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RR Donnelley Reports Q2, Splits Into 3 Publicly Traded Companies

Wednesday, August 05, 2015

Press release from the issuing company

CHICAGO - R.R. Donnelley & Sons Company (NASDAQ:RRD) today reported financial results for the second quarter of 2015:

Highlights:

  • Second-quarter net sales of $2.7 billion declined 5.3% from the second quarter of 2014; organic net sales declined 2.1% from the second quarter of 2014
  • Second-quarter GAAP net earnings attributable to common shareholders of $43.5 million, or $0.21 per diluted share, compared to GAAP net earnings attributable to common shareholders in the second quarter of 2014 of $64.7 million, or $0.32 per diluted share
  • Second-quarter non-GAAP net earnings attributable to common shareholders of $83.6 million, or $0.41 per diluted share, compared to non-GAAP net earnings attributable to common shareholders in the second quarter of 2014 of $84.4 million, or $0.42 per diluted share
  • Second-quarter operating cash flow of $205.3 million and free cash flow of $152.7 million exceeded the second quarter of 2014 by $55.2 millionand $59.9 million, respectively
  • Company provides updated guidance for full-year 2015; includes the impact of the acquisition of Courier Corporation, the sale of its operations in Venezuela and an updated view on the negative impact of foreign exchange rates  
  • Company separately announces intent to create three independent publicly traded companies

"Despite a challenging demand environment, we aggressively managed our cost structure to achieve a non-GAAP adjusted EBITDA margin of 11.3%," said Thomas J. Quinlan III, RR Donnelley's President and Chief Executive Officer.  "In addition, we are pleased with our second quarter free cash flow of $152.7 million, which represented a 65% improvement from the second quarter of last year."

Quinlan continued, "As we look to the back half of 2015, we will continue to aggressively manage costs, which is reflected in our improved non-GAAP adjusted EBITDA margin guidance for full-year 2015."

Net Sales
Net sales in the quarter were $2.7 billion, down $154.4 million, or 5.3%, from the second quarter of 2014.  After adjusting for the impact of acquisitions, changes in foreign exchange rates, dispositions and changes in pass-through paper, organic sales decreased 2.1% from the second quarter of 2014, as increases in the Strategic Services and International segments only partially offset declines in the Publishing and Retail Services and Variable Print segments.

GAAP Earnings
Second-quarter 2015 net earnings attributable to common shareholders was $43.5 million, or $0.21 per diluted share, compared to net earnings attributable to common shareholders of $64.7 million, or $0.32 per diluted share, in the second quarter of 2014.  The second-quarter net earnings attributable to common shareholders included pre-tax charges of $50.9 million and $28.3 million in 2015 and 2014, respectively, all of which are excluded from the presentation of non-GAAP net earnings attributable to common shareholders.  Additional details regarding the amount and nature of these and other items are included in the attached schedules.

Non-GAAP Earnings
Non-GAAP adjusted EBITDA in the second quarter of 2015 was $309.2 million, or 11.3% of net sales, compared to $325.6 million, or 11.2% of net sales, in the second quarter of 2014.  The decrease in non-GAAP adjusted EBITDA was due to volume declines in Variable Print and Publishing and Retail Services segments and price pressure in all four operating segments.  These decreases were partially offset by productivity improvements and lower variable compensation expense, which also positively impacted margin.

Non-GAAP net earnings attributable to common shareholders totaled $83.6 million, or $0.41 per diluted share, in the second quarter of 2015 compared to $84.4 million, or $0.42 per diluted share, in the second quarter of 2014.  Reconciliations of net earnings attributable to common shareholders to non-GAAP adjusted EBITDA and non-GAAP net earnings attributable to common shareholders are presented in the attached schedules.

Full Release

 

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