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LSC COMMUNICATIONS
Bank of America Merrill Lynch
Leveraged Finance Conference
11.30.2016
LSC COMMUNICATIONS | 2
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, strategy and plans of LSC Communications and its expectations relating to future financial
condition and performance. Statements that are not historical facts, including statements about LSC
Communications 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 LSC Communications 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 LSC Communications’ 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 LSC
Communications’ 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 LSC Communications’ information statement, dated September 23, 2016, filed as an exhibit to our Current
Report filed on Form 8-K filed on September 23, 2016 and LSC Communications’ periodic filings with the
SEC. LSC Communications 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.
LSC COMMUNICATIONS | 3
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 net income and free cash flow, 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.
Non-GAAP adjusted EBITDA, non-GAAP net income and free cash flow allow investors to make a more
meaningful comparison between the Company’s core business operating results over different periods of
time. The Company believes that non-GAAP adjusted EBITDA, non-GAAP net income and free cash flow,
when viewed with the Company’s results under GAAP and the accompanying reconciliations, provides useful
information about the Company’s business without regard to potential distortions. By eliminating potential
differences in results of operations between periods caused by factors such as depreciation and amortization
methods, historic cost and age of assets, financing and capital structures, taxation positions or regimes,
restructuring, impairment and other charges and gain or loss on certain equity investments and asset sales,
the Company believes that non-GAAP adjusted EBITDA and non-GAAP net income can provide useful
additional basis for comparing the current performance of the underlying operations being evaluated. 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.
LSC COMMUNICATIONS | 4
COMPANY REPRESENTATIVES
JANET HALPIN
SVP, Treasurer and Investor Relations
LSC Communications
DREW COXHEAD
Chief Financial Officer
LSC Communications
DAVID CLARK
Senior Investor Relations Analyst
LSC Communications
LSC COMMUNICATIONS | 5
AGENDA
+ Business Overview
+ Investment Highlights
+ Financial Overview
+ Q&A
+ Appendix
LSC COMMUNICATIONS | 6
BUSINESS OVERVIEW
LSC COMMUNICATIONS | 7
LSC COMMUNICATIONS: A LEADING PROVIDER OF PRINT AND PRINT-RELATED
PRODUCTS, SERVICES AND TECHNOLOGY SOLUTIONS
Business Overview Segment Overview – Diverse Products & Services Capabilities Across 2 Segments:
Print and Office Products
+ LSC Communications (“LSC” or “the Company”) is a worldwide leader in
providing print, fulfillment and supply chain solutions to publishers,
merchandisers and retailers
+ Specializes in publishing and retail-centric print services, such as books,
magazines, catalogs, inserts, and directories
+ Manufactures and sells office products such as filing products, note-taking
products, binders, tax and stock forms and envelopes
+ Serves >3,000 publishers, merchandisers, catalogers and retailers
globally, offering leaner and more flexible supply chain solutions to support
operating efficiency
+ LSC has 41 production facilities in the U.S and 12 international
manufacturing facilities
+ ~22,000 employees globally
Selected Clients
$3.7B 2015 sales
3.9% Directories
15.0% Office Products 24.7%
Books
8.1% Europe
48.3% Magazines, Catalogs, and Retail Inserts
Source: Company management and company filings.
Note: 2015 net sales included $184mm from the acquisition of Courier, representing net sales from close date of 6/8/2015 to 12/31/2015.
$3.7 B 2015 sales
VALUE CREATION STRATEGY
Grow core
print and
supply chain
service
offerings
Deploy
capital with
discipline
Continue
operating
excellence
LSC COMMUNICATIONS | 8
LSC COMMUNICATIONS | 9
PRINT SEGMENT OVERVIEW
Key Highlights/Strategies Net Sales ($mm)
Note: Reconciliation of non-GAAP financials in appendix.
Source: Company management, Company filings, PwC Research and Technavio.
Select Competitors
Directories
Europe
Book
Magazines, catalogs,
and retail inserts
+ Print segment produces magazines, catalogs, retail inserts, books and
directories and also provides certain print-related services, including
mail-list management and sortation and e-book formatting and
distribution with operations in US, Europe, and Mexico
+ Serves > 3,000 publishers, merchandisers, catalogers and retailers
globally, offering leaner and more flexible supply chain solutions to
support operating efficiency
+ Offers a wide range of products and services to customers:
- Magazines: Magazine publishers who use the Company’s
capabilities to print and distribute magazines through the mail
directly to subscribers and through wholesalers to retailers
- Catalogs: Retailers and other direct-to-buyer sellers who use
the Company’s production capabilities to print and distribute
catalogs to customers through mail
- Retail Inserts: Retailers who seek to include inserts in
newspapers distributed to newspaper subscribers and in-store
distribution
- Book: publishers who seek to print hardcover and softcover
books, with soft or spiral binding serving the education, trade,
religious and testing sectors
+ Serves the top 10 book publishers in North America, along with 9 of
the top 10 catalogers and magazine publishers in the U.S.
+ Print represents ~85% of LSC Communications net sales (2015)
+ Designing and executing innovative supply chain strategies to increase
speed to market and improve efficiencies across the distribution
process
+ Best-in-class, proprietary co-service solution leverages mail volume to
offer our clients significant cost savings
11.2%
10.2% 10.3% 10.1%
Non-GAAP Adj.
EBITDA Margin
LSC COMMUNICATIONS | 10
OFFICE PRODUCTS SEGMENT OVERVIEW
Key Highlights/Strategies Net Sales ($mm)
+ LSC customers in the office products segment include office
superstores, mass merchandisers and contract stationers
+ Offers a wide range of branded and private label products, primarily
within the following five core categories
- Filing products
- Note-taking products
- Binder products
- Forms
- Envelopes
+ LSC has product placement at 9 of the top 10 retailers
+ Top 5 supplies-vendor at both of the office supply superstores
+ LSC services 5 of the top 10 eCommerce retailers
- Additional focus on eCommerce channel to capture market
share with our premium branded products
+ Office Products represents ~15% of LSC Communications net sales
(2015)
+ Further industry consolidation opportunities in Office Products
Note: Reconciliation of non-GAAP financials in appendix.
Source: Company management, Company filings, PwC Research and Technavio.
Branded Products
Net Sales Non-GAAP Adj.
EBITDA Margin
LSC COMMUNICATIONS | 11
LSC COMMUNICATIONS OUTLOOK BY PRODUCT/SEGMENT
% of LTM (9/30/16)
Net Sales Commentary
Blended LSC Outlook:
Industry Outlook:
Near-to-Medium Term
Organic Growth Outlook
Total Print Segment: • (4%) to (1%)
• (3%) to 0%
Magazine,
Catalog,
Retail • (7%) to (2%)
• Advertising spend shifting to electronic
• More stable catalog demand
Books • (2%) to 3% • Supply chain management growth
• Modest electronic substitution
Europe • (4%) to 1% • Product mix is primarily MCR, but also
includes premedia and in-store marketing
Directory • (10%) to (15%) • Rapid substitution continuing
Office
Products • (2%) to 3%
• Modest industry declines
• Private label growth
• Low to mid single digit decline
14%
LSC COMMUNICATIONS | 12
INVESTMENT HIGHLIGHTS
LSC COMMUNICATIONS | 13
KEY INVESTMENT HIGHLIGHTS
3 Long-Standing Relationships with Customers
2 Significant Scale
4 Sharp Focus on Cost Structure and Efficiency Improvement
1 Diverse Product and Service Profile
5 Strong M&A Track Record
6 Financial Strength and Strong Cash Generation
7 Experienced Leadership Team
LSC COMMUNICATIONS | 14
DIVERSE PRODUCT AND SERVICE PROFILE 1
Product and service diversity allows us to provide our customers with
unique solutions that more narrow competitors cannot easily duplicate
LSC has entered into an agreement with a leading company in education, business and consumer publishing
LSC will provide complete supply chain management of 100% of this company’s printed and other learning materials to include procurement and manufacturing, warehousing and distribution and inventory management for its North American operations
Combines print, warehousing, fulfillment and supply chain management into a single workflow designed to increase speed to market and improve efficiencies across the distribution process
E-SERVICES OFFSET
PRINTING WAREHOUSING/
FULFILLMENT
SUPPLY CHAIN
MANAGEMENT
DIGITAL
PRINTING
Education, Business and Consumer Publishing Case Study
LSC COMMUNICATIONS | 15
SIGNIFICANT SCALE MAXIMIZE EFFICIENCIES AND LOWER TOTAL OVERALL COST FOR CUSTOMERS
2
>22,000 employees
>3,000 customers
41 manufacturing facilities
in 21 U.S. states
12 international
manufacturing facilities
NORTH AMERICA MEXICO
POLAND
Print Locations
Office Products Locations
LSC Communications’ global platform enables us to offer customers leaner, more
flexible supply chain solutions and greater operational and organizational efficiencies
LSC COMMUNICATIONS | 16
LONG-STANDING RELATIONSHIPS WITH CUSTOMERS LEADING PUBLISHERS, RETAILERS AND MERCHANDISERS
3
We print for:
9 OF THE TOP 10 catalogers
9 OF THE TOP 10 magazine publishers
THE TOP 10 book publishers in North America
In office products, we:
Have product placement at 9 OF THE TOP 10 RETAILERS
Service 5 OF THE TOP 10 eCommerce retailers
Are a TOP 5 supplies-vendor at both of the office supply superstores
LSC Communications is a proven, trusted partner with deep rooted relationships
LSC COMMUNICATIONS | 17
SHARP FOCUS ON COST STRUCTURE AND EFFICIENCY
IMPROVEMENT 4
Driven by our significant scale, these list processing
and sortation services greatly reduce postal costs
compared to what an individual customer could obtain
Increases in Co-mail and Co-bind volume in the last 3
years
Best-in-class safety metrics highlight
our commitment to operating excellence
Injury rate 47% below the industry average
17 facilities with 1+ years/1 million work hours
without a Days Away Case
Significant annual savings
from manufacturing cost efficiency
• Relentless productivity focus
• Substantially all manufacturing costs are
considered variable
Total manufacturing cost: better worse
Facility consolidations have
driven significant cost reductions
Our approach to restructuring and facility consolidation
has reduced fixed costs while maintaining service
levels to customers
Based on demand trends for certain product offerings,
additional rationalization opportunities are expected
Co-mail and Co-bind services offer
customers significant savings in postage costs Press Bind
Catalog
Retail
Short-Run Magazine
Long-Run Magazine
Book
2015 vs. 2011
Total Cost per Unit
We continuously work to develop advanced technologies and solutions to
enhance efficiencies, reduce time-to-market and deliver the best to our customers
LSC COMMUNICATIONS | 18
STRONG M&A TRACK RECORD 5
Capabilities, Solutions and Technology
Courier (2015)
Pro Line Printing (2008)
Banta (2007)
Office Products
Esselte Corporation (NA operations) (2014)
Cardinal Brands (2007)
Moore Wallace (2004)
Go-forward M&A
Criteria and Objectives
Enhance existing product offerings
Expand technological capabilities
Provide synergy opportunities
Attractive financial return on investment
Scale
Von Hoffman (2007)
Perry Judd’s (2007)
Poligrafia (2005)
Expanding Our Solutions and Services
Offerings and Broadening Our Reach
We have a proven ability to strategically acquire,
integrate and rationalize quickly in a fragmented market
LSC COMMUNICATIONS | 19
FINANCIAL STRENGTH AND STRONG CASH GENERATION 6
Maintain low leverage profile of 1.75x to 2.25x; pro forma for the transaction, opening secured
and total leverage is expected to be 2.0x
Disciplined approach to capital expenditures and cost management as well as focus on capital
efficiency drives strong cash flow conversion
Stable margins driven by productivity and acquisition synergies and improving product mix
Stable cash flows to enable de-leveraging
Lower working capital, restructuring and capital spending in recent years
Net Sales Non-GAAP Adj. EBITDA Margin
Net Sales ($mm) Free Cash Flow ($mm) 1
Note: Historical cash flows do not reflect interest payments and includes an allocation of pension income. 2015 net sales included $184mm from the
acquisition of Courier, representing net sales from close date of 6/8/2015 to 12/31/2015. Reconciliation of non-GAAP financials in appendix.
1. Free cash flow excludes interest payments per Form 10 filing dated 9/16/2016
LSC COMMUNICATIONS | 20
EXPERIENCED LEADERSHIP TEAM 7
Tom Quinlan: Chairman and Chief Executive Officer Mr. Quinlan was RRD's President and CEO from April 2007 until
October 2016. He joined RRD in 2004 and has served in various
finance and operations capacities including as Chief Financial Officer.
Prior to that time, Mr. Quinlan served in various finance positions at
World Color Press, Inc., Walter Industries, Marsh & McLennan and
Kidder Peabody. He has been a director of RRD since 2007.
Sue Bettman: Chief Administrative Officer Ms. Bettman was RRD’s Executive Vice President, General Counsel,
Corporate Secretary and Chief Compliance Officer from January 2007
until October 2016. She served previously as Senior Vice President,
General Counsel since March 2004.
Drew Coxhead: Chief Financial Officer Mr. Coxhead was RRD’s Senior Vice President and Chief Accounting
Officer from October 2007 to October 2016, and Corporate Controller
from October 2007 to January 2013. Prior to this, he served as Vice
President, Assistant Controller since September 2006. From 1995 until
2006, Mr. Coxhead served in various capacities with RRD in financial
planning, accounting, manufacturing management, operational finance
and mergers and acquisitions.
Jim Ellward: President Office Products Mr. Ellward was President of TOPS Products, the office products
segment of RRD from July 2013 until October 2016. He previously
served as Vice President of Sales since May 2008, and has held other
management roles since joining the organization in November 2006.
From 2001 until 2006, Mr. Ellward served in various sales capacities
with RRD's book manufacturing division.
Janet Halpin: Treasurer and Investor Relations Ms. Halpin was RRD’s Senior Vice President and Treasurer from February
2010 to October 2016. Prior to this, she served as Vice President of
Internal Audit since April 2008.
Kent Hansen: Chief Accounting Officer and Controller Mr. Hansen joined LSC Communications in September 2016. Since 2015,
Mr. Hansen was Vice President, Assistant Controller, of Baxalta,
Incorporated, a biopharmaceutical company. From 2006 to 2015, Mr.
Hansen served in various finance and accounting roles with Scientific
Games Corporation (formerly WMS Industries, Inc.), including Director of
Accounting and SEC Reporting, Assistant Controller, and Group Chief
Financial Officer. Mr. Hansen's previous experience included roles in
accounting and financial reporting at Accenture and as an auditor at Ernst
and Young LLP.
Dave Houck: Chief Information Officer Mr. Houck was RRD's Senior Vice President, Information Technology from
January 2009 to October 2016. He joined RRD in 2005 as Vice President,
Information Technology. Mr. Houck previously spent 15 years with
Accenture specializing in IT Planning in the Media and Entertainment
vertical focused on the printing industry.
Rick Lane: Chief Strategy and Supply Chain Officer Mr. Lane was RRD’s Executive Vice President of Global Business
Solutions from 2005 to October 2016 and is responsible for products and
materials sourcing, customer service and Global Print Management sales
and operations. From 1989 to 1997, Mr. Lane served in various capacities
within RRD in sales, strategy and operations and from 1997 to 2005, with
other companies in strategic sales and operations roles.
LSC Communications has an experienced management team with a proven
ability to execute operationally and financially in a dynamic market environment
LSC COMMUNICATIONS | 21
FINANCIAL OVERVIEW
LSC COMMUNICATIONS | 22
RECENT FINANCIAL PERFORMANCE
Key Performance Drivers NET SALES AND GROWTH RATES (IN $MM)
2013PF 2014PF 2015PF LTM Q3’16
Net sales 3,741 $ 3,853 $ 3,743 $ 3,739 $
Business unit net sales
Office Products
Mag/Cat/Retail
Europe
Books
Directory
Stabilization of organic growth rates from -4.1% in 2015 to
-2.5% in YTD 2016 driven by growth in books (1)
Source: Company management and company filings.
Note: 2015 net sales included $184mm from the acquisition of Courier, representing net sales from close date of 6/8/2015 to 12/31/2015.
Reconciliation of non-GAAP financials and organic growth in appendix. (1) Organic growth rates pro forma for acquisitions and excluding impact of changes in fx rates and paper sales.
177 149 144 137
827 787 925 1,095
385 381 305
291
2,109 2,036 1,807
1,687
243 500 562 528
0
1,000
2,000
3,000
4,000
2013 2014 2015 LTM Q3'16 Business unit net sales
• Further expansion into end-to-end supply
chain management
• Focus on cost structure and efficiency
• Level of excess industry capacity and
price pressures
• Pace of electronic substitution
• Strength of economy and general
advertising environment
• State education budgets and textbook
adoption cycles
• Postal and distribution costs
• Expansion of Office Products brands
• Office products retailer store
consolidation
• Shift in consumer preferences toward
private label office products
LSC COMMUNICATIONS | 23
HISTORICAL FINANCIAL PERFORMANCE
Note: Historical cash flows do not reflect interest payments and includes allocation of pension income. 2015 net sales included $184mm from the acquisition of Courier, representing net sales
from close date of 6/8/2015 to 12/31/2015. Reconciliation of non-GAAP financials in appendix.
1. Reflects unadjusted cash flows excluding interest payments per Form 10 filing dated 9/16/2016.
2. Represents free cash flow as a percent of Non-GAAP Adj. EBITDA.
3. Represents capital expenditures as a percent of net sales.
Net Sales ($mm) Non-GAAP Adj. EBITDA ($mm)
Capex ($mm) Free Cash Flow 1 ($mm)
$3,741 $3,853 $3,743 $3,739
0
1,000
2,000
3,000
4,000
5,000
2013 2014 2015 LTM Q3'16
$409 $392 $397 $399
0
100
200
300
400
500
2013 2014 2015 LTM Q3'16
$234 $246
$233
$210
0
50
100
150
200
250
300
2013 2014 2015 LTM Q3'16
$79
$60
$42 $44
0
20
40
60
80
100
2013 2014 2015 LTM Q3'16
(3) (2)
% growth 3.0% (2.9%) NA % margin 10.9% 10.2% 10.6% 10.7%
% conv. 57.1% 62.8% 58.7% 52.6% % intensity 2.1% 1.6% 1.1% 1.2%
$13
$50 $48 $43 $43 $43
$137
$450
$0
$100
$200
$300
$400
$500
2016 2017 2018 2019 2020 2021 2022 2023
Term Loan
Secured Notes
LSC COMMUNICATIONS | 24
LEVERAGE, LIQUIDITY AND DEBT MATURITY PROFILE
Debt Maturity Profile at 9/30/2016
(1)The Company has a $400.0 million senior secured revolving credit agreement (the “Credit Agreement”) which expires on September 30, 2021. The Credit Agreement is
subject to a number of covenants, including, but not limited to, a minimum Interest Coverage Ratio and a maximum Leverage Ratio, as defined in and calculated pursuant to
the Credit Agreement, that, in part, restrict the Company’s ability to incur additional indebtedness, create liens, engage in mergers and consolidations, make restricted
payments and dispose of certain assets.
(2) Net available liquidity was reduced by $12.0 million of outstanding letters of credit. The Company expects additional letters of credit related to the Company’s workers
compensation plan which will further reduce the availability by approximately $35.0 million to $45.0 million.
*Please refer to appendix for reconciliation of non-GAAP measures
Cash 54.8$
Stated amount of the Credit Agreement 400.0
-
Amount available under the Credit Agreement(1) 400.0
Usage
Borrowings under Credit Agreement -
Letters of Credit (12.0)
Net Available Liquidity(2)442.8$
Less: availability reduction from covenants
Liquidity at September 30, 2016Leverage at September 30, 2016
Short-Term and Current Portion of Long-Term Debt 52.1$
Long-Term Debt 755.7
Total Debt 807.8$
Non-GAAP Adjusted EBITDA LTM 9/30/2016* 399.2$
Non-GAAP Gross Leverage 2.0x
$ millions
LSC COMMUNICATIONS | 25
LSC FINANCIAL POLICY
Leverage and
Liquidity
• Commitment to a conservative leverage target
• Targeting 1.75x to 2.25x gross leverage(1)
• 2.0x reported gross leverage(1) at September 30, 2016
• Strong free cash flow(2) generation supports commitment to leverage target
• Combination of pre-payable and long term debt provides ability to efficiently pay down
debt
• Supportive bank group with access to five year credit facility that provides for seasonal
working capital needs and liquidity buffer
Pension Plans
• US pension plans closed and frozen
• De-risking actions and liability driven investment structure reduces funded status
volatility while minimizing required contributions
Capital
Expenditures • Approximately 1.5% to 2.0% of net sales
Mergers and
Acquisitions
• Selectively pursue strategic acquisitions
• Strategy governed by target leverage
Dividend Policy • Board of Directors to review dividend quarterly
1. Gross leverage defined as total debt / LTM non-GAAP adjusted EBITDA
2. Free cash flow defined as net cash provided by operating activities less capital expenditures
LSC COMMUNICATIONS | 26
FULL YEAR 2016 GUIDANCE (1)
Certain components of the guidance given in the table above are provided on a non-GAAP basis only, without providing a reconciliation to
guidance provided on a GAAP basis. Information is presented in this manner, consistent with SEC rules, because the preparation of such
a reconciliation could not be accomplished without "unreasonable efforts.“ The Company does not have access to certain information that
would be necessary to provide such a reconciliation, including non-recurring items that are not indicative of the Company's ongoing
operations. Such items include, but are not limited to, restructuring charges, impairment charges, spinoff-related transaction expenses,
pension settlement charges, acquisition-related expenses, gains or losses on investments and business disposals, losses on debt
extinguishment and other similar gains or losses not reflective of the Company's ongoing operations. The Company does not believe that
excluding such items is likely to be significant to an assessment of the Company's ongoing operations, given that such excluded items are
not indicators of business performance.
(1) Full year 2016 guidance as of Q3 2016 Earnings Call on November 10, 2016 and is not being reaffirmed here.
US Dollars Full Year 2016
Net Sales $3.6 - $3.7 billion
Non-GAAP Adjusted EBITDA 10.2% - 10.4%
Depreciation and Amortization $175 - $180 million
Interest Expense- Net $18 - $19 million
Effective Tax Rate 34% - 35%
Diluted Shares Approximately 32.5 million shares
We are Excited
About the Future of
LSC Communications
We operate in large, highly fragmented markets
with opportunities created by evolving
technologies
We create value by enabling publishers, retailers
and merchandisers to succeed
We are a worldwide leader with best-in-class
capabilities, cost structure, scale and relationships
We have a proven operating record and the
financial strength needed to execute our strategy
We are confident in our ability to deliver value
to all of our stakeholders
LSC COMMUNICATIONS | 27
LSC COMMUNICATIONS | 28
Q & A
LSC COMMUNICATIONS | 29
APPENDIX
LSC COMMUNICATIONS | 30
NON-GAAP FINANCIAL MEASURES
($ millions)
Total LSC CommunicationsQ1 2016 Q2 2016 Q4 Q3 2016
2015 2014 2013 2016 2015 LTM 2016 2015 2016 2015 LTM 2016 2015 2016 2015 2015 LTM
Net sales $3,742.9 $3,853.4 $3,741.0 $880.0 $860.9 $3,762.0 $906.1 $879.0 $1,786.1 $1,739.9 $3,789.1 $948.5 $999.0 $2,734.6 $2,738.9 $1,004.0 $3,738.6
Net income 73.6 58.0 94.5 31.0 9.1 95.5 28.0 11.8 59.0 20.9 111.7 38.1 14.7 97.1 35.6 38.0 135.1
Restructuring, impairment and other
charges, net56.5 131.5 79.3 2.9 5.9 53.5 5.1 21.1 8.0 27.0 37.5 3.2 25.4 11.2 52.4 4.1 15.3
Spinoff-related transaction expenses - - - - - - - - - - - 0.6 - 0.6 - - 0.6
Pension settlement charge - - - - - - 0.5 - 0.5 - 0.5 - - 0.5 - - 0.5
Acquisition-related expenses 13.8 1.4 1.0 - 10.5 3.3 - 3.1 - 13.6 0.2 - 0.1 - 13.7 0.1 0.1
Purchase accounting inventory
adjustments, net10.8 2.2 - - - 10.8 - 3.2 - 3.2 7.6 - 6.7 - 9.9 0.9 0.9
Gain on bargain purchase - (9.5) - - - - - - - - - - - - - - -
Loss on equity investment - - 2.5 - - - - - - - - - - - - - -
Depreciation and amortization 181.4 182.0 193.7 45.5 43.1 183.8 43.6 43.0 89.1 86.1 184.4 40.6 48.1 129.7 134.2 47.2 176.9
Interest income-net (2.5) (3.9) (3.8) (0.3) (0.8) (2.0) (0.5) (0.8) (0.8) (1.6) (1.7) 0.5 (0.6) (0.3) (2.2) (0.3) (0.6)
Income tax expense 63.9 30.2 42.1 15.9 6.4 73.4 16.3 7.1 32.2 13.5 82.6 18.0 30.2 50.2 43.7 20.2 70.4
Non-GAAP Adjusted EBITDA $397.5 $391.9 $409.3 $95.0 $74.2 $418.3 $93.0 $88.5 $188.0 $162.7 $422.8 $101.0 $124.6 $289.0 $287.3 $110.2 $399.2
Non-GAAP Adjusted EBITDA margin 10.6% 10.2% 10.9% 10.8% 8.6% 11.1% 10.3% 10.1% 10.5% 9.4% 11.2% 10.6% 12.5% 10.6% 10.5% 11.0% 10.7%
Net cash provided by operating activities $274.6 $306.7 $312.9 $14.0 $18.9 $269.7 $41.3 $55.3 $55.3 $74.2 $255.7 $80.9 $82.2 $136.2 $156.4 $118.2 $254.4
Capital expenditures (41.6) (60.4) (79.3) (11.9) (13.4) (40.1) (7.2) (9.5) (19.1) (22.9) (37.8) (15.8) (9.4) (34.9) (32.3) (9.3) (44.2)
Free cash flow $233.0 $246.3 $233.6 $2.1 $5.5 $229.6 $34.1 $45.8 $36.2 $51.3 $217.9 $65.1 $72.8 $101.3 $124.1 $108.9 $210.2
Q1 Q2 Q2 YTD Q3 Q3 YTD
LSC COMMUNICATIONS | 31
NON-GAAP FINANCIAL MEASURES
($ millions)
Print SegmentQ1 2016 Q2 2016 Q4 Q3 2016
2015 2014 2013 2016 2015 LTM 2016 2015 2016 2015 LTM 2016 2015 2016 2015 2015 LTM
Magazines, catalogs and retail inserts $1,806.6 $2,035.9 $2,108.7 $406.8 $437.7 $1,775.7 $377.6 $422.9 $784.4 $860.6 $1,730.4 $407.1 $450.3 $1,191.5 $1,310.9 $495.7 $1,687.2
Books 925.0 787.3 827.0 242.8 177.4 990.4 288.0 201.0 530.8 378.4 1,077.4 309.8 292.6 840.6 671.0 254.0 1,094.6
Europe 304.7 381.3 385.1 70.0 74.8 299.9 66.6 69.5 136.6 144.3 297.0 72.1 77.9 208.7 222.2 82.5 291.2
Directories 144.4 148.6 177.3 32.6 33.0 144.0 31.6 37.1 64.2 70.1 138.5 32.4 33.5 96.6 103.6 40.8 137.4
Net sales $3,180.7 $3,353.1 $3,498.1 $752.2 $722.9 $3,210.0 $763.8 $730.5 $1,516.0 $1,453.4 $3,243.3 $821.4 $854.3 $2,337.4 $2,307.7 $873.0 $3,210.4
Income from operations 95.9 46.8 126.6 32.2 18.3 109.8 34.2 7.7 66.4 26.0 136.3 46.7 27.8 113.1 53.8 42.1 155.2
Depreciation and amortization 164.2 164.4 185.4 41.1 38.4 166.9 39.2 38.9 80.3 77.3 167.2 36.8 44.0 117.1 121.3 42.9 160.0
Restructuring, impairment and other
charges, net53.1 126.9 78.9 3.0 4.6 51.5 5.1 20.6 8.1 25.2 36.0 1.2 24.2 9.3 49.4 3.7 13.0
Purchase accounting inventory
adjustments, net10.8 - - - - 10.8 - 3.2 - 3.2 7.6 - 6.7 - 9.9 0.9 0.9
Non-GAAP Adjusted EBITDA $324.0 $338.1 $390.9 $76.3 $61.3 $339.0 $78.5 $70.4 $154.8 $131.7 $347.1 $84.7 $102.7 $239.5 $234.4 $89.6 $329.1
Non-GAAP Adjusted EBITDA margin 10.2% 10.1% 11.2% 10.1% 8.5% 10.6% 10.3% 9.6% 10.2% 9.1% 10.7% 10.3% 12.0% 10.2% 10.2% 10.3% 10.3%
Office Products SegmentQ1 2016 Q2 2016 Q4 Q3 2016
2015 2014 2013 2016 2015 LTM 2016 2015 2016 2015 LTM 2016 2015 2016 2015 2015 LTM
Net sales $562.2 $500.3 $242.9 $127.8 $138.0 $552.0 $142.3 $148.5 $270.1 $286.5 $545.8 $127.1 $144.7 $397.2 $431.2 $131.0 $528.2
Income from operations 46.8 39.8 24.1 13.8 8.5 52.1 13.2 13.9 27.0 22.4 51.4 11.2 14.1 38.2 36.5 10.3 48.5
Depreciation and amortization 15.7 15.1 6.2 3.7 4.4 15.0 3.8 3.8 7.5 8.2 15.0 3.7 3.7 11.2 11.9 3.8 15.0
Restructuring, impairment and other
charges, net3.2 4.6 0.4 (0.1) 1.3 1.8 - 0.5 (0.1) 1.8 1.3 0.2 1.1 0.1 2.9 0.3 0.4
Purchase accounting inventory
adjustments, net- 2.2 - - - - - - - - - - - - - - -
Non-GAAP Adjusted EBITDA $65.7 $61.7 $30.7 $17.4 $14.2 $68.9 $17.0 $18.2 $34.4 $32.4 $67.7 $15.1 $18.9 $49.5 $51.3 $14.4 $63.9
Non-GAAP Adjusted EBITDA margin 11.7% 12.3% 12.6% 13.6% 10.3% 12.5% 11.9% 12.3% 12.7% 11.3% 12.4% 11.9% 13.1% 12.5% 11.9% 11.0% 12.1%
Q1 Q2 Q2 YTD Q3 Q3 YTD
Q1 Q2 Q2 YTD Q3 Q3 YTD
LSC COMMUNICATIONS | 32
ORGANIC GROWTH RATES
($ millions)
Magazines,
Catalogs, and
Retail Inserts
Books Europe Directories Total PrintTotal Office
ProductsTotal LSC
3Q 2015 YTD Net Sales as Reported 1,310.9$ 671.0$ 222.2$ 103.6$ 2,307.7$ 431.2$ 2,738.9$
Pro forma (1) - 117.9 - - 117.9 - 117.9
1,310.9$ 788.9$ 222.2$ 103.6$ 2,425.6$ 431.2$ 2,856.8$
3Q 2016 YTD Net Sales as Reported 1,191.5 840.6 208.7 96.6 2,337.4 397.2 2,734.6
As Reported % Change -9.1% 25.3% -6.1% -6.8% 1.3% -7.9% -0.2%
Pro Forma % Change -9.1% 6.6% -6.1% -6.8% -3.6% -7.9% -4.3%
Non-GAAP Adjustments:
Impact of pass-through paper sales -3.8% 3.8% 0.0% -3.5% -1.0% 0.0% -0.8%
Impact of changes in foreign exchange rates -1.0% 0.0% -4.7% 0.0% -0.9% -0.6% -1.0%
3Q YTD Organic % Change -4.3% 2.8% -1.4% -3.3% -1.7% -7.3% -2.5%
3Q 2015 Net Sales as Reported 450.3$ 292.6$ 77.9$ 33.5$ 854.3$ 144.7$ 999.0$
3Q 2016 Net Sales as Reported 407.1 309.8 72.1 32.4 821.4 127.1 948.5
As Reported % Change -9.6% 5.9% -7.4% -3.3% -3.9% -12.2% -5.1%
Non-GAAP Adjustments:
Impact of pass-through paper sales -4.3% 5.4% -1.3% 0.0% -0.6% 0.0% -0.5%
Impact of changes in foreign exchange rates -0.9% 0.0% -3.3% 0.0% -0.8% -0.2% -0.7%
3Q Organic % Change -4.4% 0.5% -2.8% -3.3% -2.5% -12.0% -3.9%
(1) Adjusted for net sales of acquired business: Courier
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