Exhibit 99.1
[Cenveo letterhead]
For Immediate Release August 2nd, 2004
CENVEO OPERATIONS HAVE EIGHTH CONSECUTIVE QUARTER OF IMPROVED
YEAR OVER YEAR PERFORMANCE
ENGLEWOOD, COLO. (AUGUST 2, 2004) -- Cenveo, Inc., (NYSE: CVO) announced its
results for the quarter and six months ended June 30, 2004. The net loss was
$2.1 million for the quarter, and $18.6 million for the six months, or $0.04
per share and $0.39 per share, respectively. Sales for the quarter were $409
million and $833 million for the six months ended June 30, 2004. Last year,
the net loss for the corresponding quarter was $2.3 million, or $0.05 per
share, on $408 million of sales and for the six months ended June 30, 2003,
net income was $0.4 million, or $0.01 per share, on $835 million of sales.
Cenveo's net loss for the six months ended June 30, 2004, included a first
quarter charge for early extinguishment of debt of $17.7 million.
EBITDA for the second quarter of 2004 was $29.1 million compared to EBITDA
of $27.3 million achieved for the same period last year, a 6.4% improvement.
For the six months ended June 30, 2004, EBITDA was $60.5 million compared to
$58.6 million for the same period last year, a 3.2% improvement. This
represents the eighth consecutive quarter of year over year improvement in
operating results as measured by EBITDA. An explanation of the Company's use
of EBITDA for comparative purposes is provided below.
Net cash provided by operating activities in the quarter ended June 30, 2004
was $10 million compared to $33 million provided during the same period last
year. This change occurred as we invested in inventories to ramp up service
to new customers in the third quarter in the office products sales channel.
Paul Reilly, Chairman, President and CEO, stated, "The second quarter is
traditionally the softest of the year. Nonetheless we have seen improvements
across our businesses. Sales are firming up in all areas, and our Total
Customer Solutions initiative is creating numerous new opportunities for
sales growth. The number of customers entering into multi-year contracts is
increasing. Both our Commercial and Resale Segments are also exhibiting
strong gross margin growth. The results of the first half of 2004 are very
much in line with the guidance we gave for the full year 2004, and given our
expectations for the next two quarters, we affirm that guidance."
Cenveo will hold a conference call today, Monday August 2nd at 1:00 p.m.
Eastern Time (12 noon Central, 11:00 a.m. Mountain, 10:00 a.m. Pacific
Time). To participate in the Cenveo conference call, please dial in to
1-888-675-7686 and provide conference ID 510356. Please call 5-7 minutes
before the call is to begin. The conference call will also be available via
webcast. To listen to the webcast, go to www.cenveo.com, www.streetevents.com,
or www.fulldisclosure.com.
- more -
INTERNATIONAL DIAL-IN: An operator will dial out to you. Contact Cenveo
Investor Relations at 303-790-8023 or email: bea.rodriguez@cenveo.com no
later than 1 hour prior to the call with your telephone information.
If you are unable to join the Cenveo conference call, you may access a
replay of the call starting Monday, August 2nd, 2004 at 4:00 pm Eastern
Time until Midnight Eastern Time, August 9th, 2004. To access the replay,
please dial 866-219-1444 and reference the conference ID 510356.
EBITDA (earnings before interest, taxes, depreciation and amortization)
should not be considered as an alternative to any measure of operating
results as promulgated under accounting principles generally accepted (GAAP)
in the United States (such as operating income or net income), nor should it
be considered as an indicator of our overall financial performance. EBITDA
does not fully consider the impact of investing or financing transactions as
it specifically excludes depreciation and interest charges, which should
also be considered in the overall evaluation of results. Additionally, our
method of calculating EBITDA may be different from the method used by other
companies and therefore comparability may be limited. EBITDA has not been
provided as a measure of liquidity. The Supplemental Information to the
press release includes the Company's Statement of Cash Flows.
We use EBITDA as a supplemental measure of performance because we believe it
gives the reader a more complete understanding of our operating results
before the impact of investing and financing transactions. A reconciliation
of net income (loss) under U.S. GAAP to EBITDA is presented in the
Supplemental Information to this press release.
ABOUT CENVEO
Cenveo, Inc. (NYSE: CVO), www.cenveo.com, is one of North America's leading
providers of visual communications with one-stop services from design
through fulfillment. The company is uniquely positioned to serve both direct
customers through its commercial segment, and distributors and resellers of
printed office products through its Quality Park resale segment. The
company's broad portfolio of services and products include e-services,
envelopes, offset and digital printing, labels and business documents.
Cenveo currently has approximately 10,000 employees and more than 80
production locations plus five advanced fulfillment and distribution centers
throughout North America. In early 2004, Cenveo was voted second place in
the printing and publishing category as Fortune Magazine's Most Admired
Companies and ranked number five of the Russell 3000 companies on Corporate
Governance Quotients by Institutional Shareholder Services. The company is
headquartered in Englewood, Colorado.
- more -
This press release may contain certain forward-looking statements of
management. It should be understood that all such statements are subject to
various uncertainties and risks that could affect their outcome. Factors
which could cause or contribute to such differences include, but are not
limited to, the ability to execute strategic initiatives, economic
conditions, product demand and sales, ability to obtain assumed productivity
and cost savings, interest rates, foreign currency exchange rates, paper and
raw material costs and the ability to pass them through to customers, waste
paper prices, postage rates, union relations, competition and competitors'
actions, availability of financing, and changes in the direct mail industry.
Please refer to the company's 10-K, 10-Q and other SEC filings for a more
detailed discussion of the risks. None of management's statements in this
release should be considered an offer to sell or a solicitation of an offer
to buy Cenveo securities.
CONTACT: Mr. Michel P. Salbaing
Senior Vice President and Chief Financial Officer
Cenveo, Inc.
(303) 790-8023
# # #
[Cenveo logo]
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
2004 2003 2004 2003
CONSOLIDATED RESULTS
Net sales $409,396 $407,826 $833,138 $835,146
Gross profit 83,634 79,121 172,054 163,048
Operating income 14,805 15,625 33,719 34,903
Income (loss) from continuing operations (3,296) (1,681) (19,831) (1,150)
Loss (gain) on disposal of discontinued operations (1,230) 581 (1,230) (1,919)
Cumulative effect of change in accounting principle - - - 322
- --------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (2,066) $ (2,262) $(18,601) $ 447
Net income (loss) per share - assuming dilution $ (0.04) $ (0.05) $ (0.39) $ 0.01
- --------------------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
NET SALES:
Commercial $307,583 $306,608 $631,432 $630,670
Resale 101,813 101,218 201,706 204,476
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Total $409,396 $407,826 $833,138 $835,146
OPERATING INCOME (EXPENSE):
Commercial $ 9,920 $ 10,285 $ 21,914 $ 22,765
Resale 12,359 10,455 23,822 22,309
Corporate services and other charges (7,474) (5,115) (12,017) (10,171)
- --------------------------------------------------------------------------------------------------------------------------------
Total $ 14,805 $ 15,625 $ 33,719 $ 34,903
OPERATING INCOME MARGINS:
Commercial 3.2% 3.4% 3.5% 3.6%
Resale 12.1% 10.3% 11.8% 10.9%
EBITDA (1):
Commercial $ 20,213 $ 19,215 $ 42,420 $ 41,132
Resale 14,685 12,925 28,500 27,331
Corporate (5,828) (4,828) (10,427) (9,837)
- --------------------------------------------------------------------------------------------------------------------------------
Total $ 29,070 $ 27,312 $ 60,493 $ 58,626
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION JUNE 30, 2004 DECEMBER 31, 2003
Working capital $ 111,489 $ 102,773
Total assets 1,104,028 1,107,393
Total debt 772,956 748,961
Shareholders' equity 44,625 68,019
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See Appendix 1 in the Supplemental Information to the Press Release for
the definition of EBITDA, the reconciliation of net income to EBITDA and
the reason why EBITDA is a relevant non-GAAP financial measure for Cenveo.
[Cenveo logo]
Supplemental Information to the Press Release
For the Second Quarter Ended
June 30, 2004
Released August 2, 2004
[Cenveo logo]
============================================================================
Second quarter ended June 30, 2004
Page
Financial and Operational Summary and Recent Developments 1, 2
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Consolidated Balance Sheets 3
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Consolidated Statements of Operations 4
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Consolidated Cash Flow Statements 5
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Segment Results 6
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Appendix 1 - Reconciliation of Net Income to EBITDA 7, 8
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FINANCIAL AND OPERATIONAL SUMMARY AND RECENT DEVELOPMENTS
=========================================================
Three months ended June 30, 2004
Financial and Operational Summary
---------------------------------
CONSOLIDATED RESULTS: Net sales increased $1.6 million in the second quarter
2004 compared to net sales in the second quarter of 2003. Operating income
declined by $0.8 million in the second quarter primarily due to a $1.0
million charge for restructuring in the quarter.
COMMERCIAL: Net sales in the second quarter of 2004 increase $1.0 million to
$307.6 million compared to net sales of $306.6 million in the second quarter
of 2003. The Commercial segment improved gross margins by 140 basis points,
or 7.8%, over the same quarter last year.
RESALE: Net sales in the second quarter of 2004 increased by $0.6 million to
$101.8 million compared to net sales of $101.2 million in the second quarter
of 2003. The Resale segment improved gross margins by 100 basis points, or
2.6%, over the same quarter last year.
DEBT: Total debt was reduced by $4.4 million in the quarter and net cash
provided by operating activities was $10 million for the quarter.
CAPITAL EXPENDITURES: During the quarter ended June 30, 2004, capital
expenditures were $6.8 million compared to $6.6 million in the same period
last year. It is anticipated that full year capital expenditures will be
approximately $25 million.
AVAILABILITY: Credit available under our credit facility was $112.2 million
based on the certificate filed for the activity ending June 30, 2004.
1
Financial and Operational Summary and Recent Developments
=========================================================
Recent Developments
- -------------------
o Effective May 17, 2004, the Company changed its name from Mail-Well to
Cenveo(TM) and announced a new Company tag line of "Vision Delivered".
The Company also launched a new web site at www.cenveo.com that reflects
the Company's new name, strategy, and broad selection of products and
services, as well as a change of its New York Stock Exchange trading
symbol to "CVO."
o The Company announced on July 2, 2004 the acquisition of Valco Graphics
Inc., a high-quality web and sheetfed printer of promotional, direct
marketing and publishing products in the Seattle, Washington market with
annual sales of approximately $18 million. Cenveo(TM) also announced
that it would combine its existing Seattle commercial printing facility
with the Valco facility. The Company plans to install two 40-inch, six
and eight-color sheetfed presses at the former Valco location to increase
current capabilities.
o During the quarter Cenveo Anderson Lithograph, a Cenveo(TM) commercial
facility, received the Sappi North American Printer of the Year award with
two gold medals for the outstanding production of General Motors' Cadillac
XLR 2004 brochure and Hummer 2003 Calendar.
o During the quarter the Company began the consolidation of its Bensalem,
Pennsylvania envelope plant with the Cenveo Philadelphia print plant to
create a full service facility to better serve the customers in the
Philadelphia market. The expanded facility will contain a state-of-the-art
graphics and pre-press department, high-end offset capabilities, a full
complement of envelope converting equipment, plus a dedicated team of
customer service professionals.
o Cenveo(TM) is the first envelope licensee of Conformer(R) Expansion
Products, Inc. and now offers customers versatile envelopes that expand
to fit contents with the ease and efficiency of mechanical insertion.
Supremex, Cenveo's Canadian envelope operation, will be the first
location to manufacture Conformer Expansion Envelopes. Conformer
Expansion Products, Inc. has granted Cenveo a license to manufacture,
use, and sell envelope products with its trademarked name exclusively
in Canada and on a non-exclusive basis in the United States. The
arrangement thus enables Cenveo to offer the envelopes throughout
North America.
2
CONSOLIDATED BALANCE SHEETS
Cenveo, Inc. and Subsidiaries
(in thousands)
JUNE 30 DECEMBER 31
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $ 165 $ 307
Accounts receivable, net 218,588 223,541
Inventories, net 111,278 91,402
Other current assets 44,349 48,135
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Total current assets 374,380 363,385
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Property, plant and equipment, net 374,419 388,240
Goodwill 297,585 299,392
Other intangible assets, net 17,140 19,687
Other assets, net 40,504 36,689
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TOTAL ASSETS $1,104,028 $1,107,393
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 146,507 $ 140,468
Accrued compensation and related liabilities 54,421 53,209
Other current liabilities 59,379 64,360
Current maturities of long-term debt 2,584 2,575
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Total current liabilities 262,891 260,612
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Long-term debt, less current maturities 770,372 746,386
Deferred income taxes - 6,717
Other liabilities 26,140 25,659
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Total liabilities 1,059,403 1,039,374
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Shareholders' equity:
Common stock 484 484
Paid-in capital 213,896 213,850
Retained deficit (168,932) (150,331)
Deferred compensation (1,424) (1,714)
Accumulated other comprehensive income 601 5,730
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Total shareholders' equity 44,625 68,019
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- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,104,028 $1,107,393
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3
CONSOLIDATED STATEMENTS OF OPERATIONS
Cenveo, Inc. and Subsidiaries
(in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
2004 2003 2004 2003
Net sales $409,396 $407,826 $ 833,138 $835,146
Cost of sales 325,762 328,705 661,084 672,098
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Gross profit 83,634 79,121 172,054 163,048
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Operating expenses:
Selling, general and administrative expenses 66,415 62,722 134,413 126,157
Amortization of intangibles 1,396 418 2,801 863
Restructuring charges 1,018 356 1,121 1,125
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Operating income 14,805 15,625 33,719 34,903
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Other expense:
Interest expense 17,513 18,119 35,912 36,333
Loss on early extinguishment of debt - - 17,748 -
Other 527 355 968 487
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Income (loss) from continuing operations before
income taxes and cumulative effect of a change in
accounting principle (3,235) (2,849) (20,909) (1,917)
Income tax expense (benefit) 61 (1,168) (1,078) (767)
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before
cumulative effect of a change in accounting principle (3,296) (1,681) (19,831) (1,150)
Loss (gain) on disposal of discontinued operations (1,230) 581 (1,230) (1,919)
Cumulative effect of a change in accounting principle - - - 322
- ------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (2,066) $ (2,262) $ (18,601) $ 447
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) per share - basic and diluted:
Continuing operations $ (0.07) $ (0.04) $ (0.42) $ (0.02)
Discontinued operations 0.03 (0.01) 0.03 0.04
Cumulative effect of a change in accounting principle - - - (0.01)
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) per share - basic and diluted $ (0.04) $ (0.05) $ (0.39) $ 0.01
- ------------------------------------------------------------------------------------------------------------------------------
Weighted averages shares - basic 47,740 47,679 47,737 47,672
Weighted averages shares - diluted 47,740 47,679 47,737 48,207
4
CONSOLIDATED CASH FLOW STATEMENTS
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
SIX MONTHS ENDED
JUNE 30
2004 2003
Cash flows from operating activities:
Income (loss) from continuing operations $ (19,831) $ (1,150)
Adjustments to reconcile income (loss) from continuing operations to net cash
provided by (used in) operating activities:
Depreciation 22,841 23,347
Amortization 5,093 2,815
Write-off of deferred financing fees 4,220 -
Deferred income tax benefit (7,949) (6,270)
Loss (gain) on disposal of assets 240 581
Other noncash charges, net (366) 846
Changes in operating assets and liabilities, excluding effects of operations sold:
Accounts receivable 4,210 26,150
Inventories (20,011) 4,070
Accounts payable and accrued compensation 7,686 (37,009)
Income taxes payable (991) 8,808
Other working capital changes 211 (2,634)
Other, net (76) 605
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (4,723) 20,159
Cash flows from investing activities:
Capital expenditures (12,460) (13,010)
Proceeds from divestitures, net 2,000 3,864
Proceeds from sales of property, plant and equipment 346 627
- -------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (10,114) (8,519)
Cash flows from financing activities:
Proceeds from long-term debt 1,677,071 947,205
Repayment of long-term debt (1,653,074) (960,947)
Proceeds from the issuance of common stock 46 16
Capitalized loan fees (8,936) (437)
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Net cash provided by (used in) financing activities 15,107 (14,163)
Effect of exchange rate changes on cash and cash equivalents (412) 619
- -------------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (142) (1,904)
Cash and cash equivalents at beginning of year 307 2,650
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Cash and cash equivalents at end of quarter $ 165 $ 746
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5
SEGMENT RESULTS
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
2004 2003 2004 2003
Net sales:
Commercial $307,583 $306,608 $631,432 $630,670
Resale 101,813 101,218 201,706 204,476
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Total net sales $409,396 $407,826 $833,138 $835,146
- ---------------------------------------------------------------------------------------------------------------------
Operating income (expense):
Commercial $ 9,920 $ 10,285 $ 21,914 $ 22,765
Resale 12,359 10,455 23,822 22,309
Corporate services (7,474) (5,115) (12,017) (10,171)
- ---------------------------------------------------------------------------------------------------------------------
Total operating income $ 14,805 $ 15,625 $ 33,719 $ 34,903
- ---------------------------------------------------------------------------------------------------------------------
EBITDA (1):
Commercial $ 20,213 $ 19,215 $ 42,420 $ 41,132
Resale 14,685 12,925 28,500 27,331
Corporate services (5,828) (4,828) (10,427) (9,837)
- ---------------------------------------------------------------------------------------------------------------------
Total EBITDA $ 29,070 $ 27,312 $ 60,493 $ 58,626
- ---------------------------------------------------------------------------------------------------------------------
Net sales by product line:
Commercial printing $186,873 $185,638 $385,073 $382,468
Envelopes 172,077 171,845 346,180 352,035
Business forms and labels 50,446 50,343 101,885 100,643
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Total net sales $409,396 $407,826 $833,138 $835,146
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<FN>
(1) See Appendix 1 in the Supplemental Information to the Press Release for
the definition of EBITDA, the reconciliation of net income to EBITDA
and the reason why EBITDA is a relevant non-GAAP financial measure for
Cenveo.
6
APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2004
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $10,046 $12,344 $(24,457) $(2,066)
Interest - - 17,513 17,513
Taxes, including taxes included in discontinued operations - - 831 831
Depreciation 8,985 2,206 186 11,376
Amortization (excluding amortization included in interest) 1,182 135 99 1,416
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EBITDA $20,213 $14,685 $ (5,828) $29,070
FOR THE THREE MONTHS ENDED JUNE 30, 2003
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $ 9,845 $10,389 $(22,496) $(2,262)
Interest - - 18,119 18,119
Taxes - - (1,168) (1,168)
Tax adjustment included in discontinued operations - - 581 581
Depreciation 9,189 2,300 135 11,624
Amortization (excluding amortization included in interest) 181 236 1 418
- ------------------------------------------------------------------------------------------------------------------------
EBITDA $19,215 $12,925 $ (4,828) $27,312
<FN>
Note: This schedule is a reconciliation of net income to EBITDA which we
define as earnings before interest, taxes, depreciation and amortization and
the income tax impact included in the gain on the disposal of discontinued
operations recorded in 2004 and the tax adjustment reported as a gain on
disposal of discontinued operations in 2003. EBITDA should not be considered
as an alternative to any measure of operating results as promulgated under
accounting principles generally accepted in the United States (such as
operating income or net income), nor should it be considered as an indicator
of our overall financial performance. EBITDA does not fully consider the
impact of investing or financing transactions as it specifically excludes
depreciation and interest charges, which should also be considered in the
overall evaluation of results. Additionally, our method of calculating
EBITDA may be different from the method used by other companies, and
therefore, comparability may be limited. EBITDA has not been provided as a
measure of liquidity. We believe EBITDA provides useful supplemental
information to investors since it excludes the impact of investing or
financing transactions on our operating operating results.
7
APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2004
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $21,977 $23,753 $(64,332) $(18,601)
Loss on early extinguishment of debt - - 17,748 17,748
Interest - - 35,912 35,912
Taxes, including taxes included in discontinued operations - - (308) (308)
Depreciation 18,010 4,477 355 22,842
Amortization (excluding amortization included in interest) 2,433 270 198 2,901
- ------------------------------------------------------------------------------------------------------------------------
EBITDA $42,420 $28,500 $(10,427) $ 60,493
FOR THE SIX MONTHS ENDED JUNE 30, 2003
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $22,314 $22,210 $(44,077) $ 447
Tax adjustment included in discontinued operations - - (1,919) (1,919)
Cumulative effect of a change in accounting principle - - 322 322
Interest - - 36,333 36,333
Taxes - - (767) (767)
Depreciation 18,423 4,653 271 23,347
Amortization (excluding amortization included in interest) 395 468 - 863
- -------------------------------------------------------------------------------------------------------------------------
EBITDA $41,132 $27,331 $ (9,837) $58,626
<FN>
Note: This schedule is a reconciliation of net income to EBITDA which we
define as earnings before interest, taxes, depreciation and amortization and
excluding the loss from the early extinguishment of debt and the income tax
impact included in the gain on the disposal of discontinued operations
recorded in 2004, and the tax adjustment reported as a gain on disposal of
discontinued operations and the cumulative effect of a change in accounting
principle in 2003. EBITDA should not be considered as an alternative to any
measure of operating results as promulgated under accounting principles
generally accepted in the United States (such as operating income or net
income), nor should it be considered as an indicator of our overall
financial performance. EBITDA does not fully consider the impact of
investing or financing transactions as it specifically excludes depreciation
and interest charges, which should also be considered in the overall
evaluation of results. Additionally, our method of calculating EBITDA may be
different from the method used by other companies, and therefore,
comparability may be limited. EBITDA has not been provided as a measure of
liquidity. We believe EBITDA provides useful supplemental information to
investors since it excludes the impact of investing or financing
transactions on our operating results.
8