DFIN Donnelley Financial Solutions Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 31, 2024

 

Donnelley Financial Solutions, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

(State or Other Jurisdiction of Incorporation)

001-37728		36-4829638
(Commission File Number)		(IRS Employer Identification No.)
391 Steel Way,
Lancaster, Pennsylvania		17601
(Address of Principal Executive Offices)		(Zip Code)

 

(800) 823-5304

(Registrant’s Telephone Number, Including Area Code)

35 West Wacker Drive, Chicago, Illinois 60601

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each Class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock (Par Value $0.01)		DFIN		NYSE

 

 

 

 

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Item 2.02. Results of Operations and Financial Condition

On October 31, 2024, Donnelley Financial Solutions, Inc. (the “Company”) issued a press release reporting the Company’s financial results for the third quarter ended September 30, 2024.

Information in this Item 2.02 and Exhibit 99.1 of Item 9.01 below shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act except as otherwise expressly stated in such a filing.

Item 9.01. Financial Statements and Exhibits

99.1		Press Release issued by Donnelley Financial Solutions, Inc. on October 31, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

				DONNELLEY FINANCIAL SOLUTIONS, INC.
Date: October 31, 2024		By:		/s/ DAVID A. GARDELLA
				David A. Gardella
				Chief Financial Officer

 

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Exhibit 99.1

 

 

DFIN Reports Third-Quarter 2024 Results

 

CHICAGO – October 31, 2024 – Donnelley Financial Solutions, Inc. (NYSE: DFIN) (the “Company” or “DFIN”) today reported financial results for the third quarter of 2024.

 

Highlights for the third quarter of 2024:

(a) Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow, organic net sales, gross leverage and net leverage are non-GAAP financial measures that exclude the impact of certain items noted in the reconciliation tables below. The tables below provide reconciliations to the most comparable GAAP measures.

(b) Defined as net cash provided by operating activities.

“We are pleased with the continued momentum in the growth of our software solutions net sales, which increased 13.6% on an organic basis versus third quarter of 2023, marking the third consecutive quarter of double-digit organic net sales growth. The growth in software solutions net sales continues to be led by the performance of Venue, our virtual dataroom offering, which grew approximately 27% year-over-year. In addition, we experienced improvements in the growth rates of our recurring compliance software products, Arc Suite and ActiveDisclosure. Arc Suite posted stronger sales growth in the third quarter compared to recent trend, reflecting incremental revenue from our Tailored Shareholder Reports offering. Further, ActiveDisclosure subscription revenue growth also improved relative to trend, as we continue to make progress to increase the adoption of ActiveDisclosure,” said Daniel N. Leib, DFIN’s president and chief executive officer.

Leib continued, “As we anticipated, the level of capital markets deal activity remained soft during the third quarter, with new equity issuances and M&A activity remaining well below historical levels. Despite the ongoing weakness in the capital markets transactional environment that resulted in our third-quarter transactional revenue being down nearly 8% from the prior year, our margin performance remained resilient. Adjusted EBITDA margin in the quarter was 24.1%, which demonstrates our ability to sustainably deliver a solid level of profitability across various market conditions. Additionally, consistent with our first-half performance, we delivered higher year-over-year operating cash flow and free cash flow during the third quarter, primarily as a result of continued improvement in working capital management.”

“Moving forward, our solid financial results and strong balance sheet provide us with the financial flexibility to continue to invest in generating a more favorable recurring revenue mix, including capturing recurring revenue opportunities from current and future regulatory changes. In addition, we will continue to prudently manage our cost structure and remain disciplined in the allocation of capital as we execute our transformation to become the market leading provider of regulatory and compliance solutions,” Leib concluded.

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Net Sales

Net sales in the third quarter of 2024 were $179.5 million, a decrease of $0.5 million, or 0.3% (an increase of 0.2% on an organic basis), from the third quarter of 2023. Net sales decreased primarily due to lower capital markets and investment companies compliance revenue, part of which is related to a reduction in print and distribution volumes, lower capital markets transactional revenue, which decreased $3.8 million year-over-year, and the impact of the eBrevia disposition, partially offset by higher software solutions net sales primarily driven by Venue and Arc Suite.

 

Net Earnings

For the third quarter of 2024, net earnings were $8.7 million, or $0.29 per diluted share, as compared to $18.1 million, or $0.60 per diluted share, in the third quarter of 2023. Net earnings in the third quarter of 2024 included after-tax charges of $5.6 million, or $0.19 per diluted share, primarily related to share-based compensation expense. Net earnings in the third quarter of 2023 included after-tax charges of $3.6 million, or $0.12 per diluted share, primarily related to share-based compensation expense.

 

Adjusted EBITDA and Non-GAAP Net Earnings

For the third quarter of 2024, Adjusted EBITDA was $43.2 million, a decrease of $6.2 million as compared to the third quarter of 2023. Adjusted EBITDA margin was 24.1%, a decrease of approximately 330 basis points as compared to the third quarter of 2023. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to higher compensation-related expense compared to the third quarter of 2023, part of which is related to overlapping favorable changes in accruals in the third quarter of 2023, and lower capital markets transactional and compliance volumes, partially offset by higher software solutions net sales and cost control initiatives.

 

For the third quarter of 2024, non-GAAP net earnings were $14.3 million, or $0.48 per diluted share, as compared to $21.7 million, or $0.72 per diluted share, in the third quarter of 2023.

 

Reconciliations of net sales to organic net sales, net earnings to Adjusted EBITDA, Adjusted EBITDA margin and non-GAAP net earnings are presented in the tables.

 

Company Results and Conference Call

DFIN’s earnings press release for the third quarter of 2024, which is included as Exhibit 99.1 to the Company’s Current Report on Form 8-K that has been furnished to the SEC on October 31, 2024, is available on the Company’s investor relations website at investor.dfinsolutions.com. A supplemental trending schedule of historical results, including additional breakouts of segment-level net sales, is also available on the Company’s investor relations website.

 

DFIN will hold a conference call and webcast on October 31, 2024, at 9:00 a.m. Eastern time to discuss financial results for the third quarter of 2024, provide a general business update and respond to analyst questions.

 

A live webcast of the call will also be available on the Company’s investor relations website. Please visit investor.dfinsolutions.com at least fifteen minutes prior to the start of the event to register, download and install any necessary audio software.

 

If you are unable to participate live, a replay of the webcast will be available following the conference call on the Company’s investor relations website, along with the earnings press release and related financial tables.

 

About DFIN

DFIN is a leading global provider of innovative software and technology-enabled financial regulatory and compliance solutions. We provide domain expertise, enterprise software and data analytics for every stage of our clients’ business and investment lifecycles. Markets fluctuate, regulations evolve, technology advances, and through it all, DFIN delivers confidence with the right solutions in moments that matter. Learn about DFIN’s end-to-end risk and compliance solutions online at DFINsolutions.com or you can also follow us on X (formerly Twitter) @DFINSolutions or on LinkedIn.

 

Investor Contact:

Mike Zhao

Investor Relations

investors@dfinsolutions.com

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Use of Non-GAAP Information

This news release contains certain non-GAAP financial measures, including non-GAAP gross profit, adjusted non-GAAP gross profit, non-GAAP gross margin, adjusted non-GAAP selling, general and administrative expenses (“SG&A”), adjusted non- GAAP income from operations, adjusted non-GAAP operating margin, Adjusted EBITDA, Adjusted EBITDA margin, non- GAAP effective tax rate, adjusted non-GAAP net earnings, adjusted non-GAAP diluted earnings per share, Free Cash Flow and organic net sales. The Company believes that these non-GAAP financial measures, when presented in conjunction with comparable GAAP measures, provide useful information about the Company’s operating results and liquidity and enhance the overall ability to assess the Company’s financial performance. The Company uses these measures, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business.

 

The Company’s non-GAAP statement of operations measures, which include non-GAAP gross profit, adjusted non-GAAP gross profit, non-GAAP gross margin, adjusted non-GAAP SG&A, adjusted non-GAAP income from operations, adjusted non- GAAP operating margin, Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP effective tax rate, adjusted non-GAAP net earnings and adjusted non-GAAP diluted earnings per share, are adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items that management believes are not indicative of our ongoing operations. These adjusted measures exclude the impact of expenses associated with the Company’s non-income tax, net, accelerated rent expense, share-based compensation and eliminate potential differences in results of operations between periods caused by factors such as historic cost and age of assets, financing and capital structures, taxation positions or regimes, restructuring, impairment and other charges, net and gain or loss on certain investments, business sales and asset sales.

 

Free Cash Flow is a non-GAAP financial measure and is defined by the Company as net cash flow provided by operating activities less capital expenditures. By adjusting for the level of capital investment in operations, the Company believes that free cash flow can provide useful additional basis for understanding the Company’s ability to generate cash after capital investment and provides a comparison to peers with differing capital intensity.

 

Organic net sales is a non-GAAP financial measure and is defined by the Company as reported net sales adjusted for the changes in foreign currency exchange rates and the impact of dispositions.

 

These non-GAAP financial measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these measures are defined differently by different companies in our industry and, accordingly, such measures may not be comparable to similarly-titled measures of other companies.

 

Use of Forward-Looking Statements

This news release includes certain “forward-looking statements” within the meaning of, and subject to the safe harbor created by, Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, strategy and plans of DFIN and its expectations relating to future financial condition and performance. Statements that are not historical facts, including statements about DFIN management’s beliefs and expectations, are forward-looking statements. Words such as “believes,” “anticipates,” “estimates,” “expects,” “intends,” “aims,” “potential,” “will,” “would,” “could,” “considered,” “likely,” “estimate” and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. While DFIN believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond DFIN’s control. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur. Actual results may differ materially from DFIN’s current expectations depending upon a number of factors affecting the business and risks associated with the performance of the business. These factors include such risks and uncertainties detailed in DFIN periodic public filings with the SEC, including but not limited to those discussed under “Special Note Regarding Forward-Looking Statements” and in Part I, Item 1A. Risk Factors of DFIN’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, those discussed under “Special Note Regarding Forward-Looking Statements” in DFIN’s Quarterly Reports on Form 10-Q and in other investor communications of DFIN’s from time to time. DFIN does not undertake to and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in millions, except per share data)

 

		September 30, 2024				December 31, 2023
Assets
Cash and cash equivalents		$	33.6			$	23.1
Receivables, less allowances for expected losses of $24.4 in 2024 (2023 - $18.9)			178.0				151.8
Prepaid expenses and other current assets			25.7				31.0
Assets held for sale			—				2.6
Total current assets			237.3				208.5
Property, plant and equipment, net			11.5				13.5
Operating lease right-of-use assets			11.8				16.4
Software, net			95.0				87.6
Goodwill			405.9				405.8
Deferred income taxes, net			51.2				45.8
Other noncurrent assets			30.9				29.3
Total assets		$	843.6			$	806.9
Liabilities
Accounts payable		$	33.8			$	33.9
Operating lease liabilities			11.2				14.0
Accrued liabilities			162.1				153.7
Total current liabilities			207.1				201.6
Long-term debt			124.6				124.5
Deferred compensation liabilities			13.9				13.1
Pension and other postretirement benefits plans liabilities			31.2				34.4
Noncurrent operating lease liabilities			6.3				12.1
Other noncurrent liabilities			16.0				19.0
Total liabilities			399.1				404.7
Equity
Preferred stock, $0.01 par value
Authorized: 1.0 shares; Issued: None			—				—
Common stock, $0.01 par value
Authorized: 65.0 shares;
Issued and outstanding: 38.8 shares and 28.9 shares in 2024 (2023 - 38.0 shares and 29.1 shares)			0.4				0.4
Treasury stock, at cost: 9.9 shares in 2024 (2023 - 8.9 shares)			(326.6	)			(262.1	)
Additional paid-in capital			325.4				305.7
Retained earnings			522.2				436.1
Accumulated other comprehensive loss			(76.9	)			(77.9	)
Total equity			444.5				402.2
Total liabilities and equity		$	843.6			$	806.9

 

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Operations

(UNAUDITED)

(in millions, except per share data)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Net sales
Tech-enabled services		$	75.2			$	80.4			$	260.3			$	263.3
Software solutions			82.2				73.2				248.1				219.0
Print and distribution			22.1				26.4				117.2				138.4
Total net sales			179.5				180.0				625.6				620.7
Cost of sales (a)
Tech-enabled services			29.2				29.3				93.7				99.6
Software solutions			27.6				25.9				80.3				81.2
Print and distribution			11.9				15.7				61.3				78.6
Total cost of sales			68.7				70.9				235.3				259.4
Selling, general and administrative expenses (a)			74.0				65.4				222.9				212.1
Depreciation and amortization			17.2				14.4				45.4				41.2
Restructuring, impairment and other charges, net			1.4				(0.3	)			4.5				8.4
Other operating income, net			—				(0.2	)			(9.8	)			(0.6	)
Income from operations			18.2				29.8				127.3				100.2
Interest expense, net			3.1				4.1				10.4				12.2
Investment and other income, net			(0.3	)			(0.1	)			(1.1	)			(7.3	)
Earnings before income taxes			15.4				25.8				118.0				95.3
Income tax expense			6.7				7.7				31.9				23.7
Net earnings		$	8.7			$	18.1			$	86.1			$	71.6
Net earnings per share:
Basic		$	0.30			$	0.62			$	2.94			$	2.44
Diluted		$	0.29			$	0.60			$	2.86			$	2.36
Weighted average number of common shares outstanding:
Basic			29.1				29.4				29.3				29.4
Diluted			29.9				30.3				30.1				30.4

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		Three Months Ended September 30,								Nine Months Ended September 30,
Components of depreciation and amortization:		2024				2023				2024				2023
Cost of sales		$	16.7			$	12.8			$	43.8			$	37.1
Selling, general and administrative expenses			0.5				1.6				1.6				4.1
Total depreciation and amortization		$	17.2			$	14.4			$	45.4			$	41.2
Additional information:
Gross profit (b)		$	94.1			$	96.3			$	346.5			$	324.2
Exclude: Depreciation and amortization			16.7				12.8				43.8				37.1
Non-GAAP gross profit		$	110.8			$	109.1			$	390.3			$	361.3
Gross margin (b)			52.4	%			53.5	%			55.4	%			52.2	%
Non-GAAP gross margin			61.7	%			60.6	%			62.4	%			58.2	%
SG&A as a % of total net sales (a)			41.2	%			36.3	%			35.6	%			34.2	%
Operating margin			10.1	%			16.6	%			20.3	%			16.1	%
Effective tax rate			43.5	%			29.8	%			27.0	%			24.9	%

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Reconciliation of GAAP to Non-GAAP Measures

For the Three and Nine Months Ended September 30, 2024

(UNAUDITED)

(in millions, except per share data)

 

	For the Three Months Ended September 30, 2024
	Gross profit				SG&A (a)				Income (loss) from operations				Operating margin				Net earnings (loss)				Net earnings (loss) per diluted share
GAAP basis measures	$	94.1			$	74.0			$	18.2				10.1	%		$	8.7			$	0.29
Exclude: Depreciation and amortization		16.7
Non-GAAP measures		110.8
Non-GAAP % of total net sales		61.7	%
Non-GAAP adjustments:
Restructuring, impairment and other charges, net		—				—				1.4				0.8	%			1.0				0.03
Share-based compensation expense		—				(6.7	)			6.7				3.7	%			4.7				0.16
Non-income tax, net		—				0.3				(0.3	)			(0.2	%)			(0.1	)			—
Total Non-GAAP adjustments (b)		—				(6.4	)			7.8				4.3	%			5.6				0.19
Adjusted Non-GAAP measures (b)	$	110.8			$	67.6			$	26.0				14.5	%		$	14.3			$	0.48
Adjusted Non-GAAP % of total net sales		61.7	%			37.7	%
	For the Nine Months Ended September 30, 2024
	Gross profit				SG&A (a)				Income (loss) from operations				Operating margin				Net earnings (loss)				Net earnings (loss) per diluted share
GAAP basis measures	$	346.5			$	222.9			$	127.3				20.3	%		$	86.1			$	2.86
Exclude: Depreciation and amortization		43.8
Non-GAAP measures		390.3
Non-GAAP % of total net sales		62.4	%
Non-GAAP adjustments:
Restructuring, impairment and other charges, net		—				—				4.5				0.7	%			3.3				0.11
Share-based compensation expense		—				(19.2	)			19.2				3.1	%			10.4				0.35
Gain on sale of long-lived assets		—				—				(9.8	)			(1.6	%)			(7.0	)			(0.23	)
Non-income tax, net		—				1.0				(1.0	)			(0.2	%)			(0.6	)			(0.02	)
Gain on investments in equity securities (c)		—				—				—				—				(0.3	)			(0.01	)
Total non-GAAP adjustments (b)		—				(18.2	)			12.9				2.1	%			5.8				0.19
Adjusted Non-GAAP measures (b)	$	390.3			$	204.7			$	140.2				22.4	%		$	91.9			$	3.05
Adjusted Non-GAAP % of total net sales		62.4	%			32.7	%

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Reconciliation of GAAP to Non-GAAP Measures

For the Three and Nine Months Ended September 30, 2023

(UNAUDITED)

(in millions, except per share data)

 

	For the Three Months Ended September 30, 2023
	Gross profit				SG&A (a)				Income (loss) from operations				Operating margin				Net earnings (loss)				Net earnings (loss) per diluted share
GAAP basis measures	$	96.3			$	65.4			$	29.8				16.6	%		$	18.1			$	0.60
Exclude: Depreciation and amortization		12.8
Non-GAAP measures		109.1
Non-GAAP % of total net sales		60.6	%
Non-GAAP adjustments:
Restructuring, impairment and other charges, net		—				—				(0.3	)			(0.2	%)			(0.3	)			(0.01	)
Share-based compensation expense		—				(6.1	)			6.1				3.4	%			4.2				0.14
Non-income tax, net		—				0.4				(0.4	)			(0.2	%)			(0.2	)			(0.01	)
Gain on sale of long-lived assets		—				—				(0.2	)			(0.1	%)			(0.1	)			—
Total Non-GAAP adjustments (b)		—				(5.7	)			5.2				2.9	%			3.6				0.12
Adjusted Non-GAAP measures (b)	$	109.1			$	59.7			$	35.0				19.4	%		$	21.7			$	0.72
Adjusted Non-GAAP % of total net sales		60.6	%			33.2	%
	For the Nine Months Ended September 30, 2023
	Gross profit				SG&A (a)				Income (loss) from operations				Operating margin				Net earnings (loss)				Net earnings (loss) per diluted share
GAAP basis measures	$	324.2			$	212.1			$	100.2				16.1	%		$	71.6			$	2.36
Exclude: Depreciation and amortization		37.1
Non-GAAP measures		361.3
Non-GAAP % of total net sales		58.2	%
Non-GAAP adjustments:
Restructuring, impairment and other charges, net		—				—				8.4				1.4	%			6.1				0.20
Share-based compensation expense		—				(17.1	)			17.1				2.8	%			9.1				0.30
Accelerated rent expense		0.5				(0.1	)			0.6				0.1	%			0.4				0.01
Non-income tax, net		—				0.8				(0.8	)			(0.1	%)			(0.5	)			(0.02	)
Gain on sale of long-lived assets		—				—				(0.6	)			(0.1	%)			(0.4	)			(0.01	)
Gain on investments in equity securities (c)		—				—				—				—				(5.0	)			(0.16	)
Total non-GAAP adjustments (b)		0.5				(16.4	)			24.7				4.0	%			9.7				0.31
Adjusted Non-GAAP measures (b)	$	361.8			$	195.7			$	124.9				20.1	%		$	81.3			$	2.67
Adjusted Non-GAAP % of total net sales		58.3	%			31.5	%

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Segment GAAP to Non-GAAP Reconciliation and Supplementary Information

For the Three Months Ended September 30, 2024 and 2023

(UNAUDITED)

(in millions)

 

		Capital Markets - Software Solutions				Capital Markets - Compliance and Communications Management				Investment Companies - Software Solutions				Investment Companies - Compliance and Communications Management				Corporate				Consolidated
For the Three Months Ended September 30, 2024
Net sales		$	53.3			$	63.5			$	28.9			$	33.8			$	—			$	179.5
Income (loss) from operations			6.2				14.8				4.2				9.1				(16.1	)			18.2
Operating margin %			11.6	%			23.3	%			14.5	%			26.9	%		nm					10.1	%
Non-GAAP Adjustments
Restructuring, impairment and other charges, net			—				1.0				0.3				—				0.1				1.4
Share-based compensation expense			—				—				—				—				6.7				6.7
Non-income tax, net			(0.1	)			—				(0.1	)			(0.1	)			—				(0.3	)
Total Non-GAAP adjustments			(0.1	)			1.0				0.2				(0.1	)			6.8				7.8
Non-GAAP income (loss) from operations		$	6.1			$	15.8			$	4.4			$	9.0			$	(9.3	)		$	26.0
Non-GAAP operating margin %			11.4	%			24.9	%			15.2	%			26.6	%		nm					14.5	%
Depreciation and amortization			7.1				4.3				4.5				1.2				0.1				17.2
Adjusted EBITDA		$	13.2			$	20.1			$	8.9			$	10.2			$	(9.2	)		$	43.2
Adjusted EBITDA margin %			24.8	%			31.7	%			30.8	%			30.2	%		nm					24.1	%
Capital expenditures		$	9.9			$	2.1			$	6.0			$	0.5			$	0.6			$	19.1
For the Three Months Ended September 30, 2023
Net sales		$	46.5			$	70.1			$	26.7			$	36.7			$	—			$	180.0
Income (loss) from operations			4.9				24.9				6.6				11.2				(17.8	)			29.8
Operating margin %			10.5	%			35.5	%			24.7	%			30.5	%		nm					16.6	%
Non-GAAP Adjustments
Restructuring, impairment and other charges, net			(0.5	)			0.1				(0.1	)			0.1				0.1				(0.3	)
Share-based compensation expense			—				—				—				—				6.1				6.1
Non-income tax, net			(0.2	)			(0.1	)			(0.1	)			—				—				(0.4	)
Gain on sale of long-lived assets			—				(0.2	)			—				—				—				(0.2	)
Total Non-GAAP adjustments			(0.7	)			(0.2	)			(0.2	)			0.1				6.2				5.2
Non-GAAP income (loss) from operations		$	4.2			$	24.7			$	6.4			$	11.3			$	(11.6	)		$	35.0
Non-GAAP operating margin %			9.0	%			35.2	%			24.0	%			30.8	%		nm					19.4	%
Depreciation and amortization			7.7				1.9				3.5				1.2				0.1				14.4
Adjusted EBITDA		$	11.9			$	26.6			$	9.9			$	12.5			$	(11.5	)		$	49.4
Adjusted EBITDA margin %			25.6	%			37.9	%			37.1	%			34.1	%		nm					27.4	%
Capital expenditures		$	11.6			$	1.8			$	5.0			$	0.4			$	0.4			$	19.2

__________

nm - Not meaningful

---

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Segment GAAP to Non-GAAP Reconciliation and Supplementary Information

For the Nine Months Ended September 30, 2024 and 2023

(UNAUDITED)

(in millions)

 

		Capital Markets - Software Solutions				Capital Markets - Compliance and Communications Management				Investment Companies - Software Solutions				Investment Companies - Compliance and Communications Management				Corporate				Consolidated
For the Nine Months Ended September 30, 2024
Net sales		$	163.6			$	268.4			$	84.5			$	109.1			$	—			$	625.6
Income (loss) from operations			30.1				96.4				14.8				33.2				(47.2	)			127.3
Operating margin %			18.4	%			35.9	%			17.5	%			30.4	%		nm					20.3	%
Non-GAAP Adjustments
Restructuring, impairment and other charges, net			0.3				2.4				0.4				0.1				1.3				4.5
Share-based compensation expense			—				—				—				—				19.2				19.2
Gain on sale of long-lived assets			—				(9.8	)			—				—				—				(9.8	)
Non-income tax, net			(0.5	)			(0.1	)			(0.3	)			(0.1	)			—				(1.0	)
Total Non-GAAP adjustments			(0.2	)			(7.5	)			0.1				—				20.5				12.9
Non-GAAP income (loss) from operations		$	29.9			$	88.9			$	14.9			$	33.2			$	(26.7	)		$	140.2
Non-GAAP operating margin %			18.3	%			33.1	%			17.6	%			30.4	%		nm					22.4	%
Depreciation and amortization			20.3				8.4				13.1				3.5				0.1				45.4
Adjusted EBITDA		$	50.2			$	97.3			$	28.0			$	36.7			$	(26.6	)		$	185.6
Adjusted EBITDA margin %			30.7	%			36.3	%			33.1	%			33.6	%		nm					29.7	%
Capital expenditures		$	24.3			$	5.9			$	17.0			$	2.3			$	1.3			$	50.8
For the Nine Months Ended September 30, 2023
Net sales		$	137.9			$	287.1			$	81.1			$	114.6			$	—			$	620.7
Income (loss) from operations			8.7				88.5				18.3				35.4				(50.7	)			100.2
Operating margin %			6.3	%			30.8	%			22.6	%			30.9	%		nm					16.1	%
Non-GAAP Adjustments
Restructuring, impairment and other charges, net			2.5				4.4				0.5				0.1				0.9				8.4
Share-based compensation expense			—				—				—				—				17.1				17.1
Accelerated rent expense			—				0.6				—				—				—				0.6
Non-income tax, net			(0.5	)			(0.1	)			(0.2	)			—				—				(0.8	)
Gain on sale of long-lived assets			—				(0.6	)			—				—				—				(0.6	)
Total Non-GAAP adjustments			2.0				4.3				0.3				0.1				18.0				24.7
Non-GAAP income (loss) from operations		$	10.7			$	92.8			$	18.6			$	35.5			$	(32.7	)		$	124.9
Non-GAAP operating margin %			7.8	%			32.3	%			22.9	%			31.0	%		nm					20.1	%
Depreciation and amortization			21.8				5.6				10.2				3.5				0.1				41.2
Adjusted EBITDA		$	32.5			$	98.4			$	28.8			$	39.0			$	(32.6	)		$	166.1
Adjusted EBITDA margin %			23.6	%			34.3	%			35.5	%			34.0	%		nm					26.8	%
Capital expenditures		$	23.4			$	4.8			$	12.3			$	1.4			$	1.1			$	43.0

__________

nm - Not meaningful

 

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Cash Flows

(UNAUDITED)

(in millions)

 

		For the Nine Months Ended September 30,
		2024				2023
Operating Activities
Net earnings		$	86.1			$	71.6
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			45.4				41.2
Provision for expected losses on accounts receivable			14.3				10.8
Share-based compensation expense			19.2				17.1
Deferred income taxes			(5.7	)			(10.2	)
Net pension plan income			(0.8	)			(0.5	)
Gain on sale of long-lived assets			(9.8	)			(0.6	)
Gain on sale of investments in equity securities			(0.2	)			(6.9	)
Amortization of operating lease right-of-use assets			6.9				9.5
Other			1.6				0.7
Changes in operating assets and liabilities:
Receivables, net			(40.2	)			(37.0	)
Prepaid expenses and other current assets			0.4				1.8
Accounts payable			—				(13.8	)
Income taxes payable and receivable			4.0				1.3
Accrued liabilities and other			5.5				(22.1	)
Operating lease liabilities			(10.6	)			(12.3	)
Pension and other postretirement benefits plans contributions			(1.4	)			(1.4	)
Net cash provided by operating activities			114.7				49.2
Investing Activities
Capital expenditures			(50.8	)			(43.0	)
Proceeds from sale of long-lived assets			12.4				—
Proceeds from sales of investments in equity securities			0.2				9.9
Net cash used in investing activities			(38.2	)			(33.1	)
Financing Activities
Revolving facility borrowings			159.5				218.0
Payments on revolving facility borrowings			(159.5	)			(221.5	)
Treasury share repurchases			(64.4	)			(35.4	)
Cash received for common stock issuances			0.6				1.9
Finance lease payments			(2.1	)			(1.7	)
Net cash used in financing activities			(65.9	)			(38.7	)
Effect of exchange rate on cash and cash equivalents			(0.1	)			0.1
Net increase (decrease) in cash and cash equivalents			10.5				(22.5	)
Cash and cash equivalents at beginning of year			23.1				34.2
Cash and cash equivalents at end of period		$	33.6			$	11.7
Supplemental cash flow information:
Income taxes paid (net of refunds)		$	33.5			$	32.4
Interest paid		$	10.7			$	12.8
Non-cash investing activities:
Capitalized software included in accounts payable		$	0.1			$	1.7
Non-cash consideration from sale of investment in an equity security		$	—			$	2.9

 

Additional Information:
		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Net cash provided by operating activities		$	86.4			$	80.5			$	114.7			$	49.2
Less: capital expenditures			19.1				19.2				50.8				43.0
Free Cash Flow		$	67.3			$	61.3			$	63.9			$	6.2

 

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Reconciliation of Reported to Organic Net Sales - By Segment

(UNAUDITED)

(in millions)

 

		Capital Markets - Software Solutions				Capital Markets - Compliance and Communications Management				Investment Companies - Software Solutions				Investment Companies - Compliance and Communications Management				Consolidated
Reported Net Sales:
For the Three Months Ended September 30, 2024		$	53.3			$	63.5			$	28.9			$	33.8			$	179.5
For the Three Months Ended September 30, 2023		$	46.5			$	70.1			$	26.7			$	36.7			$	180.0
Net sales change			14.6	%			(9.4	%)			8.2	%			(7.9	%)			(0.3	%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange rates			—				—				0.4	%			—				0.1	%
Year-over-year impact of the eBrevia disposition			(2.2	%)			—				—				—				(0.6	%)
Net organic sales change			16.8	%			(9.4	%)			7.8	%			(7.9	%)			0.2	%

 

		Capital Markets - Software Solutions				Capital Markets - Compliance and Communications Management				Investment Companies - Software Solutions				Investment Companies - Compliance and Communications Management				Consolidated
Reported Net Sales:
For the Nine Months Ended September 30, 2024		$	163.6			$	268.4			$	84.5			$	109.1			$	625.6
For the Nine Months Ended September 30, 2023		$	137.9			$	287.1			$	81.1			$	114.6			$	620.7
Net sales change			18.6	%			(6.5	%)			4.2	%			(4.8	%)			0.8	%
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange rates			—				—				0.2	%			—				—
Year-over-year impact of the eBrevia disposition			(2.2	%)			—				—				—				(0.5	%)
Net organic sales change			20.8	%			(6.5	%)			4.0	%			(4.8	%)			1.3	%

 

 

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Reconciliation of Reported to Organic Net Sales - By Services and Products

(UNAUDITED)

(in millions)

 

		Tech-enabled Services				Software Solutions				Print and Distribution				Consolidated
Reported Net Sales:
For the Three Months Ended September 30, 2024		$	75.2			$	82.2			$	22.1			$	179.5
For the Three Months Ended September 30, 2023		$	80.4			$	73.2			$	26.4			$	180.0
Net sales change			(6.5	%)			12.3	%			(16.3	%)			(0.3	%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange rates			—				0.1	%			—				0.1	%
Year-over-year impact of the eBrevia disposition			—				(1.4	%)			—				(0.6	%)
Net organic sales change			(6.5	%)			13.6	%			(16.3	%)			0.2	%

 

		Tech-enabled Services				Software Solutions				Print and Distribution				Consolidated
Reported Net Sales:
For the Nine Months Ended September 30, 2024		$	260.3			$	248.1			$	117.2			$	625.6
For the Nine Months Ended September 30, 2023		$	263.3			$	219.0			$	138.4			$	620.7
Net sales change			(1.1	%)			13.3	%			(15.3	%)			0.8	%
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange rates			—				0.1	%			—				—
Year-over-year impact of the eBrevia disposition			—				(1.4	%)			—				(0.5	%)
Net organic sales change			(1.1	%)			14.6	%			(15.3	%)			1.3	%

 

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Reconciliation of Net Earnings to Adjusted EBITDA

(UNAUDITED)

(in millions)

 

		For the Twelve Months Ended				For the Three Months Ended
		September 30, 2024				September 30, 2024				June 30, 2024				March 31, 2024				December 31, 2023
Net earnings		$	96.7			$	8.7			$	44.1			$	33.3			$	10.6
Adjustments
Restructuring, impairment and other charges, net			5.9				1.4				1.3				1.8				1.4
Share-based compensation expense			24.6				6.7				7.4				5.1				5.4
Loss on sale of a business			6.1				—				—				—				6.1
Accelerated rent expense			3.1				—				—				—				3.1
Disposition-related expenses			0.3				—				—				—				0.3
Gain on sale of long-lived assets			(10.0	)			—				—				(9.8	)			(0.2	)
Non-income tax, net			(1.1	)			(0.3	)			(0.3	)			(0.4	)			(0.1	)
Gain on investments in equity securities			(0.5	)			—				(0.3	)			(0.1	)			(0.1	)
Depreciation and amortization			60.9				17.2				14.3				13.9				15.5
Interest expense, net			14.0				3.1				3.7				3.6				3.6
Investment and other income, net			(1.1	)			(0.3	)			(0.1	)			(0.3	)			(0.4	)
Income tax expense (benefit)			28.0				6.7				17.1				8.1				(3.9	)
Total Non-GAAP adjustments			130.2				34.5				43.1				21.9				30.7
Adjusted EBITDA		$	226.9			$	43.2			$	87.2			$	55.2			$	41.3
Tech-enabled services		$	333.9			$	75.2			$	102.2			$	82.9			$	73.6
Software solutions			321.8				82.2				85.6				80.3				73.7
Print and distribution			146.4				22.1				54.9				40.2				29.2
Total net sales		$	802.1			$	179.5			$	242.7			$	203.4			$	176.5
Adjusted EBITDA margin %			28.3	%			24.1	%			35.9	%			27.1	%			23.4	%

 

		For the Twelve Months Ended				For the Three Months Ended
		September 30, 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022
Net earnings		$	82.5			$	18.1			$	37.7			$	15.8			$	10.9
Adjustments
Restructuring, impairment and other charges, net			11.5				(0.3	)			(2.2	)			10.9				3.1
Share-based compensation expense			22.5				6.1				6.7				4.3				5.4
Accelerated rent expense			1.2				—				0.1				0.5				0.6
Loss on sale of a business			0.7				—				—				—				0.7
Disposition-related expenses			0.1				—				—				—				0.1
Gain on investments in equity securities			(6.9	)			—				(0.2	)			(6.7	)			—
Non-income tax, net			(1.0	)			(0.4	)			(0.2	)			(0.2	)			(0.2	)
Gain on sale of long-lived assets			(0.6	)			(0.2	)			(0.1	)			(0.3	)			—
COVID-19 related recoveries			(0.2	)			—				—				—				(0.2	)
Depreciation and amortization			53.9				14.4				14.4				12.4				12.7
Interest expense, net			15.5				4.1				4.6				3.5				3.3
Investment and other income, net			(0.6	)			(0.1	)			(0.1	)			(0.2	)			(0.2	)
Income tax expense			26.8				7.7				13.6				2.4				3.1
Total Non-GAAP adjustments			122.9				31.3				36.6				26.6				28.4
Adjusted EBITDA		$	205.4			$	49.4			$	74.3			$	42.4			$	39.3
Tech-enabled services		$	331.8			$	80.4			$	104.5			$	78.4			$	68.5
Software solutions			287.7				73.2				75.7				70.1				68.7
Print and distribution			168.9				26.4				61.9				50.1				30.5
Total net sales		$	788.4			$	180.0			$	242.1			$	198.6			$	167.7
Adjusted EBITDA margin %			26.1	%			27.4	%			30.7	%			21.3	%			23.4	%

 

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Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Debt and Liquidity Summary

(UNAUDITED)

(in millions)

 

Total Liquidity		September 30, 2024				December 31, 2023				September 30, 2023
Availability
Stated amount of the Revolving Facility (a)		$	300.0			$	300.0			$	300.0
Less: availability reduction from covenants			—				—				—
Amount available under the Revolving Facility			300.0				300.0				300.0
Usage
Borrowings under the Revolving Facility			—				—				41.5
Impact on availability related to outstanding    letters of credit			1.0				1.0				1.0
Amount used under the Revolving Facility			1.0				1.0				42.5
Availability under the Revolving Facility			299.0				299.0				257.5
Cash and cash equivalents			33.6				23.1				11.7
Net Available Liquidity		$	332.6			$	322.1			$	269.2
Term Loan A Facility		$	125.0			$	125.0			$	125.0
Borrowings under the Revolving Facility			—				—				41.5
Unamortized debt issuance costs			(0.4	)			(0.5	)			(0.6	)
Total debt		$	124.6			$	124.5			$	165.9
Adjusted EBITDA for the twelve months ended September 30, 2024 and 2023, and the year ended December 31, 2023		$	226.9			$	207.4			$	205.4
Non-GAAP Gross Leverage (defined as total debt divided by Adjusted EBITDA)			0.5	x			0.6	x			0.8	x
Non-GAAP Net Debt (defined as total debt less cash and cash equivalents)			91.0				101.4				154.2
Non-GAAP Net Leverage (defined as non-GAAP Net Debt divided by Adjusted EBITDA)			0.4	x			0.5	x			0.8	x

__________

 

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v3.24.3

Document and Entity Information	Oct. 31, 2024
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 31, 2024
Entity Registrant Name	Donnelley Financial Solutions, Inc.
Entity Central Index Key	0001669811
Entity Emerging Growth Company	false
Title of 12(b) Security	Common Stock (Par Value $0.01)
Trading Symbol	DFIN
Security Exchange Name	NYSE
Entity File Number	001-37728
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-4829638
Entity Address, Address Line One	391 Steel Way
Entity Address, City or Town	Lancaster
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	17601
City Area Code	800
Local Phone Number	823-5304
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Former Address
Document Information [Line Items]
Entity Address, Address Line One	35 West Wacker Drive
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60601

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