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Cenveo Q2 Results Puts Company in Black

Thursday, August 09, 2007

Press release from the issuing company

STAMFORD, Conn., Aug. 8 -- Cenveo, Inc. today announced its results for the three and six months ended June 30, 2007.
For the second quarter of 2007, the Company reported net income of $2.8 million, or $0.05 per diluted share, as compared to a net loss of $33.1 million, or a net loss of $0.62 per diluted share, in 2006. The second quarter 2007 results included a loss from discontinued operations, net of taxes, of $0.3 million, as compared to income from discontinued operations of $12.7 million in the same period of 2006. Second quarter 2007 results also included restructuring and impairment charges of $9.2 million, as compared to restructuring and impairment charges of $17.2 million in the same period of 2006. Net sales for the quarter increased approximately 39% to $497.0 million from $357.9 million in the same period of 2006, primarily due to the acquisition of Cadmus and Printegra, which both closed in the first quarter of 2007.
Non-GAAP income from continuing operations totaled $13.4 million, or $0.25 per diluted share, in the second quarter of 2007, as compared to $8.4 million, or $0.16 per diluted share, in the second quarter of 2006. Non-GAAP income from continuing operations excludes integration costs, restructuring and impairment charges, (gain) loss on sale of non-strategic business and loss on early extinguishment of debt. A reconciliation of income (loss) from continuing operations to Non-GAAP income from continuing operations and the related per share data are presented in the attached tables.
Operating income totaled $28.9 million in the second quarter of 2007, as compared to $5.7 million in the second quarter of 2006. Non-GAAP operating income in the second quarter of 2007 was $38.6 million, which produced a 7.8% margin, reflecting the continued benefits of our cost savings and restructuring plans. Non-GAAP operating income excludes integration costs and restructuring and impairment charges. A reconciliation of operating income to Non-GAAP operating income is presented in the attached tables.
Adjusted EBITDA in the second quarter of 2007 was $56.5 million, as compared to $34.7 million in the same period last year, an increase of approximately 63%. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, excluding integration costs, restructuring and impairment charges, (gain) loss on sale of non-strategic businesses, divested operations EBITDA, loss on early extinguishment of debt, stock-based compensation provision, and income (loss) from discontinued operations, net of taxes. An explanation of the Company's use of Adjusted EBITDA is detailed below, and a reconciliation of net income (loss) to Adjusted EBITDA is provided in the attached tables.
For the first six months of 2007, the Company reported net income of $21.5 million, or $0.39 per diluted share, as compared to net income of $79.1 million, or $1.49 per diluted share, in the first six months of 2006. The results for the first six months of 2007 included income from discontinued operations, net of taxes, of $16.0 million, as compared to income from discontinued operations of $133.8 million in the same period of 2006, relating to our sale of Supremex. The first six months of 2007 results included restructuring and impairment charges of $11.8 million, as compared to restructuring and impairment charges of $30.7 million in the same period of 2006. Net sales for the six months increased approximately 23% to $911.7 million from $743.2 million in 2006, primarily due to the acquisition of Cadmus and Printegra, which both closed in the first quarter of 2007.
Non-GAAP income from continuing operations for the first six months of 2007 totaled $26.3 million, or $0.48 per diluted share, as compared to $13.5 million, or $0.25 per diluted share, in the first six months of 2006. Non-GAAP income from continuing operations excludes integration costs, restructuring and impairment charges, (gain) loss on sale of non-strategic business and loss on early extinguishment of debt. A reconciliation of income (loss) from continuing operations to Non-GAAP income from continuing operations and the related per share data are presented in the attached tables.
Operating income was $58.2 million for the first six months of 2007, as compared to $15.5 during the same period in 2006. Non-GAAP operating income in the first six months of 2007 was $70.6 million, which produced a 7.7% margin, reflecting the continued benefits of our cost savings and restructuring plans. Non-GAAP operating income excludes integration costs and restructuring and impairment charges. A reconciliation of operating income to Non-GAAP operating income is presented in the attached tables.
Adjusted EBITDA for the first six months of 2007 was $102.3 million, as compared to $70.2 million in the same period last year, an increase of 46%. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, excluding integration costs, restructuring and impairment charges, (gain) loss on sale of non-strategic businesses, divested operations EBITDA, loss on early extinguishment of debt, stock-based compensation provision, and income (loss) from discontinued operations, net of taxes. An explanation of the Company's use of Adjusted EBITDA is detailed below and a reconciliation of net income (loss) to Adjusted EBITDA is provided in the attached tables.
Robert G. Burton, Chairman and Chief Executive Officer stated:
"I am pleased to report that Cenveo was able to meet and exceed its financial commitments during the second quarter. We once again delivered a strong quarter of results, with our Non-GAAP income from continuing operations per diluted share increasing 56% from last year and our Adjusted EBITDA increasing 63% from last year. We were also able to increase our Non-GAAP operating margins to 7.8% in the quarter from 6.4% last year. I am also pleased with our strong generation of cash from continuing operations of $38.7 million during the first half of 2007, representing a $65.4 million improvement over the same period last year, which we believe demonstrates that the action plan we implemented in September 2005 is working."
Mr. Burton continued:
"I am very pleased with the performance of both of our business segments during the quarter despite the challenges that exist in the marketplace. Our Envelopes, Forms and Labels segment was able to overcome a mid-quarter postal rate increases and deliver the results that we expected. Our Commercial Printing segment continued to show meaningful operational improvement and margin expansion. We are also encouraged by strong sales growth across our journal and packaging product offerings and believe that trend will continue."
Mr. Burton concluded:
"We have completed or announced the addition of four outstanding companies to Cenveo this year. Printegra, a leader in the short-run printing market, joined us in February. In March, we completed the acquisition of Cadmus, the world's largest provider of content management and print offerings to scientific, technical, and medical journal publishers, and a leading provider of specialty packaging products. We significantly enhanced our commercial printing operations in the West Coast market by acquiring ColorGraphics in July 2007. In addition, we will be expanding our geographic reach and capabilities in the high-growth direct mail market. We have committed financing in place in regards to our previously announced agreement to acquire Commercial Envelope, and anticipate closing this transaction in the third quarter of this year. These four market leaders, with combined annualized revenues of over $850 million, offer enhancements to our product offerings. We look forward to their contributions both within their respective markets and from cross-selling opportunities through our one-stop shopping platform.
We will continue to focus our efforts on integrating these companies into our operations on a swift and aggressive time frame and driving incremental improvements to our platform by focusing on our cost structure, expanding our sales initiatives, increasing productivity and efficiencies and reducing waste. We are focused intensely on increasing our free cash flow and using these funds to service our debt, while also expanding our business through capital expenditures and thoughtful acquisitions. I also remain highly optimistic for our growth prospects for the remainder of the year. Our sales backlog has strengthened, and we are now seeing the benefits of our one-stop shopping sales efforts. As we put the first half of 2007 behind us, I can assure you that we are extremely focused on delivering on the back half of the year. We are proud of our second quarter results; our third quarter looks promising, and we remain comfortable with the targets we communicated for the full year."

 

 

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