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RR Donnelley Reports 2Q 2013 Results



Published July 29, 2013
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R.R. Donnelley & Sons Company reported financial results for the second quarter of 2013.

Second-quarter 2013 highlights:
• Net sales of $2.6 billion grew 1.7% from the second quarter of 2012.
• GAAP net earnings attributable to common shareholders of $65.4 million, or $0.36 per diluted share.
• Non-GAAP net earnings attributable to common shareholders of $82.5 million, or $0.45 per diluted share.
• Non-GAAP adjusted EBITDA of $304.1 million, or 11.8% of net sales.
• Free cash flow of $107.3 million exceeds the second quarter of 2012 by $93.8 million.
• Company reaffirms revenue, margin and free cash flow guidance for full-year 2013.

"We are pleased with our results, as the revenue trend continued to improve during the second quarter. The year-over-year change in organic revenue is the best we've experienced in the last seven quarters, and represents a 40 basis-point improvement from the first-quarter change," said Thomas J. Quinlan III, R.R. Donnelley's president and CEO. "In addition, we continued to invest in the business, at the same time improving free cash flow by over $90 million from the same quarter last year. We remain on track to deliver our full-year guidance, including free cash flow in the range of $400 million to $500 million, that will allow us to migrate toward our targeted gross leverage range of 2.25x to 2.75x on a long-term sustainable basis."

Net sales in the quarter were $2.6 billion, up $43.0 million, or 1.7%, from the second quarter of 2012 due to the impact of 2012 acquisitions and volume growth in the U.S. Print and Related Services segment.

After adjusting for the impact of acquisitions, changes in foreign exchange rates and pass-through paper sales, organic sales declined 0.8% from the second quarter of 2012 due to price erosion in both segments and volume declines in the International segment, partially offset by volume growth in the U.S. Print and Related Services segment.

Operating income in the second quarter of 2013 was $173.2 million, which was impacted by restructuring and impairment charges and acquisition-related expenses totaling $19.9 million, compared to operating income in the second quarter of 2012 of $163.9 million, which included restructuring and impairment charges and acquisition-related expenses totaling $34.5 million.

Non-GAAP adjusted EBITDA was $304.1 million in the second quarter of 2013 compared to $319.3 million in the second quarter of 2012. Non-GAAP adjusted EBITDA margin in the second quarter of 2013 was 11.8%, or 80 basis points lower than in the second quarter of 2012, as price pressure, wage and other inflation, lower pension income and pass-through postage revenue from the Presort Solutions business acquired in 2012 more than offset lower benefits-related expenses, higher volume and a favorable product mix.


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