R.R. Donnelley & Sons Company (NYSE:RRD) Q4 2019 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 11:00 am ET

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R.R. Donnelley & Sons Company (NYSE:RRD) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Terry D. Peterson

that our operating cash flow will be between $150 million and $180 million, which is an improvement from the $139 million reported in 2019.

We expect that lower interest payments and improvements in working capital will only be partially offset by higher restructuring payments. We also expect to repatriate an additional $50 million to $75 million to the U.S. in 2020. Capital expenditures are expected to range from $85 million to $95 million, which is down from $139 million in 2019. Our 2020 capital spend is expected to be more in line with historical capital spend levels. We also expect to collect a nonrefundable deposit of approximately $24 million in the third quarter of 2020 related to the sale of our China facility. As you may recall, the agreement to sell that this facility provided for periodic nonrefundable deposits to us from the buyer. Our ongoing capital priorities remain unchanged.

As I've stated in past quarters, we expect to continue to make strategic investments in our business, including both organic investments and potential acquisitions and we continuously evaluate opportunities to optimize our portfolio as demonstrated by our recent sale of the Global Document Solutions business. Before I wrap up, I would like to comment on our expected performance for the first quarter. We expect net sales to be down from 2019, due primarily to previous business dispositions, which collectively reported net sales of $77 million in the prior year. The ongoing business is expected to be relatively flat with the exception of China, which is directly impacted by COVID-19.

The estimated revenue impact from this business disruption is roughly $50 million in the first quarter. But as I mentioned earlier, it is too early to predict how this business disruption will impact future quarters. From an earnings perspective, we anticipate reporting improved adjusted earnings per share in the first quarter. Adjusted income from operations is expected to be flat to up slightly, after taking into consideration the 2019 loss from Brazil, additional cost reductions and the negative impact from the COVID-19 disruption. Interest expense and the effective tax rate are also expected to be favorable to the prior year.

And now operator, let's open up the line for questions.