Donnelley Financial Solutions, Inc. - Quarter Report: 2022 September (Form 10-Q)

Large Accelerated filer

Accelerated filer

Non-Accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-37728

Donnelley Financial Solutions, Inc.

(Exact name of registrant as specified in its charter)


Delaware		36-4829638
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

35 West Wacker Drive, Chicago, Illinois		60601
(Address of principal executive offices)		(Zip code)

(800) 823-5304

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock (Par Value $0.01)	DFIN	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of October 28, 2022, 29,103,898 shares of common stock were outstanding.

DONNELLEY FINANCIAL SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS



		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		3
Part I
FINANCIAL INFORMATION
Item 1:	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021	5
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	7
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3:	Quantitative and Qualitative Disclosure About Market Risk	41
Item 4:	Controls and Procedures	42


Part II
OTHER INFORMATION
Item 1:	Legal Proceedings	42
Item 1A:	Risk Factors	42
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3:	Defaults Upon Senior Securities	42
Item 4:	Mine Safety Disclosures	42
Item 5:	Other Information	42
Item 6:	Exhibits	43
Signatures		47

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Donnelley Financial Solutions, Inc. and subsidiaries (“DFIN” or the “Company”) has made forward-looking statements in this Quarterly Report on Form 10-Q (the “Quarterly Report”) within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of the Company. Generally, forward-looking statements include information concerning possible or assumed future actions, events, or results of operations of the Company. These statements may include words such as “anticipates,” “estimates,” “expects,” “projects,” “forecasts,” “intends,” “plans,” “continues,” “believes,” “may,” “will,” “goals” and variations of such words and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are not guarantees of future performance. These forward-looking statements are subject to a number of important factors, including those factors discussed in detail in “Item 1A: Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022 (the “Annual Report”), in addition to those discussed elsewhere in this Quarterly Report, that could cause the Company’s actual results to differ materially from those indicated in any such forward-looking statements. These factors include, but are not limited to:

•

the adverse impacts of the pandemic resulting from a novel strain of coronavirus, known as COVID-19 (“COVID-19”), and other global public health epidemics on the Company’s business and operations, including demand for DFIN services and products, and the Company’s ability to effectively manage the impacts of the coronavirus pandemic on its business operations;

•

the volatility of the global economy and financial markets, and its impact on transactional volume;

•

failure to offer high quality customer support and services;

•

the retention of existing, and continued attraction of additional clients;

•

the growth of new technologies with which the Company may be able to adequately compete;

•

the Company’s inability to maintain client referrals;

•

the competitive market for the Company’s products and industry fragmentation affecting prices;

•

the ability to gain client acceptance of the Company’s new products and technologies;

•

delay in market acceptance of the Company’s services and products due to undetected errors or failures found in its services and products;

•

failure to maintain the confidentiality, integrity and availability of systems, software and solutions;

•

failure to properly use and protect client and employee information and data;

•

the effect of a material breach of security or other performance issues of any of the Company’s or its vendors’ systems;

•

factors that affect client demand, including changes in economic conditions, national or international regulations and clients’ budgetary constraints;

•

the Company’s ability to access debt and the capital markets due to adverse credit market conditions;

•

the effect of increasing costs of providing healthcare and other benefits to employees;

•

changes in the availability or costs of key materials (such as ink and paper);

•

failure to protect the Company’s proprietary technology;

•

ability to maintain the Company’s brands and reputation;

•

the retention of existing, and continued attraction of, key employees, including management;

•

funding obligations arising from multiemployer pension plans obligations of the Company’s former affiliates;

•

the effects of operating in international markets, including fluctuations in currency exchange rates; and

•

the effect of economic and political conditions on a regional, national or international basis.

Because forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Undue reliance should not be placed on such statements, which speak only as of the date of this document or the date of any document that may be incorporated by reference into this document.

Consequently, readers of the Quarterly Report should consider these forward-looking statements only as the Company’s current plans, estimates and beliefs. Except to the extent required by law, the Company does not undertake 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 statements or to reflect the occurrence of anticipated or unanticipated events. The Company undertakes no obligation to update or revise any forward-looking statements in this Quarterly Report to reflect any new events or any change in conditions or circumstances other than to the extent required by law.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net sales
Tech-enabled services	$	87.4		$	142.1		$	312.4		$	394.6
Software solutions		69.5			69.3			210.9			196.2
Print and distribution		31.8			36.3			142.6			169.7
Total net sales		188.7			247.7			665.9			760.5
Cost of sales (a)
Tech-enabled services		35.3			39.6			113.2			123.3
Software solutions		29.0			26.9			85.1			76.5
Print and distribution		19.6			26.6			96.2			121.1
Total cost of sales		83.9			93.1			294.5			320.9
Selling, general and administrative expenses (a)		63.8			77.0			205.5			225.6
Depreciation and amortization		11.7			10.0			33.6			29.9
Restructuring, impairment and other charges, net		2.6			3.3			4.6			6.9
Other operating income, net		—			(0.7	)		(0.2	)		(0.7	)
Income from operations		26.7			65.0			127.9			177.9
Interest expense, net		2.3			5.9			5.9			17.1
Investment and other income, net		(2.8	)		(1.7	)		(3.3	)		(4.0	)
Earnings before income taxes		27.2			60.8			125.3			164.8
Income tax expense		8.0			18.6			33.7			44.5
Net earnings	$	19.2		$	42.2		$	91.6		$	120.3

Net earnings per share:
Basic	$	0.64		$	1.25		$	2.93		$	3.57
Diluted	$	0.62		$	1.22		$	2.81		$	3.48
Weighted average number of common shares outstanding:
Basic		29.8			33.7			31.3			33.7
Diluted		30.9			34.7			32.6			34.6

(a)

Exclusive of depreciation and amortization

See Notes to the Unaudited Condensed Consolidated Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(UNAUDITED)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net earnings	$	19.2		$	42.2		$	91.6		$	120.3

Other comprehensive (loss) income, net of tax:
Translation adjustments		(1.7	)		(0.7	)		(2.1	)		(0.2	)
Adjustment for net periodic pension and other postretirement benefits plans		0.5			0.6			1.8			2.0
Other comprehensive (loss) income, net of tax		(1.2	)		(0.1	)		(0.3	)		1.8
Comprehensive income	$	18.0		$	42.1		$	91.3		$	122.1

See Notes to the Unaudited Condensed Consolidated Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Balance Sheets

(in millions, except per share data)

(UNAUDITED)


	September 30, 2022			December 31, 2021
ASSETS
Cash and cash equivalents	$	10.8		$	54.5
Receivables, less allowances for expected losses of $17.5 in 2022 (2021 - $12.7)		210.8			199.1
Prepaid expenses and other current assets		27.5			23.5
Assets held for sale		2.6			2.6
Total current assets		251.7			279.7
Property, plant and equipment, net		17.7			18.7
Operating lease right-of-use assets		36.4			42.6
Software, net		72.4			63.7
Goodwill		409.0			410.0
Other intangible assets, net		8.0			8.7
Deferred income taxes, net		30.5			31.7
Other noncurrent assets		25.1			28.2
Total assets	$	850.8		$	883.3
LIABILITIES
Accounts payable	$	42.1		$	36.3
Operating lease liabilities		16.6			17.9
Accrued liabilities		163.2			207.2
Total current liabilities		221.9			261.4
Long-term debt		191.7			124.0
Deferred compensation liabilities		18.5			19.8
Pension and other postretirement benefits plans liabilities		36.2			40.6
Noncurrent operating lease liabilities		31.5			39.4
Other noncurrent liabilities		19.5			21.1
Total liabilities		519.3			506.3
Commitments and Contingencies (Note 7)
EQUITY
Preferred stock, $0.01 par value
Authorized: 1.0 shares; Issued: None		—			—
Common stock, $0.01 par value
Authorized: 65.0 shares;
Issued and outstanding: 36.9 shares and 29.3 shares in 2022 (2021 - 35.9 shares and 33.0 shares)		0.4			0.4
Treasury stock, at cost: 7.6 shares in 2022 (2021 - 2.9 shares)		(208.0	)		(57.1	)
Additional paid-in capital		274.7			260.6
Retained earnings		343.0			251.4
Accumulated other comprehensive loss		(78.6	)		(78.3	)
Total equity		331.5			377.0
Total liabilities and equity	$	850.8		$	883.3

See Notes to the Unaudited Condensed Consolidated Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Cash Flows

(in millions)

(UNAUDITED)


	Nine Months Ended September 30,
	2022			2021
OPERATING ACTIVITIES
Net earnings	$	91.6		$	120.3
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		33.6			29.9
Provision for expected losses on accounts receivable		6.2			2.2
Impairment charge		—			2.8
Share-based compensation		13.9			14.2
Deferred income taxes		0.4			6.6
Net pension plan income		(0.7	)		(3.2	)
Amortization of right-of-use assets		12.1			12.9
Other		0.5			0.3
Changes in operating assets and liabilities:
Accounts receivable, net		(20.5	)		(73.5	)
Prepaid expenses and other current assets		(3.3	)		(11.6	)
Accounts payable		4.9			(7.5	)
Income taxes payable and receivable		(1.7	)		5.3
Accrued liabilities and other		(44.2	)		21.2
Operating lease liabilities		(14.7	)		(15.7	)
Pension and other postretirement benefits plans contributions		(1.2	)		(1.0	)
Net cash provided by operating activities		76.9			103.2
INVESTING ACTIVITIES
Capital expenditures		(39.4	)		(28.2	)
Other investing activities		—			0.9
Net cash used in investing activities		(39.4	)		(27.3	)
FINANCING ACTIVITIES
Revolving facility borrowings		270.0			278.0
Payments on revolving facility borrowings		(202.5	)		(278.0	)
Debt issuance costs		—			(2.8	)
Treasury share repurchases		(150.0	)		(26.5	)
Proceeds from exercise of stock options		0.3			2.2
Finance lease payments		(1.4	)		(0.4	)
Net cash used in financing activities		(83.6	)		(27.5	)
Effect of exchange rate on cash and cash equivalents		2.4			0.9
Net (decrease) increase in cash and cash equivalents		(43.7	)		49.3
Cash and cash equivalents at beginning of year		54.5			73.6
Cash and cash equivalents at end of period	$	10.8		$	122.9
Supplemental cash flow information
Income taxes paid (net of refunds)	$	34.4		$	32.0
Interest paid	$	4.9		$	11.0

See Notes to the Unaudited Condensed Consolidated Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months Ended September 30, 2022 and 2021

(in millions)

(UNAUDITED)


	Common Stock				Treasury Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Equity
	Shares		Amount		Shares		Amount
Balance at June 30, 2022		36.9	$	0.4		6.6	$	(175.6	)	$	270.2	$	323.8	$	(77.4	)	$	341.4
Net earnings		—		—		—		—			—		19.2		—			19.2
Other comprehensive loss		—		—		—		—			—		—		(1.2	)		(1.2	)
Share-based compensation		—		—		—		—			4.4		—		—			4.4
Common stock repurchases		—		—		1.0		(32.3	)		—		—		—			(32.3	)
Issuance of share-based awards, net of withholdings and other		—		—		—		(0.1	)		0.1		—		—			—
Balance at September 30, 2022		36.9	$	0.4		7.6	$	(208.0	)	$	274.7	$	343.0	$	(78.6	)	$	331.5


	Common Stock				Treasury Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Equity
	Shares		Amount		Shares		Amount
Balance at June 30, 2021		35.9	$	0.4		2.3	$	(35.1	)	$	249.6	$	183.6	$	(78.9	)	$	319.6
Net earnings		—		—		—		—			—		42.2		—			42.2
Other comprehensive loss		—		—		—		—			—		—		(0.1	)		(0.1	)
Share-based compensation		—		—		—		—			5.2		—		—			5.2
Common stock repurchases		—		—		0.2		(8.2	)		—		—		—			(8.2	)
Issuance of share-based awards, net of withholdings and other		—		—		—		(0.1	)		0.3		—		—			0.2
Balance at September 30, 2021		35.9	$	0.4		2.5	$	(43.4	)	$	255.1	$	225.8	$	(79.0	)	$	358.9

See Notes to the Unaudited Condensed Consolidated Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Nine Months Ended September 30, 2022 and 2021

(in millions)

(UNAUDITED)


	Common Stock				Treasury Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Equity
	Shares		Amount		Shares		Amount
Balance at December 31, 2021		35.9	$	0.4		2.9	$	(57.1	)	$	260.6	$	251.4	$	(78.3	)	$	377.0
Net earnings		—		—		—		—			—		91.6		—			91.6
Other comprehensive loss		—		—		—		—			—		—		(0.3	)		(0.3	)
Share-based compensation		—		—		—		—			13.9		—		—			13.9
Common stock repurchases		—		—		4.3		(138.8	)		—		—		—			(138.8	)
Issuance of share-based awards, net of withholdings and other		1.0		—		0.4		(12.1	)		0.2		—		—			(11.9	)
Balance at September 30, 2022		36.9	$	0.4		7.6	$	(208.0	)	$	274.7	$	343.0	$	(78.6	)	$	331.5


	Common Stock				Treasury Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Equity
	Shares		Amount		Shares		Amount
Balance at December 31, 2020		34.9	$	0.3		1.6	$	(16.0	)	$	238.8	$	105.5	$	(80.8	)	$	247.8
Net earnings		—		—		—		—			—		120.3		—			120.3
Other comprehensive income		—		—		—		—			—		—		1.8			1.8
Share-based compensation		—		—		—		—			14.2		—		—			14.2
Common stock repurchases		—		—		0.6		(18.7	)		—		—		—			(18.7	)
Issuance of share-based awards, net of withholdings and other		1.0		0.1		0.3		(8.7	)		2.1		—		—			(6.5	)
Balance at September 30, 2021		35.9	$	0.4		2.5	$	(43.4	)	$	255.1	$	225.8	$	(79.0	)	$	358.9

See Notes to the Unaudited Condensed Consolidated Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

Note 1. Overview, Basis of Presentation and Significant Accounting Policies

Description of Business

DFIN is a leading global risk and compliance solutions company. The Company provides regulatory filing and deal solutions via its software, technology-enabled services and print and distribution solutions to public and private companies, mutual funds and other regulated investment firms, to serve its clients’ regulatory and compliance needs. DFIN helps its clients comply with applicable regulations where and how they want to work in a digital world, providing numerous solutions tailored to each client’s precise needs. The prevailing trend is toward clients choosing to utilize the Company’s software solutions, in conjunction with its tech-enabled services, to meet their document and filing needs, while at the same time shifting away from physical print and distribution of documents, except for cases where it is still regulatorily required or requested by investors.

The Company serves its clients’ regulatory and compliance needs throughout their respective life cycles. For its capital markets clients, the Company offers solutions that allow public companies to comply with applicable U.S. Securities and Exchange Commission (“SEC”) regulations including filing agent services, digital document creation and online content management tools that support their corporate financial transactions and regulatory reporting; solutions to facilitate clients’ communications with their investors; and virtual data rooms and other deal management solutions. For investment companies, including mutual fund, insurance-investment and alternative investment companies, the Company provides solutions for creating, compiling and filing regulatory communications as well as solutions for investors designed to improve the access to and accuracy of their investment information.

Services and Products

The Company separately reports its net sales and related cost of sales for its software solutions, tech-enabled services and print and distribution offerings. The Company’s software solutions consist of Venue® Virtual Data Room (“Venue”), ActiveDisclosure®, eBrevia and the Arc Suite software platform ("Arc Suite"), among others. The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) filing services and transaction solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of DFIN and all majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The financial data presented herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes included in the Company’s latest Annual Report. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Results of interim periods should not be considered indicative of the results for the full year.

Significant Accounting Policies

Use of Estimates—The preparation of financial statements in conformity with GAAP requires the extensive use of management’s estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s significant accounting policies and critical accounting estimates are disclosed in the Annual Report.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Allowance for Expected Losses—Transactions affecting the current expected credit loss (“CECL”) reserve during the nine months ended September 30, 2022 and 2021 were as follows:


	September 30,
	2022			2021
Balance, beginning of year (a)	$	12.7		$	10.5
Provisions charged to expense		6.2			2.2
Write-offs, reclassifications and other		(1.4	)		0.3
Balance, end of period (a)	$	17.5		$	13.0

__________

(a)

As of September 30, 2022, the CECL reserve balance was comprised of a $16.7 million provision for accounts receivable and a $0.8 million provision for unbilled receivables and contract assets. As of December 31, 2021, the CECL reserve balance was comprised of a $12.0 million provision for accounts receivable and a $0.7 million provision for unbilled receivables and contract assets.

Property, Plant and Equipment, net—The components of the Company’s property, plant and equipment, net at September 30, 2022 and December 31, 2021 were as follows:


	September 30, 2022			December 31, 2021
Land	$	0.3		$	0.3
Buildings		20.5			20.8
Machinery and equipment		68.6			68.5
		89.4			89.6
Less: Accumulated depreciation		(71.7	)		(70.9	)
Total	$	17.7		$	18.7

Depreciation expense was $1.7 million and $1.5 million for the three months ended September 30, 2022 and 2021, respectively, and $4.8 million and $4.6 million for the nine months ended September 30, 2022 and 2021, respectively.

Assets Held for Sale—As of September 30, 2022 and December 31, 2021, the Company had land held for sale with a carrying value of $2.6 million. On August 30, 2022, the Company entered into an agreement to sell the land for $13.0 million. The closing of this transaction is subject to a due diligence period, a period to obtain needed entitlements and customary closing conditions. There is no assurance that this sale will be completed.

Software—Capitalized software development costs are amortized over their estimated useful life using the straight-line method, up to a maximum of three years. Amortization expense related to internally-developed software, excluding amortization expense related to other intangible assets, was $9.8 million and $8.2 million for the three months ended September 30, 2022 and 2021, respectively, and $28.1 million and $24.5 million for the nine months ended September 30, 2022 and 2021, respectively.

Investments—The carrying value of the Company’s investments in equity securities was $8.5 million and $8.0 million at September 30, 2022 and December 31, 2021, respectively. The Company measures its equity securities that do not have a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company performs an assessment on a quarterly basis to determine whether triggering events for impairment exist and to identify any observable price changes. During the three and nine months ended September 30, 2022, the Company recorded an unrealized gain of $0.5 million, and during the three and nine months ended September 30, 2021, the Company recorded a net unrealized gain of $0.6 million and $0.4 million, respectively, resulting from observable price changes.

Recently Issued Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, as if it had originated the contracts, rather than at fair value. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Adoption of this standard is not expected to have a material impact on the Company's Unaudited Condensed Consolidated Financial Statements.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Note 2. Revenue

Revenue Recognition

The Company manages highly-customized data and materials to enable filings with the SEC on behalf of its customers as well as performs eXtensible Business Reporting Language (“XBRL”) and other services. Clients are provided with EDGAR filing services, XBRL compliance services and translation, editing, interpreting, proof-reading and multilingual typesetting services, among other services. The Company provides software solutions to public and private companies, mutual funds and other regulated investment firms to serve their regulatory and compliance needs, including Venue, Arc Suite and ActiveDisclosure, among others, and provides digital document creation, online content management and print and distribution solutions.

Revenue is recognized upon transfer of control of promised services or products to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services or products. The Company’s services include software solutions and tech-enabled services whereas the Company’s products are comprised of print and distribution offerings. The Company’s arrangements with customers often include promises to transfer multiple services or products to a customer. Determining whether services and products are considered distinct performance obligations that should be accounted for separately requires significant judgment. Certain customer arrangements have multiple performance obligations as certain promises are both capable of being distinct and are distinct within the context of the contract. Other customer arrangements have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, and therefore is not distinct. Revenue for the Company’s tech-enabled services, software solutions and print and distribution offerings is recognized either over time or at a point in time, as further disclosed in the Annual Report.

Disaggregation of Revenue

The following tables disaggregate revenue between tech-enabled services, software solutions and print and distribution by reportable segment:


	Three Months Ended September 30,
	2022								2021
	Tech-enabled Services		Software Solutions		Print and Distribution		Total		Tech-enabled Services		Software Solutions		Print and Distribution		Total
Capital Markets - Software Solutions	$	—	$	45.8	$	—	$	45.8	$	—	$	48.1	$	—	$	48.1
Capital Markets - Compliance and Communications Management		66.8		—		16.5		83.3		122.5		—		20.0		142.5
Investment Companies - Software Solutions		—		23.7		—		23.7		—		21.2		—		21.2
Investment Companies - Compliance and Communications Management		20.6		—		15.3		35.9		19.6		—		16.3		35.9
Total net sales	$	87.4	$	69.5	$	31.8	$	188.7	$	142.1	$	69.3	$	36.3	$	247.7

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)


	Nine Months Ended September 30,
	2022								2021
	Tech-enabled Services		Software Solutions		Print and Distribution		Total		Tech-enabled Services		Software Solutions		Print and Distribution		Total
Capital Markets - Software Solutions	$	—	$	136.8	$	—	$	136.8	$	—	$	130.4	$	—	$	130.4
Capital Markets - Compliance and Communications Management		248.8		—		88.1		336.9		332.3		—		101.8		434.1
Investment Companies - Software Solutions		—		74.1		—		74.1		—		65.8		—		65.8
Investment Companies - Compliance and Communications Management		63.6		—		54.5		118.1		62.3		—		67.9		130.2
Total net sales	$	312.4	$	210.9	$	142.6	$	665.9	$	394.6	$	196.2	$	169.7	$	760.5

Unbilled Receivables and Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in unbilled receivables, contract assets or contract liabilities. Contract assets represent revenue recognized for performance obligations completed before an unconditional right to payment exists and therefore invoicing has not yet occurred. The Company generally estimates contract assets based on the historical selling price adjusted for its current experience and expected resolution of the variable consideration of the completed performance obligation. When the Company’s contracts contain variable consideration, the variable consideration is recognized only to the extent that it is probable that a significant revenue reversal will not occur in a future period. As a result, the estimated revenue and contract assets may be constrained until the uncertainty associated with the variable consideration is resolved, which generally occurs in less than one year. Contract assets were $21.0 million and $24.9 million at September 30, 2022 and December 31, 2021, respectively. Generally, the contract assets balance is impacted by the recognition of additional revenue, amounts invoiced to customers and changes in the level of constraint applied to variable consideration. Unbilled receivables are recorded when there is an unconditional right to payment and invoicing has not yet occurred. The Company estimates the value of unbilled receivables based on a combination of historical customer selling price and management’s assessment of realizable selling price. Unbilled receivables were $55.6 million and $46.7 million at September 30, 2022 and December 31, 2021, respectively. Unbilled receivables and contract assets are included in accounts receivable on the Unaudited Condensed Consolidated Balance Sheets.

Amounts recognized as revenue exceeded the estimates for performance obligations satisfied in previous periods by approximately $15.5 million and $22.9 million for the three months ended September 30, 2022 and 2021, respectively, and by approximately $14.9 million and $26.2 million for the nine months ended September 30, 2022 and 2021, respectively, primarily due to changes in the Company’s estimate of variable consideration and the application of the constraint.

Substantially all of the Company’s contracts with significant remaining performance obligations have an initial expected duration of one year or less. As of September 30, 2022, the future estimated revenue related to unsatisfied or partially satisfied performance obligations under contracts with an original contractual term in excess of one year was approximately $127 million, of which approximately 50% is expected to be recognized as revenue over the succeeding twelve months, and the remainder recognized thereafter.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Contract liabilities consist of deferred revenue and progress billings which are included in accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets. The Company recognized $5.3 million and $2.6 million of revenue during the three months ended September 30, 2022 and 2021, respectively, that was included in the deferred revenue balances at the beginning of the respective periods. The Company recognized $31.4 million and $18.5 million of revenue during the nine months ended September 30, 2022 and 2021, respectively, that was included in the deferred revenue balances at the beginning of the respective periods. Changes in contract liabilities were as follows:


Balance at January 1, 2022	$	36.0
Deferral of revenue		119.2
Revenue recognized		(103.9	)
Balance at September 30, 2022	$	51.3


Balance at January 1, 2021	$	21.7
Deferral of revenue		102.9
Revenue recognized		(86.1	)
Balance at September 30, 2021	$	38.5

Note 3. Goodwill and Other Intangible Assets

Goodwill—The goodwill balances by reportable segment were as follows:


	Gross book value at December 31, 2021		Accumulated impairment charges at December 31, 2021			Net book value at December 31, 2021		Foreign exchange and other adjustments			Net book value at September 30, 2022
Capital Markets - Software Solutions	$	103.7	$	—		$	103.7	$	(0.2	)	$	103.5
Capital Markets - Compliance and Communications Management		253.1		—			253.1		(0.6	)		252.5
Investment Companies - Software Solutions		53.2		—			53.2		(0.2	)		53.0
Investment Companies - Compliance and Communications Management		40.6		(40.6	)		—		—			—
Total	$	450.6	$	(40.6	)	$	410.0	$	(1.0	)	$	409.0

Other Intangible Assets—The components of other intangible assets at September 30, 2022 and December 31, 2021 were as follows:


	September 30, 2022							December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Customer relationships (useful life of 15 years)	$	10.4	$	(2.6	)	$	7.8	$	10.4	$	(2.1	)	$	8.3
Trade names (useful life of 5 years)		1.0		(0.8	)		0.2		1.0		(0.6	)		0.4
Total other intangible assets (a)	$	11.4	$	(3.4	)	$	8.0	$	11.4	$	(2.7	)	$	8.7

__________

(a)

The weighted-average remaining useful life of the unamortized intangible assets as of September 30, 2022 is approximately eleven years.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

The following table outlines the estimated annual amortization expense related to other intangible assets:


For the year ending December 31,	Amount
2022 (excluding the nine months ended September 30, 2022)	$	0.2
2023		0.9
2024		0.7
2025		0.7
2026		0.7
2027 and thereafter		4.8
Total	$	8.0

Note 4. Leases

The Company has operating leases for certain service centers, office space, warehouses and equipment. The Company made payments of $5.6 million and $5.5 million for the three months ended September 30, 2022 and 2021, respectively, and $16.3 million and $17.5 million for the nine months ended September 30, 2022 and 2021, respectively, related to its operating lease liabilities.

The Company has finance leases, primarily related to certain IT equipment. During the three and nine months ended September 30, 2022, the Company made payments of $0.5 million and $1.4 million, respectively related to its finance lease liabilities. During both the three and nine months ended September 30, 2021, the Company made payments of $0.4 million related to its finance lease liabilities.

The components of lease expense were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating lease expense:
Operating lease expense	$	4.4		$	4.7		$	13.2		$	14.4
Sublease income		(1.2	)		(1.1	)		(3.3	)		(3.3	)
Net operating lease expense	$	3.2		$	3.6		$	9.9		$	11.1

Finance lease expense:
Amortization of ROU assets	$	0.5		$	0.4		$	1.4		$	0.4
Interest on lease liabilities		—			—			0.1			—
Total finance lease expense	$	0.5		$	0.4		$	1.5		$	0.4

The Company’s finance leases are presented within the Company’s Unaudited Condensed Consolidated Balance Sheets as follows:


	September 30, 2022		December 31, 2021
Property, plant and equipment, net	$	7.0	$	7.5

Accrued liabilities	$	1.8	$	1.6
Other noncurrent liabilities		5.3		5.9
Total	$	7.1	$	7.5

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Note 5. Restructuring, Impairment and Other Charges, net

Restructuring, Impairment and Other Charges, net recognized in Results of Operations

The Company records restructuring charges associated with management-approved restructuring plans, which could include the elimination of job functions, closure or relocation of facilities, reorganization of operations, changes in management structure, workforce reductions or other actions. Restructuring charges may include ongoing and enhanced termination benefits related to employee separations, contract termination costs and other related costs associated with exit or disposal activities.

For the three months ended September 30, 2022 and 2021, the Company recorded the following restructuring, impairment and other charges, net by reportable segment:


	Employee Terminations		Other Restructuring Charges		Other Charges		Total
Three Months Ended September 30, 2022
Capital Markets - Software Solutions	$	0.1	$	—	$	—	$	0.1
Capital Markets - Compliance and Communications Management		1.8		—		—		1.8
Investment Companies - Software Solutions		0.1		—		—		0.1
Investment Companies - Compliance and Communications Management		0.2		0.2		—		0.4
Corporate		0.1		—		0.1		0.2
Total	$	2.3	$	0.2	$	0.1	$	2.6


	Employee Terminations			Other Restructuring Charges		Impairment Charges		Total
Three Months Ended September 30, 2021
Capital Markets - Software Solutions	$	0.2		$	—	$	—	$	0.2
Capital Markets - Compliance and Communications Management		(0.1	)		—		2.8		2.7
Investment Companies - Compliance and Communications Management		0.1			0.2		—		0.3
Corporate		0.1			—		—		0.1
Total	$	0.3		$	0.2	$	2.8	$	3.3

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

For the nine months ended September 30, 2022 and 2021, the Company recorded the following restructuring, impairment and other charges, net by reportable segment:


	Employee Terminations		Other Restructuring Charges		Other Charges		Total
Nine Months Ended September 30, 2022
Capital Markets - Software Solutions	$	1.1	$	—	$	—	$	1.1
Capital Markets - Compliance and Communications Management		2.1		—		0.1		2.2
Investment Companies - Software Solutions		0.2		—		—		0.2
Investment Companies - Compliance and Communications Management		0.3		0.3		—		0.6
Corporate		0.3		—		0.2		0.5
Total	$	4.0	$	0.3	$	0.3	$	4.6


	Employee Terminations		Other Restructuring Charges		Impairment Charges		Other Charges		Total
Nine Months Ended September 30, 2021
Capital Markets - Software Solutions	$	0.3	$	—	$	—	$	—	$	0.3
Capital Markets - Compliance and Communications Management		0.4		—		2.8		0.1		3.3
Investment Companies - Software Solutions		0.1		—		—		—		0.1
Investment Companies - Compliance and Communications Management		2.1		0.8		—		—		2.9
Corporate		0.3		—		—		—		0.3
Total	$	3.2	$	0.8	$	2.8	$	0.1	$	6.9

For the three and nine months ended September 30, 2022, the Company recorded net restructuring charges of $2.3 million and $4.0 million, respectively, related to employee termination costs for approximately 10 and 80 employees, respectively, the majority of whom will be terminated by December 31, 2022. The restructuring actions were primarily related to the reorganization of certain capital markets operations and the relocation of a digital print facility.

For the three and nine months ended September 30, 2021, the Company recorded net restructuring charges of $0.3 million and $3.2 million, respectively, related to employee termination costs for approximately 170 employees for the nine months ended September 30, 2021, substantially all of whom were terminated as of December 31, 2021. The restructuring actions were primarily the result of the implementation of SEC Rule 30e-3 and amendments to SEC Rule 498A.

For the three and nine months ended September 30, 2021, the Company recorded a $2.8 million impairment charge related to the demolition of an office building.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Restructuring Reserve – Employee Terminations

The Company’s employee terminations liability is included in accrued liabilities in the Company’s Unaudited Condensed Consolidated Balance Sheets. Changes in the accrual for employee terminations during the nine months ended September 30, 2022, were as follows:


	December 31, 2021		Restructuring Charges		Reversals			Cash Paid			September 30, 2022
Employee terminations	$	2.4	$	4.3	$	(0.3	)	$	(1.3	)	$	5.1

Note 6. Retirement Plans

The components of estimated net pension plan income for the three and nine months ended September 30, 2022 and 2021 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Interest cost	$	1.8		$	1.5		$	5.5		$	4.6
Expected return on assets		(2.9	)		(3.5	)		(8.7	)		(10.6	)
Amortization, net		0.9			0.9			2.5			2.8
Net pension plan income	$	(0.2	)	$	(1.1	)	$	(0.7	)	$	(3.2	)

Note 7. Commitments and Contingencies

Litigation

From time to time, the Company’s customers and others file voluntary petitions for reorganization under United States bankruptcy laws. In such cases, certain pre-petition payments received by the Company from these parties could be considered preference items and subject to return. In addition, the Company may be party to certain litigation arising in the ordinary course of business. Management believes that the final resolution of these preference items and litigation will not have a material effect on the Company’s consolidated results of operations, financial position or cash flows.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Note 8. Debt

The Company’s debt as of September 30, 2022 and December 31, 2021 consisted of the following:


	September 30, 2022			December 31, 2021
Term Loan A Facility	$	125.0		$	125.0
Borrowings under the Revolving Facility		67.5			—
Unamortized debt issuance costs		(0.8	)		(1.0	)
Total long-term debt	$	191.7		$	124.0

Credit Agreement—On May 27, 2021 (the "Restatement Effective Date"), the Company amended and restated its credit agreement dated as of September 30, 2016 (as in effect prior to such amendment and restatement, the “Credit Agreement,” and the Credit Agreement, as so amended and restated, the “Amended and Restated Credit Agreement”), by and among the Company, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, to, among other things, provide for a $200.0 million delayed-draw term loan A facility (the "Term Loan A Facility") (bearing interest at a rate equal to the sum of the London Interbank Offered Rate ("LIBOR") plus a margin ranging from 2.00% to 2.50% based upon the Company's Consolidated Net Leverage Ratio), extend the maturity of the $300.0 million revolving credit facility (the "Revolving Facility") to May 27, 2026 and modify the financial maintenance and negative covenants in the Credit Agreement. The Amended and Restated Credit Agreement contains a number of covenants, including a minimum Interest Coverage Ratio and the Consolidated Net 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. The Credit Agreement generally allows annual dividend payments of up to $20.0 million in the aggregate.

Term Loan A Facility—The unpaid principal amount of the Term Loan A Facility is due and payable in full on May 27, 2026. Voluntary prepayments of the Term Loan A Facility are permitted at any time without premium or penalty. The weighted-average interest rate on borrowings under the Term Loan A Facility was 3.0% for the nine months ended September 30, 2022. The fair value of the Term Loan A Facility was $120.3 million and $124.2 million as of September 30, 2022 and December 31, 2021, respectively, and was determined to be Level 2 under the fair value hierarchy.

Revolving Facility—As of September 30, 2022, there were $67.5 million of borrowings outstanding under the Revolving Facility. The weighted average interest rate on borrowings under the Revolving Facility was 3.7% and 2.8% for the nine months ended September 30, 2022 and 2021, respectively. The fair value of the Company's borrowings under the Revolving Facility is classified as Level 2 under the fair value hierarchy and approximated its carrying value as of September 30, 2022, as the Revolving Facility carries a variable rate of interest reflecting current market rates.

The following table summarizes interest expense, net included in the Unaudited Condensed Consolidated Statements of Operations:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Interest incurred	$	2.5		$	6.1		$	6.4		$	17.6
Less: Interest income		(0.2	)		(0.2	)		(0.5	)		(0.5	)
Interest expense, net (a)	$	2.3		$	5.9		$	5.9		$	17.1

__________

(a)

Interest expense, net for the three and nine months ended September 30, 2021 included interest expense related to the Company's 8.25% Senior Notes Due 2024, which were repaid in full in the fourth quarter of 2021.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Note 9. Earnings per Share

Basic earnings per share is calculated by dividing net earnings by the weighted average number of common shares outstanding for the period. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all potentially dilutive share-based awards, including stock options, restricted stock units ("RSUs"), performance share units ("PSUs") and restricted stock.

The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation and the anti-dilutive share-based awards for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net earnings per share:
Basic	$	0.64	$	1.25	$	2.93	$	3.57
Diluted	$	0.62	$	1.22	$	2.81	$	3.48
Numerator:
Net earnings	$	19.2	$	42.2	$	91.6	$	120.3
Denominator:
Basic weighted average number of common shares outstanding		29.8		33.7		31.3		33.7
Dilutive awards		1.1		1.0		1.3		0.9
Diluted weighted average number of common shares outstanding		30.9		34.7		32.6		34.6

Note 10. Capital Stock

The Company has authorized for issuance 65 million shares of $0.01 par value common stock and one million shares of $0.01 par value preferred stock. The Board of Directors (the "Board") may divide the preferred stock into one or more series and fix the redemption, dividend, voting, conversion, sinking fund, liquidation and other rights. The Company has no present plans to issue any preferred stock.

Common Stock Repurchases—On February 17, 2022, the Board authorized an increase to its previously approved stock repurchase program to bring the total remaining available repurchase authorization for shares on or after February 17, 2022 to $150 million and extended the expiration date of the repurchase program through December 31, 2023.

On August 17, 2022, the Board authorized an increase to the stock repurchase program approved in February 2022 to bring the total remaining available repurchase authorization for shares on or after August 17, 2022 to $150 million. The expiration date of the repurchase program remains through December 31, 2023.

The stock repurchase program may be suspended or discontinued at any time. The timing and amount of any shares repurchased are determined by the Company based on its evaluation of market conditions and other factors and may be completed from time to time in one or more transactions on the open market or in privately negotiated purchases in accordance with all applicable securities laws and regulations and all repurchases in the open market will be made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so.

For the three and nine months ended September 30, 2022, the Company repurchased 959,579 shares for $32.3 million at an average price of $33.72 per share and 4,367,678 shares for $138.8 million at an average price of $31.78 per share, respectively. As of September 30, 2022, the remaining authorized amount was $137.9 million. For the three and nine months ended September 30, 2021, the Company repurchased 238,072 shares for $8.2 million at an average price of $34.37 per share and 615,321 shares for $18.7 million at an average price of $30.32 per share, respectively.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Note 11. Comprehensive Income

The components of other comprehensive income (loss) and income tax expense (benefit) allocated to each component for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended September 30, 2022								Nine Months Ended September 30, 2022
	Before Tax			Income Tax		Net of Tax			Before Tax			Income Tax			Net of Tax
Translation adjustments	$	(1.7	)	$	—	$	(1.7	)	$	(2.2	)	$	(0.1	)	$	(2.1	)
Adjustment for net periodic pension and other postretirement benefits plans		0.8			0.3		0.5			2.5			0.7			1.8
Other comprehensive (loss) income	$	(0.9	)	$	0.3	$	(1.2	)	$	0.3		$	0.6		$	(0.3	)


	Three Months Ended September 30, 2021									Nine Months Ended September 30, 2021
	Before Tax			Income Tax			Net of Tax			Before Tax			Income Tax			Net of Tax
Translation adjustments	$	(1.0	)	$	(0.3	)	$	(0.7	)	$	(0.3	)	$	(0.1	)	$	(0.2	)
Adjustment for net periodic pension and other postretirement benefits plans		0.9			0.3			0.6			2.8			0.8			2.0
Other comprehensive (loss) income	$	(0.1	)	$	—		$	(0.1	)	$	2.5		$	0.7		$	1.8

The following table summarizes changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2022:


	Pension and Other Postretirement Benefits Plans Cost			Translation Adjustments			Total
Balance at December 31, 2021	$	(64.4	)	$	(13.9	)	$	(78.3	)
Other comprehensive loss before reclassifications		—			(2.1	)		(2.1	)
Amounts reclassified from accumulated other comprehensive loss		1.8			—			1.8
Net change in accumulated other comprehensive loss		1.8			(2.1	)		(0.3	)
Balance at September 30, 2022	$	(62.6	)	$	(16.0	)	$	(78.6	)

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

The following table summarizes changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2021:


	Pension and Other Postretirement Benefits Plans Cost			Translation Adjustments			Total
Balance at December 31, 2020	$	(67.6	)	$	(13.2	)	$	(80.8	)
Other comprehensive income before reclassifications		—			0.2			0.2
Amounts reclassified from accumulated other comprehensive loss		2.0			(0.4	)		1.6
Net change in accumulated other comprehensive loss		2.0			(0.2	)		1.8
Balance at September 30, 2021	$	(65.6	)	$	(13.4	)	$	(79.0	)

Reclassifications from accumulated other comprehensive loss for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Amortization of pension and other postretirement benefits plans cost:
Net actuarial loss (a)	$	0.9	$	0.9	$	2.5	$	2.8
Reclassification of translation adjustment (b)		—		—		—		(0.5	)
Reclassifications before tax		0.9		0.9		2.5		2.3
Income tax expense		0.4		0.3		0.7		0.7
Reclassifications, net of tax	$	0.5	$	0.6	$	1.8	$	1.6

(a)

These accumulated other comprehensive loss components are included in the calculation of net periodic pension and other postretirement benefits plans income recognized in investment and other income, net in the Unaudited Condensed Consolidated Statements of Operations (see Note 6, Retirement Plans).

(b)

Translation adjustment reclassification resulting from the liquidation of a foreign subsidiary is included in investment and other income, net in the Unaudited Condensed Consolidated Statements of Operations.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Note 12. Segment Information

The Company operates its business through four operating and reportable segments: Capital Markets – Software Solutions, Capital Markets – Compliance and Communications Management, Investment Companies – Software Solutions and Investment Companies – Compliance and Communications Management. Corporate is not an operating segment and consists primarily of unallocated SG&A activities and associated expenses including, in part, executive, legal, finance and certain facility costs. In addition, certain costs and earnings of employee benefit plans, such as pension and other postretirement benefit plan expense (income) as well as share-based compensation expense, are included in Corporate and not allocated to the operating segments.

Capital Markets

The Company provides software solutions, tech-enabled services and print and distribution solutions to public and private companies for deal solutions and compliance to companies that are, or are preparing to become, subject to the filing and reporting requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act. Capital markets clients leverage the Company’s software offerings, proprietary technology, deep industry expertise and experience to successfully navigate the SEC’s specified file formats when submitting compliance documents through the EDGAR system for their transactional and ongoing compliance needs. The Company assists its capital markets clients throughout the course of initial public offerings, secondary offerings, mergers and acquisitions, public and private debt offerings, leveraged buyouts, spinouts, special purpose acquisition company ("SPAC") and de-SPAC transactions and other similar transactions. In addition, the Company provides clients with compliance solutions to prepare their ongoing required Exchange Act filings that are compatible with the SEC’s EDGAR system, most notably Form 10-K, Form 10-Q, Form 8-K and proxy filings. The Company’s operating segments associated with its capital markets services and product offerings are as follows:

Capital Markets – Software Solutions—The Company provides software solutions to public and private companies to help manage public and private transaction processes; extract data and analyze contracts; collaborate; and tag, validate and file SEC documents.

Capital Markets – Compliance & Communications Management—The Company provides tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements.

Investment Companies

The Company provides software solutions, tech-enabled services and print, distribution and fulfillment solutions to its investment companies clients that are subject to the filing and reporting requirements of the Investment Company Act of 1940, as amended (the “Investment Company Act”), primarily mutual fund companies, alternative investment companies, insurance companies and third-party fund administrators. The Company’s suite of solutions enables its investment companies clients to comply with applicable ongoing SEC regulations, as well as to create, manage and deliver accurate and timely financial communications to investors and regulators. Investment companies clients leverage the Company’s proprietary technology, deep industry expertise and experience to successfully navigate the SEC’s specified file formats when submitting compliance documents through the EDGAR system. The Company’s operating segments associated with its investment companies services and products offerings are as follows:

Investment Companies – Software Solutions—The Company provides software solutions that enable clients to store and manage compliance and regulatory information in a self-service, central repository for documents to be easily accessed, assembled, edited, translated, rendered and submitted to regulators.

Investment Companies – Compliance & Communications Management—The Company provides its investment companies clients tech-enabled services to prepare and file registration forms, as well as XBRL-formatted filings pursuant to the Investment Company Act, through the SEC’s EDGAR system. In addition, the Company provides print and distribution solutions for its clients to communicate with their investors.

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)

Information by Segment

The Company has disclosed income (loss) from operations as the primary measure of segment earnings (loss). This is the measure of profitability used by the Company’s chief operating decision maker and is most consistent with the presentation of profitability reported within the Unaudited Condensed Consolidated Financial Statements.


	Net Sales		Income (Loss) from Operations			Depreciation and Amortization		Capital Expenditures
Three Months Ended September 30, 2022
Capital Markets - Software Solutions	$	45.8	$	4.4		$	6.0	$	6.8
Capital Markets - Compliance and Communications Management		83.3		22.2			1.5		0.9
Investment Companies - Software Solutions		23.7		3.9			3.0		4.6
Investment Companies - Compliance and Communications Management		35.9		10.5			1.2		0.8
Total operating segments		188.7		41.0			11.7		13.1
Corporate		—		(14.3	)		—		1.5
Total	$	188.7	$	26.7		$	11.7	$	14.6


	Net Sales		Income (Loss) from Operations			Depreciation and Amortization		Capital Expenditures
Three Months Ended September 30, 2021
Capital Markets - Software Solutions	$	48.1	$	7.5		$	4.2	$	4.1
Capital Markets - Compliance and Communications Management		142.5		67.8			1.5		0.8
Investment Companies - Software Solutions		21.2		1.4			3.0		4.2
Investment Companies - Compliance and Communications Management		35.9		2.8			1.2		1.0
Total operating segments		247.7		79.5			9.9		10.1
Corporate		—		(14.5	)		0.1		0.4
Total	$	247.7	$	65.0		$	10.0	$	10.5


	Net Sales		Income (Loss) from Operations			Assets(a)		Depreciation and Amortization		Capital Expenditures
Nine Months Ended September 30, 2022
Capital Markets - Software Solutions	$	136.8	$	11.8		$	191.6	$	16.7	$	19.6
Capital Markets - Compliance and Communications Management		336.9		111.6			419.8		4.7		3.6
Investment Companies - Software Solutions		74.1		16.0			97.5		8.7		11.8
Investment Companies - Compliance and Communications Management		118.1		32.3			52.4		3.4		2.1
Total operating segments		665.9		171.7			761.3		33.5		37.1
Corporate		—		(43.8	)		89.5		0.1		2.3
Total	$	665.9	$	127.9		$	850.8	$	33.6	$	39.4

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

(in millions, except per share data, unless otherwise indicated)


	Net Sales		Income (Loss) from Operations			Assets(a)		Depreciation and Amortization		Capital Expenditures
Nine Months Ended September 30, 2021
Capital Markets - Software Solutions	$	130.4	$	23.3		$	185.2	$	12.0	$	12.3
Capital Markets - Compliance and Communications Management		434.1		191.5			451.0		4.5		2.1
Investment Companies - Software Solutions		65.8		6.9			92.7		9.8		8.7
Investment Companies - Compliance and Communications Management		130.2		11.2			60.5		3.4		2.3
Total operating segments		760.5		232.9			789.4		29.7		25.4
Corporate		—		(55.0	)		205.1		0.2		2.8
Total	$	760.5	$	177.9		$	994.5	$	29.9	$	28.2

__________

(a)

Certain assets are recorded within a segment based on predominant usage, however, as they benefit more than one segment, the related operating expenses are allocated between segments.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this management’s discussion and analysis, unless otherwise specified or the context otherwise requires, the “Company,” “DFIN,” “we,” “our,” and “us” refer to Donnelley Financial Solutions, Inc. and its consolidated subsidiaries. This discussion and analysis should be read together with the Company’s Unaudited Condensed Consolidated Financial Statements and the notes thereto, as well as the Company’s audited Consolidated Financial Statements for the year ended December 31, 2021.

Company Overview

The Company serves its clients’ regulatory and compliance needs throughout their respective life cycles. For its capital markets clients, the Company offers solutions that allow public companies to comply with applicable U.S. Securities and Exchange Commission ("SEC") regulations including filing agent services, digital document creation and online content management tools that support their corporate financial transactions and regulatory reporting; solutions to facilitate clients’ communications with their investors; and virtual data rooms and other deal management solutions. For investment companies, including mutual fund, insurance-investment and alternative investment companies, the Company provides solutions for creating, compiling and filing regulatory communications as well as solutions for investors designed to improve the access to and accuracy of their investment information.

Technological advancements, regulatory changes, and evolving workflow preferences have led to the Company’s clients managing more of the financial disclosure process themselves, changing the marketplace for the Company’s services and products. DFIN’s strategy in its Software Solutions segments (CM-SS and IC-SS, as defined below) aligns with the changing marketplace by focusing the Company’s investments and resources in its advanced software solutions, primarily ActiveDisclosure®, Arc Suite and Venue® Virtual Data Room (“Venue”), while making targeted investments, such as the Company’s acquisition of Guardum Holdings Limited ("Guardum"), to further enhance its solution set. In its Compliance & Communications Management segments (CM-CCM and IC-CCM, as defined below), the Company’s strategy focuses on maintaining its market-leading position by offering a high-touch, service-oriented experience, using its unique combination of tech-enabled services and print and distribution capabilities.

Market Volatility/Cyclicality and Seasonality

The Company’s Capital Markets segments (CM-SS and CM-CCM), in particular, are subject to market volatility in the United States and world economies as the success of the transactional and Venue offerings is largely dependent on the global market for initial public offerings ("IPOs"), secondary offerings, mergers and acquisitions ("M&A"), public and private debt offerings, leveraged buyouts, spinouts, special purpose acquisition company ("SPAC") and de-SPAC transactions and other similar transactions. A variety of factors impact the global markets for transactions, including economic activity levels, market volatility, the regulatory and political environment, geopolitical and civil unrest and global pandemics, among others. Due to the significant net sales and profitability derived from transactional and Venue offerings, market volatility can lead to uneven financial performance when comparing to previous periods. U.S. IPOs, M&A transactions and public debt offerings were also previously disrupted by the U.S. federal government shutdowns, and any future government shutdowns could result in additional volatility. The Company mitigates a portion of this volatility through its compliance offerings, supporting the quarterly and annual public company reporting processes through its filing services and ActiveDisclosure, as well as its Investment Companies segments (IC-SS and IC-CCM) regulatory and stockholder communications offerings, including Arc Suite. The Company also mitigates some of that risk by offering services in higher demand during a down market, such as document management tools for the bankruptcy/restructuring process and by moving upstream in the filing process with products like Venue.

The quarterly/annual public company reporting process work subjects the Company to filing seasonality which peaks shortly after the end of each fiscal quarter. Additionally, investment companies clients require the Company to manage the financial and regulatory reporting and filing for mutual funds on an annual basis as well as annual prospectus filings, which peaks during the second fiscal quarter. The seasonality and associated operational implications include the need to increase staff during peak periods through a combined strategy of hiring temporary personnel, increasing the premium time of existing staff and outsourcing production for a number of services. Additionally, clients and their financial advisors have begun to increasingly rely on web-based services which allow clients to autonomously file and distribute compliance documents with regulatory agencies, such as the SEC. While the Company believes that its ActiveDisclosure and Arc Suite solutions are competitive in this space, competitors are also continuing to develop technologies that aim to improve clients’ ability to autonomously produce and file documents to meet their regulatory obligations. The Company remains focused on driving annual recurring revenue to mitigate market volatility.

COVID-19

In December 2019, a novel strain of coronavirus, known as COVID-19 (“COVID-19”), was identified and subsequently characterized as a pandemic. Although COVID-19 has adversely impacted the Company’s financial condition, results of operations and overall financial performance, the extent of any further impact is currently uncertain and depends on factors including the impact on the Company’s customers, employees and vendors.

The COVID-19 pandemic has had and may continue to have a material adverse impact on certain of the Company’s customers’ financial results, which has and may continue to force those clients to alter their plans for purchasing the Company’s services and products. There remains uncertainty for future periods with the COVID-19 pandemic, including potentially new strains of COVID-19, resulting in renewal of mitigation measures, including targeted shutdowns. Some of this volatility is mitigated through the Company’s compliance offerings, supporting the quarterly and annual public company reporting processes, as well as its investment companies regulatory and stockholder communications offerings. The Company continues to work closely with its clients to help them access the Company's services and products and continue to meet their regulatory requirements. If the Company’s customers reduce, defer or cancel their spending with DFIN, it would materially adversely impact the Company’s business, results of operations and overall financial performance.

In response to the COVID-19 pandemic, the Company has taken numerous steps, and will continue to take further actions to ensure the safety of the Company's employees. The Company also incurred and may continue to incur certain expenses related to the COVID-19 pandemic, however, the impact of such costs on the Company's business, results of operations, liquidity and overall financial performance cannot be predicted at this time.

Services and Products

The Company separately reports its net sales and related cost of sales for its software solutions, tech-enabled services and print and distribution offerings. The Company’s software solutions consist of Venue, ActiveDisclosure, eBrevia and Arc Suite, among others. The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) filing services and transaction solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.

Government Regulation and Regulatory Impact

The SEC is adopting new as well as amending existing rules and forms to modernize the reporting and disclosure of information under the Securities Act of 1933, as amended (the "Securities Act"), the Securities Acts of 1934, as amended (the "Exchange Act") and the Investment Company Act of 1940, as amended (the “Investment Company Act”). These actions, primarily within the Investment Companies business, are driving significant regulatory changes which impact the Company’s customers, and have enabled the Company to accelerate its transition from print and distribution to software solutions.

On June 5, 2018, the SEC adopted Rule 30e-3 which provides certain registered investment companies with an option to electronically deliver stockholder reports and other materials rather than providing such reports in paper. Investors who prefer to receive reports in paper will continue to receive them in that format. While Rule 30e-3 was effective January 1, 2019, default electronic distribution pursuant to the rule began on January 1, 2021 due to a 24-month transition period, during which registered investment companies notified investors of the upcoming change in transmission format of stockholder reports. As a result of Rule 30e-3, the Company experienced a significant decline in the volume of printed annual and semi-annual stockholder reports in 2021 and an increase in revenue from the ArcDigital software solution in 2021 and 2022. The Company does not anticipate any additional material impact from Rule 30e-3 in 2023.

On March 11, 2020, the SEC announced that it adopted a new rule 498A under the Securities Act and related regulatory amendments permitting variable annuity and variable life insurance contracts to use a more concise summary prospectus to provide disclosures to investors. More detailed information about the variable annuity or variable life insurance contract will be available online, and an investor must opt in to have that information delivered in paper. The new rule and related form amendments became effective on July 1, 2020 with compliance required by January 1, 2022. As a result of Rule 498A, the Company experienced a significant decline in printed prospectus volume in 2021 and an increase in revenue from the ArcPro and ArcDigital software solutions in 2021 and 2022. The Company does not anticipate any additional material impact from Rule 498A in 2023.

Segments

The Company's four operating and reportable segments are: Capital Markets – Software Solutions (“CM-SS”), Capital Markets – Compliance and Communications Management (“CM-CCM”), Investment Companies – Software Solutions (“IC-SS”), and Investment Companies – Compliance and Communications Management (“IC-CCM”). Corporate is not an operating segment and consists primarily of unallocated selling, general and administrative ("SG&A") activities and associated expenses including, in part, executive, legal, finance and certain facility costs. In addition, certain costs and earnings of employee benefit plans, such as pension and other postretirement benefits plans expense (income) as well as share-based compensation expense, are included in Corporate and not allocated to the operating segments.

Capital Markets

Capital Markets – Software Solutions—The CM-SS segment provides Venue, ActiveDisclosure, eBrevia and other solutions to public and private companies to help manage public and private transaction processes, extract data and analyze contracts; collaborate; and tag, validate and file SEC documents.

Capital Markets – Compliance & Communications Management—The CM-CCM segment provides tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. In addition, the Company offers clients the use of private conferencing facilities in major global cities. This service helps clients maintain confidentiality in deal negotiations and provide clients a place to host in-person working groups to meet, strategize and prepare documents for the transaction deal stream. Due to the COVID-19 pandemic, the Company transformed its production platform and service delivery model for a fully-virtual experience while replicating the in-person experience. The Company anticipates that in the future, clients will utilize the range of options available to them, including a hybrid approach with working group members working both virtually and in-person during drafting sessions for their transactions.

Investment Companies

Investment Companies – Software Solutions—The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions and services that enable storage and management of compliance and regulatory information in a self-service, central repository so that documents can be easily accessed, assembled, edited, translated, rendered and submitted to regulators.

Investment Companies – Compliance & Communications Management—The IC-CCM segment provides clients with tech-enabled solutions for creating and filing regulatory communications and solutions for investor communications, as well as XBRL-formatted filings pursuant to the Investment Company Act, through the SEC EDGAR system. The IC-CCM segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review and expert support.

Executive Overview

Third Quarter Overview

Net sales for the three months ended September 30, 2022 decreased by $59.0 million, or 23.8%, to $188.7 million from $247.7 million for the three months ended September 30, 2021, including a $1.9 million, or 0.8%, decrease due to changes in foreign currency exchange rates. Net sales decreased primarily due to lower capital markets transactional volumes, partially offset by higher software solutions volumes in Arc Suite and pricing increases in ActiveDisclosure.

Income from operations for the three months ended September 30, 2022 decreased by $38.3 million, or 58.9%, to $26.7 million from $65.0 million for the three months ended September 30, 2021, primarily due to lower sales volumes and an unfavorable sales mix, partially offset by lower selling expense as a result of the decrease in sales volumes and lower incentive compensation expense.

Year-to-Date Overview

Net sales for the nine months ended September 30, 2022 decreased by $94.6 million, or 12.4%, to $665.9 million from $760.5 million for the nine months ended September 30, 2021, including a $4.5 million, or 0.6%, decrease due to changes in foreign currency exchange rates. Net sales decreased primarily due to lower capital markets transactional volumes and lower print volumes as a result of SEC Rules 30e-3 and 498A, which reduced print requirements, partially offset by higher capital markets compliance volumes, higher software solutions volumes in Arc Suite and higher volumes and price increases in ActiveDisclosure.

Income from operations for the nine months ended September 30, 2022 decreased by $50.0 million, or 28.1%, to $127.9 million from $177.9 million for the nine months ended September 30, 2021, primarily due to lower sales volumes and an unfavorable sales mix, partially offset by lower incentive compensation expense, lower selling expense and a $7.7 million decrease in expense related to the LSC multiemployer pension plans obligation.

Financial Review

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the extensive use of management’s estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s significant accounting policies and critical estimates are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 22, 2022 (the “Annual Report”).

In the financial review that follows, the Company discusses its unaudited condensed consolidated results of operations, cash flows and certain other information. This discussion should be read in conjunction with the Company’s Unaudited Condensed Consolidated Financial Statements and the related notes thereto.

Results of Operations for the Three and Nine Months Ended September 30, 2022 as Compared to the Three and Nine Months Ended September 30, 2021

The following table shows the results of operations for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,												Nine Months Ended September 30,
	2022			2021			$ Change			% Change			2022			2021			$ Change			% Change
	(in millions, except percentages)
Net sales
Tech-enabled services	$	87.4		$	142.1		$	(54.7	)		(38.5	%)	$	312.4		$	394.6		$	(82.2	)		(20.8	%)
Software solutions		69.5			69.3			0.2			0.3	%		210.9			196.2			14.7			7.5	%
Print and distribution		31.8			36.3			(4.5	)		(12.4	%)		142.6			169.7			(27.1	)		(16.0	%)
Total net sales		188.7			247.7			(59.0	)		(23.8	%)		665.9			760.5			(94.6	)		(12.4	%)
Cost of sales (a)
Tech-enabled services		35.3			39.6			(4.3	)		(10.9	%)		113.2			123.3			(10.1	)		(8.2	%)
Software solutions		29.0			26.9			2.1			7.8	%		85.1			76.5			8.6			11.2	%
Print and distribution		19.6			26.6			(7.0	)		(26.3	%)		96.2			121.1			(24.9	)		(20.6	%)
Total cost of sales		83.9			93.1			(9.2	)		(9.9	%)		294.5			320.9			(26.4	)		(8.2	%)
Selling, general and administrative expenses (a)		63.8			77.0			(13.2	)		(17.1	%)		205.5			225.6			(20.1	)		(8.9	%)
Depreciation and amortization		11.7			10.0			1.7			17.0	%		33.6			29.9			3.7			12.4	%
Restructuring, impairment and other charges, net		2.6			3.3			(0.7	)		(21.2	%)		4.6			6.9			(2.3	)		(33.3	%)
Other operating income, net		—			(0.7	)		0.7			(100.0	%)		(0.2	)		(0.7	)		0.5			(71.4	%)
Income from operations		26.7			65.0			(38.3	)		(58.9	%)		127.9			177.9			(50.0	)		(28.1	%)
Interest expense, net		2.3			5.9			(3.6	)		(61.0	%)		5.9			17.1			(11.2	)		(65.5	%)
Investment and other income, net		(2.8	)		(1.7	)		(1.1	)		64.7	%		(3.3	)		(4.0	)		0.7			(17.5	%)
Earnings before income taxes		27.2			60.8			(33.6	)		(55.3	%)		125.3			164.8			(39.5	)		(24.0	%)
Income tax expense		8.0			18.6			(10.6	)		(57.0	%)		33.7			44.5			(10.8	)		(24.3	%)
Net earnings	$	19.2		$	42.2		$	(23.0	)		(54.5	%)	$	91.6		$	120.3		$	(28.7	)		(23.9	%)

(a)

Exclusive of depreciation and amortization

Consolidated

Three Months Ended September 30, 2022 compared to the Three Months Ended September 30, 2021

Net sales of tech-enabled services of $87.4 million for the three months ended September 30, 2022 decreased $54.7 million, or 38.5%, as compared to the three months ended September 30, 2021. Net sales of tech-enabled services decreased primarily due to lower capital markets transactional volumes.

Net sales of software solutions of $69.5 million for the three months ended September 30, 2022 increased $0.2 million, or 0.3%, as compared to the three months ended September 30, 2021, including a $1.0 million, or 1.4%, decrease due to changes in foreign currency exchange rates. Net sales of software solutions increased primarily due to higher ArcPro volumes and pricing increases in ActiveDisclosure, partially offset by lower Venue volumes.

Net sales of print and distribution of $31.8 million for the three months ended September 30, 2022 decreased $4.5 million, or 12.4%, as compared to the three months ended September 30, 2021. Net sales of print and distribution decreased primarily due to lower capital markets transactional volumes.

Tech-enabled services cost of sales of $35.3 million for the three months ended September 30, 2022 decreased $4.3 million, or 10.9%, as compared to the three months ended September 30, 2021. Tech-enabled services cost of sales decreased primarily due to lower sales volumes and lower incentive compensation expense, partially offset by an unfavorable sales mix. As a percentage of tech-enabled services net sales, tech-enabled services cost of sales increased 12.5%, primarily driven by an unfavorable sales mix, partially offset by lower incentive compensation expense.

Software solutions cost of sales of $29.0 million for the three months ended September 30, 2022 increased $2.1 million, or 7.8%, as compared to the three months ended September 30, 2021. Software solutions cost of sales increased primarily due to an unfavorable sales mix and a higher allocation of overhead costs. As a percentage of software solutions net sales, software solutions cost of sales increased 2.9%, primarily driven by an unfavorable sales mix and a higher allocation of overhead costs.

Print and distribution cost of sales of $19.6 million for the three months ended September 30, 2022 decreased $7.0 million, or 26.3%, as compared to the three months ended September 30, 2021. Print and distribution cost of sales decreased primarily due to lower sales volumes, cost savings as a result of the consolidation of the print platform, a lower allocation of overhead costs and lower incentive compensation expense. As a percentage of print and distribution net sales, print and distribution cost of sales decreased 11.7%, primarily driven by cost savings as a result of the consolidation of the print platform, a lower allocation of overhead costs and lower incentive compensation expense.

SG&A expenses of $63.8 million for the three months ended September 30, 2022 decreased $13.2 million, or 17.1%, as compared to the three months ended September 30, 2021. SG&A expenses decreased primarily due to lower selling expense as a result of a decrease in sales volumes and lower incentive compensation expense, partially offset by higher bad debt, legal and consulting expenses. As a percentage of net sales, SG&A expenses increased to 33.8% for the three months ended September 30, 2022 from 31.1% for the three months ended September 30, 2021, primarily driven by lower sales volumes and higher bad debt, legal and consulting expense, partially offset by lower selling expense and lower incentive compensation expense.

Depreciation and amortization of $11.7 million for the three months ended September 30, 2022 increased $1.7 million, or 17.0%, as compared to the three months ended September 30, 2021, primarily due to higher software amortization expense.

Restructuring, impairment and other charges, net of $2.6 million for the three months ended September 30, 2022 decreased $0.7 million, or 21.2%, as compared to the three months ended September 30, 2021. In 2022, these charges included $2.3 million of employee termination costs for approximately 10 employees. In 2021, these charges included a $2.8 million impairment charge related to the demolition of an office building.

Income from operations of $26.7 million for the three months ended September 30, 2022 decreased $38.3 million, or 58.9%, as compared to the three months ended September 30, 2021. Income from operations decreased primarily due to lower sales volumes and an unfavorable sales mix, partially offset by lower selling expense as a result of the decrease in sales volumes and lower incentive compensation expense.

Interest expense, net of $2.3 million for the three months ended September 30, 2022 decreased $3.6 million, or 61.0%, as compared to the three months ended September 30, 2021. Interest expense, net decreased primarily due to the prepayment of the Company's 8.25% Senior Notes Due 2024 ("Notes") during the fourth quarter of 2021 and a lower interest rate on the Term Loan A Facility (as defined below), partially offset by a higher average Revolving Facility (as defined below) balance during the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

Investment and other income, net of $2.8 million for the three months ended September 30, 2022 increased $1.1 million, or 64.7%, as compared to the three months ended September 30, 2021, primarily due to an increase in earnings on equity investments, partially offset by a decrease in net pension plan income.

The effective income tax rate was 29.4% for the three months ended September 30, 2022, as compared to 30.6% for the three months ended September 30, 2021. The decrease in the effective income tax rate for the three months ended September 30, 2022 was primarily driven by a lower forecasted annual effective rate as a result of permanent adjustments, partially offset by an inability to recognize a tax benefit on certain losses during the three months ended September 30, 2022.

Nine Months Ended September 30, 2022 compared to the Nine Months Ended September 30, 2021

Net sales of tech-enabled services of $312.4 million for the nine months ended September 30, 2022 decreased $82.2 million, or 20.8%, as compared to the nine months ended September 30, 2021. Net sales of tech-enabled services decreased primarily due to lower capital markets transactional volumes, partially offset by higher capital markets compliance volumes.

Net sales of software solutions of $210.9 million for the nine months ended September 30, 2022 increased $14.7 million, or 7.5%, as compared to the nine months ended September 30, 2021, including a $2.2 million, or 1.1%, decrease due to changes in foreign currency exchange rates. Net sales of software solutions increased primarily due to higher ActiveDisclosure volumes and pricing increases as well as higher ArcPro and ArcReporting volumes.

Net sales of print and distribution of $142.6 million for the nine months ended September 30, 2022 decreased $27.1 million, or 16.0%, as compared to the nine months ended September 30, 2021. Net sales of print and distribution decreased primarily due to lower capital markets transactional volumes and lower insurance and investment companies compliance volumes as a result of SEC Rules 30e-3 and 498A, which reduced print requirements.

Tech-enabled services cost of sales of $113.2 million for the nine months ended September 30, 2022 decreased $10.1 million, or 8.2%, as compared to the nine months ended September 30, 2021. Tech-enabled services cost of sales decreased primarily due to lower sales volumes, lower incentive compensation expense and cost savings initiatives, partially offset by an unfavorable sales mix. As a percentage of tech-enabled services net sales, tech-enabled services cost of sales increased 5.0%, primarily driven by an unfavorable sales mix, partially offset by lower incentive compensation expense and cost savings initiatives.

Software solutions cost of sales of $85.1 million for the nine months ended September 30, 2022 increased $8.6 million, or 11.2%, as compared to the nine months ended September 30, 2021. Software solutions cost of sales increased primarily due to higher sales volumes, an unfavorable sales mix, higher product development costs and a higher allocation of overhead costs. As a percentage of software solutions net sales, software solutions cost of sales increased 1.4%, primarily driven by an unfavorable sales mix, higher product development costs and a higher allocation of overhead costs.

Print and distribution cost of sales of $96.2 million for the nine months ended September 30, 2022 decreased $24.9 million, or 20.6%, as compared to the nine months ended September 30, 2021. Print and distribution cost of sales decreased primarily due to lower sales volumes, cost savings as a result of the consolidation of the print platform, a lower allocation of overhead costs and lower incentive compensation expense. As a percentage of print and distribution net sales, print and distribution cost of sales decreased 3.9%, primarily driven by cost savings as a result of the consolidation of the print platform, a lower allocation of overhead costs and lower incentive compensation expense.

SG&A expenses of $205.5 million for the nine months ended September 30, 2022 decreased $20.1 million, or 8.9%, as compared to the nine months ended September 30, 2021. SG&A expenses decreased primarily due to lower incentive compensation expense, lower selling expense as a result of a decrease in sales volume and a $7.7 million decrease in expense related to the LSC multiemployer pension plans obligation, partially offset by higher consulting, bad debt and legal expenses. As a percentage of net sales, SG&A expenses increased to 30.9% for the nine months ended September 30, 2022 from 29.7% for the nine months ended September 30, 2021, primarily due to lower sales volumes, higher consulting, bad debt and legal expenses, partially offset by lower incentive compensation expense, lower selling expense and lower expense related to the LSC multiemployer pension plans obligation.

Depreciation and amortization of $33.6 million for the nine months ended September 30, 2022 increased $3.7 million, or 12.4%, as compared to the nine months ended September 30, 2021, primarily due to higher software amortization expense.

Restructuring, impairment and other charges, net of $4.6 million for the nine months ended September 30, 2022 decreased $2.3 million, or 33.3%, as compared to the nine months ended September 30, 2021. In 2022, these charges included $4.0 million of employee termination costs for approximately 80 employees. In 2021, these charges included $3.2 million of employee termination costs for approximately 170 employees and a $2.8 million impairment charge related to the demolition of an office building.

Income from operations of $127.9 million for the nine months ended September 30, 2022 decreased $50.0 million, or 28.1%, as compared to the nine months ended September 30, 2021, primarily due to lower sales volumes and an unfavorable sales mix, partially offset by lower incentive compensation expense, lower selling expense and a $7.7 million decrease in expense related to the LSC multiemployer pension plans obligation.

Interest expense, net of $5.9 million for the nine months ended September 30, 2022 decreased $11.2 million, or 65.5%, as compared to the nine months ended September 30, 2021. Interest expense, net decreased primarily due to the prepayment of the Company's Notes during the fourth quarter of 2021 and a lower interest rate on the Term Loan A Facility, partially offset by a higher average Revolving Facility balance during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Investment and other income, net of $3.3 million for the nine months ended September 30, 2022 decreased $0.7 million, or 17.5%, as compared to the nine months ended September 30, 2021, primarily due to a decrease in net pension plan income, partially offset by an increase in earnings on equity investments.

The effective income tax rate was 26.9% for the nine months ended September 30, 2022, as compared to 27.0% for the nine months ended September 30, 2021. The decrease in the effective income tax rate for the nine months ended September 30, 2022 was primarily driven by a lower forecasted annual effective rate as a result of permanent adjustments, partially offset by a decrease in favorable discrete adjustments and an inability to recognize a tax benefit on certain losses during the nine months ended September 30, 2022.

Information by Segment

The following tables summarize net sales, income from operations, operating margin and certain items impacting comparability within each of the operating segments and Corporate.

Capital Markets – Software Solutions


	Three Months Ended September 30,												Nine Months Ended September 30,
	2022			2021			$ Change			% Change			2022			2021			$ Change			% Change
	(in millions, except percentages)
Net sales	$	45.8		$	48.1		$	(2.3	)		(4.8	%)	$	136.8		$	130.4		$	6.4			4.9	%
Income from operations		4.4			7.5			(3.1	)		(41.3	%)		11.8			23.3			(11.5	)		(49.4	%)
Operating margin		9.6	%		15.6	%								8.6	%		17.9	%
Items impacting comparability
Restructuring, impairment and other charges, net		0.1			0.2			(0.1	)		(50.0	%)		1.1			0.3			0.8		nm
Non-income tax, net		(0.2	)		(0.2	)		—			—			(0.5	)		(0.9	)		0.4			(44.4	%)

nm – Not meaningful

Three Months Ended September 30, 2022 compared to the Three Months Ended September 30, 2021

Net sales of $45.8 million for the three months ended September 30, 2022 decreased $2.3 million, or 4.8%, as compared to the three months ended September 30, 2021. Net sales decreased primarily due to lower Venue volumes, partially offset by ActiveDisclosure pricing increases.

Income from operations of $4.4 million for three months ended September 30, 2022 decreased $3.1 million, or 41.3%, as compared to the three months ended September 30, 2021, primarily due to lower sales volumes, an unfavorable sales mix, an increase in depreciation and amortization expense and a higher allocation of overhead costs, partially offset by lower selling expense as a result of the decrease in sales volume and pricing increases.

Operating margin decreased from 15.6% for the three months ended September 30, 2021 to 9.6% for the three months ended September 30, 2022, primarily due to an unfavorable sales mix, an increase in depreciation and amortization expense and a higher allocation of overhead costs, partially offset by lower selling expense as a result of the decrease in sales volume and pricing increases.

Nine Months Ended September 30, 2022 compared to the Nine Months Ended September 30, 2021

Net sales of $136.8 million for the nine months ended September 30, 2022 increased $6.4 million, or 4.9%, as compared to the nine months ended September 30, 2021. Net sales increased primarily due to higher ActiveDisclosure volumes and pricing increases.

Income from operations of $11.8 million for the nine months ended September 30, 2022 decreased $11.5 million, or 49.4%, as compared to the nine months ended September 30, 2021, primarily due to an unfavorable sales mix, an increase in depreciation and amortization expense, higher product development costs and a higher allocation of overhead costs, partially offset by price increases, higher sales volumes and lower selling expense.

Operating margin decreased from 17.9% for the nine months ended September 30, 2021 to 8.6% for the nine months ended September 30, 2022, primarily due to an unfavorable sales mix, an increase in depreciation and amortization expense, higher product development costs and a higher allocation of overhead costs, partially offset by price increases and lower selling expense.

Capital Markets – Compliance and Communications Management


	Three Months Ended September 30,												Nine Months Ended September 30,
	2022			2021			$ Change			% Change			2022			2021			$ Change			% Change
	(in millions, except percentages)
Net sales	$	83.3		$	142.5		$	(59.2	)		(41.5	%)	$	336.9		$	434.1		$	(97.2	)		(22.4	%)
Income from operations		22.2			67.8			(45.6	)		(67.3	%)		111.6			191.5			(79.9	)		(41.7	%)
Operating margin		26.7	%		47.6	%								33.1	%		44.1	%
Items impacting comparability
Restructuring, impairment and other charges, net		1.8			2.7			(0.9	)		(33.3	%)		2.2			3.3			(1.1	)		(33.3	%)
Non-income tax, net		—			(0.1	)		0.1			(100.0	%)		(0.1	)		(0.2	)		0.1			(50.0	%)
Income related to sale of assets		—			—			—			—			(0.2	)		—			(0.2	)	nm
COVID-19 related recoveries		(0.1	)		—			(0.1	)	nm				(0.3	)		(0.3	)		—			—
Accelerated rent expense and other		0.1			—			0.1		nm				0.1			—			0.1		nm

nm – Not meaningful

Three Months Ended September 30, 2022 compared to the Three Months Ended September 30, 2021

Net sales of $83.3 million for the three months ended September 30, 2022 decreased $59.2 million, or 41.5%, as compared to the three months ended September 30, 2021. Net sales decreased due to lower transactional and compliance volumes.

Income from operations of $22.2 million for three months ended September 30, 2022 decreased $45.6 million, or 67.3%, as compared to the three months ended September 30, 2021, primarily due to lower sales volumes and an unfavorable sales mix, partially offset by lower selling expense as a result of the decrease in sales volume, lower incentive compensation expense and cost control initiatives.

Operating margin decreased from 47.6% for the three months ended September 30, 2021 to 26.7% for the three months ended September 30, 2022, primarily due to an unfavorable sales mix, partially offset by lower selling expense as a result of the decrease in sales volume, lower incentive compensation expense and cost control initiatives.

Nine Months Ended September 30, 2022 compared to the Nine Months Ended September 30, 2021

Net sales of $336.9 million for the nine months ended September 30, 2022 decreased $97.2 million, or 22.4%, as compared to the nine months ended September 30, 2021. Net sales decreased primarily due to lower transactional volumes, partially offset by higher compliance volumes.

Income from operations of $111.6 million for the nine months ended September 30, 2022 decreased $79.9 million, or 41.7%, as compared to the nine months ended September 30, 2021, primarily due to lower sales volumes, an unfavorable sales mix and higher marketing and bad debt expense, partially offset by lower selling expense as a result of the decrease in sales volume, lower incentive compensation expense and cost control initiatives.

Operating margin decreased from 44.1% for the nine months ended September 30, 2021 to 33.1% for the nine months ended September 30, 2022, primarily due to an unfavorable sales mix and higher marketing and bad debt expense, partially offset by lower selling expense as a result of the decrease in sales volume, lower incentive compensation expense and cost control initiatives.

Investment Companies – Software Solutions


	Three Months Ended September 30,											Nine Months Ended September 30,
	2022			2021			$ Change		% Change			2022			2021			$ Change		% Change
	(in millions, except percentages)
Net sales	$	23.7		$	21.2		$	2.5		11.8	%	$	74.1		$	65.8		$	8.3		12.6	%
Income from operations		3.9			1.4			2.5	nm				16.0			6.9			9.1	nm
Operating margin		16.5	%		6.6	%							21.6	%		10.5	%
Items impacting comparability
Restructuring, impairment and other charges, net		0.1			—			0.1	nm				0.2			0.1			0.1		100.0	%
Non-income tax, net		—			(0.1	)		0.1		(100.0	%)		(0.1	)		(0.2	)		0.1		(50.0	%)

nm – Not meaningful

Three Months Ended September 30, 2022 compared to the Three Months Ended September 30, 2021

Net sales of $23.7 million for the three months ended September 30, 2022 increased $2.5 million, or 11.8%, as compared to the three months ended September 30, 2021. Net sales increased primarily due to higher ArcPro volumes.

Income from operations of $3.9 million for three months ended September 30, 2022 increased $2.5 million as compared to the three months ended September 30, 2021, primarily due to higher sales volumes.

Operating margin increased from 6.6% for the three months ended September 30, 2021 to 16.5% for the three months ended September 30, 2022, primarily due to higher sales volumes.

Nine Months Ended September 30, 2022 compared to the Nine Months Ended September 30, 2021

Net sales of $74.1 million for the nine months ended September 30, 2022 increased $8.3 million, or 12.6%, as compared to the nine months ended September 30, 2021. Net sales increased primarily due to higher ArcPro and ArcReporting volumes.

Income from operations of $16.0 million for the nine months ended September 30, 2022 increased $9.1 million as compared to the nine months ended September 30, 2021, primarily due to higher sales volumes, lower incentive compensation expense and a decrease in depreciation and amortization expense, partially offset by higher product development costs.

Operating margin increased from 10.5% for the nine months ended September 30, 2021 to 21.6% for the nine months ended September 30, 2022, primarily due to higher sales volumes, lower incentive compensation expense and a decrease in depreciation and amortization expense, partially offset by higher product development costs.

Investment Companies – Compliance and Communications Management


	Three Months Ended September 30,											Nine Months Ended September 30,
	2022			2021			$ Change		% Change			2022			2021			$ Change			% Change
	(in millions, except percentages)
Net sales	$	35.9		$	35.9		$	—		—		$	118.1		$	130.2		$	(12.1	)		(9.3	%)
Income from operations		10.5			2.8			7.7	nm				32.3			11.2			21.1		nm
Operating margin		29.2	%		7.8	%							27.3	%		8.6	%
Items impacting comparability
Restructuring, impairment and other charges, net		0.4			0.3			0.1		33.3	%		0.6			2.9			(2.3	)		(79.3	%)
Gain on sale of long-lived assets, net		—			(0.7	)		0.7		(100.0	%)		—			(0.7	)		0.7			(100.0	%)
Non-income tax, net		—			(0.1	)		0.1		(100.0	%)		—			(0.1	)		0.1			(100.0	%)
COVID-19 related recoveries		—			—			—		—			—			(0.7	)		0.7			(100.0	%)

____________

nm – Not meaningful

Three Months Ended September 30, 2022 compared to the Three Months Ended September 30, 2021

Net sales of $35.9 million for the three months ended September 30, 2022 were flat compared to the three months ended September 30, 2021. Net sales for the three months ended September 30, 2022 were driven by higher tech-enabled services volumes, offset by lower transactional and print volumes.

Income from operations of $10.5 million for three months ended September 30, 2022 increased $7.7 million as compared to the three months ended September 30, 2021, primarily due to a favorable sales mix, a lower allocation of overhead costs, lower incentive compensation expense as well as cost savings as a result of the consolidation of the print platform.

Operating margin increased from 7.8% for the three months ended September 30, 2021 to 29.2% for the three months ended September 30, 2022, primarily due to a favorable sales mix, a lower allocation of overhead costs, lower incentive compensation expense as well as cost savings as a result of the consolidation of the print platform.

Nine Months Ended September 30, 2022 compared to the Nine Months Ended September 30, 2021

Net sales of $118.1 million for the nine months ended September 30, 2022 decreased $12.1 million, or 9.3%, as compared to the nine months ended September 30, 2021. Net sales decreased primarily due to lower print volumes as a result of the implementation of SEC Rules 30e-3 and 498A, which reduced print requirements, partially offset by higher tech-enabled services volumes.

Income from operations of $32.3 million for the nine months ended September 30, 2022 increased $21.1 million as compared to the nine months ended September 30, 2021, primarily due to a favorable sales mix, a lower allocation of overhead costs, lower incentive compensation expense, lower restructuring, impairment and other charges, net as well as cost savings as a result of the consolidation of the print platform.

Operating margin increased from 8.6% for the nine months ended September 30, 2021 to 27.3% for the nine months ended September 30, 2022, primarily due to a favorable sales mix, a lower allocation of overhead costs, lower incentive compensation expense, lower restructuring, impairment and other charges, net, which had a positive impact on operating margin of 1.9%, as well as cost savings as a result of the consolidation of the print platform.

Corporate

The following table summarizes unallocated operating expenses and certain items impacting comparability within the activities presented as Corporate:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Operating expenses	$	14.3	$	14.5	$	43.8	$	55.0
Items impacting comparability
Share-based compensation expense		4.4		5.2		13.9		14.2
Restructuring, impairment and other charges, net		0.2		0.1		0.5		0.3
LSC multiemployer pension plans obligation		—		0.2		—		7.7
Accelerated rent expense and other		0.1		—		0.1		—

Three Months Ended September 30, 2022 compared to the Three Months Ended September 30, 2021

Corporate operating expenses for the three months ended September 30, 2022 decreased $0.2 million as compared to the three months ended September 30, 2021 primarily due to lower incentive compensation expense, partially offset by higher legal and consulting expenses.

Nine Months Ended September 30, 2022 compared to the Nine Months Ended September 30, 2021

Corporate operating expenses for the nine months ended September 30, 2022 decreased $11.2 million as compared to the nine months ended September 30, 2021, primarily due to a $7.7 million decrease in expense related to the LSC multiemployer pension plans obligation expensed in 2021, lower incentive compensation and healthcare expenses, partially offset by higher legal and consulting expenses.

Non-GAAP Measures

The Company believes that certain non-GAAP measures, such as non-GAAP adjusted EBITDA (“Adjusted EBITDA”), provide useful information about the Company’s operating results and enhance the overall ability to assess the Company’s financial performance. The Company uses these measures, together with other measures of performance prepared in accordance with GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. Adjusted EBITDA allows investors to make a more meaningful comparison between the Company’s core business operating results over different periods of time. The Company believes that Adjusted EBITDA, 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 historic cost and age of assets, restructuring, impairment and other charges, net, non-income tax, net, loss on equity investment as well as other items, as described below, the Company believes that Adjusted EBITDA can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated.

Adjusted EBITDA is not presented in accordance with GAAP and has important limitations as an analytical tool. These measures should not be considered as a substitute for analysis of the Company’s results as reported under GAAP. In addition, these measures are defined differently by different companies and, accordingly, such measures may not be comparable to similarly-titled measures of other companies. In addition to the factors listed above, the following items are excluded from Adjusted EBITDA:

•

Share-based compensation expense. Although share-based compensation is a key incentive offered to certain of the Company’s employees, business performance is evaluated excluding share-based compensation expenses. Depending upon the size, timing and the terms of grants, share-based compensation expense may vary but will recur in future periods.

•

LSC multiemployer pension plans obligation. As a result of LSC Communications, Inc.'s ("LSC") bankruptcy, the Company recorded charges for estimated payments related to LSC's multiemployer pension plans withdrawal liabilities ("LSC MEPP Liabilities"), as the Company and R.R. Donnelley & Sons Company ("RRD") remained jointly and severally liable for LSC MEPP Liabilities arising prior to the Company's and LSC's spinoff from RRD.

•

COVID-19 related recoveries. As a result of incremental expenses (including incremental vendor costs and premium wages paid to certain employees as well as costs to clean and disinfect the Company's facilities more frequently) incurred related to the COVID-19 pandemic, during the nine months ended September 30, 2021, the Company received an insurance reimbursement associated with these incremental expenses. During the three and nine months ended September 30, 2022, the Company received certain government subsidies related to employee wages at certain international locations.

A reconciliation of net earnings to Adjusted EBITDA for the three and nine months ended September 30, 2022 and 2021 is presented in the following table:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(in millions)
Net earnings	$	19.2		$	42.2		$	91.6		$	120.3
Restructuring, impairment and other charges, net		2.6			3.3			4.6			6.9
Share-based compensation expense		4.4			5.2			13.9			14.2
Non-income tax, net		(0.2	)		(0.5	)		(0.7	)		(1.4	)
Gain on equity investments, net		(0.5	)		(0.6	)		(0.5	)		(0.4	)
COVID-19 related recoveries		(0.1	)		—			(0.3	)		(1.0	)
Gain on sale of long-lived assets, net		—			(0.7	)		(0.2	)		(0.7	)
Accelerated rent expense and other		0.2			—			0.2			—
LSC multiemployer pension plans obligation		—			0.2			—			7.7
Depreciation and amortization		11.7			10.0			33.6			29.9
Interest expense, net		2.3			5.9			5.9			17.1
Investment and other income, net		(2.3	)		(1.1	)		(2.8	)		(3.6	)
Income tax expense		8.0			18.6			33.7			44.5
Adjusted EBITDA	$	45.3		$	82.5		$	179.0		$	233.5

Restructuring, impairment and other charges, net—The three and nine months ended September 30, 2022 included employee termination costs of $2.3 million and $4.0 million, respectively. The three and nine months ended September 30, 2021 included employee termination costs of $0.3 million and $3.2 million, respectively, as well as a $2.8 million impairment charge related to the demolition of an office building. Refer to Note 5, Restructuring, Impairment and Other Charges, net, for additional information.

Share-based compensation expense—Included charges of $4.4 million and $13.9 million for the three and nine months ended September 30, 2022, respectively, and $5.2 million and $14.2 million for the three and nine months ended September 30, 2021, respectively.

Non-income tax, net—Included income of $0.2 million and $0.7 million for the three and nine months ended September 30, 2022, respectively, and $0.5 million and $1.4 million for the three and nine months ended September 30, 2021, respectively, related to certain estimated non-income tax exposures previously accrued by the Company.

Gain on equity investments, net—Included an unrealized gain of $0.5 million for both the three and nine months ended September 30, 2022, and a net unrealized gain of $0.6 million and $0.4 million for the three and nine months ended September 30, 2021, respectively. Refer to Note 1, Overview, Basis of Presentation and Significant Accounting Policies, for additional information.

COVID-19 related recoveries—Included recoveries of $0.1 million and $0.3 million for the three and nine months ended September 30, 2022, respectively, related to government subsidies, as described above, and recoveries of $1.0 million for the nine months ended September 30, 2021, primarily related to insurance reimbursements of COVID-19 related expenses.

Gain on sale of long-lived assets, net—Included a gain of $0.2 million for the nine months ended September 30, 2022 from a forfeited deposit on a terminated agreement for the sale of land and a net gain of $0.7 million for both the three and nine months ended September 30, 2021, primarily related to the sale of machinery and equipment from facilities exited as a result of restructuring actions.

Accelerated rent expense and other—Included charges of $0.2 million for both the three and nine months ended September 30, 2022 for the acceleration of rent expense associated with abandoned operating leases and other miscellaneous expenses.

LSC multiemployer pension plans obligation—Included charges of $0.2 million and $7.7 million for the three and nine months ended September 30, 2021, respectively, for the Company's accrual related to the LSC MEPP Liabilities.

Liquidity and Capital Resources

The Company believes it has sufficient liquidity to support its ongoing operations and to invest in future growth to create value for its stockholders. Cash on hand, operating cash flows and the Company’s $300.0 million senior secured revolving credit facility (the “Revolving Facility”) are the primary sources of liquidity and are expected to be used for, among other things, payment of interest and principal on the Company’s debt obligations, capital expenditures necessary to support productivity improvement and growth, acquisitions and completion of restructuring programs.

The Company maintains cash pooling structures that enable participating international locations to draw on the pools’ cash resources to meet local liquidity needs. Foreign cash balances may be loaned from certain cash pools to U.S. operating entities on a temporary basis in order to reduce the Company’s short-term borrowing costs or for other purposes. The Company has the ability to repatriate foreign cash, associated with foreign earnings previously subjected to U.S. tax, with minimal additional tax consequences. The Company maintains its assertion of indefinite reinvestment on all foreign earnings and other outside basis differences to indicate that the Company remains indefinitely reinvested in operations outside of the U.S., with the exception of the previously taxed foreign earnings already subject to U.S. tax. The Company repatriated excess cash at its foreign subsidiaries to the U.S. during the year ended December 31, 2021. The Company is evaluating whether to make any cash repatriations in the future.

Cash and cash equivalents were $10.8 million at September 30, 2022, which included $3.3 million in the U.S. and $7.5 million at international locations.

The following describes the Company’s cash flows for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended September 30,
	2022			2021
	(in millions)
Net cash provided by operating activities	$	76.9		$	103.2
Net cash used in investing activities		(39.4	)		(27.3	)
Net cash used in financing activities		(83.6	)		(27.5	)
Effect of exchange rate on cash and cash equivalents		2.4			0.9
Net (decrease) increase in cash and cash equivalents	$	(43.7	)	$	49.3

Cash Flows Provided by Operating Activities

Operating cash inflows and outflows are largely attributable to sales of the Company’s services and products as well as recurring expenditures for labor, rent, raw materials and other operating activities.

Net cash provided by operating activities was $76.9 million for the nine months ended September 30, 2022 compared to $103.2 million for the nine months ended September 30, 2021. The decrease in cash provided by operating activities was primarily due to unfavorable changes in accrued liabilities and other and a decline in net earnings, partially offset by favorable changes in accounts receivable and accounts payable as well as a decrease in interest paid during the nine months ended September 30, 2022. Accrued liabilities and other decreased operating cash flows by $44.2 million for the nine months ended September 30, 2022, as compared to increasing operating cash flows by $21.2 million for the nine months ended September 30, 2021, primarily due to higher incentive compensation and commission payments in 2022 and lower incentive compensation and commissions accruals in 2022 compared to 2021. Accounts receivable decreased operating cash flows by $20.5 million for the nine months ended September 30, 2022, as compared to $73.5 million for the nine months ended September 30, 2021, due to the decline in revenue. Accounts payable increased operating cash flows by $4.9 million for the nine months ended September 30, 2022, as compared to decreasing operating cash flows by $7.5 million for the nine months ended September 30, 2021, due to timing of supplier payments. The Company's interest payments decreased to $4.9 million for the nine months ended September 30, 2022 from $11.0 million for the nine months ended September 30, 2021, primarily due to the Company's retirement of the Notes.

Cash Flows Used in Investing Activities

Net cash used in investing activities was $39.4 million for the nine months ended September 30, 2022, which consisted of capital expenditures, mostly driven by investments in software development. The Company expects that capital expenditures for the full year ended December 31, 2022 will be approximately $50 million to $55 million.

Net cash used in investing activities was $27.3 million for the nine months ended September 30, 2021, which primarily consisted of capital expenditures, mostly driven by investments in software development.

Cash Flows Used in Financing Activities

Net cash used in financing activities was $83.6 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2022, the Company received $270.0 million of proceeds from the Revolving Facility borrowings, partially offset by $202.5 million of payments on the Revolving Facility borrowings. The Company’s common stock repurchases for the nine months ended September 30, 2022 totaled $150.0 million, which included $137.9 million of repurchases under the stock repurchase program and $12.1 million associated with vesting of the Company employees’ equity awards.

Net cash used in financing activities was $27.5 million for the nine months ended September 30, 2021. During the nine months ended September 30, 2021, the Company received $278.0 million of proceeds from the Revolving Facility borrowings, offset by $278.0 million of payments on the Revolving Facility borrowings. The Company’s common stock repurchases for the nine months ended September 30, 2021 totaled $26.5 million, which included $17.8 million of repurchases under the stock repurchase program and $8.7 million associated with vesting of the Company employees' equity awards.

Debt

The Company’s debt as of September 30, 2022 and December 31, 2021 consisted of the following (in millions):


	September 30, 2022			December 31, 2021
Term Loan A Facility	$	125.0		$	125.0
Borrowings under the Revolving Facility		67.5			—
Unamortized debt issuance costs		(0.8	)		(1.0	)
Total long-term debt	$	191.7		$	124.0

Credit Agreement—On May 27, 2021 (the "Restatement Effective Date"), the Company amended and restated its credit agreement dated as of September 30, 2016 (as in effect prior to such amendment and restatement, the “Credit Agreement,” and the Credit Agreement, as so amended and restated, the “Amended and Restated Credit Agreement”), by and among the Company, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, to, among other things, provide for a $200.0 million delayed-draw term loan A facility (the "Term Loan A Facility") (bearing interest at a rate equal to the sum of the London Interbank Offered Rate ("LIBOR") plus a margin ranging from 2.00% to 2.50% based upon the Company's Consolidated Net Leverage Ratio), extend the maturity of the $300.0 million Revolving Facility to May 27, 2026 and modify the financial maintenance and negative covenants in the Credit Agreement. The unpaid principal amount of the Term Loan A Facility is due and payable in full on May 27, 2026. Voluntary prepayments of the Term Loan A Facility are permitted at any time without premium or penalty.

The Amended and Restated Agreement contains a number of covenants, including a minimum Interest Coverage Ratio and the Consolidated Net 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. The Credit Agreement generally allows annual dividend payments of up to $20.0 million in the aggregate, though additional dividends may be allowed subject to certain conditions. Each of these covenants is subject to important exceptions and qualifications.

As of September 30, 2022, there was $67.5 million of borrowings outstanding under the Revolving Facility as well as $2.8 million in outstanding letters of credit and bank guarantees and none of the outstanding letters of credit reduced the availability under the Revolving Facility. Based on the Company’s results of operations for the twelve months ended September 30, 2022 and existing debt, the Company would have had the ability to utilize the remaining $232.5 million of the Revolving Facility and not have been in violation of the terms of the agreement.

The current availability under the Revolving Facility and net available liquidity as of September 30, 2022 are presented in the table below:


	September 30, 2022
Availability	(in millions)
Revolving Facility	$	300.0
Availability reduction from covenants		—
	$	300.0
Usage
Borrowings under the Revolving Facility	$	67.5

Current availability at September 30, 2022	$	232.5
Cash and cash equivalents		10.8
Net Available Liquidity	$	243.3

The Company was in compliance with its debt covenants as of September 30, 2022, and expects to remain in compliance based on management’s estimates of operating and financial results for fiscal year 2022 and the foreseeable future. However, declines in market and economic conditions or demand for certain of the Company’s services and products could impact the Company’s ability to remain in compliance with its debt covenants in future periods.

The failure of a financial institution supporting the Revolving Facility would reduce the size of the Company’s committed facility unless a replacement institution was added. As of September 30, 2022, the Revolving Facility is supported by fifteen U.S. and international financial institutions.

As of September 30, 2022, the Company met all the conditions required to borrow under the Revolving Facility, and management expects the Company to continue to meet the applicable borrowing conditions.

OTHER INFORMATION

Litigation and Contingent Liabilities

For a discussion of certain litigation involving the Company, see Note 7, Commitments and Contingencies, to the Unaudited Condensed Consolidated Financial Statements.

Critical Accounting Estimates

There were no changes to critical accounting estimates from those disclosed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of the Annual Report.

New Accounting Pronouncements

Recently issued and adopted accounting standards, as applicable, and their effect on the Company’s Unaudited Condensed Consolidated Financial Statements are described in Note 1, Overview, Basis of Presentation and Significant Accounting Policies, to the Unaudited Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes to the Company’s market risk previously disclosed in the Annual Report.

Item 4. Controls and Procedures

(a)

Disclosure controls and procedures.

Management, together with the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(b) and Rule 15d-15(e) of the Exchange Act) as of September 30, 2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2022.

(b)

Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended September 30, 2022 that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of certain litigation involving the Company, see Note 7, Commitments and Contingencies, to the Unaudited Condensed Consolidated Financial Statements.

Item 1A. Risk Factors

There were no material changes during the three months ended September 30, 2022 to the risk factors identified in the Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (a)
July 1, 2022 - July 31, 2022		592,127	$	31.14		592,127		40,153,381
August 1, 2022 - August 31, 2022		82,712		37.13		81,604		148,836,662
September 1, 2022 - September 30, 2022 (b)		286,624		38.12		285,848		137,941,254
Total		961,463	$	33.74		959,579

(a)

As further described in Note 10, Capital Stock, to the Unaudited Condensed Consolidated Financial Statements, on February 17, 2022, the Board of Directors (the "Board") authorized an increase to its previously approved stock repurchase program to bring the total remaining available repurchase authorization for shares on or after February 17, 2022 to $150 million and extended the expiration date of the repurchase program through December 31, 2023. On August 17, 2022, the Board authorized an increase to the stock repurchase program approved in February 2022 to bring the total remaining available repurchase authorization for shares on or after August 17, 2022 to $150 million. The expiration date of the repurchase program remains through December 31, 2023. The stock repurchase program may be suspended or discontinued at any time. The timing and amount of any shares repurchased are determined by the Company based on its evaluation of market conditions and other factors and may be completed from time to time in one or more transactions on the open market or in privately negotiated purchases in accordance with all applicable securities laws and regulations and all repurchases in the open market will be made in compliance with Rule 10b-18 under the Exchange Act. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so.

(b)

Includes 30,138 shares, valued at $1.1 million, for which the Company placed orders prior to or on September 30, 2022 that were not settled until the fourth quarter of 2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


3.1			Amended and Restated Certificate of Incorporation of Donnelley Financial Solutions, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

3.2			Amended and Restated By-laws of Donnelley Financial Solutions, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

4.1			Indenture, dated as of September 30, 2016, among Donnelley Financial Solutions, Inc., the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

4.2			Description of the Donnelley Financial Solutions, Inc. Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K dated December 31, 2019, filed on February 26, 2020)

10.1			Amended and Restated Credit Agreement dated as of May 27, 2021, by and among Donnelley Financial Solutions, Inc. the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 27, 2021, filed on June 1, 2021)

10.2			2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.3			Amended and Restated Donnelley Financial Solutions, Inc. 2016 Performance Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 18, 2017, filed on May 23, 2017)*

10.4			Amendment to the Donnelley Financial Solutions, Inc. Amended and Restated 2016 Performance Incentive Plan dated May 20, 2019 (incorporated herein by reference to Appendix A of the Company’s definitive proxy statement on Schedule 14A (file No. 001-37728) filed April 22, 2019)*

10.5			Amendment to Amended and Restated Donnelley Financial Solutions, Inc. 2016 Performance Incentive Plan dated June 27, 2019 (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 10-Q dated June 30, 2019, filed on August 1, 2019)*

10.6			Donnelley Financial Solutions, Inc. Non-Employee Director Compensation Plan (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K dated December 31, 2021, filed on February 22, 2022)*

10.7			Policy on Retirement Benefits, Phantom Stock Grants and Stock Options for Directors (incorporated by reference to Exhibit 10.1 to R.R Donnelley & Sons Company Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, filed on August 6, 2008)*

10.8			Donnelley Financial Solutions, Inc. Nonqualified Deferred Compensation Plan, dated as of September 22, 2016 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.9			Donnelley Financial Unfunded Supplemental Pension Plan effective October 1, 2016 (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.10			Donnelley Financial Solutions, Inc. Amended and Restated Executive Severance Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 15, 2020, filed on July 20, 2020)*


10.11		Letter Agreement to Employment Agreement, dated as of April 20, 2018, between the Company and Daniel N. Leib (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 10, 2018, filed on April 16, 2018)*

10.12		Amended and Restated Employment Agreement, dated as of July 13, 2017, between the Company and Daniel N. Leib (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 13, 2017, filed on July 14, 2017)*
10.13		Amendment dated as of July 15, 2020 to Amended and Restated Employment Agreement dated as of July 13, 2017 between the Company and Daniel N. Leib (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated July 15, 2020, filed on July 20, 2020)*

10.14		Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 29, 2016, between Donnelley Financial Solutions, Inc., R. R. Donnelley & Sons Company and David A. Gardella (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.15		Waiver of Severance Benefits, dated as of June 1, 2017, by and between David A. Gardella and the Company (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated May 30, 2017, filed on June 5, 2017)*

10.16		Assignment of Severance Agreement and Acceptance of Assignment, dated as of September 29, 2016, between Donnelley Financial Solutions, Inc., R. R. Donnelley & Sons Company and Jennifer B. Reiners (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.17		Waiver of Severance Benefits, dated as of June 1, 2017, by and between Jennifer B. Reiners and the Company (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated May 30, 2017, filed on June 5, 2017)*

10.18		Donnelley Financial Solutions Annual Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated March 2, 2018, filed on March 13, 2018)*

10.19		Form of Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K dated December 31, 2017, filed on February 28, 2018)*

10.20		Form of Performance Share Unit Award Agreement (for 2019) (incorporated by reference to Exhibit 10.25 to the Company’s Quarterly Report on Form 10-Q dated March 31, 2018, filed on May 2, 2019)*

10.21		Employment Agreement, dated as of March 21, 2016, between R.R. Donnelley & Sons Company and Craig Clay (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K dated December 31, 2021, filed on February 22, 2022)*

10.22		Waiver of Severance Benefits, dated as of June 16, 2017, by and between Craig Clay and Donnelley Financial Solutions, Inc. (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K dated December 31, 2021, filed on February 22, 2022)*

10.23		Employment Agreement, dated as of June 9, 2010, between R.R. Donnelley & Sons Company and Eric Johnson (incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K dated December 31, 2021, filed on February 22, 2022)*

10.24		Waiver of Severance Benefits, dated as of June 19, 2017, by and between Eric Johnson and Donnelley Financial Solutions, Inc. (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K dated December 31, 2021, filed on February 22, 2022)*

10.25		Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form 10-Q dated March 31, 2017, filed on May 4, 2017)*

10.26		Form of Restricted Stock Unit Award (2021) (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K dated December 31, 2020, filed on February 25, 2021)*

10.27		Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.19 to the Company’s Quarterly Report on Form 10-Q dated March 31, 2017, filed on May 4, 2017)*

10.28		Form of Performance Cash Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 2, 2020, filed on March 6, 2020)*



10.29		Form of Performance Restricted Stock Unit Award Agreement (2021) (incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K dated December 31, 2020, filed on February 25, 2021)*

10.30		Form of Director Restricted Stock Unit Award (deferral election) (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K dated December 31, 2021, filed on February 22, 2022)*

10.31		Form of Director Restricted Stock Unit Award (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.32		Form of Restricted Stock Unit Award Agreement for directors converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.21 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed on March 14, 2005)*

10.33		Form of Restricted Stock Unit Award Agreement for directors converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.25 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed on February 27, 2008)*

10.34		Form of Restricted Stock Unit Award Agreement for directors converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.23 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.35		Form of Amendment to Director Restricted Stock Unit Awards converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.22 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.36		Form of Amendment to Director Restricted Stock Unit Awards dated May 21, 2009 converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.23 to the R.R. Donnelley & Sons Company Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 5, 2009)*

10.37		Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q dated September 30, 2016, filed on November 9, 2016)

10.38		Agreement, dated February 17, 2019, by and among the Company, Simcoe Capital Management, LLC and, solely for purposes of Section 2(g) thereof, Jeffrey Jacobowitz (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 17, 2019, filed on February 19, 2019)

10.39		Amended and Restated Agreement of Sale and Purchase, dated as of September 6, 2019, between Donnelley Financial, LLC and SECA-NJ, LLC (incorporated by reference to Exhibit 10.39 to the Company’s Quarterly Report on Form 10-Q dated September 30, 2019, filed on November 5, 2019)

10.40		First Amendment to Amended and Restated Agreement of Sale and Purchase, dated as of September 25, 2019, between Donnelley Financial, LLC and SECA-NJ, LLC (incorporated by reference to Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q dated September 30, 2019, filed on November 5, 2019)

10.41		Second Amendment to Amended and Restated Agreement of Sale and Purchase, dated as of September 26, 2019, between Donnelley Financial, LLC and SECA-NJ, LLC (incorporated by reference to Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q dated September 30, 2019, filed on November 5, 2019)

10.42		Real Estate Sale Agreement, dated as of August 30, 2022, between Donnelley Financial, LLC and Aspirant Partners, LLC (filed herein)

14.1		Code of Ethics for the Chief Executive Officer and Senior Financial Officers (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)

31.1		Certification by Daniel N. Leib, President and Chief Executive Officer, required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 (filed herewith)

31.2		Certification by David A. Gardella, Executive Vice President and Chief Financial Officer, required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 (filed herewith)



32.1		Certification by Daniel N. Leib, President and Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code (filed herewith)

32.2		Certification by David A. Gardella, Executive Vice President and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code (filed herewith)

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101

* Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	DONNELLEY FINANCIAL SOLUTIONS, INC.

	By:		/s/ DAVID A. GARDELLA
			David A. Gardella
			Executive Vice President and Chief Financial Officer

Date: November 2, 2022