Cenveo Releases Q4, Full-Year Financials; Amends ABL Facility for Greater Flexibility, Liquidity
STAMFORD, CT—February 12, 2015—Cenveo, Inc. (NYSE: CVO) announced results for the three and 12 months ended Dec. 27, 2014.
"Our fourth quarter results were in line with our prior guidance as we substantially completed the integration of the National Envelope assets," stated Robert Burton, Sr., chairman and CEO. "We expect to see the benefits of the integration through improved operational performance across our envelope platform in 2015. As previously discussed, we believe we experienced approximately $20 million of disruption-related costs and lost profits during 2014 to complete the integration. Despite this disruption, we were able to generate over $31.2 million in cash flow from continuing operations during the fourth quarter and $51.2 million over the past six months. We were also encouraged by strong performances by our print and custom label businesses during the quarter, with both businesses showing organic growth of approximately 5 percent and 2 percent, respectively, compared to the same period last year. Additionally, our direct mail business remains strong as mailers continue to utilize our national footprint."
The Company generated net sales of $498.9 million for the three months ended Dec. 27, 2014, compared to $509.9 million for the same period last year, a decline of 2.1 percent. The decline in net sales for the fourth quarter is attributable to the consolidation of several envelope facilities during 2014 in connection with the accelerated integration of the National Envelope assets into our operations. The Company generated net sales of $1.9 billion for the year ended Dec. 27, 2014, compared to $1.8 billion for the same period last year, an increase of 9.6 percent. The increase in net sales for the full year is primarily due to sales generated from the integration of the National Envelope assets into our envelope operations, as National Envelope was only included in our 2013 results beginning on September 16, 2013, the date of acquisition, as well as our ability to pass along paper price increases to certain customers in our envelope operations.
Operating income was $11.0 million for the three months ended Dec. 27, 2014, compared to an operating loss of $15.7 million for the same period last year. Operating income was $43.8 million for the year ended Dec. 27, 2014, compared to $29.4 million for the same period last year. Results in both the fourth quarter of 2013 and the year ended 2013 were impacted by the $33.4 million impairment charge related to the retirement of certain trade names. Additionally, operating income in 2014 was impacted by expenses associated with the closure and consolidation of several envelope plants related to the integration of the National Envelope assets, and the impact of the higher cost structure of National Envelope. Non-GAAP operating income was $21.4 million for the three months ended Dec. 27, 2014, compared to $31.6 million for the same period last year, and $88.6 million for the year ended Dec. 27, 2014, compared to $101.1 million for the same period last year. A reconciliation of operating income (loss) to non-GAAP operating income is presented in the attached tables.
For the three months ended Dec. 27, 2014, the Company had a loss from continuing operations of $19.4 million, or $0.29 per diluted share, compared to a loss of $59.5 million, or $0.90 per diluted share, for the same period last year. For the year ended Dec. 27, 2014, the Company had a loss from continuing operations of $86.3 million, or $1.29 per diluted share, compared to a loss of $85.5 million, or $1.32 per diluted share, for the same period last year. Non-GAAP loss from continuing operations was $5.2 million, or $0.08 per diluted share, for the three months ended Dec. 27, 2014, as compared to non-GAAP income from continuing operations of $9.3 million, or $0.11 per diluted share, for the same period last year. For the year ended Dec. 27, 2014, non-GAAP loss from continuing operations was $12.8 million, or $0.19 per diluted share, compared to $6.2 million, or $0.10 per diluted share, for the same period last year. A reconciliation of loss from continuing operations to non-GAAP (loss) income from continuing operations is presented in the attached tables.
Adjusted EBITDA for the three months ended Dec. 27, 2014, was $36.6 million, compared to Adjusted EBITDA of $52.1 million for the same period last year. For the twelve months ended Dec. 27, 2014, Adjusted EBITDA was $159.6 million, compared to $167.2 million for the same period last year. These Adjusted EBITDA results do not include the approximately $20 million of disruption-related costs and lost profits referenced previously, and include a one-time benefit from a litigation settlement. A reconciliation of net loss to Adjusted EBITDA is presented in the attached tables.
Cash flow provided by operating activities of continuing operations for the three months ended Dec. 27, 2014, was $31.2 million, compared to $11.6 million for the same period last year. Cash flow provided by operating activities of continuing operations for the twelve months ended Dec. 27, 2014, was $25.8 million, compared to $22.3 million for the same period last year. The increase was primarily due to a source of cash from working capital, primarily due to a decline in inventories due to inventory management initiatives.
"As we turn our focus to 2015, we are looking to build upon the momentum created by actions taken over the past year by improving margins, driving stronger cash flow and paying down our higher cost debt," concluded Robert Burton, Sr., chairman and CEO. "We have recently amended our ABL Facility to provide us additional liquidity and flexibility. These changes included increasing the borrowing capacity by $10 million to $240 million, and providing us additional flexibility to address our highest interest rate debt instruments. The amendment also removed any limitations on asset sales as we continue to evaluate our options in regards to our strategic review of non-core assets. Finally, as part of the amendment, we gained the ability to enact a share repurchase program, allowing us to repurchase our shares subject to statutory compliance and market conditions. We have high expectations for 2015, and believe that all the hard work and efforts put forth in 2014 will serve as a springboard for improved results in 2015. I look forward to discussing our 2015 financial guidance, which includes meaningful increases in cash flow from operations and Adjusted EBITDA, along with some strategic initiatives, on our conference call tomorrow."
