Cenveo Announces First Quarter 2014 Results

                 Cenveo Announces First Quarter 2014 Results

Net Sales of $490.1 million, up 17.1% from Q1 2013

Adjusted EBITDA up 10% from Q1 2013

Accelerated Integration of National Envelope Assets

PR Newswire

STAMFORD, Conn., May 7, 2014

STAMFORD, Conn., May7, 2014 /PRNewswire/ -- Cenveo, Inc. (NYSE: CVO) today
announced results for the three months ended March29, 2014.

CENVEO, INC. Logo.

Robert G. Burton, Sr., Chairman and Chief Executive Officer stated:
"We are very pleased to report a positive start to the year and we remain on
track to deliver our 2014 targets. We continue to see the positive operational
trends that we experienced for the past couple of quarters.We are
particularly pleased with our performance considering the severe weather that
impacted our customers and our operations during the quarter. In particular,
our label operations experienced disruption in customer ordering patterns and
several of our envelope and label plants experienced greater than normal
energy costs and reduced productivity during the quarter.

During the first quarter, we had organic revenue growth from our envelope
operations driven by increased pricing along with continued positive direct
mail trends. Our print and packaging operations had organic revenue growth
primarily driven by incremental volumes. The integration of National Envelope
is now progressing at a rapid pace, as several of the planned consolidations
are underway. During the quarter we increased our inventories to support this
consolidation effort and ahead of announced commodity price increases. We
expect to see the benefits of these strategies as we progress into the back
half of the year."

The Company generated net sales of $490.1 million for the three months ended
March29, 2014, compared to $418.6 million for the same period last year, an
increase of 17.1%. The increase in net sales is primarily due to sales
generated from the integration of National Envelope into our envelope
operations, as National Envelope was not included in our results in the first
quarter of 2013, as well as increases in our average selling price across our
direct and office product envelope businesses. These increases were partially
offset by sales declines in our label operations.

Operating income was $10.1 million for the three months ended March29, 2014,
compared to $11.7 million for the same period last year. The decrease was
primarily due to increased selling, general and administrative expenses
related to higher commission expense from increased sales and incremental
expenses of National Envelope. The decrease in operating income was also the
result of higher restructuring and integration charges from the closure and
consolidation of two envelope plants and one print plant. Non-GAAP operating
income was $20.2 million for the three months ended March29, 2014, compared
to $18.1 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 March29, 2014, the Company had a loss from
continuing operations of $16.8 million, or $0.25 per diluted share, compared
to a loss of $20.5 million, or $0.32 per diluted share for the same period
last year. Non-GAAP loss from continuing operations was $7.7 million, or $0.12
per diluted share, for the three months ended March29, 2014, as compared to
non-GAAP loss from continuing operations of $12.0 million, or $0.19 per
diluted share, for the same period last year. A reconciliation of loss from
continuing operations to non-GAAP loss from continuing operations is presented
in the attached tables.

Cash flow used in operating activities for the three months ended March29,
2014, was $5.1 million, compared to cash flow provided by operating activities
of $3.3 million for the same period last year. The use of cash was primarily
due to an increase of inventory to ensure minimal disruption as we integrate
and consolidate our envelope platform and the procurement of specific paper
grades in advance of announced price increases. We also experienced
meaningful cash outflows related to a vendor arrangement in connection with
the National Envelope acquisition.

Adjusted EBITDA for the three months ended March29, 2014, was $36.8 million,
compared to Adjusted EBITDA of $33.5 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 concluded:
"We are pleased with the momentum that we are seeing as we enter the second
quarter. The integration of the National Envelope plants and efforts to
improve margins across the organization will continue to be our daily focus
until the integration plan is completed. We expect to continue to see
operational improvement in our business each quarter and the benefits of our
strategic initiatives to reposition the Company in higher growth areas."

Conference Call:
Cenveo will host a conference call tomorrow, Thursday, May 8, 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

Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss)

(in thousands, except per share data)

(Unaudited)
                                            For the Three Months Ended
                                             March 29, 2014  March 30, 2013
Net sales                                   $   490,119       $   418,614
Cost of sales                               415,157           351,902
Selling, general and administrative         55,494            48,345
expenses
Amortization of intangible assets           3,449             2,507
Restructuring and other charges             5,947             4,182
Operating income                            10,072            11,678
Interest expense, net                       27,910            29,575
Loss on early extinguishment of debt, net   18                127
Other (income) expense, net                 (509)             296
Loss from continuing operations before      (17,347)          (18,320)
income taxes
Income tax (benefit) expense                (560)             2,170
Loss from continuing operations             (16,787)          (20,490)
Income from discontinued operations, net    953               1,345
of taxes
Net loss                                    (15,834)          (19,145)
Other comprehensive income (loss):
Changes in pension and other employee       480               —
benefit accounts, net of taxes
Currency translation adjustment             88                (779)
Comprehensive loss                          $   (15,266)      $   (19,924)
(Loss) income per share – basic:
Continuing operations                       $   (0.25)        $   (0.32)
Discontinued operations                     0.01              0.02
Net loss                                    $   (0.24)        $   (0.30)
(Loss) income per share – diluted:
Continuing operations                       $   (0.25)        $   (0.32)
Discontinued operations                     0.01              0.02
Net loss                                    $   (0.24)        $   (0.30)
Weighted average shares outstanding:
Basic                                       66,336            63,840
Diluted                                     66,336            63,840



Cenveo, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)
                                               For the Three Months Ended
                                               March 29, 2014  March 30, 2013
Cash flows from operating activities:
Net loss                                       $  (15,834)     $  (19,145)
Adjustments to reconcile net loss to net
cash (used in) provided by operating
activities:
Gain on sale of discontinued operations, net   (845)           —
of taxes
Income from discontinued operations, net of    (108)           (1,345)
taxes
Depreciation and amortization, excluding       16,061          15,636
non-cash interest expense
Non-cash interest expense, net                 2,418           2,493
Deferred income taxes                          (852)           1,857
(Gain) loss on sale of assets                  (2)             329
Non-cash restructuring and other charges, net  2,609           265
Loss on early extinguishment of debt           18              127
Stock-based compensation provision             836             953
Other non-cash charges                         735             917
Changes in operating assets and liabilities,
excluding theeffects of acquired businesses:
Accounts receivable                            7,382           5,768
Inventories                                    (11,130)        (5,486)
Accounts payable and accrued compensation and  2,654           (1,966)
related liabilities
Other working capital changes                  (2,004)         4,789
Other, net                                     (5,361)         (3,393)
Net cash (used in) provided by operating       (3,423)         1,799
activities of continuing operations
Net cash (used in) provided by operating       (1,658)         1,519
activities of discontinued operations
Net cash (used in) provided by operating       (5,081)         3,318
activities
Cash flows from investing activities:
Cost of business acquisitions, net of cash     —               (5,145)
acquired
Capital expenditures                           (8,975)         (10,061)
Purchase of investment                         (2,000)         (1,650)
Proceeds from sale of property, plant and      162             5,850
equipment
 Net cash used in investingactivities of    (10,813)        (11,006)
continuing operations
 Net cash provided by (used in)
investingactivities of discontinued           1,018           (201)
operations
 Net cash used in investingactivities       (9,795)         (11,207)
Cash flows from financing activities:
Repayment of 7.875% senior subordinated notes  —               (67,848)
Repayment of Term Loan B due 2016              —               (990)
Payment of financing-related costs and         (2,330)         (5,054)
expenses and debt issuance discounts
Repayments of other long-term debt             (1,569)         (890)
Purchase and retirement of common stock upon   (252)           (219)
vesting of RSUs
Borrowings under Revolving Credit Facility,    —               42,300
net
Proceeds from issuance of 15% Unsecured Term   —               50,000
Loan due 2017
Repayment of 15% Unsecured Term Loan due 2017  (600)           (7,000)
Repayment of Term Loan Facility due 2017       (900)           —
Borrowings under ABL facility due 2017         156,400         —
Repayments under ABL facility due 2017         (135,600)       —
 Net cash provided by financing activities   15,149          10,299
Effect of exchange rate changes on cash and    (64)            93
cashequivalents
 Net increase in cash and cash equivalents   209             2,503
Cash and cash equivalents at beginning of      11,329          8,110
period
Cash and cash equivalents at end of period     $  11,538       $  10,613





Cenveo, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
                                            March 29, 2014  December 28, 2013
                                            (Unaudited)
Assets
Current assets:
Cash and cash equivalents                   $  11,538       $   11,329
Accounts receivable, net                    273,783         281,586
Inventories                                 172,209         161,565
Prepaid and other current assets            53,178          55,353
Assets of discontinued operations - current 88              132
Total current assets                        510,796         509,965
Property, plant and equipment, net          299,915         304,907
Goodwill                                    186,426         186,436
Other intangible assets, net                165,356         168,749
Other assets, net                           44,291          43,614
Assets of discontinued operations -         —               33
long-term
Total assets                                $  1,206,784    $   1,213,704
Liabilities and Shareholders' Deficit
Current liabilities:
Current maturities of long-term debt        $  8,762        $   9,174
Accounts payable                            241,184         244,228
Accrued compensation and related            37,479          32,139
liabilities
Other current liabilities                   78,253          81,198
Liabilities of discontinued operations -    104             2,013
current
Total current liabilities                   365,782         368,752
Long-term debt                              1,193,765       1,176,351
Other liabilities                           158,899         165,581
Commitments and contingencies
Shareholders' deficit:
Preferred stock                             —               —
Common stock                                664             663
Paid-in capital                             364,760         364,177
Retained deficit                            (837,354)       (821,520)
Accumulated other comprehensive loss        (39,732)        (40,300)
Total shareholders' deficit                 (511,662)       (496,980)
Total liabilities and shareholders' deficit $  1,206,784    $   1,213,704





Cenveo, Inc. and Subsidiaries
Reconciliation of Operating Income to Non-GAAP Operating Income

(in thousands)

(Unaudited)
                                            For the Three Months Ended
                                            March 29, 2014  March 30, 2013
Operating income                            $   10,072      $   11,678
Integration, acquisition and other charges  3,337           1,298
Stock-based compensation provision          836             953
Restructuring and other charges             5,947           4,182
Non-GAAP operating income                   $   20,192      $   18,111



Cenveo, Inc. and Subsidiaries
Reconciliation of Loss from Continuing Operations to Non-GAAP Loss from

Continuing Operations and Related Per Share Data

(in thousands, except per share data)

(Unaudited)
                                            For the Three Months Ended
                                            March 29, 2014  March 30, 2013
Loss from continuing operations             $   (16,787)     $  (20,490)
Integration, acquisition and other charges  3,337            1,298
Stock-based compensation provision          836              953
Restructuring and other charges             5,947            4,182
Loss on early extinguishment of debt, net   18               127
Income tax (benefit) expense                (1,089)          1,972
Non-GAAP loss from continuing operations    $   (7,738)      $  (11,958)
(Loss) income per share – diluted:
Continuing operations                       $   (0.25)       $  (0.32)
Integration, acquisition and other charges  0.05             0.02
Stock-based compensation provision          0.01             0.01
Restructuring and other charges             0.09             0.07
Loss on early extinguishment of debt, net   —                —
Income tax (benefit) expense                (0.02)           0.03
Non-GAAP loss from continuing operations    $   (0.12)       $  (0.19)
Weighted average shares - diluted           66,336           63,840



Cenveo, Inc. and Subsidiaries

Reconciliation of Net Loss to Adjusted EBITDA

(in thousands)

(Unaudited)
                                           For the Three Months Ended
                                            March 29, 2014   March 30, 2013
Net loss                                   $   (15,834)      $   (19,145)
Interest expense, net                      27,910            29,575
Income tax (benefit) expense               (560)             2,170
Depreciation                               12,612            13,129
Amortization of intangible assets          3,449             2,507
Integration, acquisition and other         3,337             1,298
charges
Stock-based compensation provision         836               953
Restructuring and other charges            5,947             4,182
Loss on early extinguishment of debt, net  18                127
Income from discontinued operations, net   (953)             (1,345)
of taxes
Adjusted EBITDA, as defined                $   36,762        $   33,451

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 loss from continuing operations,
non-GAAP operating income, non-GAAP operating income margin, and adjusted free
cash flow. Non-GAAP operating income is defined as operating income excluding
integration, acquisition and other charges, stock-based compensation
provision, and restructuring and other charges. Non-GAAP operating income
margin is calculated by dividing non-GAAP operating income into net sales.
Non-GAAP loss from continuing operations excludes integration, acquisition and
other charges, stock-based compensation provision, restructuring and other
charges, loss on early extinguishment of debt, net, and an adjustment to
income taxes to reflect an estimated cash tax rate. Adjusted EBITDA is defined
as earnings before interest, taxes, depreciation, amortization, integration,
acquisition and other charges, stock-based compensation provision,
restructuring and other charges, loss on early extinguishment of debt, net,
and income from discontinued operations, net of taxes. Adjusted free cash flow
is defined as Adjusted EBITDA less cash interest, cash taxes, and capital
expenditures, net of proceeds from the sale of 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 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 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), world 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
which could cause actual results to differ materially from management's
expectations include, without limitation: (i) recent United States and global
economic conditions have adversely affected us and could continue to do so;
(ii) our substantial level of indebtedness could impair our financial
condition and prevent us from fulfilling our business obligations; (iii) our
ability to service or refinance our debt; (iv) the terms of our indebtedness
imposing significant restrictions on our operating and financial flexibility;
(v) additional borrowings available to us which could further exacerbate our
risk exposure from debt;(vi) our ability to successfully integrate acquired
businesses with our business; (vii) a decline in 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) the industries in which we operate our business are
highly competitive and extremely fragmented; (ix) a 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 adversely affecting 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) any failure,
interruption or security lapse of our 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
 
Press spacebar to pause and continue. Press esc to stop.