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Cenveo Announces 3Q 2013 Results



Published November 8, 2013
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Cenveo, Inc. announced results for the three and nine months ended Sept. 28, 2013. The reported results include the effect of the acquisition of certain assets of National Envelope on Sept. 16, 2013, while the custom envelope division is reported as a discontinued operation.

"Our third quarter results were in line with our expectations. We continued to see similar trends during the third quarter that we experienced in the first half of the year with negative pricing pressures in our envelope and commercial print businesses impacting our results. However, several developments late in the third quarter began to change the operating landscape for us, including the acquisition of certain assets of National Envelope, which closed in mid-September, and the divestiture of our custom envelope division, which occurred at the end of the quarter," said Robert G. Burton Sr., chairman and CEO.

"Despite the short period of operating the National Envelope assets, we are pleased with our progress to date and the fact that these assets operated profitably in a short period of time,” Burton added. “These immediate results give us early confidence that our integration plan is on track, and our target to achieve $30 million in annual run rate EBITDA by the end of next year is attainable. Our packaging facility, which experienced the press fire earlier this year, finally achieved similar pre-fire throughput levels during September as well. Given these strategic transactions, signs of continued positive results within our label and packaging operations, pricing normalization in the envelope market and improving trends within our print business, we are optimistic that the fourth quarter and, more importantly, 2014 will be much stronger for Cenveo than what we have experienced to date in 2013."

The company generated net sales of $442.8 million for the three months ended Sept. 28, 2013, compared to $437.2 million for the same period last year, an increase of 1.3%. The increase in net sales is attributable to higher sales volumes in our direct envelope business due to our market share initiatives as well as National Envelope's sales for the stub period post acquisition. These increases were offset substantially by sales declines in our commercial print operations due to lower customer demand and continued pricing pressures.

The company generated net sales of $1.27 billion in the nine months ended Sept. 28, 2013 versus $1.30 billion in the nine months ended Sept. 29, 2012. This decrease primarily relates to our commercial printing operations due to lower customer demand and continued pricing pressures, partially offset by an increase in sales from our envelope operations due to our market share initiatives and higher direct mail volumes as well as National Envelope's sales for the stub period post acquisition.

Operating income was $16.5 million for the three months ended Sept. 28, 2013, compared to $32.3 million for the same period last year. Non-GAAP operating income was $28.8 million for the three months ended Sept. 28, 2013, compared to $39.6 million for the same period last year. Operating income was $45.0 million for the nine months ended Sept. 28, 2013, compared to $69.5 million for the same period last year.

Non-GAAP operating income was $69.5 million for the nine months ended September 28, 2013, compared to $101.5 million for the same period last year. The decrease in operating income in both periods was primarily due to lower average selling prices and higher input costs within our envelope and commercial printing operations, and acquisition costs related to National Envelope.

"During the quarter we saw revenue growth across our envelope, labels and packaging businesses,” Burton concluded. “In our envelope operations we have continued to see strong growth in direct mail volumes as credit card mailing volumes have increased over 15% year to date. The envelope pricing pressures due to recent industry dynamics, which continued in the third quarter, have recently begun to reverse due to market normalization and as industry capacity continues to be rationalized. We are currently reviewing all strategic options for our operations as we look to re-position the company for the future. During the third quarter we completed the divestiture of our custom envelope division for approximately $50 million in value and we are currently evaluating several options regarding other parts of our businesses. As we look toward 2014, I am very pleased with the direction the company is heading. I am optimistic the strategy we have put in place will create value and deliver improved results our shareholders expect.”


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