RR Donnelley Records Earnings Jump on Flat Sales
“We are very pleased with our first-quarter results. The benefits of our diverse product offerings and the actions taken to improve our cost structure have driven our higher operating margins,” said Thomas J. Quinlan III, RR Donnelley’s President and Chief Executive Officer.
Quinlan added, “While the economic outlook remains uncertain, we approach the balance of the year with tempered enthusiasm. For the full year, we continue to expect revenue growth, excluding acquisitions, in the low single digits, and operating cash flow less capital expenditures in the range of $600 million to $650 million. This expectation is in line with our proven ability to achieve consistent cash flow, as reflected by the nearly $4.2 billion in operating cash flow less capital expenditures generated since the beginning of 2004.”
The Company reports its results in two reportable segments: 1) U.S. Print and Related Services and 2) International. The Company reports as Corporate its unallocated expenses associated with general and administrative activities.
Net sales in the quarter were $2.4 billion, down 1.6% from the first quarter of 2009 and inclusive of a 2.0% positive impact from changes in foreign exchange rates. Excluding the impact from foreign exchange, the 3.6% decrease was caused primarily by continued price pressure and a reduction in paper sales; the reduction in paper sales was due to the combination of lower paper prices and an increase in the relative amount of customer-supplied paper.
Gross margin increased to 23.7% in the first quarter of 2010 from 23.3% in the first quarter of 2009 due to continued productivity efforts and a higher recovery on print-related by-products, partially offset by continued price pressure.
SG&A expense as a percentage of net sales in the first quarter of 2010 decreased to 11.3% from 11.5% in the first quarter of 2009 primarily due to continued productivity efforts.