Cenveo Reports Lower Q3 Sales

Stamford, Connecticut-based Cenveo Inc. announced results for the three and nine months ended Sept. 29, 2012.

The company generated net sales of $451.3 million for the third quarter of 2012, compared to $475.8 million for the third quarter of 2011. The decrease in net sales was primarily due to lower sales in the print and envelope product lines as a result of lower direct mail volumes from financial services customers, the closure and consolidation of a print plant in the first quarter of 2012 and the decision to exit certain low margin businesses. The company generated net sales of $1.3 billion for the first nine months of 2012, compared to $1.4 billion for the first nine months of 2011. The decrease in net sales was primarily due to lower sales in our print and envelope product lines as a result of lower direct mail volumes from our financial services customers, customer product launches in the first nine months of 2011 that did not repeat in the first nine months of 2012, the closure and consolidation of a print plant in the first quarter of 2012 and the decision to exit certain low margin businesses. Net sales from our label and packaging business lines remained relatively flat for the third quarter of 2012 and for the nine months of 2012 despite our decision to exit low margin businesses within those platforms, which has been offset largely by our e-commerce initiatives and new account wins in our packaging business.

Operating income was $35.0 million for the third quarter of 2012, compared to $33.2 million for the third quarter of 2011. The increase in operating income was primarily due to our lower cost structure as a result of the integration of our Envelope Product Group ("EPG") acquisition and lower compensation related expenses, offset by lower byproduct recoveries and increased pension expense. Non-GAAP operating income was $42.4 million for the third quarter of 2012, compared to $41.6 million for the third quarter of 2011. Operating income was $78.2 million for the first nine months of 2012, compared to $78.8 million for the first nine months of 2011. The decrease in operating income was primarily due to increased restructuring, impairment and other charges as a result of the closure and consolidation of a print plant in the first quarter of 2012 and other cost savings actions, lower by-product recoveries and increased pension expense, offset in part by the company’s lower cost structure due to the integration of its EPG acquisition and lower compensation related expenses. Non-GAAP operating income was $110.3 million for the first nine months of 2012, compared to $110.4 million for the first nine months of 2011. Non-GAAP operating income excludes integration, acquisition and other charges, stock-based compensation provision, restructuring, impairment and other charges.