RR Donnelley (RRD) Reports Q2 EPS of $0.07

RR Donnelley (NYSE: RRD) reported Q2 EPS of $0.07, versus ($0.10) reported last year. Revenue for the quarter came in at $1.15 billion, versus $1.01 billion reported last year.

Outlook:

• While client demand for our products and services continues to strengthen, ongoing challenges including labor shortages, supply chain disruption, inflationary increases and shipping delays caused by container shortages in key ports including China, remain. These issues, combined with the ongoing uncertainty related to the COVID-19 pandemic, create added challenges when predicting future business performance. Against that backdrop, the Company is providing the following improved guidance for the year.
• Net sales for the year are now expected to be up 1% to 3% taking into consideration reductions from the Census project and one-time pandemic related projects in the last half of 2020, offset by further economic recovery as the year progresses.
• The Company has significantly improved its expectation for non-GAAP adjusted income from operations and now expects it to be approximately flat to the prior year after including the negative impact of foreign exchange. At current exchange rates, foreign exchange is now expected to be $28 million unfavorable for the year. This outlook also assumes the Company continues to overcome the impact from future inflation, labor shortages and supply chain disruptions while continuing to benefit from aggressive cost-reduction actions. Previously, the Company had expected its full year non-GAAP adjusted income from operations to be flat to up slightly versus the prior year excluding the unpredictable impact from changes in foreign exchange.
• Depreciation expense is expected to be approximately $135 million for the year.
• Non-GAAP interest expense is expected to be approximately $120 million excluding the second quarter GAAP only charge of $9.2 million associated with terminating certain interest rate swap agreements in connection with the April, 2021 term loan prepayment. The approximately $15 million reduction is expected to include benefits from prior repurchases and repayment of higher interest rate debt along with lower average borrowings and a lower average interest rate in 2021 as compared to 2020.
• The full year Non-GAAP effective tax rate is expected to be approximately 38% which is higher than reported in 2020 as non-recurring benefits from the CARES Act were reflected in the prior year.
• Operating cash flow is expected to be slightly lower than the prior year reflecting a reduction due to payments to settle LSC bankruptcy-related obligations and repayment of half of the employer portion of payroll taxes deferred in 2020. Capital expenditures are expected to be approximately $80 million. As part of our agreement to sell the printing facility in China, the Company expects to collect one additional deposit of approximately $50 million later in 2021. The Company also expects to continue generating proceeds from monetizing other assets including proceeds from selling additional facilities.

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

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