EX-99.1 2 ex99p1.txt Exhibit 99.1 [Cenveo letterhead] For Immediate Release August 2nd, 2004 CENVEO OPERATIONS HAVE EIGHTH CONSECUTIVE QUARTER OF IMPROVED YEAR OVER YEAR PERFORMANCE ENGLEWOOD, COLO. (AUGUST 2, 2004) -- Cenveo, Inc., (NYSE: CVO) announced its results for the quarter and six months ended June 30, 2004. The net loss was $2.1 million for the quarter, and $18.6 million for the six months, or $0.04 per share and $0.39 per share, respectively. Sales for the quarter were $409 million and $833 million for the six months ended June 30, 2004. Last year, the net loss for the corresponding quarter was $2.3 million, or $0.05 per share, on $408 million of sales and for the six months ended June 30, 2003, net income was $0.4 million, or $0.01 per share, on $835 million of sales. Cenveo's net loss for the six months ended June 30, 2004, included a first quarter charge for early extinguishment of debt of $17.7 million. EBITDA for the second quarter of 2004 was $29.1 million compared to EBITDA of $27.3 million achieved for the same period last year, a 6.4% improvement. For the six months ended June 30, 2004, EBITDA was $60.5 million compared to $58.6 million for the same period last year, a 3.2% improvement. This represents the eighth consecutive quarter of year over year improvement in operating results as measured by EBITDA. An explanation of the Company's use of EBITDA for comparative purposes is provided below. Net cash provided by operating activities in the quarter ended June 30, 2004 was $10 million compared to $33 million provided during the same period last year. This change occurred as we invested in inventories to ramp up service to new customers in the third quarter in the office products sales channel. Paul Reilly, Chairman, President and CEO, stated, "The second quarter is traditionally the softest of the year. Nonetheless we have seen improvements across our businesses. Sales are firming up in all areas, and our Total Customer Solutions initiative is creating numerous new opportunities for sales growth. The number of customers entering into multi-year contracts is increasing. Both our Commercial and Resale Segments are also exhibiting strong gross margin growth. The results of the first half of 2004 are very much in line with the guidance we gave for the full year 2004, and given our expectations for the next two quarters, we affirm that guidance." Cenveo will hold a conference call today, Monday August 2nd at 1:00 p.m. Eastern Time (12 noon Central, 11:00 a.m. Mountain, 10:00 a.m. Pacific Time). To participate in the Cenveo conference call, please dial in to 1-888-675-7686 and provide conference ID 510356. Please call 5-7 minutes before the call is to begin. The conference call will also be available via webcast. To listen to the webcast, go to www.cenveo.com, www.streetevents.com, or www.fulldisclosure.com. - more - INTERNATIONAL DIAL-IN: An operator will dial out to you. Contact Cenveo Investor Relations at 303-790-8023 or email: bea.rodriguez@cenveo.com no later than 1 hour prior to the call with your telephone information. If you are unable to join the Cenveo conference call, you may access a replay of the call starting Monday, August 2nd, 2004 at 4:00 pm Eastern Time until Midnight Eastern Time, August 9th, 2004. To access the replay, please dial 866-219-1444 and reference the conference ID 510356. EBITDA (earnings before interest, taxes, depreciation and amortization) should not be considered as an alternative to any measure of operating results as promulgated under accounting principles generally accepted (GAAP) in the United States (such as operating income or net income), nor should it be considered as an indicator of our overall financial performance. EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of results. Additionally, our method of calculating EBITDA may be different from the method used by other companies and therefore comparability may be limited. EBITDA has not been provided as a measure of liquidity. The Supplemental Information to the press release includes the Company's Statement of Cash Flows. We use EBITDA as a supplemental measure of performance because we believe it gives the reader a more complete understanding of our operating results before the impact of investing and financing transactions. A reconciliation of net income (loss) under U.S. GAAP to EBITDA is presented in the Supplemental Information to this press release. ABOUT CENVEO Cenveo, Inc. (NYSE: CVO), www.cenveo.com, is one of North America's leading providers of visual communications with one-stop services from design through fulfillment. The company is uniquely positioned to serve both direct customers through its commercial segment, and distributors and resellers of printed office products through its Quality Park resale segment. The company's broad portfolio of services and products include e-services, envelopes, offset and digital printing, labels and business documents. Cenveo currently has approximately 10,000 employees and more than 80 production locations plus five advanced fulfillment and distribution centers throughout North America. In early 2004, Cenveo was voted second place in the printing and publishing category as Fortune Magazine's Most Admired Companies and ranked number five of the Russell 3000 companies on Corporate Governance Quotients by Institutional Shareholder Services. The company is headquartered in Englewood, Colorado. - more - This press release may contain certain forward-looking statements of management. It should be understood that all such statements are subject to various uncertainties and risks that could affect their outcome. Factors which could cause or contribute to such differences include, but are not limited to, the ability to execute strategic initiatives, economic conditions, product demand and sales, ability to obtain assumed productivity and cost savings, interest rates, foreign currency exchange rates, paper and raw material costs and the ability to pass them through to customers, waste paper prices, postage rates, union relations, competition and competitors' actions, availability of financing, and changes in the direct mail industry. Please refer to the company's 10-K, 10-Q and other SEC filings for a more detailed discussion of the risks. None of management's statements in this release should be considered an offer to sell or a solicitation of an offer to buy Cenveo securities. CONTACT: Mr. Michel P. Salbaing Senior Vice President and Chief Financial Officer Cenveo, Inc. (303) 790-8023 # # # [Cenveo logo] FINANCIAL HIGHLIGHTS (dollars in thousands, except per share data) (unaudited)
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 2004 2003 2004 2003 CONSOLIDATED RESULTS Net sales $409,396 $407,826 $833,138 $835,146 Gross profit 83,634 79,121 172,054 163,048 Operating income 14,805 15,625 33,719 34,903 Income (loss) from continuing operations (3,296) (1,681) (19,831) (1,150) Loss (gain) on disposal of discontinued operations (1,230) 581 (1,230) (1,919) Cumulative effect of change in accounting principle - - - 322 -------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (2,066) $ (2,262) $(18,601) $ 447 Net income (loss) per share - assuming dilution $ (0.04) $ (0.05) $ (0.39) $ 0.01 -------------------------------------------------------------------------------------------------------------------------------- SEGMENT INFORMATION NET SALES: Commercial $307,583 $306,608 $631,432 $630,670 Resale 101,813 101,218 201,706 204,476 -------------------------------------------------------------------------------------------------------------------------------- Total $409,396 $407,826 $833,138 $835,146 OPERATING INCOME (EXPENSE): Commercial $ 9,920 $ 10,285 $ 21,914 $ 22,765 Resale 12,359 10,455 23,822 22,309 Corporate services and other charges (7,474) (5,115) (12,017) (10,171) -------------------------------------------------------------------------------------------------------------------------------- Total $ 14,805 $ 15,625 $ 33,719 $ 34,903 OPERATING INCOME MARGINS: Commercial 3.2% 3.4% 3.5% 3.6% Resale 12.1% 10.3% 11.8% 10.9% EBITDA (1): Commercial $ 20,213 $ 19,215 $ 42,420 $ 41,132 Resale 14,685 12,925 28,500 27,331 Corporate (5,828) (4,828) (10,427) (9,837) -------------------------------------------------------------------------------------------------------------------------------- Total $ 29,070 $ 27,312 $ 60,493 $ 58,626 -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL POSITION JUNE 30, 2004 DECEMBER 31, 2003 Working capital $ 111,489 $ 102,773 Total assets 1,104,028 1,107,393 Total debt 772,956 748,961 Shareholders' equity 44,625 68,019 -------------------------------------------------------------------------------------------------------------------------------- (1) See Appendix 1 in the Supplemental Information to the Press Release for the definition of EBITDA, the reconciliation of net income to EBITDA and the reason why EBITDA is a relevant non-GAAP financial measure for Cenveo.
[Cenveo logo] Supplemental Information to the Press Release For the Second Quarter Ended June 30, 2004 Released August 2, 2004 [Cenveo logo] ============================================================================ Second quarter ended June 30, 2004 Page Financial and Operational Summary and Recent Developments 1, 2 ---------------------------------------------------------------------------- Consolidated Balance Sheets 3 ---------------------------------------------------------------------------- Consolidated Statements of Operations 4 ---------------------------------------------------------------------------- Consolidated Cash Flow Statements 5 ---------------------------------------------------------------------------- Segment Results 6 ---------------------------------------------------------------------------- Appendix 1 - Reconciliation of Net Income to EBITDA 7, 8 ---------------------------------------------------------------------------- FINANCIAL AND OPERATIONAL SUMMARY AND RECENT DEVELOPMENTS ========================================================= Three months ended June 30, 2004 Financial and Operational Summary --------------------------------- CONSOLIDATED RESULTS: Net sales increased $1.6 million in the second quarter 2004 compared to net sales in the second quarter of 2003. Operating income declined by $0.8 million in the second quarter primarily due to a $1.0 million charge for restructuring in the quarter. COMMERCIAL: Net sales in the second quarter of 2004 increase $1.0 million to $307.6 million compared to net sales of $306.6 million in the second quarter of 2003. The Commercial segment improved gross margins by 140 basis points, or 7.8%, over the same quarter last year. RESALE: Net sales in the second quarter of 2004 increased by $0.6 million to $101.8 million compared to net sales of $101.2 million in the second quarter of 2003. The Resale segment improved gross margins by 100 basis points, or 2.6%, over the same quarter last year. DEBT: Total debt was reduced by $4.4 million in the quarter and net cash provided by operating activities was $10 million for the quarter. CAPITAL EXPENDITURES: During the quarter ended June 30, 2004, capital expenditures were $6.8 million compared to $6.6 million in the same period last year. It is anticipated that full year capital expenditures will be approximately $25 million. AVAILABILITY: Credit available under our credit facility was $112.2 million based on the certificate filed for the activity ending June 30, 2004. 1 Financial and Operational Summary and Recent Developments ========================================================= Recent Developments ------------------- o Effective May 17, 2004, the Company changed its name from Mail-Well to Cenveo(TM) and announced a new Company tag line of "Vision Delivered". The Company also launched a new web site at www.cenveo.com that reflects the Company's new name, strategy, and broad selection of products and services, as well as a change of its New York Stock Exchange trading symbol to "CVO." o The Company announced on July 2, 2004 the acquisition of Valco Graphics Inc., a high-quality web and sheetfed printer of promotional, direct marketing and publishing products in the Seattle, Washington market with annual sales of approximately $18 million. Cenveo(TM) also announced that it would combine its existing Seattle commercial printing facility with the Valco facility. The Company plans to install two 40-inch, six and eight-color sheetfed presses at the former Valco location to increase current capabilities. o During the quarter Cenveo Anderson Lithograph, a Cenveo(TM) commercial facility, received the Sappi North American Printer of the Year award with two gold medals for the outstanding production of General Motors' Cadillac XLR 2004 brochure and Hummer 2003 Calendar. o During the quarter the Company began the consolidation of its Bensalem, Pennsylvania envelope plant with the Cenveo Philadelphia print plant to create a full service facility to better serve the customers in the Philadelphia market. The expanded facility will contain a state-of-the-art graphics and pre-press department, high-end offset capabilities, a full complement of envelope converting equipment, plus a dedicated team of customer service professionals. o Cenveo(TM) is the first envelope licensee of Conformer(R) Expansion Products, Inc. and now offers customers versatile envelopes that expand to fit contents with the ease and efficiency of mechanical insertion. Supremex, Cenveo's Canadian envelope operation, will be the first location to manufacture Conformer Expansion Envelopes. Conformer Expansion Products, Inc. has granted Cenveo a license to manufacture, use, and sell envelope products with its trademarked name exclusively in Canada and on a non-exclusive basis in the United States. The arrangement thus enables Cenveo to offer the envelopes throughout North America. 2 CONSOLIDATED BALANCE SHEETS Cenveo, Inc. and Subsidiaries (in thousands)
JUNE 30 DECEMBER 31 2004 2003 ASSETS Current assets: Cash and cash equivalents $ 165 $ 307 Accounts receivable, net 218,588 223,541 Inventories, net 111,278 91,402 Other current assets 44,349 48,135 ------------------------------------------------------------------------------------------------ Total current assets 374,380 363,385 ------------------------------------------------------------------------------------------------ Property, plant and equipment, net 374,419 388,240 Goodwill 297,585 299,392 Other intangible assets, net 17,140 19,687 Other assets, net 40,504 36,689 ------------------------------------------------------------------------------------------------ TOTAL ASSETS $1,104,028 $1,107,393 ------------------------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 146,507 $ 140,468 Accrued compensation and related liabilities 54,421 53,209 Other current liabilities 59,379 64,360 Current maturities of long-term debt 2,584 2,575 ------------------------------------------------------------------------------------------------ Total current liabilities 262,891 260,612 ------------------------------------------------------------------------------------------------ Long-term debt, less current maturities 770,372 746,386 Deferred income taxes - 6,717 Other liabilities 26,140 25,659 ------------------------------------------------------------------------------------------------ Total liabilities 1,059,403 1,039,374 ------------------------------------------------------------------------------------------------ Shareholders' equity: Common stock 484 484 Paid-in capital 213,896 213,850 Retained deficit (168,932) (150,331) Deferred compensation (1,424) (1,714) Accumulated other comprehensive income 601 5,730 ------------------------------------------------------------------------------------------------ Total shareholders' equity 44,625 68,019 ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,104,028 $1,107,393 ------------------------------------------------------------------------------------------------
3 CONSOLIDATED STATEMENTS OF OPERATIONS Cenveo, Inc. and Subsidiaries (in thousands, except per share data) (unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2004 2003 2004 2003 Net sales $409,396 $407,826 $ 833,138 $835,146 Cost of sales 325,762 328,705 661,084 672,098 ------------------------------------------------------------------------------------------------------------------------------ Gross profit 83,634 79,121 172,054 163,048 ------------------------------------------------------------------------------------------------------------------------------ Operating expenses: Selling, general and administrative expenses 66,415 62,722 134,413 126,157 Amortization of intangibles 1,396 418 2,801 863 Restructuring charges 1,018 356 1,121 1,125 ------------------------------------------------------------------------------------------------------------------------------ Operating income 14,805 15,625 33,719 34,903 ------------------------------------------------------------------------------------------------------------------------------ Other expense: Interest expense 17,513 18,119 35,912 36,333 Loss on early extinguishment of debt - - 17,748 - Other 527 355 968 487 ------------------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations before income taxes and cumulative effect of a change in accounting principle (3,235) (2,849) (20,909) (1,917) Income tax expense (benefit) 61 (1,168) (1,078) (767) ------------------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations before cumulative effect of a change in accounting principle (3,296) (1,681) (19,831) (1,150) Loss (gain) on disposal of discontinued operations (1,230) 581 (1,230) (1,919) Cumulative effect of a change in accounting principle - - - 322 ------------------------------------------------------------------------------------------------------------------------------ Net income (loss) $ (2,066) $ (2,262) $ (18,601) $ 447 ------------------------------------------------------------------------------------------------------------------------------ Income (loss) per share - basic and diluted: Continuing operations $ (0.07) $ (0.04) $ (0.42) $ (0.02) Discontinued operations 0.03 (0.01) 0.03 0.04 Cumulative effect of a change in accounting principle - - - (0.01) ------------------------------------------------------------------------------------------------------------------------------ Income (loss) per share - basic and diluted $ (0.04) $ (0.05) $ (0.39) $ 0.01 ------------------------------------------------------------------------------------------------------------------------------ Weighted averages shares - basic 47,740 47,679 47,737 47,672 Weighted averages shares - diluted 47,740 47,679 47,737 48,207
4 CONSOLIDATED CASH FLOW STATEMENTS Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
SIX MONTHS ENDED JUNE 30 2004 2003 Cash flows from operating activities: Income (loss) from continuing operations $ (19,831) $ (1,150) Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: Depreciation 22,841 23,347 Amortization 5,093 2,815 Write-off of deferred financing fees 4,220 - Deferred income tax benefit (7,949) (6,270) Loss (gain) on disposal of assets 240 581 Other noncash charges, net (366) 846 Changes in operating assets and liabilities, excluding effects of operations sold: Accounts receivable 4,210 26,150 Inventories (20,011) 4,070 Accounts payable and accrued compensation 7,686 (37,009) Income taxes payable (991) 8,808 Other working capital changes 211 (2,634) Other, net (76) 605 ------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities (4,723) 20,159 Cash flows from investing activities: Capital expenditures (12,460) (13,010) Proceeds from divestitures, net 2,000 3,864 Proceeds from sales of property, plant and equipment 346 627 ------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (10,114) (8,519) Cash flows from financing activities: Proceeds from long-term debt 1,677,071 947,205 Repayment of long-term debt (1,653,074) (960,947) Proceeds from the issuance of common stock 46 16 Capitalized loan fees (8,936) (437) ------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 15,107 (14,163) Effect of exchange rate changes on cash and cash equivalents (412) 619 ------------------------------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (142) (1,904) Cash and cash equivalents at beginning of year 307 2,650 ------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of quarter $ 165 $ 746 -------------------------------------------------------------------------------------------------------------------------
5 SEGMENT RESULTS Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2004 2003 2004 2003 Net sales: Commercial $307,583 $306,608 $631,432 $630,670 Resale 101,813 101,218 201,706 204,476 --------------------------------------------------------------------------------------------------------------------- Total net sales $409,396 $407,826 $833,138 $835,146 --------------------------------------------------------------------------------------------------------------------- Operating income (expense): Commercial $ 9,920 $ 10,285 $ 21,914 $ 22,765 Resale 12,359 10,455 23,822 22,309 Corporate services (7,474) (5,115) (12,017) (10,171) --------------------------------------------------------------------------------------------------------------------- Total operating income $ 14,805 $ 15,625 $ 33,719 $ 34,903 --------------------------------------------------------------------------------------------------------------------- EBITDA (1): Commercial $ 20,213 $ 19,215 $ 42,420 $ 41,132 Resale 14,685 12,925 28,500 27,331 Corporate services (5,828) (4,828) (10,427) (9,837) --------------------------------------------------------------------------------------------------------------------- Total EBITDA $ 29,070 $ 27,312 $ 60,493 $ 58,626 --------------------------------------------------------------------------------------------------------------------- Net sales by product line: Commercial printing $186,873 $185,638 $385,073 $382,468 Envelopes 172,077 171,845 346,180 352,035 Business forms and labels 50,446 50,343 101,885 100,643 --------------------------------------------------------------------------------------------------------------------- Total net sales $409,396 $407,826 $833,138 $835,146 --------------------------------------------------------------------------------------------------------------------- (1) See Appendix 1 in the Supplemental Information to the Press Release for the definition of EBITDA, the reconciliation of net income to EBITDA and the reason why EBITDA is a relevant non-GAAP financial measure for Cenveo.
6 APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003 Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2004 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $10,046 $12,344 $(24,457) $(2,066) Interest - - 17,513 17,513 Taxes, including taxes included in discontinued operations - - 831 831 Depreciation 8,985 2,206 186 11,376 Amortization (excluding amortization included in interest) 1,182 135 99 1,416 ------------------------------------------------------------------------------------------------------------------------ EBITDA $20,213 $14,685 $ (5,828) $29,070 FOR THE THREE MONTHS ENDED JUNE 30, 2003 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $ 9,845 $10,389 $(22,496) $(2,262) Interest - - 18,119 18,119 Taxes - - (1,168) (1,168) Tax adjustment included in discontinued operations - - 581 581 Depreciation 9,189 2,300 135 11,624 Amortization (excluding amortization included in interest) 181 236 1 418 ------------------------------------------------------------------------------------------------------------------------ EBITDA $19,215 $12,925 $ (4,828) $27,312 Note: This schedule is a reconciliation of net income to EBITDA which we define as earnings before interest, taxes, depreciation and amortization and the income tax impact included in the gain on the disposal of discontinued operations recorded in 2004 and the tax adjustment reported as a gain on disposal of discontinued operations in 2003. EBITDA should not be considered as an alternative to any measure of operating results as promulgated under accounting principles generally accepted in the United States (such as operating income or net income), nor should it be considered as an indicator of our overall financial performance. EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of results. Additionally, our method of calculating EBITDA may be different from the method used by other companies, and therefore, comparability may be limited. EBITDA has not been provided as a measure of liquidity. We believe EBITDA provides useful supplemental information to investors since it excludes the impact of investing or financing transactions on our operating operating results.
7 APPENDIX 1 - RECONCILIATION OF NET INCOME TO EBITDA FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 Cenveo, Inc. and Subsidiaries (in thousands) (unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2004 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $21,977 $23,753 $(64,332) $(18,601) Loss on early extinguishment of debt - - 17,748 17,748 Interest - - 35,912 35,912 Taxes, including taxes included in discontinued operations - - (308) (308) Depreciation 18,010 4,477 355 22,842 Amortization (excluding amortization included in interest) 2,433 270 198 2,901 ------------------------------------------------------------------------------------------------------------------------ EBITDA $42,420 $28,500 $(10,427) $ 60,493 FOR THE SIX MONTHS ENDED JUNE 30, 2003 COMMERCIAL RESALE CORPORATE TOTAL Net income (loss) $22,314 $22,210 $(44,077) $ 447 Tax adjustment included in discontinued operations - - (1,919) (1,919) Cumulative effect of a change in accounting principle - - 322 322 Interest - - 36,333 36,333 Taxes - - (767) (767) Depreciation 18,423 4,653 271 23,347 Amortization (excluding amortization included in interest) 395 468 - 863 ------------------------------------------------------------------------------------------------------------------------- EBITDA $41,132 $27,331 $ (9,837) $58,626 Note: This schedule is a reconciliation of net income to EBITDA which we define as earnings before interest, taxes, depreciation and amortization and excluding the loss from the early extinguishment of debt and the income tax impact included in the gain on the disposal of discontinued operations recorded in 2004, and the tax adjustment reported as a gain on disposal of discontinued operations and the cumulative effect of a change in accounting principle in 2003. EBITDA should not be considered as an alternative to any measure of operating results as promulgated under accounting principles generally accepted in the United States (such as operating income or net income), nor should it be considered as an indicator of our overall financial performance. EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of results. Additionally, our method of calculating EBITDA may be different from the method used by other companies, and therefore, comparability may be limited. EBITDA has not been provided as a measure of liquidity. We believe EBITDA provides useful supplemental information to investors since it excludes the impact of investing or financing transactions on our operating results.
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