Cenveo Reports Drop in Sales

Headquartered in Stamford, Connecticut, Cenveo, Inc. announced results for the three months ended March 31, 2012.

The company generated net sales of $455.6 million for the first quarter of 2012, compared to $477.0 million in the first quarter of 2011. The decrease in net sales was primarily due to lower sales in the company’s print and envelope product lines as a result of customer product launches in the first quarter of 2011 that did not repeat in the first quarter of 2012 and lower direct mail volumes from its financial services customers. Cenveo expects the direct mail market to strengthen in the second half of 2012. The company's custom label and specialty packaging products both displayed strong growth relating to customer wins and sales channel expansion.

Operating income was $14.2 million in the first quarter of 2012, compared to $19.3 million in the first quarter of 2011. The decrease in operating income was primarily due to increased restructuring, impairment and other charges as a result of a print plant closure and other cost savings actions executed in the first quarter of 2012, offset in part by our lower cost structure due to the integration of our Envelope Product Group ("EPG") acquisition and lower compensation related expenses. Non-GAAP operating income was $31.6 million in the first quarter of 2012, compared to $31.5 million in the first quarter of 2011. Non-GAAP operating income excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges.

In the first quarter of 2012, the company had a net loss of $27.2 million, or $0.43 per share, compared to net income of $2.8 million, or $0.04 per share in the first quarter of 2011. The results in the first quarter of 2012 include a loss on early extinguishment of debt, net of $10.6 million related to our recent debt refinancing and restructuring, impairment and other charges of $14.0 million as a result of a print plant closure and other cost savings actions executed in the first quarter of 2012, while the results in the first quarter of 2011 included a preliminary bargain purchase gain of $10.5 million related to the EPG acquisition and restructuring, impairment and other charges of $3.8 million. On a Non-GAAP basis, income from continuing operations was $3.3 million, or $0.04 per share, in the first quarter of 2012 as compared to $1.1 million, or $0.02 per share, in the first quarter of 2012. Non-GAAP income (loss) from continuing operations excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges, gain on bargain purchase, loss on early extinguishment of debt, net and adjusts income taxes to reflect an estimated cash tax rate. A reconciliation of (loss) income from continuing operations to Non-GAAP income from continuing operations is presented in the attached tables.