Net sales in the quarter were $1.68 billion, up $30.7 million or 1.9% from the first quarter of 2016. This increase was primarily due to $38.7 million in net sales previously recognized by reporting units that are now part of LSC and Donnelley
Gross profit in the first quarter of 2017 was $327.8 million or 19.6% of net sales versus $332.5 million or 20.2% of net sales in the prior year quarter.
“Our first quarter financial performance represented a solid start to the year as we grew both our net sales and non-GAAP income from operations for the third consecutive quarter,” said Dan Knotts, RRD’s president and CEO. “In addition, we exceeded our expectations for operating cash flow in the quarter from achieving planned improvements in working capital initiatives earlier than expected, and we reduced our debt outstanding during the quarter. With the spinoffs behind us, we are focused on growing our business, and I am pleased to report that we remain on track to deliver against our previous net sales and income from operations guidance for 2017, and are raising our full year non-GAAP diluted earnings per share and operating cash flow guidance due to lower expected taxes.”
Income from operations of $47.4 million in the first quarter decreased by $10.2 million from $57.6 million reported in the 2016 quarter. A $12.3 million gain from the sale of two businesses in the first quarter of 2016 and higher restructuring charges in 2017 contributed to the decrease. Non-GAAP income from operations of $58.6 million, or 3.5% of net sales, increased $7.4 million from $51.2 million, or 3.1% of net sales, reported in the prior year period as lower SG&A and depreciation and amortization expense more than offset lower gross profit.
Net loss attributable to common stockholders from continuing operations was $50.1 million in the first quarter compared to net earnings of $3.6 million in the first quarter of 2016. The 2017 results included a loss of $51.6 million related to the sale of the company’s equity interest in LSC.
As of March 31, 2017, cash on hand was $244.3 million and total debt outstanding was $2.25 billion, including $40.0 million drawn against the credit facility. Availability under the credit facility was $458.2 million at March 31, 2017.
During March 2017, the company completed the disposition of its equity interest in LSC and used the net proceeds of $121.4 million to pay down borrowings under the credit facility. As previously announced, the Company plans to dispose of its 19.25% equity interest in Donnelley Financial and use the net proceeds to reduce debt during 2017.