189) Interest expense, net 27,373 28,376 107,321 91,467 (Gain)
loss on early extinguishment of debt (18,513) - (14,642) 9,256
Other (income) expense, net (1,066) 1,066 (637) 3,131 Income (loss)
from continuing operations before income taxes (338,647) 24,207
(315,588) 33,885 Income tax expense (benefit) (28,961) 7,083
(18,612) 9,900 Income (loss) from continuing operations (309,686)
17,124 (296,976) 23,985 Income (loss) from discontinued operations,
net of taxes 63 1,655 (1,051) 16,796 Net income (loss) $ (309,623)
$ 18,779 $(298,027) $40,781 Income (loss) per share - basic:
Continuing operations $ (5.71) $ 0.32 $ (5.51) $ 0.45 Discontinued
operations - 0.03 (0.02) 0.31 Net income (loss) $ (5.71) $ 0.35 $
(5.53) $ 0.76 Income (loss) per share-diluted: Continuing
operations $ (5.71) $ 0.31 $ (5.51) $ 0.44 Discontinued operations
- 0.03 (0.02) 0.31 Net income (loss) $ (5.71) $ 0.34 $ (5.53) $
0.75 Weighted average shares: Basic 54,204 53,700 53,904 53,584
Diluted 54,204 54,749 53,904 54,645 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 Year Ended January December January December 3, 2009 29, 2007
3, 2009 29, 2007 Income (loss) from continuing operations
$(309,686) $17,124 $(296,976) $ 23,985 Integration, acquisition and
other charges 4,159 7,346 11,989 14,120 Stock-based compensation
provision 5,200 3,114 18,140 10,280 Restructuring, impairment and
other charges 377,019 7,992 399,066 40,086 Gain on sale of
non-strategic business - - - (189) (Gain) loss on early
extinguishment of debt (18,513) - (14,642) 9,256 Income tax
(expense) benefit (32,175) 2,281 (29,498) (2,028) Non-GAAP income
from continuing operations $26,004 $ 37,857 $88,079 $ 95,510 Income
(loss) per share - diluted: Continuing operations $ (5.70) $ 0.31 $
(5.49) $ 0.44 Integration, acquisition and other charges 0.08 0.13
0.22 0.26 Stock-based compensation provision 0.10 0.06 0.34 0.19
Restructuring, impairment and other charges 6.93 0.15 7.38 0.73
Gain on sale of non-strategic business - - - - (Gain) loss on early
extinguishment of debt (0.34) - (0.27) 0.17 Income tax (expense)
benefit (0.59) 0.04 (0.55) (0.04) Non-GAAP income from continuing
operations $ 0.48 $ 0.69 $ 1.63 $ 1.75 Weighted average
shares-diluted 54,378 54,749 54,064 54,645 Cenveo, Inc. and
Subsidiaries Reconciliation of Operating Income (Loss) to Non-GAAP
Operating Income (in thousands) (Unaudited) Three Months Ended Year
Ended January December January December 3, 2009 29, 2007 3, 2009
29, 2007 Operating income (loss) $(330,853) $53,649 $(223,546)
$137,550 Integration, acquisition and other charges 4,159 7,346
11,989 14,120 Stock-based compensation provision 5,200 3,114 18,140
10,280 Restructuring, impairment and other charges 377,019 7,992
399,066 40,086 Non-GAAP operating income $55,525 $72,101 $205,649
$202,036 Cenveo, Inc. and Subsidiaries Reconciliation of Net Income
(Loss) to Adjusted EBITDA (in thousands) Three Months Ended Year
Ended January December January December 3, 2009 29, 2007 3, 2009
29, 2007 Net Income (loss) $(309,623) $18,779 $(298,027) $40,781
Interest expense 27,373 28,376 107,321 91,467 Income taxes
(benefit) expense (28,961) 7,083 (18,612) 9,900 Depreciation 16,233
15,913 65,001 55,095 Amortization of intangible assets 2,261 3,168
9,008 10,413 Integration, acquisition and other charges 4,159 7,346
11,989 14,120 Stock-based compensation provision 5,200 3,114 18,140
10,280 Restructuring, impairment and other charges 377,019 7,992
399,066 40,086 Gain on sale of non-strategic businesses - - - (189)
(Gain) loss on early extinguishment of debt (18,513) - (14,642)
9,256 (Income) loss from discontinued operations, net of taxes (63)
(1,655) 1,051 (16,796) Adjusted EBITDA, as defined $75,085 $90,116
$280,295 $264,413 Cenveo, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (in thousands) (Unaudited) January 3,
2009 December 29, 2007 Assets Current assets: Cash and cash
equivalents $ 10,444 $ 15,882 Accounts receivable, net 270,145
344,634 Inventories 159,569 162,908 Prepaid and other current
assets 74,890 73,358 Total current assets 515,048 596,782 Property,
plant and equipment, net 420,457 428,341 Goodwill 311,183 669,802
Other intangible assets, net 276,944 270,622 Other assets, net
28,482 37,175 Total assets $1,552,114 $2,002,722 Liabilities and
Shareholders' Equity (Deficit) Current liabilities: Current
maturities of long-term debt $24,314 $18,752 Accounts payable
174,435 165,458 Accrued compensation and related liabilities 37,319
47,153 Other current liabilities 88,870 79,554 Total current
liabilities 324,938 310,917 Long-term debt 1,282,041 1,425,885
Deferred income taxes 26,772 55,181 Other liabilities 139,318
111,413 Shareholders' equity (deficit): Preferred stock - - Common
stock 542 537 Paid-in capital 271,821 254,241 Retained deficit
(446,966) (148,939) Accumulated other comprehensive loss (46,352)
(6,513) Total shareholders' equity (deficit) (220,955) 99,326 Total
liabilities and shareholders' equity (deficit) $1,552,114
$2,002,722 Cenveo, Inc. and Subsidiaries Condensed Consolidated
Statements of Cash Flows (in thousands) (Unaudited) Year Ended
January 3, December 29, 2009 2007 Cash flows from operating
activities: Net income (loss) $ (298,027) $ 40,781 Adjustments to
reconcile net income to net cash provided by operating activities:
Gain on sale of discontinued operations, net of taxes - (17,007)
Loss from discontinued operations, net of taxes 1,051 211
Depreciation 65,001 55,095 Amortization of other intangible assets
9,008 10,413 Non-cash interest expense, net 1,773 1,410 Deferred
income taxes (24,287) 8,763 Non-cash restructuring, impairment and
other charges, net 378,688 19,729 (Gain) loss on early
extinguishment of debt (14,642) 9,256 Provisions for bad debts
4,660 5,363 Provisions for inventory obsolescence 902 2,851
Stock-based compensation provision 18,140 10,280 (Gain) loss on
disposal of assets (4,364) (369) (Gain) loss on sale of
non-strategic businesses - (189) Other non-cash charges, net 3,350
- Changes in operating assets and liabilities, excluding the
effects of acquired businesses: Accounts receivable 70,376 (6,086)
Inventories 5,198 1,193 Accounts payable and accrued compensation
and related liabilities (2,928) (9,101) Other working capital
changes 1,454 (36,580) Other, net (5,505) (9,805) Net cash provided
by continuing operating activities 209,848 86,208 Net cash provided
by discontinued operating activities - 2,198 Net cash provided by
operating activities 209,848 88,406 Cash flows from investing
activities: Cost of business acquisitions, net of cash acquired
(47,412) (627,304) Capital expenditures (49,243) (31,538)
Acquisition payments (3,653) (3,653) Proceeds from sale of
property, plant and equipment 18,258 8,949 Proceeds from
divestitures, net - 431 Net cash used in investing activities of
continuing operations (82,050) (653,115) Proceeds from the sale of
discontinued operations - 73,628 Net cash provided by investing
activities of discontinued operations - 73,628 Net cash (used in)
provided by investing activities (82,050) (579,487) Cash flows from
financing activities: Repayments of senior unsecured loan (175,000)
- (Repayment) borrowings under revolving credit facility, net
(83,200) 75,700 Repayment of 8 3/8% senior subordinated notes
(19,567) (20,880) Repayments of other long-term debt (18,933)
(29,053) Repayment of 7 7/8% senior subordinated notes (10,561) -
Repayment of term loans (7,200) (4,900) Repayment of debt issuance
costs (5,297) (5,906) Purchase and retirement of common stock upon
vesting of RSUs (1,054) (1,302) Tax (liability) asset from stock -
based compensation (1,377) 67 Payment of refinancing fees,
redemption, premiums and expenses (130) (8,045) Proceeds from
issuance of 10 1/2% senior notes 175,000 - Proceeds from issuance
of other long-term debt 12,927 - Proceeds from exercise of stock
options 1,876 304 Proceeds from issuance of term loans - 720,000
Proceeds from senior unsecured loan - 175,000 Repayment of term
loan B - (324,188) Repayment of Cadmus revolving senior bank credit
facility - (70,100) Repayment of 9 5/8% senior notes - (10,498) Net
cash (used in) provided by financing activities (132,516) 496,199
Effect of exchange rate changes on cash and cash equivalents of
continuing operations (720) 206 Net (decrease) increase in cash and
cash equivalents (5,438) 5,324 Cash and cash equivalents at
beginning of year 15,882 10,558 Cash and cash equivalents at end of
year $ 10,444 $ 15,882 In addition to results presented in
accordance with generally accepted accounting principles in the
U.S. ("GAAP"), included in this release are certain Non-GAAP
financial measures, including Adjusted EBITDA, Non-GAAP income from
continuing operations and Non-GAAP operating income. These Non-GAAP
financial measures are defined herein, and should be read in
conjunction with GAAP financial measures. Non-GAAP income from
operations excludes integration, acquisition and other charges,
stock based compensation provision and restructuring, impairment
and other charges. A reconciliation of operating income to Non-GAAP
income from operations is presented in the attached tables. These
Non-GAAP financial measures are not presented as an alternative to
cash flow from operations, as a measure of our liquidity or as an
alternative to reported net income 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 from
continuing operations and non-GAAP operating income 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 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, headquartered in Stamford, Connecticut, is a leader
in the management and distribution of print and related product
offerings. The Company provides its customers with low-cost
solutions within its core businesses of commercial printing and
packaging, envelope, form, and label manufacturing, and publisher
services; offering one-stop solutions from design through
fulfillment. With approximately 10,000 employees worldwide, 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 the 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 update any
forward-looking statements made herein. Factors that could cause
actual results to differ materially from management's expectations
include, without limitation: (1) our substantial indebtedness
impairing our financial condition and limiting our ability to incur
additional debt; (2) the terms of our indebtedness imposing
significant restrictions on our operating and financial
flexibility; (3) the potential to incur additional indebtedness,
exacerbating the above factors; (4) cross default provisions in our
indebtedness, which could cause all of our debt to become due and
payable as a result of a default under an unrelated debt
instrument; (5) our ability to successfully integrate acquisitions;
(6) intense competition in our industry; (7) the general absence of
long-term customer agreements in our industry, subjecting our
business to fluctuations; (8) factors affecting the U.S. postal
services impacting demand for our products; (9) increases in paper
costs and decreases in its availability; (10) the availability of
the Internet and other electronic media affecting demand for our
products; (11) our labor relations; (12) compliance with
environmental rules and regulations; (13) dependence on key
management personnel; and (14) general economic, business and labor
conditions. This list of factors is not exhaustive, and new factors
may emerge or changes to the foregoing factors may occur that would
impact the Company's 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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