Donnelley Financial Solutions(US:DFIN)2024-10-31 11:00Financial Performance - Record third-quarter software solutions net sales of $82.2 million, an increase of 12.3% year-over-year, accounting for 45.8% of total net sales[1] - Total net sales of $179.5 million, a decrease of 0.3% from the third quarter of 2023, with a 0.2% increase on an organic basis[2] - Net earnings of $8.7 million, or $0.29 per diluted share, compared to $18.1 million, or $0.60 per diluted share, in the third quarter of 2023[3] - Adjusted EBITDA of $43.2 million, a decrease of $6.2 million year-over-year, with an Adjusted EBITDA margin of 24.1%, down approximately 330 basis points[4] - Total net sales for the three months ended September 30, 2024, were $179.5 million, a slight decrease of 0.3% compared to $180.0 million in the same period of 2023[18] - Tech-enabled services generated $75.2 million in sales for the three months ended September 30, 2024, down from $80.4 million in the same period of 2023, representing a decline of 4.0%[18] - Software solutions sales increased to $82.2 million for the three months ended September 30, 2024, up 12.3% from $73.2 million in the same period of 2023[18] - Net earnings for the three months ended September 30, 2024, were $8.7 million, a decrease of 52.0% from $18.1 million in the same period of 2023[18] - The company reported an operating margin of 10.1% for the three months ended September 30, 2024, down from 16.6% in the same period of 2023[19] - Non-GAAP net earnings were $14.3 million, or $0.48 per diluted share, compared to $21.7 million, or $0.72 per diluted share, in the third quarter of 2023[5] Cash Flow and Liquidity - Operating cash flow of $86.4 million and free cash flow of $67.3 million, improvements of $5.9 million and $6.0 million, respectively, from the third quarter of 2023[1] - Cash and cash equivalents increased to $33.6 million as of September 30, 2024, from $23.1 million as of December 31, 2023[17] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $114.7 million, significantly higher than $49.2 million in 2023[28] - Cash and cash equivalents at the end of the period on September 30, 2024, were $33.6 million, up from $11.7 million at the end of September 2023[28] - The company maintained $300.0 million in availability under its revolving credit facility, with no borrowings outstanding as of September 30, 2024[43] Shareholder Actions - The company repurchased 208,254 shares for approximately $13.3 million at an average price of $63.96 per share[1] Market Conditions - Capital markets deal activity remained soft, with transactional revenue down nearly 8% year-over-year[1] - The eBrevia disposition negatively impacted net organic sales change by 2.2% for the three months ended September 30, 2024[33] Adjustments and Non-GAAP Measures - Total non-GAAP adjustments for the three months ended September 30, 2023, amounted to $18.2 million, leading to an adjusted non-GAAP net income of $91.9 million, or $3.05 per diluted share[21] - Non-GAAP income from operations for Q3 2024 was $26.0 million, compared to $29.8 million in Q3 2023, reflecting a decrease of approximately 12.7%[25] - Adjusted EBITDA for Q3 2024 was $43.2 million, down from $49.4 million in Q3 2023, indicating a decline of about 12.5%[25] - Total non-GAAP adjustments for Q3 2024 amounted to $7.8 million, compared to $5.2 million in Q3 2023, reflecting an increase of approximately 50%[25] - Total non-GAAP adjustments for the nine months ended September 30, 2024, amounted to $12.9 million, compared to $24.7 million in 2023, indicating a reduction in adjustments[26] Asset and Liability Management - Total liabilities decreased to $399.1 million as of September 30, 2024, compared to $404.7 million as of December 31, 2023[17] - Total assets increased to $843.6 million as of September 30, 2024, from $806.9 million as of December 31, 2023[17] - The company reported a total debt of $124.5 million, a decrease from $165.9 million in the previous quarter[42] Growth and Strategic Initiatives - The company aims to invest in generating a more favorable recurring revenue mix and capture opportunities from regulatory changes[1] - Non-GAAP income from operations for the nine months ended September 30, 2024, was $140.2 million, compared to $124.9 million in 2023, reflecting a 12.6% increase[26] - Adjusted EBITDA for the nine months ended September 30, 2024, was $185.6 million, up from $166.1 million in 2023, indicating an increase of 11.4%[26] - The operating margin for the nine months ended September 30, 2024, improved to 20.3%, compared to 16.1% in the same period of 2023[26] - The company experienced a provision for expected losses on accounts receivable of $14.3 million for the nine months ended September 30, 2024, up from $10.8 million in 2023[28]