RRD Reports Second Quarter 2021 Results

Q2 Key messages
*GAAP net sales, including the impact of foreign exchange, increased 13.5%; Non-GAAP organic net sales increased 11.4%; largely driven by strengthening demand for most of the Company’s products and continued recovery from the global impact of COVID-19
*GAAP and Non-GAAP income from operations up from prior year results; both benefitted from higher sales volumes and continued cost reductions, partially offset by higher variable incentive compensation expense, approximately $9 million of unfavorable foreign exchange and the prior year Census project
*GAAP operating margin improved 440 bps while Non-GAAP improved by 150 bps, driven by leverage on increased sales volumes and aggressive cost-out actions
*GAAP loss per share from continuing operations of $0.13 and Non-GAAP adjusted earnings per share from continuing operations of $0.07, both improved significantly from prior year
*Cash used in operating activities during the six months ended June 30, 2021 was $65 million compared to $44 million in the prior year period; current year amount includes $24 million of payments to settle LSC bankruptcy-related claims
*Gross leverage ratio of 3.8x improved 0.9x from June 30, 2020; net leverage ratio of 3.3x improved 0.6x from the same period

“RRD delivered strong second quarter performance as we continue to successfully execute our strategic initiatives while protecting the health and safety of our global colleagues,” said Dan Knotts, RRD President and Chief Executive Officer. “Our double-digit organic sales growth, driven by an improving market and increased volumes in our strategic product categories, marked our fourth consecutive quarter of improving sales trends. Through our ongoing actions to strengthen our core and enhance our financial flexibility, we reported Q2 adjusted income from operations that surpassed our pre-pandemic earnings in 2019 and our debt was at the lowest second quarter level since the spin. Looking forward, we remain highly focused on driving sales growth and aggressively managing our cost structure to combat the ongoing challenges created by the global pandemic, inflation and supply chain disruptions.”

Net sales in the second quarter were $1.15 billion, up $136.0 million or 13.5% from the same period in 2020. Second quarter net sales benefitted $21.7 million due to changes in foreign exchange rates. The increase also includes higher volume reflecting strengthening demand for most of the Company’s products and services. Notably, higher demand for e-commerce sales have contributed to four consecutive quarters of net sales growth in the Company’s Packaging and Labels products. Net sales also grew in the quarter due to continued recovery from the COVID-19 pandemic.

Organic net sales increased 11.4%. The Business Services segment was up 14.3% on a GAAP basis and 11.6% on a non-GAAP organic basis while the Marketing Solutions segment was up 10.3% both on a GAAP and non-GAAP organic basis from the second quarter of 2020. The Business Services segment experienced growth in several of our strategic focus areas including Packaging, Labels and Supply Chain Management. Net sales in Marketing Solutions also experienced growth, led by higher volumes in Digital Print and Fulfillment and Direct Marketing, partially offset by last year’s Census project, which was completed in mid-2020.

Income from operations was $28.2 million in the second quarter of 2021 compared to loss from operations of $19.0 million in the second quarter of 2020. The second quarter of 2021 included net restructuring, impairment and other charges of $9.7 million, a decrease of $18.7 million from the prior year period primarily due to lower consulting and employee termination costs.

Loss per share from continuing operations attributable to common stockholders was $0.13 in the second quarter of 2021 compared to loss per share of $0.79 reported in the second quarter of 2020. The 2021 results benefitted from higher income from operations, including lower restructuring, impairment and other charges and lower income taxes, slightly offset by higher interest expense, which included $9.2 million to terminate interest rate swap agreements associated with the portion of term loans repaid in the quarter and a loss on debt extinguishment of $6.2 million.
details at: https://investor.rrd.com/news/news-details/2021/RRD-Reports-Second-Quarter-2021-Results/default.aspx

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