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What changed in Donnelley Financial Solutions, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Donnelley Financial Solutions, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+323 added−329 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in Donnelley Financial Solutions, Inc.'s 2023 10-K

323 paragraphs added · 329 removed · 254 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

76 edited+12 added−33 removed34 unchanged
Biggest changeThe Company also provides registration statement and prospectus preparation and filing services through the Company’s filing solution and software solution, ActiveDisclosure, data room and secure file sharing through Venue as well as contract analytics through eBrevia. The Company’s Venue solution is a highly secure data room platform that allows clients to share confidential information in real-time throughout the transaction lifecycle.
Biggest changeThe Company’s Venue solution is a highly secure ISO/IEC 27001:2013-certified data room platform that allows clients to share confidential information in real-time throughout the transaction lifecycle. Clients can also maintain control over sensitive data when conducting due diligence for M&A transactions, raising capital, dual-tracking an IPO or developing a document repository.
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 Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system for their transactional and ongoing compliance needs.
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 SEC's Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system for their transactional and ongoing compliance needs.
In 2022, approximately 41% of investment companies net sales related to software solutions, while tech-enabled services and print and distribution solutions accounted for approximately 59% of investment companies net sales, of which approximately 94% were compliance in nature and 6% were transactional in nature.
In 2022, approximately 41% of investment companies net sales related to software solutions, while tech-enabled services and print and distribution solutions accounted for approximately 59% of investment companies net sales, of which 94% were compliance in nature and 6% were transactional in nature.
The map and career framework are designed to help employees understand how their role fits into the overall structure and the various pathways for advancement. My Health —The Company offers comprehensive health and benefits including medical insurance, prescription drug benefits, dental insurance and vision insurance.
The map and career framework are designed to help employees understand how their role fits into the overall structure and the various pathways for advancement. My Health —The Company offers comprehensive health benefits including medical insurance, prescription drug benefits, dental insurance and vision insurance.
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® software platform (“Arc Suite”) and Venue® Virtual Data Room (“Venue”), while making targeted investments, such as the Company’s acquisition of Guardum Holdings Limited (“Guardum”) in 2021, to further enhance product features.
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® (“ActiveDisclosure”), Arc Suite® software platform (“Arc Suite”) and Venue® Virtual Data Room (“Venue”), while making targeted investments, such as the Company’s acquisition of Guardum Holdings Limited (“Guardum”) in 2021, to further enhance product features.
The Company believes that the risk of incurring material losses as a result of a shortage in raw materials is unlikely as the Company has strategically downsized its print production platform in favor of outsourcing the offset printing to its select network of vendors and reduced its print and distribution revenue such that the losses, if any, would not have a materially negative impact on the Company’s business.
The Company believes that the risk of incurring material losses as a result of any unforeseen shortage in raw materials is unlikely as the Company has strategically downsized its print production platform in favor of outsourcing the offset printing to its select network of vendors and reduced its print and distribution revenue such that the losses, if any, would not have a materially negative impact on the Company’s business.
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 (including incorporating appropriate XBRL tagging) through the EDGAR system.
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 (including incorporating appropriate XBRL and iXBRL tagging) through the SEC's EDGAR system.
The Company’s end-to-end proxy solutions include advisory services, proxy strategy and design, disclosure management, EDGAR filing and expertise, online hosting solutions, print production, distribution and annual meeting services.
The Company’s end-to-end proxy solutions include advisory services, proxy strategy and design, disclosure management, SEC EDGAR filing and expertise, online hosting solutions, print production, distribution and annual meeting services.
The Company’s competitors for SEC filing services for public company compliance clients include full service financial communications providers, technology point solution providers focused on financial communications and general technology providers.
The Company’s competitors for SEC filing services for public company clients include full service financial communications providers, technology point solution providers focused on financial communications and general technology providers.
The Company invests in client facing solutions and its core composition systems and has also adopted market-leading third-party systems which have improved the efficiency of its sales and operations processes. The Company has continued to invest in enhancements of its technology-based offerings including ActiveDisclosure, the Arc Suite software platform, Venue, EDGAR filing and iXBRL services, among others.
The Company invests in client facing solutions and its core systems and has also adopted market-leading third-party systems which have improved the efficiency of its sales and operations processes. The Company has continued to invest in enhancements of its technology-based offerings including ActiveDisclosure, the Arc Suite software platform, Venue, SEC EDGAR filing and iXBRL services, among others.
The global risk and compliance industry, in general, is highly competitive and barriers to entry have decreased as a result of technology innovation and the simplification of EDGAR filings. Despite some consolidation in recent years, the industry remains highly fragmented in the United States and even more so internationally with many in-country alternative providers.
The global compliance industry, in general, is highly competitive and barriers to entry have decreased as a result of technology innovation and the simplification of SEC EDGAR filings. Despite some consolidation in recent years, the industry remains highly fragmented in the United States and even more so internationally with many in-country alternative providers.
Distribution The Company’s products are distributed to end-users through the U.S or foreign postal services, through retail channels, electronically or by direct shipment to customer facilities. Customers For each of the years ended December 31, 2022, 2021 and 2020, no customer accounted for 10% or more of the Company’s net sales.
Distribution The Company’s products are distributed to end-users through the U.S. or foreign postal services, through retail channels, electronically or by direct shipment to customer facilities. Customers For each of the years ended December 31, 2023, 2022 and 2021, no customer accounted for 10% or more of the Company’s net sales.
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 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 when 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.
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 companies to comply with U.S.
Investment Company Act of 1940, as amended (the “Investment Company Act”) as well as European and Canadian regulations, primarily mutual fund companies, alternative investment companies, insurance companies and third-party fund administrators.
Investment Company Act of 1940, as amended (the “Investment Company Act”) as well as European and Canadian regulations, which are primarily mutual fund companies, alternative investment companies, insurance companies and third-party fund administrators.
References to the Company’s website address do not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of or incorporated by reference in this document. 13
References to the Company’s website address do not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of or incorporated by reference in this document. 11
These solutions include the Company’s traditional full-service EDGAR filing preparation and filing agent services, tech-enabled services and print and distribution solutions as well as the Company’s software solutions, ActiveDisclosure, Venue, eBrevia and others.
These solutions include the Company’s traditional full-service EDGAR filing preparation and filing agent services, tech-enabled services and print and distribution solutions as well as the Company’s software solutions, ActiveDisclosure and Venue.
Investment Companies – Compliance & Communications Management —The IC-CCM segment provides clients with tech-enabled solutions for creating, filing and distributing regulatory communications and solutions for investor communications, as well as XBRL-formatted filings pursuant to the Investment Company Act, through the SEC EDGAR system.
Investment Companies – Compliance & Communications Management —The IC-CCM segment provides clients with tech-enabled solutions for creating, filing and distributing regulatory communications and solutions for investor communications, as well as XBRL and iXBRL-formatted filings pursuant to the Investment Company Act, through the SEC's EDGAR system.
The Company’s competitors for SEC filing services for investment companies clients include full service traditional providers, small niche technology providers as well as local and regional print providers that bid against the Company for printing, mailing and fulfillment services. Technology The Company invests resources in developing software solutions to address customer and market requirements.
The Company’s competitors for SEC filing services for investment companies clients include full service traditional providers, small niche technology providers as well as local and regional print providers that offer competing printing, mailing and fulfillment services. Technology The Company invests resources in developing software solutions to address customer and market requirements.
Paper and ink are sourced from a small set of select suppliers to ensure consistent quality and provide for continuity of supply. The global supply chain challenges, because of the COVID-19 pandemic, made it more difficult to source paper in 2021 and 2022.
Paper and ink are sourced from a small set of select suppliers to ensure consistent quality and provide for continuity of supply. The global supply chain challenges, because of the COVID-19 pandemic, made it more difficult to source paper in 2021 and 2022, with residual effects in 2023.
ITEM 1. B USINESS Company Overview 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.
ITEM 1. B USINESS Company Overview DFIN is a leading global provider of innovative software and technology-enabled financial regulatory and compliance solutions. 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.
The Company competes primarily on the depth and breadth of its products, features, benefits, service levels, subject matter regulatory expertise, security, price and reputation. The impact of digital technologies has impacted many of the products and markets in which the Company competes, most acutely in the Company’s mutual fund, variable annuity and public company compliance business offerings.
The Company competes primarily on the depth and breadth of its products, features, benefits, service levels, subject matter regulatory expertise, security, reliability, price and reputation. 7 Digital technologies have impacted many of the products and markets in which the Company competes, most acutely in the Company’s mutual fund, variable annuity and public company compliance business offerings.
The Company has accounting and finance professionals that assist its capital markets clients with the processes of tag selection, tag review, file creation, validation and distribution. 5 The Company helps capital markets clients elevate their proxy filings from compliance documents to investor-focused strategic communications tools with Proxy Design services.
The Company provides clients with a suite of tagging, review and validation tools and has accounting and finance professionals that assist its capital markets clients with the processes of tag selection, tag review, file creation, validation and distribution. The Company helps capital markets clients elevate their proxy filings from compliance documents to investor-focused strategic communications tools with Proxy Design services.
The future impact of technology as well as the streamlining and modernizing of disclosure requirements on the business is difficult to predict and could result in additional expenditures to restructure impacted operations or develop new technologies.
The future impact of technology as well as changes in regulatory and disclosure requirements on the business is difficult to predict and could result in additional expenditures to restructure impacted operations or develop new technologies.
The Company sets annual leading and lagging indicators to improve its sustainability performance and in 2022 achieved a workforce total recordable incident rate of 0.99 (per 200,000 hours worked).
The Company sets annual leading and lagging indicators to improve its sustainability performance and in 2023 achieved a workforce total recordable incident rate of 0.28 (per 200,000 hours worked).
My Money —The Company offers competitive base salaries and compensation programs to reward performance relative to key strategic and financial metrics. The Company also cultivates a “pay for performance” culture in which when the Company does well, it shares those rewards with employees.
My Money —The Company offers competitive base salaries and compensation programs to reward performance relative to key strategic and financial metrics. The Company cultivates a “pay for performance” culture so that when the Company does well, it shares those rewards with employees.
The Company's private conference facilities offer around-the-clock services to support the transaction process, production platform and service delivery model for a fully-virtual experience while replicating the in-person experience. The Company has seen clients utilizing 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.
The Company's private conference facilities offer around-the-clock services to support the transaction process, production platform and service delivery for a fully-virtual experience while replicating the in-person experience. Clients utilize the range of options available to them, including a hybrid approach with working group members participating both virtually and in-person during drafting sessions for their transactions.
The Company’s Arc Suite software platform, which includes ArcDigital, ArcReporting, ArcPro and ArcRegulatory, enables its investment companies clients to comply with applicable ongoing SEC, Canadian and European regulations as well as to create, manage and deliver accurate and timely financial communications to investors and regulators.
The Company’s Arc Suite software platform, which includes ArcDigital, ArcReporting, ArcPro and ArcRegulatory, is ISO/IEC 27001:2013-certified and enables its investment companies clients to comply with applicable ongoing SEC, Canadian and European regulations as well as to create, manage and deliver accurate and timely financial communications to investors and regulators.
The Company’s software solutions consist of Venue, ActiveDisclosure, eBrevia, Arc Suite, among others. The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC EDGAR filing services and transaction solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.
The Company’s software solutions consist of ActiveDisclosure, Arc Suite and Venue. The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC EDGAR filing services and transactional solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.
The Company is committed to paying its employees in a fair and equitable way and has a rigorous internal compensation review process. Training and Development —The Company invests in its employees’ skills and professional development by offering virtual, social and self-directed learning, mentoring, coaching and career development opportunities.
The Company is committed to paying its employees in a fair and equitable way and has a rigorous compensation review process, including a review by external counsel and consultants. 10 Learning and Development —The Company invests in its employees’ skills and professional development by offering virtual, social and self-directed learning, mentoring, coaching and career development opportunities.
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 transactional and compliance processes; extract data and analyze contracts; collaborate; and tag, validate and file SEC documents.
Capital Markets – Software Solutions —The CM-SS segment provides Venue and ActiveDisclosure to public and private companies to help manage public and private transactional and compliance processes; collaborate; and tag, validate and file SEC documents.
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.
Securities and Exchange Commission (“SEC”) regulations and support their corporate financial transactions and regulatory/financial reporting through the use of digital document creation and online content management tools; filing agent services, where applicable; solutions to facilitate clients’ communications with their investors; and virtual data rooms and other deal management solutions.
ActiveDisclosure utilizes native Microsoft Excel reporting capabilities of financial consolidation systems to seamlessly flow changes throughout an entire document automatically, reducing risk and providing additional assurance to clients. The Company employs stringent data security and privacy practices to provide that information is encrypted. The Company also engages third parties to perform annual SOC2 Type II compliance audits and penetration/vulnerability testing.
ActiveDisclosure utilizes native Microsoft Excel reporting capabilities of financial consolidation systems to seamlessly flow changes throughout an entire document automatically, reducing risk and providing additional assurance to clients. The Company employs stringent data security and privacy practices to provide that information is encrypted.
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's 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 are less impacted by market volatility.
As of December 31, 2022, the Company had approximately 2,150 employees, approximately 80% of whom are located in the United States and approximately 20% in international locations. The Company's workforce is approximately 40% female and 60% male, with an average tenure of approximately 12.7 years with the Company (including periods prior to the Separation from RRD).
As of December 31, 2023, the Company had approximately 1,900 employees, approximately 83% of whom are located in the United States and approximately 17% in international locations. The Company's workforce is approximately 40% female and 60% male, with an average tenure of approximately 13.4 years with the Company (including periods prior to the Separation from RRD).
The components of the program are below: My Time —The Company announced its move to an unlimited paid time-off philosophy in which U.S. salaried employees can take as much time as needed for vacation or personal issues not covered by other sick or disability policies. New policies providing up to 12 weeks of paid maternity leave were also announced.
The components of the program are below: My Time —The Company has an unlimited paid time-off philosophy in which U.S. salaried employees can take as much time as needed for vacation or personal issues not covered by other sick or disability policies.
As a result, the Company is expecting an increase in revenue from Arc Suite software and related regulatory filings beginning in 2024. It is the Company’s policy to conduct its global operations in accordance with all applicable laws, regulations and other requirements.
As a result, the Company is expecting an increase in net sales from Arc Suite software, tech-enabled services and print beginning in the second half of 2024. It is the Company’s policy to conduct its global operations in accordance with all applicable laws, regulations and other requirements.
In 2021, approximately 35% of investment companies net sales related to software solutions, while tech-enabled services and print and distribution solutions accounted for approximately 65% of investment companies net sales, of which 93% were compliance in nature and 7% were transactional in nature.
In 2023, approximately 42% of investment companies net sales related to software solutions, while tech-enabled services and print and distribution solutions accounted for approximately 58% of investment companies net sales, of which approximately 89% were compliance in nature and 11% were transactional in nature.
Investment Companies – Software Solutions —The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro and ArcRegulatory as well as 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, tagged, translated, rendered and submitted to regulators and investors.
The Company has seen clients utilizing the range of options available to them, including a hybrid approach with working group members participating both virtually and in-person during drafting sessions for their transactions. 6 Investment Companies – Software Solutions —The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro and ArcRegulatory as well as 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, tagged, translated, rendered and submitted to regulators and investors.
In 2021, tech-enabled services and print and distribution solutions accounted for approximately 76% of capital markets net sales, of which approximately 72% were transactional in nature and 28% were compliance in nature. 4 Transaction Solutions The Company helps capital markets clients throughout the course of public and private business transactions.
In 2022, tech-enabled services and print and distribution solutions accounted for approximately 69% of capital markets net sales, of which approximately 58% were transactional in nature and 42% were compliance in nature. 4 Transactional Solutions The Company helps capital markets clients throughout the course of public and private business transactions via its full-service traditional services.
In 2022, approximately 31% of capital markets net sales related to software solutions, of which approximately 55% related to Venue, the Company’s transactional solution, and 45% related to compliance and other software solutions.
In 2023, approximately 34% of capital markets net sales related to software solutions, of which approximately 59% related to Venue, the Company’s transactional solution, and 34% related to ActiveDisclosure, the Company's compliance solution.
The Company's disposition of the Edgar Online (“EOL”) business closed on November 9, 2022, and the Company received net cash proceeds of $3.3 million. Markets and Competition Technological and regulatory changes continue to impact the market for the Company’s services and products.
The Company's disposition of the eBrevia business closed on December 1, 2023, and the Company received net cash proceeds of $0.5 million. Markets and Competition Technological and regulatory changes continue to impact the market for the Company’s services and products.
For the fourth year in a row, the Company was chosen as one of the Best Places to Work by Built In, for going above and beyond in terms of compensation, benefits and cultural programs, nationally and in the largest tech markets. Built In is the online community for startups and tech companies.
For the fifth year in a row, the Company was chosen as one of the Best Places to Work by Built In, for offering the best compensation packages, total rewards and cultural programs, among peers. Built In is the online community for startups and tech companies.
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, the Exchange Act and the Investment Company Act.
The Company remains focused on driving annual recurring revenue to mitigate the impact of market volatility on its financial results. 8 Government Regulations 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, the Exchange Act and the Investment Company Act.
The Company continues to invest in leading and innovative technology such as cloud-native solutions, composable applications, API management machine learning and hybrid cloud architecture. 8 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 IPOs, secondary offerings, M&A, public and private debt offerings, leveraged buyouts, spinouts, SPAC and de-SPAC transactions and other similar transactions.
Market Volatility/Cyclicality and Seasonality The Company’s Capital Markets segments (CM-SS and CM-CCM), in particular, are subject to market volatility, as the demand for the transactional and Venue offerings is largely dependent on the global market for IPOs, secondary offerings, M&A, public and private debt offerings, leveraged buyouts, spinouts, SPAC and de-SPAC transactions and other similar transactions.
For M&A transactions, the Company supports deal participants in creating transaction-related registration statements, proxy statements and prospectuses, filing client documents as their filing agent through the EDGAR filing system and managing print for distribution to stockholders.
The Company supports deal participants in creating transaction-related registration statements, proxy statements and prospectuses, filing client documents as their filing agent through the SEC's EDGAR filing system and managing print for distribution to investors. The Company also provides registration statement, prospectus preparation and filing services through ActiveDisclosure and data room and secure file sharing through Venue.
Due to the nature of the business, DFIN does not anticipate any material direct impacts from climate-related regulations, physical effects of climate change or material expenditures for climate-related projects.
The Corporate Responsibility and Governance Committee of the Company's Board has broad oversight of environmental, social and governance issues, which includes climate-related risks and opportunities. Due to the nature of the business, DFIN does not anticipate any material direct impacts from climate-related regulations, physical effects of climate change or material expenditures for climate-related projects.
In 2022, tech-enabled services and print and distribution solutions accounted for approximately 69% of capital markets net sales, of which approximately 58% were transactional in nature and 42% were compliance in nature.
In 2023, tech-enabled services and print and distribution solutions accounted for approximately 66% of capital markets net sales, of which approximately 52% were transactional in nature and 48% were compliance in nature. In 2022, approximately 31% of capital markets net sales related to software solutions, of which approximately 55% related to Venue and 34% related to ActiveDisclosure.
The TSR, which can be printed and mailed or delivered electronically upon request of the investor, replace Rule 30e-3 for open-ended funds and ETFs registered under N-1A and will require iXBRL tagging. While the rule was effective January 24, 2023, due to an 18-month transition period, compliance is not required until July 24, 2024.
The TSR, which can be printed and mailed or delivered electronically upon request of the investor, replaces SEC Rule 30e-3 “Optional Internet Availability of Investment Company Shareholder Reports” for open-ended funds and ETFs registered under N-1A and will require iXBRL tagging. The rule went into effect on January 24, 2023 and compliance is required by July 24, 2024.
My Career —The Company supports employees in growing their skills and making informed choices about their career. The “Career Map,” launched in 2021, shows every role in the Company by level and was updated in 2022 with summaries about key positions.
Office space is available and often used for team meetings and collaboration. My Career —The Company supports employees in growing their skills and making informed choices about their career. The “Career Map,” available on the Company's intranet site, shows every role in the Company by level with summaries about key positions.
In addition to personal training and development, the Company requires employees to complete a series of mandatory courses in data protection, IT security, principles of ethical business conduct, harassment awareness, anti-corruption/anti-trust and General Data Protection Regulation (“GDPR”). In 2022, the Company achieved more than 99% completion of these required courses.
In addition to learning and development, the Company requires employees to complete a series of mandatory courses in data protection, IT security, principles of ethical business conduct, harassment awareness, anti-corruption/anti-trust and data privacy. In 2023, the Company achieved 100% completion of these required courses. Employee Experience —DFIN's Total Wellbeing program underscores its employment value proposition.
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 a semi-annual basis as well as annual prospectus filings, which peaks during the second fiscal quarter.
Additionally, investment companies clients' financial and regulatory reporting requirements include filings for mutual funds on a semi-annual basis as well as annual prospectus filings, which peaks during the second fiscal quarter.
This arrangement allows the Company to provide end-to-end annual and special meeting services, from fulfillment and distributions of proxy materials, to the centralization of communications for all investors, to hosting of virtual stockholder meetings and tabulation of voting results.
This arrangement allows the Company to provide end-to-end annual and special meeting services, from fulfillment and distributions of proxy materials, to the centralization of communications for all investors, to hosting of virtual stockholder meetings and tabulation of voting results. 5 The Company provides additional compliance solutions through strategic relationships, including a full suite of audit management and compliance solutions for Sarbanes-Oxley Act (“SOX”) compliance, operational audits, IT compliance, enterprise risk management and workflow management.
The Company also mitigates some of the 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 Company's overall risk profile is balanced 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 cycle subjects the Company to filing seasonality which peaks shortly after the end of each fiscal quarter.
The Company’s services and sales teams currently support clients in the United States, Canada, Ireland, the United Kingdom, France, Luxembourg, Poland, India and Australia. 6 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”).
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”).
The Company also supports the distribution, tabulation and solicitation of stockholders for corporate elections and mutual fund proxy events.
The Company also supports the distribution, tabulation and solicitation of stockholders for corporate elections and mutual fund proxy events. The Company’s services and sales teams currently support clients in the United States, Canada, Ireland, the United Kingdom, France and Luxembourg.
The acquisition enhances the Company's Venue offering. By safeguarding privacy and improving data accuracy, Guardum's data security is a competitive differentiator. Prior to the acquisition, the Company held a 33.0% investment in Guardum. The purchase price for the remaining equity of Guardum was $3.6 million, net of cash acquired of $0.1 million.
On December 13, 2021, the Company completed the acquisition of Guardum, a leading data security and privacy software provider that helps companies locate, secure and control data. The acquisition enhances the Company's Venue offering. By safeguarding privacy and improving data accuracy, Guardum's data security is a competitive differentiator. Prior to the acquisition, the Company held a 33.0% investment in Guardum.
Clients can also maintain control over sensitive data when conducting due diligence for M&A transactions, raising capital, dual-tracking an IPO or developing a document repository. Specifically, companies have used Venue to securely organize, manage, distribute and track corporate governance, financing, legal and other documents in an online workspace accessible to internal and outside advisors.
Specifically, companies have used Venue to securely organize, manage, distribute and track corporate governance, financing, legal and other documents in an online workspace accessible to internal and outside advisors.
Compliance Solutions The Company provides compliance solutions to capital markets clients in preparing the Exchange Act filings that are compatible with the SEC’s EDGAR system. Capital markets clients leverage the Company’s deep industry expertise and experience to successfully navigate the SEC’s specified file formats when submitting compliance documents through the EDGAR system.
Compliance Solutions The Company provides compliance solutions to capital markets clients in preparing the Exchange Act filings that are compatible with the SEC’s EDGAR system via its full-service traditional services and through the use of ActiveDisclosure.
In 2022, the Company continued its strategy to provide greater market-driven and predictable pay and benefit programs through the “My Total Wellbeing” program, which was launched in 2021.
The Company's 2023 voluntary turnover rate was 6.3% for its global workforce and 5.4% for its U.S. workforce, which is lower than the industry average. 9 In 2023, the Company continued its strategy to provide greater market-driven and predictable pay and benefit programs through the “My Total Wellbeing” program.
The Company continues to focus on leadership development and launched two cohort leadership development programs aligned to the Company's values, leadership behaviors and skills for effective leadership. In partnership with external vendors, the Company provides situational development for senior leaders to support their skills and career growth.
In 2023, approximately 62% of employees engaged in self-directed learning and development activities through the Company's on-demand learning platforms. The Company continues to focus on leadership development with two cohort leadership development programs aligned to the Company's values, leadership behaviors and skills for effective leadership.
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.
As the scope and complexity of the regulatory environment continues to increase, regulators are also demanding greater use of structured, machine-readable data in companies' disclosures. These actions are driving significant changes which impact the Company’s customers, and have enabled the Company to offer new value-added functionality and services and accelerate its transition from print and distribution to software solutions.
The Company also hires temporary employees in its manufacturing facilities during peak periods of production. None of the Company’s employees are represented by a labor union or covered by a collective bargaining agreement. The Company's U.S. employee voluntary turnover rate is less than 8% per year.
The Company also hires contractors for production and engineering support. None of the Company’s employees are represented by a labor union or covered by a collective bargaining agreement.
In 2022, the Company began a 401(k) match of 50 cents for every dollar an employee contributes up to 6% of eligible compensation (along with the potential of a future discretionary match). 11 The Company enhanced financially-focused benefits available by improving short-term disability, long-term disability and life insurance programs.
The Company also provides a bi-weekly 401(k) match of 50 cents for every dollar an employee contributes up to 6% of eligible compensation with a potential for an additional discretionary Company match based upon overall Company performance.
The Company continued to embrace a flexible model in which employees work remotely (with the exception of essential employees whose roles require them to be on site). Office space is available for team meetings and collaboration, and the Company hosted several in-person events throughout the year so that employees could connect with one another.
The policy also provides up to 12 weeks of paid maternity leave and six weeks paid leave for fathers and both adoptive parents in the U.S. The Company continued to embrace a flexible model in which employees work remotely (with the exception of essential employees whose roles require them to be on site).
Manufacturing employees achieved a 100% completion rate for job-specific safety training and participate in an onsite safety committee that promotes safe practices at work and at home. 12 For wellness, employees participated in a 28-day activity challenge in June 2022 during Safety Month and collectively achieved 85 million steps.
Manufacturing employees achieved a 100% completion rate for job-specific safety training and participate in an onsite safety committee that promotes safe practices at work and at home. 2023 marked the fifth year DFIN observed the importance of employee health and safety among its global workforce through its annual Safety Week event.
The Company's programs focus on physical as well as mental and emotional health and encourage all employees to take ownership of their wellbeing. Highlights include topical webinars, targeted programs (e.g., tobacco cessation, diabetes management and weight management) and employee assistance programs.
The Company is responsive to employee input in designing its programs and, in 2023, introduced new offerings in its health plans to meet its workforce's evolving needs. The Company's programs focus on physical as well as mental and emotional health and encouraging all employees to take ownership of their wellbeing.
Best Practice Institute, a leadership benchmark research company, surveyed employees prior to certifying the Company and found that the Company earned high ratings in the areas of trust, teamwork and competence. Employees cited their strong bond with coworkers, flexible work schedules and strong management and senior leadership among the reasons they loved working for DFIN.
In 2023, the Company was again ranked on Newsweek's list of Top 100 Most Loved Workplaces® in America, which recognizes companies that have created a workplace where employees feel respected, inspired and appreciated. Employees cited their strong bond with coworkers, flexible work schedules and strong management and senior leadership among the reasons they loved working for DFIN.
The Company expects to decommission ActiveDisclosure 3.0 by the end of the first half of 2023, once the transition of clients has been completed. ActiveDisclosure provides capital markets clients with end-to-end solutions to collaborate, tag, validate and file with the SEC efficiently.
The cloud-based product replaced legacy ActiveDisclosure 3.0, which was decommissioned in 2023. ActiveDisclosure provides capital markets clients with end-to-end solutions to collaborate, tag, validate and file with the SEC efficiently over 80 different forms, including Section 16 and Form 144 forms.
The Company's Total Compliance Management (“TCM”) offering allows clients to utilize multiple Arc Suite products to streamline the creation and distribution of materials required by the SEC Rules 30e-3 “Optional Internet Availability of Investment Company Shareholder Reports” and 498A “Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts.” The Company provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review and expert support for mutual funds, variable annuities, REITs and other alternative investments.
Arc Suite products are cloud-based and include automation and single-source data validation which streamlines processes and drives efficiencies for clients. The Company provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review and expert support for mutual funds, variable annuities, REITs and other alternative investments.
Via integration with the Company’s eBrevia solution, Venue uses artificial intelligence to analyze documents to help clients better understand their content and make informed decisions. Venue's auto-redaction capability, powered by Guardum, also allows clients to protect personally identifiable information (“PII”) using efficient, secure, systematically burned-in redaction.
Venue allows clients to analyze documents to help them better understand their content as well as mitigate risk through the use of Venue's auto-redaction capability which protects personally identifiable information using efficient, secure and systematically burned-in redaction. The Company also engages third parties to perform annual SOC2 Type II compliance audits and penetration/vulnerability testing.
Other benefits include the health savings account (which includes a Company contribution), flexible spending accounts and a group legal services plan. Diversity, Equity & Inclusion (“DEI”) —The Company is committed to increasing gender and racial diversity at all levels through recruiting, training and promotion opportunities. The Company has made progress in bringing more diverse perspectives into leadership.
The Company's other offerings include short-term disability, long-term disability, life insurance programs, health savings accounts (which includes a Company contribution), flexible spending accounts and a group legal services plan. Diversity, Equity and Inclusion (“DEI”) —The Company is committed to fostering a diverse, equitable and inclusive environment where people feel valued, respected and heard.
In 2022, approximately 38% of U.S. employees in managerial roles were women and approximately 26% of U.S. employees in managerial roles were people of color. In 2022, women or people of color made up approximately 58% of all U.S. hires and promotions at the manager level and above, an increase of 10% over the last three years.
The Company has seen an approximately 6% increase in representation for women and people of color at the level of supervisor and above (“Supervisor+”) over the last three years. In 2023, 37% of U.S. employees in Supervisor+ roles were women and 25% were people of color. The Company's Board reflects both gender and racial/ethnic diversity, constituting 22% each.
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.
ActiveDisclosure and Arc Suite provide clients and their financial advisors software solutions which allow them to autonomously file and distribute compliance documents with regulatory agencies reducing the need for additional service support during peak periods.
In November 2022, the Company expanded its Safety Pinnacle Awards, which annually recognizes best-in-class contributions of employees who foster a culture of safety, health and well-being in the workplace, to recognize employee contributions in four additional environmental, social and governance (“ESG”) categories: community service, data privacy and security, DEI and the environment. 46 employees were recognized with awards in 2022.
Employees participated in a 5-day activity challenge during this event and collectively achieved approximately 8.5 million steps. In November 2023, the Company expanded its Pinnacle Awards to recognize employee contributions in six categories: community service, data privacy and security, DEI, the environment, safety, health and wellbeing and living the Company values.
The Company also supports capital markets clients in meeting SEC-mandated regulatory filing requirements, including tagging filings in the XBRL format. The Company provides clients with a suite of tagging, review and validation tools to assist them with the XBRL requirements.
ActiveDisclosure is ISO/IEC 27001:2013-certified, and the Company also engages third parties to perform annual SOC2 Type II compliance audits and penetration/vulnerability testing. The Company also supports capital markets clients in meeting SEC-mandated regulatory filing requirements, including tagging filings in the applicable XBRL format, through its full-service traditional offerings and through the use of ActiveDisclosure.
Removed
In 2021, approximately 24% of capital markets net sales related to software solutions, of which approximately 58% related to the Company’s transactional solution and 42% related to compliance and other software solutions.
Added
Capital markets clients leverage the Company’s deep industry expertise and experience to successfully navigate the SEC’s specified file formats when submitting compliance documents through the SEC's EDGAR system. The Company's cloud-based product, ActiveDisclosure, provides features such as built-in collaboration tools and eXtensible Business Reporting Language (“XBRL”) and Inline XBRL (“iXBRL”) client-tagging capability.
Removed
In 2021, the Company launched an entirely new cloud-based product, ActiveDisclosure (“ActiveDisclosure”), which provides new features such as built-in collaboration tools and eXtensible Business Reporting Language (“XBRL”) client-tagging capability. The new product replaced ActiveDisclosure 3.0, and as of December 31, 2022, less than 15% of the Company's ongoing ActiveDisclosure client base remain on ActiveDisclosure 3.0.
Added
The purchase price for the remaining equity of Guardum was $3.6 million, net of cash acquired of $0.1 million. The Company's disposition of the Edgar Online (“EOL”) business closed on November 9, 2022, and the Company received net cash proceeds of $3.3 million.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA failure to adapt to technological changes to address the changing demands of clients may adversely impact the Company’s business, and if the Company fails to successfully develop, introduce or integrate new services or enhancements to its services and products platforms, systems or applications, DFIN’s reputation, net sales and operating income may suffer.
Biggest changeA failure to successfully develop, introduce or integrate new services or enhancements to DFIN’s services and products platforms, systems or applications, may harm DFIN’s reputation, and cause its net sales and operating income to suffer. The Company’s business plan continues to focus on transitioning its business to a software and technology focused company, offering compliance and regulatory solutions.
ITEM 1A. R ISK FACTORS The Company’s consolidated results of operations, financial position and cash flows can be adversely affected by various risks. These risks include the principal factors listed below and the other matters set forth in the Annual Report. You should carefully consider all of these risks.
ITEM 1A. R ISK FACTORS The Company’s consolidated results of operations, financial position and cash flows can be adversely affected by various risks. These risks include the principal factors listed below and other matters set forth in the Annual Report. You should carefully consider all of these risks.
As a result, the Company is subject to the risks inherent in conducting business outside the United States, including: • costs of customizing services and products for foreign countries; • difficulties in managing and staffing international operations; • increased infrastructure costs including legal, tax, accounting and information technology; • reduced protection for intellectual property rights in some countries; • potentially greater difficulties in collecting accounts receivable, including currency conversion and cash repatriation from foreign jurisdictions; • increased licenses, tariffs and other trade barriers; • potentially adverse tax consequences; • increased burdens of complying with a wide variety of foreign laws, including employment-related laws, which may be more stringent than U.S. laws; • unexpected changes in regulatory requirements; • political and economic instability; and • compliance with applicable anti-corruption and sanction laws and regulations.
As a result, the Company is subject to the risks inherent in conducting business outside the United States, including: • costs of customizing services and products for foreign countries; • difficulties in managing and staffing international operations; • increased infrastructure costs including legal, tax, accounting and information technology; • reduced protection for intellectual property rights in some countries; • potentially greater difficulties in collecting accounts receivable, including currency conversion and cash repatriation from foreign jurisdictions; • increased licenses, tariffs and other trade barriers; • potentially adverse tax consequences; • increased burdens of complying with a wide variety of foreign laws, including data privacy and employment-related laws, which may be more stringent than U.S. laws; • unexpected changes in regulatory requirements; • political and economic instability; and • compliance with applicable anti-corruption and sanction laws and regulations.
Any of these results could negatively impact the Company’s business, results of operations, financial position and cash flows. A substantial part of the Company’s business depends on clients continuing their use of DFIN’s services and products. Any decline in the Company’s client retention would harm the Company’s future operating results.
Any of these results could negatively impact the Company’s business, reputation, results of operations, financial position and cash flows. A substantial part of the Company’s business depends on clients continuing their use of DFIN’s services and products. Any decline in the Company’s client retention would harm the Company’s future operating results.
The Amended and Restated Credit Agreement that governs the Company’s Credit Facilities contain a number of significant restrictions and covenants that limit the Company’s ability to: • incur additional debt; • pay dividends, make other distributions or repurchase or redeem capital stock; • prepay, redeem or repurchase certain debt; • make loans and investments; • sell, transfer or otherwise dispose of assets; 20 • incur or permit to exist certain liens; • enter into certain types of transactions with affiliates; • enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends; and • consolidate, merge or sell all or substantially all of the Company’s assets.
The Amended and Restated Credit Agreement that governs the Company’s Credit Facilities contain a number of significant restrictions and covenants that limit the Company’s ability to: • incur additional debt; • pay dividends, make other distributions or repurchase or redeem capital stock; • prepay, redeem or repurchase certain debt; • make loans and investments; 19 • sell, transfer or otherwise dispose of assets; • incur or permit to exist certain liens; • enter into certain types of transactions with affiliates; • enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends; and • consolidate, merge or sell all or substantially all of the Company’s assets.
As a result, the Company may be less able to respond timely to changes in market dynamics, which could have a material adverse effect on its business, results of operations, financial position and cash flows. 19 The Company has in the past acquired and may in the future acquire other businesses, and it may be unable to successfully integrate the operations of these businesses and may not achieve the cost savings and increased net sales anticipated as a result of these acquisitions.
As a result, the Company may be less able to respond timely to changes in market dynamics, which could have a material adverse effect on its business, results of operations, financial position and cash flows. 18 The Company has in the past acquired and may in the future acquire other businesses, and it may be unable to successfully integrate the operations of these businesses and may not achieve the cost savings and increased net sales anticipated as a result of these acquisitions.
Management believes the Company’s ability to retain its client base and to attract new clients is directly related to DFIN’s sales force and client service personnel, and if the Company cannot retain these key employees, its business could suffer. In addition, many members of DFIN’s management have significant industry experience that is valuable to competitors.
Management believes the Company’s ability to retain its client base and to attract new clients is directly related to DFIN’s sales force and client service personnel, and if the Company cannot retain these key employees, its business could suffer. In addition, many members of DFIN’s management have significant industry experience or functional experience that is valuable to competitors.
If RRD fails to make required payments in respect of the remaining LSC MEPP Liabilities or RRD fails to make required payments in respect of the RRD MEPP liabilities, the Company may become obligated to make such payments, which payment obligations may negatively impact the Company’s cash flows and results of operations.
If RRD fails to make required payments in respect of the remaining LSC MEPP Liabilities or RRD fails to make required payments in respect of the RRD MEPP liabilities, the Company may become obligated to make such payments, which may negatively impact the Company’s cash flows and results of operations.
In addition, any preventative or protective actions that governments implement or that the Company takes in respect of a global health crises such as COVID-19, such as travel or movement restrictions, quarantines or site closures, may interfere with the ability of the Company’s employees and vendors to perform their respective responsibilities and obligations relative to the conduct of DFIN’s business.
Any preventative or protective actions that governments implement or that the Company takes in respect of a global health crises, such as travel or movement restrictions, quarantines or site closures, may interfere with the ability of the Company’s employees and vendors to perform their respective responsibilities and obligations relative to the conduct of DFIN’s business.
The Company’s success in this area will be dependent on a wide range of factors, some of which are beyond the Company’s control, including the efficacy of the Company’s marketing efforts, its ability to retain existing and obtain new clients and strategic partners, human error, the quality and perceived value of DFIN’s services and products offerings, actions of the Company’s competitors and positive or negative publicity.
The Company’s success in this area will be dependent on a wide range of factors, some of which are beyond the Company’s control, including the efficacy of the Company’s marketing efforts, its ability to retain existing and obtain new clients and strategic partners, human error, the quality and perceived value of DFIN’s services and products offerings, customer service and support interactions, actions of the Company’s competitors and positive or negative publicity.
In 2022, the Company completed the consolidation of its print platform, which enabled DFIN to achieve meaningful cost savings as well as reduced the number of owned and leased global facilities from 50 as of December 31, 2020 to 28 as of December 31, 2022.
In 2022, the Company completed the consolidation of its print platform, which enabled DFIN to achieve meaningful cost savings as well as reduced the number of owned and leased global facilities from 50 as of December 31, 2020 to 20 as of December 31, 2023.
The financial communications services industry is highly competitive with relatively low barriers to entry and the industry remains highly fragmented in North America and internationally. Management expects that competition will increase from existing competitors, as well as new and emerging entrants. Additionally, as the Company expands its services and products offerings, it may face competition from new and existing competitors.
The financial communications services industry is highly competitive with relatively low barrier to entry and the industry remains highly fragmented in North America and internationally. Management expects that competition will increase from existing competitors, as well as new and emerging entrants. Additionally, as the Company expands its services and product offerings, it may face competition from new and existing competitors.
As of December 31, 2022, the Company had the remaining $255.0 million available for additional borrowing under the Revolving Facility. The more indebtedness the Company incurs, the further exposed it becomes to the risks associated with leverage described above. Adverse credit market conditions may limit the Company’s ability to obtain future financing.
As of December 31, 2023, the Company had the remaining $299.0 million available for additional borrowing under the Revolving Facility. The more indebtedness the Company incurs, the further exposed it becomes to the risks associated with leverage described above. Adverse credit market conditions may limit the Company’s ability to obtain future financing.
Further, to access the Company’s services and products, the Company’s customers use personal electronic devices that are beyond DFIN’s security control systems. Techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and generally are not recognized until executed against a target. Consistent with all software solutions, DFIN’s software may be vulnerable to these types of attacks.
Further, to access the Company’s services and products, the Company’s customers use personal electronic devices that are beyond DFIN’s security control systems. Techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and generally are not recognized until executed against a target. Similar to other software solutions, DFIN’s software may be vulnerable to these types of attacks.
There is no guarantee that these measures will be adequate to safeguard against all data security breaches, system compromises or misuses of data. 14 Furthermore, DFIN’s systems allow the Company to share information that may be confidential in nature to its clients across the Company’s offices worldwide.
There is no guarantee that these measures will be adequate to safeguard against all data security breaches, system compromises or misuses of data. 12 Furthermore, DFIN’s systems allow the Company to share information that may be confidential in nature to its clients across the Company’s offices and remote working locations worldwide.
For instance, a portion of the Company’s net sales from capital markets clients is generated through referrals by investment banks, financial advisors and law firms that have utilized the Company’s services in connection with prior transactions.
For instance, a portion of the Company’s net sales from capital markets clients is generated through referrals by investment banks, financial advisors and law firms that have utilized the Company’s services in connection with prior transactions. These referrals are an important source of new clients for the Company’s services.
The Company has operations outside the United States. DFIN works with capital markets clients around the world, and in 2022 the Company’s international sales accounted for approximately 14% of DFIN’s net sales. The Company’s operations outside of the United States are primarily focused in Europe, Asia and Canada.
DFIN works with capital markets clients around the world, and in 2023 the Company’s international sales accounted for approximately 12% of DFIN’s total net sales. The Company’s operations outside of the United States are primarily focused in Asia, Europe and Canada.
As of December 31, 2022, the Company had $125.0 million outstanding under its Term Loan A Facility, as defined below, and $45.0 million outstanding under its Revolving Facility, as defined below.
As of December 31, 2023, the Company had $125.0 million outstanding under its Term Loan A Facility, as defined below, and no borrowings outstanding under its Revolving Facility, as defined below.
Global supply chain challenges leading to decreased availability of paper and other raw materials and the costs of these resources due to sourcing difficulties or otherwise have increased and are expected to continue to increase DFIN’s costs. The Company may not be able to pass these costs on to clients through higher prices.
Global supply chain challenges leading to decreased availability of paper and other raw materials and the costs of these resources due to sourcing difficulties or otherwise have increased DFIN’s costs in the past and may do so in the future. The Company may not be able to pass these costs on to clients through higher prices.
The Company’s business could be materially adversely affected by the risk, or the public perception of risk, related to a pandemic or widespread health crisis, such as the current COVID-19 pandemic.
In addition, the Company’s business could be materially adversely affected by the risk, or the public perception of risk, related to a pandemic or widespread health crisis similar to the COVID-19 pandemic.
In addition, it is possible that the Company’s hardware vendors or the licensors of third party software could increase their prices, which could have an adverse impact on DFIN’s business, operating results and financial condition.
In addition, it is possible that the Company’s vendors could increase their prices, which could have an adverse impact on DFIN’s business, operating results and financial condition.
There can be no assurance that new products or services, or upgrades to DFIN’s products or services, will be released as anticipated or that, when released, they will not contain defects.
There can be no assurance that new products or services, or upgrades to DFIN’s products or services, will be released as anticipated or that, when released, they will be adopted by clients.
The Company does not have long-term contracts with most of capital markets and some investment companies clients and, therefore, relies on their continued use of DFIN’s services and products, particularly for IC-CCM and CM-CCM-related services. As a result, client retention, particularly during periods of declining transactional volume, is an important part of the Company’s strategic business plan.
The Company does not generally have long-term contracts for traditional services and products within the CM-CCM and IC-CCM segments and, therefore, relies on those clients continued use of DFIN’s services and products. As a result, client retention, particularly during periods of declining transactional volume, is an important part of the Company’s strategic business plan.
DFIN’s success depends, in part, on its general ability to attract, develop, motivate and retain highly skilled employees. The loss of a significant number of employees or the inability to attract, hire, develop, train and retain additional skilled personnel could have a serious negative effect on DFIN’s business.
The loss of a significant number of employees or the inability to attract, hire, develop, train and retain additional skilled personnel could have a serious negative effect on DFIN’s business.
The Company may be forced to delay commercial release of its services until any discovered problems are corrected and, in some cases, may need to implement enhancements or modifications to correct errors that the Company does not detect until after deployment of its services. 15 Undetected errors or failures found in DFIN’s services and products may result in loss of or delay in market acceptance of the services and products that could negatively impact its business.
The Company may be forced to delay commercial release of its services until any discovered problems are corrected and, in some cases, may need to implement enhancements or modifications to correct errors that the Company does not detect until after deployment of its services.
Any loss of the right to use any of this hardware or software could result in delays in the provisioning of DFIN’s services, which could negatively affect the Company’s business until equivalent technology is either developed by the Company or, if available, is identified, obtained and integrated.
Any loss of the right to use any of these systems and services could result in delays in the provisioning of DFIN’s services, which could negatively affect the Company’s business until alternatives are either developed by the Company or identified, obtained and integrated.
As a percentage of total net sales, the Company’s software solutions net sales increased from 18% in 2018 to 33% in 2022, while the Company’s tech-enabled services net sales were flat at 46% in 2018 and 2022 and print and distribution net sales declined from 36% in 2018 to 21% in 2022.
As a percentage of total net sales, the Company’s software solutions net sales increased from 18% in 2018 to 37% in 2023, tech-enabled services net sales decreased from 46% in 2018 to 42% in 2023 and print and distribution net sales decreased from 36% in 2018 to 21% in 2023.
In addition, the Company’s MEPP liabilities could also be affected by the financial stability of other employers participating in such plans and decisions by those employers to withdraw from such plans in the future. 22 The trend of increasing costs to provide health care and other benefits to employees and retirees may continue.
In addition, the Company’s MEPP liabilities could also be affected by the financial stability of other employers participating in such plans and decisions by those employers to withdraw from such plans in the future.
If the Company is unable to protect its proprietary technology and other rights, the value of DFIN’s business and its competitive position may be impaired. If the Company is unable to protect its intellectual property, the Company’s competitors could use its intellectual property to market services and products similar to DFIN’s, which could decrease demand for its services.
If the Company is unable to protect its intellectual property, the Company’s competitors could use its intellectual property to market services and products similar to DFIN’s, which could decrease demand for its services.
Various conditions may lead to changes in the discount rates used to value the year-end benefit obligations of the plans, which could partially mitigate, or worsen, the effects of lower asset returns.
These reductions may increase the level of expected required pension and other postretirement benefits plans contributions in future years. Various conditions may lead to changes in the discount rates used to value the year-end benefit obligations of the plans, which could partially mitigate, or worsen, the effects of lower asset returns.
There can be no assurance that clients will continue to use DFIN’s services and products to meet their ongoing needs, particularly in the face of competitors’ services and products offerings.
There can be no assurance that clients will continue to use DFIN’s services and products to meet their ongoing needs, particularly in the face of competitors’ services and products offerings. Although some of the Company’s software contracts are multi-year, both multi-year contracts and contracts that are less than one year are subject to renewals.
The Company’s business may be adversely affected by new technologies enabling clients to produce and file documents on their own. The Company’s business may be adversely affected as clients seek out opportunities to produce and file regulatory documentation on their own and begin to implement technologies that assist them in this process.
The Company’s business may be adversely affected if clients seek out alternative means to produce and file regulatory documentation and implement technologies that assist them in this process.
The Company’s operating results would suffer if its innovations are not responsive to the needs of the Company’s clients, are not appropriately timed with market opportunities or are not brought to market effectively.
The Company utilizes product pilots, alpha release and other means to gauge market demand as DFIN’s operating results would suffer if its innovations are not responsive to the needs of the Company’s clients, are not appropriately timed with market opportunities or are not brought to market effectively.
If the Company is unable to license or acquire new technology solutions to enhance existing services and products offerings, the results of operations, financial position and cash flows may be negatively impacted. Fluctuations in the costs and availability of paper and other raw materials may adversely impact the Company.
If the Company is unable to license or acquire new technology solutions to enhance existing services and products offerings, the results of operations, financial position and cash flows may be negatively impacted. The Company may be unable to hire and retain talented employees, including management.
An attack of this type, such as the incident described in the preceding paragraph, could disrupt the proper functioning of the Company’s software solutions, cause errors in the output of clients’ work, allow unauthorized access to sensitive, proprietary or confidential information and other undesirable or destructive outcomes.
Breaches and other inappropriate access can be difficult to detect and any delay in identifying them could increase their harm. An attack of this type could disrupt the proper functioning of the Company’s software solutions, cause errors in the output of clients’ work, allow unauthorized access to sensitive, proprietary or confidential information and other undesirable or destructive outcomes.
Despite production testing by the Company and operational testing by current and potential clients, errors may not be found in new services and products until after commencement of commercial availability or use, resulting in a loss of or a delay in market acceptance, damage to the Company’s reputation, client dissatisfaction and decline in net sales and operating income.
Despite production testing by the Company and operational testing by current and potential clients, errors may not be found in new services and products until after commencement of commercial availability or use, resulting in a loss of or a delay in market acceptance, a need for additional non-billable customer service and support to ameliorate the error, damage to the Company’s reputation, client dissatisfaction and decline in net sales and operating income. 14 If the Company is unable to protect its proprietary technology and other rights, the value of DFIN’s business and its competitive position may be impaired.
If technologies are further developed to provide clients with the ability to autonomously produce and file documents to meet their regulatory obligations, and the Company does not develop products or provide services to compete with such new technologies, the Company’s business may be adversely affected by those clients who choose alternative solutions, including self-serving or filing themselves.
If technologies are further developed to provide client alternative means to produce and file documents to meet their regulatory obligations, and the Company does not develop products or provide services to compete with such new technologies in a timely and cost-effective manner, the Company’s business may be adversely affected.
Damage to the Company’s reputation and loss of brand equity may reduce demand for DFIN’s services and products offerings and negatively impact its business, results of operations, financial position and cash flows. 18 The Company may be unable to hire and retain talented employees, including management.
Damage to the Company’s reputation and loss of brand equity may reduce demand for DFIN’s services and products offerings and negatively impact its business, results of operations, financial position and cash flows. There are risks associated with operations outside the United States. The Company has operations outside the United States.
These referrals are an important source of new clients for the Company’s services. 17 A decline in the number of referrals could require the Company to devote substantially more resources to the sales and marketing of its services, which would increase costs, potentially lead to a decline in net sales, slow the Company’s growth and negatively impact its business, results of operations, financial position and cash flows.
A decline in the number of referrals could require the Company to devote substantially more resources to the sales and marketing of its services, which would increase costs, potentially lead to a decline in net sales, slow the Company’s growth and negatively impact its business, results of operations, financial position and cash flows. 16 The highly competitive market for DFIN’s services and products, clients’ budgetary constraints and industry fragmentation may continue to create adverse price dynamics.
Legal and Regulatory Risks Modifications in the rules and regulations to which clients or potential clients are subject to may impact the demand for the Company’s services and products offerings.
These impacts may reduce demand for DFIN’s services and products offerings and negatively impact its business, results of operations, financial position and cash flows. 21 Legal and Regulatory Risks Modifications in the rules and regulations to which clients or potential clients are subject to may impact the demand for the Company’s services and products offerings.
If adverse conditions were to continue for an extended period of time, the Company’s costs and required cash contributions associated with pension and other postretirement benefits plans may substantially increase in future periods. The Company may become liable for funding obligations arising from multi-employer pension plan obligations of the Company’s former affiliates.
If adverse conditions were to continue for an extended period of time, the Company’s costs and required cash contributions associated with pension and other postretirement benefits plans may substantially increase in future periods. 22 The trend of increasing costs to provide health care and other benefits to employees and retirees may continue.
The funded status of DFIN’s pension and other postretirement benefits plans is dependent upon many factors, including returns on invested assets and the level of certain interest rates.
The funded status of DFIN’s pension and other postretirement benefits plans is dependent upon many factors, including returns on invested assets and the level of certain interest rates. Declines in the market value of the securities held by the plans or increase in the obligations due to fluctuating interest rates could further reduce the funded status of the plans.
To the extent borrowings, sales, purchases, net sales and expenses or other transactions are not in the applicable local currency, the Company may enter into foreign currency spot and forward contracts to hedge the currency risk. Management cannot be sure, however, that its efforts at hedging will be successful, and such efforts could, in certain circumstances, lead to losses.
To the extent borrowings, sales, purchases, net sales and expenses or other transactions are not in the applicable local currency, the Company may enter into foreign currency spot and forward contracts to hedge the currency risk.
The Company continues to invest a significant portion of its capital expenditures budget on software development, including the development of software solutions for both investment companies and capital markets, most recently with the launch of new cloud-based ActiveDisclosure in early 2021.
The Company continues to invest substantially all of its capital expenditures budget on software development, including the development of software solutions for both investment companies and capital markets, most recently with the launch of cloud-based ActiveDisclosure in 2021 and the ongoing development of additional features thereafter and new functionality developed in Arc Suite in 2023 to prepare for the new TSR regulatory requirements in 2024.
In order to do that, the Company must attract new clients for those businesses, and its ability to attract new clients and increase sales to existing clients depends in large part on the Company’s ability to enhance and improve existing services and products platforms, including application solutions, and to introduce new functionality either by acquisition or internal development.
DFIN’s ability to attract new clients and increase sales to existing clients depends in large part on the Company’s ability to enhance and improve existing services and products platforms, including application solutions, and to introduce new functionality and enhancements.
For example, clients and their financial advisors have increasingly relied on web-based services which allow clients to autonomously file and distribute reports required pursuant to the Exchange Act, prospectuses and other materials as a replacement for using the Company’s EDGAR filing services.
For example, clients and their financial advisors have increasingly relied on web-based services which allow clients to autonomously file and distribute reports required pursuant to the Exchange Act, prospectuses and other materials or utilized other technologies to facilitate collaborative document production and integration of financial and other types of data to produce compliance reports.
A number of core processes, such as software development, sales and marketing, client service and financial transactions, rely on DFIN’s IT infrastructure and applications.
A number of core processes, such as software development, sales and marketing, client service and financial transactions, rely on DFIN’s IT infrastructure and applications. Many of DFIN’s products and services are delivered on a current and time-sensitive basis and depend on reliable access to important systems and information.
In addition, malicious software, sabotage, ransomware and other cybersecurity breaches of the types described above could cause an outage in DFIN’s infrastructure, which could lead to a substantial delay of service and ultimately downtimes, recovery costs and client claims, any of which could negatively impact the Company’s results of operations, financial position and cash flows.
In addition, DFIN’s systems leverage third-party outsourcing arrangements, which expedites the Company’s responsiveness but exposes information to additional access points. Malicious software, sabotage, ransomware and other cybersecurity breaches of the types described below could cause an outage in DFIN's infrastructure, which could lead to a substantial delay of service and ultimately downtimes, recovery costs and client claims.
The quality of the Company’s customer support and services offerings is important to the Company’s clients, and if the Company fails to offer high quality customer support and services, clients may not use DFIN’s solutions resulting in a potential decline in net sales. A high level of customer support is critical for the successful marketing and sale of DFIN’s solutions.
Unfavorable conditions or changes in any of these factors could negatively impact the Company’s business, results of operations, financial position and cash flows. 15 The quality of the Company’s customer support and services offerings is important to the Company’s clients, and if the Company fails to offer high quality customer support and services, clients may not use DFIN’s solutions resulting in a potential decline in net sales.
If one or more members of the senior management team leave and cannot be replaced with a suitable candidate quickly, the Company could experience difficulty in managing its business properly, which could negatively impact its business, results of operations, financial position and cash flows. There are risks associated with operations outside the United States.
If one or more members of the senior management team are suddenly unavailable and their responsibilities cannot be handled by internal resources or a suitable replacement quickly, the Company could experience difficulty in managing its business properly, which could negatively impact its business, results of operations, financial position and cash flows. 17 Fluctuations in the costs and availability of paper and other raw materials may adversely impact the Company.
As a result, competition may lead to additional pricing pressure on DFIN’s services and products, which could negatively impact its business, results of operations, financial position and cash flows.
Budgetary constraints or other economic pressures on the Company’s existing or potential clients may impact DFIN’s ability to price its services and products profitably. As a result, these factors may lead to pricing dynamics for DFIN’s services and products which could negatively impact its business, results of operations, financial position and cash flows.
Such results could have a material adverse effect on DFIN’s operations, business, financial condition, results of operations, or cash flows.
Although a majority of the Company’s employees work remotely, restrictions on the locations of the Company’s manufacturing operations could impact service delivery timeliness or create other process inefficiencies. Such results could have a material adverse effect on DFIN’s reputation, client retention, operations, business, financial condition, results of operations and cash flows.
Some of DFIN’s systems and services are developed by third parties or rely on hardware purchased or leased and software licensed from third parties. These systems and services, or the hardware and software required to run the Company’s existing systems and services, may not continue to be available on commercially reasonable terms or at all.
The Company also relies on third parties for certain data center and cloud services to support services and product delivery to clients. These third-party systems and services may not continue to be available on commercially reasonable terms or at all.
Further, changing hardware vendors or software licensors could detract from management’s ability to focus on the ongoing operations of the Company’s business or could cause delays in the operations of the business. Additionally, third party software underlying DFIN’s services can contain undetected errors or bugs, or be susceptible to cybersecurity breaches described above.
Further, changing vendors for these systems and services could detract from management’s ability to focus on the ongoing operations of the Company’s business, cause delays in the Company’s operations or service delivery to clients or result in increased expenses during a transitional period.
Some of DFIN’s systems and services are developed by third parties or supported by third party hardware and software. The Company’s business and reputation could suffer if these third party systems and services fail to perform properly or are no longer available to the Company.
The Company’s business and reputation could suffer due to negative effects of poor availability, reliability, quality, security or other performance issues of these third-party systems and services. Some of DFIN’s systems, operations and infrastructure rely on third parties and utilize hardware purchased or leased or incorporate software licensed from third parties.
Modifications in such regulations could eliminate the need for certain types of communications altogether or impact the quantity or format of required communications. 21 Increasing regulatory focus on privacy issues and expanding laws could impact DFIN’s software solutions and expose the Company to increased liability.
The Company may find it difficult or costly to update its software and services to keep pace with evolving industry standards, regulatory requirements or other developments impacting the industries in which DFIN and its clients operate. Increasing regulatory focus on privacy issues and expanding laws could impact DFIN’s software solutions and expose the Company to increased liability.
Changes to health care regulations in the U.S. and internationally may also increase cost of providing such benefits. COVID-19 Pandemic Risk The current COVID-19 pandemic and other global public health epidemics may materially adversely impact the Company’s business, its future results of operations and its overall financial performance .
Changes to health care regulations in the U.S. and internationally may also increase cost of providing such benefits. The Company may become liable for funding obligations arising from multi-employer pension plans (“MEPP”) obligations of the Company’s former affiliates.
Modifications in these regulations may impact clients’ business practices and could reduce demand for DFIN’s services and products offerings.
Other developments, such as the SEC's TSR rule required in 2024, are expected to drive increased demand for the Company's services and product in the Investment Company segments but also requires additional investment of capital and other resources. Modifications in these regulations may impact clients’ business practices and could impact the competitive landscape for DFIN’s services and products offerings.
Removed
For example, during 2019 and 2020 the Company experienced two cyber incidents, one of which was through a commercial partner. The incident involving the Company’s commercial partner was a result of a compromise to the partner’s email server, which allowed unauthorized viewing of client information on that system.
Added
Any of the security concerns could negatively impact the Company's results of operations, financial position and cash flows. The Company’s business may be adversely affected if it fails to adapt to technological changes and address the changing demands of clients, including new technologies enabling clients to produce and file documents on their own.
Removed
The DFIN incident was, the Company believes, the result of a compromised login credential which allowed unauthorized viewing of client information on that system and access to an internal Company system.
Added
The markets in which the Company and its clients operate are characterized by changing business models, technology and regulation that causes clients’ needs and demand for DFIN’s services and products to evolve. Technological advancements such as artificial intelligence and machine learning are impacting client workflows and raising expectations for user experience, scale and efficiency.
Removed
In each incident, the Company believes the unauthorized viewing of client information was limited to that system and the DFIN incident has been fully remediated with no indication of continuing unauthorized access.
Added
The Company’s future success will depend, in part, on its ability to respond to these developments and keep pace with an evolving competitive landscape. Some of DFIN’s systems, operations and infrastructure rely on third parties or are supported by third-party hardware, software and data storage.
Removed
Breaches and other inappropriate access can be difficult to detect and any delay in identifying them could increase their harm.
Added
DFIN’s product and engineering capabilities require technology experts, data and software engineers and personnel with other specialized technical knowledge and experience. The Company utilizes contractors and other third parties for some of these human resources.
Removed
In addition, DFIN’s systems leverage third party outsourcing arrangements, which expedites the Company’s responsiveness but exposes information to additional access points.
Added
The quality and timing of the development services provided by such resources is not totally under the Company’s control, which may result in late delivery, errors or higher project costs.
Removed
Unfavorable conditions or changes in any of these factors could negatively impact the Company’s business, results of operations, financial position and cash flows. 16 The highly competitive market for DFIN’s services and products and industry fragmentation may continue to create adverse price pressures.
Added
A failure to appropriately manage third party resources could have an adverse impact on DFIN’s reputation or profitability. 13 Additionally, third-party systems and services underlying DFIN’s operations can contain undetected errors or bugs, or be susceptible to cybersecurity breaches described above.
Removed
In May 2018, management introduced the Company’s new business plan that focuses on transitioning its business to a software and technology focused company.
Added
Furthermore, certain third-party service providers or vendors may have access to sensitive data including personal information, valuable intellectual property and other proprietary or confidential data, including that which was provided to DFIN by its clients.
Removed
As further described in Item 1. Business—Company History , in 2018, the Company sold its Language Solutions business and acquired eBrevia. In December 2021, the Company completed an acquisition of Guardum in order to enhance Venue product features, and in November 2022, the Company sold its EOL business.
Added
A third-party vendor could intentionally or inadvertently disclose sensitive data including personal information, which could have a material adverse effect on the Company’s business and financial results and damage the Company’s reputation. In the event of a material disruptive event, the Company’s disaster recovery and business continuity plans may fail, which could adversely interrupt operations.
Removed
If product defects arise, the Company could experience negative publicity, damage to its reputation, decline in net sales, delay in market acceptance or claims by clients brought against the Company.
Added
Damage to the Company’s IT infrastructure could result from catastrophe, natural disaster, severe weather, power loss, telecommunications failure, terrorist attack or pandemic as well as from security breach of the types described above or other events that could have a significant disruptive effect on operations.
Removed
Declines in the market value of the securities held by the plans coupled with historically low interest rates have substantially reduced, and in the future could further reduce, the funded status of the plans. These reductions may increase the level of expected required pension and other postretirement benefit plan contributions in future years.
Added
The Company has disaster recovery and business continuity plans in place in the event of system failure due to any of these events and these plans are tested regularly.
Removed
A significant outbreak of epidemic, pandemic, or contagious diseases in the human population resulting in a widespread health crisis that adversely affect the broader economies and financial markets will also adversely impact the overall demand environment for DFIN’s services and products.
Added
If these disaster recovery or business continuity plans are not adequate to address the disruptive event, it could result in an outage in DFIN’s infrastructure, which could lead to a substantial delay of service and ultimately downtimes, recovery costs and client claims, any of which could negatively impact the Company’s results of operations, financial position and cash flows.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company leased 12 international facilities, some of which had multiple buildings and warehouses, encompassing less than 0.1 million square feet in Asia, Europe and Canada. Of the Company’s worldwide facilities, approximately 0.2 million square feet of space was owned, while the remaining 0.4 million square feet of space was leased.
Biggest changeOf the Company’s worldwide facilities, approximately 0.2 million square feet of space was owned, while the remaining 0.3 million square feet of space was leased.
As further described in Note 1, Overview, Basis of Presentation and Significant Accounting Policies , to the audited Consolidated Financial Statements, as of December 31, 2022, the Company had land held for sale which encompassed approximately 3.3 acres. ITEM 3.
As further described in Note 1, Overview, Basis of Presentation and Significant Accounting Policies , to the audited Consolidated Financial Statements, as of December 31, 2023, the Company had land held for sale which encompassed approximately 3.3 acres. ITEM 3.
LEG AL PROCEEDINGS For a discussion of certain litigation involving the Company, see Note 8, Commitments and Contingencies , to the audited Consolidated Financial Statements. ITEM 4. MIN E SAFETY DISCLOSURES Not applicable. 24 PART II
LEG AL PROCEEDINGS For a discussion of certain litigation involving the Company, see Note 8, Commitments and Contingencies , to the audited Consolidated Financial Statements. ITEM 4. MIN E SAFETY DISCLOSURES Not applicable. 25 PART II
ITEM 2. PROP ERTIES The Company’s corporate office is located in leased office space at 35 West Wacker Drive, Chicago, Illinois, 60601. As of December 31, 2022, the Company leased or owned 16 U.S. facilities, some of which had multiple buildings and warehouses, and these U.S. facilities encompassed approximately 0.5 million square feet.
ITEM 2. PROP ERTIES The Company’s corporate office is located in leased office space at 35 West Wacker Drive, Chicago, Illinois, 60601. As of December 31, 2023, the Company leased or owned 11 U.S. facilities encompassing approximately 0.5 million square feet. The Company leased 9 international facilities encompassing less than 0.1 million square feet in Asia, Europe and Canada.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−1 removed2 unchanged
Biggest changeIssuer 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) October 1, 2022 - October 31, 2022 180,061 $ 38.41 180,061 $ 131,025,550 November 1, 2022 - November 30, 2022 128,526 35.61 124,612 126,593,507 December 1, 2022 - December 31, 2022 (b) 61,524 37.41 61,524 124,292,140 Total 370,111 $ 37.27 366,197 ___________ (a) As further described in Note 13, Capital Stock , to the audited Consolidated Financial Statements, 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.
Biggest changeIssuer 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) October 1, 2023 - October 31, 2023 37,633 $ 53.56 37,633 $ 104,274,335 November 1, 2023 - November 30, 2023 28,726 55.92 24,812 102,891,003 December 1, 2023 - December 31, 2023 (b) 20,000 61.19 20,000 $ 101,667,267 Total 86,359 $ 56.11 82,445 (a) As further described in Note 13, Capital Stock , to the audited Consolidated Financial Statements, 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.
Market for Donnelley Financial Solutions, Inc.'s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of this Annual Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act. ITEM 6. [RESERVED] 26
Market for Donnelley Financial Solutions, Inc.'s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of this Annual Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act. ITEM 6. [RESERVED] 27
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 4,000 shares, valued at $0.2 million, for which the Company placed orders prior to December 31, 2022 that were not settled until the first quarter of 2023.
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 2,000 shares, valued at $0.1 million, for which the Company placed orders prior to December 31, 2023 that were not settled until the first quarter of 2024.
The comparison assumes all dividends have been reinvested and an initial investment of $100 on December 31, 2017. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
The comparison assumes all dividends have been reinvested and an initial investment of $100 on December 31, 2018. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters of this Annual Report. 25 PEER PERFORMANCE TABLE The following graph compares the cumulative total stockholder return on DFIN’s common stock from December 31, 2017 through December 31, 2022, with (i) the cumulative total return of the Russell 2000 Index, (ii) the cumulative return of the Standard & Poor’s (“S&P”) SmallCap 600 Index, and (iii) S&P Composite 1500 Diversified Financials Index, a business industry index of which DFIN is a constituent.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters of this Annual Report. 26 PEER PERFORMANCE TABLE The following graph compares the cumulative total stockholder return on DFIN’s common stock from December 31, 2018 through December 31, 2023, with (i) the cumulative total return of the Russell 2000 Index, (ii) the cumulative return of the Standard & Poor’s (“S&P”) SmallCap 600 Index, and (iii) S&P Composite 1500 Diversified Financials Index, a business industry index of which DFIN is a constituent.
ITEM 5. MARKET FOR DONNELLEY FINANCIAL SOLUTIONS, INC.’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market DFIN’s common stock began “regular-way” trading under the ticker symbol “DFIN” on the New York Stock Exchange (“NYSE”) on October 3, 2016. Stockholders As of February 14, 2023, there were 3,345 stockholders of record of the Company’s common stock.
ITEM 5. MARKET FOR DONNELLEY FINANCIAL SOLUTIONS, INC.’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market DFIN’s common stock began “regular-way” trading under the ticker symbol “DFIN” on the New York Stock Exchange (“NYSE”) on October 3, 2016. Stockholders As of February 13, 2024, there were 3,099 stockholders of record of the Company’s common stock.
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.
On August 17, 2022, the Board authorized an increase to the stock repurchase program previously approved in February 2022 to bring the total remaining available repurchase authorization for shares on or after August 17, 2022 to $150 million, which expired on December 31, 2023 with a remaining available repurchase authorization of $101.7 million.
Performance Table Base Period December 31, December 31, December 31, December 31, December 31, Company Name/Index 12/31/2017 2018 2019 2020 2021 2022 Donnelley Financial Solutions 100 71.99 53.72 87.07 241.87 198.31 Russell 2000 Index 100 88.99 111.70 134.00 153.85 122.41 S&P SmallCap 600 Index 100 91.52 112.37 125.05 158.59 133.06 S&P Composite 1500 Diversified Financials Index 100 89.76 111.82 124.58 168.96 149.27 This performance graph and other information furnished under Part II, Item 5.
Performance Table Base Period December 31, December 31, December 31, December 31, December 31, Company Name/Index 12/31/2018 2019 2020 2021 2022 2023 Donnelley Financial Solutions 100 74.63 120.96 335.99 275.48 444.55 Russell 2000 Index 100 125.53 150.58 172.90 137.56 160.85 S&P SmallCap 600 Index 100 122.78 136.64 173.29 145.39 168.73 S&P Composite 1500 Diversified Financials Index 100 124.57 138.79 188.23 166.30 192.61 This performance graph and other information furnished under Part II, Item 5.
Removed
The stock repurchase program may be suspended or discontinued at any time.
Added
On November 14, 2023, the Board authorized the repurchase of up to $150 million of the Company's outstanding common stock commencing on January 1, 2024, with an expiration date of December 31, 2025. The stock repurchase program may be suspended or discontinued at any time.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

99 edited+16 added−19 removed47 unchanged
Biggest changeLSC multiemployer pension plans obligation— Included charges of $5.4 million for the year ended December 31, 2021 for the Company’s accrual related to the LSC MEPP Liabilities. 33 Selected Financial Data Year Ended December 31, 2022 2021 (in millions, except per share data) Consolidated Statements of Operations data: Net sales $ 833.6 $ 993.3 Net earnings 102.5 145.9 Net earnings per share: Basic 3.33 4.36 Diluted 3.17 4.14 Consolidated Balance Sheets data: Total assets 828.3 883.3 Long-term debt 169.2 124.0 The following table includes the pre-tax and after-tax impact of certain Non-GAAP adjustments for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 Year Ended December 31, 2021 Pre-tax After-tax Pre-tax After-tax (in millions) Restructuring, impairment and other charges, net $ 7.7 $ 5.7 $ 13.6 $ 9.9 Share-based compensation expense 19.3 12.1 19.5 9.9 Accelerated rent expense 0.8 0.6 — — Loss on sale of a business 0.7 0.4 — — Disposition-related expenses 0.1 0.1 — — Non-income tax, net (0.9 ) (0.6 ) (1.6 ) (1.2 ) COVID-19 related recoveries (0.5 ) (0.3 ) (1.0 ) (0.7 ) Gain on equity investments, net (0.5 ) (0.4 ) (0.4 ) (0.3 ) Gain on sale of long-lived assets, net (0.2 ) (0.2 ) (0.7 ) (0.5 ) Loss on debt extinguishments — — 7.4 5.4 LSC multiemployer pension plans obligation — — 5.4 3.9 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 investors.
Biggest changeCOVID-19 related recoveries— Included recoveries of $0.5 million for the year ended December 31, 2022 from certain governmental subsidies related to employee wages at certain international locations. 34 Selected Financial Data Year Ended December 31, 2023 2022 (in millions, except per share data) Consolidated Statements of Operations data: Net sales $ 797.2 $ 833.6 Net earnings 82.2 102.5 Net earnings per share: Basic 2.81 3.33 Diluted 2.69 3.17 Consolidated Balance Sheets data: Total assets 806.9 828.3 Long-term debt 124.5 169.2 The following table includes the pre-tax and after-tax impact of certain Non-GAAP adjustments for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 Year Ended December 31, 2022 Pre-tax After-tax Pre-tax After-tax (in millions) Restructuring, impairment and other charges, net $ 9.8 $ 7.5 $ 7.7 $ 5.7 Share-based compensation expense 22.5 13.3 19.3 12.1 Loss on sale of businesses 6.1 — 0.7 0.4 Accelerated rent expense 3.7 3.2 0.8 0.6 Disposition-related expenses 0.3 0.2 0.1 0.1 Gain on investments in equity securities (7.0 ) (5.1 ) (0.5 ) (0.4 ) Non-income tax, net (0.9 ) (0.6 ) (0.9 ) (0.6 ) Gain on sale of long-lived assets (0.8 ) (0.6 ) (0.2 ) (0.2 ) COVID-19 related recoveries — — (0.5 ) (0.3 ) 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 investors.
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, gain on equity investments, net 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.
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, gain on investments in equity securities 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.
ITEM 7. MANAGEMENT’S DISC USSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read together with the Company’s audited Consolidated Financial Statements and the notes thereto, as well as Part I, Item 1. Business of this Annual Report.
ITEM 7. MANAGEMENT’S DISC USSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read together with the Company’s audited Consolidated Financial Statements and the related notes thereto, as well as Part I, Item 1. Business of this Annual Report.
Refer to Note 9, Income Taxes , to the audited Consolidated Financial Statements for further information. 29 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.
Refer to Note 9, Income Taxes , to the audited Consolidated Financial Statements for further information. 30 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.
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, ActiveDisclosure, among others, and provides digital document creation, online content management and print and distribution solutions.
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 ActiveDisclosure, Arc Suite and Venue, and provides digital document creation, online content management and print and distribution solutions.
The future contractual obligations consist of outstanding debt and related interest, operating and finance lease payments, outsourced services relating to information technology, maintenance and other services, sales commissions, incentive compensation, deferred compensation, multi-employer pension plan obligations and other miscellaneous obligations.
The future contractual obligations consist of outstanding debt and related interest, sales commissions, operating and finance lease payments, outsourced services relating to information technology, maintenance and other services, incentive compensation, deferred compensation, multi-employer pension plans obligations and other miscellaneous obligations.
As of December 31, 2022, the Revolving Facility is supported by fifteen U.S. and international financial institutions. As of December 31, 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.
As of December 31, 2023, the Revolving Facility is supported by fifteen U.S. and international financial institutions. As of December 31, 2023, 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.
The Company repatriated excess cash at its foreign subsidiaries to the U.S. during the year ended December 31, 2021 and did not make cash repatriations during 2022 and 2020. The Company is evaluating whether to make any cash repatriations in the future.
The Company repatriated excess cash at its foreign subsidiaries to the U.S. during the year ended December 31, 2021 and did not make cash repatriations during 2023 and 2022. The Company is evaluating whether to make any cash repatriations in the future.
If the carrying value of the reporting unit is less than the fair value, no impairment exists. If the carrying amount of a reporting unit exceeded the estimated fair value, an impairment loss is recognized, generally in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
If the carrying value of the reporting unit is less than the fair value, no impairment exists. If the carrying amount of a reporting unit exceeds the estimated fair value, an impairment loss is recognized, generally in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
A discussion of the Company's financial condition, changes in financial condition and results of operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020, can be found in Part II, Item 7.
A discussion of the Company’s financial condition, changes in financial condition and results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, can be found in Part II, Item 7.
If actual results differ from these estimates, or the estimates are adjusted in future periods, adjustments to the valuation allowance might need to be recorded. As of December 31, 2022 and 2021, valuation allowances of $5.4 million and $4.8 million, respectively, were recorded in the Company’s audited Consolidated Balance Sheets.
If actual results differ from these estimates, or the estimates are adjusted in future periods, adjustments to the valuation allowance might need to be recorded. As of December 31, 2023 and 2022, valuation allowances of $5.8 million and $5.4 million, respectively, were recorded on the Company’s audited Consolidated Balance Sheets.
No new employees are permitted to enter the Company’s frozen plan and participants will earn no additional benefits. Benefits are generally based upon years of service and compensation. These defined benefit retirement income plans are funded in conformity with the applicable government regulations.
No new employees are permitted to enter the Company’s frozen plan and participants do not earn additional benefits. Benefits are generally based upon years of service and compensation. These defined benefit retirement income plans are funded in conformity with the applicable government regulations.
A 0.25% change in the expected long-term rate of return on plan assets as of December 31, 2022 would increase (decrease) net pension plan income for the year ending December 31, 2023 as follows: Year Ending December 31, 2023 (in millions) 0.25% increase $ 0.6 0.25% decrease $ (0.6 ) 40 Accounting for Income Taxes In the Company’s audited Consolidated Financial Statements, income tax expense and deferred tax balances have been calculated on a separate income tax return basis.
A 0.25% change in the expected long-term rate of return on plan assets as of December 31, 2023 would increase (decrease) net pension plan income for the year ending December 31, 2024 as follows: Year Ending December 31, 2024 (in millions) 0.25% increase $ 0.6 0.25% decrease $ (0.6 ) 41 Accounting for Income Taxes In the Company’s audited Consolidated Financial Statements, income tax expense and deferred tax balances have been calculated on a separate income tax return basis.
(b) Includes estimated interest for the Term Loan A Facility and the Revolving Facility based on borrowings and the interest rates at December 31, 2022. Estimated interest payments may differ in the future based on changes in borrowings, floating interest rates, timing of additional prepayments or other factors or events.
(b) Includes estimated interest for the Term Loan A Facility based on borrowings and the interest rates at December 31, 2023. Estimated interest payments may differ in the future based on changes in borrowings, floating interest rates, timing of additional prepayments or other factors or events.
The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and investment advisors. The weighted-average discount rate to determine the pension benefit obligation at December 31, 2022 was 5.2%.
The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and investment advisors. The weighted-average discount rate to determine the pension benefit obligation at December 31, 2023 was 5.0%.
Based on the Company’s results of operations for the year ended December 31, 2022 and existing debt, the Company would have had the ability to utilize the remaining $255.0 million of the Revolving Facility and not have been in violation of the terms of the agreement.
Based on the Company’s results of operations for the year ended December 31, 2023 and existing debt, the Company would have had the ability to utilize the remaining $299.0 million of the Revolving Facility and not have been in violation of the terms of the agreement.
Cash Flows Used In Investing Activities Net cash used in investing activities was $50.9 million for the year ended December 31, 2022, which consisted of $54.2 million of capital expenditures, mostly driven by investments in software development, partially offset by $3.3 million of proceeds from the sale of the EOL business.
Net cash used in investing activities was $50.9 million for the year ended December 31, 2022, which consisted of $54.2 million of capital expenditures, mostly driven by investments in software development, partially offset by $3.3 million of proceeds from the sale of the EOL business. 36 Cash Flows Used In Financing Activities Net cash used in financing activities was $84.6 million for the year ended December 31, 2023.
Business For a description of the Company’s business and services and products offerings, refer to Part I, Item 1. Business of this Annual Report. The Company separately reports its net sales and related cost of sales for its software solutions, tech-enabled services and print and distribution offerings.
Business For a description of the Company’s business and services and products offerings, refer to Part I, Item 1. Business of this Annual Report. 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 ActiveDisclosure, Arc Suite and Venue.
Net sales decreased primarily due to lower transactional volumes, partially offset by higher compliance volumes.
Net sales increased primarily due to higher transactional volumes, partially offset by lower compliance volumes.
A 1.0% change in the discount rates as of December 31, 2022 would (decrease) increase the accumulated benefit obligation and projected benefit obligation: 1.0% 1.0% Increase Decrease (in millions) Accumulated benefit obligation $ (20.2 ) $ 23.8 Projected benefit obligation $ (20.2 ) $ 23.8 The Company’s defined benefit plan has a risk management approach for its pension plan assets.
A 1.0% change in the discount rates as of December 31, 2023 would (decrease) increase the accumulated benefit obligation and projected benefit obligation: 1.0% 1.0% Increase Decrease (in millions) Accumulated benefit obligation $ (19.7 ) $ 23.2 Projected benefit obligation $ (19.7 ) $ 23.2 The Company’s defined benefit plan has a risk management approach for its pension plan assets.
Debt The Company’s debt as of December 31, 2022 and 2021 consisted of the following: December 31, 2022 2021 (in millions) Term Loan A Facility $ 125.0 $ 125.0 Borrowings under the Revolving Facility 45.0 — Unamortized debt issuance costs (0.8 ) (1.0 ) Total long-term debt $ 169.2 $ 124.0 The Company’s debt maturity and interest payments schedule as of December 31, 2022 is shown in the table below: Payments Due In Total 2023 2024 2025 2026 2027 2028 and thereafter (in millions) Term Loan A Facility (a) $ 125.0 $ — $ — $ — $ 125.0 $ — $ — Borrowings under the Revolving Facility (a) 45.0 — — — 45.0 — — Interest (b) 37.5 10.9 11.1 11.1 4.4 — — Total as of December 31, 2022 $ 207.5 $ 10.9 $ 11.1 $ 11.1 $ 174.4 $ — $ — _________ (a) Excludes unamortized debt issuance costs of $0.8 million, which do not represent contractual commitments with a fixed amount or maturity date.
Debt The Company’s debt as of December 31, 2023 and 2022 consisted of the following (in millions): December 31, 2023 2022 Term Loan A Facility $ 125.0 $ 125.0 Borrowings under the Revolving Facility — 45.0 Unamortized debt issuance costs (0.5 ) (0.8 ) Total long-term debt $ 124.5 $ 169.2 The Company’s debt maturity and interest payments schedule as of December 31, 2023 is shown in the table below: Payments Due In Total 2024 2025 2026 2027 2028 2029 and thereafter (in millions) Term Loan A Facility (a) $ 125.0 $ — $ — $ 125.0 $ — $ — $ — Interest (b) 22.4 9.3 9.3 3.8 — — — Total as of December 31, 2023 $ 147.4 $ 9.3 $ 9.3 $ 128.8 $ — $ — $ — (a) Excludes unamortized debt issuance costs of $0.5 million, which do not represent contractual commitments with a fixed amount or maturity date.
Net cash provided by operating activities was $150.2 million for the year ended December 31, 2022, as compared to $180.0 million for the year ended December 31, 2021.
Net cash provided by operating activities was $124.0 million for the year ended December 31, 2023, as compared to $150.2 million for the year ended December 31, 2022.
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.
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. 37 On May 11, 2023, the Company entered into the first amendment to the Amended and Restated Credit Agreement to change the reference rate from LIBOR, which ceased being published on June 30, 2023, to the Secured Overnight Financing Rate (“SOFR”) for both the Term Loan A Facility and the Revolving Facility.
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.
In addition to the factors listed above, share-based compensation expense is excluded from Adjusted EBITDA. Although share-based compensation is a key incentive offered to certain employees, business performance is evaluated excluding share-based compensation expense.
The following describes the Company’s cash flows for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 (in millions) Net cash provided by operating activities $ 150.2 $ 180.0 Net cash used in investing activities (50.9 ) (45.0 ) Net cash used in financing activities (121.1 ) (154.9 ) Effect of exchange rate on cash and cash equivalents 1.5 0.8 Net decrease in cash and cash equivalents $ (20.3 ) $ (19.1 ) 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.
The following describes the Company’s cash flows for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in millions) Net cash provided by operating activities $ 124.0 $ 150.2 Net cash used in investing activities (51.3 ) (50.9 ) Net cash used in financing activities (84.6 ) (121.1 ) Effect of exchange rate on cash and cash equivalents 0.8 1.5 Net decrease in cash and cash equivalents $ (11.1 ) $ (20.3 ) 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 and other operating activities.
Capital Markets – Compliance and Communications Management Year Ended December 31, 2022 2021 $ Change % Change (in millions, except percentages) Net sales $ 410.3 $ 561.5 $ (151.2 ) (26.9 %) Income from operations 131.4 242.6 (111.2 ) (45.8 %) Operating margin 32.0 % 43.2 % Items impacting comparability Restructuring, impairment and other charges, net 3.7 3.5 0.2 5.7 % Accelerated rent expense 0.4 — 0.4 nm COVID-19 related recoveries (0.5 ) (0.2 ) (0.3 ) nm Gain on sale of long-lived assets (0.2 ) — (0.2 ) nm Non-income tax, net (0.1 ) (0.2 ) 0.1 (50.0 %) nm – Not meaningful Net sales of $410.3 million for the year ended December 31, 2022 decreased $151.2 million, or 26.9%, as compared to the year ended December 31, 2021.
Capital Markets – Compliance and Communications Management Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Net sales $ 355.4 $ 410.3 $ (54.9 ) (13.4 %) Income from operations 103.9 131.4 (27.5 ) (20.9 %) Operating margin 29.2 % 32.0 % Items impacting comparability Restructuring, impairment and other charges, net 5.3 3.7 1.6 43.2 % Accelerated rent expense 3.1 0.4 2.7 nm Gain on sale of long-lived assets (0.8 ) (0.2 ) (0.6 ) nm Non-income tax, net (0.1 ) (0.1 ) — — COVID-19 related recoveries — (0.5 ) 0.5 (100.0 %) nm – Not meaningful Net sales of $355.4 million for the year ended December 31, 2023 decreased $54.9 million, or 13.4%, as compared to the year ended December 31, 2022.
Investment Companies – Software Solutions Year Ended December 31, 2022 2021 $ Change % Change (in millions, except percentages) Net sales $ 99.4 $ 89.0 $ 10.4 11.7 % Income from operations 21.9 8.9 13.0 nm Operating margin 22.0 % 10.0 % Items impacting comparability Restructuring, impairment and other charges, net 0.5 0.1 0.4 nm Non-income tax, net (0.2 ) (0.3 ) 0.1 (33.3 %) nm – Not meaningful Net sales of $99.4 million for the year ended December 31, 2022 increased $10.4 million, or 11.7%, as compared to the year ended December 31, 2021.
Investment Companies – Software Solutions Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Net sales $ 106.8 $ 99.4 $ 7.4 7.4 % Income from operations 22.1 21.9 0.2 0.9 % Operating margin 20.7 % 22.0 % Items impacting comparability Restructuring, impairment and other charges, net 0.6 0.5 0.1 20.0 % Accelerated rent expense 0.2 — 0.2 nm Non-income tax, net (0.2 ) (0.2 ) — — nm – Not meaningful Net sales of $106.8 million for the year ended December 31, 2023 increased $7.4 million, or 7.4%, as compared to the year ended December 31, 2022.
Contractual Cash Obligations and Other Commitments and Contingencies As of December 31, 2022, the Company had total future contractual and other obligations of approximately $438 million, with approximately $156 million of the future contractual and other obligations due during 2023.
Contractual Cash Obligations and Other Commitments and Contingencies As of December 31, 2023, the Company had total future contractual and other obligations of approximately $334 million, with approximately $138 million of the future contractual and other obligations due during 2024.
The target asset allocation percentage for the pension plan was approximately 60% for fixed income investments and 40% for return seeking investments. The expected long-term rate of return on plan assets assumption used to calculate net pension plan income in 2022 was 4.8% for the Company’s pension plans.
The target asset allocation percentage for the pension plan was approximately 60% for fixed income investments and 40% for return seeking investments. The expected long-term rate of return on plan assets assumption used to calculate net pension plan income for the year ended December 31, 2023 was 5.8% for the Company’s pension plans.
Capital Markets – Software Solutions Year Ended December 31, 2022 2021 $ Change % Change (in millions, except percentages) Net sales $ 180.2 $ 181.0 $ (0.8 ) (0.4 %) Income from operations 13.5 30.4 (16.9 ) (55.6 %) Operating margin 7.5 % 16.8 % Items impacting comparability Restructuring, impairment and other charges, net 1.5 0.4 1.1 nm Loss on sale of a business 0.7 — 0.7 nm Accelerated rent expense 0.2 — 0.2 nm Non-income tax, net (0.6 ) (1.0 ) 0.4 (40.0 %) nm – Not meaningful Net sales of $180.2 million for the year ended December 31, 2022 decreased $0.8 million, or 0.4%, as compared to the year ended December 31, 2021.
Capital Markets – Software Solutions Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Net sales $ 185.9 $ 180.2 $ 5.7 3.2 % Income from operations 6.8 13.5 (6.7 ) (49.6 %) Operating margin 3.7 % 7.5 % Items impacting comparability Restructuring, impairment and other charges, net 2.7 1.5 1.2 80.0 % Loss on sale of businesses 6.1 0.7 5.4 nm Accelerated rent expense 0.4 0.2 0.2 100.0 % Non-income tax, net (0.6 ) (0.6 ) — — nm – Not meaningful Net sales of $185.9 million for the year ended December 31, 2023 increased $5.7 million, or 3.2%, as compared to the year ended December 31, 2022.
The current availability under the Revolving Facility and net available liquidity as of December 31, 2022 is shown in the table below: December 31, 2022 Availability (in millions) Revolving Facility $ 300.0 Availability reduction from covenants — $ 300.0 Usage Borrowings under the Revolving Facility $ 45.0 Current availability at December 31, 2022 $ 255.0 Cash and cash equivalents 34.2 Net Available Liquidity $ 289.2 The Company was in compliance with its debt covenants as of December 31, 2022, and expects to remain in compliance based on management’s estimates of operating and financial results for fiscal year 2023 and the foreseeable future.
The current availability under the Revolving Facility and net available liquidity as of December 31, 2023 is shown in the table below: December 31, 2023 Availability (in millions) Revolving Facility $ 300.0 Availability reduction from covenants — $ 300.0 Usage Borrowings under the Revolving Facility $ — Impact on availability related to outstanding letters of credit 1.0 $ 1.0 Current availability at December 31, 2023 $ 299.0 Cash and cash equivalents 23.1 Net Available Liquidity $ 322.1 The Company was in compliance with its debt covenants as of December 31, 2023, and expects to remain in compliance based on management’s estimates of operating and financial results for fiscal year 2024 and the foreseeable future.
New Accounting Pronouncements and Pending Accounting Standards Recently issued accounting standards and their estimated effect on the Company’s audited Consolidated Financial Statements are described in Note 1, Overview, Basis of Presentation and Significant Accounting Policies , to the audited Consolidated Financial Statements.
Refer to Note 9, Income Taxes , to the audited Consolidated Financial Statements for further information. New Accounting Pronouncements and Pending Accounting Standards Recently adopted and issued accounting standards and their effect on the Company’s audited Consolidated Financial Statements are described in Note 1, Overview, Basis of Presentation and Significant Accounting Policies , to the audited Consolidated Financial Statements.
The Company's common stock repurchases for the year ended December 31, 2022 totaled $164.7 million, which included $152.5 million of repurchases under the stock repurchase program and $12.2 million associated with vesting of the Company employees' equity awards. 35 Net cash used in financing activities was $154.9 million for the year ended December 31, 2021.
The Company’s common stock repurchases for the year ended December 31, 2022 totaled $164.7 million, which included $152.5 million of repurchases under the stock repurchase program and $12.2 million associated with vesting of the Company employees' equity awards.
Voluntary prepayments of the Term Loan A Facility are permitted at any time without premium or penalty. 36 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 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.
On August 16, 2022, President Biden signed the Inflation Reduction Act (“IRA”) into law, which included enactment of a 15% corporate minimum tax effective in 2023 and imposes a 1% excise tax on share repurchases that occur after December 31, 2022. The Company currently does not expect the IRA to have a material impact on its financial results.
On August 16, 2022, President Biden signed the Inflation Reduction Act (“IRA”) into law, which included enactment of a 15% corporate minimum tax effective in 2023 and imposes a 1% excise tax on share repurchases that occur after December 31, 2022.
Based on these interim assessments, management concluded that as of the interim periods, no events or changes in circumstances indicated that it was more likely than not that the fair value for any reporting unit had declined below its carrying amount. Three of the Company's four reporting units, CM-SS, CM-CCM and IC-SS, had goodwill as of October 31, 2022.
Based on these interim assessments in 2023, management concluded that as of the interim periods, no events or changes in circumstances indicated that it was more likely than not that the fair value for any reporting unit had declined below its carrying amount.
Executive Overview Net sales for the year ended December 31, 2022 decreased by $159.7 million, or 16.1%, to $833.6 million from $993.3 million for the year ended December 31, 2021, including a $6.3 million, or 0.6%, decrease due to changes in foreign currency exchange rates.
Executive Overview Net sales for the year ended December 31, 2023 decreased by $36.4 million, or 4.4%, to $797.2 million from $833.6 million for the year ended December 31, 2022, including a $0.8 million, or 0.1% decrease due to changes in foreign currency exchange rates.
Loss on sale of a business —Included a loss of $0.7 million for the year ended December 31, 2022 related to the disposition of the EOL business. Disposition-related expenses —Included charges of $0.1 million for the year ended December 31, 2022 related to legal costs associated with the disposition of the EOL business.
Disposition-related expenses —Included charges of $0.3 million for the year ended December 31, 2023 related to costs associated with the disposition of the eBrevia business and charges of $0.1 million for the year ended December 31, 2022 related to legal costs associated with the disposition of the EOL business.
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.
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. The unpaid principal amount of the Term Loan A Facility is due and payable in full on May 27, 2026.
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 EDGAR filing services and transaction solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.
The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC EDGAR filing services and transactional solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.
Operating margin increased from 9.3% for the year ended December 31, 2021 to 24.8% for the year ended December 31, 2022, primarily due to a favorable sales mix, a lower allocation of overhead costs, lower incentive compensation expense, cost savings as a result of the consolidation of the print platform and lower restructuring, impairment, and other charges, net. 31 Corporate The following table summarizes unallocated operating expenses and certain items impacting comparability within the activities presented as Corporate: Year Ended December 31, 2022 2021 (in millions) Operating expenses $ 57.5 $ 77.6 Items impacting comparability Share-based compensation expense 19.3 19.5 Restructuring, impairment and other charges, net 0.6 6.7 Accelerated rent expense 0.1 — Disposition-related expenses 0.1 — LSC multiemployer pension plans obligation — 5.4 Corporate operating expenses of $57.5 million for the year ended December 31, 2022 decreased $20.1 million as compared to the year ended December 31, 2021, primarily due to lower incentive compensation expense, lower restructuring, impairment, and other charges, net and the 2021 LSC multiemployer pension plans obligation expense, partially offset by a higher allocation of costs and higher legal expenses.
Operating margin increased from 24.8% for the year ended December 31, 2022 to 30.0% for the year ended December 31, 2023, primarily due to a favorable sales mix, cost control initiatives, and lower restructuring, impairment and other charges, net, partially offset by a higher allocation of overhead costs. 32 Corporate The following table summarizes unallocated operating expenses and certain items impacting comparability within the activities presented as Corporate: Year Ended December 31, 2023 2022 (in millions) Operating expenses $ 67.5 $ 57.5 Items impacting comparability Share-based compensation expense 22.5 19.3 Restructuring, impairment and other charges, net 1.1 0.6 Disposition-related expenses 0.3 0.1 Accelerated rent expense — 0.1 Corporate operating expenses of $67.5 million for the year ended December 31, 2023 increased $10.0 million as compared to the year ended December 31, 2022, primarily due to higher consulting expense, higher share-based compensation expense, higher incentive compensation expense and higher healthcare expense, partially offset by cost control initiatives.
Management's Discussion and Analysis of Financial Condition and Results of Operations of DFIN's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 22, 2022. 27 Results of Operations for the Year Ended December 31, 2022 as Compared to the Year Ended December 31, 2021 The following table shows the results of operations for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 $ Change % Change (in millions, except percentages) Net sales Tech-enabled services $ 380.9 $ 519.5 $ (138.6 ) (26.7 %) Software solutions 279.6 270.0 9.6 3.6 % Print and distribution 173.1 203.8 (30.7 ) (15.1 %) Total net sales 833.6 993.3 (159.7 ) (16.1 %) Cost of sales (a) Tech-enabled services 141.1 162.3 (21.2 ) (13.1 %) Software solutions 113.4 105.3 8.1 7.7 % Print and distribution 115.7 145.5 (29.8 ) (20.5 %) Total cost of sales 370.2 413.1 (42.9 ) (10.4 %) Selling, general and administrative expenses (a) 264.0 307.7 (43.7 ) (14.2 %) Depreciation and amortization 46.3 40.3 6.0 14.9 % Restructuring, impairment and other charges, net 7.7 13.6 (5.9 ) (43.4 %) Other operating loss (income), net 0.4 (0.7 ) 1.1 nm Income from operations 145.0 219.3 (74.3 ) (33.9 %) Interest expense, net 9.2 26.6 (17.4 ) (65.4 %) Investment and other income, net (3.5 ) (5.1 ) 1.6 (31.4 %) Earnings before income taxes 139.3 197.8 (58.5 ) (29.6 %) Income tax expense 36.8 51.9 (15.1 ) (29.1 %) Net earnings $ 102.5 $ 145.9 $ (43.4 ) (29.7 %) nm – Not meaningful (a) Exclusive of depreciation and amortization Consolidated Net sales of tech-enabled services of $380.9 million for the year ended December 31, 2022 decreased $138.6 million, or 26.7%, as compared to the year ended December 31, 2021.
Management's Discussion and Analysis of Financial Condition and Results of Operations of DFIN's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 21, 2023. 28 Results of Operations for the Year Ended December 31, 2023 as Compared to the Year Ended December 31, 2022 The following table shows the results of operations for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Net sales Tech-enabled services $ 336.9 $ 380.9 $ (44.0 ) (11.6 %) Software solutions 292.7 279.6 13.1 4.7 % Print and distribution 167.6 173.1 (5.5 ) (3.2 %) Total net sales 797.2 833.6 (36.4 ) (4.4 %) Cost of sales (a) Tech-enabled services 127.6 141.1 (13.5 ) (9.6 %) Software solutions 108.7 113.4 (4.7 ) (4.1 %) Print and distribution 97.0 115.7 (18.7 ) (16.2 %) Total cost of sales 333.3 370.2 (36.9 ) (10.0 %) Selling, general and administrative expenses (a) 282.1 264.0 18.1 6.9 % Depreciation and amortization 56.7 46.3 10.4 22.5 % Restructuring, impairment and other charges, net 9.8 7.7 2.1 27.3 % Other operating loss, net 5.3 0.4 4.9 nm Income from operations 110.0 145.0 (35.0 ) (24.1 %) Interest expense, net 15.8 9.2 6.6 71.7 % Investment and other income, net (7.8 ) (3.5 ) (4.3 ) nm Earnings before income taxes 102.0 139.3 (37.3 ) (26.8 %) Income tax expense 19.8 36.8 (17.0 ) (46.2 %) Net earnings $ 82.2 $ 102.5 $ (20.3 ) (19.8 %) nm – Not meaningful (a) Exclusive of depreciation and amortization Consolidated Net sales of tech-enabled services of $336.9 million for the year ended December 31, 2023 decreased $44.0 million, or 11.6%, as compared to the year ended December 31, 2022.
During the year ended December 31, 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.
During the year ended December 31, 2023, the Company made payments of $347.0 million on the Revolving Facility borrowings, partially offset by $302.0 million of proceeds from the Revolving Facility borrowings.
Share-based compensation expense —Included charges of $19.3 million and $19.5 million for the years ended December 31, 2022 and 2021, respectively. Accelerated rent expense— Included charges of $0.8 million for the year ended December 31, 2022 for the acceleration of rent expense associated with abandoned operating leases.
Accelerated rent expense— Included charges of $3.7 million and $0.8 million for the years ended December 31, 2023 and 2022, respectively, related to the acceleration of rent expense associated with abandoned operating leases.
Accounts payable increased operating cash flows by $12.1 million for the year ended December 31, 2022, as compared to decreasing operating cash flows by $19.8 million for the year ended December 31, 2021, due to timing of supplier payments.
Accounts payable decreased operating cash flows by $15.3 million for the year ended December 31, 2023, as compared to increasing operating cash flows by $12.1 million for the year ended December 31, 2022, primarily due to timing of supplier payments.
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. Determining whether there will be a significant revenue reversal in the future and the determination of the amount of the constraint requires significant judgment.
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.
The Company currently expects capital expenditures to be approximately $60 million in 2023, as compared to $54.2 million in 2022. The increase in capital expenditures relates to investments in the Company's software portfolio. 34 Cash and cash equivalents were $34.2 million at December 31, 2022, which included $4.2 million in the U.S. and $30.0 million at international locations.
The Company currently expects capital expenditures to be approximately $65 million to $70 million in 2024, as compared to $61.8 million in 2023. The increase in capital expenditures relates to investments in the Company’s software portfolio. Cash and cash equivalents were $23.1 million at December 31, 2023, which included $4.7 million in the U.S. and $18.4 million at international locations.
OTHER INFORMATION Litigation and Contingent Liabilities For a discussion of certain litigation and contingent liabilities involving the Company, see Note 8, Commitments and Contingencies , to the audited Consolidated Financial Statements. 37 Critical Accounting 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.
Critical Accounting 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.
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 $279.6 million for the year ended December 31, 2022 increased $9.6 million, or 3.6%, as compared to the year ended December 31, 2021.
Net sales of tech-enabled services decreased primarily due to lower capital markets transactional and compliance volumes. Net sales of software solutions of $292.7 million for the year ended December 31, 2023 increased $13.1 million, or 4.7%, as compared to the year ended December 31, 2022.
Restructuring, impairment and other charges, net of $7.7 million for the year ended December 31, 2022 decreased $5.9 million, or 43.4%, as compared to the year ended December 31, 2021. For the year ended December 31, 2022, these charges included $6.8 million of employee termination costs for approximately 130 employees.
Restructuring, impairment and other charges, net of $9.8 million for the year ended December 31, 2023 increased $2.1 million, or 27.3%, as compared to the year ended December 31, 2022. For the year ended December 31, 2023, these charges included $9.2 million of employee termination costs for approximately 170 employees.
As a percentage of tech-enabled services net sales, tech-enabled services cost of sales increased 5.8%, primarily driven by an unfavorable sales mix, partially offset by lower incentive compensation expense and cost savings initiatives. 28 Software solutions cost of sales of $113.4 million for the year ended December 31, 2022 increased $8.1 million, or 7.7%, as compared the year ended December 31, 2021.
As a percentage of tech-enabled services net sales, tech-enabled services cost of sales increased 0.9%, primarily driven by an unfavorable sales mix, partially offset by cost control initiatives and a lower allocation of technology-related expenses. 29 Software solutions cost of sales of $108.7 million for the year ended December 31, 2023 decreased $4.7 million, or 4.1%, as compared the year ended December 31, 2022.
Contract liabilities consist of deferred revenue and progress billings which are included in accrued liabilities on the audited Consolidated Balance Sheets. 38 Goodwill The Company performs its goodwill impairment tests annually as of October 31, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Goodwill The Company performs its goodwill impairment tests annually as of October 31, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Investment Companies – Compliance and Communications Management Year Ended December 31, 2022 2021 $ Change % Change (in millions, except percentages) Net sales $ 143.7 $ 161.8 $ (18.1 ) (11.2 %) Income from operations 35.7 15.0 20.7 nm Operating margin 24.8 % 9.3 % Items impacting comparability Restructuring, impairment and other charges, net 1.4 2.9 (1.5 ) (51.7 %) Accelerated rent expense 0.1 — 0.1 nm COVID-19 related recoveries — (0.8 ) 0.8 (100.0 %) Gain on sale of long-lived assets, net — (0.7 ) 0.7 (100.0 %) Non-income tax, net — (0.1 ) 0.1 (100.0 %) nm – Not meaningful Net sales of $143.7 million for the year ended December 31, 2022 decreased $18.1 million, or 11.2%, as compared to the year ended December 31, 2021.
Investment Companies – Compliance and Communications Management Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Net sales $ 149.1 $ 143.7 $ 5.4 3.8 % Income from operations 44.7 35.7 9.0 25.2 % Operating margin 30.0 % 24.8 % Items impacting comparability Restructuring, impairment and other charges, net 0.1 1.4 (1.3 ) (92.9 %) Accelerated rent expense — 0.1 (0.1 ) (100.0 %) Net sales of $149.1 million for the year ended December 31, 2023 increased $5.4 million, or 3.8%, as compared to the year ended December 31, 2022.
As of December 31, 2022, there were $45.0 million of borrowings outstanding under the Revolving Facility as well as $2.6 million in outstanding letters of credit and bank guarantees and none of the outstanding letters of credit reduced the availability under the Revolving Facility.
As of December 31, 2023, there were no borrowings outstanding under the Revolving Facility, however, the Company had $2.5 million in outstanding letters of credit and bank guarantees, of which $1.0 million of the outstanding letters of credit reduced the availability under the Revolving Facility.
The expected long-term rate of return on plan assets assumption that will be used to calculate net pension plan income in 2023 is 5.8%.
The expected long-term rate of return on plan assets assumption that will be used to calculate net pension plan income for the year ending December 31, 2024 is 6.0%.
Investment and other income, net of $3.5 million for the year ended December 31, 2022 decreased $1.6 million, or 31.4%, as compared to the year ended December 31, 2021, primarily due to a decrease in net pension plan income, partially offset by an increase in earnings on equity investments.
Investment and other income, net of $7.8 million for the year ended December 31, 2023 increased $4.3 million as compared to the year ended December 31, 2022, primarily due to a net realized gain on the sales of investments in equity securities, partially offset by a decrease in earnings on equity investments.
Income from operations of $131.4 million for the year ended December 31, 2022 decreased $111.2 million, or 45.8%, as compared to the year ended December 31, 2021, primarily due to lower transactional sales volumes, an unfavorable sales mix, higher bad debt and marketing expenses and a higher allocation of overhead costs, partially offset by lower selling expense as a result of the decrease in sales volume, lower incentive compensation expense, price increases and cost control initiatives. 30 Operating margin decreased from 43.2% for the year ended December 31, 2021 to 32.0% for the year ended December 31, 2022, primarily due to an unfavorable sales mix, higher bad debt and marketing expenses and a higher allocation of overhead costs, partially offset by lower selling expense as a result of the decrease in sales volume, lower incentive compensation expense, price increases and cost control initiatives.
Income from operations of $103.9 million for the year ended December 31, 2023 decreased $27.5 million, or 20.9%, as compared to the year ended December 31, 2022, primarily due to lower sales volumes, an unfavorable sales mix, higher bad debt expense and higher accelerated rent expense, partially offset by cost control initiatives and lower selling expense as a result of the decrease in sales volumes. 31 Operating margin decreased from 32.0% for the year ended December 31, 2022 to 29.2% for the year ended December 31, 2023, primarily due to an unfavorable sales mix, higher bad debt expense and higher accelerated rent expense, partially offset by cost control initiatives and lower selling expense as a result of the decrease in sales volumes.
During the year ended December 31, 2022, the Company received certain government subsidies related to employee wages at certain international locations. 32 A reconciliation of net earnings to Adjusted EBITDA for the years ended December 31, 2022 and 2021 is presented in the following table: Year Ended December 31, 2022 2021 (in millions) Net earnings $ 102.5 $ 145.9 Restructuring, impairment and other charges, net 7.7 13.6 Share-based compensation expense 19.3 19.5 Accelerated rent expense 0.8 — Loss on sale of a business 0.7 — Disposition-related expenses 0.1 — Non-income tax, net (0.9 ) (1.6 ) COVID-19 related recoveries (0.5 ) (1.0 ) Gain on equity investments, net (0.5 ) (0.4 ) Gain on sale of long-lived assets, net (0.2 ) (0.7 ) LSC multiemployer pension plans obligation — 5.4 Depreciation and amortization 46.3 40.3 Interest expense, net 9.2 26.6 Investment and other income, net (3.0 ) (4.7 ) Income tax expense 36.8 51.9 Adjusted EBITDA $ 218.3 $ 294.8 Restructuring, impairment and other charges, net —The year ended December 31, 2022 included employee termination costs of $6.8 million.
Depending upon the size, timing and the terms of grants, share-based compensation expense may vary but will recur in future periods. 33 A reconciliation of net earnings to Adjusted EBITDA for the years ended December 31, 2023 and 2022 is presented in the following table: Year Ended December 31, 2023 2022 (in millions) Net earnings $ 82.2 $ 102.5 Restructuring, impairment and other charges, net 9.8 7.7 Share-based compensation expense 22.5 19.3 Loss on sale of businesses 6.1 0.7 Accelerated rent expense 3.7 0.8 Disposition-related expenses 0.3 0.1 Gain on investments in equity securities (7.0 ) (0.5 ) Non-income tax, net (0.9 ) (0.9 ) Gain on sale of long-lived assets (0.8 ) (0.2 ) COVID-19 related recoveries — (0.5 ) Depreciation and amortization 56.7 46.3 Interest expense, net 15.8 9.2 Investment and other income, net (0.8 ) (3.0 ) Income tax expense 19.8 36.8 Adjusted EBITDA $ 207.4 $ 218.3 Restructuring, impairment and other charges, net —The year ended December 31, 2023 included employee termination costs of $9.2 million.
Tech-enabled services cost of sales of $141.1 million for the year ended December 31, 2022 decreased $21.2 million, or 13.1%, as compared to the year ended December 31, 2021. Tech-enabled services cost of sales decreased primarily due to lower capital markets transactional volumes, lower incentive compensation expense and cost control initiatives, partially offset by an unfavorable sales mix.
Tech-enabled services cost of sales of $127.6 million for the year ended December 31, 2023 decreased $13.5 million, or 9.6%, as compared to the year ended December 31, 2022. Tech-enabled services cost of sales decreased primarily due to lower sales volumes, cost control initiatives and a lower allocation of technology-related expenses, partially offset by an unfavorable sales mix.
Income from operations for the year ended December 31, 2022 decreased by $74.3 million, or 33.9%, to $145.0 million from $219.3 million for the year ended December 31, 2021.
Income from operations for the year ended December 31, 2023 decreased by $35.0 million, or 24.1%, to $110.0 million from $145.0 million for the year ended December 31, 2022.
Operating margin decreased from 16.8% for the year ended December 31, 2021 to 7.5% for the year ended December 31, 2022, primarily due to an unfavorable sales mix, an increase in depreciation and amortization, a higher allocation of overhead costs and higher product development costs, partially offset by lower selling expense, price increases and lower incentive compensation expense.
Operating margin decreased from 22.0% for the year ended December 31, 2022 to 20.7% for the year ended December 31, 2023, primarily due to higher product development costs, higher depreciation and amortization expense and a higher allocation of overhead costs, partially offset by cost control initiatives and price increases.
Accrued liabilities and other decreased operating cash flows by $53.9 million for the year ended December 31, 2022, as compared to a $36.6 million increase in operating cash flows for the year ended December 31, 2021, primarily due to higher incentive compensation and sales commission payments in 2022 and lower incentive compensation and sales commission accruals in 2022 compared to 2021.
These decreases in cash provided were partially offset by accrued liabilities and other, which decreased operating cash flows by $14.6 million for the year ended December 31, 2023, as compared to a decrease of $53.9 million for the year ended December 31, 2022, primarily due to lower incentive compensation payments in 2023 as a result of the Company’s 2022 operating results and lower commissions payments in 2023 as a result of lower sales volumes.
Other Long-Lived Assets The Company evaluates the recoverability of other long-lived assets, including operating lease right-of-use assets (“ROU”), property, plant and equipment, software and definite-lived intangible assets, whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable.
Changes in assumptions concerning future financial results, including lower than expected growth or profitability, unfavorable regulatory developments or other underlying assumptions could have a significant impact on the fair value of the reporting units. 40 Other Long-Lived Assets The Company evaluates the recoverability of other long-lived assets, including software, operating lease right-of-use assets (“ROU”) and property, plant and equipment, whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable.
Non-income tax, net —Included income of $0.9 million and $1.6 million for the years ended December 31, 2022 and 2021, respectively, related to certain estimated non-income tax exposures previously accrued by the Company.
Refer to Note 1, Overview, Basis of Presentation and Significant Accounting Policies , to the audited Consolidated Financial Statements for additional information. Non-income tax, net —Included income of $0.9 million for both of the years ended December 31, 2023 and 2022 related to certain estimated non-income tax exposures previously accrued by the Company.
If the carrying value of an asset group exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset group’s carrying value over its fair value.
If the carrying value of an asset group exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset group’s carrying value over its fair value. Pension and Other Postretirement Benefits Plans The Company’s primary defined benefit plan was frozen effective December 31, 2011.
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 can vary significantly from period to period as a result of seasonality, volume and market conditions. Unbilled receivables and contract assets are included in accounts receivable on the audited Consolidated Balance Sheets.
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 can vary significantly from period to period as a result of seasonality, volume and market conditions.
Income from operations of $13.5 million for the year ended December 31, 2022 decreased $16.9 million, or 55.6%, as compared to the year ended December 31, 2021, primarily due to an unfavorable sales mix, an increase in depreciation and amortization, a higher allocation of overhead costs and higher product development costs, partially offset by lower selling expense, price increases and lower incentive compensation expense.
Income from operations of $22.1 million for the year ended December 31, 2023 increased $0.2 million, or 0.9%, as compared to the year ended December 31, 2022, primarily due to higher sales volumes, cost control initiatives and price increases, partially offset by higher product development costs, higher depreciation and amortization expense and a higher allocation of overhead costs.
Income from operations of $35.7 million for the year ended December 31, 2022 increased $20.7 million, as compared to the year ended December 31, 2021, primarily due to a favorable sales mix, a lower allocation of overhead costs, lower incentive compensation expense, cost savings as a result of the consolidation of the print platform and lower restructuring, impairment, and other charges, net.
Income from operations of $44.7 million for the year ended December 31, 2023 increased $9.0 million, or 25.2%, as compared to the year ended December 31, 2022, primarily due to higher sales volumes, a favorable sales mix, cost control initiatives and lower restructuring, impairment and other charges, net, partially offset by a higher allocation of overhead costs.
As a percentage of net sales, SG&A expenses increased from 31.0% for the year ended December 31, 2021 to 31.7% for the year ended December 31, 2022, primarily driven by lower sales volumes and higher bad debt, marketing and consulting expenses, partially offset by lower selling expense, lower incentive compensation expense and lower expense related to the LSC multiemployer pension plans obligation.
As a percentage of net sales, SG&A expenses increased from 31.7% for the year ended December 31, 2022 to 35.4% for the year ended December 31, 2023, primarily driven by a higher allocation of technology-related expense, higher bad debt expense, higher employee-related expenses, higher share-based compensation expense, higher third-party services and higher incentive compensation expense, partially offset by cost control initiatives and lower selling expense as a result of the decrease in sales volumes.
The Company's common stock repurchases for the year ended December 31, 2021 totaled $40.9 million, which included $32.2 million of repurchases under the stock repurchase program and $8.7 million associated with vesting of the Company employees' equity awards.
The Company’s common stock repurchases for the year ended December 31, 2023 totaled $40.3 million, which included $22.6 million of repurchases under the stock repurchase program and $17.7 million associated with vesting of the Company’s employees’ equity awards. Net cash used in financing activities was $121.1 million for the year ended December 31, 2022.
The decrease in net cash provided by operating activities was primarily due to the unfavorable change in accrued liabilities and other and the decrease in net earnings, partially offset by favorable changes to accounts receivable, accounts payable and a decrease in income taxes and interest paid during the year ended December 31, 2022.
The decrease in net cash provided by operating activities was primarily due to unfavorable changes to accounts payable, accounts receivable, a decrease in net earnings and an increase in interest paid, partially offset by lower incentive compensation and commissions payments.
Accounts receivable increased operating cash flows by $24.4 million for the year ended December 31, 2022, as compared to a $28.8 million decrease for the year ended December 31, 2022, due to the decline in revenue.
Accounts receivable decreased operating cash flows by $2.3 million for the year ended December 31, 2023, as compared to increasing operating cash flows by $24.4 million for the year ended December 31, 2022, due to the timing of collections.
For the annual goodwill impairment review, the Company has the option to perform a qualitative test (also known as “Step 0”) or a quantitative test (“Step 1”).
Three of the Company's four reporting units, CM-SS, CM-CCM and IC-SS, had goodwill as of October 31, 2023. For the annual goodwill impairment review, the Company has the option to perform a qualitative test (“Step 0”) or a quantitative test (“Step 1”).
Other operating loss, net of $0.4 million for the year ended December 31, 2022 included a $0.7 million loss on the sale of the EOL business. Other operating income, net of $0.7 million for the year ended December 31, 2021 included a net gain on the sale of machinery and equipment from facilities being exited.
Other operating loss, net of $5.3 million for the year ended December 31, 2023 included a $6.1 million loss on the disposition of the eBrevia business. Other operating loss, net of $0.4 million for the year ended December 31, 2022 included a $0.7 million loss on the disposition of the EOL business.
Print and distribution cost of sales of $115.7 million for the year ended December 31, 2022 decreased $29.8 million, or 20.5%, as compared to the year ended December 31, 2021.
Print and distribution cost of sales of $97.0 million for the year ended December 31, 2023 decreased $18.7 million, or 16.2%, as compared to the year ended December 31, 2022. Print and distribution cost of sales decreased primarily due to cost control initiatives and lower sales volumes.
Refer to Note 9, Income Taxes , to the audited Consolidated Financial Statements for further detail on the accounting for income taxes.
Refer to Note 10, Debt , to the audited Consolidated Financial Statements for further information.
Software solutions cost of sales increased primarily due to an unfavorable sales mix, higher product development expense, higher sales volumes and a higher allocation of overhead costs. As a percentage of software solutions net sales, software solutions costs of sales increased 1.6%, primarily driven by an unfavorable sales mix, higher product development expense and a higher allocation of overhead costs.
Software solutions cost of sales decreased primarily due to cost control initiatives, partially offset by higher product development costs and a higher allocation of technology-related expenses. As a percentage of software solutions net sales, software solutions costs of sales decreased 3.5%, primarily driven by cost control initiatives and a favorable sales mix, partially offset by higher product development costs.
Gain on sale of long-lived assets, net —Included a gain of $0.2 million for the year ended December 31, 2022 from non-refundable deposits on agreements for the sale of land and a net gain of $0.7 million for the year ended December 31, 2021, primarily related to the sale of machinery and equipment from facilities being exited as a result of restructuring actions.
Gain on sale of long-lived assets —Included a gain of $0.8 million and $0.2 million for the years ended December 31, 2023 and 2022, respectively, from non-refundable deposits on the potential sale of land.
The year ended December 31, 2021 included employee termination costs of $3.4 million and impairment charges of $9.2 million, primarily related to a partial impairment of an investment in equity securities and the demolition of an office building. Refer to Note 6, Restructuring, Impairment and Other Charges, net , to the audited Consolidated Financial Statements for additional information.
For the year ended December 31, 2022, these charges included $6.8 million of employee termination costs for approximately 130 employees. Refer to Note 6, Restructuring, Impairment and Other Charges, net , to the audited Consolidated Financial Statements for further information.
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 year ended December 31, 2022 compared to the year ended December 31, 2021.
Interest expense, net of $15.8 million for the year ended December 31, 2023 increased $6.6 million, or 71.7%, as compared to the year ended December 31, 2022. Interest expense, net increased primarily due to a higher variable interest rate on the Company's outstanding debt facilities and a higher average Revolving Facility balance during the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed4 unchanged
Biggest changeITEM 8. FINANCIAL STAT EMENTS AND SUPPLEMENTARY DATA The financial information required by Item 8 is located beginning on page F-1 of this Annual Report. ITEM 9. CHANGES IN AN D DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Biggest changeSignificant economic disruptions or a slowdown in the economy, which negatively impact capital markets activity, could result in significant additional charges. ITEM 8. FINANCIAL STAT EMENTS AND SUPPLEMENTARY DATA The financial information required by Item 8 is located beginning on page F-1 of this Annual Report. ITEM 9.
The Company has operations internationally that are denominated in foreign currencies, primarily the Hong Kong dollar, Canadian dollar, and British Pound, exposing the Company to foreign currency exchange risk which may adversely impact financial results.
The Company has operations internationally that are denominated in foreign currencies, primarily the Canadian dollar, Hong Kong dollar, and British Pound, exposing the Company to foreign currency exchange risk which may adversely impact financial results.
Credit Risk The Company is exposed to credit risk on accounts receivable balances. This risk is mitigated due to the Company’s large, diverse customer base, dispersed over various geographic regions and industrial sectors. No single customer comprised more than 10% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020.
Credit Risk The Company is exposed to credit risk on accounts receivable balances. This risk is mitigated due to the Company’s large, diverse customer base, dispersed over various geographic regions and industrial sectors. No single customer comprised more than 10% of the Company’s net sales for the years ended December 31, 2023, 2022 and 2021.
The Company was not a party to any derivative financial instrument as of December 31, 2022 and 2021. The Company discusses risk management in various places throughout this Annual Report, including discussions concerning liquidity and capital resources.
The Company was not a party to any derivative financial instrument as of December 31, 2023 and 2022. The Company discusses risk management in various places throughout this Annual Report, including discussions concerning liquidity and capital resources.
For the year ended December 31, 2022, a hypothetical 10% strengthening of the U.S. dollar relative to multiple currencies would have resulted in a decrease in the Company’s earnings before income taxes of approximately $0.6 million.
For the year ended December 31, 2023, a hypothetical 10% strengthening of the U.S. dollar relative to multiple currencies would have resulted in a decrease in the Company’s earnings before income taxes of approximately $0.6 million.
Using this sensitivity analysis for the year ended December 31, 2022, such changes would have a $2.5 million impact on interest expense and cash flows. A hypothetical 10% change in yield as of December 31, 2022 would change the fair value of the Term Loan A Facility by approximately $12.2 million, or 10.0%.
Using this sensitivity analysis for the year ended December 31, 2023, such changes would have a $2.2 million impact on interest expense and cash flows. A hypothetical 10% change in yield as of December 31, 2023 would change the fair value of the Term Loan A Facility by approximately $12.4 million, or 10.0%.
Foreign Exchange Risk While the substantial majority of the Company’s business is conducted within the U.S., approximately 14% of the Company’s net sales during the year ended December 31, 2022 were earned outside of the U.S.
Foreign Exchange Risk While the substantial majority of the Company’s business is conducted within the U.S., approximately 12% of the Company’s net sales during the year ended December 31, 2023 were earned outside of the U.S.
A hypothetical 10% strengthening of the U.S. dollar relative to multiple currencies as of December 31, 2022 would have resulted in a decrease in total assets of approximately $5.8 million. 41 Interest Rate Risk The Company assesses market risk based on changes in interest rates utilizing a sensitivity analysis that measures the potential loss in earnings, fair values and cash flows based on a hypothetical 10% change in interest rates.
A hypothetical 10% strengthening of the U.S. dollar relative to multiple currencies as of December 31, 2023 would have resulted in a decrease in total assets of approximately $4.0 million. 42 Interest Rate Risk The Company assesses market risk based on changes in interest rates utilizing a sensitivity analysis that measures the potential loss in earnings, fair values and cash flows based on a hypothetical 10% change in interest rates.
The Company maintains provisions for potential credit losses and such losses to date have normally been within the Company’s expectations. The Company evaluates the solvency of its customers on an ongoing basis to determine if additional allowances for expected losses needs to be recorded. Significant economic disruptions or a slowdown in the economy could result in significant additional charges.
The Company maintains provisions for potential credit losses and such losses to date have normally been within the Company’s expectations. The Company evaluates the solvency of its customers on an ongoing basis to determine if additional allowances for expected losses needs to be recorded.
Added
CHANGES IN AN D DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

Other DFIN 10-K year-over-year comparisons