R.R. Donnelley & Sons' CEO Discusses Q1 2012 Results - Earnings Call Transcript

R.R. Donnelley & Sons (RRD)

Q1 2012 Earnings Call

May 02, 2012 10:00 am ET


Dave Gardella - Vice President of Investor Relations

Thomas J. Quinlan - Chief Executive Officer, President and Director

Daniel N. Leib - Chief Financial Officer and Executive Vice President


Charles Strauzer - CJS Securities, Inc.

Scott Wipperman - Goldman Sachs Group Inc., Research Division

Kannan Venkateshwar - Barclays Capital, Research Division

Daniel R. Leben - Robert W. Baird & Co. Incorporated, Research Division

Edward J. Atorino - The Benchmark Company, LLC, Research Division

Hale Holden

Scott Vogel

Ted Shiung



Welcome to the RR Donnelley First Quarter 2012 Results Conference Call. My name is Monica, and I'll be the moderator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Dave Gardella. Mr. Gardella, you may begin.

Dave Gardella

Thank you, Monica. Good morning, everyone, and thank you for joining us for RR Donnelley's First Quarter 2012 Results Conference Call. Earlier this morning, we released our earnings report. A copy of which can be found in the Investors section of our website at rrdonnelley.com.

During this call, we'll refer to forward-looking statements that are subject to uncertainty. For a complete discussion, please refer to the cautionary statement included in our earnings release and further detailed in our Annual Report on Form 10-K and other filings with the SEC.

Further, we will discuss non-GAAP and pro forma financial information. We believe the presentation of non-GAAP and pro forma results provides you with the useful supplementary information concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only. Please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information. We also posted to our website, in the Investors section, a description as well as reconciliation of GAAP measures to which we will refer on this call.

We are joined this morning by Tom Quinlan; Dan Leib; and Drew Coxhead. I'll now turn the call over to Tom.

Thomas J. Quinlan

Thank you, Dave, and good morning, everyone. During the first quarter, our revenue trend improved sequentially as compared with the fourth quarter of 2011. This reflects a favorable shift in customer demand as well as new account wins that were added to our platform during the quarter. During our call in February, we told you that in the back half of the fourth quarter of 2011, we saw our customers abruptly defer spending on marketing promotions. In the latter part of the first quarter, we saw that trend begin to reverse itself. During that discussion, we also identified an ongoing challenge that has continued into 2012. This is the imbalance in our capital markets business between the IPOs that are being announced versus those that are being priced. Though we are continuing to win a very sizable share of the work associated with IPOs, invoicing for our services that are connected with each IPO occur only as the deals or price has been closed. We saw an uptick in IPO pricing activity late in the first quarter, so we are encouraged about the outlook.

Based on the first quarter results and what we are seeing in terms of customer wins that will further ramp up this year, we are comfortable in our expectation that revenue for the full year will be flat to slightly up. And as noted in this morning's release, we reaffirmed full year 2012 guidance for both non-GAAP earnings per diluted share and operating cash flow less capital expenditures. Dan will take you through all the numbers in more detail shortly.

Before he does, I will briefly highlight a few of the actions that we have been taking, placing them into the context of the 5-pronged strategy that we discussed during our conference call this past February. We said then that the first pillar of our strategy is to win share by aggressively pursuing all appropriate print opportunities across a diverse range of vertical segments and by using the comprehensive range of our integrated offering as a key value added differentiator.

Let me share 2 examples of how the breadth of our offering serves to create integrated solutions that differentiate RR Donnelley. The Audit Bureau of Circulation, Game Informer closed 2011 as a top 4 title in print. We produced a significant share of the print run. As you might imagine, the world's #1 videogame magazine appeals to a youthful demographic that is also comfortable in the virtual world. In fact, this title is all about virtual world. While it is a top 4 print title, a recent article in Adweek identified Game Informer as having the highest digital circulation of any title. RR Donnelley prepares this enhanced digital version for electronic distribution to more than 1.5 million subscribers through our strategic Creative Services offering, which provides a host of premedia resources. Preparing the #1 title for digital circulation reflects our ability to bridge content across channels. This capability is extremely attractive to our customers.

Going forward, we see customers looking for integrated solutions that enable content to be created, managed, produced, distributed and monetized in print and digital versions. RR Donnelley is uniquely equipped to provide this capability across the broadest range of vertical segments, including retail and financial services, technology, health care and more. Whether it is an enhanced digital version of a print publication or an XBRL presentation of financial data, we are the single source that helps content connect across media platforms. Visibility is a key differentiator as customers consider where to place their printing contracts. We are for sole source convenience and control in this emerging environment, which is something that other printers cannot as broadly accomplish and that pure e-providers cannot do it all.

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