EXHIBIT 99.1
[CENVEO logo]
NEWS RELEASE
CENVEO ANNOUNCES FIRST QUARTER 2007 RESULTS
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1st Quarter EPS of $0.34 per diluted share
1st Quarter Non-GAAP EPS of $0.24 per diluted share, up 140% from prior year
1st Quarter Adjusted EBITDA of $45.8 million, up 29% from prior year
Integration of Printegra and Cadmus delivering expected results
STAMFORD, CT - (MAY 9, 2007) - Cenveo, Inc. (NYSE: CVO) today announced its
results for the three months ended March 31, 2007.
For the first quarter, the Company reported net income of $18.7 million, or
$0.34 per diluted share, as compared to net income of $112.2 million, or $2.11
per diluted share, in the first quarter of 2006. The first quarter 2007
results include income from discontinued operations, net of taxes, of $16.3
million as compared to $121.1 million in 2006, primarily related to the sale
of Supremex. First quarter 2007 results include restructuring and impairment
charges of $2.6 million, as compared to $13.5 million in 2006. Net sales for
the quarter increased 8% to $414.7 million from $385.3 million in 2006,
primarily due to the acquisitions of Cadmus and Printegra, which both closed
in the first quarter of 2007.
Non-GAAP net income totaled $12.9 million, or $0.24 per diluted share, in the
first quarter of 2007 as compared to $5.1 million, or $0.10 per diluted share,
in the first quarter of 2006. Non-GAAP net income excludes restructuring and
impairment charges, integration costs, (gain) loss on sale of non-strategic
businesses, loss on early extinguishment of debt, income from discontinued
operations, net of taxes. A reconciliation of net income to non-GAAP net
income for these adjustments is presented in the attached tables. Non-GAAP
operating income in the first quarter of 2007 was
$32.0 million, which produced a 7.7% margin, reflecting the continued benefits
of our cost savings and restructuring plan. Non-GAAP operating income excludes
restructuring and impairment charges and integration costs. A reconciliation
of operating income to non-GAAP operating income is presented in the attached
tables.
Adjusted EBITDA in the first quarter of 2007 was $45.8 million as compared to
$35.5 million in the same period last year, an increase of 29%. Adjusted
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization, excluding restructuring and impairment charges, integration
costs, (gain) loss on sale of non-strategic businesses, divested operations
EBITDA, loss on early extinguishment of debt, stock-based compensation
expense, and income from discontinued operations, net of taxes. An explanation
of the Company's use of Adjusted EBITDA is detailed below and a reconciliation
of Adjusted EBITDA to net income is provided in the attached tables.
ROBERT G. BURTON, CHAIRMAN AND CHIEF EXECUTIVE OFFICER STATED:
"We are pleased to have delivered another strong quarter of results with our
non-GAAP earnings per diluted share increasing 140% from last year. Both of
our business segments continue to show meaningful operational improvement and
margin expansion. Our focus on controlling costs and providing customers with
a one-stop solution are yielding the desired results, as we delivered strong
cash flow from operations. The integration of Cadmus and Printegra is on track
and meeting our expectations. We have begun the process of consolidating
facilities and functions of these companies, leveraging our purchasing spend,
and cross-selling our capabilities. These results give us continued confidence
that the game plan we implemented in September 2005 is working. I believe that
the Company's future has never been brighter."
MR. BURTON CONCLUDED:
"We accomplished much in the first quarter: We closed two highly strategic
acquisitions that we believe will be accretive to earnings and will expand the
breadth of our manufacturing platform; we completed the sale of our remaining
stake in Supremex to pay down debt and fund our growth initiatives; we
refinanced our capital structure at
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favorable rates to fund our acquisitions; and most importantly, we delivered
on our financial commitments to our shareholders. During the remainder of the
year, we will build upon these successes to continue to deliver results for
our customers, employees, and shareholders. We are integrating Cadmus and
Printegra into our platform on a swift and aggressive time frame. We will
continue to drive improved results in our core businesses by increasing
productivity and efficiencies and reducing waste. I am also optimistic for our
growth prospects, both organically and through acquisition. Our sales pipeline
is strong and we will continue to look to grow our business by acquiring what
we believe are strong companies in the niche markets we serve. With the
positive results of our core business today, we continue to seek to expand our
portfolio of products by acquiring additional businesses to provide additional
opportunities to our customers."
CONFERENCE CALL:
Cenveo will host a conference call tomorrow, Thursday May 10, 2007, 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)
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THREE MONTHS ENDED
MARCH 31,
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2007 2006
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Net sales $ 414,714 $ 385,286
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Cost of sales 331,490 309,644
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Selling, general and administrative 49,484 51,014
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Amortization of intangible assets 1,830 1,298
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Restructuring and impairment charges 2,625 13,476
--------- ---------
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Operating income 29,285 9,854
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Loss on sale of non-strategic business -- 706
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Interest expense, net 16,282 18,114
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Loss on early extinguishment of debt 8,700 --
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Other expense, net 222 219
--------- ---------
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Income (loss) from continuing operations before income taxes 4,081 (9,185)
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Income tax expense (benefit) 1,684 (337)
--------- ---------
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Income (loss) from continuing operations 2,397 (8,848)
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Income from discontinued operations, net of taxes 16,293 121,050
--------- ---------
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Net income $ 18,690 $ 112,202
========= =========
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Income (loss) per share - basic :
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Continuing operations $ 0.04 $ (0.17)
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Discontinued operations 0.31 2.28
------- -------
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Net income $ 0.35 $ 2.11
======= =======
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Income (loss) per share - diluted :
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Continuing operations $ 0.04 $ (0.17)
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Discontinued operations 0.30 2.28
------- -------
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Net income $ 0.34 $ 2.11
======= =======
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Weighted average shares:
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Basic 53,525 53,109
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Diluted 54,572 53,109
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CENVEO, INC., AND SUBSIDIARIES
Reconciliation of Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(Unaudited)
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THREE MONTHS ENDED MARCH 31, 2007
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ADJUSTMENTS
AS REPORTED TO NON-GAAP NON-GAAP
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Net sales $ 414,714 -- $ 414,714
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Cost of sales 331,490 -- 331,490
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Selling, general and administrative 49,484 (92) 49,392
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Amortization of intangible assets 1,830 -- 1,830
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Restructuring and impairment charges 2,625 (2,625) --
--------- ------- ---------
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Operating income 29,285 2,717 32,002
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Interest expense, net 16,282 -- 16,282
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Loss on early extinguishment of debt 8,700 (8,700) --
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Other expense, net 222 -- 222
--------- ------- ---------
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Income from continuing operations before taxes 4,081 11,417 15,498
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Income tax expense 1,684 899 2,583
--------- ------- ---------
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Income from continuing operations 2,397 10,518 12,915
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Income from discontinued operations, net of taxes 16,293 (16,293) --
--------- ------- ---------
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Net income (loss) $ 18,690 (5,775) $ 12,915
========= ======= =========
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Income per share - basic :
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Continuing operations $ 0.04 -- $ 0.24
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Discontinued operations 0.31 -- --
------ ------
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Net income $ 0.35 -- $ 0.24
====== ======
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Income per share - diluted :
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Continuing operations $ 0.04 -- $ 0.24
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Discontinued operations 0.30 -- --
------ ------
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Net income $ 0.34 -- $ 0.24
====== ======
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Weighted average shares:
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Basic 53,525 -- 53,525
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Diluted 54,572 -- 54,572
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CENVEO, INC., AND SUBSIDIARIES
Reconciliation of Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(Unaudited)
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THREE MONTHS ENDED MARCH 31, 2006
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ADJUSTMENTS
AS REPORTED TO NON-GAAP NON-GAAP
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Net sales $ 385,286 -- $ 385,286
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Cost of sales 309,644 -- 309,644
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Selling, general and administrative 51,014 -- 51,014
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Amortization of intangible assets 1,298 -- 1,298
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Restructuring and impairment charges 13,476 (13,476) --
--------- -------- ---------
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Operating income 9,854 13,476 23,330
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Loss on sale of non-strategic business 706 (706) --
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Interest expense, net 18,114 -- 18,114
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Loss on early extinguishment of debt -- -- --
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Other expense, net 219 -- 219
--------- -------- ---------
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Income (loss) from continuing operations before taxes (9,185) 14,182 4,997
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Income tax (benefit) expense (337) 248 (89)
--------- -------- ---------
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Income from continuing operations (8,848) 13,934 5,086
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Income from discontinued operations, net of taxes 121,050 (121,050) --
--------- -------- ---------
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Net income (loss) $ 112,202 (107,116) $ 5,086
========= ======== =========
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Income (loss) per share - basic :
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Continuing operations $ (0.17) -- $ 0.10
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Discontinued operations 2.28 -- --
------- ------
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Net income $ 2.11 -- $ 0.10
======= ======
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Income (loss) per share - diluted :
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Continuing operations $ (0.17) -- $ 0.10
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Discontinued operations 2.28 -- --
------- ------
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Net income $ 2.11 -- $ 0.10
======= ======
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Weighted average shares:
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Basic 53,109 -- 53,109
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Diluted 53,109 -- 53,536
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CENVEO, INC., AND SUBSIDIARIES
Reconciliation of Net Income to Adjusted EBITDA
(in thousands)
(Unaudited)
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THREE MONTHS ENDED
MARCH 31,
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2007 2006
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Net Income $ 18,690 $ 112,202
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Interest expense 16,282 18,114
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Income taxes 1,684 (337)
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Depreciation 9,936 9,351
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Amortization of intangible assets 1,830 1,298
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Restructuring and impairment charges 2,625 13,476
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Integration costs 92 --
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Loss on sale of non-strategic businesses -- 706
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Divested operations -- 622
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Loss on early extinguishment of debt 8,700 --
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Stock-based compensation expense 2,265 1,140
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Discontinued operations, net of taxes (16,293) (121,050)
-------- ---------
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Adjusted EBITDA, as defined $ 45,811 $ 35,522
======== =========
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CENVEO, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
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MARCH 31, 2007 DECEMBER 31, 2006
-------------- -----------------
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ASSETS
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Current assets:
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Cash and cash equivalents $ 7,887 $ 10,558
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Accounts receivable, net 286,603 230,098
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Inventories 135,485 92,406
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Assets held for sale 6,112 51,966
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Prepaid and other current assets 34,141 41,413
---------- ----------
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Total current assets 470,228 426,441
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Property, plant and equipment, net 382,598 251,103
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Goodwill 538,587 258,136
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Other intangible assets, net 170,327 31,985
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Other assets, net 27,979 34,285
---------- ----------
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Total assets $1,589,719 $1,001,950
========== ==========
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Current maturities of long-term debt $ 10,818 $ 7,513
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Accounts payable 145,321 116,067
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Accrued compensation and related liabilities 64,159 40,242
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Other current liabilities 82,729 63,609
---------- ----------
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Total current liabilities 303,027 227,431
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Long-term debt 1,108,141 667,782
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Deferred income taxes 25,227 4,356
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Other liabilities 75,735 40,640
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Shareholders' equity:
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Preferred stock -- --
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Common stock 535 535
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Paid-in capital 247,345 244,894
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Retained deficit (167,746) (186,436)
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Accumulated other comprehensive (loss) income (2,545) 2,748
---------- ----------
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Total shareholders' equity 77,589 61,741
---------- ----------
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Total liabilities and shareholders' equity $1,589,719 $1,001,950
========== ==========
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CENVEO, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
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THREE MONTHS ENDED
MARCH 31,
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2007 2006
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Cash flows from operating activities:
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Net income $ 18,690 $ 112,202
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Adjustments to reconcile net income to net cash provided by operating activities:
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Gain on sale of discontinued operations, net of taxes (16,287) (115,637)
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Income from discontinued operations, net of taxes (6) (5,413)
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Depreciation and amortization, excluding amortization of deferred financing costs 11,766 10,649
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Amortization of deferred financing costs 379 618
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Loss on early extinguishment of debt 8,700 --
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Stock-based compensation provision 2,265 1,140
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Non-cash restructuring and impairment charges (473) 3,787
- --------------------------------------------------------------------------------------------------------------------------
Loss on sale of non-strategic business -- 706
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Deferred income taxes 1,621 --
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Other non-cash charges, net 1,431 1,233
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Changes in operating assets and liabilities, excluding the effects of acquired businesses:
- --------------------------------------------------------------------------------------------------------------------------
Accounts receivable 9,102 2,399
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Inventories (4,868) (1,754)
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Accounts payable and accrued compensation and related liabilities (1,545) 14,850
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Other working capital changes 4,201 (8,265)
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Other, net 3,312 (4,450)
-------- ---------
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Net cash provided by continuing operating activities 38,288 12,065
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Net cash provided by discontinued operating activities -- 2,617
-------- ---------
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Net cash provided by operating activities 38,288 14,682
======== =========
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Cash flows from investing activities:
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Cost of business acquisitions, net of cash acquired (329,300) --
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Capital expenditures (7,115) (5,502)
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Acquisition payments -- (4,653)
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Proceeds from sale of property, plant and equipment 2,347 326
-------- ---------
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Net cash used in investing activities of continuing operations (334,068) (9,829)
======== =========
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Proceeds from the sale of discontinued operations 67,228 119,380
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Capital expenditures for discontinued operations -- (632)
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Net cash provided by investing activities of discontinued operations 67,228 118,748
-------- ---------
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Net cash (used in) provided by investing activities (266,840) 108,919
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Cash flows from financing activities:
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Repayment of Term Loan B (324,188) --
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Repayment of Cadmus revolving senior bank credit facility (70,100) --
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Repayment of 8 3/8% senior subordinated notes (20,875) --
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Repayments of senior secured revolving credit facility -- (123,931)
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Repayments of other long-term debt (166) (436)
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Payment of refinancing fees, redemption premiums and expenses (7,489) --
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Payment of debt issuance costs (886) --
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Proceeds from issuance of Term Loans 620,000 --
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Borrowings under revolving credit facility, net 29,400 --
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Proceeds from exercise of stock options 185 1,110
-------- ---------
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Net cash provided by (used in) financing activities 225,881 (123,257)
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Effect of exchange rate changes on cash and cash equivalents of discontinued operations -- 15
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Net (decrease) increase in cash and cash equivalents (2,671) 359
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Cash and cash equivalents at beginning of year 10,558 1,035
-------- ---------
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Cash and cash equivalents at end of quarter $ 7,887 $ 1,394
======== =========
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###
In addition to results presented in accordance with generally accepted
accounting principles in the U.S. ("GAAP"), the Company included in this
release certain non-GAAP financial measures, including Adjusted EBITDA,
non-GAAP net income and non-GAAP operating income. These non-GAAP financial
measures are defined above, and should be read in conjunction with GAAP
financial measures. These non-GAAP financial measures are not presented as an
alternative to cash flow from operations, as a measure of our liquidity or as
an alternative to reported net income as an indicator of our operating
performance. The non-GAAP financial measures as used herein may not be
comparable to similarly titled measures reported by competitors.
We believe the use of Adjusted EBITDA, non-GAAP net income and non-GAAP
operating income along with GAAP financial measures enhances the understanding
of our operating results and is useful to investors in comparing our operating
performance with that of our competitors and estimating our enterprise value.
Adjusted EBITDA is a useful tool in evaluating the core operating results of
the Company given the significant variation that can result from, for example,
the timing of capital expenditures, the amount of intangible assets recorded
or the differences in assets' lives. We also use Adjusted EBITDA internally to
evaluate operating performance of our segments, to allocate resources and
capital to such segments, to measure performance for incentive compensation
programs, and to evaluate future growth opportunities. The non-GAAP financial
measures included in this press release are reconciled to their most directly
comparable GAAP financial measures in the tables included herein.
###
CENVEO (NYSE: CVO), HEADQUARTERED IN STAMFORD, CONNECTICUT, IS A LEADER IN THE
MANAGEMENT AND DISTRIBUTION OF PRINT AND RELATED PRODUCTS AND SERVICES. THE
COMPANY PROVIDES ITS CUSTOMERS WITH LOW-COST SOLUTIONS WITHIN ITS CORE
BUSINESSES OF COMMERCIAL PRINTING AND PACKAGING, ENVELOPE, FORM, AND LABEL
MANUFACTURING, AND PUBLISHER SERVICES; OFFERING ONE-STOP SERVICES FROM DESIGN
THROUGH FULFILLMENT. WITH 10,000 EMPLOYEES WORLDWIDE, CENVEO DELIVERS EVERYDAY
FOR ITS CUSTOMERS THROUGH A NETWORK OF PRODUCTION, FULFILLMENT, CONTENT
MANAGEMENT, AND DISTRIBUTION FACILITIES ACROSS THE GLOBE.
---------------------------
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Statements made in this release, other than those concerning historical
financial information, may be considered "forward-looking statements," which
are based upon current expectations and involve a number of assumptions, risks
and uncertainties that could cause the actual results to differ materially
from such forward-looking statements. In view of such uncertainties, investors
should not place undue reliance on our forward-looking statements. Such
statements speak only as of the date of this release, and we undertake no
obligation to update any forward-looking statements made herein. Factors that
could cause actual results to differ materially from management's expectations
include, without limitation: (1) our substantial indebtedness impairing our
financial condition and limiting our ability to incur additional debt; (2) the
terms of our indebtedness imposing significant restrictions on our operating
and financial flexibility; (3) the potential to incur additional indebtedness,
exacerbating the above factors; (4) cross default provisions in our
indebtedness, which could cause all of our debt to become due and payable as a
result of a default under an unrelated debt instrument; (5) our ability to
successfully integrate acquisitions; (6) intense competition in our industry;
(7) the absence of long-term customer agreements in our industry, subjecting
our business to fluctuations; (8) factors affecting the U.S. postal services
impacting demand for our products; (9) increases in paper costs and decreases
in its availability; (10) our history of losses and ability to return to
consistent profitability; (11) the availability of the Internet and other
electronic media affecting demand for our products; (12) our labor relations;
(13) compliance with environmental rules and regulations; (14) dependence on
key management personnel; and (15) general economic, business and labor
conditions. This list of factors is not exhaustive, and new factors may emerge
or changes to the foregoing factors may occur that would impact the Company's
business. Additional information regarding these and other factors can be
found in Cenveo, Inc.'s periodic filings with the SEC, which are available at
http://www.cenveo.com.
Inquiries from analysts and investors should be directed to Robert G. Burton,
Jr. at (203) 595-3005.
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