By Trevor Shackelford May 25, 2006 -- Cenveo, Inc., (NYSE: CVO) announced their first quarter 2006 results recently. Net sales for Cenveo's first quarter were $426.7 million, down from $449.6 million reported for the same period last year. This decrease was primarily due to the company’s decision to close several “non-strategic” business units. Net income for the first quarter was $112.2 million, or $2.10 per diluted share, compared to a net loss of $22.6 million, or $0.47 per diluted share reported for the same period last year. This result includes restructuring and impairment charges of $13.5 million and the gain on sale of non-strategic business of $123.4 million, primarily related to sale of a 63.5% interest in Supremex. Excluding these two items, the company would have posted income of $2.3 million. Contents of this Summary * Quarter Highlights * Segment Performance * Guidance * Raine Radar * Q & A Quarter Highlights • The company completed the sale of 63.5% interest in Supremex. • Non-GAAP net income for the quarter was $10.5 million, or $0.20 per diluted share. • Adjusted EBITDA for the quarter was $45 million, up 61% from $28 million reported for the same period last year. Excluding the results of Supremex for the first quarter, adjusted EBITDA increased 93%. • During the quarter, the company saved approximately $17 million as a part of its $100 million cost saving plan. • Income tax expense for the quarter was $11.6 million. • Restructuring and impairment charges for the quarter were $13.5 million, of which $9.7 million was in cash. • During the quarter, debt decreased by $124.3 million. At the end of the quarter, the company had approximately $687.8 million of total debt. • Weighted average interest rate for the quarter was 8.4%, compared to 8.5% reported in the fourth quarter of fiscal 2005. • Cash interest expense for the quarter was $18 million and cash taxes for the quarter were $4.4 million. • Capital expenses for the quarter were $6 million, primarily due to the installation of two large presses. • Cenveo is looking for potential acquisitions in envelopes, labels, pharmaceuticals, statement printing, and packaging. Segment Performance Envelope, Forms and Labels Segment Cenveo reported first quarter net sales consistent with the first quarter of fiscal 2005, however, excluding the divestiture sales in the segment increased $2.5 million, or 1% compared to the first quarter of fiscal 2005. The company realized increased sales in envelope, direct mail, as well as its office product retail segment, partially offset by lower sales in its distribution channel as a result of closure of two plants in 2005 and not retaining certain low margin businesses. Commercial Printing Segment Cenveo reported lower sales in the commercial print segment due to the closure of five commercial printing plants since the first quarter of fiscal 2005. Guidance For the full year, the company expects earnings of $0.66 per diluted share. For the second quarter of fiscal 2006, the company reaffirmed its original guidance of $0.06 per diluted share and $0.19 and $0.21 for the third and fourth quarters respectively. The company expects an EBITDA margin for the full year of approximately 7%. Raine Radar Aggressive cost cutting measures and selective investments appear to have made a dramatic improvement to the financial results of the company. In just a matter of a few quarters, the company has slimmed down, tightened its focus, and now appears to be looking for smart acquisition options. All in all, the company seems to be doing the right things. Debt is down, EBITDA is improved, and the remaining facilities are getting some upgrades. Q & A 1. Cenveo expects its stock price to move into the mid thirties. 2. The company expects that EBITDA would be improved over the next 12 months and lot of that will come from the anticipated acquisitions. 3. The company intended to improve the margins by adapting the waste and productivity measurements. 4. Except $3 million, the company received all the proceeds from the initial part of the sales. 5. The company expects EBITDA for the second quarter would be $31 million and for the full year it would be approximately $155 million. 6. The company expects that the total restructuring charges for the full year would be in the range of $25 to $30 million. However, all of these are not cash charges. 7. The company said that its main focus in commercial printing is on national sales. The company did 75 annual reports in the first quarter. 8.The company intended to reduce the number of commercial plants going forward, which were non-strategic businesses. 9.The company said that the tax affected NOL is about $54 million.