2021 FULL YEAR NET SALES INCREASED 4% OVER PRIOR YEAR
TOTAL DEBT OF $1.47 BILLION AT LOWEST LEVEL SINCE THE SPIN IN
2016
REGULATORY APPROVALS FOR THE MERGER WITH CHATHAM HAVE BEEN
OBTAINED; SUBJECT TO STOCKHOLDER VOTE SCHEDULED FOR FEBRUARY 23,
TRANSACTION IS EXPECTED TO CLOSE EXPEDITIOUSLY THEREAFTER AND AS
SOON AS FEBRUARY 25
R.R. Donnelley & Sons Company (NYSE: RRD) (“RRD” or the
“Company”) today reported financial results for the fourth quarter
and full year of 2021.
Full Year Key Messages
- GAAP net sales, including the impact of foreign exchange and a
disposition in early 2020, increased $197 million or 4.1%; Non-GAAP
organic net sales increased 3.2% primarily from higher demand for
many of the Company’s products and services
- GAAP income from operations was up $55 million versus the prior
year
- Non-GAAP income from operations for the year improved $17
million despite headwinds in excess of $80 million which included
one-time projects in the prior year related to COVID and the
Census, unfavorable FX and valuation adjustments for certain
incentive compensation awards caused by the stock price increase in
2021
- Cash provided by operating activities in 2021 was $92.1 million
as compared to $149.8 million in the prior year period; current
year results include payments in excess of $100 million related to
the planned merger, settlement of LSC bankruptcy related claims,
repayment of half the payroll taxes deferred in 2020 and payments
made to terminate certain interest rate swap agreements
- Total debt outstanding of $1.47 billion at December 31, 2021 is
down $37 million from the prior year end; Pension and OPEB plans
are overfunded by $42 million at December 31, 2021 which is an
improvement of $146 million from the $104 million underfunded
amount at the prior year end
- Gross leverage ratio of 3.6x and net leverage ratio of 2.9x
both improved 0.1x from December 31, 2020 and represent lowest
levels since 2016 spin
“We delivered a strong year of performance capped by fourth
quarter results that exceeded our expectations. I am proud of the
RRD team as we continue to successfully execute our strategy and
navigate through the COVID-19 pandemic. Our full year 2021 adjusted
income from operations and operating margin represent our third
consecutive year of improved performance, while also representing
our best performance in those metrics since 2016,” said Dan Knotts,
RRD President and Chief Executive Officer. “We have remained laser
focused on executing our strategic priorities and have a business
that is consistently delivering profitable growth and improving
margins through organic sales growth and a leaner cost structure.
In addition, our balance sheet is in its best shape since the spin
in 2016. I would like to thank our 32,000 employees for their many
contributions and dedication to deliver the high level of business
performance we have today for our stockholders. RRD is well
positioned for continued success under the expected future
ownership of Chatham Asset Management.”
Financial highlights
The following table provides an overview of RRD’s financial
performance:
4th Quarter Results
Q4 2021
Q4 2020
% Change
Net sales
$1.38 billion
$1.35 billion
2.1%
Income from operations
$37.1 million
$78.1 million
(52.5%)
Diluted (loss) earnings per share from
continuing operations
($0.19)
$0.46
nm
Adjusted income from operations - non-GAAP
(1)
$96.4 million
$94.5 million
2.0%
Adjusted diluted earnings per share from
continuing operations - non-GAAP (1)
$0.58
$0.71
(18.3%)
Full Year Results
FY 2021
FY 2020
% Change
Net sales
$4.96 billion
$4.77 billion
4.1%
Income from operations
$163.5 million
$108.1 million
51.2%
Diluted earnings (loss) per share from
continuing operations
$0.04
($0.37)
nm
Adjusted income from operations - non-GAAP
(1)
$256.3 million
$239.7 million
6.9%
Adjusted diluted earnings per share from
continuing operations - non-GAAP (1)
$1.29
$1.21
6.6%
(1)
Refer to "Use of Non-GAAP Information" for
additional information on the usage and presentation of non-GAAP
financial measures, and refer to the schedules for reconciliations
to the most directly comparable GAAP financial measures.
On December 14, 2021, RRD entered into a definitive merger
agreement under which the Company agreed to be acquired by
affiliates of Chatham Asset Management, LLC (“Chatham”), a leading
private investment firm. Under the terms of the merger agreement,
an affiliate of Chatham will acquire all of the outstanding shares
of RRD common stock not already owned by Chatham and its affiliates
for $10.85 per share in cash. Necessary regulatory approvals for
the transaction have been obtained, and, subject to the stockholder
vote scheduled for February 23, 2022, the transaction is expected
to close expeditiously thereafter and as soon as February 25, 2022.
Once the transaction closes, RRD’s shares will no longer trade on
the New York Stock Exchange, and RRD will become a private
company.
Net sales in the fourth quarter were $1.38 billion, up $28.6
million or 2.1% from the same period in 2020. While fourth quarter
net sales benefitted $3 million due to changes in foreign exchange
rates, the majority of the increase relates to higher client demand
for many of the Company’s products and price increases to partially
offset inflationary cost increases. Notably, net sales of
Commercial Print products were up significantly due to strong
demand for domestic trading cards as well as other printed products
produced in China while net sales in Supply Chain Management were
negatively impacted by the large one-time COVID projects in the
prior year period. Organic net sales increased 1.9%.
Income from operations was $37.1 million in the fourth quarter
of 2021 compared to income from operations of $78.1 million in the
fourth quarter of 2020. The fourth quarter of 2021 included $40.8
million of expenses related to the planned merger, and net
restructuring, impairment and other charges of $13.8 million which
was an increase from $6.2 million in the prior year period.
Non-GAAP adjusted income from operations of $96.4 million in the
fourth quarter of 2021 increased $1.9 million from the prior year
period. The increase was primarily due to the impact of higher net
sales and ongoing cost control initiatives partially offset by
continued inflation.
Loss per share from continuing operations attributable to common
stockholders was $0.19 in the fourth quarter of 2021 compared to
earnings per share of $0.46 reported in the fourth quarter of 2020.
The 2021 results reflect lower income from operations and higher
income tax expense, partially offset by lower interest expense.
Non-GAAP adjusted earnings per share from continuing operations
attributable to common stockholders of $0.58 in the fourth quarter
of 2021 decreased from $0.71 in the fourth quarter of 2020
primarily due to higher income taxes, partially offset by lower
interest expense and higher adjusted income from operations.
Other highlights and information (including discontinued
operations in 2020)
Cash provided by operating activities during the twelve months
ended December 31, 2021 was $92.1 million compared to $149.8
million in the prior year period. The 2021 results included
payments of $44.2 million related to the planned merger, $31.1
million to settle LSC bankruptcy related claims, $17.5 million to
repay half of the payroll taxes deferred in 2020 as part of the
CARES Act and $9.2 million to terminate certain interest rate swap
agreements. The current year results also reflect investments in
working capital and lower restructuring, tax and interest payments
in 2021 as compared to last year.
Capital expenditures in the twelve months ended December 31,
2021 were $73.3 million compared to $85.6 million in the prior year
period.
As of December 31, 2021, cash on hand was $280.2 million, down
$8.6 million from 2020. Total debt outstanding was $1.47 billion,
down $36.8 million from 2020. Availability under the credit
facility was $550.7 million at December 31, 2021. Total liquidity,
including cash on hand, was $830.9 million, up from $739.2 million
at September 30, 2021. As of December 31, 2021, there are no
scheduled debt maturities prior to November 2023.
At December 31, 2021, the Company’s pension and OPEB plans were
overfunded by $42 million which was an improvement of $146 million
from the $104 million underfunded amount at December 31, 2020. The
improvement in funded status is due primarily to updated actuarial
assumptions, asset returns and slightly higher discount rates.
During 2020, the Company completed the sale of its DLS
Worldwide, International Logistics and Courier Logistics
businesses. The Company has reflected the Logistics businesses as
discontinued operations, and the financial results of these
businesses have been excluded from continuing operations and
segment results for all periods presented unless otherwise
noted.
Conference call
RRD will host a conference call to discuss its fourth quarter
results on Friday, February 18, 2022 at 11:00 a.m. Eastern Time
(10:00 a.m. Central Time). Participants must register in advance in
order to either join the webcast or request the dial-in information
to join by telephone. Registration links for both the webcast and
the telephone options are available on the Events &
Presentations page of the Investor Relations website. For those
unable to join live, a replay of the webcast will be available
until April 30, 2022 under the Past Events section of the Investor
Relations website.
A slide presentation will be available on the Investors section
of the RRD web site at www.rrd.com or by clicking through this
link.
About RRD
RRD is a leading global provider of multichannel business
communications services and marketing solutions. With 25,000
clients and 32,000 employees across 28 countries, RRD offers the
industry’s most comprehensive offering of solutions designed to
help companies—from Main Street to Wall Street—optimize customer
engagement and streamline business operations across the complete
customer journey. RRD offers a comprehensive portfolio of
capabilities, experience and scale that enables organizations
around the world to create, manage, deliver, and optimize their
marketing and business communications strategies.
For more information, visit the Company's web site at
www.rrd.com.
Use of non-GAAP information
This news release contains non-GAAP financial measures,
including non-GAAP SG&A, non-GAAP income from operations,
non-GAAP Adjusted EBITDA, non-GAAP interest expense, non-GAAP
effective tax rate, non-GAAP net earnings (loss) attributable to
common stockholders, non-GAAP diluted earnings (loss) per share,
non-GAAP organic net sales and gross and net leverage ratios. The
Company believes that these non-GAAP measures, when presented in
conjunction with comparable GAAP measures, provide useful
information about its operating results and enhance the overall
ability to assess the Company’s financial performance. These
measures should be considered in addition to, and not as a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. RRD uses these non-GAAP 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. Additional information
relating to the adjustments for the non-GAAP SG&A, non-GAAP
income from operations, non-GAAP Adjusted EBITDA, non-GAAP
effective tax rate, non-GAAP net earnings (loss) attributable to
common stockholders, non-GAAP diluted earnings (loss) per share,
non-GAAP organic net sales and gross and net leverage ratios for
RRD is set forth in the attached schedules.
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 the Company and
its expectations relating to future financial condition and
performance, including the anticipated merger with an affiliate of
Chatham. Statements that are not historical facts, including
statements about RRD’s 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 RRD 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 RRD’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 RRD’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 RRD’s periodic public filings with the U.S. Securities
and Exchange Commission (the “SEC”), including but not limited to
those discussed under the “Risk Factors” section in RRD’s most
recent Annual Report on Form 10-K filed with the Securities
Exchange Commission (SEC) and other filings with the SEC, and in
other investor communications of RRD from time to time. RRD does
not undertake to and specifically disclaims 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.
R. R. Donnelley & Sons
Company
Consolidated Statements of
Operations
For the Three and Twelve Months
Ended December 31, 2021 and 2020
(UNAUDITED)
(in millions, except per share
data)
For the Three Months Ended
December 31
For the Twelve Months Ended
December 31
2021
2020
2021
2020
Net sales
$
1,377.2
$
1,348.6
$
4,963.7
$
4,766.3
Cost of sales (1)
1,104.9
1,059.8
3,994.9
3,789.2
Gross profit (1)
272.3
288.8
968.8
977.1
Selling, general and administrative
expenses (SG&A) (1)
162.3
160.8
600.6
597.5
Restructuring, impairment and other
charges-net
13.8
6.2
33.3
100.0
Depreciation and amortization
31.5
33.4
130.5
145.7
Other operating expense
27.6
10.3
40.9
25.8
Income from operations
37.1
78.1
163.5
108.1
Interest expense - net
29.2
32.4
127.6
135.1
Loss on debt extinguishment
0.9
2.6
7.1
3.0
Investment and other income - net
(4.8
)
(3.3
)
(19.9
)
(14.1
)
Income (loss) from continuing
operations before income taxes
11.8
46.4
48.7
(15.9
)
Income tax expense
25.2
13.0
44.9
10.0
Net (loss) income from continuing
operations
(13.4
)
33.4
3.8
(25.9
)
Income from discontinued operations, net
of tax
—
144.4
0.6
124.9
Net (loss) income
(13.4
)
177.8
4.4
99.0
Less: income attributable to
noncontrolling interests
0.5
0.2
0.7
0.5
Net (loss) income attributable to RRD
common stockholders
$
(13.9
)
$
177.6
$
3.7
$
98.5
Basic net (loss) earnings per share
attributable to RRD common stockholders:
Continuing Operations
$
(0.19
)
$
0.46
$
0.04
$
(0.37
)
Discontinued Operations
$
-
$
1.99
$
0.01
$
1.73
Net (loss) earnings attributable to RR
Donnelley stockholders
$
(0.19
)
$
2.45
$
0.05
$
1.36
Diluted net (loss) earnings per share
attributable to RRD common stockholders:
Continuing Operations
$
(0.19
)
$
0.46
$
0.04
$
(0.37
)
Discontinued Operations
$
-
$
1.99
$
0.01
$
1.73
Net (loss) earnings attributable to RR
Donnelley stockholders
$
(0.19
)
$
2.45
$
0.05
$
1.36
Weighted average common shares
outstanding:
Basic
73.6
72.4
73.2
72.3
Diluted
73.6
72.6
74.5
72.3
Additional
information:
Gross margin (1)
19.8
%
21.4
%
19.5
%
20.5
%
SG&A as a % of total net sales (1)
11.8
%
11.9
%
12.1
%
12.5
%
Operating margin
2.7
%
5.8
%
3.3
%
2.3
%
Effective tax rate
213.6
%
28.0
%
92.2
%
(62.9
%)
(1) Exclusive of depreciation and
amortization.
R. R. Donnelley & Sons
Company
Consolidated Balance Sheets
As of December 31, 2021 and
2020
(UNAUDITED)
(in millions, except per share
data)
12/31/2021
12/31/2020
Assets
Cash and cash equivalents
$
280.2
$
288.8
Receivables, less allowances for credit
losses
1,063.4
1,009.2
Inventories
352.7
302.1
Assets held-for-sale
9.2
23.1
Prepaid expenses and other current
assets
101.3
133.4
Total Current Assets
1,806.8
1,756.6
Property, plant and equipment - net
408.4
438.8
Goodwill
405.4
410.6
Other intangible assets - net
49.8
68.8
Deferred income taxes
34.6
78.5
Operating lease assets
214.5
223.8
Other noncurrent assets
211.9
153.8
Total Assets
$
3,131.4
$
3,130.9
Liabilities
Accounts payable
895.3
804.5
Accrued liabilities and other
352.9
351.2
Short-term operating lease liabilities
70.8
73.4
Short-term and current portion of
long-term debt
-
61.1
Total Current Liabilities
1,319.0
1,290.2
Long-term debt
1,466.3
1,442.0
Pension liabilities
62.5
89.5
Other postretirement benefits plan
liabilities
-
55.8
Long-term income tax liability
60.3
68.3
Long-term operating lease liabilities
149.9
156.9
Other noncurrent liabilities
238.3
272.0
Total Liabilities
$
3,296.3
$
3,374.7
Equity
Common stock, $0.01 par value
Authorized: 165.0 shares;
Issued: 89.0 shares in 2021 and 2020
0.9
0.9
Additional paid-in capital
2,686.9
3,263.6
Accumulated deficit
(2,237.0
)
(2,240.7
)
Accumulated other comprehensive loss
(63.1
)
(153.9
)
Treasury stock, at cost, 13.8 shares in
2021 (2020 - 17.6 shares)
(566.4
)
(1,127.6
)
Total RRD stockholders' equity
(178.7
)
(257.7
)
Noncontrolling interests
13.8
13.9
Total Equity
$
(164.9
)
$
(243.8
)
Total Liabilities and Equity
$
3,131.4
$
3,130.9
R. R. Donnelley & Sons
Company
Condensed Consolidated Statements
of Cash Flows
For the Twelve Months Ended
December 31, 2021 and 2020
(UNAUDITED)
(in millions)
2021
2020
Net income
$
4.4
$
99.0
Adjustment to reconcile net income to net
cash used in operating activities
129.0
34.7
Changes in operating assets and
liabilities
(36.3
)
25.6
Pension and other postretirement benefits
plan contributions
(5.0
)
(9.5
)
Net cash provided by operating
activities
$
92.1
$
149.8
Capital expenditures
(73.3
)
(85.6
)
All other cash provided by investing
activities
18.0
390.6
Net cash (used in) provided by
investing activities
$
(55.3
)
$
305.0
Net cash used in financing
activities
$
(75.3
)
$
(329.3
)
Effect of exchange rate on cash, cash
equivalents and restricted cash
1.2
8.3
Net (decrease) increase in cash, cash
equivalents and restricted cash
$
(37.3
)
$
133.8
Cash, cash equivalents and restricted cash
at beginning of year
357.6
223.8
Cash, cash equivalents and restricted
cash at end of period
$
320.3
$
357.6
Supplemental cash flow
disclosures:
Operating cash flows used in discontinued
operations
$
-
$
(1.4
)
Investing cash flows provided by
discontinued operations
$
-
$
239.5
R. R. Donnelley & Sons
Company
Reconciliation of GAAP to
Non-GAAP Measures
For the Three Months Ended
December 31, 2021 and 2020
(UNAUDITED)
(in millions, except per share
data)
For the Three Months Ended
December 31, 2021
For the Three Months Ended
December 31, 2020
Cost of sales
SG&A (1)
Income from operations
Investment and other income -
net
Income tax expense
Net (loss) income from continuing
operations attributable to common stockholders
Net (loss) earnings from
continuing operations attributable to common stockholders per
diluted share
SG&A (1)
Income from operations
Investment and other income -
net
Income tax (benefit) expense
Net (loss) income from continuing
operations attributable to common stockholders
Net (loss) earnings from
continuing operations attributable to common stockholders per
diluted share
GAAP basis measures
$
1,104.9
$
162.3
$
37.1
$
(4.8
)
$
25.2
$
(13.9
)
$
(0.19
)
$
160.8
$
78.1
$
(3.3
)
$
13.0
$
33.2
$
0.46
Non-GAAP adjustments:
Restructuring, impairment and other
charges-net (2)
—
—
13.8
—
0.2
13.6
0.18
—
6.2
—
5.3
0.9
0.01
Merger-related expenses (3)
(0.1
)
(17.8
)
40.8
—
4.3
36.5
0.50
—
—
—
—
—
—
Loss on debt extinguishment
—
—
—
—
—
1.0
0.01
—
—
—
—
—
—
All other (4)
—
(0.1
)
4.7
(0.5
)
(0.3
)
5.7
0.08
0.1
10.2
(1.4
)
(3.3
)
17.6
0.24
Total Non-GAAP adjustments
(0.1
)
(17.9
)
59.3
(0.5
)
4.2
56.8
0.77
0.1
16.4
(1.4
)
2.0
18.5
0.25
Non-GAAP measures
$
1,104.8
$
144.4
$
96.4
$
(5.3
)
$
29.4
$
42.9
$
0.58
$
160.9
$
94.5
$
(4.7
)
$
15.0
$
51.7
$
0.71
Additional non-GAAP information:
2021
2020
Gross margin (1)
19.8
%
21.4
%
Adjusted SG&A as a % of total net
sales (1)
10.5
%
11.9
%
Adjusted operating margin
7.0
%
7.0
%
Adjusted effective tax rate
40.6
%
22.5
%
(1)
Exclusive of depreciation and
amortization.
(2)
Restructuring, impairment and other-net:
charges incurred in the fourth quarter of 2021 included $13.8
million in restructuring charges including $9.8 million for
multi-employer pension plan withdrawn obligations, primarily
related to the final liability apportionment of the LSC MEPP
between RRD and Donnelley Financial, and $2.1 million for employee
terminations, partially offset by net gains on the sale of
restructured facilities, including the Chile facility. Charges
incurred in the fourth quarter of 2020 included $2.9 million for
employee termination costs and $0.8 million for multi-employer
pension plan withdrawal obligations, partially offset net gains on
the sale of restructured facilities.
(3)
Merger-related expenses: includes $17.9
million of GAAP-only incentive compensation, a $12 million break
fee paid to Atlas Holdings and other professional fees incurred in
connection with the planned merger with Chatham.
(4)
All other: charges incurred in the fourth
quarter of 2021 primarily included expenses related to the ongoing
SEC and DOJ investigations, costs related to the investigation by
Brazil regulators and costs related to the cybersecurity incident
that occurred in December 2021. Charges incurred in the fourth
quarter of 2020 primarily included expenses related to the ongoing
SEC and DOJ investigations and costs related to the investigation
by Brazil regulators.
R. R. Donnelley & Sons
Company
Reconciliation of GAAP to
Non-GAAP Measures
For the Twelve Months Ended
December 31, 2021 and 2020
(UNAUDITED)
(in millions, except per share
data)
For the Twelve Months Ended
December 31, 2021
For the Twelve Months Ended
December 31, 2020
Cost of sales
SG&A (1)
Income from operations
Investment and other income -
net
Interest Expense
Income tax expense
Net income from continuing
operations attributable to common stockholders
Net earnings from continuing
operations attributable to common stockholders per diluted
share
SG&A (1)
Income from operations
Investment and other income -
net
Income tax (benefit) expense
Net (loss) income from continuing
operations attributable to common stockholders
Net (loss) earnings from
continuing operations attributable to common stockholders per
diluted share
GAAP basis measures
$
3,994.9
$
600.6
$
163.5
$
(19.9
)
$
127.6
$
44.9
$
3.1
$
0.04
$
597.5
$
108.1
$
(14.1
)
$
10.0
$
(26.4
)
$
(0.37
)
Non-GAAP adjustments:
Restructuring, impairment and other
charges-net (2)
—
—
33.3
—
—
3.4
29.9
0.40
—
100.0
—
16.5
83.5
1.15
Merger-related expenses (3)
(0.1
)
(17.8
)
40.8
—
—
4.3
36.5
0.49
—
—
—
—
—
—
Loss on swap terminations
—
—
—
—
(9.2
)
4.1
5.2
0.07
—
—
—
—
—
—
Loss on debt extinguishment
—
—
—
—
—
2.7
4.4
0.06
—
—
—
0.5
2.5
0.03
All other (4)
—
(0.7
)
18.7
(0.5
)
—
2.0
17.4
0.23
(5.9
)
31.6
(1.4
)
5.4
27.6
0.40
Total Non-GAAP adjustments
(0.1
)
(18.5
)
92.8
(0.5
)
(9.2
)
16.5
93.4
1.25
(5.9
)
131.6
(1.4
)
22.4
113.6
1.58
Non-GAAP measures
$
3,994.8
$
582.1
$
256.3
$
(20.4
)
$
118.4
$
61.4
$
96.5
$
1.29
$
591.6
$
239.7
$
(15.5
)
$
32.4
$
87.2
$
1.21
Additional non-GAAP information:
2021
2020
Gross margin (1)
19.5
%
20.5
%
Adjusted SG&A as a % of total net
sales (1)
11.7
%
12.4
%
Adjusted operating margin
5.2
%
5.0
%
Adjusted effective tax rate
38.8
%
27.0
%
(1)
Exclusive of depreciation and
amortization.
(2)
Restructuring, impairment and other-net:
charges incurred in the year ending December 31, 2021 included
$21.9 million in other restructuring charges, primarily lease
terminations and environmental costs. It also included $10.7
million for multi-employer pension plan charges, primarily related
to the final liability apportionment of the LSC MEPP between RRD
and Donnelley Financial, and $8.4 million for employee termination
costs, partially offset by net gains on the sale of restructured
facilities. Charges incurred in the twelve months ended December
31, 2020 included pre-tax charges of $40.0 million of
multi-employer pension plan charges, including $37.1 million
related to LSC’s MEPP contingent obligation, $32.8 million for
employee termination costs, and $33.8 million of other
restructuring costs, partially offset by net gains on the sale of
restructured facilities.
(3)
Merger-related expenses: includes $17.9
million of GAAP-only incentive compensation, a $12 million break
fee paid to Atlas Holdings and other professional fees incurred in
connection with the planned merger with Chatham.
(4)
All other: Primarily included expenses
related to the ongoing SEC and DOJ investigations and costs related
to the investigation by Brazil regulators.
R. R. Donnelley & Sons
Company
Segment GAAP to Non-GAAP Income
(Loss) from Operations and Non-GAAP Adjusted EBITDA and Margin
Reconciliation
For the Three Months Ended
December 31, 2021 and 2020
(UNAUDITED)
(in millions)
Business Services
Marketing Solutions
Corporate
Consolidated
For the Three
Months Ended December 31, 2021
Net sales
$
1,074.2
$
303.0
$
—
$
1,377.2
Income (loss) from operations
99.2
21.6
(83.7
)
37.1
Operating margin %
9.2
%
7.1
%
nm
2.7
%
Non-GAAP
Adjustments
Restructuring, impairment and other
charges-net
0.1
1.7
12.0
13.8
Merger-related expenses
—
—
40.8
40.8
Other
0.5
0.5
3.7
4.7
Total Non-GAAP adjustments
0.6
2.2
56.5
59.3
Non-GAAP income (loss) from operations
$
99.8
$
23.8
$
(27.2
)
$
96.4
Non-GAAP operating margin %
9.3
%
7.9
%
nm
7.0
%
Depreciation and amortization
21.8
7.4
2.3
31.5
Investment and other income-net (1)
1.3
-
4.0
5.3
Non-GAAP Adjusted EBITDA
$
122.9
$
31.2
$
(20.9
)
$
133.2
Non-GAAP Adjusted EBITDA margin %
11.4
%
10.3
%
nm
9.7
%
For the Three
Months Ended December 31, 2020
Net sales
$
1,059.8
$
288.8
$
-
$
1,348.6
Income (loss) from operations
104.0
22.9
(48.8
)
78.1
Operating margin %
9.8
%
7.9
%
nm
5.8
%
Non-GAAP Adjustments
Restructuring, impairment and other
charges-net
(0.9
)
2.4
4.7
6.2
Other
—
—
10.2
10.2
Total Non-GAAP adjustments
(0.9
)
2.4
14.9
16.4
Non-GAAP income (loss) from operations
$
103.1
$
25.3
$
(33.9
)
$
94.5
Non-GAAP operating margin %
9.7
%
8.8
%
nm
7.0
%
Depreciation and amortization
23.4
9.6
0.4
33.4
Investment and other income-net (1)
0.9
—
3.8
4.7
Non-GAAP Adjusted EBITDA
$
127.4
$
34.9
$
(29.7
)
$
132.6
Non-GAAP Adjusted EBITDA margin %
12.0
%
12.1
%
nm
9.8
%
(1)
Represents amounts in investment and other
income-net that are not non-GAAP adjustments, and primarily
includes pension and postretirement benefits interest cost,
expected return on plan assets and net amortization.
R. R. Donnelley & Sons
Company
Segment GAAP to Non-GAAP Income
(Loss) from Operations and Non-GAAP Adjusted EBITDA and Margin
Reconciliation
For the Twelve Months Ended
December 31, 2021 and 2020
(UNAUDITED)
(in millions)
Business Services
Marketing Solutions
Corporate
Consolidated
For the Twelve
Months Ended December 31, 2021
Net sales
$
3,909.5
$
1,054.2
$
—
$
4,963.7
Income (loss) from operations
292.4
61.5
(190.4
)
163.5
Operating margin %
7.5
%
5.8
%
nm
3.3
%
Non-GAAP
Adjustments
Restructuring, impairment and other
charges-net
7.0
7.5
18.8
33.3
Merger-related expenses
—
—
40.8
40.8
Other
0.5
0.5
17.7
18.7
Total Non-GAAP adjustments
7.5
8.0
77.3
92.8
Non-GAAP income (loss) from operations
$
299.9
$
69.5
$
(113.1
)
$
256.3
Non-GAAP operating margin %
7.7
%
6.6
%
nm
5.2
%
Depreciation and amortization
89.2
31.3
10.0
130.5
Investment and other income-net (1)
4.6
—
15.8
20.4
Non-GAAP Adjusted EBITDA
$
393.7
$
100.8
$
(87.3
)
$
407.2
Non-GAAP Adjusted EBITDA margin %
10.1
%
9.6
%
nm
8.2
%
For the Twelve
Months Ended December 31, 2020
Net sales
$
3,685.2
$
1,081.1
$
—
$
4,766.3
Income (loss) from operations
227.9
56.3
(176.1
)
108.1
Operating margin %
6.2
%
5.2
%
nm
2.3
%
Non-GAAP
Adjustments
Restructuring, impairment and
other-net
21.4
9.9
68.7
100.0
Other
0.2
0.1
31.3
31.6
Total Non-GAAP adjustments
21.6
10.0
100.0
131.6
Non-GAAP income (loss) from operations
$
249.5
$
66.3
$
(76.1
)
$
239.7
Non-GAAP operating margin %
6.8
%
6.1
%
nm
5.0
%
Depreciation and amortization
95.1
47.2
3.4
145.7
Investment and other income-net (1)
3.3
—
12.2
15.5
Non-GAAP Adjusted EBITDA
$
347.9
$
113.5
$
(60.5
)
$
400.9
Non-GAAP Adjusted EBITDA margin %
9.4
%
10.5
%
nm
8.4
%
(1)
Represents amounts in investment and other
income-net that are not non-GAAP adjustments, and primarily
includes pension and postretirement benefits interest cost,
expected return on plan assets and net amortization.
R. R. Donnelley & Sons
Company
Reconciliation of Reported to
Organic Net Sales
For the Three and Twelve Months
Ended December 31, 2021
(UNAUDITED)
For the Three Months Ended
December 31, 2021
Business Services
Marketing Solutions
Consolidated
Reported net sales change
1.4
%
4.9
%
2.1
%
Less:
Year-over-year impact of changes in
foreign currency rates
0.3
%
---
%
0.2
%
Net organic sales change
1.1
%
4.9
%
1.9
%
For the Twelve Months Ended
December 31, 2021
Business Services
Marketing Solutions
Consolidated
Reported net sales change
6.1
%
(2.5
%)
4.1
%
Less:
Year-over-year impact of changes in
foreign currency rates
1.4
%
---
%
1.1
%
Year-over-year impact of dispositions
(1)
(0.2
%)
---
%
(0.2
%)
Net organic sales change
4.9
%
(2.5
%)
3.2
%
(1) Adjusted for net sales of RRD Chile,
disposed of in the first quarter of 2020.
R. R. Donnelley & Sons
Company
Reconciliation of GAAP Net Income
(Loss) to Non-GAAP Adjusted EBITDA
For the Three and Twelve Months
Ended December 31, 2021 and 2020
(UNAUDITED)
(in millions)
For the Three Months Ended
December 31,
2021
2020
GAAP net (loss) income from continuing
operations attributable to RRD common stockholders
$
(13.9
)
$
33.2
Adjustments
Income attributable to noncontrolling
interests
0.5
0.2
Income tax expense
25.2
13.0
Interest expense - net
29.2
32.4
Depreciation and amortization
31.5
33.4
Restructuring, impairment and other
charges-net
13.8
6.2
Loss on debt extinguishment
0.9
2.6
Merger-related expenses
40.8
—
Other
5.2
11.6
Total Non-GAAP adjustments
147.1
99.4
Non-GAAP adjusted EBITDA
$
133.2
$
132.6
Net sales
$
1,377.2
$
1,348.6
Non-GAAP adjusted EBITDA margin %
9.7
%
9.8
%
For the Twelve Months Ended
December 31,
2021
2020
GAAP net income (loss) from continuing
operations attributable to RRD common stockholders
$
3.1
$
(26.4
)
Adjustments
Income attributable to noncontrolling
interests
0.7
0.5
Income tax expense
44.9
10.0
Interest expense - net
127.6
135.1
Depreciation and amortization
130.5
145.7
Restructuring, impairment and other
charges-net
33.3
100.0
Loss on debt extinguishment
7.1
3.0
Merger-related expenses
40.8
—
Other
19.2
33.0
Total Non-GAAP adjustments
404.1
427.3
Non-GAAP adjusted EBITDA
$
407.2
$
400.9
Net sales
$
4,963.7
$
4,766.3
Non-GAAP adjusted EBITDA margin %
8.2
%
8.4
%
R. R. Donnelley & Sons
Company
Debt Leverage Ratios
As of December 31, 2021 and
2020
(UNAUDITED)
As of December 31,
2021
2020
Gross Leverage Ratio
Total Debt
1,466.3
1,503.1
Trailing 12 months adjusted EBITDA
407.2
400.9
on a continuing basis
Gross Leverage Ratio
3.6x
3.7x
Net Leverage Ratio
Total Debt
1,466.3
1,503.1
Less Cash and cash equivalents
280.2
288.8
Net Debt
1,186.1
1,214.3
Trailing 12 months adjusted EBITDA
407.2
400.9
on a continuing basis
Net Leverage Ratio
2.9x
3.0x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220218005046/en/
Johan Nystedt, Senior Vice President, Finance Telephone:
630-322-7111 E-mail: investor.info@rrd.com
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