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RR Donnelley, Quad/Graphics and Consolidated Graphics Remain Profitable



Consolidation within the publication and commercial printing industry can be expected; the question becomes whether these larger companies will ultimately be profitable



By David Savastano, Editor



Published November 14, 2013

RR Donnelley, Quad/Graphics and Consolidated Graphics Remain Profitable

By David Savastano

The publication and commercial printing industry continues to shift. The recent news that R.R. Donnelley & Sons (RRD)will acquireConsolidated Graphicsfor approximately $620 million, plus the assumption of Consolidated Graphics' net debt, further shows the changes in the market. With that move, and Quad/Graphics' October 2012 acquisition of Vertis, means that two billion-dollar printers have been or will be acquired in the last year, which is of interest to ink manufacturers in the field.

The consolidation within the publication and commercial printing industry can be expected, considering the downsizing in the industry. The question becomes whether these larger companies will ultimately be profitable. R.R. Donnelley & Sons has approximately $10 billion a year in sales prior to adding Consolidated Graphics, and Quad/Graphics has nearly $5 billion in annual sales. Consolidated Graphics had $1,048.2 million in annual sales.

With the third quarter and nine month 2013 results for all three companies now out, insights into the profitability of these companies can be seen.

R.R. Donnelley & Sons

R.R. Donnelley’s net sales in the second quarter were $2.6 billion, an increase of $106 million, or 4.2%, from the third quarter of 2013. Notably, its organic sales rose 2.2% during the third quarter.

Operating income was $173.2 million in the second quarter of 2013; the operating income in the second quarter of 2012 was $163.9 million. Non-GAAP adjusted EBITDA was $280 million, or 10.7% of net sales.

Most interestingly, RR Donnelley’s third quarter free cash flow was $193.9 million, an increase of $100.6 million, or more than double that of the third quarter of 2012. Year-to-date, the company’s free cash flow has increased by $158 million.

Meanwhile, Quad/Graphics, Inc. reported net sales of $1.2 billion for the third quarter of 2013. By comparison, Quad/Graphics had roughly $1 billion in net sales for the second quarter of 2013. The change is largely due to the acquisition of Vertis, which was finalized Jan.16, 2013

Adjusted EBITDA for the third quarter of 2013 was $154 million, almost the same as the same period in 2012, which was $155 million. Quad/Graphics reported recurring free cash flow of $86 million in 2013, compared to $60 million for the second quarter of 2012.

For the three months of 2013, net sales were $3.4 billion compared to $3.0 billion in 2012. Year-to-date adjusted EBITDA was down at $379 million compared to $393 million in 2012. Recurring free cash flow was $178 million for the first nine months of 2013, down from $220 million for the same period in 2012.

Consolidated Graphics’ net sales in the quarter ending Sept. 30, 2013 was $256 million (its fiscal year ended in March 2013). This was a 2.9% decline from $263.6 million from the same quarter last year. Adjusted EBITDA was $32.0 million for the quarter and free cash flow was $13.7 million.

R.R. Donnelley/Consolidated Graphics, if and when the deal goes through in the first quarter of 2013, and Quad/Graphics are the two largest players in the publication and commercial printing markets. Judging by their adjusted EBIDTA, each of these companies are profitable, with adjusted EBIDTA in the neighborhood of 10% to 12%, as well as solid free cash flow numbers. This seems to indicate that these sectors can be profitable, although not at previous levels. RR Donnelley, Quad/Graphics and Consolidated Graphics Remain Profitable

By David Savastano

The publication and commercial printing industry continues to shift. The recent news that R.R. Donnelley & Sons (RRD)will acquireConsolidated Graphicsfor approximately $620 million, plus the assumption of Consolidated Graphics' net debt, further shows the changes in the market. With that move, and Quad/Graphics' October 2012 acquisition of Vertis, means that two billion-dollar printers have been or will be acquired in the last year, which is of interest to ink manufacturers in the field.

The consolidation within the publication and commercial printing industry can be expected, considering the downsizing in the industry. The question becomes whether these larger companies will ultimately be profitable. R.R. Donnelley & Sons has approximately $10 billion a year in sales prior to adding Consolidated Graphics, and Quad/Graphics has nearly $5 billion in annual sales. Consolidated Graphics had $1,048.2 million in annual sales.

With the third quarter and nine month 2013 results for all three companies now out, insights into the profitability of these companies can be seen.

R.R. Donnelley & Sons

R.R. Donnelley’s net sales in the second quarter were $2.6 billion, an increase of $106 million, or 4.2%, from the third quarter of 2013. Notably, its organic sales rose 2.2% during the third quarter.

Operating income was $173.2 million in the second quarter of 2013; the operating income in the second quarter of 2012 was $163.9 million. Non-GAAP adjusted EBITDA was $280 million, or 10.7% of net sales.

Most interestingly, RR Donnelley’s third quarter free cash flow was $193.9 million, an increase of $100.6 million, or more than double that of the third quarter of 2012. Year-to-date, the company’s free cash flow has increased by $158 million.

Meanwhile, Quad/Graphics, Inc. reported net sales of $1.2 billion for the third quarter of 2013. By comparison, Quad/Graphics had roughly $1 billion in net sales for the second quarter of 2013. The change is largely due to the acquisition of Vertis, which was finalized Jan.16, 2013

Adjusted EBITDA for the third quarter of 2013 was $154 million, almost the same as the same period in 2012, which was $155 million. Quad/Graphics reported recurring free cash flow of $86 million in 2013, compared to $60 million for the second quarter of 2012.

For the three months of 2013, net sales were $3.4 billion compared to $3.0 billion in 2012. Year-to-date adjusted EBITDA was down at $379 million compared to $393 million in 2012. Recurring free cash flow was $178 million for the first nine months of 2013, down from $220 million for the same period in 2012.

Consolidated Graphics’ net sales in the quarter ending Sept. 30, 2013 was $256 million (its fiscal year ended in March 2013). This was a 2.9% decline from $263.6 million from the same quarter last year. Adjusted EBITDA was $32.0 million for the quarter and free cash flow was $13.7 million.

R.R. Donnelley/Consolidated Graphics, if and when the deal goes through in the first quarter of 2013, and Quad/Graphics are the two largest players in the publication and commercial printing markets. Judging by their adjusted EBIDTA, each of these companies are profitable, with adjusted EBIDTA in the neighborhood of 10% to 12%, as well as solid free cash flow numbers. This seems to indicate that these sectors can be profitable, although not at previous levels. RR Donnelley, Quad/Graphics and Consolidated Graphics Remain Profitable

By David Savastano

The publication and commercial printing industry continues to shift. The recent news that R.R. Donnelley & Sons (RRD)will acquireConsolidated Graphicsfor approximately $620 million, plus the assumption of Consolidated Graphics' net debt, further shows the changes in the market. With that move, and Quad/Graphics' October 2012 acquisition of Vertis, means that two billion-dollar printers have been or will be acquired in the last year, which is of interest to ink manufacturers in the field.

The consolidation within the publication and commercial printing industry can be expected, considering the downsizing in the industry. The question becomes whether these larger companies will ultimately be profitable. R.R. Donnelley & Sons has approximately $10 billion a year in sales prior to adding Consolidated Graphics, and Quad/Graphics has nearly $5 billion in annual sales. Consolidated Graphics had $1,048.2 million in annual sales.

With the third quarter and nine month 2013 results for all three companies now out, insights into the profitability of these companies can be seen.

R.R. Donnelley & Sons

R.R. Donnelley’s net sales in the second quarter were $2.6 billion, an increase of $106 million, or 4.2%, from the third quarter of 2013. Notably, its organic sales rose 2.2% during the third quarter.

Operating income was $173.2 million in the second quarter of 2013; the operating income in the second quarter of 2012 was $163.9 million. Non-GAAP adjusted EBITDA was $280 million, or 10.7% of net sales.

Most interestingly, RR Donnelley’s third quarter free cash flow was $193.9 million, an increase of $100.6 million, or more than double that of the third quarter of 2012. Year-to-date, the company’s free cash flow has increased by $158 million.

Meanwhile, Quad/Graphics, Inc. reported net sales of $1.2 billion for the third quarter of 2013. By comparison, Quad/Graphics had roughly $1 billion in net sales for the second quarter of 2013. The change is largely due to the acquisition of Vertis, which was finalized Jan.16, 2013

Adjusted EBITDA for the third quarter of 2013 was $154 million, almost the same as the same period in 2012, which was $155 million. Quad/Graphics reported recurring free cash flow of $86 million in 2013, compared to $60 million for the second quarter of 2012.

For the three months of 2013, net sales were $3.4 billion compared to $3.0 billion in 2012. Year-to-date adjusted EBITDA was down at $379 million compared to $393 million in 2012. Recurring free cash flow was $178 million for the first nine months of 2013, down from $220 million for the same period in 2012.

Consolidated Graphics’ net sales in the quarter ending Sept. 30, 2013 was $256 million (its fiscal year ended in March 2013). This was a 2.9% decline from $263.6 million from the same quarter last year. Adjusted EBITDA was $32.0 million for the quarter and free cash flow was $13.7 million.

R.R. Donnelley/Consolidated Graphics, if and when the deal goes through in the first quarter of 2013, and Quad/Graphics are the two largest players in the publication and commercial printing markets. Judging by their adjusted EBIDTA, each of these companies are profitable, with adjusted EBIDTA in the neighborhood of 10% to 12%, as well as solid free cash flow numbers. This seems to indicate that these sectors can be profitable, although not at previous levels.



The publication and commercial printing industry continues to shift. The recent news that
R.R. Donnelley & Sons (RRD) will acquire Consolidated Graphics for approximately $620 million, plus the assumption of Consolidated Graphics' net debt, further shows the changes in the market. With that move, and Quad/Graphics' October 2012 acquisition of Vertis, means that two billion-dollar printers have been or will be acquired in the last year, which is of interest to ink manufacturers in the field.

The consolidation within the publication and commercial printing industry can be expected, considering the downsizing in the industry. The question becomes whether these larger companies will ultimately be profitable. R.R. Donnelley & Sons has approximately $10 billion a year in sales prior to adding Consolidated Graphics, and Quad/Graphics has nearly $5 billion in annual sales. Consolidated Graphics had $1,048.2 million in annual sales.

With the third quarter and nine month 2013 results for all three companies now out, insights into the profitability of these companies can be seen.

R.R. Donnelley & Sons

R.R. Donnelley’s net sales in the second quarter were $2.6 billion, an increase of $106 million, or 4.2%, from the third quarter of 2013. Notably, its organic sales rose 2.2% during the third quarter.

Operating income was $173.2 million in the second quarter of 2013; the operating income in the second quarter of 2012 was $163.9 million. Non-GAAP adjusted EBITDA was $280 million, or 10.7% of net sales.

Most interestingly, RR Donnelley’s third quarter free cash flow was $193.9 million, an increase of $100.6 million, or more than double that of the third quarter of 2012. Year-to-date, the company’s free cash flow has increased by $158 million.

Meanwhile, Quad/Graphics, Inc. reported net sales of $1.2 billion for the third quarter of 2013. By comparison, Quad/Graphics had roughly $1 billion in net sales for the second quarter of 2013. The change is largely due to the acquisition of Vertis, which was finalized Jan.16, 2013

Adjusted EBITDA for the third quarter of 2013 was $154 million, almost the same as the same period in 2012, which was $155 million. Quad/Graphics reported recurring free cash flow of $86 million in 2013, compared to $60 million for the second quarter of 2012.

For the three months of 2013, net sales were $3.4 billion compared to $3.0 billion in 2012. Year-to-date adjusted EBITDA was down at $379 million compared to $393 million in 2012. Recurring free cash flow was $178 million for the first nine months of 2013, down from $220 million for the same period in 2012.

Consolidated Graphics’ net sales in the quarter ending Sept. 30, 2013 was $256 million (its fiscal year ended in March 2013). This was a 2.9% decline from $263.6 million from the same quarter last year. Adjusted EBITDA was $32.0 million for the quarter and free cash flow was $13.7 million.

R.R. Donnelley/Consolidated Graphics, if and when the deal goes through in the first quarter of 2013, and Quad/Graphics are the two largest players in the publication and commercial printing markets. Judging by their adjusted EBIDTA, each of these companies are profitable, with adjusted EBIDTA in the neighborhood of 10% to 12%, as well as solid free cash flow numbers. This seems to indicate that these sectors can be profitable, although not at previous levels.



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