RR Donnelley Reports 13.1 Percent Q3 Net Sales Growth Over the Previous Fiscal Year

CHICAGO—November 5, 2014—R.R. Donnelley & Sons Company today reported financial results for the third quarter of 2014:

Highlights:

• Third-quarter net sales of $3.0 billion grew 13.1 percent from the third quarter of 2013; organic net sales grew 0.8 percent from the third quarter of 2013
• Third-quarter GAAP net earnings attributable to common shareholders of $62.2 million, or $0.31 per diluted share, compared to GAAP net earnings attributable to common shareholders in the third quarter of 2013 of $14.7 million, or $0.08 per diluted share
• Third-quarter non-GAAP net earnings attributable to common shareholders of $78.9 million, or $0.39 per diluted share, compared to non-GAAP net earnings attributable to common shareholders in the third quarter of 2013 of $69.3 million, or $0.38 per diluted share
• Non-GAAP adjusted EBITDA in the quarter of $313.2 million increased by $33.1 million, or 11.8 percent, from the third quarter of 2013

Company refines full-year 2014 guidance within previously issued ranges
Thomas Quinlan III, RR Donnelley's president and CEO, said: "Our third-quarter results reflect the continuing success we are having in the marketplace, highlighted by the positive trend in revenue. Despite a challenging comparable related to the timing shift of a significant customer project into the fourth quarter this year, we achieved organic revenue growth of 0.8 percent in the third quarter. In addition, we continue to reduce our gross leverage, reflecting the combination of our year-over-year EBITDA growth and third-quarter debt reduction of approximately $75 million. We remain committed to migrating toward our targeted gross leverage range of 2.25x to 2.75x on a long-term sustainable basis."

Net Sales
Net sales in the quarter were $3.0 billion, up $342.9 million, or 13.1 percent, from the third quarter of 2013, largely due to the acquisitions of Consolidated Graphics and the North American operations of Esselte. After adjusting for the impact of acquisitions and dispositions, organic sales increased 0.8 percent from the third quarter of 2013, as increases in the Strategic Services and Variable Print segments were partially offset by declines in the Publishing and Retail Services and International segments.

GAAP Earnings
Third-quarter 2014 net earnings attributable to common shareholders was $62.2 million, or $0.31 per diluted share, compared to net earnings attributable to common shareholders of $14.7 million, or $0.08 per diluted share, in the third quarter of 2013. The third-quarter 2014 diluted share count increased by 17.7 million shares from the third quarter of 2013, primarily related to shares issued in connection with the acquisitions of Consolidated Graphics and the North American operations of Esselte. The third-quarter net earnings attributable to common shareholders included pre-tax charges of $22.6 million and $85.5 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
Third-quarter 2014 non-GAAP adjusted EBITDA was $313.2 million, or 10.6 percent of net sales, compared to non-GAAP adjusted EBITDA of $280.1 million, or 10.7 percent of net sales, in the third quarter of 2013. The increase in non-GAAP adjusted EBITDA was primarily due to the acquisitions of Consolidated Graphics and the North American operations of Esselte, as well as higher volume, primarily in the Strategic Services segment. These increases were partially offset by price pressure in each segment which also negatively impacted margin.

Non-GAAP net earnings attributable to common shareholders totaled $78.9 million, or $0.39 per diluted share, in the third quarter of 2014 compared to $69.3 million, or $0.38 per diluted share, in the third quarter of 2013. The third-quarter 2014 diluted share count increased by 17.7 million shares from the third quarter of 2013, primarily related to shares issued in connection with the acquisitions of Consolidated Graphics and the North American operations of Esselte. Third-quarter non-GAAP net earnings attributable to common shareholders excluded pre-tax charges of $22.6 million and $85.5 million in 2014 and 2013, respectively.

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: RR Donnelley.