Donnelley Financial Solutions(DFIN) - 2024 Q1 - Quarterly Results

Revenue Growth and Sales Performance - Total net sales increased by 2.4% to $203.4 million in Q1 2024, driven by growth in software solutions and tech-enabled services, partially offset by lower print and distribution net sales[6] - Net sales for Q1 2024 increased to $203.4 million, up from $198.6 million in Q1 2023[26][28] - Total net sales increased to $203.4 million in Q1 2024 from $198.6 million in Q1 2023, reflecting a 2.4% growth[41] - Software solutions net sales reached a record $80.3 million, up 14.6% YoY, accounting for 39.5% of total net sales, an increase of 420 basis points from Q1 2023[6] - Software Solutions segment net sales increased by 14.6% to $80.3 million in Q1 2024, up from $70.1 million in Q1 2023[34] - Software solutions net sales rose to $80.3 million in Q1 2024, a 14.6% increase from $70.1 million in Q1 2023[41] - Tech-enabled Services segment net sales grew by 5.7% to $82.9 million in Q1 2024, compared to $78.4 million in Q1 2023[34] - Tech-enabled services net sales grew to $82.9 million in Q1 2024, up 5.7% from $78.4 million in Q1 2023[41] - Print and Distribution segment net sales declined by 19.8% to $40.2 million in Q1 2024, down from $50.1 million in Q1 2023[34] - Print and distribution net sales declined to $40.2 million in Q1 2024, down 19.8% from $50.1 million in Q1 2023[41] - Net organic sales change for the consolidated company was 2.8% in Q1 2024, driven by growth in Software Solutions and Tech-enabled Services[34] - The eBrevia disposition had a year-over-year impact of $(0.6%) on net sales for Q1 2024[34] - Total net sales for the twelve months ended March 31, 2024 were $802.0 million, down from $821.2 million in 2023[37] - Tech-enabled services revenue for the twelve months ended March 31, 2024 was $341.4 million, down from $367.6 million in 2023[37] - Software solutions revenue for the twelve months ended March 31, 2024 was $302.9 million, up from $279.9 million in 2023[37] - Print and distribution revenue for the twelve months ended March 31, 2024 was $157.7 million, down from $173.7 million in 2023[37] Profitability and Earnings - Net earnings surged 110.8% to $33.3 million, or $1.09 per diluted share, compared to $15.8 million, or $0.52 per diluted share, in Q1 2023[6] - GAAP net income for Q1 2024 was $33.3 million, compared to $15.8 million in Q1 2023[26] - Net earnings for Q1 2024 increased to $33.3 million, up from $15.8 million in Q1 2023, reflecting a significant year-over-year growth[30] - Net earnings more than doubled to $33.3 million in Q1 2024 from $15.8 million in Q1 2023[41] - Diluted earnings per share increased to $1.09 in Q1 2024 from $0.52 in Q1 2023[41] - Net earnings for the twelve months ended March 31, 2024 were $99.7 million, compared to $91.9 million for the same period in 2023[37] Adjusted EBITDA and Margins - Adjusted EBITDA increased by 30.2% to $55.2 million, with Adjusted EBITDA margin expanding to 27.1%, up 580 basis points from Q1 2023[6] - Adjusted EBITDA for Q1 2024 was $55.2 million, compared to $42.4 million in Q1 2023[28] - Adjusted EBITDA for the twelve months ended March 31, 2024 was $220.2 million, up from $209.6 million in 2023[37] - Adjusted EBITDA margin for the twelve months ended March 31, 2024 was 27.5%, up from 25.5% in 2023[37] - Non-GAAP operating margin for Q1 2024 was 20.3%, up from 15.1% in Q1 2023[26] - Gross margin improved to 54.1% in Q1 2024 compared to 48.7% in Q1 2023[41] - Non-GAAP gross margin increased to 60.6% in Q1 2024 from 54.5% in Q1 2023[41] - Operating margin significantly improved to 21.9% in Q1 2024 from 7.5% in Q1 2023[41] Cash Flow and Liquidity - Operating Cash Flow improved by $23.6 million and Free Cash Flow improved by $21.9 million compared to Q1 2023[6] - Net cash used in operating activities for Q1 2024 was $27.9 million, compared to $21.5 million in Q1 2023[30] - Free Cash Flow for Q1 2024 was $(40.2) million, an improvement from $(62.1) million in Q1 2023[31] - Total liquidity as of March 31, 2024 was $262.7 million, compared to $218.3 million as of March 31, 2023[39] Segment Performance - Capital Markets - Compliance and Communications Management segment generated $91.1 million in net sales with a 42.4% operating margin in Q1 2024[28] - Investment Companies - Software Solutions segment reported $27.3 million in net sales with a 13.9% operating margin in Q1 2024[28] - Capital Markets - Software Solutions segment reported a 21.3% increase in net sales to $53.0 million in Q1 2024, up from $43.7 million in Q1 2023[34] - Investment Companies - Compliance and Communications segment saw a 7.0% decline in net sales to $32.0 million in Q1 2024, down from $34.4 million in Q1 2023[34] Share Repurchase and Leverage - The company repurchased 139,893 shares for approximately $8.8 million at an average price of $62.61 per share during Q1 2024[6] - The remaining share repurchase authorization was $141.2 million as of March 31, 2024[6] - Gross leverage stood at 0.9x and net leverage at 0.7x as of March 31, 2024[6] - Non-GAAP Gross Leverage as of March 31, 2024 was 0.9x, down from 1.1x as of March 31, 2023[39] - Non-GAAP Net Leverage as of March 31, 2024 was 0.7x, down from 1.0x as of March 31, 2023[39] Expenses and Other Financial Metrics - Total capital expenditures for Q1 2024 were $12.3 million, up from $10.6 million in Q1 2023[28] - Share-based compensation expense increased to $5.1 million in Q1 2024 from $4.3 million in Q1 2023[26][28] - Depreciation and amortization expenses rose to $13.9 million in Q1 2024 from $12.4 million in Q1 2023[28] - The company recorded a $9.8 million gain on sale of long-lived assets in Q1 2024[26][28] - Effective tax rate rose to 19.6% in Q1 2024 compared to 13.2% in Q1 2023[41] Product and Market Performance - Venue, the virtual dataroom product, grew approximately 43% YoY, contributing to a 16.0% organic growth in software solutions net sales[4] - Capital markets transactional revenue increased by $7 million, or 17%, compared to Q1 2023, reflecting improving market activity[4]