LSC Communications Reports First Quarter 2018 Results

LSC Communications, Inc. (NYSE: LKSD) today reported financial results for the first quarter of 2018.

1Q 2018 Highlights:
• Net sales of $929 million compared to $821 million in the first quarter of 2017, an increase of $108 million, or 13.2%
• Organic net sales decrease of 1.7% compared to the first quarter of 2017, an improvement in organic net sales trends
• GAAP net loss of $11 million, or $0.32 per diluted share compared to a net loss of $1 million, or $0.02 per diluted share in the first quarter of 2017
• Non-GAAP net loss of $4 million, or $0.11 per diluted share, compared to non-GAAP net income of $4 million, or $0.14 per diluted share in the first quarter of 2017
• Non-GAAP adjusted EBITDA of $53 million, or 5.7% of net sales, compared to $65 million, or 7.9% of net sales, in the first quarter of 2017
• Company reaffirms full-year guidance

“We are pleased with the overall revenue trends in the quarter and, as we expected given the sales mix, the first quarter’s margin comparisons were difficult. We anticipate margin improvements as we move through 2018, driven by improved sales mix, integration synergies and cost actions taken earlier this year,” said Thomas J. Quinlan III, LSC Communications’ Chairman, Chief Executive Officer and President. “In 2018, we have continued to execute on our strategic initiatives and are excited to add the Print Logistics component of RRD’s Logistics business to further strengthen our logistics infrastructure to drive growth in warehousing and distribution services. Additionally, we announced the sale of LSC’s retail offset printing facilities as we continue to focus on our adjacencies growth strategy.”

Net Sales
First quarter net sales were $929 million, up $108 million, or 13.2%, from the first quarter of 2017. After adjusting for acquisitions, changes in foreign exchange rates, pass-through paper sales, and the adoption of new revenue recognition standards, organic net sales decreased 1.7% from the first quarter of 2017 which represents an improvement in the Company’s organic net sales trend. This improvement was driven by sales performance in the Print segment, especially within the book reporting unit, that was more than offset by the impact of customer inventory reductions in the Office Products segment.

GAAP Net Income
First quarter 2018 net loss was $11 million, or $0.32 per diluted share, compared to a net loss of $1 million, or $0.02 per diluted share, in the first quarter of 2017. The first quarter 2018 net loss included after-tax charges of $7 million and first quarter 2017 net income included after-tax charges of $5 million, both of which are excluded from the presentation of non-GAAP net income. Additional details regarding the amount and nature of these adjustments and other items are included in the attached schedules.

Non-GAAP Adjusted EBITDA and Non-GAAP Net Income
Non-GAAP adjusted EBITDA in the first quarter of 2018 was $53 million, or 5.7% of net sales, compared to $65 million, or 7.9% of net sales, in the first quarter of 2017. The decrease in non-GAAP adjusted EBITDA margin was primarily due to sales mix, pricing pressure and the impact of lower margins related to recent acquisitions partially offset by on-going productivity and cost control initiatives.

Non-GAAP net loss totaled $4 million, or $0.11 per diluted share, in the first quarter of 2018 compared to non-GAAP net income of $4 million, or $0.14 per diluted share in the first quarter of 2017. Reconciliations of net income to non-GAAP adjusted EBITDA and non-GAAP net income are presented in the attached schedules.
more detail at: http://investor.lsccom.com/news-releases/2018/05-03-2018-113056020

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