Print services provider R.R. Donnelley & Sons Co. (RRD) on Wednesday reported a plunge in third-quarter profit, hurt by charges as well as a decline in revenues. On an adjusted basis, earnings topped Wall Street view.
The Chicago, Illinois-based company said third quarter net earnings from continuing operations attributable to common shareholders plunged to $13.1 million or $0.06 per share from $168.2 million or $0.80 per share reported last year.
The latest quarterly results included pre-tax charges of $131.7 million related to restructuring and impairment as well as acquisition expenses of $0.1 million. The company noted that most of the restructuring and impairment charges were associated with the termination of a significant long-term customer contract in the business process outsourcing reporting unit within the International segment.
Non-GAAP net earnings attributable to common shareholders was $111.9 million or $0.54 per share. On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude special items.
Gross margin for the latest quarter decreased to 25.2% from 27.0% in the previous year. Operating margin decreased to 3.8% from 10.7% in the previous year.
Net sales in the quarter were $2.463 billion, down 14.0% from $2.865 billion in the prior year quarter. Foreign exchange rates had a 1.8% negative impact on sales. The remaining decrease was caused by volume declines and continued price pressures across most products and services.
Segment-wise, net sales for the U.S. Print and Related Services segment dropped 14.9% to $1.8 billion due to volume and price declines across all products and services.
In the International segment, net sales decreased 11.5% to $638.3 million, including a 7.0% negative impact from changes in foreign exchange rates. The remaining decrease was caused by volume and price declines across most product lines, the company said.
According to Thomas Quinlan III, RR Donnelley's President and Chief Executive Officer, ''Although demand in most of the end-markets we serve remains challenged by economic conditions, we saw continued stabilization and achieved modest sequential revenue growth over the second quarter, in line with our expectations.''
For the first three quarters of the fiscal, net income declined to $52.2 million or $0.25 per share from $497 million or $2.34 per share in the prior-year period. Net sales declined to $7.274 billion from $8.785 billion in the prior year.
The company said it expects a sequential revenue growth rate in the low single digits in the fourth quarter.
The stock is currently trading at $21.63, up 4.24%, on 64,989 shares.
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