Donnelley Financial Solutions, Inc. (NYSE:DFIN) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 09:00 am ET


Donnelley Financial Solutions, Inc. (NYSE:DFIN) Q3 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Donnelley Financial Solutions third-quarter earnings conference call. [Operator Instructions] Please be advised that today's program is being recorded.

I would now like to hand your conference over to host today, Justin Ritchie, head of investor relations. Thank you. Please go ahead.

Justin Ritchie

Thank you, Rob. Good morning, everyone, and thank you for joining the Donnelley Financial Solutions third-quarter 2019 results conference call. This morning, we released our earnings report, a copy of which can be found in the Investors section of our website at During this call we refer to forward-looking statements that are subject to uncertainty.

For a complete discussion, please refer to the cautionary statements included in our earnings release, and further detailed in our annual report on Form 10-K and other filings with the SEC. Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP financial information provides you with useful supplementary information provide -- concerning the company's ongoing operations, and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only.

Please refer to the press release and related footnotes for GAAP financial information and a reconciliation of GAAP to non-GAAP financial information. I'm joined this morning by Dan Leib, Dave Gardella, Kami Turner, and Tom Juhase. I will now turn the call over to Dan.

Dan Leib

Thank you, Justin, and good morning, everyone. On today's call, I will provide an update on our third-quarter performance, as well as detail various operating highlights from across the business. Following my comments, Dave will provide additional detail on our third-quarter financial results and update on guidance and some additional color on the fourth quarter. We will then open it up for Q&A.

We recorded consolidated net sales of $195.9 million in the third quarter, down 8.2% on an organic basis and below our expectations, due largely to a weak transactional environment, where the market slowdown in M&A activity, which we mentioned on the last earnings call, continued.

Specifically, the third quarter global M&A market declined 21% for deal completions greater than $100 million. The weaker M&A activity also continued to be a headwind for Venue. Despite soft revenue performance, our third-quarter adjusted EBITDA margin increased by 150 basis points year-over-year.

This was driven by tight cost control and a shifting business mix. Lower margin print and distribution revenue was down 16.5% in the quarter, while we saw a modest growth of 2.5% in SaaS sales. SaaS revenue represented just over 23% of total revenue in the quarter. Operating cash flow for the quarter was consistent with the third quarter of 2018.

Looking deeper into our third-quarter transactional performance, despite fewer quarterly IPO filings year-over-year, we recognized increased domestic IPO-related net sales in the quarter. This increase was partially driven by a handful of large projects, including two large deals where the client ended up withdrawing their transactions, though the value of those deals to us was lower