LSC Communications — Q2 2018 Earnings Presentation
18 slides from LSC Communications's earnings presentation, Aug 2, 2018
Slide 1: 2018 Second Quarter Results
LSC COMMUNICATIONS 2018 Second Quarter Results August 2, 2018
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
LSC COMMUNICATIONS CAUTIONARY STATEMENT REGARDING 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 Securities Exchange Act of 1934, as amended, with respect to the business,
Slide 3: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION This presentation contains certain non-GAAP measures. The Company believes that these non-GAAP measures, such as non-GAAP adjusted EBITDA, non-GAAP adjusted EBITDA margin, non-GAAP net income/loss and free cash flow, when presented in conjunction with comparable GAAP m
Slide 4: Strategic Focus
STRATEGIC FOCUS Highlights Key Initiatives + Experienced favorable organic revenue + Closed the acquisition of RR Donnelley’s print trends and an improved sales mix logistics business + Monetized assets with two business unit + Made an equity investment and signed a definitive divestures – the sale
Slide 5: Q2 2018 Financial Summary
Q2 2018 FINANCIAL SUMMARY Q2 2018 Q2 2017 Organic Growth Rates(1) Net sales $943 $848 As reported % change 11.2% Organic % change (1) -2.0% Cost of sales 798 705 0% -1.7% -2.0% -1.7% SG&A expenses (exclusive of D&A) 82 76 -2% -4.6% Restructuring, impairment, and other charges - net -6.3% -6.8% -6.6%
Slide 6: Segment Overview
SEGMENT OVERVIEW Print Office Products ($ millions) Q2'18 Q2'17 ($ millions) Q2'18 Q2'17 Revenues $789 $723 Revenues $154 $125 As reported % change 9.1% As reported % change 23.2% Organic % change (1) -2.0% Organic % change (1) -2.1% Non-GAAP Adj EBITDA (1) $59 $64 Non-GAAP Adj EBITDA (1) $17 $15 (1
Slide 7: Strong Liquidity and Returns to Shareholders
STRONG LIQUIDITY AND RETURNS TO SHAREHOLDERS Q2 Free Cash Flow (1) Debt and Liquidity (1) Returns to Shareholders $ millions $ in millions $ in millions Q2'18 Q4'17 $914 $822 Total Debt 8% 6.9%(4) Cash $22 $34 6% Stated amount of the Revolving Credit Facility 400 400 $(17) $(20) Less: availability r
Slide 8: Strategic Transactions
STRATEGIC TRANSACTIONS Retail Offset Sale RRD Print Logistics Purchase Europe Sale Transaction + Sale of retail offset printing facilities to Trend + Purchase of print logistics business from RR + Sale of LSC European printing business to Offset Printing Donnelley Walstead Group(2) Background + Five
Slide 9: Full Year 2018 Guidance
FULL YEAR 2018 GUIDANCE 2018 Guidance (1) Prior Guidance Net Sales $3.75 - $3.85 billion $3.8 - $3.9 billion Non-GAAP Adjusted EBITDA(2) $310 - $340 million $320 - $360 million Depreciation and Amortization $135 - $145 million $135 - $145 million Interest Expense- Net $76 - $78 million $72 - $76 mil
Slide 10: Q&A
Q&A 10 | LSC COMMUNICATIONS
Slide 11: Appendix
Appendix 11 | LSC COMMUNICATIONS
Slide 12: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES ($ millions) Total LSC Communications Q2 2018 TTM Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 FY 2017 FY 2016 FY 2015 Net sales $3,806 $943 $929 $999 $935 $848 $3,603 $3,654 $3,743 GAAP Net (loss) income (64) 8 (11) (58) (3) 5 (57) 106 74 Restructuring, impairment and other 1
Slide 13: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES ($ millions) Print Segment Q2 2018 TTM Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 FY 2017 FY 2016 FY 2015 Magazines, catalogs and retail inserts $1,879 $442 $468 $521 $448 $378 $1,730 $1,632 $1,807 Book 1,036 266 249 245 276 262 1,022 1,097 925 Europe 253 56 62 67 68 56 247
Slide 14: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES ($ millions, except earnings per share) Total LSC Communications Q2 2018 Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 GAAP Net income (loss) $8 ($11) ($57) ($58) ($3) $5 ($1) Non-GAAP adjustments, net of tax: Restructuring, impairment and other charges - net 8 4 92 50
Slide 15: Organic Growth Rates - Q2 2018 and Q2 YTD 2018
ORGANIC GROWTH RATES - Q2 2018 and Q2 YTD 2018 Magazines, Total Office Catalogs, and Books Europe Directories Total Print Total LSC Products ($ millions) Retail Inserts Q2 2017 Net Sales as Reported $378 $262 $56 $27 $723 $125 $848 (1) Adjustments 89 - - - 89 30 119 Q2 2017 Net Sales Pro Forma $467
Slide 16: Quarterly Organic Growth Rates – Q1 2018 to Q4 2016
QUARTERLY ORGANIC GROWTH RATES – Q1 2018 to Q4 2016 ($ millions) Q1 2018(1) Q4 2017(2) Q3 2017(3) Q2 2017(4) Q1 2017(5) Q4 2016(6) Prior Year Quarter Net Sales as Reported $821 $919 $949 $906 $880 $1,004 Adjustments 122 141 103 14 14 13 Prior Year Quarter Net Sales Pro Forma $943 $1,060 $1,052 $920
Slide 17: Liquidity and Leverage
LIQUIDITY AND LEVERAGE Net Available Liqudity (1) Leverage at June 30, 2018 Q2'18 Q4'17 $ millions Short-Term and Current Portion of Long-Term Debt $234 Total Debt $914 $822 Long-Term Debt 680 Cash $22 $34 Total Debt $914 Stated amount of the Revolving Credit Facility (2) 400 400 Non-GAAP Adjusted E
Slide 18: Investor Relations Contact
investor.relations@lsccom.com | 773-272-9275 | 191 N Wacker (Suite 1400), Chicago, Illinois 60606