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Cenveo Announces Fourth Quarter and Full Year 2015 Results

Thursday, February 18, 2016

Press release from the issuing company

Sale of Packaging Business Closed in January 2016

Net Sales of $479.0 million in Q4 2015

Adjusted EBITDA of $44.1 million in Q4 2015, up 32.5% from Q4 2014page1image1944 page1image2104

STAMFORD, CT - Cenveo, Inc. (NYSE: CVO) today announced results for the three and twelve months ended January 2, 2016. The reported results exclude the operating results of our Packaging operating segment as well as our one top-sheet lithographic print operation, collectively referred to as our Packaging Business, as it has been classified in our consolidated financial statements as discontinued operations. During the first quarter of 2016, we completed the sale of our Packaging Business.

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

"We are very pleased with our fourth quarter operating results, in which we experienced solid revenue performance, increased our operating income and improved Adjusted EBITDA as expected. We also completed one of our strategic alternatives with the sale of our Packaging Business, which officially closed in January. Our envelope business continued to deliver margin expansion driven by strong direct mail volumes and the benefits of the cost actions that we completed in 2014. This performance allowed the Company to deliver Adjusted EBITDA growth of over 32% for the fourth quarter compared with the same period in 2014."

Results of Operations Overview:

The Company generated net sales of $479.0 million for the three months ended January 2, 2016, compared with $453.5 million for the same period last year, an increase of 5.6%. The fourth quarter of 2015 included an extra week versus the fourth quarter of 2014. We estimate the impact of this week was 1

approximately $20 million to our consolidated net sales. We experienced strong sales performance in all three of our operating segments during the fourth quarter, particularly in our print business, driven by new account wins. The Company generated net sales of $1.74 billion for the year ended January 2, 2016, compared with $1.76 billion for the prior year, a decline of 1.1%. The decline in net sales for the year is primarily attributable to decreased capacity in our envelope business due to the closure and consolidation related to the National Envelope integration during 2014, partially offset by one extra week in the full year 2015 versus the full year 2014, price increases and product mix changes with certain envelope customers.

Operating income was $24.8 million for the three months ended January 2, 2016, compared to operating income of $11.2 million for the same period last year, an improvement of 121.0%. Operating income was $83.8 million for the year ended January 2, 2016, compared to operating income of $42.8 million for the prior year, an improvement of 95.9%. Operating income in 2014 was impacted by expenses associated with the closure and consolidation of several envelope facilities related to the integration of the National Envelope assets, which along with the price increases realized from certain customers, primarily resulted in significant operating margin improvement and manufacturing efficiencies in 2015. Non-GAAP operating income was $27.6 million for the three months ended January 2, 2016, compared to income of $21.1 million for the same period last year, and income of $105.1 million for the year ended January 2, 2016, compared to income of $86.0 million for the prior year. A reconciliation of operating income to non- GAAP operating income is presented in the attached tables.

For the three months ended January 2, 2016, the Company had a loss from continuing operations of $4.4 million, or $0.06 per diluted share, compared to a loss of $23.4 million, or $0.34 per diluted share, for the same period last year. For the year ended January 2, 2016, the Company had a loss from continuing operations of $19.5 million, or $0.29 per diluted share, compared to a loss of $95.1 million, or $1.42 per diluted share, for the prior year. The improvement was primarily due to significant operating margin improvement and efficiencies resulting from the National Envelope asset integration, as well as lower restructuring charges. Additionally in 2014, we incurred a $27.4 million debt extinguishment charge in connection with the debt refinancing that was completed in June 2014. Non-GAAP income from continuing operations was $5.7 million, or $0.06 per diluted share, for the three months ended January 2, 2016, compared to non-GAAP loss from continuing operations of $5.4 million, or $0.08 per diluted share, for the same period last year. For the year ended January 2, 2016, non-GAAP income from continuing operations was $10.7 million, or $0.12 per diluted share, compared to a loss of $21.8 million, or $0.33 per diluted share, for the prior year. A reconciliation of loss from continuing operations to non-GAAP income (loss) from continuing operations is presented in the attached tables.

Adjusted EBITDA was $44.1 million and $33.3 million for the three months ended January 2, 2016 and December 27, 2014, respectively, an improvement of 32.5%. The increase over the prior year quarter is primarily attributable to the improvement of our envelope operations subsequent to the prior year consolidation efforts and operating improvements from our print operations. For the year ended January 2, 2016, Adjusted EBITDA was $158.0 million, compared to $139.4 million for the prior year, an improvement of 13.3%. The increase is primarily attributable to the improvement of our envelope operations subsequent to the prior year consolidation efforts and continued operating improvements in our label product lines, partially offset by a decline in our print operations due to product mix and continued price pressure. A reconciliation of net loss to Adjusted EBITDA is presented in the attached tables.

Cash flow provided by operating activities for the year ended January 2, 2016 was $32.2 million, compared to $23.9 million for the prior year. This improvement was primarily driven by the improvement in our operating results, lower contributions to post-retirement plans, partially offset by a net use of cash from working capital as compared to the prior year.

NYSE Communication:

On February 11, 2016, we received a notice from the NYSE that we do not presently satisfy the NYSE’s continued listing standard requiring our average market capitalization to not be less than $50 million over a 30 trading-day period while stockholders’ equity is less than $50 million. The notice has no immediate impact on the listing of our common stock. It also does not affect our ongoing business operations or our Securities and Exchange Commission reporting requirements. In accordance with the NYSE rules, we intend to submit to the NYSE a business plan demonstrating how we intend to return to compliance with the market capitalization standards within 18 months of receipt of the notice. The NYSE will review that plan and determine whether we have made a reasonable demonstration of an ability to achieve compliance on the market capitalization standard. If the NYSE accepts our plan, the common stock will continue to be listed and traded on the NYSE during that 18-month period, subject to our compliance with other continued listing standards.

Robert G. Burton, Sr., Chairman and Chief Executive Officer, concluded:

"As we turn our focus to 2016, we are looking forward to building upon the operating momentum that we built in 2015. We will look to continue to improve our margins and drive stronger cash flow. We are currently working to address and improve our capital structure, and we look forward to sharing our plans with our investors at the appropriate time. We have high expectations for 2016 and we believe that we are on the right path for continued improvement. I look forward to discussing our 2016 financial guidance on our conference call tomorrow." 

Full Release

 

 

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