1 Exhibit 99.1 DFIN Reports Fourth-Quarter and Full-Year 2019 Results CHICAGO- February 26, 2020 – Donnelley Financial Solutions, Inc. (NYSE: DFIN), (the “Company”) today reported financial results for the fourth quarter and full year 2019. Fourth-quarter and full-year highlights: Fourth-quarter 2019 Full-year 2019 Net Sales $190.3 million $874.7 million GAAP Net Earnings $7.0 million $37.6 million Non-GAAP Adjusted EBITDA (1) $26.1 million $137.0 million Operating Cash Flow (2) $58.7 million $54.5 million Free Cash Flow (1)(2)(3) $49.0 million $9.7 million (1) Non-GAAP Adjusted EBITDA and Free Cash Flow are non-GAAP measures that exclude the impact of items noted in the reconciliation tables below. The tables below provide reconciliations to the most comparable GAAP measures. (2) Full-year 2019 Operating Cash Flow and Free Cash Flow include taxes and fees paid associated with the 2019 sales of the Company’s Secaucus, NJ facility and a portion of certain equity investments, as well as taxes paid related to the 2018 sale of the Company’s Language Solutions business. In aggregate, these items negatively impacted full-year 2019 Operating Cash Flow and Free Cash Flow by approximately $18.3 million. (3) Defined as operating cash flow less capital expenditures. • Fourth-quarter 2019 GAAP fully diluted net earnings per share of $0.20, up $0.23 from the prior year; non-GAAP fully diluted earnings per share of $0.22, up $0.28 from the prior year • Fourth-quarter 2019 operating cash flow of $58.7 million, up 5.0% from the prior year; free cash flow of $49.0 million, up 17.8% from the prior year • Record quarterly software-as-a-service (“SaaS”) net sales of $49.8 million, up 7.9% from the prior year; SaaS net sales accounted for 26.2% of total fourth-quarter 2019 net sales • Fourth-quarter 2019 non-GAAP adjusted EBITDA margin of 13.7%, up 400 basis points from the prior year, primarily due to continued focus on cost controls and an improved business mix • Completed the sale of Secaucus, NJ facility and sold a portion of certain equity investments in 2019, generating $43.4 million of cash proceeds (approximately $29.7 million after taxes and fees associated with the 2019 sale transactions) • Reduced total debt by $66.7 million during 2019, paying off term loan; ended the year with total debt of $296.0 million and $17.2 million of cash and cash equivalents • Company announces $25 million common stock repurchase program • Company issues full-year 2020 guidance “We are pleased to see the reacceleration in SaaS net sales growth in the fourth quarter. ActiveDisclosure again led the way, growing more than 20%, while adding dozens of new clients. SaaS made up 26.2% of fourth-quarter total net sales, up from 23.0% in last year’s fourth quarter, showing positive momentum heading into 2020,” said Daniel N. Leib, DFIN’s president and chief executive officer. Leib continued, “Together our team addressed a challenging M&A environment this year, which significantly impacted our capital markets transactional business, rationalizing costs and improving consolidated fourth-quarter 2019 non-GAAP EBITDA margin to 13.7%, compared to 9.7% in the fourth-quarter of 2018, all while either maintaining or improving market share. Looking forward, as the market leader, we remain poised to capitalize on a rebound in capital markets transactional activity in 2020 and beyond.” “We remain steadfast in executing our long-term strategy to transition our traditional clients to software-first solutions, introduce new solutions to market, and continue to maintain share elsewhere in our portfolio. This strategy is focused on sustainable EBITDA and free cash flow growth through incremental SaaS sales and increased profitability from our traditional businesses through planned efficiencies. Additionally, we continue to look to deploy capital in ways that will generate long-term value for shareholders. As such, our board authorized a $25 million stock repurchase program, reflecting our deep belief in the intrinsic value of the company,” Leib concluded.
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1
Exhibit 99.1
DFIN Reports Fourth-Quarter and Full-Year 2019 Results
CHICAGO- February 26, 2020 – Donnelley Financial Solutions, Inc. (NYSE: DFIN), (the “Company”) today reported financial results for the fourth quarter and full year 2019.
Fourth-quarter and full-year highlights:
Fourth-quarter 2019 Full-year 2019
Net Sales $190.3 million $874.7 million
GAAP Net Earnings $7.0 million $37.6 million
Non-GAAP Adjusted EBITDA(1) $26.1 million $137.0 million
Operating Cash Flow(2) $58.7 million $54.5 million
Free Cash Flow(1)(2)(3) $49.0 million $9.7 million
(1) Non-GAAP Adjusted EBITDA and Free Cash Flow are non-GAAP measures that exclude the impact of items noted in the reconciliation tables below. The tables
below provide reconciliations to the most comparable GAAP measures. (2)
Full-year 2019 Operating Cash Flow and Free Cash Flow include taxes and fees paid associated with the 2019 sales of the Company’s Secaucus, NJ facility and a
portion of certain equity investments, as well as taxes paid related to the 2018 sale of the Company’s Language Solutions business. In aggregate, these items
negatively impacted full-year 2019 Operating Cash Flow and Free Cash Flow by approximately $18.3 million.
(3) Defined as operating cash flow less capital expenditures.
• Fourth-quarter 2019 GAAP fully diluted net earnings per share of $0.20, up $0.23 from the prior year; non-GAAP
fully diluted earnings per share of $0.22, up $0.28 from the prior year
• Fourth-quarter 2019 operating cash flow of $58.7 million, up 5.0% from the prior year; free cash flow of $49.0
million, up 17.8% from the prior year
• Record quarterly software-as-a-service (“SaaS”) net sales of $49.8 million, up 7.9% from the prior year; SaaS net sales
accounted for 26.2% of total fourth-quarter 2019 net sales
• Fourth-quarter 2019 non-GAAP adjusted EBITDA margin of 13.7%, up 400 basis points from the prior year,
primarily due to continued focus on cost controls and an improved business mix
• Completed the sale of Secaucus, NJ facility and sold a portion of certain equity investments in 2019, generating $43.4
million of cash proceeds (approximately $29.7 million after taxes and fees associated with the 2019 sale transactions)
• Reduced total debt by $66.7 million during 2019, paying off term loan; ended the year with total debt of $296.0
million and $17.2 million of cash and cash equivalents
• Company announces $25 million common stock repurchase program
• Company issues full-year 2020 guidance
“We are pleased to see the reacceleration in SaaS net sales growth in the fourth quarter. ActiveDisclosure again led the way,
growing more than 20%, while adding dozens of new clients. SaaS made up 26.2% of fourth-quarter total net sales, up from
23.0% in last year’s fourth quarter, showing positive momentum heading into 2020,” said Daniel N. Leib, DFIN’s president
and chief executive officer.
Leib continued, “Together our team addressed a challenging M&A environment this year, which significantly impacted our
capital markets transactional business, rationalizing costs and improving consolidated fourth-quarter 2019 non-GAAP
EBITDA margin to 13.7%, compared to 9.7% in the fourth-quarter of 2018, all while either maintaining or improving market
share. Looking forward, as the market leader, we remain poised to capitalize on a rebound in capital markets transactional
activity in 2020 and beyond.”
“We remain steadfast in executing our long-term strategy to transition our traditional clients to software-first solutions,
introduce new solutions to market, and continue to maintain share elsewhere in our portfolio. This strategy is focused on
sustainable EBITDA and free cash flow growth through incremental SaaS sales and increased profitability from our
traditional businesses through planned efficiencies. Additionally, we continue to look to deploy capital in ways that will
generate long-term value for shareholders. As such, our board authorized a $25 million stock repurchase program, reflecting
our deep belief in the intrinsic value of the company,” Leib concluded.
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Net Sales
Net sales in the fourth quarter of 2019 were $190.3 million, a decrease of $10.0 million, or 5.0%, from the fourth quarter of
2018. After adjusting for the 2018 acquisition of eBrevia and changes in foreign exchange rates, organic net sales decreased
5.2% from the fourth quarter of 2018. The decrease was driven largely by lower capital markets transactions and compliance
volume, as well as lower mutual fund print volume, which was partially offset by growth in SaaS solutions, primarily in
ActiveDisclosure and FundSuiteArc.
GAAP Net Earnings
Fourth-quarter 2019 net earnings were $7.0 million, or $0.20 per diluted share, compared to a net loss of $1.0 million, or
$0.03 loss per diluted share, in the fourth-quarter of 2018. The fourth quarter 2019 net earnings included an after-tax
unrealized and realized gain of $9.7 million, or $0.28 per diluted share, in part related to the sale of a portion of the
Company’s investment in AuditBoard; an after-tax loss of $3.1 million related to the extinguishment of the term loan, or
$0.09 loss per diluted share; and other items totaling $7.2 million, or $0.21 loss per diluted share. The fourth-quarter 2018 net
losses included various items totaling $1.1 million, or $0.03 loss per diluted share, all of which are excluded from the
presentation of non-GAAP net earnings. Additional details regarding the amount and nature of these and other items are
included in the attached schedules.
Non-GAAP Adjusted EBITDA and Net Earnings
Non-GAAP adjusted EBITDA in the fourth quarter of 2019 was $26.1 million, compared to $19.4 million in the fourth
quarter of 2018. Non-GAAP adjusted EBITDA margin in the fourth quarter of 2019 was 13.7%, an improvement of 400
basis points versus the fourth quarter of 2018. The increase in non-GAAP adjusted EBITDA was primarily driven by the
impact of cost savings initiatives and improved business mix.
Non-GAAP net earnings totaled $7.6 million, or $0.22 earnings per diluted share, in the fourth quarter of 2019 compared to a
non-GAAP net loss of $2.1 million, or $0.06 loss per diluted share, in the fourth quarter of 2018. Reconciliations of net
earnings to non-GAAP adjusted EBITDA, non-GAAP net earnings and non-GAAP adjusted EBITDA margin, are presented
in the attached schedules.
Sale of the Language Solutions Business
On July 22, 2018, the Company sold its Language Solutions business for net proceeds of $77.5 million in cash. On a full-year
basis for 2019, the sale negatively impacts the year-over-year net sales comparison by $41.8 million and negatively impacts
the gross profit and non-GAAP adjusted EBITDA comparisons by approximately $12.0 million and $3.0 million,
respectively, inclusive of estimated net stranded costs. The Language Solutions business did not impact the year-over-year
comparisons in the fourth-quarter of 2019.
Share Repurchase Program
Today the Company announced that its board of directors authorized the repurchase of up to $25 million of the Company's
outstanding common stock from time to time in one or more transactions on the open market or in privately negotiated
purchases. The stock repurchase program will be effective through December 31, 2021.
The timing and amount of any shares repurchased will be determined by the Company's management based on its evaluation
of market conditions and other factors. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares
to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The
repurchase program may be suspended or discontinued at any time.
3
2020 Guidance
The Company provides the following full-year guidance for 2020.
2020 Guidance
Net Sales $860 to $880 million
Non-GAAP adjusted EBITDA $140 to $145 million
Depreciation and amortization Approximately $55 million
Interest expense Approximately $30 million
Non-GAAP effective tax rate 29% to 31%
Diluted share count(1) Approximately 35 million
Operating cash flow $70 to $75 million
Capital expenditures Approximately $35 million
Free cash flow $35 to $40 million
(1) Excludes the impact of potential share repurchases
Certain components of the guidance given above are provided on a non-GAAP basis only, without providing a reconciliation
to guidance provided on a GAAP basis. Information is presented in this manner, consistent with SEC rules, because the
preparation of such a reconciliation could not be accomplished without “unreasonable efforts.” The Company does not have
access to certain information that would be necessary to provide such a reconciliation, including non-recurring items that are
not indicative of the Company’s ongoing operations. Such items include, but are not limited to, restructuring charges,
impairment charges, gains or losses on investments and other similar gains or losses not reflective of the Company's ongoing
operations. The Company does not believe that this information is likely to be significant to an assessment of the Company’s
ongoing operations, given that it is not an indicator of business performance.
Conference Call Details
DFIN will hold a conference call and webcast today, Wednesday, February 26, 2020 at 9:00 a.m. Eastern time (8:00 a.m.
Central time) to discuss its fourth-quarter and full-year 2019 financial results, provide a general business update and respond
to investor questions.
The conference call can be accessed via telephone as follows:
Domestic toll-free #: 833-227-5840
International toll #: 647-689-4064
Conference ID: 4694888
A live webcast of the call will also be available on the Company’s investor relations website. Please visit
investor.dfinsolutions.com at least fifteen minutes prior to the start of the call to register, download and install any necessary
audio software.
If you are unable to participate during the live teleconference, a replay of the conference call will be available from 12:00
a.m. Eastern time, February 26, 2020 until 11:59 p.m. Eastern time, March 4, 2020. To access the replay, please dial 800-
585-8367 (domestic) or 416-621-4642 (international). The Conference ID for the replay is: 4694888. The replay will also be
available as a webcast on the Company’s investor relations website.
About DFIN
DFIN is a leading global risk and compliance solutions company. We provide domain expertise, enterprise software and data
analytics for every stage of our clients’ business and investment lifecycles. Markets fluctuate, regulations evolve, technology
advances, and through it all, DFIN delivers confidence with the right solutions in moments that matter. Learn about DFIN’s
end-to-end risk and compliance solutions online at DFINsolutions.com or you can also follow us on Twitter
(1) Net earnings per diluted share totals may not foot due to rounding.
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 this indicator. These measures should be considered in addition to,
not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)
Segment GAAP to Non-GAAP Operating Income and Non-GAAP Adjusted EBITDA and Margin Reconciliation
(UNAUDITED)
(in millions)
U.S. International Corporate Consolidated
For the Three Months Ended December 31, 2019
Net sales $ 161.7 $ 28.6 $ — $ 190.3
Income (loss) from operations 12.6 0.3 (6.5 ) 6.4
Operating margin % 7.8 % 1.0 % nm 3.4 %
Non-GAAP Adjustments
Restructuring, impairment and other charges - net 2.6 1.2 1.1 4.9
Share-based compensation expense — — 1.2 1.2
Net loss on sale of Language Solutions business 1.5 (0.3 ) — 1.2
Spin-off related transaction expenses — — (0.4 ) (0.4 )
Total Non-GAAP adjustments 4.1 0.9 1.9 6.9
Non-GAAP income (loss) from operations $ 16.7 $ 1.2 $ (4.6 ) $ 13.3