CHICAGO--(BUSINESS WIRE)--
Donnelley Financial Solutions (NYSE: DFIN) today reported
financial results for the fourth quarter 2018.
Highlights:
|
|
| Fourth-quarter 2018 |
|
| Full-year 2018(1) |
|
Net sales
| | | $200.3 million | | | $963.0 million |
|
GAAP Net earnings (loss)
| | | ($1.0) million | | | $73.6 million |
|
Non-GAAP Adjusted EBITDA(2) | | | $19.4 million | | | $154.9 million |
|
Operating Cash Flow
| | | $55.9 million | | | $66.3 million |
|
Free Cash Flow(2) | | | $41.6 million | | | $29.2 million |
(1) |
|
|
Full-year 2018 results include a partial year of the Language
Solutions business, which was sold in July 2018
|
| (2) | | |
Non-GAAP Adjusted EBITDA and Free Cash Flow are non-GAAP measures
that exclude the impact of items noted in the reconciliation tables
below. See the tables below for amounts and reconciliations to the
most comparable GAAP measures.
|
-
SaaS net sales increased by 19.3% from the fourth quarter of 2017, and
represented 22.0% of fourth-quarter net sales
-
Reduced outstanding debt by $95.6 million during 2018, ending the year
with total debt of $362.7 million, and cash of $47.3 million
-
Acquired eBrevia, a leading SaaS contract review and analysis
solution, on December 18, 2018 for a total consideration of
approximately $23.2 million, net of cash acquired
-
Company issues full-year 2019 guidance
“We are pleased with the progress we made against the initiatives we
shared at our Investor Day last May,” said Daniel N. Leib, DFIN's
president and chief executive officer. “The investments that we have
made in 2018 will help further propel us toward meeting our long-term
strategic objectives.”
Leib continued, “The momentum of our SaaS offerings continues to build,
as demonstrated by the 19.3% increase in fourth-quarter SaaS net sales.
While we continue to look for opportunities to accelerate our strategic
transformation, we remain disciplined in our approach to capital
allocation, as reflected in our year-end net leverage of 2.0x.”
“Market volatility adversely impacted capital markets transactional
activity in the latter half of the fourth quarter. Specifically, the
global IPO market experienced a significant year-over-year decline in
deal volume, and there were no high yield debt deals completed in
December. The government shutdown negatively impacted activity at year
end and into the first quarter. Since the SEC’s reopening in late
January, we have seen robust market activity and good share performance
that has resulted in a strong pipeline,” Leib concluded.
Net Sales
Net sales in the fourth quarter of 2018 were $200.3 million, a decrease
of $24.5 million, or 10.9%, from the fourth quarter of 2017 driven
largely by the disposition of the Language Solutions business. After
adjusting for the sale of Language Solutions, the impact of the adoption
of the new revenue recognition standard(1) and changes in
foreign exchange rates, organic sales decreased 1.4% from the fourth
quarter of 2017. The decrease was exclusively driven by U.S. Capital
Markets which was down 13.1% on an organic basis due to lower
transactional activity, partially offset by growth in global SaaS
offerings, higher International transactional activity, and higher
mutual funds volume in U.S. Investment Markets.
(1) |
|
|
On January 1, 2018, the Company adopted the Accounting Standards
Update No. 2014-09 "Revenue from Contracts with Customers (Topic
606)" ("the new revenue recognition standard") using the modified
retrospective approach applied to contracts that were not completed
as of January 1, 2018.
|
GAAP Earnings
Fourth-quarter 2018 net loss was $1.0 million, or $0.03 loss per diluted
share, compared to a net loss of $23.7 million, or $0.71 loss per
diluted share, in the fourth quarter of 2017. Fourth-quarter 2017 net
loss included additional income tax expense of $22.4 million, or $0.67
per diluted share, related to the impact of the U.S. Tax Cuts and Jobs
Act. The fourth-quarter net losses included after-tax (income)/charges
of ($1.1) million and $28.4 million in 2018 and 2017, 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 Adjusted EBITDA and Net Earnings
Non-GAAP adjusted EBITDA in the fourth quarter of 2018 was $19.4
million, compared to $32.1 million in the fourth quarter of 2017.
Non-GAAP adjusted EBITDA margin in the fourth quarter of 2018 was 9.7%,
460 basis points lower than in the fourth quarter of 2017. This decrease
was primarily driven by lower transactional activity in U.S. Capital
Markets, the sale of Language Solutions and a legal settlement,
partially offset by the growth in our global SaaS offerings and lower
variable compensation.
Non-GAAP net loss totaled $2.1 million, or $0.06 loss per diluted share,
in the fourth quarter of 2018 compared to non-GAAP net earnings of $4.7
million, or $0.14 earnings per diluted share, in the fourth quarter of
2017. Reconciliations of net earnings to non-GAAP adjusted EBITDA and
non-GAAP net earnings, as well as non-GAAP adjusted EBITDA margin, are
presented in the attached schedules.
2019 Guidance
The Company provides the following full-year guidance for 2019.
|
|
|
|
| 2019 Guidance |
|
Net sales
| | | $910 to $940 million |
|
Non-GAAP adjusted EBITDA
| | | $145 to $155 million |
|
Depreciation and amortization
| | |
Approximately $48 million |
|
Interest expense
| | |
Approximately $35 million |
|
Non-GAAP effective tax rate
| | |
29% to 31%
|
|
Diluted share count
| | |
Approximately 35 million
|
|
Capital expenditures
| | | $40 to $45 million |
|
Free cash flow(1) | | | $40 to $45 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, acquisition-related
expenses, gains or losses on investments and business disposals 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 fourth-quarter results today, Wednesday, February 27,
2019, 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 at
investor.dfinsolutions.com. Individuals wishing to participate on the
call 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 888.843.7419, passcode 4816
5752#.
About Donnelley Financial
DFIN is a leading global risk and compliance solutions company. We
provide domain expertise, enterprise software and data analytics for
every stage of our clients’ business and investment lifecycles. Markets
fluctuate, regulations evolve, technology advances, and through it all,
DFIN delivers confidence with the right solutions in moments that
matter. Learn about DFIN’s end-to-end risk and compliance solutions
online at DFINsolutions.com or
you can also follow us on Twitter @DFINSolutions or
on LinkedIn.
Use of non-GAAP Information
This news release contains certain non-GAAP measures, including non-GAAP
SG&A, non-GAAP SG&A as % of total net sales, non-GAAP income from
operations, non-GAAP operating margin, non-GAAP adjusted EBITDA,
non-GAAP adjusted EBITDA margin, non-GAAP effective tax rate, non-GAAP
net earnings, non-GAAP diluted earnings per share, free cash flow and
organic net sales. The Company believes that these non-GAAP measures,
when presented in conjunction with comparable GAAP measures, provide
useful information about the Company’s operating results and liquidity
and enhance the overall ability to assess the Company’s financial
performance. The Company uses these measures, together with other
measures of performance under GAAP, to compare the relative performance
of operations in planning, budgeting and reviewing the performance of
its business.
Our non-GAAP statement of operations measures, non-GAAP SG&A, non-GAAP
SG&A as % of total net sales, non-GAAP income from operations, non-GAAP
operating margin, non-GAAP adjusted EBITDA, non-GAAP adjusted EBITDA
margin, non-GAAP effective tax rate, non-GAAP net earnings and non-GAAP
diluted earnings per share, are adjusted to exclude the impact of
certain costs, expenses, gains and losses and other specified items that
management believes are not indicative of our ongoing operations. These
adjusted measures exclude the impact of expenses associated with the
Company’s acquisition activities, spin-off related expenses,
non-recurring investor-related fees, share-based compensation and
eliminate potential differences in results of operations between periods
caused by factors such as historic cost and age of assets, financing and
capital structures, taxation positions or regimes, restructuring,
impairment and other charges and gain or loss on certain equity
investments and asset sales.
Free cash flow is a non-GAAP financial measure and is defined by the
Company as net cash flow provided by operating activities less capital
expenditures. By adjusting for the level of capital investment in
operations, the Company believes that free cash flow can provide useful
additional basis for understanding the Company’s ability to generate
cash after capital investment and provides a comparison to peers with
differing capital intensity.
Organic net sales is a non-GAAP financial measure and is defined by the
Company as reported net sales adjusted for the changes in foreign
exchange rates, the impact of the new revenue recognition standard and
the purchase or disposition of businesses.
These non-GAAP measures should be considered in addition to, not a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. In addition, these measures are
defined differently by different companies in our industry and,
accordingly, such measures may not be comparable to similarly-titled
measures of other companies
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, 2017, 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. |
Consolidated Balance Sheets
|
As of December 31, 2018 and December 31, 2017
|
(UNAUDITED) |
(in millions, except per share data) |
|
|
|
| December 31, 2018 |
|
| December 31, 2017 |
Assets | | | |
| | | | |
| |
|
Cash and cash equivalents
| | |
$
|
47.3
| | | |
$
|
52.0
| |
|
Receivables, less allowances for doubtful accounts of
$7.9 in 2018 (2017 - $7.3)
| | | |
172.9
| | | | |
165.2
| |
|
Inventories
| | | |
12.1
| | | | |
23.3
| |
|
Prepaid expenses and other current assets
| | |
|
16.7
|
| | |
|
29.6
|
|
|
Total Current Assets
| | |
|
249.0
|
| | |
|
270.1
|
|
|
Property, plant and equipment - net
| | | |
32.2
| | | | |
34.7
| |
|
Software - net
| | | |
47.8
| | | | |
41.1
| |
|
Goodwill
| | | |
450.0
| | | | |
447.4
| |
|
Other intangible assets - net
| | | |
37.2
| | | | |
39.9
| |
|
Deferred income taxes
| | | |
9.7
| | | | |
22.2
| |
|
Other noncurrent assets
| | |
|
42.8
|
| | |
|
38.1
|
|
| Total Assets | | | $ | 868.7 |
| | | $ | 893.5 |
|
| | | | | | | | | | |
Liabilities | | | | | | | | | | |
|
Accounts payable
| | |
$
|
72.4
| | | |
$
|
67.8
| |
|
Accrued liabilities
| | |
|
126.0
|
| | |
|
119.2
|
|
|
Total Current Liabilities
| | |
|
198.4
|
| | |
|
187.0
|
|
|
Long-term debt
| | | |
362.7
| | | | |
458.3
| |
|
Deferred compensation liabilities
| | | |
19.5
| | | | |
22.8
| |
|
Pension and other postretirement benefits plan liabilities
| | | |
51.3
| | | | |
52.5
| |
|
Other noncurrent liabilities
| | |
|
10.8
|
| | |
|
23.5
|
|
| Total Liabilities | | |
| 642.7 |
| | |
| 744.1 |
|
| | | | | | | | | |
|
Equity | | | | | | | | | | |
|
Common stock, $0.01 par value
| | | | | | | | | | |
|
Authorized: 65.0 shares;
| | | | | | | | | | |
|
Issued: 34.2 shares in 2018 (2017 - 33.8 shares)
| | | |
0.3
| | | | |
0.3
| |
|
Treasury stock, at cost: 0.1 shares in 2018 (2017 - less than 0.1
shares)
| | | |
(2.4
|
)
| | | |
(0.9
|
)
|
|
Additional paid-in capital
| | | |
216.5
| | | | |
205.7
| |
|
Retained earnings
| | | |
94.3
| | | | |
8.9
| |
|
Accumulated other comprehensive loss
| | |
|
(82.7
|
)
| | |
|
(64.6
|
)
|
| Total Equity | | |
| 226.0 |
| | |
| 149.4 |
|
| Total Liabilities and Equity | | | $ | 868.7 |
| | | $ | 893.5 |
|
|
|
Donnelley Financial Solutions, Inc. |
Consolidated Statements of Operations
|
|
For the Three and Twelve Months Ended December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions, except per share data) |
|
|
|
| For the Three Months Ended December 31, |
|
| For the Twelve Months Ended December 31, |
| | | | |
|
| | |
|
| 2018 |
|
| | |
|
| | |
|
| 2017 | | | | |
|
| | |
|
| 2018 |
|
| | |
|
| | |
|
| | |
| | | 2018 | | | ADJUSTMENTS | | | NON- | | | 2017 | | | | ADJUSTMENTS | | | NON- | | | 2018 | | | ADJUSTMENTS | | | | NON- | | | 2017 | | | ADJUSTMENTS | | | 2017 |
| | | GAAP | | | TO NON-GAAP | | | GAAP | | | GAAP | | | | TO NON-GAAP | | | GAAP | | | GAAP | | | TO NON-GAAP | | | | GAAP | | | GAAP | | | TO NON-GAAP | | | NON-GAAP |
|
Services net sales
| | |
$
|
132.1
| | | |
$
|
—
| | | |
$
|
132.1
| | | |
$
|
160.7
| | | |
$
|
—
| | | |
$
|
160.7
| | | |
$
|
618.0
| | | |
$
|
—
| | | |
$
|
618.0
| | | |
$
|
632.1
| | | |
$
|
—
| | | |
$
|
632.1
| |
|
Products net sales
| | |
|
68.2
|
| | |
|
—
|
| | |
|
68.2
|
| | |
|
64.1
|
| | |
|
—
|
| | |
|
64.1
|
| | |
|
345.0
|
| | |
|
—
|
| | |
|
345.0
|
| | |
|
372.8
|
| | |
|
—
|
| | |
|
372.8
|
|
| Total net sales | | |
| 200.3 |
| | |
| — |
| | |
| 200.3 |
| | |
| 224.8 |
| | |
| — |
| | |
| 224.8 |
| | |
| 963.0 |
| | |
| — |
| | |
| 963.0 |
| | |
| 1,004.9 |
| | |
| — |
| | |
| 1,004.9 |
|
|
Services cost of sales (1)
| | | |
75.4
| | | | |
—
| | | | |
75.4
| | | | |
88.5
| | | | |
—
| | | | |
88.5
| | | | |
328.8
| | | | |
—
| | | | |
328.8
| | | | |
328.7
| | | | |
—
| | | | |
328.7
| |
|
Services cost of sales with R.R. Donnelley affiliates (1) (2)
| | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
19.5
| | | | |
—
| | | | |
19.5
| |
|
Products cost of sales (1)
| | | |
54.4
| | | | |
—
| | | | |
54.4
| | | | |
50.2
| | | | |
—
| | | | |
50.2
| | | | |
258.5
| | | | |
—
| | | | |
258.5
| | | | |
240.9
| | | | |
—
| | | | |
240.9
| |
|
Products cost of sales with R.R. Donnelley affiliates (1) (2)
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
32.3
|
| | |
|
—
|
| | |
|
32.3
|
|
| Total cost of sales (1) | | |
| 129.8 |
| | |
| — |
| | |
| 129.8 |
| | |
| 138.7 |
| | |
| — |
| | |
| 138.7 |
| | |
| 587.3 |
| | |
| — |
| | |
| 587.3 |
| | |
| 621.4 |
| | |
| — |
| | |
| 621.4 |
|
|
Selling, general and administrative expenses (SG&A) (1) (3)
| | | |
54.4
| | | | |
(3.3
|
)
| | | |
51.1
| | | | |
62.5
| | | | |
(8.5
|
)
| | | |
54.0
| | | | |
258.2
| | | | |
(37.4
|
)
| | | |
220.8
| | | | |
236.2
| | | | |
(23.5
|
)
| | | |
212.7
| |
|
Restructuring, impairment and other charges - net
| | | |
0.3
| | | | |
(0.3
|
)
| | | |
—
| | | | |
0.7
| | | | |
(0.7
|
)
| | | |
—
| | | | |
4.4
| | | | |
(4.4
|
)
| | | |
—
| | | | |
7.1
| | | | |
(7.1
|
)
| | | |
—
| |
|
Depreciation and amortization
| | | |
12.7
| | | | |
—
| | | | |
12.7
| | | | |
12.8
| | | | |
—
| | | | |
12.8
| | | | |
45.8
| | | | |
—
| | | | |
45.8
| | | | |
44.5
| | | | |
—
| | | | |
44.5
| |
|
Other operating income (4)
| | |
|
(0.3
|
)
| | |
|
0.3
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
(53.8
|
)
| | |
|
53.8
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
| | |
|
—
|
|
| Income from operations | | |
| 3.4 |
| | |
| 3.3 |
| | |
| 6.7 |
| | |
| 10.1 |
| | |
| 9.2 |
| | |
| 19.3 |
| | |
| 121.1 |
| | |
| (12.0 | ) | | |
| 109.1 |
| | |
| 95.7 |
| | |
| 30.6 | | | |
| 126.3 |
|
|
Interest expense - net
| | | |
9.5
| | | | |
—
| | | | |
9.5
| | | | |
10.2
| | | | |
—
| | | | |
10.2
| | | | |
36.7
| | | | |
—
| | | | |
36.7
| | | | |
42.9
| | | | |
—
| | | | |
42.9
| |
|
Investment and other income - net (3) (5)
| | |
|
(2.7
|
)
| | |
|
1.8
|
| | |
|
(0.9
|
)
| | |
|
(0.9
|
)
| | |
|
—
|
| | |
|
(0.9
|
)
| | |
|
(18.3
|
)
| | |
|
13.6
|
| | |
|
(4.7
|
)
| | |
|
(3.4
|
)
| | |
|
—
|
| | |
|
(3.4
|
)
|
| Earnings (loss) before income taxes | | |
| (3.4 | ) | | |
| 1.5 |
| | |
| (1.9 | ) | | |
| 0.8 |
| | |
| 9.2 |
| | |
| 10.0 |
| | |
| 102.7 |
| | |
| (25.6 | ) | | |
| 77.1 |
| | |
| 56.2 |
| | |
| 30.6 |
| | |
| 86.8 |
|
|
Income tax expense (benefit)
| | |
|
(2.4
|
)
| | |
|
2.6
|
| | |
|
0.2
|
| | |
|
24.5
|
| | |
|
(19.2
|
)
| | |
|
5.3
|
| | |
|
29.1
|
| | |
|
(5.4
|
)
| | |
|
23.7
|
| | |
|
46.5
|
| | |
|
(10.1
|
)
| | |
|
36.4
|
|
| Net earnings (loss) | | | $ | (1.0 | ) | | | $ | (1.1 | ) | | | $ | (2.1 | ) | | | $ | (23.7 | ) | | | $ | 28.4 |
| | | $ | 4.7 |
| | | $ | 73.6 |
| | | $ | (20.2 | ) | | | $ | 53.4 |
| | | $ | 9.7 |
| | | $ | 40.7 |
| | | $ | 50.4 |
|
| Net earnings (loss) per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Basic net earnings (loss) per share
| | | $ | (0.03 | ) | | | | | | | | $ | (0.06 | ) | | | $ | (0.71 | ) | | | | | | | | $ | 0.14 | | | | $ | 2.18 | | | | | | | | | $ | 1.58 | | | | $ | 0.29 | | | | | | | | | $ | 1.52 | |
|
Diluted net earnings (loss) per share
| | | $ | (0.03 | ) | | | | | | | | $ | (0.06 | ) | | | $ | (0.71 | ) | | | | | | | | $ | 0.14 | | | | $ | 2.16 | | | | | | | | | $ | 1.57 | | | | $ | 0.29 | | | | | | | | | $ | 1.51 | |
| Weighted average number of common shares outstanding (2): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Basic
| | | | 33.9 | | | | | | | | | | 33.9 | | | | | 33.6 | | | | | | | | | | 33.6 | | | | | 33.8 | | | | | | | | | | 33.8 | | | | | 33.1 | | | | | | | | | | 33.1 | |
|
Diluted
| | | | 33.9 | | | | | | | | | | 33.9 | | | | | 33.6 | | | | | | | | | | 33.6 | | | | | 34.0 | | | | | | | | | | 34.0 | | | | | 33.3 | | | | | | | | | | 33.3 | |
Additional information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Gross margin (1)
| | | |
35.2
|
%
| | | | | | | | |
35.2
|
%
| | | |
38.3
|
%
| | | | | | | | |
38.3
|
%
| | | |
39.0
|
%
| | | | | | | | |
39.0
|
%
| | | |
38.2
|
%
| | | | | | | | |
38.2
|
%
|
|
SG&A as a % of total net sales (1)
| | | |
27.2
|
%
| | | | | | | | |
25.5
|
%
| | | |
27.8
|
%
| | | | | | | | |
24.0
|
%
| | | |
26.8
|
%
| | | | | | | | |
22.9
|
%
| | | |
23.5
|
%
| | | | | | | | |
21.2
|
%
|
|
Operating margin
| | | |
1.7
|
%
| | | | | | | | |
3.3
|
%
| | | |
4.5
|
%
| | | | | | | | |
8.6
|
%
| | | |
12.6
|
%
| | | | | | | | |
11.3
|
%
| | | |
9.5
|
%
| | | | | | | | |
12.6
|
%
|
|
Effective tax rate
| | | |
70.6
|
%
| | | | | | | |
nm
| | | |
nm
| | | | | | | | | |
53.0
|
%
| | | |
28.3
|
%
| | | | | | | | |
30.7
|
%
| | | |
82.7
|
%
| | | | | | | | |
41.9
|
%
|
|
(1)
|
|
|
Exclusive of depreciation and amortization
|
|
(2)
| | |
Beginning in the quarter ended June 30, 2017, LSC Communications,
Inc. (“LSC”) no longer qualified as a related party, therefore the
amounts disclosed related to LSC are presented through March 31,
2017 only. Beginning in the quarter ended September 30, 2017, R.R.
Donnelley & Sons Company ("RRD") no longer qualified as a related
party, therefore the amounts disclosed related to RRD are presented
through June 30, 2017 only.
|
|
(3)
| | |
During the first quarter of 2018, the Company adopted Accounting
Standards Update No. 2017-07 “Compensation—Retirement Benefits
(Topic 715): Improving the Presentation of Net Periodic Pension Cost
and Net Periodic Postretirement Benefit Cost” ("ASU 2017-07"), which
resulted in the presentation of net pension income within investment
and other income in the consolidated statement of operations instead
of selling, general and administrative expenses. Prior period net
pension income was also reclassified.
|
|
(4)
| | |
Gain on sale of Language Solutions business
|
|
(5)
| | |
Includes gain on equity investment and gain on eBrevia investment
for the twelve months ended December 31, 2018
|
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 and Twelve Months Ended December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions, except per share data) |
|
|
|
|
| For the Three Months Ended December 31, 2018 |
|
| For the Twelve Months Ended December 31, 2018 |
| | |
| |
|
| | |
|
|
| |
|
|
| |
|
| Net | | |
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
| | | | | | | | | | | | | | | | | | | earnings | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | (loss) | | | | | | | | | | | | | | | | | | | Net |
| | | | | | | Income | | | | | | | Net | | | per | | | | | | | Income | | | | | | | | | | | earnings |
| | | | | | | from | | | Operating | | | earnings | | | diluted | | | | | | | from | | | Operating | | | Net | | | per diluted |
| | | SG&A | | | operations | | | margin | | | (loss) | | | share | | | SG&A | | | operations | | | margin | | | earnings | | | share |
|
GAAP basis measures
| | |
$
|
54.4
| | | |
$
|
3.4
| | | |
|
1.7
|
%
| | |
$
|
(1.0
|
)
| | |
$
|
(0.03
|
)
| | |
$
|
258.2
| | | |
$
|
121.1
| | | |
|
12.6
|
%
| | |
$
|
73.6
| | | |
$
|
2.16
| |
|
Non-GAAP adjustments:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Gain on sale of business
| | | |
—
| | | | |
(0.3
|
)
| | | |
(0.1
|
%)
| | | |
(0.2
|
)
| | | |
(0.01
|
)
| | | |
—
| | | | |
(53.8
|
)
| | | |
(5.6
|
%)
| | | |
(38.6
|
)
| | | |
(1.14
|
)
|
|
Gain on equity investment
| | | |
—
| | | | |
—
| | | | |
0.0
|
%
| | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
0.0
|
%
| | | |
(8.5
|
)
| | | |
(0.25
|
)
|
|
Gain on eBrevia investment
| | | |
—
| | | | |
—
| | | | |
0.0
|
%
| | | |
(1.5
|
)
| | | |
(0.04
|
)
| | | |
—
| | | | |
—
| | | | |
0.0
|
%
| | | |
(1.5
|
)
| | | |
(0.04
|
)
|
|
Restructuring, impairment and other
charges - net
| | | |
—
| | | |
0.3
| | | | |
0.1
|
%
| | | |
0.2
| | | | |
0.01
| | | | |
—
| | | | |
4.4
| | | | |
0.4
|
%
| | | |
3.2
| | | | |
0.09
| |
|
Spin-off related transaction expenses
| | | |
(0.2
|
)
| | |
0.2
| | | | |
0.1
|
%
| | | |
0.1
| | | | |
0.00
| | | | |
(20.1
|
)
| | | |
20.1
| | | | |
2.1
|
%
| | | |
14.6
| | | | |
0.43
| |
|
Share-based compensation expense
| | | |
(2.0
|
)
| | | |
2.0
| | | | |
1.0
|
%
| | | |
1.4
| | | | |
0.04
| | | | |
(9.2
|
)
| | | |
9.2
| | | | |
0.9
|
%
| | | |
6.7
| | | | |
0.20
| |
|
Disposition-related expenses
| | | |
(0.3
|
)
| | | |
0.3
| | | | |
0.1
|
%
| | | |
0.3
| | | | |
0.01
| | | | |
(6.8
|
)
| | | |
6.8
| | | | |
0.7
|
%
| | | |
5.0
| | | | |
0.15
| |
|
Acquisition-related expenses
| | | |
(0.3
|
)
| | | |
0.3
| | | | |
0.1
|
%
| | | |
0.3
| | | | |
0.01
| | | | |
(0.8
|
)
| | | |
0.8
| | | | |
0.1
|
%
| | | |
0.6
| | | | |
0.02
| |
|
Investor-related expenses
| | | |
(0.5
|
)
| | | |
0.5
| | | | |
0.3
|
%
| | | |
0.4
| | | | |
0.01
| | | | |
(0.5
|
)
| | | |
0.5
| | | | |
0.1
|
%
| | | |
0.4
| | | | |
0.01
| |
Income tax adjustments (1) | | |
|
—
|
| | |
|
—
|
| | |
|
0.0
|
%
| | |
|
(2.1
|
)
| | |
|
(0.06
|
)
| | |
|
—
|
| | |
|
—
|
| | |
|
0.0
|
%
| | |
|
(2.1
|
)
| | |
|
(0.06
|
)
|
|
Total Non-GAAP adjustments
| | |
|
(3.3
|
)
| | |
|
3.3
|
| | |
|
1.6
|
%
| | |
|
(1.1
|
)
| | |
|
(0.03
|
)
| | |
|
(37.4
|
)
| | |
|
(12.0
|
)
| | |
|
(1.3
|
%)
| | |
|
(20.2
|
)
| | |
|
(0.59
|
)
|
|
Non-GAAP measures
| | |
$
|
51.1
|
| | |
$
|
6.7
|
| | |
|
3.3
|
%
| | |
$
|
(2.1
|
)
| | |
$
|
(0.06
|
)
| | |
$
|
220.8
|
| | |
$
|
109.1
|
| | |
|
11.3
|
%
| | |
$
|
53.4
|
| | |
$
|
1.57
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | For the Three Months Ended December 31, 2017 | | | For the Twelve Months Ended December 31, 2017 |
| | | | | | | | | | | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | earnings | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | (loss) | | | | | | | | | | | | | | | | | | | Net |
| | | | | | | Income | | | | | | | Net | | | per | | | | | | | Income | | | | | | | | | | | earnings |
| | | | | | | from | | | Operating | | | earnings | | | diluted | | | | | | | from | | | Operating | | | Net | | | per diluted |
| | | SG&A | | | operations | | | margin |
| | (loss) |
| | share | | | SG&A | | | operations | | | margin | | | earnings | | | share |
|
GAAP basis measures
| | |
$
|
62.5
| | | |
$
|
10.1
| | | | |
4.5
|
%
| | |
$
|
(23.7
|
)
| | |
$
|
(0.71
|
)
| | |
$
|
236.2
| | | |
$
|
95.7
| | | | |
9.5
|
%
| | |
$
|
9.7
| | | |
$
|
0.29
| |
|
Non-GAAP adjustments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Restructuring, impairment and other
charges - net
| | | |
—
| | | | |
0.7
| | | | |
0.3
|
%
| | | |
0.3
| | | | |
0.01
| | | | |
—
| | | | |
7.1
| | | | |
0.7
|
%
| | | |
4.2
| | | | |
0.13
| |
|
Spin-off related transaction expenses
| | | |
(6.7
|
)
| | | |
6.7
| | | | |
3.0
|
%
| | | |
4.4
| | | | |
0.13
| | | | |
(16.5
|
)
| | | |
16.5
| | | | |
1.6
|
%
| | | |
9.9
| | | | |
0.30
| |
|
Share-based compensation expense
| | | |
(1.6
|
)
| | | |
1.6
| | | | |
0.7
|
%
| | | |
1.2
| | | | |
0.04
| | | | |
(6.8
|
)
| | | |
6.8
| | | | |
0.7
|
%
| | | |
4.1
| | | | |
0.12
| |
|
Acquisition-related expenses
| | | |
(0.2
|
)
| | | |
0.2
| | | | |
0.1
|
%
| | | |
0.1
| | | | |
0.00
| | | | |
(0.2
|
)
| | | |
0.2
| | | | |
0.1
|
%
| | | |
0.1
| | | | |
0.00
| |
Income tax adjustments (1) | | |
|
—
|
| | |
|
—
|
| | |
|
0.0
|
%
| | |
|
22.4
|
| | |
|
0.67
|
| | |
|
—
|
| | |
|
—
|
| | |
|
0.0
|
%
| | |
|
22.4
|
| | | |
0.67
|
|
|
Total Non-GAAP adjustments
| | |
|
(8.5
|
)
| | |
|
9.2
| | | |
|
4.1
|
%
| | |
|
28.4
|
| | |
|
0.85
|
| | |
|
(23.5
|
)
| | |
|
30.6
|
| | |
|
3.1
|
%
| | |
|
40.7
|
| | |
|
1.22
|
|
|
Non-GAAP measures
| | |
$
|
54.0
|
| | |
$
|
19.3
| | | |
|
8.6
|
%
| | |
$
|
4.7
|
| | |
$
|
0.14
|
| | |
$
|
212.7
|
| | |
$
|
126.3
|
| | |
|
12.6
|
%
| | |
$
|
50.4
|
| | |
$
|
1.51
|
|
(1) |
|
|
For the three and twelve months ended December 31, 2017 and 2018,
income tax adjustments relate to the impact of the U.S. Tax Cuts
and Jobs Act, including the transition tax imposed on the
Company's accumulated foreign earnings and the remeasurement of
the Company's U.S. net deferred tax asset.
|
|
|
|
|
| Donnelley Financial Solutions, Inc. |
Segment GAAP to Non-GAAP Operating Income and Non-GAAP Adjusted
EBITDA and Margin Reconciliation
|
For the Three Months Ended December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions) |
|
|
|
|
| U.S. |
|
|
International
|
|
|
Corporate
|
|
|
Consolidated
|
For the Three Months Ended December 31,
2018 | | | |
| | | | |
| | | | | | | | | | | |
|
Net sales
| | |
$
|
170.7
| | | |
$
|
29.6
| | | |
$
|
—
| | | |
$
|
200.3
| |
|
Income (loss) from operations
| | | |
12.3
| | | | |
0.5
| | | | |
(9.4
|
)
| | | |
3.4
| |
|
Operating margin %
| | | |
7.2
|
%
| | | |
1.7
|
%
| | |
nm
| | | | |
1.7
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Adjustments | | | | | | | | | | | | | | | | | | | | |
|
Gain on sale of business
| | | |
—
| | | | |
(0.3
|
)
| | | |
—
| | | | |
(0.3
|
)
|
|
Restructuring, impairment and other charges - net
| | | |
0.1
| | | | |
(0.1
|
)
| | | |
0.3
| | | | |
0.3
| |
|
Spin-off related transaction expenses
| | | |
0.9
| | | | |
—
| | | | |
(0.7
|
)
| | | |
0.2
| |
|
Share-based compensation expense
| | | |
—
| | | | |
—
| | | | |
2.0
| | | | |
2.0
| |
|
Disposition-related expenses
| | | |
—
| | | | |
0.2
| | | | |
0.1
| | | | |
0.3
| |
|
Acquisition-related expenses
| | | |
—
| | | | |
—
| | | | |
0.3
| | | | |
0.3
| |
|
Investor-related expenses
| | | |
—
|
| | | |
—
|
| | | |
0.5
|
| | | |
0.5
|
|
|
Total Non-GAAP adjustments
| | | |
1.0
| | | | |
(0.2
|
)
| | | |
2.5
| | | | |
3.3
| |
| | | | | | | | | | | | | |
| | | | | | | |
|
Non-GAAP income (loss) from operations
| | |
$
|
13.3
| | | |
$
|
0.3
| | | |
$
|
(6.9
|
)
| | |
$
|
6.7
| |
|
Non-GAAP operating margin %
| | | |
7.8
|
%
| | | |
1.0
|
%
| | |
nm
| | | | |
3.3
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
|
Depreciation and amortization
| | | |
10.9
|
| | | |
1.7
|
| | | |
0.1
|
| | | |
12.7
|
|
|
Non-GAAP Adjusted EBITDA
| | |
$
|
24.2
| | | |
$
|
2.0
| | | |
$
|
(6.8
|
)
| | |
$
|
19.4
| |
|
Non-GAAP Adjusted EBITDA margin %
| | | |
14.2
|
%
| | | |
6.8
|
%
| | |
nm
| | | | |
9.7
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
For the Three Months Ended December 31,
2017 | | | | | | | | | | | | | | | | | | | | | |
|
Net sales
| | |
$
|
189.7
| | | |
$
|
35.1
| | | |
$
|
—
| | | |
$
|
224.8
| |
|
Income (loss) from operations
| | | |
20.1
| | | | |
(0.4
|
)
| | | |
(9.6
|
)
| | | |
10.1
| |
|
Operating margin %
| | | |
10.6
|
%
| | | |
(1.1
|
%)
| | |
nm
| | | | |
4.5
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Adjustments | | | | | | | | | | | | | | | | | | | | | |
|
Restructuring, impairment and other charges - net
| | | |
(0.5
|
)
| | | |
0.9
| | | | |
0.3
| | | | |
0.7
| |
|
Spin-off related transaction expenses
| | | |
6.0
| | | | |
—
| | | | |
0.7
| | | | |
6.7
| |
|
Share-based compensation expense
| | | |
—
| | | | |
—
| | | | |
1.6
| | | | |
1.6
| |
|
Acquisition-related expenses
| | | |
—
|
| | | |
—
|
| | | |
0.2
|
| | | |
0.2
|
|
|
Total Non-GAAP adjustments
| | | |
5.5
| | | | |
0.9
| | | | |
2.8
| | | | |
9.2
| |
| | | | | | | | | | | | | | | | | | |
|
|
Non-GAAP income (loss) from operations
| | |
$
|
25.6
| | | |
$
|
0.5
| | | |
$
|
(6.8
|
)
| | |
$
|
19.3
| |
|
Non-GAAP operating margin %
| | | |
13.5
|
%
| | | |
1.4
|
%
| | |
nm
| | | | |
8.6
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
|
Depreciation and amortization
| | | |
10.7
|
| | | |
2.1
|
| | | |
—
|
| | | |
12.8
|
|
|
Non-GAAP Adjusted EBITDA
| | |
$
|
36.3
| | | |
$
|
2.6
| | | |
$
|
(6.8
|
)
| | |
$
|
32.1
| |
|
Non-GAAP Adjusted EBITDA margin %
| | | |
19.1
|
%
| | | |
7.4
|
%
| | |
nm
| | | | |
14.3
|
%
|
|
|
|
|
| Donnelley Financial Solutions, Inc. |
Segment GAAP to Non-GAAP Operating Income and Non-GAAP Adjusted
EBITDA and Margin Reconciliation
|
For the Twelve Months Ended December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions) |
|
|
|
|
| U.S. |
|
|
International
|
|
|
Corporate
|
|
|
Consolidated
|
For the Twelve Months Ended December 31,
2018 | | | | | | | | | | | | | | | | | | | | |
|
Net sales
| | |
$
|
811.8
| | | |
$
|
151.2
| | | |
$
|
—
| | | |
$
|
963.0
| |
|
Income (loss) from operations
| | | |
134.0
| | | | |
31.6
| | | | |
(44.5
|
)
| | | |
121.1
| |
|
Operating margin %
| | | |
16.5
|
%
| | | |
20.9
|
%
| | |
nm
| | | | |
12.6
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Adjustments | | | | | | | | | | | | | | | | | | | | |
|
Gain on sale of business
| | | |
(26.6
|
)
| | | |
(27.2
|
)
| | | |
—
| | | | |
(53.8
|
)
|
|
Restructuring, impairment and other charges - net
| | | |
2.0
| | | | |
1.8
| | | | |
0.6
| | | | |
4.4
| |
|
Spin-off related transaction expenses
| | | |
16.5
| | | | |
—
| | | | |
3.6
| | | | |
20.1
| |
|
Share-based compensation expense
| | | |
—
| | | | |
—
| | | | |
9.2
| | | | |
9.2
| |
|
Disposition-related expenses
| | | |
—
| | | | |
1.4
| | | | |
5.4
| | | | |
6.8
| |
|
Acquisition-related expenses
| | | |
—
| | | | |
—
| | | | |
0.8
| | | | |
0.8
| |
|
Investor-related expenses
| | | |
—
| | | | |
—
| | | | |
0.5
| | | | |
0.5
| |
|
Total Non-GAAP adjustments
| | | |
(8.1
|
)
| | | |
(24.0
|
)
| | | |
20.1
| | | | |
(12.0
|
)
|
| | | | | | | | | | | | | | | | | | | |
|
|
Non-GAAP income (loss) from operations
| | |
$
|
125.9
| | | |
$
|
7.6
| | | |
$
|
(24.4
|
)
| | |
$
|
109.1
| |
|
Non-GAAP operating margin %
| | | |
15.5
|
%
| | | |
5.0
|
%
| | |
nm
| | | | |
11.3
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
|
Depreciation and amortization
| | | |
39.6
| | | | |
5.7
| | | | |
0.5
| | | | |
45.8
| |
|
Non-GAAP Adjusted EBITDA
| | |
$
|
165.5
| | | |
$
|
13.3
| | | |
$
|
(23.9
|
)
| | |
$
|
154.9
| |
|
Non-GAAP Adjusted EBITDA margin %
| | | |
20.4
|
%
| | | |
8.8
|
%
| | |
nm
| | | | |
16.1
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
For the Twelve Months Ended December 31,
2017 | | | | | | | | | | | | | | | | | | | | |
|
Net sales
| | |
$
|
847.9
| | | |
$
|
157.0
| | | |
$
|
—
| | | |
$
|
1,004.9
| |
|
Income (loss) from operations
| | | |
127.6
| | | | |
7.2
| | | | |
(39.1
|
)
| | | |
95.7
| |
|
Operating margin %
| | | |
15.0
|
%
| | | |
4.6
|
%
| | |
nm
| | | | |
9.5
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Adjustments | | | | | | | | | | | | | | | | | | | | |
|
Restructuring, impairment and other charges - net
| | | |
3.9
| | | | |
2.2
| | | | |
1.0
| | | | |
7.1
| |
|
Spin-off related transaction expenses
| | | |
10.0
| | | | |
—
| | | | |
6.5
| | | | |
16.5
| |
|
Share-based compensation expense
| | | |
—
| | | | |
—
| | | | |
6.8
| | | | |
6.8
| |
|
Acquisition-related expenses
| | | |
—
| | | | |
—
| | | | |
0.2
| | | | |
0.2
| |
|
Total Non-GAAP adjustments
| | | |
13.9
| | | | |
2.2
| | | | |
14.5
| | | | |
30.6
| |
| | | | | | | | | | | | | | | | | | | |
|
|
Non-GAAP income (loss) from operations
| | |
$
|
141.5
| | | |
$
|
9.4
| | | |
$
|
(24.6
|
)
| | |
$
|
126.3
| |
|
Non-GAAP operating margin %
| | | |
16.7
|
%
| | | |
6.0
|
%
| | |
nm
| | | | |
12.6
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
|
Depreciation and amortization
| | | |
38.2
| | | | |
6.3
| | | | |
—
| | | | |
44.5
| |
|
Non-GAAP Adjusted EBITDA
| | |
$
|
179.7
| | | |
$
|
15.7
| | | |
$
|
(24.6
|
)
| | |
$
|
170.8
| |
|
Non-GAAP Adjusted EBITDA margin %
| | | |
21.2
|
%
| | | |
10.0
|
%
| | |
nm
| | | | |
17.0
|
%
|
|
|
|
|
| Donnelley Financial Solutions, Inc. |
Consolidated Statements of Cash Flows
|
For the Twelve Months Ended December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions) |
|
|
|
|
| For the Twelve Months Ended December 31, |
| | | 2018 |
|
| 2017 |
|
Net earnings
| | |
$
|
73.6
| | | |
$
|
9.7
| |
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
| | | | | | | | | | |
|
Depreciation and amortization
| | | |
45.8
| | | | |
44.5
| |
|
Provision for doubtful accounts receivable
| | | |
4.9
| | | | |
3.9
| |
|
Share-based compensation
| | | |
9.2
| | | | |
6.8
| |
|
Deferred income taxes
| | | |
10.5
| | | | |
12.4
| |
|
Changes in uncertain tax positions
| | | |
—
| | | | |
(0.2
|
)
|
|
Net pension plan income
| | | |
(3.2
|
)
| | | |
(3.3
|
)
|
|
Gain on change in fair value of investment
| | | |
(13.6
|
)
| | | |
—
| |
|
Gain on disposition
| | | |
(53.8
|
)
| | | |
—
| |
|
Gain on investments and other assets - net
| | | |
—
| | | | |
0.2
| |
|
Other
| | | |
2.3
| | | | |
2.8
| |
|
Changes in operating assets and liabilities - net of acquisitions:
| | | | | | | | | | |
|
Accounts receivable - net
| | | |
(25.3
|
)
| | | |
18.0
| |
|
Inventories
| | | |
(1.6
|
)
| | | |
0.8
| |
|
Prepaid expenses and other current assets
| | | |
1.2
| | | | |
(3.5
|
)
|
|
Accounts payable
| | | |
10.7
| | | | |
(18.3
|
)
|
|
Income taxes payable and receivable
| | | |
9.2
| | | | |
5.4
| |
|
Accrued liabilities and other
| | | |
(1.7
|
)
| | | |
14.4
| |
|
Pension and other postretirement benefits plan contributions
| | |
|
(1.9
|
)
| | |
|
(2.2
|
)
|
| Net cash provided by operating activities | | | $ | 66.3 | | | | $ | 91.4 | |
| | | | | | | | | |
|
|
Capital expenditures
| | | |
(37.1
|
)
| | | |
(27.8
|
)
|
|
Acquisition of business, net of cash acquired
| | | |
(12.5
|
)
| | | |
—
| |
|
Sale (purchase) of investment
| | | |
3.1
| | | | |
(3.4
|
)
|
|
Proceeds from disposition
| | | |
77.5
| | | | |
—
| |
|
Other investing activities
| | |
|
(0.8
|
)
| | |
|
0.2
| |
| Net cash provided by (used in) investing activities | | | $ | 30.2 | | | | $ | (31.0 | ) |
| | | | | | | | | |
|
|
Revolving facility borrowings
| | | |
360.0
| | | | |
298.5
| |
|
Payments on revolving facility borrowings
| | | |
(360.0
|
)
| | | |
(298.5
|
)
|
|
Payments on long-term debt
| | | |
(97.5
|
)
| | | |
(133.0
|
)
|
|
Proceeds from issuance of common stock
| | | |
1.2
| | | | |
18.8
| |
|
Treasury share repurchases
| | | |
(1.5
|
)
| | | |
(0.9
|
)
|
|
Debt issuance costs
| | | |
(1.2
|
)
| | | |
(2.1
|
)
|
|
Separation-related payment from R.R. Donnelley
| | | |
—
| | | | |
68.0
| |
|
Proceeds from issuance of long-term debt
| | | |
—
| | | | |
3.1
| |
|
Other financing activities
| | |
|
—
| | | |
|
0.4
| |
| Net cash used in financing activities | | | $ | (99.0 | ) | | | $ | (45.7 | ) |
|
Effect of exchange rate on cash and cash equivalents
| | |
|
(2.2
|
)
| | |
|
1.1
| |
| Net (decrease) increase in cash and cash equivalents | | |
| (4.7 | ) | | |
| 15.8 | |
|
Cash and cash equivalents at beginning of year
| | |
|
52.0
| | | |
|
36.2
| |
| Cash and cash equivalents at end of period | | | $ | 47.3 | | | | $ | 52.0 | |
|
|
Additional Information: | | | | | | | | | | |
| | | 2018 | | | 2017 |
| For the Twelve Months Ended December 31: | | | | | | | | | | |
|
Net cash provided by operating activities
| | |
$
|
66.3
| | | |
$
|
91.4
| |
|
Less: capital expenditures
| | |
|
37.1
| | | |
|
27.8
| |
|
Free cash flow
| | |
$
|
29.2
| | | |
$
|
63.6
| |
| | | | | | | | | |
|
| | | 2018 | | | 2017 |
| For the Nine Months Ended September 30: | | | | | | | | | | |
|
Net cash used in operating activities
| | |
$
|
10.4
| | | |
$
|
33.7
| |
|
Less: capital expenditures
| | |
|
22.8
| | | |
|
20.0
| |
|
Free cash flow
| | |
$
|
(12.4
|
)
| | |
$
|
13.7
| |
| | | | | | | | | |
|
| | | 2018 | | | 2017 |
| For the Three Months Ended December 31: | | | | | | | | | | |
|
Net cash provided by operating activities
| | |
$
|
55.9
| | | |
$
|
57.7
| |
|
Less: capital expenditures
| | |
|
14.3
| | | |
|
7.8
| |
|
Free cash flow
| | |
$
|
41.6
| | | |
$
|
49.9
| |
|
|
|
|
Donnelley Financial Solutions, Inc. |
Reconciliation of Reported to Organic Net Sales
|
For the Three and Twelve Months Ended December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions) |
|
|
|
|
| U.S. | |
| | | |
|
| | | |
|
| | | |
| | |
Capital
| |
|
Investment
| |
|
Language
| | | | | | | | | | | | |
| | |
Markets
| | |
Markets
| | |
Solutions
| | |
Total U.S. | | | |
International
| | | |
Consolidated
|
Reported Net Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
For the Three Months Ended
December 31, 2018
| | |
$
|
91.4
| | |
$
|
79.3
| | |
$
|
—
| | |
$
|
170.7
| | | |
$
|
29.6
| | | |
$
|
200.3
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
For the Three Months Ended
December 31, 2017 (1) | | | |
105.6
| | | |
75.3
| | | |
8.8
| | | |
189.7
| | | | |
35.1
| | | | |
224.8
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales change |
|
|
| (13.4 | %) |
|
| 5.3 | % |
|
| (100.0 | %) |
|
| (10.0 | %) |
|
|
| (15.7 | %) |
|
|
| (10.9 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Supplementary non-GAAP information: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Year-over-year impact of changes in foreign exchange (FX) rates
| | | |
—
|
%
| | |
—
|
%
| | |
—
|
%
| | |
—
|
%
| | | |
(2.6
|
%)
| | | |
(0.4
|
%)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Year-over-year impact of the adoption of the new revenue recognition
standard
| | | |
(0.3
|
%)
| | |
1.2
|
%
| | |
—
|
%
| | |
0.3
|
%
| | | |
0.6
|
%
| | | |
0.3
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Year-over-year impact of the Language Solutions disposition
| | | |
—
|
%
| | |
—
|
%
| | |
(100.0
|
%)
| | |
(4.7
|
%)
| | | |
(35.4
|
%)
| | | |
(9.4
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net organic sales change (2) |
|
|
| (13.1 | %) |
|
| 4.1 | % |
|
| — | % |
|
| (5.6 | %) |
|
|
| 21.7 | % |
|
|
| (1.4 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | U.S. | | | | | | | | | | | | | | | |
| | |
Capital
| | |
Investment
| | |
Language
| | | | | | | | | | | | |
| | |
Markets
| | |
Markets
| | |
Solutions
| | |
Total U.S. | | | |
International
| | | |
Consolidated
|
Reported Net Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
For the Twelve Months Ended
December 31, 2018
| | |
$
|
456.0
| | |
$
|
342.1
| | |
$
|
13.7
| | |
$
|
811.8
| | | |
$
|
151.2
| | | |
$
|
963.0
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
For the Twelve Months Ended
December 31, 2017 (1) | | | |
455.4
| | | |
367.2
| | | |
25.3
| | | |
847.9
| | | | |
157.0
| | | | |
1,004.9
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales change |
|
|
| 0.1 | % |
|
| (6.8 | %) |
|
| (45.8 | %) |
|
| (4.3 | %) |
|
|
| (3.7 | %) |
|
|
| (4.2 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Supplementary non-GAAP information: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Year-over-year impact of changes in foreign exchange (FX) rates
| | | |
—
|
%
| | |
—
|
%
| | |
—
|
%
| | |
—
|
%
| | | |
1.7
|
%
| | | |
0.3
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Year-over-year impact of the adoption of the new revenue recognition
standard
| | | |
—
|
%
| | |
(0.2
|
%)
| | |
—
|
%
| | |
(0.1
|
%)
| | | |
0.3
|
%
| | | |
—
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Year-over-year impact of the Language Solutions disposition
| | | |
—
|
%
| | |
—
|
%
| | |
(50.5
|
%)
| | |
(1.5
|
%)
| | | |
(14.2
|
%)
| | | |
(3.6
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net organic sales change (2) | | |
| 0.1 | % | |
| (6.6 | %) | |
| 4.7 | % | |
| (2.7 | %) |
| |
| 8.5 | % |
| |
| (0.9 | %) |
(1) |
|
|
Certain prior year amounts were restated to conform to the Company’s
current reporting unit structure. The former Language Solutions and
other reporting unit has been renamed “Language Solutions.” Certain
results previously included within the former Language Solutions and
other reporting unit are now included within the Investment Markets
reporting unit.
|
(2) | | |
Adjusted for the impact of changes in FX rates, the adoption of the
new revenue recognition standard and the Language Solutions
disposition.
|
|
|
|
|
Donnelley Financial Solutions, Inc. |
|
Reconciliation of GAAP Net Earnings (Loss) to Non-GAAP Adjusted
EBITDA
|
|
For the Three and Twelve Months Ended December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions) |
|
|
|
|
For the Twelve
| |
|
| | |
| | |
Months Ended
| | | |
For the Three Months Ended
| |
| | |
December 31,
| | | |
December 31,
| |
|
|
September 30,
| |
|
|
June 30,
| |
|
|
March 31,
|
| | |
2018
| | | |
2018
| | | |
2018
| | | |
2018
| | | |
2018
|
GAAP net earnings (loss) | | | $ | 73.6 | | | | $ | (1.0 | ) | | | $ | 48.0 | | | | $ | 18.9 | | | | $ | 7.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Income tax expense (benefit)
| | | |
29.1
| | | | |
(2.4
|
)
| | | |
19.7
| | | | |
8.3
| | | | |
3.5
| |
|
Interest expense-net
| | | |
36.7
| | | | |
9.5
| | | | |
8.4
| | | | |
9.8
| | | | |
9.0
| |
|
Investment and other income-net (1) | | | |
(18.3
|
)
| | | |
(2.7
|
)
| | | |
(14.0
|
)
| | | |
(0.8
|
)
| | | |
(0.8
|
)
|
|
Depreciation and amortization
| | | |
45.8
| | | | |
12.7
| | | | |
11.6
| | | | |
11.1
| | | | |
10.4
| |
|
Restructuring, impairment and other charges-net
| | | |
4.4
| | | | |
0.3
| | | | |
0.8
| | | | |
2.6
| | | | |
0.7
| |
|
Share-based compensation expense
| | | |
9.2
| | | | |
2.0
| | | | |
2.1
| | | | |
3.3
| | | | |
1.8
| |
|
Spin-off related transaction expenses
| | | |
20.1
| | | | |
0.2
| | | | |
3.7
| | | | |
8.4
| | | | |
7.8
| |
|
Gain on sale of business
| | | |
(53.8
|
)
| | | |
(0.3
|
)
| | | |
(53.5
|
)
| | | |
—
| | | | |
—
| |
|
Disposition-related expenses (2) | | | |
6.8
| | | | |
0.3
| | | | |
4.5
| | | | |
1.5
| | | | |
0.5
| |
|
Acquisition-related expenses
| | | |
0.8
| | | | |
0.3
| | | | |
—
| | | | |
0.3
| | | | |
0.2
| |
|
Investor-related expenses(3) | | |
|
0.5
| | | |
|
0.5
| | | |
|
—
| | | |
|
—
| | | |
|
—
| |
|
Total Non-GAAP adjustments
| | | |
81.3
| | | | |
20.4
| | | | |
(16.7
|
)
| | | |
44.5
| | | | |
33.1
| |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Non-GAAP adjusted EBITDA | | | $ | 154.9 | | | | $ | 19.4 | | | | $ | 31.3 | | | | $ | 63.4 | | | | $ | 40.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Net sales
| | |
$
|
963.0
| | | |
$
|
200.3
| | | |
$
|
216.9
| | | |
$
|
290.6
| | | |
$
|
255.2
| |
|
Non-GAAP adjusted EBITDA margin %
| | | |
16.1
|
%
| | | |
9.7
|
%
| | | |
14.4
|
%
| | | |
21.8
|
%
| | | |
14.3
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
For the Twelve
| | | | | |
| | |
Months Ended
| | | |
For the Three Months Ended
| |
| | |
December 31,
| | | |
December 31,
| | | |
September 30,
| | | |
June 30,
| | | |
March 31,
|
| | |
2017
| | | |
2017
| | | |
2017
| | | |
2017
| | | |
2017
|
| GAAP net earnings (loss) | | | $ | 9.7 | | | | $ | (23.7 | ) | | | $ | 5.3 | | | | $ | 18.8 | | | | $ | 9.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Income tax expense
| | | |
46.5
| | | | |
24.5
| | | | |
2.1
| | | | |
13.1
| | | | |
6.8
| |
|
Interest expense-net
| | | |
42.9
| | | | |
10.2
| | | | |
10.6
| | | | |
11.0
| | | | |
11.1
| |
|
Investment and other income-net (1) | | | |
(3.4
|
)
| | | |
(0.9
|
)
| | | |
(0.8
|
)
| | | |
(0.9
|
)
| | | |
(0.8
|
)
|
|
Depreciation and amortization
| | | |
44.5
| | | | |
12.8
| | | | |
10.6
| | | | |
10.9
| | | | |
10.2
| |
|
Restructuring, impairment and other charges-net
| | | |
7.1
| | | | |
0.7
| | | | |
(0.6
|
)
| | | |
3.2
| | | | |
3.8
| |
|
Share-based compensation expense
| | | |
6.8
| | | | |
1.6
| | | | |
1.7
| | | | |
2.4
| | | | |
1.1
| |
|
Spin-off related transaction expenses
| | | |
16.5
| | | | |
6.7
| | | | |
2.6
| | | | |
4.5
| | | | |
2.7
| |
|
Acquisition-related expenses
| | |
|
0.2
| | | |
|
0.2
| | | |
|
—
| | | |
|
—
| | | |
|
—
| |
|
Total Non-GAAP adjustments
| | | |
161.1
| | | | |
55.8
| | | | |
26.2
| | | | |
44.2
| | | | |
34.9
| |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Non-GAAP adjusted EBITDA | | | $ | 170.8 | | | | $ | 32.1 | | | | $ | 31.5 | | | | $ | 63.0 | | | | $ | 44.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Net sales
| | |
$
|
1,004.9
| | | |
$
|
224.8
| | | |
$
|
222.6
| | | |
$
|
290.2
| | | |
$
|
267.3
| |
|
Non-GAAP adjusted EBITDA margin %
| | | |
17.0
|
%
| | | |
14.3
|
%
| | | |
14.2
|
%
| | | |
21.7
|
%
| | | |
16.5
|
%
|
(1) |
|
|
During the first quarter of 2018, the Company adopted ASU 2017-07,
which resulted in the presentation of net pension income within
investment and other income in the condensed consolidated statement
of operations instead of selling, general and administrative
expenses. Prior period net pension income was also reclassified.
|
(2) | | |
Expenses incurred related to the disposition of the Company's
Language Solutions business. Prior periods have been revised to
reflect this adjustment.
|
(3) | | |
Expenses incurred related to non-routine investor matters which
include third-party advisory and consulting fees and legal fees.
|
|
|
|
|
Donnelley Financial Solutions, Inc. |
Debt and Liquidity Summary
|
As of December 31, 2018 and 2017
|
(UNAUDITED) |
(in millions) |
|
|
Total Liquidity |
|
| December 31, 2018 | |
|
| December 31, 2017 |
Availability | | | | | | | | | | |
|
Stated amount of the Revolving Facility (1) | | |
$
|
300.0
| | | |
$
|
300.0
| |
|
Less: availability reduction from covenants
| | |
|
45.3
| | | |
|
—
| |
|
Amount available under the Revolving Facility
| | | |
254.7
| | | | |
300.0
| |
| | | | | | | | | |
|
Usage | | | | | | | | | | |
|
Borrowings under the Revolving Facility
| | | |
—
| | | | |
—
| |
|
Impact on availability related to outstanding
letters of credit
| | |
|
—
| | | |
|
—
| |
|
Amount used under the Revolving Facility
| | | |
—
| | | | |
—
| |
| | |
|
| | | |
|
| |
|
Availability under the Revolving Facility
| | |
|
254.7
| | | |
|
300.0
| |
| | | | | | | | | |
|
|
Cash (2) | | | |
47.3
| | | | |
52.0
| |
| | | | | | | | | |
|
|
Net Available Liquidity
| | |
$
|
302.0
| | | |
$
|
352.0
| |
| | | | | | | | | |
|
| | | | | | | | | |
|
|
Short-term debt
| | |
$
|
—
| | | |
$
|
—
| |
|
Long-term debt
| | |
|
362.7
| | | |
|
458.3
| |
|
Total debt
| | |
$
|
362.7
| | | |
$
|
458.3
| |
| | | | | | | | | |
|
|
Non-GAAP adjusted EBITDA for the twelve months ended December 31,
2018 and 2017
| | |
$
|
154.9
| | | |
$
|
170.8
| |
| | | | | | | | | |
|
| Non-GAAP Gross Leverage (defined as total debt divided by
non-GAAP adjusted EBITDA) | | | | 2.3 | x | | | | 2.7 | x |
| | | | | | | | | |
|
|
Non-GAAP Net Debt (defined as total debt less cash)
| | |
$
|
315.4
| | | |
$
|
406.3
| |
| | | | | | | | | |
|
| Non-GAAP Net Leverage (defined as non-GAAP Net Debt divided by
non-GAAP adjusted EBITDA) | | | | 2.0 | x | | | | 2.4 | x |
(1) |
|
|
The Company has 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 Net Leverage Ratio, both as defined
and calculated in the Credit Agreement. There were no outstanding
borrowings under the Revolving Facility as of December 31, 2018.
Based on the Company’s results of operations for the twelve months
ended December 31, 2018 and existing debt, the Company would have
had the ability to utilize an incremental $254.7 million of the
$300.0 million Revolving Facility and not have been in violation
of the terms of the agreement.
|
(2) | | |
Approximately 37% and 30% of cash as of December 31, 2018 and 2017,
respectively, was located outside of the U.S. The Company intends to
repatriate certain foreign cash balances related to foreign earnings
previously subject to U.S. tax. As the foreign earnings have
previously been subject to U.S. tax, the Company estimates that the
repatriation of the related foreign cash to the U.S. will create
minimal additional tax expense. Repatriation of some foreign cash
balances are further restricted by local laws.
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190227005128/en/
Justin Ritchie
Investor Relations
investors@dfinsolutions.com
Source: Donnelley Financial Solutions