July 2, 2022
  • July 2, 2022

RRD Reports First Quarter 2021 Financial Results

By on April 28, 2021 0

RR Donnelley & Sons Company has released its financial results for the first quarter of 2021.

Key messages for the first quarter

  • GAAP net sales, including the impact of a divestiture and foreign exchange rate, decreased 3.6%; Non-GAAP organic net sales decreased 4.3%; both rates of decline improved from the previous three quarters
  • Lower GAAP and non-GAAP operating profit and margins compared to the strong results of the previous year; both benefited from continued cost reductions, but were negatively impacted by around $ 11 million in unfavorable exchange rates
  • GAAP loss per share from continuing operations of $ 0.03 and adjusted non-GAAP adjusted earnings per share from continuing operations of $ 0.08, both negatively impacted by a higher effective tax rate
  • Operating cash flow improved $ 61 million over last year due to continuous improvement in working capital
  • The gross debt ratio of 3.9x improved by 0.9x compared to March 31, 2020; 3.2x net leverage ratio 0.6x improved compared to same period
  • Recently announced offer of $ 400 million of 6.125% senior secured notes due 2026 and expected to close on April 28
RRD has released its fourth quarter and full year 2020 financial results.

Daniel knotts

“We have got off to a good start in 2021 as we continue to provide critical marketing and business communications to our clients while continuing to protect the health and safety of our colleagues around the world,” said Dan Knotts, President and CEO from the management of RRD. “Our first quarter organic sales rate marked our third consecutive quarter of improved sales trends, we continued to execute our cost reduction plans to align with customer demand, and we achieved our best operating cash flow performance in the first quarter since the spin in 2016. We have also made significant progress in improving the flexibility of our balance sheet through the recently announced extension of the maturity date of our facility. ABL loan and the refinancing of a significant portion of our 2024 term loans with new senior secured notes. While the pace of the economic recovery remains uncertain, we continue to successfully advance our strategic priorities and are confident that we will emerge from the pandemic as a stronger company. “

Financial highlights

The following tables provide an overview of RRD’s financial performance:

rrd

Click to enlarge.

First quarter net sales were $ 1.17 billion, down $ 43.8 million or 3.6% from the first quarter of 2020. The decrease includes an impact of $ 6.5 million. dollars from the previous closure of our operations in Chile and an increase of nearly $ 15 million due to foreign currency. The current period has continued to be negatively affected by the continued impact of the COVID-19 pandemic and last year’s census project, which ended in mid-2020.

Organic net sales fell 4.3%. The Business Services segment grew 3.2% on a GAAP basis and 2.4% on a non-GAAP organic basis, while the Marketing Solutions segment was down 22.5% on an organic GAAP basis and not GAAP compared to the first quarter of 2020. Business Services The segment experienced growth in several of our strategic areas, including packaging, labels and supply chain management, while net sales of corporate services. marketing were negatively affected by last year’s census project.

Operating income was $ 25.1 million in the first quarter of 2021, compared to operating income of $ 33.1 million in the first quarter of last year.

Adjusted non-GAAP operating income of $ 37.4 million decreased $ 13.0 million compared to the prior year period. The decrease is primarily attributable to an unfavorable foreign exchange rate of nearly $ 11 million, primarily related to operations in China. Additionally, the proactive steps taken to reduce the company’s cost structure nearly offset the impact of declining sales, which included the impact of last year’s census project and the ongoing pandemic, as well. as the increase in the variable incentive compensation expense.

Loss per share from continuing operations attributable to common shareholders was $ 0.03 in the first quarter of 2021, compared to earnings per share of $ 0.10 in the first quarter of 2020. Results for 2021 were negatively affected by the lower operating income and higher income taxes, slightly offset by lower interest expense reflecting lower outstanding debt and a lower variable interest rate. The effective tax rate for the previous year reflected the benefits of the CARES Act.

Non-GAAP adjusted earnings per share from continuing operations attributable to common shareholders of $ 0.08 in the first quarter of 2021 decreased by $ 0.27 in the first quarter of 2020, mainly due to lower adjusted operating income and unfavorable income taxes.

Other highlights and information

Cash used in operating activities of $ 18.9 million in the first quarter of 2021 improved by $ 61 million compared to the prior year period. The improvement is mainly related to the improvement in working capital, partially offset by lower profits and payments related to the bankruptcy of LSC.

Capital spending in the first quarter of 2021 was $ 13.0 million compared to $ 17.7 million in the same period a year earlier.

As at March 31, 2021, cash on hand was $ 261.6 million, down $ 27.2 million from December 31, 2020. Total debt outstanding at quarter end was 1.5 billion dollars, which is unchanged from the end of the previous fiscal year. Availability under the credit facility was $ 512 million as at March 31, 2021. Total liquidity, including cash, was $ 774 million, compared to $ 865 million as at December 31, 2020 and $ 644 million. dollars as of March 31, 2020.

In 2020, the Company finalized the sale of its DLS Worldwide, International Logistics and Courier Logistics businesses. The Company has reflected logistics activities as discontinued operations, and the financial results of these activities have been excluded from continuing operations and segment results for all periods presented, unless otherwise indicated.

Outlook

While COVID-19 infection rates remain high in many parts of the world, the coming year continues to present many uncertainties. As such, the company is unable to provide its typical forecast for the remainder of the year. However, the company provides the following observations and guidance for the year.

  • Net sales for the year are expected to be stable at lower single digits, given cuts in the census and one-off pandemic-related projects in the last half of 2020, offset by a modest economic recovery over the course of the year. of the year. Second-quarter net sales are expected to be between $ 1.10 billion and $ 1.15 billion, up 8 to 13 percent, organically reflecting the improvement in the pandemic partially offset by last year’s census project.
  • Excluding the unpredictable impact of changes in exchange rates and the possible impact of future inflation and labor availability, adjusted non-GAAP operating profit and operating margin result are expected to be flat or slightly up from the previous year as the company continues to benefit from aggressive cost cutting actions. Non-GAAP adjusted operating income for the second quarter is expected to be higher year over year, reflecting increased volume and continued cost reduction efforts, partially offset by an unfavorable exchange rate of approximately $ 10 million assuming exchange rates don’t change Current rates.
  • Depreciation expense is expected to be approximately $ 135 million for the year.
  • Interest expense is expected to range from $ 120 million to $ 125 million, excluding GAAP only costs estimated to be between $ 9 million and $ 10 million associated with the termination of certain interest rate swap agreements in connection with the issuance of secured notes. first in April 2021 and early repayment of term loans. Interest expense is expected to include the benefits of lower average borrowing and a lower average interest rate in 2021 compared to 2020.
  • The effective non-GAAP tax rate for the full year is expected to be around 35%, which is higher than reported in 2020, as the one-time benefits were reflected in 2020 and the benefit of the law CARES has expired.
  • Cash flow from operations is expected to be slightly lower than last year, reflecting a reduction due to reimbursement of half of the employer portion of deferred payroll taxes in 2020 and payments to settle employee benefits. bankruptcy of LSC. Capital expenditures are expected to be approximately $ 80 million. As part of our China printing plant sale agreement, the company plans to raise an additional deposit of approximately $ 50 million in 2021. The company also plans to continue to generate additional proceeds from other monetization. assets, including the proceeds from the sale of additional facilities.

Source: RRD

The previous press release was provided by a company not affiliated with Printing impressions. The views expressed do not directly reflect the thoughts or opinions of staff at Printing impressions.