RR Donnelley (RRD) Tops Q2 EPS by 7c

RR Donnelley (NYSE: RRD) reported Q2 EPS of ($0.09), $0.07 better than the analyst estimate of ($0.16). Revenue for the quarter came in at $1.16 billion versus the consensus estimate of $1.15 billion.

Second quarter key messages

GAAP net sales decreased 23.0%; non-GAAP organic net sales decreased 17.1%; June net sales performance was the strongest month in the quarter as local economies began to reopen
GAAP (loss) income from operations was down $36.8 million versus the prior year; non-GAAP adjusted income from operations decreased $14.1 million; additional cost-out actions implemented throughout the quarter
GAAP loss per share was $0.79; non-GAAP adjusted loss per share of $0.09 reflects the impact from COVID-19
Operating cash flow in the quarter increased $22.5 million from the prior year period driven by working capital improvements; year-to-date improvement now at $72.9 million; capital expenditures were down $18.6 million in the quarter
Completed three debt exchanges, repaid the 2020 Senior Notes and repurchased additional debt due in 2021 during the quarter; aggregate maturities for Senior Notes and Debentures due in 2020 to 2024 now total $394 million, down $628 million from the beginning of the year

“The second quarter was a very challenging period as we swiftly responded to the worldwide impact from the COVID-19 pandemic. We acted quickly to protect our employees and adapt our operations to meet the essential communications requirements of our more than 50,000 global clients,” said Dan Knotts, RRD President and Chief Executive Officer. “We also took significant steps to improve our financial flexibility and protect our liquidity. During the quarter, we executed three debt exchanges, repaid our 2020 notes and repurchased additional debt due in 2021. Further, our operating cash flow improved from the prior year for the second consecutive quarter.”

“While we expect continued uncertainty and volatility for the foreseeable future, our priorities remain clear,” Knotts added. “We will continue to be responsive to our clients’ evolving needs while protecting our employees, adjusting our cost structure and maintaining the necessary liquidity to run our business. Despite the challenges, I am confident that the actions we are taking will enable us to successfully navigate through short-term uncertainty and position us to be an even stronger RRD in the future.”

OUTLOOK

As infection rates continue to increase in many parts of the world, the path forward presents many uncertainties and RRD continues to evaluate a range of possible recovery scenarios. Because of these uncertainties, the Company is unable to furnish typical guidance for the balance of the year. For the third quarter, however, management expects that net sales will be unfavorable to the prior year between $325 and $400 million. This reflects further impact from the pandemic, Census work in the prior year period that will not repeat and a decline of $92 million from recent business dispositions. In addition, third quarter results will benefit from additional cost reductions and lower interest expense.

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

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