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Cenveo Reports Q1 Results, Reaffirms Guidance

Thursday, May 07, 2009

Press release from the issuing company

STAMFORD, Conn., May 6 -- Cenveo, Inc. today announced results for the three months ended March 28, 2009.

For the first quarter ended March 28, 2009, net sales were $412.1 million, as compared to $534.3 million for the same period in the previous year. For the quarter ended March 28, 2009, the Company recorded a net loss of $4.3 million, or $0.08 per share, compared to a net loss of $3.4 million, or $0.06 per share, in the quarter ended March 29, 2008. On a Non-GAAP basis, loss from continuing operations was $7.6 million, or $0.14 per diluted share for the first quarter of 2009. Non-GAAP income (loss) from continuing operations excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges, and gain on early extinguishment of debt. A reconciliation of income (loss) from continuing operations to Non-GAAP income (loss) from continuing operations is presented in the attached tables. It is important to note that the reporting periods ending on March 28, 2009 and March 29, 2008 consist of 12 and 13 weeks, respectively, which affects the comparability of the periods.

Adjusted EBITDA in the first quarter of 2009 was $31.5 million. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, excluding integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges, (gain) loss on early extinguishment of debt, and 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 loss to Adjusted EBITDA is provided in the attached tables.

In the first quarter of 2009, the Company generated cash flows from operations of $36.4 million, as compared to $54.4 million in 2008. During the first quarter the Company made open market repurchases of an aggregate $42.7 million principal amount of its outstanding 7 7/8% senior subordinated notes due 2013, its 8 3/8% senior subordinated notes due 2014, and its 101/2% senior notes due 2016, (collectively the "Notes"). In connection with the repurchases of these Notes, the Company recognized gains of approximately $17.6 million in the first quarter of 2009, representing the difference between the net carrying amount and the total repurchase price of the Notes. Additionally the Company made the annual mandatory prepayment sweep of excess cash flow repaying $17.5 million to lenders, thereby further reducing the balance of its term loans outstanding.

Robert G. Burton, Chairman and Chief Executive Officer stated:

"Despite the most challenging economic environment I have ever encountered and one less week to execute in this quarter compared to the prior year, we are pleased with many of the accomplishments we achieved during the first quarter. We were able to generate over $36 million of cash flows from operations and reduce our debt by $45.1 million during the quarter. We continued to focus on improving our cost structure by implementing a $30+ million cost containment plan focusing on plant consolidation and headcount reduction; increasing productivity and improving efficiencies to further drive incremental margins. We also were successful in amending our credit facility, which will provide the Company with increased financial flexibility to navigate through this period of economic uncertainty and volatility."

2009 Outlook:

We have begun to see some signs of stabilization in a number of the markets we serve. This coupled with the recent cost actions we implemented, along with stronger seasonality effects that are materializing, gives me confidence that our second quarter results will be significantly stronger than the first quarter. With that being said, we will remain diligent on controlling our expenses and aligning our cost structure with our revenue stream. We reiterate our previously communicated financial guidance for 2009, including Adjusted EBITDA of at least $250 million and free cash flow of at least $110 million.

Mr. Burton concluded:

"The action items that we have taken over the past year have positioned us well for future success. We are uniquely positioned to compete and win in the niche markets we serve. As a low cost provider with outstanding quality and service, we continue to win a larger share of the marketplace. We are seeing a trend of our key customers coming to us to "single source" all of their printing-related products and service needs to take advantage of our size, scale, and reliability. We expect to see this trend continue given the competitive activity occurring in the marketplace. Going forward, we expect to continue to pay down debt, while simultaneously looking to grow our business organically and through thoughtful strategic acquisition. We remain 100% focused on executing our game plan, and I can assure you that we are doing everything in our power to ensure that we will emerge stronger on the other side of this economic storm, when much of our competition cannot say the same. "




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