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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Executive
Daniel L. Knotts

substantially reduced our total debt outstanding. Since the end of 2016, we have now lowered our total debt outstanding by $569 million. Through these collective actions, we exited 2019 with a stronger financial foundation, including having the highest level of availability on our credit facility since the spin, and we remain firmly on our strategic path to advance RRD as a leading provider of customer communications. Shifting to our financial performance. Our Q4 results were in line with our expectations, excluding the $0.09 per share tax charge we incurred in the quarter. On the top line, our reported net sales were negatively impacted by the divestiture of our GDS business and the exiting of the Brazilian market.

Organic sales were lower in the quarter, due primarily to lower election-related volume and overall softness in the commercial print market as well as within logistics, reflective of the current state of the broader logistics market. Organic sales for the full year declined 2.3%, also largely related to softness in the commercial print and logistics markets. Importantly, three of our strategic product categories, direct marketing, labels and digital print, reported organic growth for both the fourth quarter and the full year as we work to shift our product mix towards higher value growth opportunities. Adjusted income from operations for the fourth quarter was unfavorable to the prior year, in line with our expectations. Our overall service performance and operational execution continued to be strong as we delivered our largest quarter of the year. For the full year, we reported an increase in adjusted income from operations as well as an improvement in operating margin despite lower organic sales.

Our favorable full year earnings performance is a direct result of our teams aggressively managing our cost structure, including SG&A, while continuing to navigate across a number of challenging markets and deliver value for our clients. Our team members perform mission-critical operations for some of the most demanding brands in the world. Our solutions help them tell their stories, create deeper and more connected experiences with their customers and ultimately drive their business performance. Every day, we are earning the right to grow with our clients by delivering the scale, expertise and capabilities needed to execute their customer communications in whatever form or format they want to maximize results. Here are some recent examples of how we're helping our clients do just that. With more than 25 years as a preferred print supplier to American Airlines, we further expanded our relationship to include the management of their print communications on a global scale.

American Airlines wanted a centralized cloud-based platform to automate the workflow of their print communication process and provide a seamless print supply chain management experience. Through our integrated solution, we're helping American Airlines improve brand consistency, reduce cost and increase the speed with which they produce their communication materials, including their safety briefing cards, in-flight menus, baggage tags, labels, brochures, direct mail, stationery and signage. We recently signed a new contract with