Free Annual Reports
Catalog Printer Fights Through Hard Times
Commercial printing leader R.R. Donnelley & Sons Company (RRD) had a difficult earnings report at the end of February, and wouldn't provide guidance for the year ahead, as its industry faces business headwinds in the coming months. Donnelley, like its brethren in the industry, fared better than consumer print publishers, though, the business-to-business trade looks a bit healthier than newsstands. We look at the results and what might be ahead.
IN PICTURES: 10 Tips For Choosing An Online Broker
Recent Results
Donnelley, the $1.4 billion market cap printer of books, and business material, reported its fourth quarter and full year earnings for 2008 recently, which were beaten down by non-cash impairment charges of $1.138 billion. This took their GAAP earnings down to a $3.35 per share figure for fourth quarter 2008. While the company stresses these are non-cash charges for goodwill, they are at least significant write-downs. Excluding these charges, the fourth quarter for 2008 finished at net income from continuing operations of $1.29 million (63 cents), as compared to $1.72 million (80 cents per share) the previous year's same quarter. For the full year, net income from continuing operations was $6.17 million ($2.93 per share) versus $6.45 million ($2.94 per share) in 2007. These flat numbers, plus the impairment charges, make for a slight downturn in Donnelley's fortunes, in an industry sure to see further struggles.
Checks, Please and Other Useful Stuff
R.R. Donnelley's commercial printing world is filled with a diverse group of companies, most of whom either provide services to other businesses or necessary business items to consumers, such as Dexluxe Corporation (NYSE:DLX), which makes paper checks. Deluxe's earnings are projected to be a bit down in the near-term, but still healthy for the year. Standard Register (NYSE:SR), a business documents printer and provider, has found a flat spot in its earnings as businesses are cutting back in every way they can.
The more diverse channels of Donnelley, on the other hand, might buoy them up a bit even through the difficult-looking year ahead. Bowne and Co. (NYSE:BNE), another document printer, is feeling the effects more than others, though it should seem that its space in financial and legal documents might be thriving more in hard times. Looking at the diverse nature of a Donnelley compared to a Bowne, we can see that although companies might be cutting back on everything printed, including the catalog and brochure staple items of Donnelley, Donnelley also provides extensive consultancy services and are very involved with their clients' project planning, so their business support services help carry them. Still another printer, Consolidated Graphics Inc. (NYSE:CGX), has had a falloff more similar to Bowne in its business, as it tends to have to do a lot of selling to its clients, despite its eclectic mix of printing services, this can be a vulnerability in the current economy. Donnelley often gains large-scale long-term client contracts, such as the recent one it landed with apparel maker Orchard Brands, which help build and maintain revenue. (For further reading, read The Impact Of Recession On Businesses.)
Beyond Out of Favor
Most of these stocks, including Donnelley, are mired in their 12-month lows. Its stock is trading at just under $6. If investors can weather the bumpy economy in this coming year and watch for some pickup in the business-to-business area, the commercial printers, led by Donnelley, should slowly rebound. Donnelley's array of vital business services still make them a solid long-term business, with a nice potential to move off the bottom of this dismal market whenever some stocks start doing that.
IN PICTURES: 10 Tips For Choosing An Online Broker
Donnelley, the $1.4 billion market cap printer of books, and business material, reported its fourth quarter and full year earnings for 2008 recently, which were beaten down by non-cash impairment charges of $1.138 billion. This took their GAAP earnings down to a $3.35 per share figure for fourth quarter 2008. While the company stresses these are non-cash charges for goodwill, they are at least significant write-downs. Excluding these charges, the fourth quarter for 2008 finished at net income from continuing operations of $1.29 million (63 cents), as compared to $1.72 million (80 cents per share) the previous year's same quarter. For the full year, net income from continuing operations was $6.17 million ($2.93 per share) versus $6.45 million ($2.94 per share) in 2007. These flat numbers, plus the impairment charges, make for a slight downturn in Donnelley's fortunes, in an industry sure to see further struggles.
Checks, Please and Other Useful Stuff
R.R. Donnelley's commercial printing world is filled with a diverse group of companies, most of whom either provide services to other businesses or necessary business items to consumers, such as Dexluxe Corporation (NYSE:DLX), which makes paper checks. Deluxe's earnings are projected to be a bit down in the near-term, but still healthy for the year. Standard Register (NYSE:SR), a business documents printer and provider, has found a flat spot in its earnings as businesses are cutting back in every way they can.
The more diverse channels of Donnelley, on the other hand, might buoy them up a bit even through the difficult-looking year ahead. Bowne and Co. (NYSE:BNE), another document printer, is feeling the effects more than others, though it should seem that its space in financial and legal documents might be thriving more in hard times. Looking at the diverse nature of a Donnelley compared to a Bowne, we can see that although companies might be cutting back on everything printed, including the catalog and brochure staple items of Donnelley, Donnelley also provides extensive consultancy services and are very involved with their clients' project planning, so their business support services help carry them. Still another printer, Consolidated Graphics Inc. (NYSE:CGX), has had a falloff more similar to Bowne in its business, as it tends to have to do a lot of selling to its clients, despite its eclectic mix of printing services, this can be a vulnerability in the current economy. Donnelley often gains large-scale long-term client contracts, such as the recent one it landed with apparel maker Orchard Brands, which help build and maintain revenue. (For further reading, read The Impact Of Recession On Businesses.)
Beyond Out of Favor
Most of these stocks, including Donnelley, are mired in their 12-month lows. Its stock is trading at just under $6. If investors can weather the bumpy economy in this coming year and watch for some pickup in the business-to-business area, the commercial printers, led by Donnelley, should slowly rebound. Donnelley's array of vital business services still make them a solid long-term business, with a nice potential to move off the bottom of this dismal market whenever some stocks start doing that.
by
Greg Sushinsky
Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Free Annual Reports
