RRD Reports Fourth Quarter and Full Year 2018 Results

CHICAGO - February 27, 2019 - R.R. Donnelley & Sons Company reported financial results for the fourth quarter and full year of 2018.

Dan Knotts, president and CEO

“I am pleased to report that in 2018 we achieved our second consecutive year of improved organic sales performance and our highest annual organic sales growth since 2014. With both our Business Services and Marketing Solutions segments delivering organic growth for the year, we are demonstrating our unique ability to provide solutions to help our clients improve customer engagement and drive business performance. Throughout the year, we took significant steps to position RRD for the future, including realigning our organizational structure, executing significant cost reduction initiatives and repositioning our balance sheet in support of our strategic priorities. I am also excited that we concluded the year with a $115 million contract award for the 2020 U.S. Census work,” said Dan Knotts, president and CEO. “As we look to 2019, we have a solid client opportunity pipeline and our teams are aggressively implementing plans to address the inflationary cost headwinds that we expect to face throughout the year. We also plan to increase our investments in critical strategic initiatives, including new client implementations, as we continue to execute our strategy and further establish RRD’s position as a leading provider of marketing and business communications.”

Financial highlights

The following table provides an overview of RRD’s financial performance:

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Net sales in the quarter were $1.76 billion, down $162.4 million or 8.4% from the fourth quarter of 2017, including a $119.5 million impact from the July 2018 disposition of the Print Logistics business. On an organic basis, consolidated net sales decreased 1.2% primarily driven by lower volume, including the planned exit of low margin sourcing business, and modest price pressure in the Business Services segment.

Income from operations was $90.0 million in the fourth quarter compared to $101.9 million in the fourth quarter of 2017. The fourth quarter of 2018 included pre-tax restructuring, impairment and other charges of $16.0 million. The prior year period included pre-tax restructuring, impairment and other charges of $6.3 million.

Non-GAAP adjusted income from operations of $107.0 million, or 6.1% of net sales, decreased $1.2 million from $108.2 million, or 5.6% of net sales, reported in the prior year period which included Print Logistics. Productivity improvements and favorable changes in foreign exchange rates of approximately $8 million were offset by volume and price declines as well as inflationary cost increases.

Diluted loss per share attributable to common stockholders was $0.32 in the fourth quarter of 2018 compared to $0.75 in the fourth quarter of 2017. The fourth quarter of 2018 included a $0.45 loss per share on debt extinguishments and a $0.32 loss per share for adjustments related to the Tax Cuts and Jobs Act of 2017 (“Tax Reform”). The fourth quarter of 2017 included a $1.57 loss per share related to Tax Reform. Non-GAAP adjusted diluted earnings per share attributable to common stockholders of $0.64 in 2018 decreased from $0.81 in 2017 primarily due to higher taxes.

Other highlights and information

Cash provided by operating activities of $267.4 million in the fourth quarter of 2018 increased $46.3 million versus the prior year period amount. Cash provided by operating activities during the twelve months ended December 31, 2018 was $203.5 million compared to $217.9 million in the prior year period. The full year decrease is primarily related to lower operating earnings, including the impact from the Print Logistics disposition. Capital expenditures in the twelve months ended December 31, 2018 were $104.4 million versus $108.5 million in the prior year period and proceeds from dispositions and other asset sales, including non-refundable deposits collected were $98.6 million in 2018.

As of December 31, 2018, cash on hand was $370.6 million and total debt outstanding was $2.09 billion, including $59.0 million drawn against the credit facility. Availability under the credit facility was $524.0 million at December 31, 2018.

2019 guidance

The Company provides its full year guidance as follows:

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Source: R.R. Donnelley

The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of Printing Impressions.