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R.R. Donnelley & Sons (RRD)
Q3 2012 Earnings Call
November 01, 2012 10:00 am ET
David A. 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
Joseph S. Rodbard - Providence Equity Partners LLC
Previous Statements by RRD
» R.R. Donnelley & Sons Management Discusses Q2 2012 Results - Earnings Call Transcript
» R.R. Donnelley & Sons' CEO Discusses Q1 2012 Results - Earnings Call Transcript
» R.R. Donnelley & Sons' CEO Discusses Q4 2011 Results - Earnings Call Transcript
David A. Gardella
Thank you, Richard. Good morning, everyone, and thank you for joining us for RR Donnelley's Third 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 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 Investor section, a description, as well as reconciliations of non-GAAP measures to which we will refer on the 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. I'd like to begin by adding my voice to those all over the world that are expressing thoughts and prayers for the people who are impacted by the East Coast storm, as well as gratitude to the first responders and others who continue to help people deal with the storm's aftermath. An event like this one makes the phrase, Disaster Recovery Capabilities, very real. It has certainly made it real to us at RR Donnelley and to the customers who depend on us for continuity of service.
Our ability to plan ahead for contingencies, to transfer work electronically to other RR Donnelley facilities that were not affected and to have those operations pick up and deliver needed projects, has made a significant difference for our customers. This ability is something that customers evaluate pretty carefully as they are considering where to place their business, and it is a resource that we fully exercised in dealing with this huge storm.
I'm extremely proud of the way that our employees have risen to the occasion. So many have kept work commitments, even as they have been dealing with power outages and even much worse at their homes and in their communities. It is precisely because of our peoples' ability to rise to the occasion that we were also disappointed by the deeply regrettable premature filing of a customer's 8-K to the SEC that occurred on October 18. Everyone at RR Donnelley wishes it could have been undone. In a business in which we strive for perfection, an exceptionally rare and exceptionally unfortunate human error created turmoil for a valued client. As you know, in this fast-paced business environment, there are some steps that, once taken, cannot be taken back. This was one of those.
While we cannot retrieve the transmission, we could and did undertake an immediate and exhaustive set of reviews to determine if our technology, systems and protocol performed as designed. They did perform and they have historically performed and will continue to perform as we execute more than 100,000 similar filings this year. We have been supporting companies' compliance and reporting needs for decades and have invested significantly in our people, processes and technology throughout those years in support of our valued clients. Our quality and governance processes include an ongoing focus on continuous improvement, and we have already begun to implement additional process and system enhancements that will help to prevent an extremely rare incident like this from happening again.
For all of our employees, this incident was a vivid reminder of how closely integrated RR Donnelley is with our customers, especially as we continue to provide a range of services that extend far beyond printing. Every day, we are working behind the scenes to help our customers connect content -- connect with the right audiences at the right time to deliver the right results. Our creation, production, management and distribution of content frequently occur in real time speed. This work that we do for our customers reflect deep integration with them and includes custom programming, e-communications, desktop and mobile platforms, digital archiving and distribution, sophisticated logistics, supply chain management, packaging services and much more.
With regard to the third quarter, we confronted significant demand headwinds as customers in a range of segments and geographies began exercising more caution about expenditures. Nonetheless, we posted GAAP income from operations of $186.7 million, up 19.1% as compared with the same quarter a year ago. During the quarter, GAAP operating margins of 7.4% were up 160 basis points from the comparable quarter in 2011. We are always operating at 100% in terms of our sales efforts, and we also always act quickly to match costs to revenues. In doing so, we work from the shop forward to the management offices to ensure that our employees' interests are aligned with our shareholder interest.