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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