RR Donnelley Q1 2014 Results: Net Sales Up 5.3% to $2.7B, Mainly from CGX Acquisition

CHICAGO—May 1, 2014—R.R. Donnelley & Sons Company today reported financial results for the first quarter of 2014:

"We are pleased with our first-quarter performance, which was consistent with our expectations," said Thomas J. Quinlan III, RR Donnelley's president and CEO. "While the difficult weather conditions and a lagging macroeconomic environment created challenges in the quarter, we were able to deliver nearly flat year-over-year organic revenue by leveraging the broad portfolio of product and service offerings that we have built to support our customers' communications requirements. In addition, we further enhanced our breadth of offerings and geographic diversity with the acquisitions that closed in the quarter. While still early in the process, the integration of each is proceeding very well and we remain excited about the benefits associated with adding these companies to RR Donnelley."

Net Sales
Net sales in the quarter were $2.7 billion, up $135.3 million, or 5.3 percent, from the first quarter of 2013, largely due to the acquisition of Consolidated Graphics. After adjusting for the impact of acquisitions and dispositions, a 30 basis point negative impact from changes in foreign exchange rates and a 40 basis point negative impact from pass-through paper sales, organic sales declined 0.1 percent from the first quarter of 2013, as volume declines in the variable print and publishing and retail services segments and price erosion were nearly offset by volume growth in the strategic services and international segments.

GAAP Earnings
The first-quarter 2014 net loss attributable to common shareholders was $29.0 million, or $0.15 per diluted share, compared to net earnings attributable to common shareholders of $27.1 million, or $0.15 per diluted share, in the first quarter of 2013. The first-quarter net loss attributable to common shareholders included pre-tax charges, expenses and other adjustments of $148.1 million and $62.5 million in 2014 and 2013, respectively, all of which were excluded from the presentation of non-GAAP net earnings attributable to common shareholders.

Non-GAAP Earnings
First-quarter 2014 non-GAAP adjusted EBITDA was $276.5 million, or 10.3 percent of net sales, compared to non-GAAP adjusted EBITDA of $277.1 million, or 10.9 percent of net sales, in the first quarter of 2013. Price pressure and wage and other cost inflation more than offset higher volume, the benefit of two months of Consolidated Graphics and a favorable product mix.

Non-GAAP net earnings attributable to common shareholders totaled $59.7 million, or $0.31 per diluted share, in the first quarter of 2014 compared to $68.1 million, or $0.37 per diluted share, in the first quarter of 2013. First-quarter non-GAAP net earnings attributable to common shareholders exclude pre-tax charges, expenses and other adjustments of $148.1 million and $62.5 million in 2014 and 2013, respectively.

2014 Guidance
The company provides (in the chart below) the following updated full-year guidance for 2014, which includes the impact of the recently completed acquisition of Esselte North America:

About RR Donnelley
RR Donnelley (Nasdaq:RRD) helps organizations communicate more effectively by working to create, manage, produce, distribute and process content on behalf of our customers. The company assists customers in developing and executing multichannel communication strategies that engage audiences, reduce costs, drive revenues and increase compliance. RR Donnelley's innovative technologies enhance digital and print communications to deliver integrated messages across multiple media to highly targeted audiences at optimal times for clients in virtually every private and public sector. Strategically located operations provide local service and responsiveness while leveraging the economic, geographic and technological advantages of a global organization.

Source: RRD.