Integration of National Envelope Helps Fuel Cenveo's 17.1% Q1 2014 Sales Growth
STAMFORD, CT—May 8, 2014—Cenveo Inc. has announced results for the three months ended March 29, 2014.
Robert G. Burton Sr., chairman and CEO stated: "We are very pleased to report a positive start to the year and we remain on track to deliver our 2014 targets. We continue to see the positive operational trends that we experienced for the past couple of quarters. We are particularly pleased with our performance considering the severe weather that impacted our customers and our operations during the quarter. In particular, our label operations experienced disruption in customer ordering patterns and several of our envelope and label plants experienced greater than normal energy costs and reduced productivity during the quarter."
He continued: "During the first quarter, we had organic revenue growth from our envelope operations driven by increased pricing along with continued positive direct mail trends. Our print and packaging operations had organic revenue growth primarily driven by incremental volumes. The integration of National Envelope is now progressing at a rapid pace, as several of the planned consolidations are underway. During the quarter we increased our inventories to support this consolidation effort and ahead of announced commodity price increases. We expect to see the benefits of these strategies as we progress into the back half of the year."
The company generated net sales of $490.1 million for the three months ended March 29, 2014, compared to $418.6 million for the same period last year, an increase of 17.1 percent. The increase in net sales is primarily due to sales generated from the integration of National Envelope into our envelope operations, as National Envelope was not included in our results in the first quarter of 2013, as well as increases in our average selling price across our direct and office product envelope businesses. These increases were partially offset by sales declines in our label operations.
Operating income was $10.1 million for the three months ended March 29, 2014, compared to $11.7 million for the same period last year. The decrease was primarily due to increased selling, general and administrative expenses related to higher commission expense from increased sales and incremental expenses of National Envelope. The decrease in operating income was also the result of higher restructuring and integration charges from the closure and consolidation of two envelope plants and one print plant. Non-GAAP operating income was $20.2 million for the three months ended March 29, 2014, compared to $18.1 million for the same period last year.
For the three months ended March 29, 2014, the Company had a loss from continuing operations of $16.8 million, or $0.25 per diluted share, compared to a loss of $20.5 million, or $0.32 per diluted share for the same period last year. Non-GAAP loss from continuing operations was $7.7 million, or $0.12 per diluted share, for the three months ended March 29, 2014, as compared to non-GAAP loss from continuing operations of $12.0 million, or $0.19 per diluted share, for the same period last year.
Cash flow used in operating activities for the three months ended March 29, 2014, was $5.1 million, compared to cash flow provided by operating activities of $3.3 million for the same period last year. The use of cash was primarily due to an increase of inventory to ensure minimal disruption as we integrate and consolidate our envelope platform and the procurement of specific paper grades in advance of announced price increases. We also experienced meaningful cash outflows related to a vendor arrangement in connection with the National Envelope acquisition.
Adjusted EBITDA for the three months ended March 29, 2014, was $36.8 million, compared to Adjusted EBITDA of $33.5 million for the same period last year.
Robert G. Burton Sr., chairman and CEO concluded: "We are pleased with the momentum that we are seeing as we enter the second quarter. The integration of the National Envelope plants and efforts to improve margins across the organization will continue to be our daily focus until the integration plan is completed. We expect to continue to see operational improvement in our business each quarter and the benefits of our strategic initiatives to reposition the Company in higher growth areas."
Cenveo (NYSE: CVO), world headquartered in Stamford, CT, is a leading global provider of print and related resources, offering world-class solutions in the areas of custom boxes, custom labels, shrink sleeve labels, envelopes, commercial print, content management and publisher solutions. The company provides a one-stop offering through services ranging from design and content management to fulfillment and distribution. With a worldwide distribution platform, we pride ourselves on delivering quality solutions and service every day for our more than 100,000 customers.