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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

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

 

For the quarterly period ended March 31, 2022

OR

 

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

 

Commission File Number 1-37728

 

Donnelley Financial Solutions, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

36-4829638

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

35 West Wacker Drive,

Chicago, Illinois

 

60601

(Address of principal executive offices)

 

(Zip code)

(800) 823-5304

(Registrant’s telephone number, including area code)

 

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

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock (Par Value $0.01)

 

DFIN

 

NYSE

 

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

 

Large Accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-Accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

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

Yes ☐ No

As of April 29, 2022, 31,789,583 shares of common stock were outstanding.

 

 

 


 

 

DONNELLEY FINANCIAL SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022

 

TABLE OF CONTENTS

 

 

 

 

Page

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

3

Part I

FINANCIAL INFORMATION

 

 

Item 1:

Condensed Consolidated Financial Statements (unaudited)

 

 

 

Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021

 

4

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021

 

5

 

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

 

6

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

 

7

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2022 and 2021

 

8

 

Notes to Condensed Consolidated Financial Statements

 

9

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

Item 3:

Quantitative and Qualitative Disclosure About Market Risk

 

34

Item 4:

Controls and Procedures

 

34

 

Part II

OTHER INFORMATION

 

 

Item 1:

Legal Proceedings

 

35

Item 1A:

Risk Factors

 

35

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

Item 3:

Defaults Upon Senior Securities

 

35

Item 4:

Mine Safety Disclosures

 

35

Item 5:

Other Information

 

35

Item 6:

Exhibits

 

36

Signatures

 

40

 

 

2


 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

the adverse impacts of the pandemic resulting from a novel strain of coronavirus, known as COVID-19 (“COVID-19”), and other global public health epidemics on the Company’s business and operations, including demand for DFIN services and products, and the Company’s ability to effectively manage the impacts of the coronavirus pandemic on its business operations;
the volatility of the global economy and financial markets, and its impact on transactional volume;
failure to offer high quality customer support and services;
the retention of existing, and continued attraction of additional clients;
the growth of new technologies with which the Company may be able to adequately compete;
the Company’s inability to maintain client referrals;
the competitive market for the Company’s products and industry fragmentation affecting prices;
the ability to gain client acceptance of the Company’s new products and technologies;
delay in market acceptance of the Company’s services and products due to undetected errors or failures found in its services and products;
failure to maintain the confidentiality, integrity and availability of systems, software and solutions;
failure to properly use and protect client and employee information and data;
the effect of a material breach of security or other performance issues of any of the Company’s or its vendors’ systems;
factors that affect client demand, including changes in economic conditions, national or international regulations and clients’ budgetary constraints;
the Company’s ability to access debt and the capital markets due to adverse credit market conditions;
the effect of increasing costs of providing healthcare and other benefits to employees;
changes in the availability or costs of key materials (such as ink and paper);
failure to protect the Company’s proprietary technology;
ability to maintain the Company’s brands and reputation;
the retention of existing, and continued attraction of, key employees, including management;
funding obligations arising from multiemployer pension plans obligations of the Company’s former affiliates;
the effects of operating in international markets, including fluctuations in currency exchange rates; and
the effect of economic and political conditions on a regional, national or international basis.

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

Consequently, readers of the Quarterly Report should consider these forward-looking statements only as the Company’s current plans, estimates and beliefs. Except to the extent required by law, the Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. The Company undertakes no obligation to update or revise any forward-looking statements in this Quarterly Report to reflect any new events or any change in conditions or circumstances other than to the extent required by law.

3


 

 

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

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net sales

 

 

 

 

 

 

Tech-enabled services

 

$

91.7

 

 

$

118.5

 

Software solutions

 

 

69.8

 

 

 

60.3

 

Print and distribution

 

 

49.5

 

 

 

66.5

 

Total net sales

 

 

211.0

 

 

 

245.3

 

Cost of sales (a)

 

 

 

 

 

 

Tech-enabled services

 

 

37.7

 

 

 

41.0

 

Software solutions

 

 

27.5

 

 

 

24.5

 

Print and distribution

 

 

33.7

 

 

 

44.8

 

Total cost of sales

 

 

98.9

 

 

 

110.3

 

Selling, general and administrative expenses (a)

 

 

64.3

 

 

 

73.5

 

Depreciation and amortization

 

 

10.7

 

 

 

9.8

 

Restructuring, impairment and other charges, net

 

 

1.8

 

 

 

0.8

 

Income from operations

 

 

35.3

 

 

 

50.9

 

Interest expense, net

 

 

1.5

 

 

 

5.3

 

Investment and other income, net

 

 

(0.2

)

 

 

(0.8

)

Earnings before income taxes

 

 

34.0

 

 

 

46.4

 

Income tax expense

 

 

7.6

 

 

 

11.2

 

Net earnings

 

$

26.4

 

 

$

35.2

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

Basic

 

$

0.80

 

 

$

1.05

 

Diluted

 

$

0.77

 

 

$

1.02

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

 

32.9

 

 

 

33.6

 

Diluted

 

 

34.4

 

 

 

34.5

 

 

(a)
Exclusive of depreciation and amortization

See Notes to the Unaudited Condensed Consolidated Financial Statements

4


 

 

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

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net earnings

 

$

26.4

 

 

$

35.2

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

Translation adjustments

 

 

0.1

 

 

 

0.9

 

Adjustment for net periodic pension and other postretirement benefits plans

 

 

0.6

 

 

 

0.6

 

Other comprehensive income, net of tax

 

 

0.7

 

 

 

1.5

 

Comprehensive income

 

$

27.1

 

 

$

36.7

 

See Notes to the Unaudited Condensed Consolidated Financial Statements

5


 

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

Condensed Consolidated Balance Sheets

(in millions, except per share data)

(UNAUDITED)

 

 

 

March 31, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

10.4

 

 

$

54.5

 

Receivables, less allowances for expected losses of $14.5 in 2022 (2021 - $12.7)

 

 

218.8

 

 

 

199.1

 

Prepaid expenses and other current assets

 

 

32.4

 

 

 

23.5

 

Assets held for sale

 

 

2.6

 

 

 

2.6

 

Total current assets

 

 

264.2

 

 

 

279.7

 

Property, plant and equipment, net

 

 

18.4

 

 

 

18.7

 

Operating lease right-of-use assets

 

 

45.2

 

 

 

42.6

 

Software, net

 

 

66.5

 

 

 

63.7

 

Goodwill

 

 

409.9

 

 

 

410.0

 

Other intangible assets, net

 

 

8.5

 

 

 

8.7

 

Deferred income taxes, net

 

 

31.7

 

 

 

31.7

 

Other noncurrent assets

 

 

27.2

 

 

 

28.2

 

Total assets

 

$

871.6

 

 

$

883.3

 

LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

54.8

 

 

$

36.3

 

Operating lease liabilities

 

 

18.5

 

 

 

17.9

 

Accrued liabilities

 

 

129.7

 

 

 

207.2

 

Total current liabilities

 

 

203.0

 

 

 

261.4

 

Long-term debt

 

 

194.1

 

 

 

124.0

 

Deferred compensation liabilities

 

 

19.5

 

 

 

19.8

 

Pension and other postretirement benefits plan liabilities

 

 

39.3

 

 

 

40.6

 

Noncurrent operating lease liabilities

 

 

40.5

 

 

 

39.4

 

Other noncurrent liabilities

 

 

21.3

 

 

 

21.1

 

Total liabilities

 

 

517.7

 

 

 

506.3

 

Commitments and Contingencies (Note 7)

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Preferred stock, $0.01 par value

 

 

 

 

 

 

Authorized: 1.0 shares; Issued: None

 

 

 

 

 

 

Common stock, $0.01 par value

 

 

 

 

 

 

Authorized: 65.0 shares;

 

 

 

 

 

 

Issued and outstanding: 36.8 shares and 32.4 shares in 2022 (2021 - 35.9 shares and 33.0 shares)

 

 

0.4

 

 

 

0.4

 

Treasury stock, at cost: 4.4 shares in 2022 (2021 - 2.9 shares)

 

 

(111.1

)

 

 

(57.1

)

Additional paid-in capital

 

 

264.4

 

 

 

260.6

 

Retained earnings

 

 

277.8

 

 

 

251.4

 

Accumulated other comprehensive loss

 

 

(77.6

)

 

 

(78.3

)

Total equity

 

 

353.9

 

 

 

377.0

 

Total liabilities and equity

 

$

871.6

 

 

$

883.3

 

See Notes to the Unaudited Condensed Consolidated Financial Statements

6


 

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

Condensed Consolidated Statements of Cash Flows

(in millions)

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

OPERATING ACTIVITIES

 

 

 

 

 

 

Net earnings

 

$

26.4

 

 

$

35.2

 

Adjustments to reconcile net earnings to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

10.7

 

 

 

9.8

 

Provision for expected losses on accounts receivable

 

 

2.3

 

 

 

1.1

 

Share-based compensation

 

 

3.6

 

 

 

3.1

 

Deferred income taxes

 

 

(0.2

)

 

 

3.2

 

Net pension plan income

 

 

(0.2

)

 

 

(1.0

)

Amortization of right-of-use assets

 

 

4.1

 

 

 

4.4

 

Other

 

 

0.2

 

 

 

0.9

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(22.2

)

 

 

(63.1

)

Prepaid expenses and other current assets

 

 

(12.2

)

 

 

(14.3

)

Accounts payable

 

 

16.4

 

 

 

4.0

 

Income taxes payable and receivable

 

 

5.3

 

 

 

5.0

 

Accrued liabilities and other

 

 

(81.1

)

 

 

(20.5

)

Operating lease liabilities

 

 

(5.0

)

 

 

(5.8

)

Pension and other postretirement benefits plan contributions

 

 

(0.3

)

 

 

(0.3

)

Net cash used in operating activities

 

 

(52.2

)

 

 

(38.3

)

INVESTING ACTIVITIES

 

 

 

 

 

 

Capital expenditures

 

 

(9.9

)

 

 

(8.0

)

Net cash used in investing activities

 

 

(9.9

)

 

 

(8.0

)

FINANCING ACTIVITIES

 

 

 

 

 

 

Revolving facility borrowings

 

 

113.0

 

 

 

105.0

 

Payments on revolving facility borrowings

 

 

(43.0

)

 

 

(83.0

)

Treasury share repurchases

 

 

(52.6

)

 

 

(11.2

)

Proceeds from exercise of stock options

 

 

0.3

 

 

 

 

Finance lease payments

 

 

(0.4

)

 

 

 

Net cash provided by financing activities

 

 

17.3

 

 

 

10.8

 

Effect of exchange rate on cash and cash equivalents

 

 

0.7

 

 

 

0.4

 

Net decrease in cash and cash equivalents

 

 

(44.1

)

 

 

(35.1

)

Cash and cash equivalents at beginning of year

 

 

54.5

 

 

 

73.6

 

Cash and cash equivalents at end of period

 

$

10.4

 

 

$

38.5

 

Supplemental cash flow information

 

 

 

 

 

 

Income taxes paid (net of refunds)

 

$

2.5

 

 

$

2.5

 

Interest paid

 

$

0.9

 

 

$

0.3

 

See Notes to the Unaudited Condensed Consolidated Financial Statements

7


 

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

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months Ended March 31, 2022 and 2021

(in millions)

(UNAUDITED)

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

35.9

 

 

$

0.4

 

 

 

2.9

 

 

$

(57.1

)

 

$

260.6

 

 

$

251.4

 

 

$

(78.3

)

 

$

377.0

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26.4

 

 

 

 

 

 

26.4

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.7

 

 

 

0.7

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.6

 

 

 

 

 

 

 

 

 

3.6

 

Common stock repurchases

 

 

 

 

 

 

 

 

1.2

 

 

 

(42.1

)

 

 

 

 

 

 

 

 

 

 

 

(42.1

)

Issuance of share-based awards, net of withholdings and other

 

 

0.9

 

 

 

 

 

 

0.3

 

 

 

(11.9

)

 

 

0.2

 

 

 

 

 

 

 

 

 

(11.7

)

Balance at March 31, 2022

 

 

36.8

 

 

$

0.4

 

 

 

4.4

 

 

$

(111.1

)

 

$

264.4

 

 

$

277.8

 

 

$

(77.6

)

 

$

353.9

 

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

34.9

 

 

$

0.3

 

 

 

1.6

 

 

$

(16.0

)

 

$

238.8

 

 

$

105.5

 

 

$

(80.8

)

 

$

247.8

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35.2

 

 

 

 

 

 

35.2

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.5

 

 

 

1.5

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.1

 

 

 

 

 

 

 

 

 

3.1

 

Common stock repurchases

 

 

 

 

 

 

 

 

0.1

 

 

 

(3.4

)

 

 

 

 

 

 

 

 

 

 

 

(3.4

)

Issuance of share-based awards, net of withholdings and other

 

 

0.7

 

 

 

0.1

 

 

 

0.3

 

 

 

(8.3

)

 

 

 

 

 

 

 

 

 

 

 

(8.2

)

Balance at March 31, 2021

 

 

35.6

 

 

$

0.4

 

 

 

2.0

 

 

$

(27.7

)

 

$

241.9

 

 

$

140.7

 

 

$

(79.3

)

 

$

276.0

 

See Notes to the Unaudited Condensed Consolidated Financial Statements

 

 

 

 

 

 

8


 

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

Notes to the Unaudited Condensed Consolidated Financial Statements

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

 

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

Description of Business

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

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

Services and Products

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

Basis of Presentation

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

Significant Accounting Policies

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

9


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

Notes to the Unaudited Condensed Consolidated Financial Statements (continued)

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

 

Allowance for Expected LossesTransactions affecting the current expected credit loss (“CECL”) reserve during the three months ended March 31, 2022 and 2021 were as follows:

 

 

March 31,

 

 

 

2022

 

 

2021

 

Balance, beginning of year (a)

 

$

12.7

 

 

$

10.5

 

Provisions charged to expense

 

 

2.3

 

 

 

1.1

 

Write-offs, reclassifications and other

 

 

(0.5

)

 

 

1.0

 

Balance, end of period (a)

 

$

14.5

 

 

$

12.6

 

__________

(a)
As of March 31, 2022, the CECL reserve balance was comprised of a $13.5 million provision for accounts receivable and a $1.0 million provision for unbilled receivables and contract assets. As of December 31, 2021, the CECL reserve balance was comprised of a $12.0 million provision for accounts receivable and a $0.7 million provision for unbilled receivables and contract assets.

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