RR Donnelley’s Stock Price Drops After Guidance Misses Analysts’ Estimates

CHICAGO—Jan. 18, 2012—Before the market opened on Tuesday, RR Donnelley issued a full-year 2011 guidance report that missed analysts’ estimates for its revenues and operating margin. Its stock began the trading session with a price of $14.66 and ended the day by sliding 15.82 percent to close at $12.13, according to a report by Galaxy Stocks.

Galaxy added that Donnelley’s stock hit a new 52-week and record low, and is down approximately 41 percent for the period.

The text of company’s release follows:

R.R. Donnelley & Sons announced expected full-year 2011 free cash flow to be in the range of $650 million to $700 million, an increase from the previous guidance that called for free cash flow of approximately $600 million.

Revenue is expected to be $10.6 billion, non-GAAP operating margin is expected to be 6.6-6.7 percent, non-GAAP effective tax rate is expected to be 23-24 percent and fully-diluted weighted average share count is expected to be 196 to 197 million.

“We are pleased that free cash flow exceeded expectations,” said Thomas J. Quinlan III, RR Donnelley’s president and CEO. “Our debt continued to decline in the fourth quarter, and we expect to close 2011 comfortably within our targeted gross leverage range of 2.5x to 3.0x.

“In 2012, despite an elevated level of pension funding as previously communicated, we expect to once again generate strong free cash flow of over $500 million. We continue to target a range of 2.5x to 3.0x gross leverage on a sustainable basis, recognizing that at times we will operate outside of this range. We look forward to providing a full update on 2011 performance as well as additional guidance for 2012 on our February 22 conference call.”

For 2011, non-GAAP operating margin excludes restructuring and impairment charges, a pension curtailment gain, acquisition-related expenses and other items, the exact amount of which are not currently determinable, but which may be significant. For that reason, the company is unable to provide GAAP operating earnings estimates at this time.

Furthermore, the expected 2011 non-GAAP results are subject to completion of the company’s year-end accounting processes, which include the finalization of several potentially significant items that could affect these results. These items include, among others, the valuation of accounts receivable and inventories and estimation of certain liabilities. Final results could also be affected by certain subsequent events in accordance with GAAP.

About RR Donnelley
RR Donnelley (Nasdaq:RRD) is a global provider of integrated communications. Founded more than 147 years ago, the company works collaboratively with more than 60,000 customers worldwide to develop custom communications solutions that reduce costs, enhance ROI and ensure compliance. Drawing on a range of proprietary and commercially available digital and conventional technologies deployed across four continents, the company employs a suite of leading Internet-based capabilities and other resources to provide premedia, printing, logistics and business process outsourcing products and services to leading clients in virtually every private and public sector.

Source: RRD.