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Cenveo Announces Q2 Results, Sales down

Friday, August 07, 2009

Press release from the issuing company

STAMFORD, Conn. -- Cenveo, Inc. today announced results for the three and six months ended June 27, 2009.

For the three months ended June 27, 2009, net sales were $397.6 million, as compared to $524.5 million for the same period in the previous year. For the three months ended June 27, 2009, the Company recorded a net loss of $18.3 million, or ($0.34) per share, compared to net income of $2.7 million, or $0.05 per share, in the three months ended June 28, 2008. On a Non-GAAP basis, income from continuing operations was $8.1 million, or $0.15 per diluted share for the three months ended June 27, 2009. Non-GAAP income from continuing operations excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges, (gain) loss on early extinguishment of debt and includes an adjustment to income taxes to reflect an estimated cash tax rate.

Adjusted EBITDA for the three months ended June 27, 2009 was $53.1 million. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, 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 Non-GAAP measures and Adjusted EBITDA is detailed below.

For the six months ended June 27, 2009, net sales were $809.7 million, as compared to $1.1 billion for the same period in the previous year. For the six months ended June 27, 2009, the Company recorded a net loss of $22.6 million, or ($0.41) per share, compared to a net loss of $0.7 million, or ($0.01) per share, in the six months ended June 28, 2008. On a Non-GAAP basis, income from continuing operations was $0.6 million or $0.01 per diluted share for the first six months of 2009. Adjusted EBITDA in the first six months of 2009 was $84.6 million. The six month periods ending on June 27, 2009 and June 28, 2008 consist of 25 and 26 weeks, respectively, which affects the comparability of the periods.

In the first six months of 2009, the Company generated cash flows from operations of $22.0 million and also made open market repurchases of an aggregate $52.2 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 10 1/2% senior notes due 2016, (collectively the "Notes") for approximately $30.6 million plus accrued interest. In connection with the repurchases of the Notes, the Company recognized gains of approximately $4.3 million and $21.9 million in the three and six month periods ending June 27, 2009, representing the difference between the net carrying amount and the total repurchase price of the Notes. The Company also recognized a $5.0 million loss on extinguishment of debt in connection with its Amendment of its debt facilities in the second quarter of 2009. 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:

"Our improved operating results for the second quarter were reflective of a number of management initiatives implemented during this tough macroeconomic period. Despite the anticipated decline in sales and earnings resulting from the recessionary environment, our proactive, disciplined approach to matching our cost structure with lower sales resulted in improved Adjusted EBITDA margins during the quarter. This improved performance would not have been possible without the continued dedication and hard work of our most important asset, our employees. We also took several steps to provide the Company with increased financial flexibility going forward by amending our credit facilities and by taking advantage of the current interest rate environment to lock in our borrowing costs for a period of time, while continuing to pay down debt. Over the past twelve months, we have reduced our debt outstanding by over $107 million, a testament to our focus on generating free cash flow and improving our capital structure.

Mr. Burton concluded:

"We continue to see signs of stabilization in several of the markets we serve, as certain of our customers begin returning to more normalized spending patterns. This activity increase, coupled with the more recent cost actions we implemented and stronger seasonal effects that are beginning to materialize, gives me confidence that we will continue to improve our results each quarter going forward. Despite the unsettled print markets we face, I feel that we are uniquely positioned with our breadth of products and services as a low cost provider that delivers outstanding quality and service to our customers. This position will only be enhanced by our proposed combination with Nashua Corporation. As I have stated previously, this merger will provide many benefits to the customers of both companies and its shareholders. I look forward to completing this transaction during our third quarter.

As I've also said before, Cenveo's short and long term success is built around operating diverse niche businesses that are market leaders; generating strong cash flows; and having an experienced management team that knows how to deliver results. We have been able to demonstrate the benefit of these strategies in this recessionary environment, and it is our belief that our businesses will continue to outperform within their product categories in good times as well as under difficult market conditions. "

 

 

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