Cenevo (CVO) Tops Q3 EPS by 1c

Cenevo (NYSE: CVO) reported Q3 EPS of $0.07, $0.01 better than the analyst estimate of $0.06. Revenue for the quarter came in at $19.8 million versus the consensus estimate of $471.26 million.

Results of Operations Overview:

The Company generated net sales of $419.8 million for the three months ended September 26, 2015, compared to $435.6 million for the same period last year, a decline of 3.6%. The Company generated net sales of $1.26 billion for the nine months ended September 26, 2015, compared to $1.31 billion for the same period last year, a decline of 3.4%. The decline in net sales is attributable to the consolidation of several envelope facilities during 2014 in connection with the accelerated integration of the National Envelope assets with our existing operations and two new envelope facilities, and continued pricing pressure in our print business. Excluding the impact of the integration, we believe our envelope group net sales were up modestly on a year-to-date basis, which is primarily attributable to product mix and pricing improvements, offset by volume declines.

Operating income was $19.5 million for the three months ended September 26, 2015, compared to operating income of $10.2 million for the same period last year, an improvement of 90.7%. Operating income was $59.0 million for the nine months ended September 26, 2015, compared to operating income of $31.5 million for the same period last year, an improvement of 87.0%. Operating income in 2014 was impacted by expenses associated with the closure and consolidation of several envelope facilities related to the integration of the National Envelope assets, which along with the price increases realized from certain customers, has resulted in significant operating margin improvement and efficiencies in 2015. Non-GAAP operating income was $29.0 million for the three months ended September 26, 2015, compared to income of $22.1 million for the same period last year, and income of $77.5 million for the nine months ended September 26, 2015, compared to income of $64.9 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 September 26, 2015, the Company had a loss from continuing operations of $3.6 million, or $0.05 per diluted share, compared to a loss of $14.0 million, or $0.21 per diluted share, for the same period last year. For the nine months ended September 26, 2015, the Company had a loss from continuing operations of $15.1 million, or $0.22 per diluted share, compared to a loss of $71.7 million, or $1.07 per diluted share, for the same period last year. On a year-to-date basis, the improvement was primarily due to a debt extinguishment charge in connection with the debt refinancing that was completed in June 2014, lower restructuring charges, as well as the significant operating margin improvement and efficiencies resulting from the National Envelope integration. Non-GAAP income from continuing operations was $6.5 million, or $0.07 per diluted share, for the three months ended September 26, 2015, compared to non-GAAP loss from continuing operations of $3.6 million, or $0.05 per diluted share, for the same period last year. For the nine months ended September 26, 2015, non-GAAP income from continuing operations was $5.0 million, or $0.06 per diluted share, compared to a loss of $16.4 million, or $0.25 per diluted share, for the same period last year. A reconciliation of loss from continuing operations to non-GAAP income (loss) from continuing operations is presented in the attached tables.

Adjusted EBITDA was $42.0 million and $35.6 million for the three months ended September 26, 2015 and September 27, 2014, respectively. For the nine months ended September 26, 2015, Adjusted EBITDA was $113.9 million, compared to $106.1 million for the same period last year. These increases over their prior year respective periods are primarily attributable to the improvement of our envelope operations subsequent to the prior year consolidation efforts and continued operating improvements in our label product lines, partially offset by a decline in our print operations due to product mix and continued price pressure. A reconciliation of net loss to Adjusted EBITDA is presented in the attached tables.

Cash flow provided by operating activities for the nine months ended September 26, 2015 was $14.8 million, compared to a use of cash of $7.3 million for the same period last year. This improvement was primarily driven by the improvement in our operating results, lower contributions to post-retirement plans, partially offset by a net use of cash from working capital as compared to the prior year due to seasonal working capital levels and the timing of interest payments on our long-term debt.

For earnings history and earnings-related data on Cenevo (CVO) click here.

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