RRD Reports Double-Digit Sales, EBITDA Gains in Q2 2022 Results
GAAP net sales increased 13% over prior year period; organic net sales up 14% representing fifth consecutive quarter of organic sales growth.
Adjusted EBITDA increased 47% over the prior year period – strongest second quarter performance since the 2016 spin.
R.R. Donnelley & Sons Company (“RRD” or the “Company”) reported financial results for the second quarter of 2022.
Q2 Key messages
- GAAP net sales, including the impact of foreign exchange, increased $143 million or 12.5%; Non-GAAP organic net sales increased 13.8% primarily from higher client demand for most of the Company’s products and services
- GAAP net income from continuing operations was up $39 million versus the prior year period
- Non-GAAP adjusted EBITDA of $116 million increased 47% over the second quarter of 2021; related margin increased 210 bps to 9.0%
- Non-GAAP adjusted net income of $44 million was up $39 million versus the prior year period
- Cash used in operating activities during the six months ended June 30, 2022 was $256 million compared to $65 million in the prior year period; current year results reflect working capital investments due to increased volume and inflation in addition to $79 million of merger related payments
- Gross leverage ratio of 3.3x and net leverage ratio of 2.8x; both improved 0.5x from June 30, 2021 due to higher trailing 12 months adjusted EBITDA which improved from $401 million in 2021 to $478 million in 2022
Financial highlights
The following table provides an overview of RRD’s financial performance:
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Net sales in the second quarter were $1.29 billion, up $143.2 million or 12.5% from the second quarter of 2021. Net sales were negatively impacted $14.9 million due to changes in foreign exchange, while the majority of the increase relates to higher client demand for most of the Company’s products and services, and price increases to mostly offset inflationary cost increases. The Company experienced significant growth in Commercial Print, Direct Marketing and Labels products. Organic net sales increased 13.8%.
Income from operations was $60.7 million in the second quarter of 2022 compared to $28.2 million in the second quarter of 2021. During the second quarter of 2022, net restructuring, impairment and other charges of $19.8 million increased $10.1 million from the prior year period due primarily to a $12 million asset impairment charge related to an equity investment.
Net income from continuing operations was $30.1 million in the second quarter of 2022 compared to a net loss from continuing operations of $9.2 million reported in the second quarter of 2021. The increase in net income from continuing operations reflects increased income from operations and lower interest expense, partially offset by higher income taxes on improved pre-tax income.
Non-GAAP adjusted EBITDA of $115.9 million increased $37.1 million from the prior year period. The increase was primarily due to the impact of higher net sales, ongoing cost control initiatives and favorable foreign exchange of approximately $4.4 million, partially offset by continued inflation.
Non-GAAP adjusted net income from continuing operations of $43.8 million in the second quarter of 2022 increased from $5.3 million in the second quarter of 2021 primarily due to higher adjusted income from operations and lower interest expense, partially offset by higher income taxes on improved pre-tax income.
Other highlights and information
Cash used in operating activities during the six months ended June 30, 2022 was $255.7 million compared to $64.8 million in the prior year period. The increase in cash used is primarily driven by working capital investments due to increased volume, including initiatives to accumulate inventory to better ensure availability for clients, inflation and $79.0 million of merger related payments.
Capital expenditures during the six months ended June 30, 2022 were $31.7 million versus $29.9 million in the prior year period.
As of June 30, 2022, cash on hand was $254.2 million, down $26.0 million from December 31, 2021. Total debt outstanding at the end of the quarter was $1.58 billion, up $116.8 million from the prior year end. Availability under the credit facility was $196.7 million at June 30, 2022. Total liquidity, including cash on hand, was $450.9 million, down from $699.2 million at June 30, 2021.
Distribution of future earnings releases
As part of its transition to a privately owned company, the Company plans to publicly issue a press release related to its quarterly earnings releases and post the release to its website for each of the quarters in 2022. Beginning with the first quarter of 2023, the Company expects to no longer issue its results publicly. Instead creditors, investors, clients, suppliers and other approved parties may submit a request for access to financial information on the investor relations page on the Company’s website.
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The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of Printing Impressions.
