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STAMFORD, Conn., Nov. 11 /PRNewswire-FirstCall/ -- Cenveo, Inc. (NYSE: CVO) today announced results for the three and nine months ended October 3, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070618/CENVEOLOGO)
For the three months ended October 3, 2009, net sales were $448.0 million, as compared to $522.7 million for the same period in the previous year. For the three months ended October 3, 2009, the Company reported net income of $1.1 million, or $0.02 per share, as compared to net income of $12.3 million, or $0.23 per share, for the three months ended September 27, 2008. On a Non-GAAP basis, income from continuing operations was $9.9 million, or $0.18 per diluted share for the three months ended October 3, 2009. Non-GAAP income from continuing operations excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges, (gain) loss on early extinguishment of debt and adjusts income taxes to reflect an estimated cash tax rate.
Adjusted EBITDA for the three months ended October 3, 2009 was $56.3 million. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges, (gain) loss on early extinguishment of debt, and income (loss) from discontinued operations, net of taxes. An explanation of the Company's use of Non-GAAP measures and Adjusted EBITDA is detailed below.
For the nine months ended October 3, 2009, net sales were $1.3 billion, as compared to $1.6 billion for the same period in the previous year. For the nine months ended October 3, 2009, the Company reported a net loss of $21.5 million, or $0.39 per share, as compared to net income of $11.6 million, or $0.22 per share, for the nine months ended September 27, 2008. On a Non-GAAP basis, income from continuing operations was $10.4 million or $0.19 per diluted share for the first nine months of 2009. Adjusted EBITDA for the first nine months of 2009 was $140.9 million.
Robert G. Burton, Chairman and Chief Executive Officer stated:
"Our business continued to improve throughout the third quarter, as we delivered stronger performance across our operations. Our continued focus on being proactive in managing our cost structure combined with modest strengthening across our revenue stream led to improved results for the quarter. Revenues remained in line with our expectations, as we experienced market strengthening that enabled us to achieve sequential revenue growth over the second quarter. Despite limited sales visibility, we were once again able to match our cost structure with our revenue stream, delivering a Non-GAAP operating income margin of 9.0%. We continue to focus on generating strong cash flows which has allowed us to reduce our debt by $94 million over the past twelve months."
Mr. Burton concluded:
"The third quarter marked an important period for the Company as we continue to see stabilization in the key product markets we serve, including labels, packaging, journals, envelopes and print. This market improvement, combined with the cost actions we implemented earlier this year and the completion of our previously announced acquisition of Nashua, has Cenveo well positioned to weather this economic storm and be poised for future growth. We will continue to invest in these key product markets via prudent capital investments and highly strategic and accretive acquisitions to strengthen our leadership position.
"As we prepare to exit 2009, I am proud of the hard work and efforts of our entire organization, in light of the many economic challenges we faced. We have performed as well as we could in this recessionary environment, never losing our focus on our customers and shareholders. As I've also said before, Cenveo's short and long term success is built around having an experienced management team that knows how to deliver results in the diverse niche businesses we operate. Going forward, I believe that our fourth quarter results will show continued improvement over the third quarter and that 2010 will be significantly stronger than 2009 from a revenue and profitability standpoint."
Conference Call:
Cenveo will host a conference call tomorrow, Thursday, November 12, 2009, 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
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
October September October September
3, 2009 27, 2008 3, 2009 27, 2008
Net sales $448,039 $522,705 $1,257,783 $1,581,534
Cost of sales 359,343 406,908 1,028,024 1,260,612
Selling, general and
administrative expenses 52,570 58,455 153,455 184,821
Amortization of intangible assets 2,587 2,293 7,258 6,747
Restructuring, impairment and
other charges 8,537 6,873 49,300 22,047
----- ----- ------ ------
Operating income 25,002 48,176 19,746 107,307
Interest expense, net 29,037 26,795 79,389 79,948
(Gain) loss on early
extinguishment of debt - (371) (16,917) 3,871
Other (income) expense, net 266 (695) (2,320) 429
--- ---- ------ ---
Income (loss) from continuing
operations before income
taxes (4,301) 22,447 (40,406) 23,059
Income tax (benefit) expense 4,131 10,060 (9,946) 10,349
----- ------ ------ ------
Income (loss) from continuing
operations (8,432) 12,387 (30,460) 12,710
Income (loss) from discontinued
operations, net of taxes 9,505 (59) 8,970 (1,114)
----- --- ----- ------
Net income (loss) $1,073 $12,328 $(21,490) $11,596
====== ====== ======== =======
Income (loss) per share - basic:
Continuing operations $(0.15) $0.23 $(0.55) $0.24
Discontinued operations 0.17 - 0.16 (0.02)
==== === ==== =====
Net income (loss) $0.02 $0.23 $(0.39) $0.22
===== ===== ====== =====
Income (loss) per share-diluted:
Continuing operations $(0.15) $0.23 $(0.55) $0.23
Discontinued operations 0.17 - 0.16 (0.02)
==== ==== ==== =====
Net income (loss) $0.02 $0.23 $(0.39) $0.21
===== ===== ===== =====
Weighted average shares:
Basic 55,911 53,897 54,978 53,796
Diluted 55,911 54,174 54,978 53,994
Cenveo, Inc. and Subsidiaries
Reconciliation of Income (Loss) from Continuing Operations to Non-GAAP
Income from Continuing Operations and Related Per Share Data
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
October September October September
3, 2009 27, 2008 3, 2009 27, 2008
Income (loss)
from continuing
operations $(8,432) $12,387 $(30,460) $12,710
Integration, acquisition
and other charges 2,822 1,797 8,851 7,830
Stock-based compensation
provision 3,961 5,979 10,817 12,940
Restructuring, impairment
and other charges 8,537 6,873 49,300 22,047
(Gain) loss on early
extinguishment of debt - (371) (16,917) 3,871
Income tax benefit
(expense) 2,963 6,020 (11,168) 2,677
Non-GAAP income from
continuing operations $9,851 $32,685 $10,423 $62,075
Income per share - diluted:
Continuing operations $(0.15) $0.23 $(0.55) $0.23
Integration, acquisition
and other charges 0.05 0.03 0.16 0.15
Stock-based compensation
provision 0.07 0.11 0.20 0.24
Restructuring, impairment
and other charges 0.15 0.13 0.89 0.41
(Gain) loss on early
extinguishment of debt - (0.01) (0.31) 0.07
Income tax benefit
(expense) 0.06 0.11 (0.20) 0.05
Non-GAAP continuing
operations $0.18 $0.60 $0.19 $1.15
Weighted average
shares-diluted 56,113 54,174 55,109 53,994
Cenveo, Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
October September October September
3, 2009 27, 2008 3, 2009 27, 2008
Net income (loss) $1,073 $12,328 $(21,490) $11,596
Interest expense, net 29,037 26,795 79,389 79,948
Income tax (benefit)
expense 4,131 10,060 (9,946) 10,349
Depreciation 13,659 16,721 42,615 48,768
Amortization of
intangible assets 2,587 2,293 7,258 6,747
Integration, acquisition
and other charges 2,822 1,797 8,851 7,830
Stock-based compensation
provision 3,961 5,979 10,817 12,940
Restructuring, impairment
and other charges 8,537 6,873 49,300 22,047
(Gain) loss on early
extinguishment of debt - (371) (16,917) 3,871
(Income) loss from
discontinued operations,
net of taxes (9,505) 59 (8,970) 1,114
Adjusted EBITDA, as
defined $56,302 $82,534 $140,907 $205,210
Cenveo, Inc. and Subsidiaries
Reconciliation of Operating Income to Non-GAAP Operating Income
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
October September October September
3, 2009 27, 2008 3, 2009 27, 2008
Operating income $25,002 $48,176 $19,746 $107,307
Integration, acquisition
and other charges 2,822 1,797 8,851 7,830
Stock-based compensation
provision 3,961 5,979 10,817 12,940
Restructuring, impairment
and other charges 8,537 6,873 49,300 22,047
Non-GAAP operating
income $40,322 $62,825 $88,714 $150,124
CENVEO, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
October 3, January 3,
2009 2009
---- ----
Assets
Current assets:
Cash and cash equivalents $12,119 $10,444
Accounts receivable, net 281,316 270,145
Inventories 149,585 159,569
Prepaid and other current assets 81,675 74,890
------ ------
Total current assets 524,695 515,048
Property, plant and equipment, net 414,082 420,457
Goodwill 334,710 311,183
Other intangible assets, net 298,572 276,944
Other assets, net 29,126 28,482
------ ------
Total assets $1,601,185 $1,552,114
========== ==========
Liabilities and Shareholders' Deficit
Current liabilities:
Current maturities of long-term debt $21,445 $24,314
Accounts payable 174,890 174,435
Accrued compensation and related
liabilities 32,515 37,319
Other current liabilities 92,429 88,870
------ ------
Total current liabilities 321,279 324,938
Long-term debt 1,260,202 1,282,041
Deferred income taxes 36,428 26,772
Other liabilities 162,249 139,318
Shareholders' deficit:
Preferred stock - -
Common stock 619 542
Paid-in capital 327,175 271,821
Retained deficit (468,456) (446,966)
Accumulated other comprehensive loss (38,311) (46,352)
------- -------
Total shareholders' deficit (178,973) (220,955)
-------- --------
Total liabilities and shareholders'
deficit $1,601,185 $1,552,114
========== ==========
CENVEO, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended
-----------------
October September
3, 2009 27, 2008
------- --------
Cash flows from operating activities:
Net income (loss) $(21,490) $11,596
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Income (loss) from discontinued
operations, net of taxes (8,970) 1,114
Depreciation and amortization,
excluding non-cash interest
expense 49,873 55,515
Non-cash interest expense, net 1,700 1,305
(Gain) loss on early extinguishment
of debt (16,917) 3,871
Stock-based compensation provision 10,817 12,940
Non-cash restructuring, impairment and
other charges 23,786 5,124
Deferred income taxes (12,676) 6,709
Gain on sale of assets (3,876) (4,378)
Other non-cash charges, net 5,772 6,599
Changes in operating assets and liabilities,
excluding the effects of acquired
businesses:
Accounts receivable 11,209 35,590
Inventories 29,497 (125)
Accounts payable and accrued
compensation and related liabilities (25,945) 5,718
Other working capital changes (9,762) 13,351
Other, net 316 (5,515)
--- ---
Net cash provided by operating
activities 33,334 149,414
------ -------
Cash flows from investing activities:
Capital expenditures (23,519) (37,782)
Cost of business acquisitions,
net of cash acquired (3,189) (47,151)
Proceeds from sale of property, plant
and equipment 5,709 18,258
Proceeds from sale of investment 4,032 -
Acquisition payments - (3,653)
--- ------
Net cash used in investing
activities (16,967) (70,328)
------- -------
Cash flows from financing activities:
Repayment of 83/8% senior subordinated
notes (23,024) -
Repayment of term loans (22,839) (5,400)
Payment of amendment and debt
issuance costs (7,296) (5,297)
Repayments of other long-term debt (6,979) (16,535)
Repayment of 77/8% senior subordinated
notes (4,295) -
Repayment of 101/2% senior notes (3,250) -
Purchase and retirement of common stock
upon vesting of RSUs (2,028) (1,055)
Payment of fees on repurchase and
retirement of debt (94) -
Borrowings (repayments) under
revolving credit facility, net 55,250 (65,200)
Proceeds from exercise of stock options 98 1,873
Repayment of senior unsecured loan - (175,000)
Tax liability from stock-based compensation - (873)
Proceeds from issuance of 101/2% senior notes - 175,000
Proceeds from issuance of other long-term debt - 11,338
--- ------
Net cash provided by (used in) financing
activities (14,457) (81,149)
------- -------
Effect of exchange rate changes on cash and
cash equivalents (235) -
---- ---
Net increase (decrease) in cash and cash
equivalents 1,675 (2,063)
Cash and cash equivalents at beginning of
period 10,444 15,882
------ ------
Cash and cash equivalents at end of period $12,119 $13,819
======= =======
In addition to results presented in accordance with accounting principles generally accepted in the U.S. ("GAAP"), included in this release are certain Non-GAAP financial measures, including Adjusted EBITDA, Non-GAAP income (loss) from continuing operations, Non-GAAP operating income, and Non-GAAP operating income margin. 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. These Non-GAAP financial measures are defined herein, and should be read in conjunction with GAAP financial measures. A reconciliation of income (loss) from continuing operations to Non-GAAP income 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 operations, as a measure of our liquidity or as an alternative to reported net income (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 and Non-GAAP operating income margin 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 leader in the management and distribution of print and related products and services. The Company provides its customers with low-cost solutions within its core businesses of labels and forms manufacturing, packaging and publisher offerings, envelope production, and printing; supplying one-stop services from design through fulfillment. Cenveo delivers everyday for its customers through a network of production, fulfillment, content management, and distribution facilities across the globe.
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) a decline of our consolidated or individual reporting units operating performance as a result of the current economic environment could affect the results of our operations and financial position, including the impairment of our goodwill and other long-lived assets; (ii) our substantial 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 are available to us that could further exacerbate our risk exposure from debt; (vi) our ability to successfully integrate acquisitions; (vii) intense competition in our industry; (viii) the general absence of long-term customer agreements in our industry, subjecting our business to quarterly and cyclical fluctuations; (ix) factors affecting the U.S. postal services impacting demand for our products; (x) the availability of the Internet and other electronic media affecting demand for our products; (xi) increases in paper costs and decreases in its availability; (xii) our labor relations; (xiii) our compliance with environmental rules and regulations; and (xiv) our dependence on key management personnel. 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 http://www.cenveo.com.
Inquiries from analysts and investors should be directed to Robert G. Burton, Jr. at (203) 595-3005.
SOURCE Cenveo, Inc.
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