R.R. Donnelley and Sons Co. (RRD)
Q3 2009 Earnings Call
November 04, 2009 10:00 a.m. ET
Dave Gardella - VP, IR
Tom Quinlan - President and CEO
Miles McHugh - SVP and CFO
Charlie Strauzer - CJS Securities
Eugene Fox - Cardinal Capital Management
Edward Atorino - Benchmark
Previous Statements by RRD
» R.R. Donnelley & Sons Company Q2 2009 Earnings Call Transcript
» R.R. Donnelley & Sons Q1 2009 Earnings Call Transcript
» R.R. Donnelley & Sons Company Q4 2008 Earnings Call Transcript
Thank you Teresa. Good morning and thank you for joining us for R.R. Donnelley's third quarter 2009 results conference call. Earlier this morning, we released our earnings report, a copy of which can be found in the Investor Section of our website at rrdonnelley.com.
During this call, we'll refer to forward-looking statements that are subject to uncertainty. For 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 that presentation of non-GAAP and pro forma results provide you with useful supplementary information concerning the company's ongoing operations, and are 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've also posted to our website in the investor section, a description as well as reconciliations of non-GAAP measures to which we will refer on this call.
We are joined this morning by Tom Quinlan, Miles McHugh and Drew Coxhead. I will now turn the call over to Tom.
Thank you, Dave and good morning everyone. I do not think that any year has begun with more uncertainty than this one. As 2009 kicked off, we recognized that it would be almost impossible to try to predict the specific impact that the global economic slowdown would have on our customers and on our industry overall.
In the face of so many uncertain variables we told you that we would push through by focusing intently on that which is under our control and by positioning the company to take full advantage of opportunities that emerge as conditions improve.
Our Q3 results reflect the value of this approach. In August, we told you that we expected a returns of the historical pattern of sequential revenue growth in Q3. And that revenue declines would moderate on a year-over-year basis. And as we expected, that has been the case.
Please let me make it clear that we are not satisfied with merely slowing the rate of decline. As a worldwide provider of integrated marketing and communication solutions, we have a more than $280 billion global opportunity in front of us in a few minutes, I'll talk about some of the actions we have put in place throughout 2009 to position us to win more of that business. Though we are still experiencing softer demand we posted non-GAAP earnings per diluted share from continuing operations up $0.54.
Miles will talk about some non-recurring items and other factors that impacted EPS, but our efforts to win a diverse mix of business and to relentlessly control cost continue to bear fruit.
I will address three areas that reflect our disciplined approach to managing in this uncertain environment before Miles takes you though the quarter in detail. After his discussion, I'll return for a couple of quick comments. And then we'll open it up for questions.
The first area I'll touch on has to do with the steps that we have taken to maintain our financial strength and flexibility which has been the lynch pin of our response to the unprecedented conditions that began to emerge in 2007. Through the first three quarters cash from continuing operations was $1.1 billion up over 400 million or almost 60% as compared with the same period last year.
We remained confidently on target for the year to generate free cash flow, which is cash from continuing operations less capital expenditures in excess of $1 billion. R.R. Donnelley continues to reduce debt, while investing in the business and maintaining our dividend. We took advantage of improved credit markets to use our strong cash flow to convert some longer term debt into shorter term borrowings that we can pay down this year.
In August the bond offering a $350 million that matures in seven years and the tender for $640 million of debt that previously matured in 2010 and 2012, enables us to continue reducing our debt and provided us with a favorable future repayment schedule that doesn't see a significant maturity until 2014.
We believe that our solid financial position gives us a competitive advantage, as it allows us to better serve our customers by investing in productivity and growth initiatives, including the deployment of new proprietary technology.
The second topic, I'll talk to is the component of our overall strategy that is continuing to position R.R. Donnelley to complement and expand the interconnectivity between our conventional capabilities and our emerging global platform of digital resources.
The speed with which emerging media is making the impact continues to accelerate. It took Radio 38 years to reach an audience of 50 million people, television took 13 years, the internet, four years, iPod, three years and it took facebook just two years. We aren't sure out of which garage the next media revolution will emerge, so we are watching that space carefully and making targeted investments where we feel that the technologies will ultimately be attractive to our global customer base.