CHICAGO--(BUSINESS WIRE)--
Donnelley Financial Solutions (NYSE: DFIN) today reported
financial results for the first quarter 2017.
Highlights:
-
First-quarter net sales of $267.3 million grew 11.3% from the first
quarter of 2016
-
First-quarter GAAP net earnings of $9.3 million, or $0.28 per diluted
share, compared to GAAP net earnings in the first quarter of 2016 of
$13.4 million, or $0.41 per diluted share
-
First-quarter 2016 does not include interest expense associated
with the debt raised in connection with the spin-off from RR
Donnelley
-
First-quarter non-GAAP net earnings(1) of $13.9 million, or
$0.42 per diluted share, compared to non-GAAP net earnings in the
first quarter of 2016 of $14.0 million, or $0.43 per diluted share
-
First-quarter 2016 does not include interest expense associated
with the debt raised in connection with the spin-off from RR
Donnelley
-
Non-GAAP adjusted EBITDA(1) in the quarter of $45.0 million
increased by $12.1 million, or 37%, from the first quarter of 2016
-
Company raises full-year 2017 guidance for revenue, non-GAAP adjusted
EBITDA and free cash flow
|
|
|
|
(1)
|
|
Non-GAAP net earnings and non-GAAP adjusted EBITDA are non-GAAP
measures that exclude the impact of items noted in the
reconciliation in the attached schedules. See the attached schedules
for amounts and reconciliations to the most comparable GAAP measures.
|
“We are pleased with our first-quarter performance,” said Daniel N.
Leib, Donnelley Financial’s President and Chief Executive Officer.
“Strong revenue growth was driven by the improvement in capital markets
activity levels, growth in our software product offerings of Venue
dataroom, ActiveDisclosure corporate compliance platform and our
FundSuiteArc content management platform. This growth, coupled with our
cost reduction efforts that we began to implement late last year,
resulted in a 37% increase in non-GAAP adjusted EBITDA. Given the strong
first-quarter performance, we are modestly raising our full-year
guidance ranges for revenue, non-GAAP adjusted EBITDA and free cash
flow.”
Leib continued, “Subsequent to quarter end, and as contemplated in the
separation agreement with RR Donnelley, we received a cash payment of
$68 million, which we used to pay down our term loan. Including this
payment, we have reduced our term loan by $118 million since the
spin-off, and are on track to reach the top end of our targeted leverage
range by year-end 2017, while also continuing to invest in the business.”
Net Sales
Net sales in the first quarter of 2017 were $267.3 million, an increase
of $27.2 million, or 11.3%, from the first quarter of 2016. After
adjusting for changes in foreign exchange rates, organic sales increased
11.9% from the first quarter of 2016 driven primarily by an increase in
capital markets transactions and growth in our software product
offerings.
GAAP Earnings
First-quarter 2017 net earnings were $9.3 million, or $0.28 per diluted
share, compared to net earnings of $13.4 million, or $0.41 per diluted
share, in the first quarter of 2016. First-quarter 2016 net earnings do
not include interest expense associated with the debt raised in
connection with the spin-off from RR Donnelley. The first-quarter net
earnings included pre-tax charges of $7.6 million and $0.9 million in
2017 and 2016, respectively, all of which are excluded from the
presentation of non-GAAP net earnings. Additional details regarding the
amount and nature of these and other items are included in the attached
schedules.
Non-GAAP Earnings
Non-GAAP adjusted EBITDA in the first quarter of 2017 was $45.0 million,
compared to $32.9 million in the first quarter of 2016. Non-GAAP
adjusted EBITDA margin in the first quarter of 2017 was 16.8%, or 310
basis points higher than in the first quarter of 2016. The increase in
non-GAAP adjusted EBITDA and non-GAAP adjusted EBITDA margin was
primarily due to higher capital markets transactions and mutual funds
volume and cost reduction actions, partially offset by an increase in
selling, general, and administrative costs driven by the separation from
RR Donnelley.
Non-GAAP net earnings totaled $13.9 million, or $0.42 per diluted share,
in the first quarter of 2017 compared to $14.0 million, or $0.43 per
diluted share, in the first quarter of 2016. First-quarter 2016 non-GAAP
net earnings do not include interest expense associated with the debt
raised in connection with the spin-off from RR Donnelley.
Reconciliations of net earnings to non-GAAP adjusted EBITDA and non-GAAP
net earnings are presented in the attached schedules.
Dis-synergies and Allocation of Costs in Historical Carve-out
Accounting
As previously communicated, the combination of dis-synergies and
recognition of ongoing costs in excess of the costs allocated to the
Company in 2015 results in incremental cost of approximately $29.8
million, of which approximately $16.5 million was recognized in 2016
with an incremental increase of approximately $13.3 million expected in
2017. Of the $13.3 million expected to be recognized in 2017,
approximately $5.0 million was recognized in the first quarter. The
Company expects to recognize approximately $3.0 million in the second
quarter of 2017 and $5.3 million in the third quarter of 2017.
2017 Guidance
The Company provides the following updated full-year guidance for 2017,
reflecting a modest improvement from previous guidance:
-
Revenue of approximately $1 billion, representing organic growth in
the range of 3% to 5%
-
Non-GAAP adjusted EBITDA in the range of $175 - $180 million
-
Free cash flow(1) in the range of $50 - $60 million, which
includes an assumption of capital spending in the range of $30 - $35
million
|
|
|
|
(1)
|
|
Defined as operating cash flow less capital expenditures
|
| | | | |
|
Certain components of the guidance given above are provided on a
non-GAAP basis only, without providing a reconciliation to guidance
provided on a GAAP basis. Information is presented in this manner,
consistent with SEC rules, because the preparation of such a
reconciliation could not be accomplished without “unreasonable efforts.”
The Company does not have access to certain information that would be
necessary to provide such a reconciliation, including non-recurring
items that are not indicative of the Company’s ongoing operations. Such
items include, but are not limited to, restructuring charges, impairment
charges, spinoff-related transaction expenses, pension settlement
charges, acquisition-related expenses, gains or losses on investments
and business disposals, losses on debt extinguishment and other similar
gains or losses not reflective of the Company's ongoing operations. The
Company does not believe that this information is likely to be
significant to an assessment of the Company’s ongoing operations, given
that it is not an indicator of business performance.
Conference Call
Donnelley Financial will host a conference call and simultaneous webcast
to discuss its first-quarter results today, Thursday, May 4, at 9:00
a.m. Eastern Time (8:00 a.m. Central Time). The live webcast will be
accessible on Donnelley Financial’s web site: www.dfsco.com.
Individuals wishing to participate must
register in advance at http://www.meetme.net/DFIN.
After registering, participants will receive dial-in numbers, a
passcode, and a personal identification number (PIN) that is used to
uniquely identify their presence and automatically join them into the
audio conference. A webcast replay will be archived on the Company’s web
site for 30 days after the call. In addition, a telephonic replay of the
call will be available for seven days at 630.652.3042, passcode 8403075#.
About Donnelley Financial
Donnelley Financial (NYSE: DFIN) provides software and services that
enable clients to communicate with confidence in a complex regulatory
environment. With 3,600 employees in 61 locations across 18 countries,
we provide thousands of clients globally with innovative tools for
content creation, management and distribution, as well as data analytics
and multi-lingual localization services. Leveraging advanced technology,
deep-domain expertise and 24/7 support, we deliver cost-effective
solutions to meet the evolving needs of our clients.
For more information about Donnelley Financial, visit dfsco.com.
Use of non-GAAP Information
Non-GAAP net earnings, non-GAAP adjusted EBITDA and free cash flow are
non-GAAP financial measures as defined under the rules of the SEC. As
calculated in the attached schedules, non-GAAP net earnings is defined
as GAAP net earnings (loss) adjusted for restructurings and impairments,
acquisition-related expenses, share-based compensation expense, spin-off
related transaction expenses and certain other charges or credits;
non-GAAP adjusted EBITDA is defined as GAAP net earnings (loss) adjusted
for income taxes, interest expense, depreciation and amortization,
restructurings and impairments, acquisition-related expenses,
share-based compensation expense, spin-off related transaction expenses
and certain other charges or credits; free cash flow is defined as net
cash provided by operating activities less capital expenditures.
The Company believes that these 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 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.
Use of Forward-Looking Statements
This news release includes certain "forward-looking statements" within
the meaning of, and subject to the safe harbor created by, Section 21E
of the Securities Exchange Act of 1934, as amended, with respect to the
business, strategy and plans of Donnelley Financial and its expectations
relating to future financial condition and performance. Statements that
are not historical facts, including statements about Donnelley Financial
management’s beliefs and expectations, are forward-looking statements.
Words such as "believes," "anticipates," "estimates," "expects,"
"intends," "aims," "potential," "will," "would," "could," "considered,"
"likely," "estimate" and variations of these words and similar future or
conditional expressions are intended to identify forward-looking
statements but are not the exclusive means of identifying such
statements. While Donnelley Financial believes these expectations,
assumptions, estimates and projections are reasonable, such
forward-looking statements are only predictions and involve known and
unknown risks and uncertainties, many of which are beyond Donnelley
Financial’s control. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events and depend upon
future circumstances that may or may not occur. Actual results may
differ materially from Donnelley Financial’s current expectations
depending upon a number of factors affecting the business and risks
associated with the performance of the business. These factors include
such risks and uncertainties detailed in Donnelley Financial’s periodic
public filings with the SEC, including but not limited to those
discussed under "Risk Factors" in Donnelley Financial's Form 10-K for
the fiscal year ended December 31, 2016, those discussed under
“Cautionary Statement” in Donnelley Financial’s quarterly Form 10-Q
filings, and in other investor communications of Donnelley Financial’s
from time to time. Donnelley Financial 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.
|
|
| Donnelley Financial Solutions, Inc. |
|
Condensed Consolidated Balance Sheets
|
|
As of March 31, 2017 and December 31, 2016
|
| (UNAUDITED) |
| (in millions, except per share data) |
|
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | March 31, 2017 |
|
| December 31, 2016 |
Assets | | | |
|
| |
| | | | | | | | | | |
|
| |
Cash and cash equivalents
| | |
$
|
12.3
| | | |
$
|
36.2
| |
| |
Receivables, less allowances for doubtful accounts of $7.5 in 2017
(2016 - $6.4)
| | | |
233.3
| | | | |
156.2
| |
| |
Receivable from R.R. Donnelley
| | | |
84.2
| | | | |
96.0
| |
| |
Inventories
| | | |
27.5
| | | | |
24.1
| |
| |
Prepaid expenses and other current assets
| | |
|
17.3
|
|
|
|
|
17.1
|
|
|
Total Current Assets
| | |
| 374.6 |
|
|
|
| 329.6 |
|
| |
Property, plant and equipment - net
| | | |
36.0
| | | | |
35.5
| |
| |
Goodwill
| | | |
446.5
| | | | |
446.4
| |
| |
Other intangible assets - net
| | | |
50.9
| | | | |
54.3
| |
| |
Software-net
| | | |
39.3
| | | | |
41.6
| |
| |
Deferred income taxes
| | | |
39.1
| | | |
|
37.0
| |
|
|
|
Other noncurrent assets
|
|
|
|
38.2
|
|
|
|
|
34.5
|
|
| Total Assets |
|
| $ | 1,024.6 |
|
|
| $ | 978.9 |
|
| | | | | | | | | | |
|
Liabilities | | | | | | |
| | | | | | | | | | |
|
| |
Accounts payable
| | |
$
|
101.3
| | | |
$
|
85.3
| |
| |
Accrued liabilities
| | |
|
99.8
|
|
|
|
|
100.7
|
|
|
Total Current Liabilities
| | |
| 201.1 |
|
|
|
| 186.0 |
|
| |
Long-term debt
| | | |
607.5
| | | | |
587.0
| |
| |
Deferred compensation liabilities
| | | |
23.1
| | | | |
24.4
| |
| |
Pension and other postretirement benefits plan liabilities
| | | |
55.0
| | | | |
56.4
| |
|
|
|
Other noncurrent liabilities
|
|
|
|
13.4
|
|
|
|
|
14.0
|
|
| Total Liabilities |
|
|
| 900.1 |
|
|
|
| 867.8 |
|
| | | | | | | | | | |
|
Equity | | | | | | |
| | | | | | | | | | |
|
| |
Common stock, $0.01 par value
| | | | | | |
| |
Authorized: 65.0 shares;
| | | |
-
| | | | |
-
| |
| |
Issued: 32.8 shares in 2017 (2016 - 32.6 shares)
| | | |
0.3
| | | | |
0.3
| |
| |
Additional paid-in capital
| | | |
183.5
| | | | |
179.9
| |
| |
Retained earnings (deficit)
| | | |
8.5
| | | | |
(0.8
|
)
|
|
|
|
Accumulated other comprehensive loss
|
|
|
|
(67.8
|
)
|
|
|
|
(68.3
|
)
|
| Total Equity |
|
|
| 124.5 |
|
|
|
| 111.1 |
|
| Total Liabilities and Equity |
|
| $ | 1,024.6 |
|
|
| $ | 978.9 |
|
| | | | | | | | | |
|
| Donnelley Financial Solutions, Inc. |
|
Condensed Consolidated and Combined Statements of Operations
|
|
For the Three Months Ended March 31, 2017 and 2016
|
| (UNAUDITED) |
| (in millions, except per share data) |
|
| |
| |
| | |
| |
| |
| |
| | | | | | | | | | | | |
|
| |
|
| | For the Three Months Ended March 31, |
| | 2 0 1 7 | | ADJUSTMENTS | | 2 0 1 7 | | 2 0 1 6 | | ADJUSTMENTS | | 2 0 1 6 |
| | GAAP |
| TO NON-GAAP |
| NON-GAAP |
| GAAP |
| TO NON-GAAP |
| NON-GAAP |
|
Services net sales
| |
$
|
154.0
| | |
$
|
-
| | |
$
|
154.0
| | | |
$
|
139.8
| | |
$
|
-
| | |
$
|
139.8
| |
|
Products net sales
|
|
|
113.3
|
|
|
|
-
|
|
|
|
113.3
|
|
|
|
|
100.3
|
|
|
|
-
|
|
|
|
100.3
|
|
| Total net sales |
|
| 267.3 |
|
|
| - |
|
|
| 267.3 |
|
|
|
| 240.1 |
|
|
| - |
|
|
| 240.1 |
|
| | | | | | | | | | | | |
|
|
Services cost of sales (1)
| | |
77.7
| | | |
-
| | | |
77.7
| | | | |
71.9
| | | |
-
| | | |
71.9
| |
Services cost of sales with R.R. Donnelley affiliates (1)
| | |
9.9
| | | |
-
| | | |
9.9
| | | | |
11.2
| | | |
-
| | | |
11.2
| |
Products cost of sales (1)
| | |
63.0
| | | |
-
| | | |
63.0
| | | | |
55.0
| | | |
-
| | | |
55.0
| |
Products cost of sales with R.R. Donnelley affiliates (1)
|
|
|
18.8
|
|
|
|
-
|
|
|
|
18.8
|
|
|
|
|
20.4
|
|
|
|
-
|
|
|
|
20.4
|
|
Total cost of sales (1) |
|
| 169.4 |
|
|
| - |
|
|
| 169.4 |
|
|
|
| 158.5 |
|
|
| - |
|
|
| 158.5 |
|
| | | | | | | | | | | | |
|
Selling, general and administrative expenses (SG&A) (1)
| | |
56.7
| | | |
(3.8
|
)
| | |
52.9
| | | | |
49.0
| | | |
(0.3
|
)
| | |
48.7
| |
|
Restructuring, impairment and other charges - net
| | |
3.8
| | | |
(3.8
|
)
| | |
-
| | | | |
0.6
| | | |
(0.6
|
)
| | |
-
| |
|
Depreciation and amortization
| | |
10.2
| | | |
-
| | | |
10.2
| | | | |
9.5
| | | |
-
| | | |
9.5
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations |
|
| 27.2 |
|
|
| 7.6 |
|
|
| 34.8 |
|
|
|
| 22.5 |
|
|
| 0.9 |
|
|
| 23.4 |
|
| | | | | | | | | | | | |
|
|
Interest expense - net
| | |
11.1
| | | |
-
| | | |
11.1
| | | | |
0.3
| | | |
-
| | | |
0.3
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings before income taxes |
|
| 16.1 |
|
|
| 7.6 |
|
|
| 23.7 |
|
|
|
| 22.2 |
|
|
| 0.9 |
|
|
| 23.1 |
|
| | | | | | | | | | | | |
|
|
Income tax expense
| | |
6.8
| | | |
3.0
| | | |
9.8
| | | | |
8.8
| | | |
0.3
| | | |
9.1
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net earnings |
| $ | 9.3 |
|
| $ | 4.6 |
|
| $ | 13.9 |
|
|
| $ | 13.4 |
|
| $ | 0.6 |
|
| $ | 14.0 |
|
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
|
| Net earnings per share: | | | | | | | | | | | | | |
|
Basic net earnings per share
| | $ | 0.29 | | | | | $ | 0.43 | | | | $ | 0.41 | | | | | $ | 0.43 | |
|
Diluted net earnings per share
| | $ | 0.28 | | | | | $ | 0.42 | | | | $ | 0.41 | | | | | $ | 0.43 | |
Weighted average number of common shares outstanding (2): | | | | | | | | | | | |
|
Basic
| | | 32.6 | | | | | | 32.6 | | | | | 32.4 | | | | | | 32.4 | |
|
Diluted
| | | 32.8 | | | | | | 32.8 | | | | | 32.4 | | | | | | 32.4 | |
| | | | | | | | | | | | |
|
Additional information: | | | | | | | | | | | | | |
|
Gross margin (1)
| | |
36.6
|
%
| | | | |
36.6
|
%
| | | |
34.0
|
%
| | | | |
34.0
|
%
|
|
SG&A as a % of total net sales (1)
| | |
21.2
|
%
| | | | |
19.8
|
%
| | | |
20.4
|
%
| | | | |
20.3
|
%
|
|
Operating margin
| | |
10.2
|
%
| | | | |
13.0
|
%
| | | |
9.4
|
%
| | | | |
9.7
|
%
|
|
Effective tax rate
| | |
42.2
|
%
| | | | |
41.4
|
%
| | | |
39.6
|
%
| | | | |
39.4
|
%
|
|
(1) Exclusive of depreciation and amortization
|
|
(2) For periods prior to the Separation, basic and diluted earnings
per share were calculated using the number of shares distributed and
retained by R.R. Donnelley ("RRD"), totaling 32.4 million. The same
number of shares was used to calculate basic and diluted earnings
per share since there were no Donnelley Financial equity awards
outstanding prior to the spin-off.
|
|
|
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.
|
|
|
| Donnelley Financial Solutions, Inc. |
|
Reconciliation of GAAP to Non-GAAP Measures
|
|
For the Three Months Ended March 31, 2017 and 2016
|
| (UNAUDITED) |
| (in millions, except per share data) |
|
| |
| |
| |
| |
| |
| | | | | | | | | |
|
| |
For the Three Months Ended March 31, 2017
|
| | | |
Income
| | | | | |
Net earnings
|
| | | |
from
| |
Operating
| |
Net
| |
per diluted
|
| |
SG&A
| |
operations
| |
margin
| |
earnings
| |
share
|
|
GAAP basis measures
| |
$
|
56.7
| | |
$
|
27.2
| |
10.2
|
%
| |
$
|
9.3
| |
$
|
0.28
|
| | | | | | | | | |
|
|
Non-GAAP adjustments:
| | | | | | | | | | |
| | | | | | | | | |
|
|
Restructuring, impairment and other charges - net
| | |
-
| | | |
3.8
| |
1.4
|
%
| | |
2.3
| | |
0.07
|
|
Spinoff-related transaction expenses
| | |
(2.7
|
)
| | |
2.7
| |
1.0
|
%
| | |
1.6
| | |
0.05
|
|
Share-based compensation expense
| |
|
(1.1
|
)
|
|
|
1.1
|
|
0.4
|
%
|
|
|
0.7
|
|
|
0.02
|
|
Total Non-GAAP adjustments
| |
|
(3.8
|
)
|
|
|
7.6
|
|
2.8
|
%
|
|
|
4.6
|
|
|
0.14
|
|
Non-GAAP measures
| |
$
|
52.9
|
|
|
$
|
34.8
|
|
13.0
|
%
|
|
$
|
13.9
|
|
$
|
0.42
|
| | | | | | | | | |
|
| | | | | | | | | |
|
| |
For the Three Months Ended March 31, 2016
|
| | | |
Income
| | | | | |
Net earnings
|
| | | |
from
| |
Operating
| |
Net
| |
per diluted
|
| |
SG&A
| |
operations
| |
margin
| |
earnings
| |
share (1)
|
|
GAAP basis measures
| |
$
|
49.0
| | |
$
|
22.5
| |
9.4
|
%
| |
$
|
13.4
| |
$
|
0.41
|
| | | | | | | | | |
|
|
Non-GAAP adjustments:
| | | | | | | | | | |
| | | | | | | | | |
|
|
Restructuring, impairment and other charges - net
| | |
-
| | | |
0.6
| |
0.2
|
%
| | |
0.4
| | |
0.01
|
|
Share-based compensation expense
| |
|
(0.3
|
)
|
|
|
0.3
|
|
0.1
|
%
|
|
|
0.2
|
|
|
0.01
|
|
Total Non-GAAP adjustments
| |
|
(0.3
|
)
|
|
|
0.9
|
|
0.3
|
%
|
|
|
0.6
|
|
|
0.02
|
|
Non-GAAP measures
| |
$
|
48.7
|
|
|
$
|
23.4
|
|
9.7
|
%
|
|
$
|
14.0
|
|
$
|
0.43
|
|
(1)
|
|
For periods prior to the Separation, basic and diluted earnings per
share were calculated using the number of shares distributed and
retained by RRD, totaling 32.4 million. The same number of shares
was used to calculate basic and diluted earnings per share since
there were no Donnelley Financial equity awards outstanding prior to
the spin-off.
|
| |
|
| Donnelley Financial Solutions, Inc. |
|
Segment GAAP to Non-GAAP Operating Income and Non-GAAP Adjusted
EBITDA and Margin Reconciliation
|
|
For the Three Months Ended March 31, 2017 and 2016
|
| (UNAUDITED) |
| (in millions) |
|
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | |
|
| | | U.S. |
|
|
International
|
|
|
Corporate
|
|
|
Consolidated
|
| | | | | | | | | | | |
|
For the Three Months Ended March 31, 2017 | | | | | | | | | | | | |
|
Net sales
| | |
$
|
230.4
| | | |
$
|
36.9
| | | |
$
|
-
| | | |
$
|
267.3
| |
|
Income (loss) from operations
| | | |
37.0
| | | | |
0.2
| | | | |
(10.0
|
)
| | | |
27.2
| |
|
Operating margin %
| | | |
16.1
|
%
| | | |
0.5
|
%
| | |
nm
| | | |
10.2
|
%
|
| | | | | | | | | | | |
|
Non-GAAP Adjustments | | | | | | | | | | | | |
|
Restructuring, impairment and other charges - net
| | | |
2.5
| | | | |
0.7
| | | | |
0.6
| | | | |
3.8
| |
|
Spinoff-related transaction expenses
| | | |
-
| | | | |
-
| | | | |
2.7
| | | | |
2.7
| |
|
Share-based compensation expense
| | |
|
-
|
|
|
|
|
-
|
|
|
|
|
1.1
|
|
|
|
|
1.1
|
|
|
Total Non-GAAP adjustments
| | | |
2.5
| | | | |
0.7
| | | | |
4.4
| | | | |
7.6
| |
| | | | | | | | | | | |
|
|
Non-GAAP income (loss) from operations
| | |
$
|
39.5
| | | |
$
|
0.9
| | | |
$
|
(5.6
|
)
| | |
$
|
34.8
| |
|
Non-GAAP operating margin %
| | | |
17.1
|
%
| | | |
2.4
|
%
| | |
nm
| | | |
13.0
|
%
|
| | | | | | | | | | | |
|
|
Depreciation and amortization
| | |
|
8.8
|
|
|
|
|
1.4
|
|
|
|
|
-
|
|
|
|
|
10.2
|
|
|
Non-GAAP Adjusted EBITDA
| | |
$
|
48.3
| | | |
$
|
2.3
| | | |
$
|
(5.6
|
)
| | |
$
|
45.0
| |
|
Non-GAAP Adjusted EBITDA margin %
| | | |
21.0
|
%
| | | |
6.2
|
%
| | |
nm
| | | |
16.8
|
%
|
| | | | | | | | | | | |
|
For the Three Months Ended March 31, 2016 | | | | | | | | | | | | |
|
Net sales
| | |
$
|
208.1
| | | |
$
|
32.0
| | | |
$
|
-
| | | |
$
|
240.1
| |
|
Income (loss) from operations
| | | |
22.0
| | | | |
3.0
| | | | |
(2.5
|
)
| | | |
22.5
| |
|
Operating margin %
| | | |
10.6
|
%
| | | |
9.4
|
%
| | |
nm
| | | |
9.4
|
%
|
| | | | | | | | | | | |
|
Non-GAAP Adjustments | | | | | | | | | | | | |
|
Restructuring, impairment and other charges - net
| | | |
0.6
| | | | |
-
| | | | |
-
| | | | |
0.6
| |
|
Share-based compensation expense
| | |
|
-
|
|
|
|
|
-
|
|
|
|
|
0.3
|
|
|
|
|
0.3
|
|
|
Total Non-GAAP adjustments
| | | |
0.6
| | | | |
-
| | | | |
0.3
| | | | |
0.9
| |
| | | | | | | | | | | |
|
|
Non-GAAP income (loss) from operations
| | |
$
|
22.6
| | | |
$
|
3.0
| | | |
$
|
(2.2
|
)
| | |
$
|
23.4
| |
|
Non-GAAP operating margin %
| | | |
10.9
|
%
| | | |
9.4
|
%
| | |
nm
| | | |
9.7
|
%
|
| | | | | | | | | | | |
|
|
Depreciation and amortization
| | |
|
8.3
|
|
|
|
|
1.1
|
|
|
|
|
0.1
|
|
|
|
|
9.5
|
|
|
Non-GAAP Adjusted EBITDA
| | |
$
|
30.9
| | | |
$
|
4.1
| | | |
$
|
(2.1
|
)
| | |
$
|
32.9
| |
|
Non-GAAP Adjusted EBITDA margin %
| | | |
14.8
|
%
| | | |
12.8
|
%
| | |
nm
| | | |
13.7
|
%
|
| | | | | | | | | | | | | | | | | |
|
| Donnelley Financial Solutions, Inc. |
|
Condensed Consolidated and Combined Statements of Cash Flows
|
|
For the Three Months Ended March 31, 2017 and 2016
|
| (UNAUDITED) |
| (in millions) |
|
|
| |
|
| |
| | |
|
| | | For the Three Months Ended March 31, |
| | | 2017 |
|
| 2016 |
| | | | | |
|
|
Net earnings
| | |
$
|
9.3
| | | |
$
|
13.4
| |
|
Adjustments to reconcile net earnings to net cash used in operating
activities:
| | | | | | |
|
Depreciation and amortization
| | | |
10.2
| | | | |
9.5
| |
|
Provision for doubtful accounts receivable
| | | |
1.8
| | | | |
0.2
| |
|
Share-based compensation
| | | |
1.1
| | | | |
0.3
| |
|
Deferred income taxes
| | | |
(2.2
|
)
| | | |
(0.3
|
)
|
|
Net pension and other postretirement benefits plan income
| | | |
(0.8
|
)
| | | |
(0.2
|
)
|
|
Other
| | | |
0.4
| | | | |
—
| |
|
Changes in operating assets and liabilities - net of acquisitions:
| | | | | | |
|
Accounts receivable - net
| | | |
(66.7
|
)
| | | |
(52.8
|
)
|
|
Inventories
| | | |
(3.4
|
)
| | | |
(2.9
|
)
|
|
Prepaid expenses and other current assets
| | | |
(4.4
|
)
| | | |
(0.5
|
)
|
|
Accounts payable
| | | |
15.0
| | | | |
4.5
| |
|
Income taxes payable and receivable
| | | |
7.7
| | | | |
(0.3
|
)
|
|
Accrued liabilities and other
| | | |
(6.1
|
)
| | | |
(13.5
|
)
|
|
Pension and other postretirement benefits plan contributions
|
|
|
|
(0.1
|
)
|
|
|
|
(1.1
|
)
|
| Net cash used in operating activities |
|
| $ | (38.2 | ) |
|
| $ | (43.7 | ) |
| | | | | |
|
|
Capital expenditures
| | | |
(4.3
|
)
| | | |
(8.5
|
)
|
|
Purchase of investment
| | | |
(3.4
|
)
| | | |
—
| |
|
Other investing activities
|
|
|
|
0.2
|
|
|
|
|
2.4
|
|
| Net cash used in investing activities |
|
| $ | (7.5 | ) |
|
| $ | (6.1 | ) |
| | | | | |
|
|
Revolving facility borrowings
| | | |
57.0
| | | | |
—
| |
|
Payments on revolving facility borrowings
| | | |
(37.0
|
)
| | | |
—
| |
|
Debt issuance costs
| | | |
(1.5
|
)
| | | |
—
| |
|
Net transfers related to the Separation
| | | |
3.1
| | | | |
—
| |
|
Net change in short-term debt
| | | |
—
| | | | |
6.9
| |
|
Net transfers to Parent and affiliates
| | | |
—
| | | | |
39.7
| |
|
Other financing activities
|
|
|
|
—
|
|
|
|
|
0.2
|
|
| Net cash provided by financing activities |
|
| $ | 21.6 |
|
|
| $ | 46.8 |
|
| | | | | |
|
|
Effect of exchange rate on cash and cash equivalents
| | | |
0.2
| | | | |
2.9
| |
|
|
|
|
|
|
|
|
| Net decrease in cash and cash equivalents |
|
| $ | (23.9 | ) |
|
| $ | (0.1 | ) |
| | | | | |
|
|
Cash and cash equivalents at beginning of period
| | | |
36.2
| | | | |
15.1
| |
|
|
|
|
|
|
|
|
| Cash and cash equivalents at end of period |
|
| $ | 12.3 |
|
|
| $ | 15.0 |
|
| | | | | |
|
| | | | | |
|
Additional Information: | | |
|
| | | 2017 |
|
| 2016 |
| For the Three Months Ended March 31: | | | | | | |
|
Net cash used in operating activities
| | |
$
|
(38.2
|
)
| | |
$
|
(43.7
|
)
|
|
Less: capital expenditures
| | |
|
4.3
|
|
|
|
|
8.5
|
|
|
Free cash flow
| | |
$
|
(42.5
|
)
| | |
$
|
(52.2
|
)
|
| | | | | | | | | |
|
| Donnelley Financial Solutions, Inc. |
|
Reconciliation of Reported to Organic Net Sales
|
|
For the Three Months Ended March 31, 2017 and 2016
|
| (UNAUDITED) |
| (in millions) |
|
|
| |
| | |
|
| | |
For the Three
|
| | |
Months Ended
|
| | | Reported net sales |
March 31, 2017 | | | |
|
Capital Markets
| | |
$
|
119.1
| |
|
Investment Markets
| | | |
100.1
| |
|
Language Solutions and other
| | |
|
11.2
|
|
| U.S. | | | |
230.4
| |
|
International
| | |
|
36.9
|
|
|
Consolidated
| | |
$
|
267.3
|
|
| | |
|
March 31, 2016 | | | |
|
Capital Markets
| | |
$
|
106.8
| |
|
Investment Markets
| | | |
91.1
| |
Language Solutions and other
| | |
|
10.2
|
|
| U.S. | | | |
208.1
| |
|
International
| | |
|
32.0
|
|
|
Consolidated
| | |
$
|
240.1
|
|
|
|
Net sales change | | | |
|
Capital Markets
| | | |
11.5
|
%
|
|
Investment Markets
| | | |
9.9
|
%
|
Language Solutions and other
| | |
|
9.8
|
%
|
| U.S. | | | |
10.7
|
%
|
|
International
| | | |
15.3
|
%
|
|
Consolidated
|
|
|
|
11.3
|
%
|
| | |
|
| Supplementary non-GAAP information: | | | |
| | |
|
Year-over-year impact of changes in
foreign exchange (FX) rates | | | |
| U.S. | | | |
---
|
%
|
|
International
| | | |
(4.1
|
%)
|
|
Consolidated
| | | |
(0.6
|
%)
|
|
|
Net organic sales change (1) | | | |
| U.S. | | | |
10.7
|
%
|
|
International
| | | |
19.4
|
%
|
|
Consolidated
|
|
|
|
11.9
|
%
|
| | |
|
|
(1) Adjusted for the impact of changes in FX rates
|
|
|
| Donnelley Financial Solutions, Inc. |
|
Reconciliation of GAAP Net Earnings (Loss) to Non-GAAP Adjusted
EBITDA
|
|
For the Three and Twelve Months Ended March 31, 2017 and 2016
|
| (UNAUDITED) |
| (in millions) |
|
| |
| |
| |
| |
| |
| |
| | | | | | | | |
| |
For the Twelve
| | |
| |
Months Ended
| |
For the Three Months Ended
|
| |
March 31,
| |
March 31,
| |
December 31,
| |
September 30,
| |
June 30,
|
| |
2017
| |
2017
|
|
2016
|
|
2016
|
|
2016
|
| | | | | | | | | |
|
| GAAP net earnings (loss) | | $ | 55.0 | | | $ | 9.3 | | | $ | (0.8 | ) | | $ | 10.2 | | | $ | 36.3 | |
| | | | | | | | | |
|
Adjustments | | | | | | | | | | |
|
Income tax expense (benefit)
| | |
33.2
| | | |
6.8
| | | |
(4.1
|
)
| | |
7.9
| | | |
22.6
| |
|
Interest expense (income)-net
| | |
22.5
| | | |
11.1
| | | |
11.4
| | | |
(0.1
|
)
| | |
0.1
| |
|
Depreciation and amortization
| | |
44.0
| | | |
10.2
| | | |
13.2
| | | |
9.8
| | | |
10.8
| |
|
Restructuring, impairment and other charges-net
| | |
8.6
| | | |
3.8
| | | |
1.8
| | | |
1.7
| | | |
1.3
| |
|
Share-based compensation expense
| | |
3.3
| | | |
1.1
| | | |
1.3
| | | |
0.2
| | | |
0.7
| |
|
Spin-off related transaction expenses
| |
|
7.6
|
| |
|
2.7
|
|
|
|
4.9
|
|
|
|
-
|
|
|
|
-
|
|
|
Total Non-GAAP adjustments
| | |
119.2
| | | |
35.7
| | | |
28.5
| | | |
19.5
| | | |
35.5
| |
| | | | | | | | | |
|
| Non-GAAP adjusted EBITDA | | $ | 174.2 |
| | $ | 45.0 |
|
| $ | 27.7 |
|
| $ | 29.7 |
|
| $ | 71.8 |
|
| | | | | | | | | |
|
|
Net sales
| |
$
|
1,010.7
| | |
$
|
267.3
| | |
$
|
221.0
| | |
$
|
224.4
| | |
$
|
298.0
| |
|
Non-GAAP adjusted EBITDA margin %
| | |
17.2
|
%
| | |
16.8
|
%
| | |
12.5
|
%
| | |
13.2
|
%
| | |
24.1
|
%
|
| | | | | | | | | |
|
| |
| | | | | | | | |
| |
For the Twelve
| | |
| |
Months Ended
| |
For the Three Months Ended
|
| |
March 31,
| |
March 31,
| |
December 31,
| |
September 30,
| |
June 30,
|
| |
2016
| |
2016
|
|
2015
|
|
2015
|
|
2015
|
| | | | | | | | | |
|
| GAAP net earnings | | $ | 93.9 | | | $ | 13.4 | | | $ | 23.2 | | | $ | 16.8 | | | $ | 40.5 | |
| | | | | | | | | |
|
Adjustments | | | | | | | | | | |
|
Income tax expense
| | |
60.5
| | | |
8.8
| | | |
14.8
| | | |
11.1
| | | |
25.8
| |
|
Interest expense-net
| | |
1.1
| | | |
0.3
| | | |
0.2
| | | |
0.3
| | | |
0.3
| |
|
Investment and other income-net
| | |
(0.1
|
)
| | |
-
| | | |
(0.1
|
)
| | |
-
| | | |
-
| |
|
Depreciation and amortization
| | |
40.2
| | | |
9.5
| | | |
9.7
| | | |
10.3
| | | |
10.7
| |
|
Restructuring, impairment and other charges-net
| | |
4.5
| | | |
0.6
| | | |
1.1
| | | |
1.4
| | | |
1.4
| |
|
Share-based compensation expense
| |
|
1.5
|
| |
|
0.3
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.6
|
|
|
Total Non-GAAP adjustments
| | |
107.7
| | | |
19.5
| | | |
26.0
| | | |
23.4
| | | |
38.8
| |
| | | | | | | | | |
|
| Non-GAAP adjusted EBITDA | | $ | 201.6 |
| | $ | 32.9 |
|
| $ | 49.2 |
|
| $ | 40.2 |
|
| $ | 79.3 |
|
| | | | | | | | | |
|
|
Net sales
| |
$
|
1,019.2
| | |
$
|
240.1
| | |
$
|
238.6
| | |
$
|
231.6
| | |
$
|
308.9
| |
|
Non-GAAP adjusted EBITDA margin %
| | |
19.8
|
%
| | |
13.7
|
%
| | |
20.6
|
%
| | |
17.4
|
%
| | |
25.7
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
| Donnelley Financial Solutions, Inc. |
|
| |
|
| |
|
Debt and Liquidity Summary
| | | | | | |
|
As of March 31, 2017 and December 31, 2016
| | | | | | |
| (UNAUDITED) | | | | | | |
| (in millions) | | | | | | |
| | | | | |
|
| | | | | |
|
| | | | | |
|
| | | | | |
|
Total Liquidity | | | March 31, 2017 | | | December 31, 2016 |
Availability | | | | | | |
|
Stated amount of the Revolving Facility
| | |
$
|
300.0
| | |
$
|
300.0
|
|
Less: availability reduction from covenants
| | |
|
107.5
| | |
|
145.4
|
|
Amount available under the Revolving Facility (1) | | | |
192.5
| | | |
154.6
|
| | | | | |
|
Usage | | | | | | |
|
Borrowings under the Revolving Facility (1) | | | |
20.0
| | | |
-
|
|
Impact on availability related to outstanding letters of credit
| | |
|
2.2
| | |
|
0.9
|
| | | |
22.2
| | | |
0.9
|
| | |
| | |
|
|
Availability under the Revolving Facility
| | |
|
170.3
| | |
|
153.7
|
| | | | | |
|
|
Cash (2) | | | |
12.3
| | | |
36.2
|
| | | | | |
|
|
Net Available Liquidity (3) | | |
$
|
182.6
| | |
$
|
189.9
|
| | | | | |
|
| | | | | |
|
|
|
|
Long-term debt
| | |
$
|
607.5
| | |
$
|
587.0
|
|
Total debt
| | |
$
|
607.5
| | |
$
|
587.0
|
| | | | | |
|
|
Non-GAAP adjusted EBITDA for the twelve months ended March 31, 2017
and the year ended December 31, 2016
| | |
$
|
174.2
| | |
$
|
162.1
|
| | | | | |
|
| Non-GAAP Gross Leverage (defined as total debt divided by
non-GAAP adjusted EBITDA) |
|
| 3.5x |
|
| 3.6x |
|
(1)
|
|
On September 30, 2016, the Company entered into a $300.0 million
senior secured revolving credit facility (the “Revolving Facility”).
The Revolving Facility is subject to a number of covenants,
including a minimum Interest Coverage Ratio and a maximum Leverage
Ratio, both as defined and calculated in the Credit Agreement. There
were $20.0 million of outstanding borrowings under the Revolving
Facility as of March 31, 2017. Based on the Company’s results of
operations for the twelve months ended March 31, 2017 and existing
debt, the Company would have had the ability to utilize $170.3
million of the $300.0 million Revolving Facility and not have been
in violation of the terms of the agreement.
|
| |
|
|
(2)
| |
Approximately 84% and 46% of cash as of March 31, 2017 and December
31, 2016, respectively, was located outside of the U.S. Certain cash
balances of foreign subsidiaries may be subject to U.S. or local
country taxes if repatriated to the U.S. In addition, repatriation
of some foreign cash balances is further restricted by local laws.
|
| |
|
|
(3)
| |
Pursuant to the Separation and Distribution Agreement and subsequent
to quarter-end, the Company received a cash payment of $68.0 million
from RRD on April 3, 2017. The proceeds were used to reduce
outstanding debt under the $350.0 million senior secured term loan B
facility. This activity is not reflected in the table above.
|
| |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504005127/en/
Investor Contact:
Sloan Bohlen
Solebury Communications
Group
investors@dfsco.com
Source: Donnelley Financial Solutions