Simcoe Capital Voices Concerns Over DFIN Performance

The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were and continue to be substantially undervalued, particularly when considering the Issuer’s growing software as a service (SaaS) revenue streams and strong, consistent free cash flow generation. The Reporting Persons are supportive of the Issuer’s management team as well as the operating performance of the Issuer and are pleased with the five-year projected forecast laid out at the Issuer’s May 2018 investor day, where free cash flow was projected to grow at a 13% CAGR through 2022 – cumulatively well in excess of $300 million (approximately $10 per share).

The Reporting Persons are nevertheless concerned about:

the 28% total shareholder return generated since the Issuer’s spin-off from R.R. Donnelley & Sons Company in October 2016 versus the Russell 2000 at +21%;
the exceedingly discounted valuation at which the Issuer trades (EV/2018e EBITDA of 5.2x – adjusted for expected year end cash balance);
the absence of a shareholder capital return program;
the ongoing perception by many investors that the Issuer is a print oriented company; and
the intended utilization of in excess of $300 million in cumulative free cash expected to be generated through 2022.

Link to the Filing: https://www.sec.gov/Archives/edgar/data/1633362/000092189518003151/sc13d07902006_11262018.htm


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