Exhibit 99.1
[Cenveo logo]
For Immediate Release November 1st, 2004
CENVEO OPERATIONS HAVE NINTH CONSECUTIVE QUARTER OF IMPROVED
YEAR OVER YEAR PERFORMANCE
ENGLEWOOD, COLO. (NOVEMBER 1ST, 2004) -- Cenveo, Inc., (NYSE: CVO) announced
its results for the quarter and nine months ended September 30, 2004. Net
income was $2.5 million for the quarter or $0.05 per share, and for the nine
months the net loss was $16.1 million, or $0.34 per share. Sales were $428
million for the quarter and $1,261 million for the nine months ended
September 30, 2004. In the third quarter of 2003, the net income was $2.2
million, or $0.04 per share, on $412 million of sales and for the nine
months ended September 30, 2003, net income was $2.6 million, or $0.05 per
share, on $1,247 million of sales. Cenveo's net loss for the nine months
ended September 30, 2004, included a first quarter charge for early
extinguishment of debt of $17.7 million.
EBITDA for the third quarter of 2004 was $33.9 million compared to EBITDA of
$33.5 million achieved for the same period last year, a 1.2% improvement.
For the nine months ended September 30, 2004, EBITDA was $94.4 million
compared to $92.1 million for the same period last year, a 2.5% improvement.
This represents the ninth consecutive quarter of year over year improvement
in 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 September 30,
2004 was $19 million compared to $14 million provided during the comparable
period of 2003.
Paul Reilly, Chairman, President and CEO, stated, "In the third quarter we
saw a definite increase in volumes of work. Our Commercial Segment had its
best third quarter in sales and EBITDA since 2001. Our Resale Segment
increased its market share in the office products channel. Our Strategic
Sales Team continues to create numerous new opportunities for sales growth.
The acquisitions we completed in the Seattle and San Francisco markets will
be good catalysts for growth in those vibrant markets".
"The results of the first three quarters of 2004", continued Mr. Reilly,
"are in line with the lower end of the guidance we gave for the full year
2004, and given our expectations for the next quarter, we expect to remain
at the low end of the full year EBITDA guidance of $135 million to $142
million."
Cenveo will hold a conference call today, Monday November 1st 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
1-888-639-6218 and provide conference ID 581445. 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 303-730-8023 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, November 1st, 2004 at 3:00 pm Eastern
Time until Midnight Eastern Time, November 8, 2004. To access the replay,
please dial 866-219-1444 and reference the conference ID581445.
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 NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2004 2003 2004 2003
CONSOLIDATED RESULTS
- --------------------
Net sales $ 428,099 $ 412,218 $ 1,261,238 $ 1,247,363
Gross profit 84,503 81,877 256,556 244,922
Operating income 21,144 22,023 54,863 56,925
Income (loss) from continuing operations 2,490 2,172 (17,341) 1,020
Loss (gain) on disposal of discontinued operations - - (1,230) (1,919)
Cumulative effect of change in accounting principle - - - 322
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2,490 $ 2,172 $ (16,111) $ 2,617
Net income (loss) per share - assuming dilution $ 0.05 $ 0.04 $ (0.34) $ 0.05
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SEGMENT INFORMATION
NET SALES:
Commercial $ 327,365 $ 315,029 $ 958,797 $ 945,699
Resale 100,734 97,189 302,441 301,664
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Total $ 428,099 $ 412,218 $ 1,261,238 $ 1,247,363
OPERATING INCOME (EXPENSE):
Commercial $ 16,366 $ 16,877 $ 38,281 $ 39,643
Resale 9,469 9,946 33,291 32,256
Corporate services and other charges (4,691) (4,800) (16,709) (14,974)
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Total $ 21,144 $ 22,023 $ 54,863 $ 56,925
OPERATING INCOME MARGINS:
Commercial 5.0% 5.4% 4.0% 4.2%
Resale 9.4% 10.2% 11.0% 10.7%
EBITDA (1):
Commercial $ 27,215 $ 25,948 $ 69,637 $ 67,078
Resale 11,775 12,345 40,275 39,674
Corporate (5,117) (4,838) (15,546) (14,678)
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Total $ 33,873 $ 33,455 $ 94,366 $ 92,074
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FINANCIAL POSITION SEPTEMBER 30, 2004 DECEMBER 31, 2003
Working capital $ 113,749 $ 102,773
Total assets 1,148,717 1,107,393
Total debt 769,983 748,961
Shareholders' equity 54,885 68,019
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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.
[Cenveo logo]
Supplemental Information to the Press Release
For the Third Quarter Ended
September 2004
Released November 1, 2004
- -------------------------------------------------------------------------------
Third Quarter Ended September 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
- -------------------------------------------------------------------------------
Appendix 1 - Reconciliation of Net Income to EBITDA 7, 8
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Financial and Operational Summary and Recent Developments
- ----------------------------------------------------------------------------
Three months ended September 30, 2004
Financial and Operational Summary
- ---------------------------------
CONSOLIDATED RESULTS: Net sales increased $15.9 million in the third quarter
2004 compared to net sales in the third quarter of 2003. Operating income
decreased by $0.9 million in the third quarter. Higher gross profit was
offset by higher selling, general and administration expenses and higher
amortization expense in the quarter. Diluted earnings per share was $0.05 in
the quarter as compared to $0.04 for the same period last year.
COMMERCIAL: Net sales in the third quarter of 2004 increased $12.3 million
to $327.4 million compared to net sales of $315.0 million in the third
quarter of 2003.
RESALE: Net sales in the second quarter of 2004 increased by $3.5 million to
$100.7 million compared to net sales of $97.2 million in the third quarter
of 2003.
DEBT: Net cash provided by operating activities was $18.7 million for the
quarter and total debt was reduced by $3.0 million in the quarter.
CAPITAL EXPENDITURES: During the quarter ended September 2004, capital
expenditures were $7.8 million compared to $6.7 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 $132.4 million
based on the certificate filed for the activity ending September 2004.
1
Financial and Operational Summary and Recent Developments
- ----------------------------------------------------------------------------
Three months ended September 30, 2004
Recent Developments
- -------------------
o The Company announced on August 30, 2004 the appointment of Allen Conway
to the position of president of the Resale segment. Mr. Conway was
previously executive vice president for the Resale custom division of
Cenveo. In addition, Bob Hart, current president of the Resale segment, has
accepted a position as special assistant to the chairman and will be
responsible for the implementation of key strategic initiatives.
o The Company announced on August 27, 2004 the acquisition of Waller Press
Inc., a high-quality web and sheetfed printer located in the San Francisco,
California with annual sales of approximately $14 million. When the
capabilities of Waller Press are coupled with the Cenveo Anderson Lithograph
capabilities in South San Francisco, California, the company will be the
largest commercial printer in the San Francisco area which has often been at
the forefront of advertising, graphic design, and marketing communications.
This acquisition is in line with Cenveo's(TM) strategy to invest in
geographical areas where the Company can achieve significant local market
share growth.
o The Company announced on August 23,2004 that the former mayor of Denver,
Wellington Webb, has joined its Board of Directors.
o The Company announced on August 20,2004 that Paul Kocourek has joined its
Board of Directors. Mr. Kocourek has been with Booz Allen & Hamilton since
1987 and is an expert in strategic roll-ups and their transition to
successful integration.
o The Company announced on August 16,2004 the launch of Cenveo ColorScience,
an end-to-end process control solution that will enable every plant in the
Commercial segment of Cenveo to deliver consistent color from digital file
creation to final printed output. The benefits to the customer include
dramatically reduced production cycle times; streamlined quality control for
print buying; cost savings from faster makereadies and reduced spoilage; the
ability to generate proofs at the customer site; and the peace of mind that
comes only from working with measurable parameters that assure the desired
result.
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.
2
CONSOLIDATED BALANCE SHEETS
Cenveo, Inc. and Subsidiaries
(in thousands)
SEPTEMBER 30 DECEMBER 31
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $ 379 $ 307
Accounts receivable, net 252,230 223,541
Inventories, net 115,547 91,402
Other current assets 45,711 48,135
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Total current assets 413,867 363,385
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Property, plant and equipment, net 372,327 388,240
Goodwill 306,097 299,392
Other intangible assets, net 15,863 19,687
Other assets, net 40,563 36,689
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TOTAL ASSETS $ 1,148,717 $ 1,107,393
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 178,452 $ 140,468
Accrued compensation and related liabilities 59,960 53,209
Other current liabilities 59,442 64,360
Current maturities of long-term debt 2,264 2,575
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Total current liabilities 300,118 260,612
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Long-term debt, less current maturities 767,719 746,386
Deferred income taxes - 6,717
Other liabilities 25,995 25,659
- ----------------------------------------------------------------------------------------------------------
Total liabilities 1,093,832 1,039,374
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Shareholders' equity:
Common stock 487 484
Paid-in capital 214,900 213,850
Retained deficit (166,442) (150,331)
Deferred compensation (2,205) (1,714)
Accumulated other comprehensive income 8,145 5,730
- ----------------------------------------------------------------------------------------------------------
Total shareholders' equity 54,885 68,019
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- ----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,148,717 $ 1,107,393
- ----------------------------------------------------------------------------------------------------------
3
CONSOLIDATED STATEMENTS OF OPERATIONS
Cenveo, Inc. and Subsidiaries
(in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2004 2003 2004 2003
Net sales $428,099 $ 412,218 $ 1,261,238 $1,247,363
Cost of sales 343,596 330,341 1,004,682 1,002,441
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Gross profit 84,503 81,877 256,556 244,922
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Operating expenses:
Selling, general and administrative expenses 62,315 59,278 196,728 185,433
Amortization of intangibles 1,313 500 4,114 1,363
Restructuring charges (269) 76 851 1,201
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Operating income 21,144 22,023 54,863 56,925
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Other expense:
Interest expense 17,859 17,831 53,771 54,163
Loss on early extinguishment of debt - - 17,748 -
Other 787 574 1,755 1,063
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Income (loss) from continuing operations before
income taxes and cumulative effect of a change in
accounting principle 2,498 3,618 (18,411) 1,699
Income tax expense (benefit) 8 1,446 (1,070) 679
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Income (loss) from continuing operations before
cumulative effect of a change in accounting principle 2,490 2,172 (17,341) 1,020
Loss (gain) on disposal of discontinued operations, net of
taxes of $770 in 2004 - - (1,230) (1,919)
Cumulative effect of a change in accounting principle - - - 322
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Net income (loss) $ 2,490 $ 2,172 $ (16,111) $ 2,617
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Income (loss) per share - basic:
Continuing operations $ 0.05 $ 0.05 $ (0.36) $ 0.02
Discontinued operations - - 0.02 0.04
Cumulative effect of a change in accounting principle - - - (0.01)
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Income (loss) per share - basic $ 0.05 $ 0.05 $ (0.34) $ 0.05
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) per share - diluted:
Continuing operations $ 0.05 $ 0.04 $ (0.36) $ 0.02
Discontinued operations - - 0.02 0.04
Cumulative effect of a change in accounting principle - - - (0.01)
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Income (loss) per share - diluted $ 0.05 $ 0.04 $ (0.34) $ 0.05
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted averages shares - basic 47,753 47,689 47,742 47,677
Weighted averages shares - diluted 48,504 48,406 47,742 48,268
4
CONSOLIDATED CASH FLOW STATEMENTS
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
NINE MONTHS ENDED
SEPTEMBER 30
2004 2003
Cash flows from operating activities:
Income (loss) from continuing operations $ (17,341) $ 1,020
Adjustments to reconcile income (loss) from continuing operations to
net cash provided by (used in) operating activities:
Depreciation 35,014 34,852
Amortization 7,513 4,393
Write-off of deferred financing fees 4,220 -
Deferred income tax benefit (9,718) (7,826)
Loss (gain) on disposal of assets 438 891
Other noncash charges, net (1,958) 590
Changes in operating assets and liabilities, excluding effects of
acquired businesses:
Accounts receivable (23,941) (3,886)
Inventories (21,893) 7,431
Accounts payable and accrued compensation 40,863 242
Income taxes payable (2,830) 10,888
Other working capital changes 3,762 (14,717)
Other, net (132) (244)
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Net cash provided by operating activities 13,997 33,634
Cash flows from investing activities:
Acquisitions, less cash acquired (9,803) -
Capital expenditures (20,246) (19,722)
Proceeds from divestitures, net 2,000 3,864
Proceeds from sales of property, plant and equipment 1,475 658
- --------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (26,574) (15,200)
Cash flows from financing activities:
Proceeds from long-term debt 2,129,193 1,384,781
Repayment of long-term debt (2,108,171) (1,405,239)
Proceeds from the issuance of common stock 1,053 16
Capitalized loan fees (9,076) (484)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 12,999 (20,926)
Effect of exchange rate changes on cash and cash equivalents (350) 936
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Net increase (decrease) in cash and cash equivalents 72 (1,556)
Cash and cash equivalents at beginning of year 307 2,650
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Cash and cash equivalents at end of quarter $ 379 $ 1,094
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5
SEGMENT RESULTS
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2004 2003 2004 2003
Net sales:
Commercial $ 327,365 $ 315,029 $ 958,797 $ 945,699
Resale 100,734 97,189 302,441 301,664
- --------------------------------------------------------------------------------------------------------------------
Total net sales $ 428,099 $ 412,218 $1,261,238 $1,247,363
- --------------------------------------------------------------------------------------------------------------------
Operating income (expense):
Commercial $ 16,366 $ 16,877 $ 38,281 $ 39,643
Resale 9,469 9,946 33,291 32,256
Corporate services (4,691) (4,800) (16,709) (14,974)
- --------------------------------------------------------------------------------------------------------------------
Total operating income $ 21,144 $ 22,023 $ 54,863 $ 56,925
- --------------------------------------------------------------------------------------------------------------------
EBITDA (1):
Commercial $ 27,215 $ 25,948 $ 69,637 $ 67,078
Resale 11,775 12,345 40,275 39,674
Corporate services (5,117) (4,838) (15,546) (14,678)
- --------------------------------------------------------------------------------------------------------------------
Total EBITDA $ 33,873 $ 33,455 $ 94,366 $ 92,074
- --------------------------------------------------------------------------------------------------------------------
Net sales by product line:
Commercial printing $ 207,181 $ 194,597 $ 594,301 $ 580,419
Envelopes 172,636 167,824 515,942 515,740
Business forms and labels 48,282 49,797 150,995 151,204
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Total net sales $ 428,099 $ 412,218 $1,261,238 $1,247,363
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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 SEPTEMBER 30, 2004 AND 2003
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $ 16,287 $ 9,441 $ (23,238) $ 2,490
Interest - - 17,859 17,859
Taxes - - 8 8
Depreciation 9,753 2,199 221 12,173
Amortization (excluding amortization included in interest) 1,175 135 33 1,343
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EBITDA $ 27,215 $ 11,775 $ (5,117) $ 33,873
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $ 16,539 $ 9,880 $ (24,247) $ 2,172
Interest - - 17,831 17,831
Taxes - - 1,446 1,446
Depreciation 9,146 2,229 131 11,506
Amortization (excluding amortization included in interest) 263 236 1 500
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EBITDA $ 25,948 $ 12,345 $ (4,838) $ 33,455
<FN>
Note: This schedule is a reconciliation of net income to EBITDA which we
define as earnings before interest, taxes, depreciation and amortization.
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.
7
APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $ 38,266 $ 33,194 $ (87,571) $ (16,111)
Loss on early extinguishment of debt - - 17,748 17,748
Interest - - 53,771 53,771
Taxes, including taxes included in discontinued operations - - (300) (300)
Depreciation 27,763 6,676 575 35,014
Amortization (excluding amortization included in interest) 3,608 405 231 4,244
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EBITDA $ 69,637 $ 40,275 $ (15,546) $ 94,366
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $ 38,854 $ 32,090 $ (68,327) $ 2,617
Tax adjustment included in discontinued operations - - (1,919) (1,919)
Cumulative effect of a change in accounting principle - - 322 322
Interest - - 54,163 54,163
Taxes - - 679 679
Depreciation 27,563 6,882 404 34,849
Amortization (excluding amortization included in interest) 661 702 - 1,363
- --------------------------------------------------------------------------------------------------------------------------------
EBITDA $ 67,078 $ 39,674 $ (14,678) $ 92,074
<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