Shares of R.R. Donnelley (NYSE: RRD) have skyrocketed today, up by 26% as of 12:15 p.m. EDT, after the company reported third-quarter earnings results. Organic sales grew for the fourth consecutive quarter.
Total revenue fell 5% to $1.65 billion in the third quarter, in part due to the sale of the print logistics business. On an organic basis, revenue increased 2% thanks to higher volume in the business services segment. Gross margin expanded to 19%, and the company said the favorable impact of cost reductions was more than offset by pricing pressure and an unfavorable mix. Operating income came in at $60.9 million. RRD also recognized a pre-tax restructuring charge of $11 million during the quarter, as well as a $4.5 million pre-tax gain from selling the print logistics business.
"Our third quarter performance was in-line with our expectations as we continue to help our clients create better connections with their customers through the execution of their multichannel marketing and business communications," CEO Dan Knotts said in a statement. He continued:
We delivered our fourth consecutive quarter of organic sales growth, made meaningful progress in executing our plans to lower our overall cost structure and delivered improved operating cash flow. We also took an important step to reposition our balance sheet through a successful debt refinancing. As we enter our seasonally strongest quarter, we are well positioned for a solid finish to the year.
Turning to guidance, RRD's full-year outlook is largely unchanged. The multichannel marketing company still expects net sales to be in the range of $6.75 billion to $6.9 billion, with adjusted earnings per share of $0.80 to $1.10. Operating cash flow should be $175 million to $210 million. RRD slightly narrowed its forecast for other items like depreciation and amortization, interest expense, and capital expenditures.
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