Cenveo Announces 2Q 2015 Results

Cenveo, Inc. announced results for the three and six months ended June 27, 2015.
 
The company generated net sales of $460.9 million for the three months ended June 27, 2015, compared to $479.4 million for the same period last year, a decline of 3.9%. The company generated net sales of $936.0 million for the six months ended June 27, 2015, compared to $969.5 million for the same period last year, a decline of 3.5%.
 
The decline in net sales is attributable to the consolidation of several envelope facilities during the second half of 2014 in connection with the accelerated integration of the National Envelope assets with Cenveo’s existing operations and two new envelope facilities and continued pricing pressure in the company’s print business. Excluding the impact of the integration, Cenveo believes its envelope group net sales were up modestly, which is primarily attributable to product mix and pricing improvements, offset by volume declines.
 
“We are pleased with the performance of our operations during the second quarter,” said Robert G. Burton Sr., chairman and CEO. “Our results continue to reflect our consolidation efforts that were implemented in our envelope group as solid direct mail volumes and price increases offset the impact of facility closures that were completed throughout 2014.
 
“Our envelope segment Adjusted EBITDA margins for the second quarter were 10.2%, which we committed to achieving at the time we completed the acquisition of certain assets of National and began the integration process,” Burton added. “Our print, label and packaging groups continued to perform in-line with our expectations for the first six months of the year as well.”
 
Operating income was $23.2 million for the three months ended June 27, 2015, compared to operating income of $13.3 million for the same period last year, an improvement of 74.0%. Operating income was $41.4 million for the six months ended June 27, 2015, compared to operating income of $23.4 million for the same period last year, an improvement of 76.9%.
 
Operating income in 2014 was impacted by expenses associated with the closure and consolidation of several envelope facilities related to the integration of the National Envelope assets, which resulted in significant operating margin improvement and efficiencies in 2015.
 
For the three months ended June 27, 2015, the company had a loss from continuing operations of $2.4 million, or $0.04 per diluted share, compared to a loss of $39.3 million, or $0.59 per diluted share, for the same period last year. For the six months ended June 27, 2015, the company had a loss from continuing operations of $10.1 million, or $0.15 per diluted share, compared to a loss of $56.1 million, or $0.84 per diluted share, for the same period last year.
 
The improvement was primarily due to a $26.5 million debt extinguishment charge in the prior year in connection with the debt refinancing that was completed in June 2014, as well as the significant margin improvement and operating efficiencies resulting from the National Envelope integration.
 
Cash flow used in operating activities of continuing operations for the six months ended June 27, 2015 was $1.6 million, compared to a use of cash of $25.4 million for the same period last year. This improvement was primarily driven by cost reductions and efficiencies resulting from the completion of the accelerated integration of the National Envelope assets with existing operations and two new facilities, the timing of interest payments on long-term debt, and lower contributions to post-retirement plans versus the prior period.
 
Over the course of the last several months, Cenveo reports it has been actively involved in moving forward with its plan to review and potentially divest certain non-strategic assets. The company received multiple non-binding indications of interest for these assets and are currently evaluating them.
 
“As we begin the second half of 2015, we are excited about the progress we have made operationally and strategically,” Burton concluded. “We will look to continue executing our plan of improving margins, driving stronger cash flow and paying down our higher cost debt.”