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Cenveo Announces Second Quarter 2013 Results

                 Cenveo Announces Second Quarter 2013 Results

Direct Mail volumes up over 20% versus prior year

Evaluating distressed industry assets

Replacement packaging press operational end of 2nd quarter

Company provides update on strategic review

PR Newswire

STAMFORD, Conn., Aug. 7, 2013

STAMFORD, Conn., Aug.7, 2013 /PRNewswire/ --Cenveo, Inc. (NYSE: CVO) today
announced results for the three and six months ended June29, 2013.

(Logo: http://photos.prnewswire.com/prnh/20070618/CENVEOLOGO)

The Company generated net sales of $415.7 million for the three months ended
June29, 2013, compared to $433.2 million for the same period last year. The
Company generated net sales of $844.0 million for the six months ended
June29, 2013, compared to $883.0 million for the same period last year. The
decrease in net sales for both periods was primarily due to lower sales
volumes in our commercial print operations mainly resulting from production
timing and lower customer demand, lower sales of office product envelopes due
to the transition of a low margin account out of our operating platform, lower
average selling price from our direct envelopes due to our initiatives to gain
market share as well as pricing pressures primarily from a competitor now in
bankruptcy protection. These decreases were offset in part by higher sales
volume from our direct envelopes due to our initiatives to increase market
share and increased direct mail demand.

Operating income was $19.2 million for the three months ended June29, 2013,
compared to $28.6 million for the same period last year. The decrease in
operating income was primarily due to lower sales volumes and higher input
costs in ancillary raw material categories. Non-GAAP operating income was
$24.9 million for the three months ended June29, 2013, compared to $35.9
million for the same period last year. Operating income was $33.5 million for
the six months ended June29, 2013, compared to $42.7 million for the same
period last year. The decrease in operating income was primarily due to lower
sales volumes and higher input costs in ancillary raw material categories,
offset in part by lower restructuring, impairment and other charges. Non-GAAP
operating income was $45.6 million for the six months ended June29, 2013,
compared to $67.4 million for the same period last year. A reconciliation of
operating income to non-GAAP operating income is presented in the attached
tables.

For the three months ended June29, 2013, the Company had a loss from
continuing operations of $17.6 million, or $0.28 per share, compared to a loss
of $0.2 million, or $0.01 per share for the same period last year. Non-GAAP
loss from continuing operations was $0.5 million, or $0.01 per share, for the
three months ended June29, 2013, as compared to non-GAAP income from
continuing operations of $8.0 million, or $0.13 per share, for the same period
last year. For the six months ended June29, 2013, the Company had a loss from
continuing operations of $36.5 million, or $0.57 per share, compared to a loss
of $22.8 million, or $0.36 per share for the same period last year. Non-GAAP
loss from continuing operations was $9.8 million, or $0.15 per share, for the
six months ended June29, 2013, as compared to non-GAAP income from continuing
operations of $11.2 million, or $0.18 per share, for the same period last
year. A reconciliation of loss from continuing operations to non-GAAP (loss)
income from continuing operations is presented in the attached tables.

Cash flow provided by operating activities of continuing operations for the
six months ended June29, 2013 was $9.6 million, compared to cash flow
provided by operating activities of continuing operations of $15.9 million for
the same period last year. The change in our cash flows year over year is due
to an inventory build related to potential supply constraints and pending
price increases for certain raw materials and the timing of interest and
vendor payments in the first six months compared to prior year.

Adjusted EBITDA for the three months ended June29, 2013 was $42.0 million,
compared to Adjusted EBITDA of $52.6 million for the same period last year.
Adjusted EBITDA for the six months ended June29, 2013 was $78.3 million,
compared to Adjusted EBITDA of $99.4 million for the same period last year. A
reconciliation of net loss to Adjusted EBITDA is presented in the attached
tables.

Robert G. Burton, Sr., Chairman and Chief Executive Officer stated:
"Our second quarter performance was mixed. Our labels and packaging operations
had a solid quarter with positive revenue growth up 2.5% despite continued
disruption from the press fire that occurred earlier this year. I am very
proud of our team's performance during this difficult period of time and I
remain optimistic about our future prospects in our packaging business as the
replacement press became fully operational in late June. We continue to
expect that the performance of our print operations will begin to stabilize as
we enter the back-half of the year as important industry verticals, such as
managed care and travel and leisure enter seasonally stronger periods. In the
meantime, we continue to remain vigilant on costs and increasing sales within
this segment. Our envelope operations have continued to see significant
improvement in direct mail as credit card mailing volumes have increased over
20% in the first half of the year, the strongest performance we have
experienced since 2011. Despite this improvement in volume, we have
experienced pricing pressures due to industry competitive dynamics."

Strategic Update: 
As discussed on our last conference call, we initiated reviews of all
strategic options for some of our operating assets. Our recent focus has
narrowed on divesting certain underperforming assets or assets that do not fit
our future strategic plans. We continue to be in discussions with multiple
parties for certain assets and expect to conclude any present opportunities
over the coming months. More importantly, since our last conference call, we
began evaluating distressed assets within certain industries that we operate
and may look to potentially integrate them into our existing platform. While
no assurances can be made that any transaction will be consummated, we expect
that any potential transaction currently being contemplatedregarding these
distressed assets would be in the best interests of our customers and
shareholders as it must be deleveraging to our capital structure and must be
accretive to earnings and cash flow per share.

Conference Call:
Cenveo will host a conference call tomorrow, Thursday, August 8, 2013 at 10:00
a.m. Eastern Time. The conference call will be available via webcast, which
can be accessed via the Internet at www.cenveo.com.

Cenveo, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss)

(in thousands, except per share data)

(Unaudited)
                    For the Three Months Ended    For the Six Months Ended
                    June29, 2013  June30, 2012  June29, 2013  June30, 2012
Net sales           $  415,702     $  433,218     $  843,993     $  882,977
Cost of sales       343,611        352,800        702,246        722,847
Selling, general
and administrative  47,595         44,913         96,173         93,827
expenses
Amortization of     2,607          2,586          5,214          5,209
intangible assets
Restructuring,
impairment and      2,724          4,354          6,906          18,376
other charges
Operating income    19,165         28,565         33,454         42,718
Interest expense,   28,235         28,796         57,810         56,648
net
Loss on early
extinguishment of   7,720          785            7,847          11,414
debt, net
Other income, net   (2,291)        (1,116)        (1,995)        (818)
(Loss) income from
continuing          (14,499)       100            (30,208)       (24,526)
operations before
income taxes
Income tax expense  3,088          314            6,286          (1,678)
(benefit)
Loss from
continuing          (17,587)       (214)          (36,494)       (22,848)
operations
Loss from
discontinued        (1,296)        (187)          (1,534)        (4,771)
operations, net of
taxes
Net loss            (18,883)       (401)          (38,028)       (27,619)
Other
comprehensive
income (loss):
 Currency
translation         (2,329)        (2,202)        (3,108)        (758)
adjustment
Comprehensive       $  (21,212)    $  (2,603)     $  (41,136)    $  (28,377)
income (loss)
Loss per share –
basic:
Continuing          $  (0.28)      $  (0.01)      $  (0.57)      $  (0.36)
operations
Discontinued        (0.02)         —              (0.03)         (0.08)
operations
Net loss            $  (0.30)      $  (0.01)      $  (0.60)      $  (0.44)
Loss per share –
diluted:
Continuing          $  (0.28)      $  (0.01)      $  (0.57)      $  (0.36)
operations
Discontinued        (0.02)         —              (0.03)         (0.08)
operations
Net loss            $  (0.30)      $  (0.01)      $  (0.60)      $  (0.44)
Weighted average
shares
outstanding:
Basic               63,922         63,476         63,881         63,441
Diluted             63,922         63,476         63,881         63,441

Cenveo, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
                                                  For the Six Months Ended
                                                  June29, 2013  June30, 2012
Cash flows from operating activities:
Net loss                                          $  (38,028)    $  (27,619)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Loss on sale of discontinued operations, net of   —              5,319
taxes
Loss (income) from discontinued operations, net   1,534          (548)
of taxes
Depreciation and amortization, excluding non-cash 30,686         31,180
interest expense
Non-cash interest expense, net                    5,143          3,786
Deferred income taxes                             4,779          (3,381)
Gain on sale of assets                            (226)          (1,118)
Non-cash restructuring, impairment and other      783            10,633
charges, net
Loss on early extinguishment of debt, net         7,847          11,414
Stock-based compensation provision                1,977          2,993
Gain on insurance claim                           (2,670)        —
Other non-cash charges                            2,504          2,835
Changes in operating assets and liabilities,
excluding theeffects of acquired businesses:
Accounts receivable                               12,152         25,247
Inventories                                       (14,793)       806
Accounts payable and accrued compensation and     5,487          (25,251)
related liabilities
Other working capital changes                     2,904          (13,009)
Other, net                                        (10,518)       (7,341)
Net cash provided by operating activities of      9,561          15,946
continuing operations
Net cash used in operating activities of          (215)          (3,959)
discontinued operations
Net cash provided by operating activities         9,346          11,987
Cash flows from investing activities:
Cost of business acquisitions, net of cash        (5,145)        (644)
acquired
Capital expenditures                              (15,730)       (11,282)
Purchase of investment                            (1,650)        —
Proceeds from insurance claim                     3,036          —
Proceeds from sale of property, plant and         7,561          1,948
equipment
Proceeds from sale of intangible asset            —              1,700
Net cash used in investingactivities of          (11,928)       (8,278)
continuing operations
Net cash provided by investingactivities of      —              39,875
discontinued operations
Net cash (used in) provided by                    (11,928)       31,597
investingactivities
Cash flows from financing activities:
Repayment of 10.5% senior notes                   —              (169,875)
Repayment of 7.875% senior subordinated notes     (67,848)       (180,139)
(Repayment) borrowing of Term Loan B due 2016     (389,105)      18,948
Repayment of 8.375% senior subordinated notes     —              (24,787)
Payment of financing related costs and expenses   (13,884)       (32,335)
and debt issuance discounts
Repayments of other long-term debt                (2,413)        (2,639)
Purchase and retirement of common stock upon      (363)          (434)
vesting of RSUs
Proceeds from issuance of 11.5% senior notes      —              225,000
Proceeds from issuance of 7% senior exchangeable  —              86,250
notes
(Repayment) borrowings under revolving credit     (18,000)       34,700
facility, net
Proceeds from issuance of 15% unsecured term loan 50,000         —
due 2017
Proceeds from issuance of term loan facility      360,000        —
Borrowings under ABL facility due 2017            266,700        —
Repayments under ABL facility due 2017            (163,900)      —
Repayment of 15% unsecured term loan due 2017     (15,000)       —
Net cash provided by (used in) financing          6,187          (45,311)
activities of continuing operations
Net cash used in financing activities of          —              (1,652)
discontinued operations
Net cash provided by (used in) financing          6,187          (46,963)
activities
Effect of exchange rate changes on cash and       161            (307)
cashequivalents
Net increase (decrease) in cash and cash          3,766          (3,686)
equivalents
Cash and cash equivalents at beginning of period  8,110          17,753
Cash and cash equivalents at end of period        $  11,876      $  14,067







Cenveo, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
                                             June29, 2013  December 29, 2012
                                             (unaudited)
Assets
Current assets:
Cash and cash equivalents                    $  11,876      $   8,110
Accounts receivable, net                     244,670        258,199
Inventories                                  144,358        130,432
Prepaid and other current assets             64,989         68,299
Assets of discontinued operations - current  2,214          3,923
 Total current assets                       468,107        468,963
Property, plant and equipment, net           266,720        281,798
Goodwill                                     190,742        191,415
Other intangible assets, net                 210,808        212,904
Other assets, net                            49,392         44,673
Assets of discontinued operations -          481            1,456
long-term
Total assets                                 $  1,186,250   $   1,201,209
Liabilities and Shareholders' Deficit
Current liabilities:
Current maturities of long-term debt         $  7,483       $   11,748
Accounts payable                             187,800        182,799
Accrued compensation and related liabilities 25,469         24,947
Other current liabilities                    80,784         77,610
Liabilities of discontinued operations -     2,511          3,130
current
 Total current liabilities                  304,047        300,234
Long-term debt                               1,194,422      1,171,870
Other liabilities                            191,453        193,419
Liabilities of discontinued operations -     164            —
long-term
Commitments and contingencies                —              —
Shareholders' deficit:
Preferred stock                              —              —
Common stock                                 640            638
Paid-in capital                              356,595        354,983
Retained deficit                             (790,762)      (752,734)
Accumulated other comprehensive loss         (70,309)       (67,201)
 Total shareholders' deficit                (503,836)      (464,314)
Total liabilities and shareholders' deficit  $  1,186,250   $   1,201,209

Cenveo, Inc. and Subsidiaries

Reconciliation of Operating Income to Non-GAAP Operating Income

(in thousands)

(Unaudited)
                        For the Three Months Ended    For the Six Months Ended
                        June29, 2013  June30, 2012  June29, 2013  June30,
                                                                     2012
Operating income        $   19,165     $   28,565     $   33,454     $ 42,718
Integration,
acquisition and other   1,980          1,574          3,305          3,321
charges
Stock-based             1,024          1,406          1,977          2,993
compensation provision
Restructuring,
impairment and other    2,724          4,354          6,906          18,376
charges
Non-GAAP operating      $   24,893     $   35,899     $   45,642     $ 67,408
income

Cenveo, Inc. and Subsidiaries

Reconciliation of Loss from Continuing Operations to Non-GAAP Income (Loss)
from Continuing Operations and
Related Per Share Data

(in thousands, except per share data)

(Unaudited)
                      For the Three Months Ended  For the Six Months Ended
                      June29, 2013   June30,   June29, 2013  June30, 2012
                                       2012
Loss from continuing  $   (17,587)     $ (214)    $  (36,494)    $  (22,848)
operations
Integration,
acquisition and       1,980            1,574      3,305          3,321
other charges
Stock-based
compensation          1,024            1,406      1,977          2,993
provision
Restructuring,
impairment and other  2,724            4,354      6,906          18,376
charges
Loss on early
extinguishment of     7,720            785        7,847          11,414
debt, net
Income tax benefit    3,657            67         6,657          (2,025)
(expense)
Non-GAAP income
(loss) from           $   (482)        $ 7,972    $  (9,802)     $  11,231
continuing
operations
Income (loss) per
share – diluted:
Continuing            $   (0.28)       $ (0.01)   $  (0.57)      $  (0.36)
operations
Integration,
acquisition and       0.03             0.03       0.05           0.05
other charges
Stock-based
compensation          0.02             0.02       0.03           0.05
provision
Restructuring,
impairment and       0.04             0.07       0.11           0.29
other charges
Loss on early
extinguishment of     0.12             0.01       0.12           0.18
debt, net
Income tax benefit    0.06             0.01       0.11           (0.03)
(expense)
Non-GAAP income
(loss) from           $   (0.01)       $ 0.13     $  (0.15)      $  0.18
continuing
operations
Weighted average      63,922           63,476     63,881         63,474
shares—diluted

Cenveo, Inc. and Subsidiaries

Reconciliation of Net Loss to Adjusted EBITDA

(in thousands)

(Unaudited)
                    For the Three Months Ended    For the Six MonthsEnded
                    June29, 2013  June30, 2012  June29, 2013  June30, 2012
Net loss            $  (18,883)    $   (401)      $  (38,028)    $  (27,619)
Interest expense,   28,235         28,796         57,810         56,648
net
Income tax expense  3,088          314            6,286          (1,678)
(benefit)
Depreciation        12,216         12,956         25,472         25,971
Amortization of     2,607          2,586          5,214          5,209
intangible assets
Integration,
acquisition and     1,980          1,574          3,305          3,321
other charges
Stock-based
compensation        1,024          1,406          1,977          2,993
provision
Restructuring,
impairment and      2,724          4,354          6,906          18,376
other charges
Loss on early
extinguishment of   7,720          785            7,847          11,414
debt, net
Loss from
discontinued        1,296          187            1,534          4,771
operations, net of
taxes
Adjusted EBITDA,    $  42,007      $   52,557     $  78,323      $  99,406
as defined

In addition to results presented in accordance with accounting principles
generally accepted in the U.S. ("GAAP"), we use certain non-GAAP financial
measures, including Adjusted EBITDA, non-GAAP income (loss) from continuing
operations, non-GAAP operating income, non-GAAP operating income margin, and
adjusted free cash flow. Adjusted EBITDA is defined as earnings before
interest, taxes, depreciation, amortization, integration, acquisition and
other charges, stock-based compensation provision, restructuring, impairment
and other charges, gain on bargain purchase, loss (gain) on early
extinguishment of debt, net and (loss) income from discontinued operations,
net of taxes. 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. Non-GAAP income (loss) from continuing operations excludes
integration, acquisition and other charges, stock-based compensation
provision, restructuring, impairment and other charges, gain on bargain
purchase, loss (gain) on early extinguishment of debt, net, and an adjustment
to income taxes to reflect an estimated cash tax rate. Adjusted free cash flow
is defined as Adjusted EBITDA less cash interest, cash taxes, and capital
expenditures, net of proceeds from plant, property and equipment. These are
non-GAAP financial measures, as defined herein, and should be read in
conjunction with GAAP financial measures. A reconciliation of loss from
continuing operations to non-GAAP income (loss) 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 continuing operations, as a measure of our liquidity or as
an alternative to reported net 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, non-GAAP operating income margin and
free cash flow 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 leading
global provider of print and related resources, offering world-class solutions
in the areas of custom labels, specialty packaging, envelopes, commercial
print, content management and publisher solutions. The company provides a
one-stop offering through services ranging from design and content management
to fulfillment and distribution. With a worldwide distribution platform, we
pride ourselves on delivering quality solutions and service every day for our
more than 100,000 customers. For more information please visit us at
www.cenveo.com.

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) the recent United States and
global economic conditions, which have adversely affected us and could
continue to do so; (ii) our substantial level of indebtedness, which 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 that are available to us
could further exacerbate our risk exposure from debt; (vi) our ability to
successfully integrate acquired businesses into our business; (vii) a decline
of our consolidated profitability or profitability within one of our
individual reporting units could result in the impairment of our assets,
including goodwill, other long-lived assets and deferred tax assets; (viii)
intense competition and fragmentation in our industry; (ix) the general
absence of long-term customer agreements in our industry, subjecting our
business to quarterly and cyclical fluctuations; (x) factors affecting the
United States postal services impacting demand for our products; (xi) the
availability of the internet and other electronic media may adversely affect
our business; (xii) increases in paper costs and decreases in the availability
of raw materials; (xiii) our labor relations; (xiv) our compliance with
environmental laws; (xv) our dependence on key management personnel; (xvi) our
dependence upon information technology systems; and (xvii) our international
operations and the risks associated with operating outside of the United
States. 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
www.cenveo.com.

Inquiries from analysts and investors should be directed to Robert G. Burton,
Jr. at (203) 595-3005.



SOURCE Cenveo, Inc.

Website: http://www.cenveo.com
 
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