Cenveo, Inc. News
Cenveo Announces First Quarter 2008 Results
For the first quarter, sales increased 29% to
Non-GAAP net income from continuing operations totaled
Adjusted EBITDA in the first quarter of 2008 was
"We are pleased with our strong cash flow generation and solid operational performance during the first quarter despite an extremely challenging economic environment. We were able to generate over
2008 Outlook:
We reiterate our financial guidance for 2008, projecting adjusted EBITDA of
— Capital Expenditures: Capital expenditures during the first quarter were $9.1 million, and are expected to be in the $35 to $40 million range for the year. — Cash Taxes: The Company paid cash taxes of $0.7 million during the quarter. The company currently has approximately $220 million of net operating loss carryforwards. — Cash Interest: The Company incurred $19.2 million of cash interest expense during the quarter. The difference between cash interest expense versus reported interest expense reflects the timing of interest payments on our senior subordinated notes. The company's weighted average cost of debt was 7.3% during the quarter
Mr. Burton concluded:
"We benefited from our diverse product offerings, our attention to customer service and our broad operational platform during the quarter despite a very challenging economic environment with softness from our financial services customers compounded by seasonal slowdowns in certain product areas. We saw strong performances from our Cadmus publisher services group, custom labels, forms and envelopes business and global packaging operations. We also continue to focus on lowering costs and winning a larger share of the market place. We expect to continue generating strong cash flow and use these funds to pay down debt, and grow our business organically and through thoughtful strategic acquisition. We encountered many challenges during the quarter and we worked relentlessly to overcome them. As the senior manager of Cenveo, I can assure you that we are doing everything in our power to ensure that we are successful in 2008, and that our customers, employees and shareholders reap the rewards with us as their partner."
Conference Call:
Cenveo will host a conference call tomorrow,
Cenveo, Inc., and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 As Restated Net sales $534,328 $414,714 Cost of sales 436,298 332,536 Selling, general and administrative 63,126 49,484 Amortization of intangible assets 2,175 1,830 Restructuring, impairment and other charges 9,749 2,625 Operating income 22,980 28,239 Interest expense, net 26,978 16,282 Loss on early extinguishment of debt - 8,700 Other expense, net 461 222 (Loss) income from continuing operations before income taxes (4,459) 3,035 Income tax (benefit) expense (1,716) 1,255 (Loss) Income from continuing operations (2,743) 1,780 (Loss) income from discontinued operations, net of taxes (656) 16,293 Net (loss) income (3,399) $18,073 (Loss) income per share - basic : Continuing operations $(0.05) $0.03 Discontinued operations (0.01) 0.31 Net (loss) income $(0.06) $0.34 (Loss) income per share - diluted : Continuing operations $(0.05) $0.03 Discontinued operations (0.01) 0.30 Net (loss) income $(0.06) $0.33 Weighted average shares: Basic 53,715 53,525 Diluted 53,715 54,572 Cenveo, Inc. and Subsidiaries
Reconciliation of (Loss) Income from Continuing Operations to Non-GAAP Income
from Continuing Operations and Related Per Share Data (in thousands, except per share data) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 As Restated (Loss) income from continuing operations $(2,743) $1,780 Integration, acquisition and other charges 1,125 1,092 Restructuring, impairment and other charges 9,749 2,625 Stock-based compensation provision 2,692 2,265 Loss on early extinguishment of debt - 8,700 Income tax expense (2,718) (694) Non-GAAP income from continuing operations $8,105 $15,768 Income (loss) per share - diluted: Continuing operations $(0.05) $0.03 Integration, acquisition and other charges 0.02 0.02 Restructuring, impairment and other charges 0.18 0.05 Stock-based compensation provision 0.05 0.04 Loss on early extinguishment of debt - 0.16 Income tax expense (0.05) (0.01) Non-GAAP continuing operations $0.15 $0.29 Weighted average shares-diluted 54,271 54,572 Cenveo, Inc. and Subsidiaries Reconciliation of Net (Loss) Income to Adjusted EBITDA (in thousands) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 As Restated Net (loss) income $(3,399) $18,073 Interest expense 26,978 16,282 Income taxes (1,716) 1,255 Depreciation 15,838 9,936 Amortization of intangible assets 2,175 1,830 Integration, acquisition and other charges 1,125 1,092 Restructuring, impairment and other charges 9,749 2,625 Loss on early extinguishment of debt - 8,700 Stock-based compensation provision 2,692 2,265 Loss (income) from discontinued operations, net of taxes 656 (16,293) Adjusted EBITDA, as defined $54,098 $45,765 Cenveo, Inc. and Subsidiaries Reconciliation of Operating Income to Non-GAAP Operating Income (in thousands) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 As Restated Operating income $22,980 $28,239 Integration, acquisition and other charges 1,125 1,092 Restructuring, impairment and other charges 9,749 2,625 Stock-based compensation provision 2,692 2,265 Non-GAAP operating income $36,546 $34,221 CENVEO, INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) March 29, December 29, 2008 2007 Assets Current assets: Cash and cash equivalents $13,055 $15,882 Accounts receivable, net 307,505 344,634 Inventories 172,060 162,908 Assets held for sale 4,278 - Prepaid and other current assets 66,320 73,358 Total current assets 563,218 596,782 Property, plant and equipment, net 416,281 428,341 Goodwill 668,738 669,802 Other intangible assets, net 268,447 270,622 Other assets, net 29,673 37,175 Total assets $1,946,357 $2,002,722 Liabilities and Shareholders' Equity Current liabilities: Current maturities of long-term debt $16,961 $18,752 Accounts payable 160,192 165,458 Accrued compensation and related liabilities 48,732 47,153 Other current liabilities 88,667 79,554 Total current liabilities 314,552 310,917 Long-term debt 1,378,790 1,425,885 Deferred income taxes 47,540 55,181 Other liabilities 117,177 111,413 Shareholders' equity: Preferred stock - - Common stock 537 537 Paid-in capital 257,221 254,241 Retained deficit (152,338) (148,939) Accumulated other comprehensive loss (17,122) (6,513) Total shareholders' equity 88,298 99,326 Total liabilities and shareholders' equity $1,946,357 $2,002,722 CENVEO, INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 As Restated Cash flows from operating activities: Net (loss) income $(3,399) $18,073 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of discontinued operations, net of taxes - (16,287) Loss (income) from discontinued operations, net of taxes 656 (6) Depreciation and amortization, excluding non-cash interest expense 18,013 11,766 Non-cash interest expense, net 390 379 Loss on early extinguishment of debt - 8,700 Stock-based compensation provision 2,692 2,265 Non-cash restructuring, impairment and other charges 3,456 (473) Deferred income taxes (1,775) 1,621 Other non-cash charges, net 2,846 1,431 Changes in operating assets and liabilities, excluding the effects of acquired businesses: Accounts receivable 35,195 9,635 Inventories (10,106) (4,387) Accounts payable and accrued compensation and related liabilities (3,442) (1,506) Other working capital changes 12,955 (4,833) Other, net (3,050) 3,312 Net cash provided by continuing operating activities 54,431 29,690 Net cash provided by discontinued operating activities - 2,198 Net cash provided by operating activities 54,431 31,888 Cash flows from investing activities: Cost of business acquisitions, net of cash acquired - (329,300) Capital expenditures (9,097) (7,115) Proceeds from sale of property, plant and equipment 348 2,347 Net cash used in investing activities of continuing operations (8,749) (334,068) Proceeds from the sale of discontinued operations - 73,628 Net cash used in investing activities (8,749) (260,440) Cash flows from financing activities: Proceeds from issuance of Term Loans - 620,000 (Repayments) borrowing under Revolving Credit Facility, net (45,200) 29,400 Proceeds from exercise of stock options 288 185 Repayment of Term Loan B - (324,188) Repayment of Cadmus revolving senior bank credit facility - (70,100) Repayment of 8 3/8% senior subordinated notes - (20,875) Repayments of Term Loans (1,800) - Repayments of other long-term debt (1,806) (166) Payment of refinancing fees, redemption premiums and expenses - (7,489) Payment of debt issuance costs - (886) Net cash (used in) provided by financing activities (48,518) 225,881 Effect of exchange rate changes on cash and cash equivalents of continuing operations 9 - Net decrease in cash and cash equivalents (2,827) (2,671) Cash and cash equivalents at beginning of year 15,882 10,558 Cash and cash equivalents at end of quarter $13,055 $7,887
In addition to results presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), included in this release are certain Non-GAAP financial measures, including Adjusted EBITDA, Non-GAAP income from continuing operations and Non-GAAP operating income. These Non- GAAP financial measures are defined above, and should be read in conjunction with GAAP financial measures. These Non-GAAP financial measures are not presented as an alternative to cash flow from operations, as a measure of our liquidity or as an alternative to reported net income as an indicator of our operating performance. The Non-GAAP financial measures as used herein may not be comparable to similarly titled measures reported by competitors.
We believe the use of Adjusted EBITDA, Non-GAAP income from continuing operations and non-GAAP operating income along with GAAP financial measures enhances the understanding of our operating results and may be useful to investors in comparing our operating performance with that of our competitors and estimating our enterprise value. Adjusted EBITDA is also a useful tool in evaluating the core operating results of the Company given the significant variation that can result from, for example, the timing of capital expenditures, the amount of intangible assets recorded or the differences in assets' lives. We also use Adjusted EBITDA internally to evaluate operating performance of our segments, to allocate resources and capital to such segments, to measure performance for incentive compensation programs, and to evaluate future growth opportunities. The Non-GAAP financial measures included in this press release are reconciled to their most directly comparable GAAP financial measures in the tables included herein.
Cenveo, headquartered in
Statements made in this release, other than those concerning historical financial information, may be considered "forward-looking statements," which are based upon current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. In view of such uncertainties, investors should not place undue reliance on our forward-looking statements. Such statements speak only as of the date of this release, and we undertake no obligation to update any forward-looking statements made herein. Factors that could cause actual results to differ materially from management's expectations include, without limitation: (1) our substantial indebtedness impairing our financial condition and limiting our ability to incur additional debt; (2) the terms of our indebtedness imposing significant restrictions on our operating and financial flexibility; (3) the potential to incur additional indebtedness, exacerbating the above factors; (4) cross default provisions in our indebtedness, which could cause all of our debt to become due and payable as a result of a default under an unrelated debt instrument; (5) our ability to successfully integrate acquisitions; (6) intense competition in our industry; (7) the absence of long-term customer agreements in our industry, subjecting our business to fluctuations; (8) factors affecting the U.S. postal services impacting demand for our products; (9) increases in paper costs and decreases in its availability; (10) the availability of the Internet and other electronic media affecting demand for our products; (11) our labor relations; (12) compliance with environmental rules and regulations; (13) dependence on key management personnel; and (14) general economic, business and labor conditions. This list of factors is not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that would impact the Company's business. Additional information regarding these and other factors can be found in Cenveo, Inc.'s periodic filings with the SEC, which are available at http://www.cenveo.com.
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SOURCE Cenveo, Inc.
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