Attached files
| file | filename |
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| 8-K - 8-K - RR Donnelley & Sons Co | d16751d8k.htm |
| EX-99.1 - EX-99.1 - RR Donnelley & Sons Co | d16751dex991.htm |
 R.R. Donnelley & Sons Company
Investor Presentation
August 4, 2015
Exhibit 99.2 |
 Safe Harbor & Non-GAAP
2 Use of Forward-Looking Statements This presentation contains "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of
1995. Readers are cautioned not to place undue reliance on these
forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date of this presentation and are based on current expectations and involve a number
of assumptions, risks and uncertainties that could cause the
actual results to differ materially from such forward-looking statements. The company does not undertake to and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or
circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events. The factors that could cause material differences in the expected results of RR
Donnelley include, without limitation, the following: the volatility and disruption of the capital and credit markets, and adverse changes in the global economy; successful execution and integration of acquisitions; successful negotiation
of future acquisitions; and our ability to integrate operations
successfully and achieve enhanced earnings or effect cost savings; the ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, system integration and other key strategies; the ability to divest non-core businesses; future
growth rates in our core businesses; competitive pressures in all
markets in which we operate; our ability to access unsecured debt in the capital markets and the participants’ ability to perform to our contractual lending and insurance agreements; factors that affect customer demand, including changes in postal rates and postal regulations, changes in the
capital markets, changes in advertising markets, the rate of
migration from paper-based forms to digital formats, customers’ budgetary constraints, and customers’ changes in short-range and long-range plans; the ability to gain customer acceptance of our new products and technologies; the ability to secure and defend intellectual property rights
and, when appropriate, license required technology; customer
expectations and financial strength; performance issues with key suppliers; changes in the availability or costs of key materials (such as ink, paper and fuel or in prices received for the sale of by-products; changes in ratings of our debt securities, as a result of financial community and
rating agency perceptions of our business, operations and
financial condition and the industry in which we operate; the ability to generate cash flow or obtain financing to fund growth; the effect of inflation, changes in currency exchange rates and changes in interest rates; the effect of changes in laws and regulations, including changes in accounting
standards, trade, tax, environmental compliance (including the
emission of greenhouse gases and other air pollution controls), health and welfare benefits, price controls and other regulatory matters and the cost, which could be substantial, of complying with these laws and regulations; contingencies related to actual or alleged environmental
contamination; the retention of existing, and continued
attraction of additional, customers and key employees; the effect of a material breach of security of any of our systems; the effect of labor disruptions or labor shortages; the effect of economic and political conditions on a regional, national or international basis; the effect of economic
weakness and constrained advertising; uncertaint about future
economic conditions; the possibility of future terrorist activities or the possibility of a future escalation of hostilities in the Middle East or elsewhere; the possibility of a regional or global health pandemic outbreak; adverse outcomes of pending and threatened litigation; our ability to complete the
spin-offs of our financial communications services business
and our publishing and retail-centric conventional print services business; our ability to realize the benefits of the spin-offs, including the tax-free nature of the transaction and other risks and uncertainties detailed from time to time in our filings with the SEC, including under “Risk
Factors” in our Annual Report on Form 10-K. Readers are
strongly encouraged to read the full cautionary statements contained in RR Donnelley's filings with the SEC.
Non-GAAP Financial Information
The company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful because
that information is an appropriate measure for evaluating the
company’s operating performance. Internally, the company uses this non-GAAP information as an indicator of business performance, and evaluates management’s effectiveness with specific reference to these indicators. These measures should be considered in addition to, not a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. A reconciliation of GAAP net earnings to non-GAAP net earnings and further
descriptions are presented in the tables attached to our Earnings Releases, which are available in the investors section of our website, rrdonnelley.com. Also available in the investors section of our website, rrdonnelley.com, is a
description of additional non-GAAP financial measures
referred to in this presentation. |
 A Transformative Separation – The Next Phase of Our Strategic Evolution 3 Separating our current business segments into three publicly-traded industry leaders:
– Customized Multi-Channel Communications Management Company (CMCo)
– Financial Communications Services Company (FinancialCo) – Publishing and Retail-Centric Print Services Company (PRSCo) Successful execution of strategy paved way for today’s announcement
– For over 10 years RRD has strategically developed a diverse portfolio and business mix
with significant scale and a goal of successfully evolving with transformative
market shifts Unlocking shareholder value by creating three
industry leading companies that can capitalize on unique
industry trends and opportunities –
Increased management focus to pursue tailored business strategies
–
Increased organic growth opportunities
– Flexibility to optimize capital structures and capital allocation to drive appropriate
investment policy
– Valuations more accurately reflect distinctive business characteristics
Clear Opportunity to Enhance Shareholder Value by Creating Three Distinct RRD
Businesses That Will Each Be An Industry Leader
|
 RRD
has been on a Purposeful Path of Strategic Evolution
4 Pre-2000s Today and beyond …to a full-line printing services provider… …to a leading provider of multi-channel communication services Evolved from a printer… Print and Ship Data Acquisition Content Management Print & Deliver Data Analytics Content Optimization Multi-channel Marketing Portfolio Transformation to Become More Service-Orientated and Focused on Value-Add Products |
 5 2000 2010 2014A Variable Print Publishing & Retail Services Strategic Services International Revenue Mix RRD Portfolio Has Become More Diversified With Significant Scale Across Key Businesses
(1) Color represents primary segment in which acquisition is
reported. $5.2bn
$10.0bn $11.6bn Financial Print Logistics & Other Moore Wallace (‘04) Acquisitions (1) Office Tiger (’06) Banta (’07) Bowne (’10) Poligrafia (’05) Von Hoffman (’07) Cardinal (’07) CGX (‘14) Courier (‘15) Esselte NA (‘14) Edgar Online ('12) XPO ('12) Presort (‘12) 23% ($2.6) 32% ($3.8) 14% ($1.6) 22% ($2.6) 9% ($1.0) 34% 28% 25% 13% 64% 4% 12% 20% Portfolio Transformation Has Been Supported by Key Acquisitions |
 Unique Industry Dynamics are Creating Different Paths
to Success for Key RRD Businesses…
6 Variable Print Statements Commercial and Digital Print Labels Publishing, Retail and Office Products Books Magazines, Catalogs, and Retail Inserts Directories Forms Financial Financial print Expand offerings to existing clients Differentiated approach by vertical Invest in new capabilities Focus on further developing industry leading customized multi-channel communications offerings Capitalize on broad “brand permission” for potential future product offerings Investment in technology/workflow Focus on content collaboration & data analytics Quickly adapt to changing regulatory requirements Cost optimization & efficient capacity utilization Industry consolidation & alliances Leverage scope of print- related capabilities Financial Print Related Services Customized Multi-Channel Communications Management Product Promotion & Logistics Direct Mail Packaging & Related Products Global Turnkey Solutions Logistics Services Business Process Outsourcing Digital and Creative Solutions Office Products FinancialCo PRSCo CMCo |
 2013 – 2018 Org. Growth Outlook +1% to + 7% Strategic Services Long-Term Outlook by Current Reporting Segment …With Significant Differences in Financial & Operating Profiles Note: Percentages and revenue numbers based on LTM Revenues as of June 2015. Catalog, Magazine, Retail Book Directory Commercial and Digital Print Direct Mail Labels Office Products Business Communication Services Forms Logistics Financial ($1.0 bn) Sourcing Digital Solutions Asia Business Process Outsourcing LatAm (ex. Mexico) Europe Global Turnkey Canada Mexico Distinct Businesses With Scale Within RRD Portfolio Today Variable Print Publishing & Retail Services Strategic Services International 2013 – 2018 Org. Growth Outlook -7% to -2% Publishing & Retail Services 2013 – 2018 Org. Growth Outlook -5% to Flat Variable Print 2013 – 2018 Org. Growth Outlook +1% to +3% International Multi-Channel Comm. Mgmt ($7.0bn) Publishing & Retail-Centric ($3.5 bn) 7 |
 Compelling Benefits of Separation
8 Creates three publicly-traded industry leaders
Separation to provide significant strategic
and financial benefits –
Increased management focus to pursue tailored business strategies
• Continue to develop Multi-Channel Communications Management strategy (CMCo)
• Leader in transition to a content management, e-delivery, digital, data business
(FinancialCo)
• Cost leadership and industry consolidation (PRSCo) – Tailored management incentive plans aligned with financial and operating profiles – Flexibility to optimize capital structures and capital allocation to drive appropriate
investment policy
– Ability to attract
long-term investor base appropriate for each company – Enables investors to value each company separately
Accelerates RRD Integrated Communications Management Strategy and
Enables Tailored Strategic, Financial and Operational Approaches for Distinct
RRD Businesses |
 Financial Communications Services
Creates Three Industry Leading Companies
9 Customized Multi-Channel Communications Management Publishing and Retail-Centric Print Services High Single Digits High Teens - Low 20’s Low Double Digits EBITDA Margin Capital Markets Investment Management Int’l Catalog, Magazine, Retail Book Office Products Europe Directory Mexico Variable Print Strategic Services (incl Logistics) Int’l Provides data management and analytics solutions to the corporate filing and global financial community “One-stop shop” for content creation, collaboration, management, and distribution Creates, manages and executes customer-specific and branded communications strategies Oversees logistics, supply chain management & workflow solutions Manages related analytics and digital services Produces and distributes periodicals, catalogs, inserts, books, office products and directories Unmatched scope of print- related capabilities Serves publishers, merchandisers and retailers globally $7.0 bn $1.0 bn $3.5 bn 2.6% 1.4% (3.1%) LTM June ‘15 Net Sales. ’12 – ’14 Org. CAGR Low to Medium (Asset Light Logistics) Asset Light Low Incremental Capital Intensity 43.6% 23.8% 4.0% 16.1% 9.7% 2.7% 49.6% 34.7% 15.7% 47.2% 23.9% 28.9% |
 10 Key Business Highlights Historical Net Sales ($ bn) Deep relationships with customers Clear growth opportunity driven by increasing demand for cost-effective multichannel communications strategies Global capabilities (~30% of sales international) Strong balance sheet Representative Customers POA: Integrated branding and communications execution Omnichannel communications and retail marketing Multiple solutions and services (e.g. brand and project marketing and management, communications) Retail / brand execution Packag-ing Labels POP displays Print & Digital Mktg Integrated product consistent with client’s brand—become one-stop for branding/communications
execution Sold with
associated physical logistics Related value- added services across channels, e.g., in-store activation Leading Customized Multi-Channel Communications Management Company Adjacent product logistics $5.6 $6.0 $7.0 2012A 2013A 2014A Key Product – Multi-Channel Communications Management
Customized Multi-Channel Communications Management
Company |
 $0.97 $1.01 $1.02 2012A 2013A 2014A Leading Financial Communications Services Company 11 Key Business Highlights Key Product Offerings Leading market position Strong margins and free cash flow generation Deep customer relationships Participates in high-growth content collaboration (ActiveDisclosure) and data
analytics (EDGAR Pro)
Fast delevering
profile Transactions Support Compliance Investor Communications Data Analytics Filings and content origination / management (IPO docs, proxies, PPMs) Virtual Data Rooms Translation Services Regulatory Filings (Ks, Qs, etc.) ActiveDisclosure File 16 / Netfiler EDGAR / SEDAR Reporting Management Solutions ActiveXBRL Software EDGAR Pro I-Metrix Xcelerate Transcription Web Content Solutions Shareholder report solutions Fund marketing and fund fact sheet eDelivery of all investor comms. Post-sale trade data Right Prospectus & iCOMPLi Historical Net Sales ($ bn) Representative Customers Best-In-Class Full-Service Provider of Transactional and Compliance Filing and Reporting Services,
Content Management and Data Analytics to the Corporate Filing and Global
Financial Community Investment Banking
Corporate Filers
Mutual funds |
 Leading Publishing and Retail-Centric Print Services Company 12 Key Business Highlights Key Products Historical Net Sales ($ bn) Leading traditional printer: produces over 20
billion pages annually
Unmatched scope of print-related capabilities
Competitive advantages
from scale, track record
of innovation and cost leadership
Strong cash flow generation Flexible balance sheet with conservative starting
leverage Well-positioned for additional value creation through further industry consolidation Representative Customers Unmatched Scope Of Print-Related Capabilities and Global Leader in Cost-efficient Traditional Print and Print-Related Services
Books Directories Magazines Retail Inserts Catalogs Office Products $3.64 $3.49 $3.61 2012A 2013A 2014A |
 Transaction Details
13 Intended to take the form of a tax-free spin-off of FinancialCo and PRSCo
Target completion prior to the end of 2016, subject to customary conditions,
including obtaining rulings from the IRS and/or tax opinions,
execution of inter-company agreements and final approval by
the Company’s Board of Directors
It is expected that the currently outstanding RRD notes will remain at
CMCo and
that CMCo will receive certain cash proceeds in connection with the capitalization
of each of PRSCo
and FinancialCo
RR Donnelley management intends to continue to recommend to the Board of
Directors a quarterly dividend consistent with its current level
until the completion of the transaction; each company will then
determine its appropriate capital allocation policy
All three companies will be capitalized with strong balance sheets
Additional detail, including management teams and capital
structures to be announced at a later date
Creating three leading, independent public companies
positioned to increase long-term shareholder value
|