RR Donnelley (RRD) Misses Q2 EPS by 5c, Revenues Beat; Updates FY18 EPS Mid-Point View Above Consensus, Lowers FY18 Revenue Outlook

RR Donnelley (NYSE: RRD) reported Q2 EPS of ($0.09), $0.05 worse than the analyst estimate of ($0.04). Revenue for the quarter came in at $1.68 billion versus the consensus estimate of $1.64 billion.

Key messages

• Net sales increased 3.7%, and organic sales grew 2.7% - represents third consecutive quarter of organic growth
• Income from operations includes unfavorable foreign exchange rate impact of nearly $7 million versus 2017 on both a GAAP and non-GAAP basis
• Net cash provided by operating activities of $12.3 million in the quarter increased $48.2 million versus the prior year period
• Print logistics sale completed on July 2, 2018; proceeds of $60.0 million, subject to customary working capital adjustments, were used to reduce credit facility borrowings
• Full year guidance adjusted primarily for the sale of print logistics and expected stronger organic sales performance
• Board of Directors approved a quarterly dividend of $0.03 per common share

“I am pleased with our solid performance and the progress we made during the quarter in executing our strategic growth objectives as a marketing and business communications services company,\" said Dan Knotts, RRD\'s President and Chief Executive Officer. \"We delivered our third consecutive quarter of organic growth, which continues to be driven by our unique ability to help our clients manage the full range of interactions they have with their customers across every critical touch point – online, offline and in-store – with reduced complexity and increased efficiency. Through the powerful combination of our Marketing Solutions and Business Services capabilities, we believe we are well positioned to win new business and execute our long-term growth strategy. Excluding the negative impact of foreign exchange rates, our adjusted income from operations and EBITDA also increased year over year, largely attributable to productivity improvements and our aggressive actions to address inflationary cost headwinds. Our operating cash flow also improved significantly in the quarter in line with our expectations. As we enter our seasonally stronger back half of the year, we remain confident in our ability to execute our strategy, sustain our organic sales growth and deliver our cost reduction plans to achieve our full year guidance.”

GUIDANCE:

RR Donnelley sees Q3 2018 EPS of $0.80-$1.10, versus the consensus of $0.87. RR Donnelley sees Q3 2018 revenue of $6.7-6.9 billion, versus the consensus of $6.93 billion.

For earnings history and earnings-related data on RR Donnelley (RRD) click here.

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