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Cenveo sales are up but losses increase in Q4

Thursday, March 03, 2011

Press release from the issuing company

Stamford, CT – Cenveo, Inc. today announced results for the three months and full year ended January 1, 2011.

For the three months ended January 1, 2011, net sales were $460.4 million, as compared to $456.8 million for the same period in the previous year. For the three months ended January 1, 2011, the Company reported a net loss of $9.8 million, or $0.16 per share, as compared to a net loss of $9.4 million, or $0.15 per share for the same prior year period. The net loss for the three months ended January 1, 2011 includes non-cash restructuring charges of $12.0 million, primarily related to real estate actively being marketed for sale and the Company’s decision to exit two multi-employer pension funds as well as a loss on early extinguishment of debt of $7.0 million relating to the refinancing of the Company’s credit facility. On a Non-GAAP basis, income from continuing operations was $14.1 million, or $0.22 per diluted share for the three months ended January 1, 2011. Non-GAAP income from continuing operations excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges, divested operations or assets held for sale, (gain) loss on early extinguishment of debt and adjusts income taxes to reflect an estimated cash tax rate.

Adjusted EBITDA for the three months ended January 1, 2011 was $60.3 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, divested operations or assets held for sale, (gain) loss on early extinguishment of debt, and income (loss) from discontinued operations, net of taxes.

For the year ended January 1, 2011, net sales were $1.8 billion, as compared to $1.7 billion for the same period in the previous year. The increase in the Company’s net sales was primarily due to the inclusion of Nashua in the Company’s results for a full year in 2010, partially offset by the loss of sales from plant closures and consolidation that occurred in 2009 and early 2010. For the year ended January 1, 2011, the Company reported a net loss of $186.4 million, or $2.99 per share, as compared to a net loss of $30.9 million, or $0.54 per share, for the year ended January 2, 2010. Net loss for the year ended January 1, 2011 includes $181.4 million of non-cash goodwill and other long-lived asset impairment charges related to our PSG reporting unit and a $9.6 million loss on early extinguishment of debt related to the Company’s two financing transactions. The year ended January 2, 2010 included gains on early extinguishment of debt of $16.9 million. On a Non-GAAP basis, income from continuing operations was $27.7 million or $0.44 per diluted share for the full year. Adjusted EBITDA for the year ended January 1, 2011 was $216.3 million, as compared to Adjusted EBITDA of $201.7 million for the year ended January 2, 2010.

Robert G. Burton, Sr., Chairman and Chief Executive Officer stated:
“Our fourth-quarter results, combined with our recently announced acquisitions of Gilbreth and MeadWestvaco’s Envelope Products Group (EPG), marked a strong finish for Cenveo in 2010. Despite still dealing with some volatile industry conditions, we were able to deliver sequential operational and financial improvements in the fourth quarter, highlighted by delivering Non-GAAP operating income margin of 9.7% for the quarter.”

“We also saw continued improvement in our label and commercial print markets, and began to see meaningful stabilization in the envelope market, as the changing competitive landscape and direct mail market strength resulted in increased utilization across the industry. In addition, we were able to opportunistically refinance our term loan and revolver during the fourth quarter, allowing us to push our debt maturities out several years.”

Mr. Burton concluded:

“2011 will be a year of execution for Cenveo. In the envelope market, we will look to take advantage of continued strength in the direct mail market, as well as the recent stabilization seen in the envelope industry over the past quarter. At the same time, we will finalize integration of the EPG acquisition, which will be truly transformative for our company. In the print business, we will look to continue to grow our market share and take advantage of stronger demand in the commercial end markets, led by strength in the automotive, financial services, and travel and leisure markets. We will also continue to invest in the high-growth labels area and in our leading custom product platform. We are utilizing our strong free cash flow to pay down debt and deleverage our balance sheet, while still investing for growth in our niche products.”

“We have all the tools at our disposal to be successful in 2011. We’ve made tremendous progress in positioning Cenveo for future success over the past few years, and we have many opportunities ahead of us in 2011 and beyond. Based on the current business climate and the significant synergies that the acquisition of EPG will begin to provide, I expect Cenveo’s revenue to be between $2.0 billion and $2.1 billion for 2011. I also expect $230 million to $245 million in Adjusted EBITDA, and approximately $100 million to $120 million free cash flow. We believe that if there is a continued improvement in the economy, we are successful in our ability to recover historical and anticipated raw material price increases and our current integration timeline of EPG improves, then we may have the opportunity to increase our earnings guidance. I look forward to our conference call tomorrow to discuss in more depth our positive 2011 outlook for Cenveo.”

 

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