STAMFORD, CT – (November 5, 2008) – Cenveo, Inc. today announced results for the three and nine months ended September 27, 2008.
For the third quarter, the Company reported income from continuing operations of $12.4 million, or $0.23 per diluted share, as compared to income from continuing operations of $2.5 million, or $0.04 per diluted share, in the same period in 2007. On a Non-GAAP basis, income from continuing operations totaled $32.7 million, or $0.60 per diluted share, in the third quarter of 2008, as compared to $24.3 million or $0.44 per diluted share in the same period last year. Non-GAAP income from continuing operations excludes restructuring, impairment and other charges, integration, acquisition and other charges, stock-based compensation provision, gain on sale of non-strategic business and loss (gain) on early extinguishment of debt. A reconciliation of income from continuing operations to non-GAAP income from continuing operations is presented in the attached tables.
Sales for the quarter were $522.7 million. Adjusted EBITDA in the third quarter of 2008 was $82.5 million, as compared to $70.7 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, gain on sale of non-strategic business, loss (gain) 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.
For the first nine months of 2008, the Company reported income from continuing operations of $12.7 million, or $0.23 per diluted share, as compared to income from continuing operations of $6.9 million, or $0.12 per diluted share, in the same period in 2007. On a Non-GAAP basis, income from continuing operations totaled $62.1 million, or $1.15 per diluted share, in the first nine months of 2008, as compared to $57.7 million, or $1.06 per diluted share, in the same period last year. Sales for the first nine months of 2008 were $1.58 billion compared to $1.46 billion in 2007. Adjusted EBITDA for the first nine months of 2008 was $205.2 million, as compared to $174.3 million in the same period last year, an increase of 18%.
Other financial highlights:
- For the first nine months cash flow from continuing operations was $149.4 million, up $90 million from the same period last year.
- Non-GAAP operating income margin was 12.0% for the third quarter.
- Net debt decreased $7 million in the quarter to $1.362 billion.
- Quarterly weighted average interest rate was 7.3%.
- At the end of the quarter, approximately 89% of the Company's debt was subject to fixed interest rates.
Robert G. Burton, Chairman and Chief Executive Officer stated:
"Despite very challenging economic and market conditions, we are very pleased with our financial results, highlighted by the significant increase in our non-GAAP operating margin to 12.0% for the third quarter. We were able to once again match our costs with our revenue stream, which allowed us to excel operationally despite a soft revenue environment. I continue to be particularly pleased with our strong cash flow generation, which remains a central focus of our management team. For the first nine months of 2008, we generated $149.4 million of cash flows from continuing operations, up 152% from the same period last year. Over the past year, we have been able to pay down close to $90 million in debt while at the same time growing the company through acquisitions and prudent investments of capital. Going forward we will continue to use our strong cash flows to reduce our debt and solidify our capital structure. We are well positioned with no significant debt maturities until 2012, which provides us with ample liquidity to manage and grow our business during these challenging economic periods. "
Mr. Burton concluded:
"Our strong financial performance during the third quarter was driven by our ability to manage our cost structure while simultaneously being responsive to our customers needs. By aggressively focusing on these areas, we were again able to increase our gross margins and lower our selling, general, and administrative costs during the quarter. We continued to see better operating performance across most of our product offerings, led once again by solid results from our labels and Cadmus businesses. These niche businesses continue to perform very well and we will look to expand our presence in these areas in the future.
"We have worked relentlessly over the past year to right size our cost structure so we may be able to succeed and flourish despite the most difficult market environment I have seen in my business career. We continue to grow our margins, generate record cash flow from operations, and pay down our debt. The Company is in the strongest position, both operationally and with our customers since our team's arrival in 2005. We believe that our diverse and specialized product offerings that focus on the custom and short-run markets will allow us to better weather this economic environment than the competition. These strengths when combined with our experienced management teams' cost control efforts, give me great confidence that Cenveo will continue to be successful and will grow even stronger in the future. "
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