Exhibit 99.1
[Cenveo logo]
For Immediate Release May 2, 2005
CENVEO ANNOUNCES FIRST QUARTER RESULTS IN LINE WITH EXPECTATIONS
ENGLEWOOD, COLO. (MAY 2, 2005) -- Cenveo(TM), Inc., (NYSE: CVO) today
announced its results for the quarter ended March 31, 2005. Net loss in the
quarter was $22.6 million, or $0.47 per share on sales of $450 million. In
the first quarter of 2004, the net loss was $16.5 million, or $0.35 per
share, on $424 million of sales. Sales increased 6.1% as compared to the
same period last year. Cenveo's net loss for the quarter ended March 31,
2005, includes restructuring and impairment charges of $8 million. The
restructuring charge relates to a plant that is currently being closed. The
asset impairments relate to underperforming plants that will likely be sold
or otherwise disposed of before the end of 2005. In the corresponding period
last year, the company incurred a $17.7 million charge upon refinancing a
significant portion of its long-term debt.
EBITDA for the first quarter of 2005 was $24.9 million compared to EBITDA of
$31.4 million for the first quarter of 2004. As discussed during the
company's last conference call this decrease in EBITDA was fully expected
and driven by three elements, 1) the continued reduced profitability of
sales to the office products channel 2) the provision for incentive
remuneration as the company's results are in line with internal plans this
quarter, contrary to last year when no provision was made for incentive
remuneration, and finally 3) as previously disclosed, the cost of the
transition to a new CEO. An explanation of the Company's use of EBITDA for
comparative purposes is provided below.
Net cash used by operating activities in the quarter ended March 31, 2005
was $27 million compared to $15 million used during the comparable period of
2004, generally in line with internal expectations and driven by the
seasonality of our business.
The Company also announced that its Board of Directors had accepted the
resignation of President and CEO Paul Reilly effective April 30, and that
Michel Salbaing, Senior Vice President and Chief Financial Officer had been
appointed acting CEO while the Board completes its search for Mr. Reilly's
successor.
Mr. Salbaing, stated, "In the first quarter we continued to see increases in
volumes of orders and production. However, our margins continue to erode due
to higher paper prices, as well as increases in other raw materials. We
intend to recover these costs through increases in the prices of our
products and services and through productivity improvements. We will also
consider further plant consolidations where we determine that it is in the
best long-term interest of the Company. Our expectations for full year
improvement in EBITDA remain unchanged."
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Cenveo will hold a conference call today, Monday May 2, 2005 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
1-800-811-0667 and provide conference ID 4887416. 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.
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, May 2, 2005 at 3:00 pm Eastern Time.
until Midnight Eastern Time, May 9, 2005. To access the replay, please dial
888-203-1112 and reference the conference ID 4887416.
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 and the effects of
asset impairments. 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 2004 and 2005, Cenveo was voted among Fortune
Magazine's Most Admired Companies in the printing and publishing category
and has consistently earned one of the highest Corporate Governance
Quotients by Institutional Shareholder Services. The company is
headquartered in Englewood, Colorado.
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Forward-Looking Statements
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Statements made in this release, other than those concerning historical
financial information, may be considered forward-looking statements, which
are subject to risks and uncertainties, including without limitation: (1)
general economic, business and labor conditions, (2) the ability to
implement the Company's strategic initiatives, (3) the ability to regain
profitability after substantial losses in 2004, 2002 and 2001, (4) the
majority of Company's sales are not subject to long-term contracts, (5) the
industry is extremely competitive due to over capacity, (6) the impact of
the Internet and other electronic media on the demand for envelopes and
printed material, (7) postage rates and other changes in the direct mail
industry, (8) environmental laws may affect the Company's business, (9) the
ability to retain key management personnel, (10) compliance with recently
enacted and proposed changes in laws and regulations affecting public
companies could be burdensome and expensive, (11) the ability to
successfully identify, manage and integrate possible future acquisitions,
(12) dependence on suppliers and the costs of paper and other raw materials
and the ability to pass paper price increases onto customers, (13) the
ability to meet customer demand for additional value-added products and
services, (14) changes in interest rates and currency exchange rates of the
Canadian dollar, (15) the ability to manage operating expenses, (16) the
risk that a decline in business volume or profitability could result in a
further impairment of goodwill, and (17) the ability to timely or adequately
respond to technological changes in the Company's industry.
Discussion of additional factors that could cause actual results to differ
materially from management's projections, forecasts, estimates and
expectations is set forth under Management's Discussion and Analysis of
Results of Operations and Financial Condition in the Cenveo, Inc. Annual
Report for the fiscal year ended December 31, 2004, and in the Company's
other SEC filings. A copy of the annual report is available on the Company's
Web site at http://www.cenveo.com.
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 MARCH 31,
2005 2004
CONSOLIDATED RESULTS
- --------------------
Net sales $ 449,602 $ 423,742
Gross profit 86,755 88,420
Operating income 3,971 18,914
Net loss $ (22,556) $ (16,535)
Net loss per share $ (0.47) $ (0.35)
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SEGMENT INFORMATION
NET SALES:
Commercial $ 346,408 $ 323,849
Resale 103,194 99,893
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Total $ 449,602 $ 423,742
OPERATING INCOME (EXPENSE):
Commercial $ 2,263 $ 11,996
Resale 8,739 11,463
Corporate services and other charges (7,031) (4,545)
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Total $ 3,971 $ 18,914
OPERATING INCOME MARGINS:
Commercial 0.7% 3.7%
Resale 8.5% 11.5%
EBITDA (1):
Commercial $ 20,921 $ 22,207
Resale 10,976 13,818
Corporate (7,047) (4,601)
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Total $ 24,850 $ 31,424
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FINANCIAL POSITION MARCH 31, 2005 DECEMBER 31, 2004
Working capital $ 132,883 $ 113,391
Total assets 1,178,114 1,174,747
Total debt 801,812 769,769
Shareholders' equity 33,413 57,354
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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]
vision | delivered
Supplemental Information to the Press Release
For the Quarter Ended
March 31, 2005
Released May 2, 2005
[Cenveo logo]
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First Quarter ended March 31, 2005
Page
Financial and Operational Summary 1
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Consolidated Balance Sheets 2
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Consolidated Statements of Operations 3
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Consolidated Cash Flow Statements 4
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Segment Results 5
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Appendix 1 - Reconciliation of Net Income to EBITDA 6
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Financial and Operational Summary
- -----------------------------------------------------------------------------
First Quarter ended March 31, 2005
Financial and Operational Summary
- ---------------------------------
CONSOLIDATED RESULTS: Net sales increased $25.9 million in the first quarter
2005 compared to net sales in the same period in 2004. Sales from
acquisitions contributed $6.4 million in the quarter. Operating income
decreased by $14.9 million in the first quarter as compared to operating
income in the first quarter of 2004.
This decline was due primarily to asset impairment charges taken in the
quarter. The expenses related to the resignation of our CEO and incentives
accurued for our employees.
COMMERCIAL: Net sales in the first quarter of 2005 increased $22.6 million
to $346.4 million compared to net sales of $323.8 million in the first
quarter of 2004.
RESALE: Net sales in the first quarter of 2005 increased by $3.3 million to
$103.2 million compared to net sales of $99.9 million in the first quarter
of 2004.
DEBT: Total debt increased by $32.0 million in the quarter.
CAPITAL EXPENDITURES: During the quarter ended March 31, 2005, captial
expenditures were $6.5 million compared to $5.6 million in the same period
last year.
AVAILABILITY: Credit available under our credit facility was $119.9 million
based on the certificate filed on April 22, 2005.
1
CONSOLIDATED BALANCE SHEETS
Cenveo, Inc. and Subsidiaries
(in thousands)
MARCH 31, DECEMBER 31,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $ 2,897 $ 796
Accounts receivable, net 257,711 252,711
Inventories, net 118,101 112,219
Other current assets 50,626 46,019
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Total current assets 429,335 411,745
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Property, plant and equipment, net 352,774 367,260
Goodwill 307,372 308,938
Other intangible assets, net 30,824 28,788
Other assets, net 57,809 58,016
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TOTAL ASSETS $ 1,178,114 $ 1,174,747
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 170,716 $ 172,731
Accrued compensation and related liabilities 54,169 58,639
Other current liabilities 68,706 64,714
Current maturities of long-term debt 2,861 2,270
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Total current liabilities 296,452 298,354
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Long-term debt, less current maturities 798,951 767,499
Other liabilities 49,298 51,540
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Total liabilities 1,144,701 1,117,393
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Shareholders' equity:
Common stock 487 487
Paid-in capital 214,930 214,902
Retained deficit (192,596) (170,039)
Deferred compensation (1,811) (2,003)
Accumulated other comprehensive income 12,403 14,007
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Total shareholders' equity 33,413 57,354
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,178,114 $ 1,174,747
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2
CONSOLIDATED STATEMENTS OF OPERATIONS
Cenveo, Inc. and Subsidiaries
(in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
2005 2004
Net sales $ 449,602 $ 423,742
Cost of sales 362,847 335,322
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Gross profit 86,755 88,420
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Operating expenses:
Selling, general and administrative expenses 72,664 67,998
Amortization of intangibles 1,330 1,405
Loss on sale of non-strategic businesses 722 -
Restructuring and impairment charges 8,068 103
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Operating income 3,971 18,914
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Other expense:
Interest expense 18,192 18,399
Loss on early extinguishment of debt - 17,748
Other (11) 441
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Loss before income taxes (14,210) (17,674)
Income tax expense (benefit) 8,346 (1,139)
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Net loss $ (22,556) $ (16,535)
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Loss per share - basic and diluted $ (0.47) $ (0.35)
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Weighted averages shares - basic and diluted 47,780 47,739
3
CONSOLIDATED CASH FLOW STATEMENTS
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
2005 2004
Cash flows from operating activities:
Net loss $ (22,556) $ (16,535)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 11,649 11,465
Amortization 2,439 2,549
Asset impairment charges 7,137 -
Loss on sale of non-strategic businesses 722 -
Write-off of deferred financing fees - 4,220
Other noncash charges, net (1,527) (4,992)
Changes in operating assets and liabilities, excluding effects of operations sold:
Accounts receivable (5,522) (649)
Inventories (6,417) (8,038)
Accounts payable and accrued compensation (7,304) 11,752
Income taxes payable 3,443 (801)
Other working capital changes (7,126) (11,369)
Other, net (1,437) (2,080)
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Net cash used in operating activities (26,499) (14,478)
Cash flows from investing activities:
Capital expenditures (6,478) (5,647)
Proceeds from sale of non-strategic businesses 3,058 -
Proceeds from sales of property, plant and equipment 21 229
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Net cash used in investing activities (3,399) (5,418)
Cash flows from financing activities:
Increase in borrowings under credit facility 32,469 10,613
Proceeds from long-term debt - 320,000
Repayment of long-term debt (565) (302,237)
Proceeds from the issuance of common stock 28 7
Capitalized loan fees - (8,291)
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Net cash provided by financing activities 31,932 20,092
Effect of exchange rate changes on cash and cash equivalents 67 (244)
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Net increase (decrease) in cash and cash equivalents 2,101 (48)
Cash and cash equivalents at beginning of year 796 307
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Cash and cash equivalents at end of quarter $ 2,897 $ 259
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4
SEGMENT RESULTS
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
2005 2004
Net sales:
Commercial $ 346,408 $ 323,849
Resale 103,194 99,893
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Total net sales $ 449,602 $ 423,742
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Operating income (expense):
Commercial $ 2,263 $ 11,996
Resale 8,739 11,463
Corporate services (7,031) (4,545)
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Total operating income $ 3,971 $ 18,914
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EBITDA (1):
Commercial $ 20,921 $ 22,207
Resale 10,976 13,818
Corporate services (7,047) (4,601)
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Total EBITDA $ 24,850 $ 31,424
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Net sales by product line:
Commercial printing $ 210,377 $ 198,647
Envelopes 189,939 173,764
Business forms and labels 49,286 51,331
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Total net sales $ 449,602 $ 423,742
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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.
5
APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
Cenveo, Inc. and Subsidiaries
(in thousands)
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,2005
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $ (964) $ 8,726 $ (30,318) $ (22,556)
Interest 39 5 18,148 18,192
Taxes 3,349 - 4,997 8,346
Depreciation 9,412 2,111 126 11,649
Amortization 1,226 134 - 1,360
Asset impairments 7,137 - - 7,137
Loss on sale of non-strategic businesses 722 - - 722
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EBITDA $ 20,921 $ 10,976 $ (7,047) $ 24,850
FOR THE THREE MONTHS ENDED MARCH 31, 2004
COMMERCIAL RESALE CORPORATE TOTAL
Net income (loss) $ (2,501) $ 9,086 $ (23,120) $ (16,535)
Interest 11,305 2,324 4,770 18,399
Taxes 3,128 - (4,267) (1,139)
Depreciation 9,024 2,273 168 11,465
Amortization 1,251 135 100 1,486
Loss from the early extinguishment of debt - - 17,748 17,748
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EBITDA $ 22,207 $ 13,818 $ (4,601) $ 31,424
<FN>
Note: This schedule is a reconciliation of net income to EBITDA which we
define as earnings before interest, taxes, depreciation, amortization,
non-cash charges from asset impairments and gains and losses recognized on
divestitures. In 2004 we excluded the loss on the early extinguishment of
debt. 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.
6