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R.R. Donnelley & Sons Company Message Board

  • perham1 perham1 Nov 21, 2012 5:31 PM Flag

    Cash Flow

    When I review the company's cash flow it appears to be dropping at a good clip. Here is what I see

    TTM 501 -190 -266 45 -200 -155
    2011 722 -209 -260 253 -200 53
    2010 832 -216 -232 384 -200 184
    2009 796 -216 -245 335 -200 135
    2008 1257 -219 -238 800 -200 600
    2007 1296 -227 -227 842 -200 642
    2006 1097 -225 -139 733 -200 533
    2005 966 -223 -111 632 -200 432
    2004 949 -201 -86 662 -200 462
    2003 459 -116 -50 293 -200 93
    2002 540 -111 -63 366 -200 166

    Column Key
    1 Period
    2 Operating cash flow
    3 Dividends
    4 Interest
    5 Free Cash
    6. Estimated Minimum Capital Spend to keep running
    7. Remaining Cash

    I adjusted operating cash to remove things like changes in accounts payable, inventories and accounts receivable. I am interested in other thoughts regarding this.

    Looks like the dividend will need to be cut unless they can cut more expenses. With engineering and maintenance already cut to the bone and with the pension chopped not sure what else is left to cut. Last time I drove by a plant the glass was broken out of the sign and the weeds were growing around the parking lot. Looks like they have been cutting with a vengance. Will be interested in seeing what else they can do to boost cash flow.

    Sentiment: Strong Sell

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    • I got all of the figures right out of Morningstar. Just take the operating cash flow calculation and remove the accounts payable, account receivalbe, and inventory. That is column 1. Capital spend of $200 million is the apprxoimate minimum capital spend for the last 10 years. Interest expense is from the income statement. Given their deteriorating credit rating and increasing debt I believe this will increase even if they can cut the debt. When the debt comes due you can expect it to be refinanced at a higher rate.

      Regarding engineering and maintenance, I have two college friends from school who used to be engineers there. They both got fired about 8 years ago and told me that engineering and maintenance had been drastically reduced. This is old news and RRD talked about their work force reductions and cost cutting efforts in many regulatory filings.

      I was on vacation a few weeks ago and drove by the RRD plant in Mattoon, IL where one of my friends worked (the other worked in Chicago at HQ) and the outside of the plant looked terrible. Maybe this is an exception but I was not impressed. Perhaps you can also go take a look at some plants and see if they are being kept up.

      I enjoy investing and like to see if useful information on message boards. I also try to provide any information I have to make the message boards better. If you don't agree maybe you can make some big bucks but from what I know this company is not a good investment.

      I am not short on the stock but I have reduced my holdings from over 2,500 shares down to 100. Getting ready to sell that as well unless I see an analysis showing that this is still a good investment. So far have not seen anything convincing. I have lost money on this stock and hope you are right that it is a good investment but from what I can tell it is not good. Their expansion investments have paid off about as well as Hewlett Packard's did and their market is shrinking faster than their debt load.

      Time will tell.

      Sentiment: Strong Sell

    • Where are you getting these numbers? They do not match their financials. Betting on a short position is one thing, creating this table that does not match what anyone can check is a little over the top. And where is that plant you refer to? You also talk about inside information regarding their budget for engineering and maintenance, items not available in their financials - that's actually illegal. People - give this post a zero on credibility!

      • 3 Replies to flaed100
      • cap ex also lower, running a little over 2% of sales.

      • agree. cash flow numbers don't match what i find from other resources, which show steady free cash flow for the past 8 years, and higher than pre-2004 levels.

      • Numbers are right off Morningstar. Oprating cash flow calcs with removal of accounts payable, accounts receivable and inventory changes to make more meaningful.

        The plant I saw was in Mattoon, IL. Drove by a few weeks ago.

        Engineering and maintenance cuts are common news to anyone lives in a town with an RRD plant. Most took place 7 or 8 years ago

        Interest expense was from Morningstar. As debt comes due I would expect this expense to rise due to increasing interest rates (due to high debt and dropping cash flow) even if they are able to cut their debt somewhat..

        I am not short but have cut my position from several thousand shares down to 100 shares. Getting ready to sell that unless i see something that changes my mind and the people on this board don't seem to be provding anything of use lately. I enjoy investing and try to glean useful information off of message boards. Likewise I try to contribute useful information. Not sure why you don't want to hear it but feel free to provide your own analsysis. Perhaps you can change my mind.

        Sentiment: Strong Buy

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