Financial Data and Key Metrics Changes - The company reported total net sales of $218.1 million for Q2 2025, a decrease of $24.6 million or 10.1% from Q2 2024 [12] - Adjusted EBITDA was $76.3 million, a decrease of $10.9 million or 12.5% from the previous year, with an adjusted EBITDA margin of 35%, down approximately 90 basis points from Q2 2024 [15][19] - Free cash flow for the quarter was $51.7 million, an increase of $14.9 million compared to Q2 2024 [23] Business Line Data and Key Metrics Changes - Software Solutions net sales grew approximately 8% year over year, with recurring compliance software offerings growing about 15% [5][12] - Capital Markets Software Solutions segment net sales were $59.1 million, an increase of 3.1% year over year, driven by Active Disclosure [16] - Capital Markets Compliance and Communications Management segment net sales decreased by 17.8% to $93.5 million, primarily due to lower transactional revenue [17] Market Data and Key Metrics Changes - The company experienced a decline in capital markets transactional revenue, which was at the lowest level in its history, with $34.8 million recorded in Q2 [17][18] - The overall transactional activity in Q2 remained well below historical norms, with IPO transactions and large public company M&A deals below last year's levels [18] - The IPO market showed signs of recovery with a total of 14 IPOs greater than $100 million in Q2, but the overall number of IPOs in the first half of 2025 decreased by 14% compared to the same period in 2024 [36][37] Company Strategy and Development Direction - The company is focused on transforming into a leading provider of compliance and regulatory solutions, predominantly through software and services [11] - The strategy includes a shift towards recurring software offerings and improving operational efficiencies while managing costs [11][28] - The company remains committed to its five-year plan updated in February, aiming for a sustainable business model despite ongoing market challenges [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving market conditions and a positive trajectory in the second quarter, despite a prolonged downturn in capital markets transactional activity [6][28] - The company anticipates Q3 consolidated net sales in the range of $165 million to $175 million, reflecting a cautious outlook due to lower print and distribution sales [25] - Management highlighted the importance of maintaining a strong balance sheet and robust free cash flow to support long-term value creation [28] Other Important Information - The company repurchased approximately 787,000 shares for $34.3 million during Q2, with a new share repurchase program authorized for up to $150 million [24][25] - Non-GAAP unallocated corporate expenses were $9.7 million, reflecting higher investments in transformation and healthcare expenses [23] Q&A Session Summary Question: Can you provide more detail on the assumptions behind the Q3 guidance? - Management indicated that the guidance for transactional sales in Q3 reflects a cautious optimism based on recent market activity, with a range of $35 million to $40 million [33][34] Question: What is the outlook for the capital markets given the improving pipeline? - Management acknowledged the improving pipeline but emphasized the uncertainty in timing and the need for a conservative outlook [57][58] Question: How does the company view share repurchases moving forward? - Management reiterated that share repurchases are a key component of capital allocation, with a strategy to be more aggressive at lower stock prices [60][62] Question: Any updates on the pension plan annuitization process? - Management confirmed that the annuitization process is underway and expected to occur in Q3, with further updates to be provided [64]

Company Overview - DFIN is a leader in assisting companies with regulatory reporting requirements, holding the 1 SEC Filing Agent position for both corporations and fund companies[10] - DFIN's portfolio includes market-leading software solutions like ArcSuite, ActiveDisclosure and Venue, with ~80% of the top 50 global fund complexes as clients[10] - DFIN's offerings are essential for recurring regulatory compliance needs and capital markets transactions such as IPOs and M&A[11] Financial Performance and Metrics (Q2 2025 TTM) - Software sales reached $341 million, expected to grow at a double-digit rate annually[14] - The company's revenue mix is shifting towards high-margin software solutions, offsetting declining low-margin print & distribution[14] - Adjusted EBITDA reached $219.4 million, resulting in an attractive valuation with EV / Q2 2025 TTM EBITDA at 9.1x[25, 27] - Free Cash Flow was $109.3 million, leading to a Free Cash Flow multiple of 16.8x[25] - Net debt stood at $156.3 million, resulting in a net leverage ratio of 0.7x[21, 24] Segment Performance (Q2 2025 TTM) - Capital Markets segment net sales totaled $509 million, with $214 million from Software Solutions and $294 million from Compliance & Communications Management[12] - Investment Companies segment net sales were $247 million, comprising $126 million from Software Solutions and $120 million from Compliance & Communications Management[12] - Capital Markets EBITDA was $170 million with a 33% margin, while Investment Companies EBITDA was $87 million with a 35% margin[12] Capital Allocation and Shareholder Focus - The company repurchased approximately 787,000 shares of common stock during Q2 2025 for $34.3 million, at an average price of $43.56 per share[63] - A new stock repurchase program of up to $150 million was authorized, expiring December 31, 2026[50, 63]

Financial Data and Key Metrics Changes - The company reported net sales of $201.1 million for Q1 2025, a decrease of $2.3 million or 1.1% from Q1 2024 [19] - Adjusted EBITDA was $68.2 million, an increase of $13 million or 23.6% year-over-year, with an adjusted EBITDA margin of 33.9%, up approximately 680 basis points from the previous year [21][19] - Adjusted non-GAAP gross margin was 63.7%, approximately 310 basis points higher than Q1 2024, driven by a favorable sales mix and cost control initiatives [20] Business Line Data and Key Metrics Changes - Software Solutions net sales represented 42.1% of total net sales, an increase of approximately 260 basis points year-over-year [7] - ActiveDisclosure sales grew approximately 11% year-over-year, while Venue sales declined by approximately 9% [22] - The Investment Company Software Solutions segment saw net sales increase by 20.2% year-over-year, primarily driven by tailored shareholder report solutions [26] Market Data and Key Metrics Changes - Capital Markets Compliance revenue decreased by $7.8 million year-over-year, primarily due to the exit from low-margin proxy statement activities [25] - The global equity deal market showed modest recovery in January and February but faced increased volatility in March, impacting overall deal activity [25] - Approximately 75% of the company's revenue is based on recurring sources, providing stability during market volatility [14] Company Strategy and Development Direction - The company aims to derive approximately 60% of total net sales from Software Solutions by 2028, focusing on becoming a software-centric company [8] - Continued investment in software offerings and technologies, including automation and AI-driven tools, is a priority to support growth and operational efficiency [12] - The company is committed to maintaining a disciplined approach to capital allocation, including share repurchases and organic investments [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainty in the global operating environment but expressed confidence in the company's strong balance sheet and liquidity to execute its strategy [16] - The company does not anticipate significant operational impacts from recent tariffs due to its predominantly U.S.-based operations [13] - Future growth is expected to be supported by latent demand for transactions and a favorable regulatory landscape, although market volatility must subside for this to materialize [36] Other Important Information - The company amended and extended its credit agreement, providing for a $115 million Term Loan A and extending the maturity of a $300 million revolving credit facility [17] - Free cash flow for the quarter was negative $51 million, primarily due to unfavorable working capital timing [30] - The company repurchased approximately 861,000 shares for $41.8 million during the first quarter, with additional repurchases in April [31] Q&A Session Summary Question: What drove the higher margins and revenue performance? - Management attributed the higher margins to incremental cost reduction actions and higher capital markets transactional sales, which exceeded guidance [38][39] Question: Can you provide more detail on Q2 segment-level guidance? - Management expects ActiveDisclosure to continue performing well, while Venue will face tough comparisons. Compliance revenue is expected to decline modestly [42][43] Question: How has the active disclosure side performed in terms of market share? - Management noted continued progress in client growth and revenue retention, with a strong market position in active disclosure services [54][60] Question: What is the outlook for share repurchases? - Management indicated a consistent approach to being more aggressive at lower prices while maintaining share repurchases as a priority in capital deployment [79][82]

Investor Presentation April 2025 DFINsolutions.com © 2025 DFIN. All rights reserved This presentation is the intellectual property of DFIN. The ideas expressed in it may not be adopted or reproduced without prior permission from and compensation to DFIN. Forward Looking Statements and Use of Non-GAAP Financial Measures USE OF FORWARD-LOOKING STATEMENTS This presentation includes certain "forward-looking statements" within the meaning of, and subject to the safe harbor created by, Section 21E of the Securiti ...

Core Insights - Donnelley Financial Solutions, Inc. (DFIN) reported strong financial performance in Q1 2025, with Adjusted EBITDA of $68.2 million, a 23.6% increase year-over-year, and an Adjusted EBITDA margin of 33.9%, up approximately 680 basis points from the previous year [2][6][7]. Financial Performance - Net sales for Q1 2025 were $201.1 million, a decrease of $2.3 million, or 1.1%, from Q1 2024, primarily due to lower capital markets compliance volumes and Venue sales [4][6]. - Net earnings for Q1 2025 were $31.0 million, or $1.05 per diluted share, compared to $33.3 million, or $1.09 per diluted share, in Q1 2024 [5][6]. - The company achieved record software solutions net sales of $84.6 million, a 5.4% increase from Q1 2024, accounting for 42.1% of total net sales, up from 39.5% [6][8]. Strategic Focus - DFIN is focused on expanding the adoption of its software solutions, with a 5.8% organic increase in total software solutions net sales compared to Q1 2024 [3][6]. - The company aims to increase its recurring sales mix, manage costs aggressively, and allocate capital in a disciplined manner to enhance shareholder value [3][6]. Debt and Share Repurchase - DFIN amended its credit agreement to establish a $300 million revolving facility and a $115 million term loan A facility, using proceeds to retire existing debt [6][7]. - The company repurchased 861,301 shares for approximately $41.8 million at an average price of $48.57 per share, with a remaining share repurchase authorization of $49.5 million as of March 31, 2025 [6][7].