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Cenveo Reports 6% Increase in Net Sales

Thursday, August 07, 2008

Press release from the issuing company

STAMFORD, Conn., Aug 06, 2008 -- Cenveo, Inc. today announced results for the three and six months ended June 28, 2008.

For the second quarter, net sales increased 6% to $524.5 million from $497.0 million in 2007, primarily due to the acquisition of Rex, ColorGraphics and Commercial Envelope. The Company reported income from continuing operations of $3.1 million, or $0.06 per diluted share in the second quarter of 2008, as compared to income from continuing operations of $2.6 million, or $0.05 per diluted share, in the same period in 2007. The results for the second quarter of 2008 include restructuring and impairment charges of $5.4 million and a loss on early extinguishment of debt of $4.2 million. This compares to $9.2 million of restructuring and impairment charges and a loss on early extinguishment of debt of $0.5 million in the same period in 2007.

Non-GAAP income from continuing operations totaled $18.3 million, or $0.34 per diluted share, in the second quarter of 2008. Non-GAAP income from continuing operations excludes integration, acquisition and other charges, stock-based compensation provision, restructuring and impairment charges and loss on early extinguishment of debt. A reconciliation of income from continuing operations to non-GAAP income from continuing operations for these adjustments is presented in the attached tables.

Operating income was $36.2 million for the second quarter of 2008, as compared to $28.0 million during the same period in 2007. Non-GAAP operating income in the second quarter of 2008 was $47.4 million, which produced a 9.0% margin, up from the 8.1% margin in the same period in 2007, reflecting the continued benefits of our cost savings, restructuring and integration plans. Non-GAAP operating income excludes integration, acquisition and other charges, stock-based compensation provision 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 2008 was $65.3 million, as compared to $55.8 million in the same period last year, an increase of 17%. 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, loss on early extinguishment of debt, 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 to Adjusted EBITDA is provided in the attached tables.

Sales for the first six months of 2008 increased approximately 16% to $1.06 billion from $911.7 million in 2007, primarily due to the Company's 2007 and 2008 acquisitions. For the first six months of 2008, the Company reported income from continuing operations of $0.3 million, or $0.01 per diluted share, as compared to income from continuing operations of $4.3 million, or $0.08 per diluted share, in the first six months of 2007. The results for the first six months of 2008 include restructuring, impairment and other charges of $15.2 million and a loss on early extinguishment of debt of $4.2 million. This compares to $11.8 million of restructuring and impairment charges and a loss on early extinguishment of debt of $9.2 million in the same period in 2007.

Non-GAAP income from continuing operations for the first six months of 2008 totaled $26.4 million, or $0.49 per diluted share. Non-GAAP income from continuing operations excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges and loss on early extinguishment of debt. A reconciliation of income from continuing operations to non-GAAP income from continuing operations and the related per share data is presented in the attached tables.

Operating income was $59.1 million for the first six months of 2008, as compared to $56.2 million in the same period in 2007. Non-GAAP operating income in the first six months of 2008 was $84.0 million, as compared to $74.5 million in the first six months of 2007. Non-GAAP operating income excludes integration, acquisition and other charges, stock-based compensation provision and restructuring, impairment and other 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 2008 was $119.4 million, as compared to $101.6 million in the same period last year, an increase of 17%. 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, loss on early extinguishment of debt, and income (loss) from discontinued operations. An explanation of the Company's use of Adjusted EBITDA is detailed below and a reconciliation of net income (loss) to Adjusted EBITDA is presented in the attached tables.

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

"Once again we were able to achieve our financial commitments and post outstanding results despite facing a challenging economic environment. During our seasonally slowest quarter we were able to improve our operating margins, generate strong cash flow, deliver working capital improvements, acquire a complementary business, and pay down our debt. I am particularly pleased with our strong cash flow generation, which we accomplished by aggressively managing and improving our working capital. For the first six months of 2008, we were able to generate $126.4 million of cash flows from continuing operations, representing an $88.5 million or a 233% increase from the same period last year. I am also very pleased that we were able to decrease our debt by approximately $14 million during the quarter, that we acquired Rex and paid our highest quarterly cash interest payments."

Mr. Burton concluded:

"Our success during the quarter is attributable to having a clear and concise game plan that allows us to be agile and responsive to both our customers and our cost structure. Also since our arrival at Cenveo in 2005, we have targeted niche product offerings that are less exposed to the current economic climate than the rest of the industry and have higher growth potential going forward. We remain committed to our strategy to become the industry's premier printing company by providing our customers low-cost and high-value solutions from our diverse product offerings. This plan is working and is resulting in improved margins and stronger cash flows which we will use to pay down debt, and grow our business organically and through thoughtful strategic acquisition. We are focused on continuing to execute our plan in the back half of the year, and I am confident that we have an experienced and seasoned management team in place that clearly understands what is needed to be accomplished to achieve our full year financial commitments. The cost actions which we implemented earlier this year, coupled with the operating momentum which we saw in the second quarter gives me great optimism that Cenveo is positioned to deliver both our short and long term goals and commitments."

 

 

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