Cenveo’s Sales Increase, Robert G. Burton, Jr. Appointed PresidentAugust 10, 2011
Adjusted EBITDA for the three months ended July 2, 2011 was $57.6 million, compared to $54.0 million for the three months ended July 3, 2010, an increase of approximately 6.7 percent. Adjusted EBITDA for the six months ended July 2, 2011, was $108.7 million, compared to $99.5 million for the six months ended July 3, 2010, an increase of approximately 9.2 percent. These increases are primarily attributable to stronger performance across the majority of the Company’s product lines combined with contributions from the EPG acquisition.
The results for the second quarter and the first six months of 2011 include a preliminary bargain purchase gain related to the EPG acquisition. The purchase price allocation of acquired assets and liabilities assumed in the EPG acquisition and the related bargain purchase gain recognized in the company’s statement of operations are preliminary. Differences between the preliminary and final purchase price allocations could have a material impact on the company’s financial statements, including the bargain purchase gain. The company will finalize the purchase price allocation as soon as practicable within the EPG acquisition’s measurement period, but in no event later than one year after the acquisition date.
Robert G. Burton, Sr., chairman and CEO, stated, “Cenveo had another strong quarter with continued operational and financial improvement, meaningful net debt pay down of $20 million and significant progress integrating EPG into our operations. Once again we saw organic revenue growth in our direct envelope and custom label businesses which, combined with our continued focus on costs, led to improvements in our revenues, operating income, and Adjusted EBITDA.
“Despite uncertainty in the economy, the positive trends which we have seen across most of our businesses since the end of 2010 continued through the second quarter of 2011. Our direct envelope group posted another quarter of strong organic sales growth of over 6 percent, benefiting from strong direct mail volumes, favorable product mix and the consolidation efforts related to the EPG integration. To date, we have announced the consolidation of three EPG facilities into our existing envelope operations and have made significant progress in aligning equipment across our leading envelope manufacturing platform.
“Our custom label and packaging products once again delivered another solid performance as our customers spending in those end markets grew in line with expectations. While our publisher services group continues to be challenged by weakness in the publishing industry, our content management offering continues to grow as our global platform benefits from the outsourcing of project management and composition services.
“Despite weaker seasonality this quarter, our commercial print businesses delivered strong year over year margin improvement benefiting from our consolidation plans executed in prior years and continued improvements in the automotive, financial services, travel and leisure markets,” Burton reported.
“We now have two strong quarters behind us, positioning us well to deliver our revenue, free cash flow and Adjusted EBITDA objectives in the back half of the year despite the challenging macro-environment,” he continued. “Our integration efforts in connection with EPG are well underway and will begin to deliver meaningful savings in the fourth quarter when we fully transition off EPG’s legacy systems and back office functions. We will continue our focus on driving free cash flow and deleveraging our balance sheet. In the short term we will look to improve our working capital position.
“We believe that by focusing our attention on working capital improvements, we can deliver upwards of $40 million of incremental cash flow by the end of 2012. Over the longer term, we remain committed to executing our game plan of operating niche growth businesses while using our free cash flow to invest in and grow our higher margin product lines or pay down debt.
“To further show our commitment to these goals, the board of directors has appointed Robert G. Burton, Jr. to the position of president. He will be responsible for overseeing this plan as we continue to position the company for the future. His 15 years of industry experience and current responsibilities make him the ideal person to see this initiative through to completion. He has my and the board’s full support as we continue to look to grow our higher margin product lines and free cash flow.”
Cenveo (NYSE: CVO), headquartered in Stamford, CT, is a leading global provider of print and related resources, offering world-class solutions in the areas of envelopes, custom labels, specialty packaging, commercial print, publisher solutions and business documents. The company provides a one-stop offering through services ranging from design and content management to fulfillment and distribution. With approximately 10,000 employees worldwide, we pride ourselves on delivering quality solutions and service every day for our customers.