R.R. Donnelley eyes $600 million of cash flow, leverage below 3 times

By Jennifer Lanning Drey

Savannah, Ga., June 21 - R.R. Donnelley & Sons Co. expects to generate $600 million of free cash flow in 2011 and aims to keep its gross leverage in the range of 2.5 times to 3.0 times, Daniel Leib, the company's chief financial officer, said Tuesday during a presentation at the Nasdaq OMX investor program in London.

The CFO noted that the company has no significant debt obligations until 2014.

At the same time, R.R. Donnelley sees no need to carry out large acquisitions, leaving much of capital available to be deployed for dividends and share repurchases, he said.

"We have built a successful platform that is very diverse in product offering. For someone else to replicate what we have built would cost billions of dollars, and we don't see someone else doing it," he said about the company's lack of interest in major acquisitions.

The company currently has available liquidity of about $1.5 billion, Leib reported.

Going forward, R.R. Donnelley also appears to be transitioning into a less-capital-intensive company based on the product lines that are growing versus those with less growth, he said.

The company expects capital expenditures of between $250 million and $275 million in 2011. On a go-forward basis, capital expenditures are expected to be between 2.25% and 2.5% of revenue, Leib said.

R.R. Donnelley is an integrated communications company based in Chicago.

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