Highlights:
The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP (Generally Accepted Accounting Principles) measures, are useful because that information is an appropriate measure for evaluating the Company's operating performance. Internally, the Company uses this non-GAAP information as an indicator of business performance, and evaluates management's effectiveness with specific reference to these indicators. These measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Non-GAAP net earnings attributable to common shareholders totaled
"We are pleased with our first-quarter results," said
Business Review
The Company reports its results in two reportable segments: 1) U.S. Print and Related Services and 2) International. The Company reports as Corporate its unallocated expenses associated with general and administrative activities.
Summary
Net sales in the quarter were
Excluding restructuring and impairment charges and acquisition-related expenses, non-GAAP operating margin improved to 6.8% in the first quarter of 2012 from 6.2% in the first quarter of 2011. Lower pension expense, the customer rebate adjustment, lower depreciation and amortization, productivity improvements and lower variable compensation expense more than offset an unfavorable product mix and continued pricing pressure.
Segments
Net sales for the U.S. Print and Related Services segment decreased 3.1% from the first quarter of 2011 to
Net sales for the International segment of
Unallocated Corporate operating expenses decreased to
Outlook - 2012 Full-Year Guidance
For the full year of 2012, the Company continues to project non-GAAP net earnings per diluted share to be in the range of
Conference Call
About
For more information, and for
Use of Forward-Looking Statements
This news release contains "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date of this news release and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. The Company does not undertake to and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances after the date of such statement or to reflect the occurrence of
anticipated or unanticipated events. The factors that could cause material differences in the expected results of
|
|
||
| Condensed Consolidated Balance Sheets | ||
|
As of |
||
| (UNAUDITED) | ||
| (in millions, except per share data) | ||
| March 31, 2012 | December 31, 2011 | |
| Assets | ||
| Cash and cash equivalents | $ 415.0 | $ 449.7 |
| Receivables, less allowance for doubtful accounts | 1,858.8 | 1,844.2 |
| Income taxes receivable | 44.3 | 32.4 |
| Inventories | 518.9 | 510.9 |
| Prepaid expenses and other current assets | 137.7 | 131.4 |
| Total Current Assets | 2,974.7 | 2,968.6 |
| Property, plant and equipment - net | 1,802.8 | 1,854.6 |
| Goodwill | 2,228.2 | 2,222.1 |
| Other intangible assets - net | 568.3 | 590.3 |
| Other noncurrent assets | 638.8 | 646.1 |
| Total Assets | $ 8,212.8 | $ 8,281.7 |
| Liabilities | ||
| Accounts payable | $ 973.8 | $ 1,063.3 |
| Accrued liabilities | 758.4 | 817.0 |
| Short-term and current portion of long-term debt | 346.8 | 243.7 |
| Total Current Liabilities | 2,079.0 | 2,124.0 |
| Long-term debt | 3,408.5 | 3,416.8 |
| Pension liability | 1,050.4 | 1,076.3 |
| Postretirement benefits | 227.8 | 227.3 |
| Other noncurrent liabilities | 355.3 | 375.1 |
| Total Liabilities | 7,121.0 | 7,219.5 |
| Equity | ||
|
Common stock, |
303.7 | 303.7 |
| Authorized shares: 500.0 | ||
| Issued shares: 243.0 in 2012 and 2011 | ||
| Additional paid-in capital | 2,823.3 | 2,888.7 |
| Retained earnings | 333.4 | 342.4 |
| Accumulated other comprehensive loss | (820.6) | (863.3) |
| Treasury stock, at cost, 62.7 shares in 2012 (2011 - 64.5 shares) | (1,567.4) | (1,628.8) |
|
Total |
1,072.4 | 1,042.7 |
| Noncontrolling interests | 19.4 | 19.5 |
| Total Equity | 1,091.8 | 1,062.2 |
| Total Liabilities and Equity | $ 8,212.8 | $ 8,281.7 |
|
|
||||||
| Condensed Consolidated Statements of Operations | ||||||
|
For the Three Months Ended |
||||||
| (UNAUDITED) | ||||||
| (in millions, except per share data) | ||||||
| For the Three Months Ended March 31, | ||||||
|
2012 GAAP |
ADJUSTMENTS TO NON-GAAP |
2012 NON-GAAP |
2011 GAAP |
ADJUSTMENTS TO NON-GAAP |
2011 NON-GAAP |
|
| Products | $ 2,196.5 | $ -- | $ 2,196.5 | $ 2,266.4 | $ -- | $ 2,266.4 |
| Services | 328.4 | -- | 328.4 | 317.1 | -- | 317.1 |
| Total net sales | 2,524.9 | -- | 2,524.9 | 2,583.5 | -- | 2,583.5 |
| Products cost of sales (exclusive of depreciation and amortization) | 1,702.9 | -- | 1,702.9 | 1,726.8 | -- | 1,726.8 |
| Services cost of sales (exclusive of depreciation and amortization) | 242.1 | -- | 242.1 | 229.4 | -- | 229.4 |
| Selling, general and administrative expenses (exclusive of depreciation and amortization) | 283.5 | (0.3) | 283.2 | 326.9 | (0.4) | 326.5 |
| Restructuring and impairment charges-net | 50.0 | (50.0) | -- | 50.8 | (50.8) | -- |
| Depreciation and amortization | 125.0 | -- | 125.0 | 140.2 | -- | 140.2 |
| Total operating expenses | 2,403.5 | (50.3) | 2,353.2 | 2,474.1 | (51.2) | 2,422.9 |
| Income from operations | 121.4 | 50.3 | 171.7 | 109.4 | 51.2 | 160.6 |
| Interest expense - net | 60.7 | -- | 60.7 | 57.9 | -- | 57.9 |
| Investment and other (income) expense - net | (1.2) | -- | (1.2) | 0.2 | -- | 0.2 |
| Loss on debt extinguishment | 12.1 | (12.1) | -- | -- | -- | -- |
| Earnings before income taxes | 49.8 | 62.4 | 112.2 | 51.3 | 51.2 | 102.5 |
| Income tax expense | 11.9 | 21.0 | 32.9 | 17.0 | 16.5 | 33.5 |
| Net earnings | 37.9 | 41.4 | 79.3 | 34.3 | 34.7 | 69.0 |
| Less: Income attributable to noncontrolling interests | 0.5 | -- | 0.5 | 0.4 | -- | 0.4 |
| Net earnings attributable to RR Donnelley common shareholders | $ 37.4 | $ 41.4 | $ 78.8 | $ 33.9 | $ 34.7 | $ 68.6 |
|
Earnings per share attributable to |
||||||
|
|
$ 0.21 | $ 0.44 | $ 0.16 | $ 0.33 | ||
| Diluted net earnings per share | $ 0.21 | $ 0.44 | $ 0.16 | $ 0.33 | ||
| Weighted average common shares outstanding: | ||||||
| Basic | 179.4 | 179.4 | 207.2 | 207.2 | ||
| Diluted | 180.4 | 180.4 | 209.8 | 209.8 | ||
| The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful because that information is an appropriate measure for evaluating the Company's operating performance. Internally, the Company uses this non-GAAP information as an indicator of business performance, and evaluates management's effectiveness with specific reference to this indicator. These measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. | ||||||
|
|
||||||||
| Reconciliation of GAAP to Non-GAAP Measures | ||||||||
|
For the Three Months Ended |
||||||||
| (UNAUDITED) | ||||||||
| (in millions, except per share data) | ||||||||
|
For the Three Months Ended |
For the Three Months Ended |
|||||||
|
Income from operations |
Operating margin |
Net earnings attributable to common shareholders |
Net earnings attributable to common shareholders per diluted share |
Income from operations |
Operating margin |
Net earnings attributable to common shareholders |
Net earnings attributable to common shareholders per diluted share |
|
| GAAP basis measures | $ 121.4 | 4.8% | $ 37.4 | $ 0.21 | $ 109.4 | 4.2% | $ 33.9 | $ 0.16 |
| Non-GAAP adjustments: | ||||||||
| Restructuring charges (1) | 40.7 | 1.6% | 27.0 | 0.15 | 42.7 | 1.7% | 28.8 | 0.14 |
| Impairment charges (2) | 9.3 | 0.4% | 6.2 | 0.03 | 8.1 | 0.3% | 5.5 | 0.03 |
| Acquisition-related expenses (3) | 0.3 | -- | 0.3 | 0.00 | 0.4 | 0.0% | 0.4 | 0.00 |
| Loss on debt extinguishment (4) | -- | -- | 7.9 | 0.05 | -- | -- | -- | -- |
| Total Non-GAAP adjustments | 50.3 | 2.0% | 41.4 | 0.23 | 51.2 | 2.0% | 34.7 | 0.17 |
| Non-GAAP measures | $ 171.7 | 6.8% | $ 78.8 | $ 0.44 | $ 160.6 | 6.2% | $ 68.6 | $ 0.33 |
|
(1) Restructuring charges (pre-tax): Operating results for the three months ended |
||||||||
| 2012 | 2011 | |||||||
| Employee termination costs (a) | $ 36.8 | $ 24.8 | ||||||
| Other charges (b) | 3.9 | 17.9 | ||||||
| Total restructuring charges | $ 40.7 | $ 42.7 | ||||||
| (a) employee termination costs resulted from the reorganization of sales and administrative functions across all segments, as well as facility closures and the reorganization of certain operations. | ||||||||
| (b) includes lease termination and other facility costs. | ||||||||
|
(2) Impairment charges (pre-tax): Operating results for the three months ended |
||||||||
| 2012 | 2011 | |||||||
| Other long-lived asset impairments | 9.3 | 8.1 | ||||||
| Total impairment charges | $ 9.3 | $ 8.1 | ||||||
| (3) Acquisition-related expenses: Legal, accounting and other expenses associated with acquisitions completed or contemplated. | ||||||||
|
(4) Loss on debt extinguishment: Pre-tax loss of |
||||||||
|
|
||||
| Segment GAAP to Non-GAAP Operating Income and Margin Reconciliation | ||||
|
For the Three Months Ended |
||||
| (UNAUDITED) | ||||
| (in millions) | ||||
|
U.S. Print and Related Services |
International |
Corporate |
Consolidated |
|
|
For the Three Months Ended |
||||
| Net sales | $ 1,881.4 | $ 643.5 | $ -- | $ 2,524.9 |
| Operating expense | 1,742.2 | 612.9 | 48.4 | 2,403.5 |
| Income (loss) from operations | 139.2 | 30.6 | (48.4) | 121.4 |
| Operating margin % | 7.4% | 4.8% | nm | 4.8% |
| Non-GAAP Adjustments | ||||
| Restructuring charges | 31.7 | 4.4 | 4.6 | 40.7 |
| Impairment charges | 8.0 | 1.0 | 0.3 | 9.3 |
| Acquisition-related expenses | -- | -- | 0.3 | 0.3 |
| Total Non-GAAP adjustments | 39.7 | 5.4 | 5.2 | 50.3 |
| Non-GAAP income (loss) from operations | $ 178.9 | $ 36.0 | $ (43.2) | $ 171.7 |
| Non-GAAP operating margin % | 9.5% | 5.6% | nm | 6.8% |
| Depreciation and amortization | 87.6 | 27.5 | 9.9 | 125.0 |
| Capital expenditures | 27.1 | 11.1 | 7.1 | 45.3 |
|
For the Three Months Ended |
||||
| Net sales | $ 1,941.1 | $ 642.4 | $ -- | $ 2,583.5 |
| Operating expense | 1,799.2 | 598.3 | 76.6 | 2,474.1 |
| Income (loss) from operations | 141.9 | 44.1 | (76.6) | 109.4 |
| Operating margin % | 7.3% | 6.9% | nm | 4.2% |
| Non-GAAP Adjustments | ||||
| Restructuring charges | 31.3 | 8.7 | 2.7 | 42.7 |
| Impairment charges | 6.9 | 0.5 | 0.7 | 8.1 |
| Acquisition-related expenses | -- | -- | 0.4 | 0.4 |
| Total Non-GAAP adjustments | 38.2 | 9.2 | 3.8 | 51.2 |
| Non-GAAP income (loss) from operations | $ 180.1 | $ 53.3 | $ (72.8) | $ 160.6 |
| Non-GAAP operating margin % | 9.3% | 8.3% | nm | 6.2% |
| Depreciation and amortization | 99.9 | 30.4 | 9.9 | 140.2 |
| Capital expenditures | 17.3 | 25.8 | 4.0 | 47.1 |
|
|
||
| Condensed Consolidated Statements of Cash Flows | ||
|
For the Three Months Ended |
||
| (UNAUDITED) | ||
| (in millions) | ||
| 2012 | 2011 | |
| Operating Activities | ||
| Net earnings | $ 37.9 | $ 34.3 |
| Adjustment to reconcile net earnings to net cash used in operating activities | 179.0 | 151.3 |
| Changes in operating assets and liabilities | (268.9) | (192.8) |
| Net cash used in operating activities | $ (52.0) | $ (7.2) |
| Net cash used in investing activities | $ (46.3) | $ (64.3) |
| Net cash provided by (used in) financing activities | $ 52.0 | $ (56.4) |
| Effect of exchange rate on cash and cash equivalents | 11.6 | 8.1 |
| Net decrease in cash and cash equivalents | $ (34.7) | $ (119.8) |
| Cash and cash equivalents at beginning of period | 449.7 | 519.1 |
| Cash and cash equivalents at end of period | $ 415.0 | $ 399.3 |
|
|
|||
| Reconciliation of Reported to Pro Forma Net Sales | |||
|
For the Three Months Ended |
|||
| (UNAUDITED) | |||
| (in millions) | |||
|
Reported net sales |
Adjustment for net sales of acquired businesses |
Pro forma net sales |
|
|
For the Three Months Ended |
|||
| U.S. Print and Related Services | $ 1,881.4 | $ -- | $ 1,881.4 |
| International | 643.5 | -- | 643.5 |
| Consolidated | $ 2,524.9 | $ -- | $ 2,524.9 |
|
For the Three Months Ended |
|||
| U.S. Print and Related Services | $ 1,941.1 | $ 11.3 | $ 1,952.4 |
| International | 642.4 | -- | 642.4 |
| Consolidated | $ 2,583.5 | $ 11.3 | $ 2,594.8 |
| Net sales change | |||
| U.S. Print and Related Services | (3.1%) | (3.6%) | |
| International | 0.2% | 0.2% | |
| Consolidated | (2.3%) | (2.7%) | |
|
The reported results of the Company include the results of acquired businesses from the acquisition date forward. The Company has provided this schedule to reconcile reported net sales for the three months ended |
|||
|
There were no acquisitions during the three months ended |
|||
|
For the three months ended |
|||
|
R. |
||
| Liquidity Summary | ||
|
As of |
||
| (UNAUDITED) | ||
| (in millions) | ||
| Total Liquidity (1) |
|
|
| Cash (2) | $ 415.0 | $ 449.7 |
| Committed Credit Agreement (3) | 1,518.7 | 1,417.7 |
| 1,933.7 | 1,867.4 | |
| Usage | ||
| Borrowings under Credit Agreement | 327.0 | 65.0 |
| Net Available Liquidity | $ 1,606.7 | $ 1,802.4 |
| (1) Liquidity does not include credit facilities of non-U.S. subsidiaries, which are uncommitted facilities. | ||
|
(2) Approximately 89% of cash as of |
||
|
(3) |
||
|
|
||
| Stated amount of Credit Agreement | $ 1,750.0 | |
| Less: availability reduction from covenants | 231.3 | |
| Total amount available | 1,518.7 | |
| Less: borrowings under Credit Agreement | 327.0 | |
|
Current availability at |
$ 1,191.7 | |
CONTACT: Media:
Doug Fitzgerald
EVP, Communications
630.322.6830
doug.fitzgerald@rrd.com
Investors:
Dave Gardella
SVP, Investor Relations
312.326.8155
david.a.gardella@rrd.com
Source: News Provided by Acquire Media