Donnelley Financial Solutions (DFIN) Tops Q3 EPS by 7c, Revenues Miss; Affirms FY18 Revenue Guidance

Donnelley Financial Solutions (NYSE: DFIN) reported Q3 EPS of $0.27, $0.07 better than the analyst estimate of $0.20. Revenue for the quarter came in at $216.9 million versus the consensus estimate of $218.5 million.

• Completed the sale of Language Solutions business on July 22, 2018 for $77.5 million in cash
• Third-quarter net sales of $216.9 million decreased 2.6% from the third quarter of 2017
  • Excluding the impact of the sale of Language Solutions, the adoption of the new revenue recognition standard(1) and changes in foreign exchange rates, organic sales increased 5.1% from the third quarter of 2017
  • SaaS sales increased by 14.9% from the third quarter of 2017
• Third-quarter GAAP net earnings of $48.0 million, or $1.40 per diluted share, compared to GAAP net earnings in the third quarter of 2017 of $5.3 million, or $0.16 per diluted share
• Third-quarter 2018 includes gain on the sale of Language Solutions and gain on an equity investment
• Third-quarter non-GAAP net earnings(2) of $9.4 million, or $0.27 per diluted share, compared to non-GAAP net earnings in the third quarter of 2017 of $6.9 million, or $0.20 per diluted share
• Non-GAAP adjusted EBITDA(2) in the quarter of $31.3 million, or 14.4% of net sales, compared to non-GAAP adjusted EBITDA in the third quarter of 2017 of $31.5 million, or 14.2% of net sales
• Company reaffirms full-year 2018 guidance for net sales, non-GAAP adjusted EBITDA and free cash flow

“We are pleased with our third-quarter results, which reflect continued strength in our Capital Markets business, as well as the improving trend in Investment Markets that we expected to see coming into the quarter, resulting in organic revenue growth of 5.1%,” said Daniel N. Leib, Donnelley Financial\'s president and chief executive officer. “Importantly, we continued to execute against our strategic priorities, achieving 14.9% growth in our SaaS offerings, which represented 19.5% of third-quarter sales.”

Leib added, “Also consistent with our strategy, we sold our Language Solutions business in the third quarter, providing additional financial flexibility to focus on our core regulatory and compliance offerings. We ended the third quarter with $341.0 million of net debt, representing net leverage of 2.0x, a reduction of 0.8x from the third quarter of 2017.”

GUIDANCE:

Donnelley Financial Solutions sees FY2018 revenue of $970-990 million, versus the consensus of $982 million.

For earnings history and earnings-related data on Donnelley Financial Solutions (DFIN) click here.

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