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RR Donnelley Q1 Sales and Earnings Decline

Wednesday, May 04, 2016

Press release from the issuing company

CHICAGO -  R.R. Donnelley & Sons Company (NASDAQ:RRD) today reported financial results for the first quarter of 2016.

Highlights:

  • First-quarter net sales of $2.7 billion declined 3.4% from the first quarter of 2015; organic net sales declined 3.1% from the first quarter of 2015
  • First-quarter GAAP net earnings attributable to common shareholders of $39.8 million, or $0.19 per diluted share, compared to GAAP net earnings attributable to common shareholders in the first quarter of 2015 of $22.3 million, or $0.11 per diluted share
  • First-quarter non-GAAP net earnings attributable to common shareholders of $47.2 million, or $0.22 per diluted share, compared to non-GAAP net earnings attributable to common shareholders in the first quarter of 2015 of $51.9 million, or $0.26 per diluted share
  • First-quarter non-GAAP adjusted EBITDA of $250.2 million, or 9.4% of net sales, compared to $259.3 million, or 9.4% of net sales, in the first quarter of 2015 
  • Company reiterates full-year 2016 guidance

"We are pleased with our first-quarter results.  While the demand environment remained challenging, our disciplined cost management allowed us to hold EBITDA margin flat compared to last year's first quarter.  In addition, we saw a marked improvement in the year-over-year revenue trend as the quarter progressed," said Thomas J. Quinlan III, RR Donnelley's President and Chief Executive Officer. 

Quinlan continued, "Our outlook for the full year is in line with our previous guidance, which we reiterate today.  We are focused on achieving these expectations, and at the same time, we are making significant progress on the spin-offs of LSC Communications and Donnelley Financial Solutions, both of which remain on track to be completed in October."

Net Sales 
Net sales in the quarter were $2.7 billion, down $94.7 million, or 3.4%, from the first quarter of 2015.  After adjusting for the impact of acquisitions and dispositions, as well as changes in foreign exchange rates and pass-through paper sales, organic sales decreased 3.1% from the first quarter of 2015, as an increase in the International segment only partially offset declines in the Strategic Services, Variable Print and Publishing and Retail Services segments. 

GAAP Earnings
First-quarter 2016 net earnings attributable to common shareholders were $39.8 million, or $0.19 per diluted share, compared to net earnings attributable to common shareholders of $22.3 million, or $0.11 per diluted share, in the first quarter of 2015.  The first-quarter net earnings attributable to common shareholders included pre-tax charges of $9.9 million and $60.2 million in 2016 and 2015, 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 first quarter of 2016 was $250.2 million, compared to $259.3 million in the first quarter of 2015.  Non-GAAP adjusted EBITDA margin in the first quarter of 2016 was 9.4%, flat to the first quarter of 2015, as productivity improvements and higher pension income offset price pressure.  

Non-GAAP net earnings attributable to common shareholders totaled $47.2 million, or $0.22 per diluted share, in the first quarter of 2016 compared to $51.9 million, or $0.26 per diluted share, in the first quarter of 2015.  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. 

2016 Guidance
The Company reiterates the following full-year guidance for 2016, which remains unchanged from previous guidance and excludes the impact of the previously announced pending spin-off transactions: 

   
  Current Guidance
Net sales $11.3 to $11.5 billion
Non-GAAP adjusted EBITDA margin 10.4% to 10.6%
Depreciation and amortization $430 to $440 million
Interest expense $260 to $270 million
Non-GAAP effective tax rate 34% to 35%
Diluted share count Approximately 211 million
Capital expenditures $200 to $225 million
Free cash flow(1) $400 to $500 million

(1)  Defined as operating cash flow less capital expenditures 

 

Full Release

 

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