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Donnelley (DFIN) Q4 Earnings Miss, Revenues Top Estimates
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Donnelley Financial Solutions (DFIN - Free Report) reported fourth-quarter 2021 adjusted earnings of $1.07 per share, which missed the Zacks Consensus Estimate by 15.1%. The company had reported earnings of 36 cents per share in the year-ago quarter.
Total revenues improved 10.7% year over year to $232.8 million and surpassed the Zacks Consensus Estimate by 3.01%. The top line increased primarily due to growth in Software solutions and higher capital market transactional and compliance volume.
However, revenues were partially offset by lower print and distribution volume as a result of the impact of SEC Rules 30e-3 and 498A eliminating print requirements.
Quarter in Detail
Donnelley’s revenues were positively impacted by revenues from Software Solutions. In the fourth quarter, revenues from Software Solutions accounted for 31.7% of total revenues. Software Solutions revenues increased by 36.2% year over year primarily on the back of acceleration in virtual data room activity in Venue and robust mergers and acquisitions environment.
Software Solutions Business offerings ActiveDisclosure and Arc Suite delivered sales growth of 40% and 28%, respectively, in the fourth quarter, courtesy of strong demand for total compliance management solution.
Tech Enabled Services accounted for 53.7% of total revenues and increased 16.3% from the year-ago quarter driven by capital markets transactional and compliance activity.
Print and Revenue Distribution revenues declined by 30% as the company is exiting from low-margin print contracts due to regulatory changes.
Donnelley Financial Solutions Price, Consensus and EPS Surprise
Adjusted EBITDA in the fourth quarter stood at $61.3 million, reflecting an increase of 75.6% from the year-ago quarter. Growth in adjusted EBITDA is primarily driven by growing net sales and the company’s cost control initiatives. However, increasing selling expenses due to increased sales volumes and incentive compensation expenses impacted the growth of EBITDA slightly.
Non-GAAP sales, general and administrative (SG&A) expenses in the fourth quarter were $79.3 million, accounting for 34.1% of net sales and expanded by 300 basis points from the year-ago quarter.
Non-GAAP SG&A increased primarily due to sales commissions, changes in business mix and increasing incentive compensation.
Balance Sheet
As of Dec 31, 2021, Donnelley ended the reported quarter with a free cash flow of $137.7 million as compared with $100.4 million ended Sep 30, 2021.
As of Dec 31, 2021, Donnelley ended the reported quarter with net debt of $69.5 million as compared with $108.1 million ended Sep 30, 2021.
Guidance
In the first quarter of 2022, Donnelley expects revenues in the range of $210 million to $230 million. The company anticipates a non-GAAP adjusted EBITDA margin in the mid 20% range.
Zacks Rank & Stocks to Consider
Donnelley currently carries a Zacks Rank #3 (Hold).
Donnelley’s shares have gained 46.7% against the Zacks Computer and Technology sector’s decline of 1.3% in the past year.
Some better-ranked stocks to consider in the same sector are ACM Research (ACMR - Free Report) , Asana (ASAN - Free Report) and Allied Motion Technologies .
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Donnelley (DFIN) Q4 Earnings Miss, Revenues Top Estimates
Donnelley Financial Solutions (DFIN - Free Report) reported fourth-quarter 2021 adjusted earnings of $1.07 per share, which missed the Zacks Consensus Estimate by 15.1%. The company had reported earnings of 36 cents per share in the year-ago quarter.
Total revenues improved 10.7% year over year to $232.8 million and surpassed the Zacks Consensus Estimate by 3.01%. The top line increased primarily due to growth in Software solutions and higher capital market transactional and compliance volume.
However, revenues were partially offset by lower print and distribution volume as a result of the impact of SEC Rules 30e-3 and 498A eliminating print requirements.
Quarter in Detail
Donnelley’s revenues were positively impacted by revenues from Software Solutions. In the fourth quarter, revenues from Software Solutions accounted for 31.7% of total revenues. Software Solutions revenues increased by 36.2% year over year primarily on the back of acceleration in virtual data room activity in Venue and robust mergers and acquisitions environment.
Software Solutions Business offerings ActiveDisclosure and Arc Suite delivered sales growth of 40% and 28%, respectively, in the fourth quarter, courtesy of strong demand for total compliance management solution.
Tech Enabled Services accounted for 53.7% of total revenues and increased 16.3% from the year-ago quarter driven by capital markets transactional and compliance activity.
Print and Revenue Distribution revenues declined by 30% as the company is exiting from low-margin print contracts due to regulatory changes.
Donnelley Financial Solutions Price, Consensus and EPS Surprise
Donnelley Financial Solutions price-consensus-eps-surprise-chart | Donnelley Financial Solutions Quote
Operating Details
Adjusted EBITDA in the fourth quarter stood at $61.3 million, reflecting an increase of 75.6% from the year-ago quarter. Growth in adjusted EBITDA is primarily driven by growing net sales and the company’s cost control initiatives. However, increasing selling expenses due to increased sales volumes and incentive compensation expenses impacted the growth of EBITDA slightly.
Non-GAAP sales, general and administrative (SG&A) expenses in the fourth quarter were $79.3 million, accounting for 34.1% of net sales and expanded by 300 basis points from the year-ago quarter.
Non-GAAP SG&A increased primarily due to sales commissions, changes in business mix and increasing incentive compensation.
Balance Sheet
As of Dec 31, 2021, Donnelley ended the reported quarter with a free cash flow of $137.7 million as compared with $100.4 million ended Sep 30, 2021.
As of Dec 31, 2021, Donnelley ended the reported quarter with net debt of $69.5 million as compared with $108.1 million ended Sep 30, 2021.
Guidance
In the first quarter of 2022, Donnelley expects revenues in the range of $210 million to $230 million. The company anticipates a non-GAAP adjusted EBITDA margin in the mid 20% range.
Zacks Rank & Stocks to Consider
Donnelley currently carries a Zacks Rank #3 (Hold).
Donnelley’s shares have gained 46.7% against the Zacks Computer and Technology sector’s decline of 1.3% in the past year.
Some better-ranked stocks to consider in the same sector are ACM Research (ACMR - Free Report) , Asana (ASAN - Free Report) and Allied Motion Technologies .
ACM Research and Allied Motion Technologies sport a Zacks Rank #1 (Strong Buy), while Asana carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ACM Research’s shares have tumbled 39.4% in the past year.
ACM Research is scheduled to report fourth-quarter 2021 results on Feb 24.