Wednesday, R.R. Donnelley & Sons Co. (RRD), provider of print and print-related services, announced profit for the second quarter compared to a loss last year. But adjusted profit increased on the strength of acquisitions and favorable foreign exchange rates, partly offset by pricing pressure and volume declines. The company reaffirmed its adjusted earnings from continuing operations for the year 2008.
Second Quarter Results
The Chicago, Illinois-based R.R. Donnelley reported net earnings of $146.3 million or $0.69 per share compared to a net loss of $69.4 million or $0.32 loss per share in the year earlier quarter. The company revealed earnings from continuing operations of $145.1 million or $0.68 per share versus a loss from continuing operations of $69.4 million or $0.32 loss per share in the prior year quarter. The latest quarter results included restructuring charges of $15.8 million, while the 2007-second quarter results were hurt by impairment and restructuring charges of $330.5 million.
Excluding items, net earnings would have been $156.4 million or $0.73 per share, up from $149.2 million or $0.67 per share in the year-ago quarter. On average, 5 analysts surveyed by First Call/Thomson Financial predicted the company to report earnings of $0.72 per share.
Net sales rose 4.9% to $2.9 billion from $2.8 billion in the previous year quarter. Four Street analysts had a consensus revenue projection of $2.98 billion.
The U.S. print and related services' net sales grew 4.5% to $2.2 billion on Von Hoffmann, Cardinal Brands and Pro Line acquisitions besides logistics services sales and volume rises, partly offset by a fall in commercial print, financial print and forms.
International division's net sales were $762.0 million, representing 4.8% increase from the corresponding period last year as a result of the favorable foreign exchange rates and higher sales in Global Turnkey Solutions and Latin America, partly offset by weakness in pricing.
R.R. Donnelley's gross margin slipped to 26.7% from 27.1% in the preceding year quarter due to the addition of the acquired companies that in aggregate carried a weaker margin historically, an unfavorable product mix and continued pricing pressure that more than offset the gains from productivity efforts.
The company bought back 5 million shares for the year-to-date with 5 million shares still remaining under its authorization for buyback. The company closed the quarter with cash and cash equivalents of $435.3 million.
Six-Months Results
For the first half, R.R. Donnelley revealed net earnings of $328.8 million or $1.54 per share, up from $69.4 million or $0.31 per share in the year earlier period. Excluding items, net earnings would have been $304.9 million or $1.43 per share, up from $295.1 million or $1.33 per share in the previous year six-months period.
Net sales grew to $5.92 billion from $5.59 billion in the corresponding period last year.
Expectations
Moving ahead, the company reaffirmed its adjusted earnings from continuing operations forecast of $3.08-$3.15 per share for the year 2008. Six Wall Street analysts, on average, are looking for earnings of $3.14 per share.
Stock Movement
Shares of R.R. Donnelley are trading down by $0.23 or 0.85% at $26.93 on a volume of 248 thousand shares. The stock hit a 52-week high of $40.98 and a low of $25.96.
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