[CENVEO logo] EXHIBIT 99.1
NEWS RELEASE
CENVEO ANNOUNCES FIRST QUARTER 2006 RESULTS
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1st Quarter EPS of $2.10 per diluted share
Non-GAAP EPS of $0.20 per diluted share
Adjusted EBITDA of $45 million, up 61% from prior year
STAMFORD, CT - (MAY 10, 2006) - Cenveo, Inc. (NYSE: CVO) today announced its
results for the three months ended March 31, 2006.
For the first quarter, the Company reported net income of $112.2 million, or
$2.10 per diluted share compared to a net loss of $22.6 million, or $0.47
per diluted share in the first quarter of 2005. The first quarter 2006
results include restructuring and impairment charges of $13.5 million, and
the gain on sale of non-strategic businesses of $123.4 million, primarily
relating to our initial sale of a 63.5% interest in Supremex. Net sales for
the quarter decreased to $426.7 million from $449.6 million in 2005,
primarily due to the Company's decision to close or sell several
non-strategic businesses.
Non-GAAP net income totaled $10.5 million, or $0.20 per diluted share in the
first quarter of 2006. Non-GAAP net income excludes restructuring and
impairment charges, and gain on sale of non-strategic businesses. A
reconciliation of net income to Non-GAAP net income for these adjustments is
presented in an attached table.
Adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization, excluding restructuring, impairment, and other charges,
gain/loss on sale of non-strategic businesses, divested operations, and
stock compensation expense on the adoption of SFAS 123R) in the first
quarter of 2006, was $45.0 million compared to Adjusted
EBITDA of $28.0 million in the same period last year, an increase of 61%. An
explanation of the Company's use of Adjusted EBITDA is provided below.
ROBERT G. BURTON, CHAIRMAN AND CHIEF EXECUTIVE OFFICER STATED:
"I am very pleased to report that we achieved substantial operating
improvement during the first quarter. Each of our business units met or
exceeded budget, resulting in across-the-board improvement in operating
margins and an increase in Adjusted EBITDA of 61% versus the prior year. We
are also seeing the benefits of effectively leveraging our size with
suppliers by driving our purchasing volume to a few strategic business
partners, consolidating our back-office functions, and lowering our overhead
costs. This continued focus on costs, combined with improved performance
from our operations, allowed us to realize over $17 million in cost savings
in the first quarter."
MR. BURTON CONTINUED:
"As I stated previously, Cenveo had a strong quarter of operational
improvement, highlighted by gains across all of our businesses, particularly
with solid performance from our envelope, forms and label segment which
showed strong sales and profit gains. We have also made positive
improvements in our commercial print segment, which showed dramatic year
over year profitability improvement during the quarter. We significantly
improved our capital structure with the successful sale of our Canadian
envelope business. The total transaction value was approximately $290
million, of which we received approximately $210 million in cash, and a
28.6% retained interest that is currently worth over $80 million at today's
market price. As we move further into the year, we will continue to look at
improving our capital structure to help position us for future growth
opportunities as we expand our platform."
MR. BURTON CONCLUDED:
"Our strong management team and focused operating strategies continue to
drive our momentum, positioning the Company favorably to deliver on our
previously communicated financial commitments for the rest of the year. I
continue to remain very optimistic about the Company's prospects for 2006
and beyond. Our team is committed to creating shareholder value and
delivering results that our customers, employees and shareholders expect."
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CONFERENCE CALL:
Cenveo will host a conference call tomorrow, Thursday May 11, 2006, 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.
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CENVEO, INC., AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
--------------------------
THREE MONTHS ENDED
MARCH 31,
--------------------------
2006 2005
--------------------------
Net sales $426,678 $449,602
Cost of sales 337,085 364,150
Selling, general and administrative 56,124 69,410
Amortization of intangible assets 1,298 1,330
Restructuring, impairment and other charges 13,476 10,019
- ---------------------------------------------------------------------------------------------------------------------
Operating income 18,695 4,693
(Gain) loss on sale of non-strategic businesses (123,352) 722
Interest expense 18,037 18,192
Other (income) expense 222 (11)
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 123,788 (14,210)
Income tax expense 11,586 8,346
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Net income (loss) $112,202 $(22,556)
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Income (loss) per share:
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Income (loss) per share--basic $2.11 $(0.47)
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Income (loss) per share--diluted $2.10 $(0.47)
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Weighted average shares--basic 53,109 47,780
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Weighted average shares--diluted 53,536 47,780
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CENVEO, INC., AND SUBSIDIARIES
Reconciliation of net income to Non-GAAP net income
(in thousands, except per share data)
(Unaudited)
---------------------------------------------
THREE MONTHS ENDED MARCH 31, 2006
---------------------------------------------
ADJUSTMENTS
AS REPORTED TO NON-GAAP NON-GAAP
---------------------------------------------
Net sales $426,678 -- $426,678
Cost of sales 337,085 -- 337,085
Selling, general and administrative 56,124 -- 56,124
Amortization of intangible assets 1,298 -- 1,298
Restructuring and impairment charges 13,476 (13,476) --
- -----------------------------------------------------------------------------------------------------------------
Operating income (loss) 18,695 13,476 32,171
- -----------------------------------------------------------------------------------------------------------------
(Gain) loss on sale of non-strategic businesses (123,352) 123,352 --
Interest expense 18,037 -- 18,037
Other (income) expense 222 -- 222
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Income (loss) before income taxes 123,788 (109,876) 13,912
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Income tax expense 11,586 (8,163) 3,423
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Net income (loss) $112,202 (101,713) $10,489
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Income (loss) per share:
- -------------------------------------------------------------------------------- ------------
Income (loss) per share--basic $2.11 $0.20
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Income (loss) per share --diluted $2.10 $0.20
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Weighted average shares--basic 53,109 53,109
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Weighted average shares--diluted 53,536 53,536
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CENVEO, INC., AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
------------------------------
MARCH 31, DECEMBER 31,
2006 2005
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Assets
Current assets:
Cash and cash equivalents $1,394 $1,035
Accounts receivable, net 223,701 247,277
Inventories, net 96,183 108,704
Receivables from sale of business 72,559 --
Prepaid and other current assets 22,440 25,767
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Total current assets 416,277 382,783
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Property, plant and equipment, net 281,750 317,606
Goodwill 255,632 311,146
Investment in affiliate 34,444 --
Other intangible assets, net 22,664 23,961
Other assets, net 33,779 44,068
- -----------------------------------------------------------------------------------------------------------------
Total assets $1,044,546 $1,079,564
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Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Current maturities of long-term debt $2,822 $2,791
Accounts payable 140,381 124,901
Accrued compensation and related liabilities 42,473 53,765
Other current liabilities 73,904 79,051
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Total current liabilities 259,580 260,508
- -----------------------------------------------------------------------------------------------------------------
Long-term debt 684,947 809,345
Deferred income taxes 4,692 10,045
Other liabilities 39,758 49,216
Commitments and contingencies
- -----------------------------------------------------------------------------------------------------------------
Shareholders' equity (deficit):
Preferred stock -- --
Common stock 532 530
Paid-in capital 239,940 239,432
Retained deficit (192,889) (305,091)
Deferred compensation -- (1,825)
Accumulated other comprehensive income 7,986 17,404
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Total shareholders' equity (deficit) 55,569 (49,550)
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Total liabilities and shareholders' equity (deficit) $1,044,546 $1,079,564
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CENVEO, INC., AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
----------------------------
THREE MONTHS ENDED
MARCH 31,
----------------------------
2006 2005
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----------------------------
Cash flows from operating activities:
Net income (loss) ............................................................ $ 112,202 $(22,556)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization............................................... 12,213 14,088
Non-cash charges, net....................................................... 10,151 5,610
(Gain) loss on sale of non-strategic businesses............................. (123,352) 722
Changes in operating assets and liabilities:
Accounts receivable......................................................... 2,877 (5,522)
Inventories................................................................. (2,601) (6,417)
Accounts payable and accrued compensation and related
liabilities................................................................ 7,929 (7,304)
Other working capital changes............................................... (6,085) (30)
Other, net.................................................................. 1,348 (1,437)
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Net cash provided by (used in) operating activities....................... 14,682 (22,846)
Cash flows from investing activities:
Proceeds from divestitures, net............................................... 119,380 3,058
Capital expenditures.......................................................... (6,134) (6,478)
Acquisition payments.......................................................... (4,653) (3,653)
Proceeds from sale of property, plant and equipment........................... 326 21
--------- --------
Net cash provided by (used in) investing activities....................... 108,919 (7,052)
Cash flows from financing activities:
Repayments under senior secured revolving credit facility, net................ (123,931) --
Borrowings under senior secured revolving credit facility, net................ -- 32,469
Repayments of long-term debt.................................................. (436) (565)
Proceeds from exercise of stock options....................................... 1,110 28
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Net cash provided by (used in) financing activities....................... (123,257) 31,932
Effect of exchange rate changes on cash and cash equivalents.................... 15 67
--------- --------
Net increase in cash and cash equivalents................................. 359 2,101
Cash and cash equivalents at beginning of year.................................. 1,035 796
--------- --------
Cash and cash equivalents at end of quarter..................................... $1,394 $2,897
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CENVEO, INC. AND SUBSIDIARIES
Reconciliation of Net Income (loss) to Adjusted EBITDA
(in thousands)
--------------------------
THREE MONTHS ENDED
MARCH 31,
--------------------------
2006 2005
--------------------------
--------------------------
Net Income (loss) $ 112,202 $(22,556)
Interest expense...................................... 18,037 18,192
Income taxes.......................................... 11,586 8,346
Depreciation.......................................... 10,298 11,649
Amortization of intangible assets..................... 1,298 1,360
Restructuring, impairment and other charges 13,476 10,019
(Gain) loss on sale of non-strategic businesses (123,352) 722
Divested operations................................... (8,974) (9,477)
Stock compensation expense on adoption of SFAS 123R 633 --
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Adjusted EBITDA, as defined................................ $35,204 $18,255
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Supremex operations........................................ 9,784 9,744
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Adjusted EBITDA, as defined and Supremex operations........ $44,988 $27,999
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###
The common definition of EBITDA is "Earnings before Interest, Taxes,
Depreciation and Amortization". Adjusted EBITDA is equivalent to the common
definition of EBITDA excluding restructuring, impairment and other charges,
gain/loss on sale of non-strategic business, divested operations EBITDA,
stock compensation expense on the adoption of SFAS 123R, gain/loss from
early extinguishment of debt and gain/loss on disposal of discontinued
operations. Restructuring, impairment and other charges have been excluded
from Adjusted EBITDA to maintain comparability of our results with the
results of competitors using similar measures. Adjusted EBITDA should be
used in conjunction with U.S. GAAP financial measures and is not presented
as an alternative to cash flow from operations as a measure of our liquidity
or as an alternative to net income as an indicator of our operating
performance.
We believe the use of Adjusted EBITDA along with U.S. GAAP financial
measures enhances the understanding of our operating results and is useful
to investors in comparing performance with competitors, estimating
enterprise value and making investment decisions. Adjusted EBITDA allows
investors to compare operating results of competitors exclusive of
depreciation and amortization. Adjusted EBITDA is a useful tool given the
significant variation that can result from the timing of capital
expenditures, the amount of intangible assets recorded or the differences in
assets' lives. Adjusted EBITDA as used here may not be comparable to
similarly titled measures reported by competitors. We also use Adjusted
EBITDA to evaluate 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.
CENVEO, INC. (NYSE: CVO), www.cenveo.com, IS ONE OF NORTH AMERICA'S LEADING
PROVIDERS OF PRINT AND VISUAL COMMUNICATIONS, WITH ONE-STOP SERVICES FROM
DESIGN THROUGH FULFILLMENT. THE COMPANY'S BROAD PORTFOLIO OF SERVICES AND
PRODUCTS INCLUDE COMMERCIAL PRINTING, ENVELOPES, LABELS, PACKAGING AND
BUSINESS DOCUMENTS DELIVERED THROUGH A NETWORK OF PRODUCTION, FULFILLMENT
AND DISTRIBUTION FACILITIES THROUGHOUT NORTH AMERICA.
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Statements made in this release, other than those concerning historical
financial information, may be considered forward-looking statements, which
speak only as of the date of this release and are based upon current
expectations and involve a number of assumptions, risks and uncertainties
that could cause the actual result to differ materially from such
forward-looking statements. Those assumptions, risks and uncertainties
include, without limitation: (1) general economic, business and labor
conditions, particularly as affect the commercial printing, envelopes,
labels and
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packaging business, (2) the Company's substantial level of indebtedness,
which imposes significant restrictions on the ability to implement the
Company's strategic initiatives, (3) the ability to regain profitability
after substantial losses in 2004 and 2005, (4) the majority of the Company's
sales are not subject to long-term contracts, (5) the impact of changes in
the board of directors, the company's CEO and other management and the
strategic direction that may be made, (6) the ability to effectively execute
cost reduction programs and management reorganizations, (7) the industry is
extremely competitive due to over capacity, (8) the impact of the Internet
and other electronic media on the demand for envelopes and printed material,
(9) postage rates and other changes in the direct mail industry, (10)
environmental laws that may affect the Company's business, (11) the ability
to retain key management personnel, (12) compliance with recently enacted
and proposed changes in laws and regulations affecting public companies that
could be burdensome and expensive, (13) the ability to successfully
identify, manage and integrate possible future acquisitions, (14) dependence
on suppliers and the costs of paper and other raw materials and the ability
to pass price increases onto customers, (15) the ability to meet customer
demand for additional value-added products and services, (16) changes in
interest rates and currency exchange rates of the Canadian dollar, (17) the
ability to manage operating expenses, (18) the risk that a decline in
business volume or profitability could result in a further impairment of
goodwill, (19) the ability to timely or adequately respond to technological
changes in the Company's industry, (20) an adverse development in rating
agency credit ratings or assessments, (21) adverse developments in the value
of collateral securing financings and (22) the cyclical nature of the
Company's industry.
These risks and uncertainties are set forth under Item 1 and Item 1A, Risk
Factors, in the Cenveo, Inc. Annual Report in form 10-K for the year ended
December 31, 2005, and in the Company's other SEC filings. A copy of the
annual report is available on the Company's website at
http://www.cenveo.com.
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Inquiries from analysts and investors should be directed to Robert G.
Burton, Jr. at (203) 595-3005.
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