Cenveo Announces Fourth Quarter and Full Year 2013 Results

          Cenveo Announces Fourth Quarter and Full Year 2013 Results  4th Quarter Net Sales of $509.9 million  4th Quarter Adjusted EBITDA of $52.1 million  4th Quarter Adjusted EBITDA Margin of 10.2%  Integration of National Envelope Assets on Schedule  PR Newswire  STAMFORD, Conn., Feb. 26, 2014  STAMFORD, Conn., Feb.26, 2014 /PRNewswire/ -- Cenveo, Inc. (NYSE: CVO) today announced results for the three months and full year ended December28, 2013.  CENVEO, INC. Logo.  The Company generated net sales of $509.9 million for the three months ended December28, 2013, compared to $437.7 million for the same period last year, an increase of 16.5%. The Company generated net sales of $1.8 billion for the year ended December28, 2013, compared to $1.7 billion for the prior year. The increase in net sales was primarily due to the acquisition of certain assets of National Envelope in the third quarter, as National Envelope was not included in our 2012 results, as well as organic growth within our envelope and label and packaging segments, partially offset by a decline in sales in our print operations as a result of lower demand and pricing pressures.  Operating loss was $15.7 million for the three months ended December28, 2013, compared to operating income of $31.7 million for the same period last year. The decrease in operating income was primarily due to a $33.4 million impairment charge related to the retirement of certain trade names, lower sales from our print operations, and higher input costs within several of our segments. Non-GAAP operating income was $31.6 million for the three months ended December28, 2013, compared to $39.3 million for the same period last year. For the year ended December28, 2013, operating income was $29.4 million, compared to $101.2 million for the prior year. The decrease in operating income was primarily due to a $33.4 million impairment charge related to the retirement of certain trade names, lower sales from our print operations and acquisition-related costs due to the acquisition of certain assets of National Envelope. These decreases were offset in part by higher gross margins in our envelope operations from volume increases. For the year ended December28, 2013, non-GAAP operating income was $101.1 million, compared to $140.8 million for the prior year. Non-GAAP operating income excludes integration, acquisition and other charges, stock-based compensation provision, restructuring and other charges and impairment of intangible assets. A reconciliation of operating (loss) income to non-GAAP operating income is presented in the attached tables.  For the three months ended December28, 2013, the Company had a loss from continuing operations of $59.5 million, or $0.90 per share, compared to a loss of $57.4 million, or $0.90 per share for the same period last year. Non-GAAP income from continuing operations was $9.3 million, or $0.11 per share, for the three months ended December28, 2013, as compared to $11.8 million, or $0.14 per share, for the same period last year. For the year ended December28, 2013, the Company had a loss from continuing operations of $85.5 million, or $1.32 per share, compared to $80.5 million, or $1.27 per share for the same period last year. For the year ended December28, 2013, non-GAAP loss from continuing operations was $6.2 million, or $0.10 per share, as compared to non-GAAP income of $29.1 million, or $0.37 per share, for the same period last year. Non-GAAP (loss) income from continuing operations excludes integration, acquisition and other related charges, stock-based compensation provision, restructuring and other charges, impairment of intangible assets, gain on bargain purchase, loss on early extinguishment of debt, net, an adjustment to income taxes to reflect an estimated cash tax rate, and an adjustment for interest expense related to the 7% convertible notes ("7% Notes"), net of taxes. A reconciliation of loss from continuing operations to non-GAAP income (loss) from continuing operations is presented in the attached tables.  Adjusted EBITDA for the three months ended December28, 2013 was $52.1 million, compared to Adjusted EBITDA of $55.3 million for the same period last year. Adjusted EBITDA for the year ended December28, 2013, was $167.2 million, compared to $202.7 million, for the same period last year. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, integration, acquisition and other related charges, stock-based compensation provision, restructuring and other charges, impairment of intangible assets, gain on bargain purchase, loss (gain) on early extinguishment of debt, net and income from discontinued operations, net of taxes. A reconciliation of net loss to Adjusted EBITDA is presented in the attached tables.  Robert G. Burton, Sr., Chairman and Chief Executive Officer stated: "We are very pleased with our fourth quarter performance and the continuation of the positive operational trends we experienced for the past couple of quarters.In the fourth quarter, we delivered 3.5% organic revenue growth from both our envelope and label and packaging segments. Direct mail continued to perform well as we saw strong growth in credit card mailings during the quarter. Recent leadership changes and selected capital investments are showing results in our print and label and packaging operations. The integration of National Envelope continues to progress well and remains on track with our expectations, as many cost actions have been implemented to date and we are relatively complete with the anticipated working capital build associated with the transaction."  Mr. Burton concluded: "I am very excited about our prospects for 2014 given the momentum in our business and the strength of our current team. We spent the majority of last year re-focusing and building our operations for the future and in 2014 we expect to begin to see the positive results of our efforts. Between the continued investment in capital and technology across our platform, the acquisition of certain assets of National Envelope and related investment of working capital, we have a strong foundation for success in 2014 and beyond."  Conference Call: Cenveo will host a conference call tomorrow, Thursday, February 27, 2014 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  Consolidated Statements of Operations and Comprehensive Income (Loss)  (in thousands, except per share data)                        For The Three Months Ended  For The Years Ended                        December28,  December29,  December28,  December29,                        2013          2012          2013          2012 Net sales              $  509,873    $  437,700    $ 1,777,808   $ 1,738,293 Cost of sales          429,539       354,028       1,485,931     1,417,147 Selling, general and administrative         57,302        45,062        206,085       182,980 expenses Amortization of        2,489         2,426         9,962         9,881 intangible assets Restructuring and      2,857         4,534         13,100        27,100 other charges Impairment of          33,367        —             33,367        — intangible assets Operating (loss)       (15,681)      31,650        29,363        101,185 income Gain on bargain        —             —             (17,262)      — purchase Interest expense, net  27,256        29,181        112,677       114,755 Loss on early extinguishment of      1,884         1,048         11,324        12,487 debt, net Other income, net      (4,202)       (922)         (5,602)       (1,249) (Loss) income from continuing operations  (40,619)      2,343         (71,774)      (24,808) before income taxes Income tax expense     18,849        59,732        13,753        55,720 Loss from continuing   (59,468)      (57,389)      (85,527)      (80,528) operations Income from discontinued           1,791         646           16,741        641 operations, net of taxes Net loss               (57,677)      (56,743)      (68,786)      (79,887) Other comprehensive income (loss): Pension liability adjustment, net of     31,430        (7,986)       31,430        (7,986) taxes Currency translation   (1,390)       (989)         (4,529)       665 adjustment Comprehensive loss     $  (27,637)   $  (65,718)   $ (41,885)    $ (87,208) (Loss) income per share – basic: Continuing operations  $  (0.90)     $  (0.90)     $ (1.32)      $ (1.27) Discontinued           0.03          0.01          0.25          0.01 operations Net loss               $  (0.87)     $  (0.89)     $ (1.07)      $ (1.26) (Loss) income per share – diluted: Continuing operations  $  (0.90)     $  (0.90)     $ (1.32)      $ (1.27) Discontinued           0.03          0.01          0.25          0.01 operations Net loss               $  (0.87)     $  (0.89)     $ (1.07)      $ (1.26) Weighted average shares outstanding: Basic                  66,209        63,762        64,576        63,567 Diluted                66,209        63,762        64,576        63,567      Cenveo, Inc. and Subsidiaries  Consolidated Statements of Cash Flows  (in thousands)                                                       For The Years Ended                                                       2013         2012 Cash flows from operating activities: Net loss                                              $ (68,786)   $ (79,887) Adjustments to reconcile net loss to net cash provided by operating activities: (Gain) loss on sale of discontinued operations, net   (14,933)     6,260 of taxes Income from discontinued operations, net of taxes     (1,808)      (6,901) Depreciation                                          50,534       50,777 Amortization of intangible assets                     9,962        9,881 Non-cash interest expense, net                        10,289       8,263 Deferred income taxes                                 (28,672)     (1,948) Non-cash taxes                                        40,562       56,500 Gain on bargain purchase                              (17,262)     — Gain on sale of assets                                (120)        (2,782) Non-cash restructuring and other charges, net         2,622        11,226 Impairment of intangible assets                       33,367       — Loss on early extinguishment of debt, net             11,324       12,487 Provisions for bad debts                              4,392        2,024 Provisions for inventory obsolescence                 6,523        3,588 Stock-based compensation provision                    3,739        5,333 Gain on insurance claim                               (2,670)      — Changes in operating assets and liabilities, excluding theeffects of acquired businesses: Accounts receivable                                   (31,686)     26,594 Inventories                                           (40,622)     (617) Accounts payable and accrued compensation and related 69,848       (13,291) liabilities Other working capital changes                         4,047        (29,050) Other, net                                            (18,335)     (15,613) Net cash provided by operating activities of          22,315       42,844 continuing operations Net cash provided by operating activities of          5,878        9,221 discontinued operations Net cash provided by operating activities             28,193       52,065 Cash flows from investing activities: Cost of business acquisitions, net of cash acquired   (33,166)     (644) Capital expenditures                                  (29,235)     (20,563) Purchase of investment                                (1,650)      (350) Proceeds from insurance claim                         3,036        — Proceeds from sale of property, plant and equipment   8,304        7,978 Proceeds from sale of intangible asset                —            5,700 Net cash used in investingactivities of continuing   (52,711)     (7,879) operations Net cash provided by investingactivities of          45,214       39,533 discontinued operations Net cash (used in) provided by investingactivities   (7,497)      31,654 Cash flows from financing activities: Repayment of 10.5% senior notes                       —            (169,875) Repayment of 7.875% senior subordinated notes         (67,848)     (214,831) (Repayment) borrowing of Term Loan B due 2016         (388,205)    31,844 Repayment of 8.375% senior subordinated notes         —            (24,787) Payment of financing related costs and expenses and   (15,570)     (37,836) debt issuance discounts Repayments of other long-term debt                    (7,365)      (4,846) Purchase and retirement of common stock upon vesting  (660)        (735) 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)     18,000 Facility, net Proceeds from issuance of 15% Unsecured Term Loan due 50,000       — 2017 Repayment of 15% Unsecured Term Loan due 2017         (40,000)     — Proceeds from exercise of stock options               98           — Repayment of Term Loan Facility due 2017              (30,900)     — Proceeds from issuance of Term Loan Facility due 2017 360,000      — Borrowings under ABL Facility due 2017                699,200      — Repayments under ABL Facility due 2017                (577,800)    — Proceeds from equipment loan                          20,000       — Repayments of equipment loan                          (500)        — Net cash used in financing activities of continuing   (17,550)     (91,816) operations Net cash used in financing activities of discontinued —            (1,652) operations Net cash used in financing activities                 (17,550)     (93,468) Effect of exchange rate changes on cash and           73           106 cashequivalents Net increase (decrease) in cash and cash equivalents  3,219        (9,643) Cash and cash equivalents at beginning of period      8,110        17,753 Cash and cash equivalents at end of period            $ 11,329     $ 8,110       Cenveo, Inc. and Subsidiaries  Consolidated Balance Sheets  (in thousands)                                                     2013          2012 Assets Current assets: Cash and cash equivalents                           $ 11,329      $ 8,110 Accounts receivable, net                            281,586       254,389 Inventories                                         161,565       127,235 Prepaid and other current assets                    55,353        67,964 Assets of discontinued operations - current         132           11,265 Total current assets                                509,965       468,963 Property, plant and equipment, net                  304,907       279,078 Goodwill                                            186,436       187,415 Other intangible assets, net                        168,749       205,199 Other assets, net                                   43,614        44,632 Assets of discontinued operations - long-term       33            15,268 Total assets                                        $ 1,213,704   $ 1,200,555 Liabilities and Shareholders' Deficit Current liabilities: Current maturities of long-term debt                $ 9,174       $ 11,748 Accounts payable                                    244,228       179,850 Accrued compensation and related liabilities        32,139        24,678 Other current liabilities                           81,198        77,367 Liabilities of discontinued operations - current    2,013         6,591 Total current liabilities                           368,752       300,234 Long-term debt                                      1,176,351     1,171,870 Other liabilities                                   165,581       191,885 Liabilities of discontinued operations - long-term  —             880 Commitments and contingencies Shareholders' deficit: Preferred stock, $0.01 par value; 25 shares         —             — authorized, no shares issued Common stock, $0.01 par value; 100,000 shares authorized, 66,265 and 63,762 shares issued and     663           638 outstanding as of the years ended 2013 and 2012, respectively Paid-in capital                                     364,177       354,983 Retained deficit                                    (821,520)     (752,734) Accumulated other comprehensive loss                (40,300)      (67,201) Total shareholders' deficit                         (496,980)     (464,314) Total liabilities and shareholders' deficit         $ 1,213,704   $ 1,200,555      Cenveo, Inc. and Subsidiaries  Reconciliation of Operating (Loss) Income to Non-GAAP Operating Income  (in thousands)  (Unaudited)                        For The Three Months Ended  For The Years Ended                        December28,  December29,  December28,  December29,                        2013          2012          2013          2012 Operating (loss)       $  (15,681)   $  31,650     $  29,363     $  101,185 income Integration, acquisition and other  10,242        2,224         21,571        7,219 charges Stock-based compensation           860           888           3,739         5,333 provision Restructuring and      2,857         4,534         13,100        27,100 other charges Impairment of          33,367        —             33,367        — intangible assets Non-GAAP operating     $  31,645     $  39,296     $  101,140    $  140,837 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 Years Ended                      December28,    December29,  December28,  December29,                      2013            2012          2013          2012 Loss from continuing           $   (59,468)    $  (57,389)   $  (85,527)   $  (80,528) operations Integration, acquisition and      10,242          2,224         21,571        7,219 other charges Stock-based compensation         860             888           3,739         5,333 provision Restructuring and    2,857           4,534         13,100        27,100 other charges Impairment of        33,367          —             33,367        — intangible assets Gain on bargain      —               —             (17,262)      — purchase Loss on early extinguishment of    1,884           1,048         11,324        12,487 debt, net Income tax expense   18,550          59,487        13,439        54,353 Interest expense on 7% Notes, net     1,020           1,020         —             3,093 of taxes Non-GAAP income (loss) from          $   9,312       $  11,812     $  (6,249)    $  29,057 continuing operations Income (loss) per share – diluted: Continuing           $   (0.67)      $  (0.67)     $  (1.32)     $  (1.01) operations Integration, acquisition and      0.12            0.03          0.33          0.09 other charges Stock-based compensation         0.01            0.01          0.06          0.07 provision Restructuring and    0.03            0.05          0.20          0.34 other charges Impairment of        0.38            —             0.52          — intangible assets Gain on bargain      —               —             (0.27)        — purchase Loss on early extinguishment of    0.02            0.01          0.18          0.16 debt, net Income tax expense   0.21            0.70          0.20          0.68 Interest expense on 7% Notes, net     0.01            0.01          —             0.04 of taxes Non-GAAP income (loss) from          $   0.11        $  0.14       $  (0.10)     $  0.37 continuing operations Weighted average     88,320          84,665        64,576        79,382 shares—diluted      Cenveo, Inc. and Subsidiaries  Reconciliation of Net Loss to Adjusted EBITDA  (in thousands)  (Unaudited)                        For The Three Months Ended  For The Years Ended                        December28,  December29,  December28,  December29,                        2013          2012          2013          2012 Net loss               $  (57,677)   $  (56,743)   $  (68,786)   $  (79,887) Interest expense, net  27,256        29,181        112,677       114,755 Income tax expense     18,849        59,732        13,753        55,720 Depreciation           13,723        12,705        50,534        50,777 Amortization of        2,489         2,426         9,962         9,881 intangible assets Impairment of          33,367        —             33,367        — intangible assets Integration, acquisition and other  10,242        2,224         21,571        7,219 charges Stock-based compensation           860           888           3,739         5,333 provision Restructuring and      2,857         4,534         13,100        27,100 other charges Gain on bargain        —             —             (17,262)      — purchase Loss on early extinguishment of      1,884         1,048         11,324        12,487 debt, net Income from discontinued           (1,791)       (646)         (16,741)      (641) operations, net of taxes Adjusted EBITDA, as    $  52,059     $  55,349     $  167,238    $  202,744 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, impairment of intangible assets, restructuring and other charges, gain on bargain purchase, loss on early extinguishment of debt, net and income from discontinued operations, net of taxes. Non-GAAP operating income is defined as operating (loss) income excluding integration, acquisition and other charges, stock-based compensation provision, impairment of intangible assets, and restructuring 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, impairment of intangible assets, restructuring and other charges, gain on bargain purchase, loss on early extinguishment of debt, net, and adjustment to income taxes to reflect an estimated cash tax rate and an adjustment for interest expense related to the 7% Notes. 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 (loss) 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 adjusted 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 boxes, custom labels, shrink sleeve labels, 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 and other long-lived 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; and (xvi) our dependence upon information technology systems. 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.  Logo- http://photos.prnewswire.com/prnh/20070618/CENVEOLOGO  SOURCE Cenveo, Inc.  Website: http://www.cenveo.com  
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