RR Donnelley Reports Net Growth for Q1 Financial Results

CHICAGO—April 25, 2013— R.R. Donnelley & Sons Company (Nasdaq: RRD) has reported its financial results for the first quarter of 2013.

Highlights:

• First-quarter 2013 net sales of $2.5 billion grew 0.5 percent from the first quarter of 2012
  —U.S. Print and Related Services segment net sales declined 0.5 percent
  —International segment net sales grew 3.5 percent
  —Organic net sales decline of 1.2 percent reflects improvement in trend from the previous five quarters
• First-quarter 2013 GAAP net earnings attributable to common shareholders of $27.1 million, or $0.15 per diluted share
• First-quarter 2013 non-GAAP net earnings attributable to common shareholders of $68.1 million, or $0.37 per diluted share
• First-quarter 2013 non-GAAP adjusted EBITDA of $277.1 million, or 10.9 percent of net sales
• Company reaffirms revenue, margin and free cash flow guidance for full-year 2013

"Our first-quarter results allow us to reaffirm our full-year guidance for revenue, margin and free cash flow," said Thomas J. Quinlan III, R.R. Donnelley's president and CEO. "We continue to focus our efforts to drive free cash flow, and remain committed to our targeted gross leverage range of 2.25x to 2.75x on a long-term sustainable basis."

Net sales in the quarter were $2.5 billion, up $13.6 million, or 0.5 percent, from the first quarter of 2012 due to the impact of 2012 acquisitions and volume growth in the International segment. The first quarter of 2012 included an adjustment to accounts receivable for prior periods' overaccruals of rebates owed to certain customers that favorably impacted both sales and operating income by $19.8 million. After adjusting for the impact of this rebate adjustment, as well as the impact of acquisitions, changes in foreign exchange rates and pass-through paper sales, organic sales declined 1.2 percent from the first quarter of 2012 due to price erosion and volume declines in the U.S. Print and Related Services segment. Operating income in the first quarter of 2013 was $139.8 million, which was impacted by restructuring and impairment charges and acquisition-related expenses totaling $23.7 million, compared to operating income in the first quarter of 2012 of $121.4 million, which included restructuring and impairment charges and acquisition-related expenses totaling $50.3 million.

First-quarter 2013 net income attributable to common shareholders was $27.1 million, or $0.15 per diluted share, compared to net income of $37.4 million, or $0.21 per diluted share, in the first quarter of 2012. First-quarter 2013 net income attributable to common shareholders included $62.5 million in pre-tax charges for restructuring, impairment (non-cash), acquisition-related expenses, a loss on currency devaluation in Venezuela and a loss on debt extinguishment, while in the first quarter of 2012, net income attributable to common shareholders included $62.4 million in pre-tax charges for restructuring, impairment (non-cash), acquisition-related expenses and a loss on debt extinguishment. Additional details regarding the nature of these and other items are included in the attached schedules.

Non-GAAP adjusted EBITDA was $277.1 million in the first quarter of 2013 compared to $296.7 million in the first quarter of 2012. Non-GAAP adjusted EBITDA margin in the first quarter of 2013 was 10.9 percent, or 90 basis points lower than in the first quarter of 2012, as the $19.8 million customer rebate adjustment, price pressure, an unfavorable product mix and lower pension income more than offset lower employee-related expenses and productivity improvements.

Non-GAAP net earnings attributable to common shareholders totaled $68.1 million, or $0.37 per diluted share, in the first quarter of 2013 compared to $78.8 million, or $0.44 per diluted share, in the first quarter of 2012. First-quarter non-GAAP net earnings attributable to common shareholders exclude restructuring and impairment charges, losses on debt extinguishment, and acquisition-related expenses in both years as well as the loss on currency devaluation in Venezuela in 2013. A reconciliation of net earnings attributable to common shareholders to non-GAAP adjusted EBITDA and non-GAAP net earnings attributable to common shareholders is presented in the attached schedules.

About RR Donnelley
RR Donnelley (Nasdaq:RRD) is a global provider of integrated communications. The Company works collaboratively with more than 60,000 customers worldwide to develop custom communications solutions that reduce costs, drive top-line growth, enhance ROI and ensure compliance. Drawing on a range of proprietary and commercially available digital and conventional technologies deployed across four continents, the Company employs a suite of leading Internet-based capabilities and other resources to provide premedia, printing, logistics and business process outsourcing services to clients in virtually every private and public sector.

Source: RRD.