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RR Donnelley & Sons (RRD)

Participants
Brian Feeney Senior Vice President, Investor Relations
Dan Knotts President and Chief Executive Officer
Terry Peterson Chief Financial Officer
Charlie Strauzer CJS Securities
Jamie Clement BRG
Dave Phipps Citi
Bill Mastoris Baird and Company
Call transcript
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Operator

Welcome to the R.R. Donnelley's Third Quarter 2018 Results Conference Call. My name is Paul and I will be your operator for today's call. [Operator Instructions] Please note that this call is being recorded. I will now turn the call over to Brian Feeney, R.R. of President Vice Senior Investor Relations. Donnelley's ahead. go Please

Brian Feeney

for Thank quarter third everyone you, and thank Paul, joining XXXX RRD’s you results call. conference

Executive on of conclusion me Dan, President our today's are Financial Officer; questions. Chief Chief Dan Peterson, and will At today's and prepared Joining Officer. Terry I Knotts, call Terry, and the RRD's take remarks,

www.rrd.com. tab today's our be found can As we a which of have reminder, section the prepared in Events call, website Investors supplemental at slides for the under

third on who This slides will advancing results is our the call, filed which of release, press we we at in follow that all reference review SEC this reviewed call, website our current results of comments we supplemental posted copy As of to uncertainties. on a our could will the by the page quarter during our financial detail outlook the involve information our on call for actual will section second today’s yesterday. expectations. Form the on themselves. materially to along and numbers which wish The is quarter from be more slides addressed participants those differ Therefore, Investors was to we strategy, also statements, forward-looking X-K from rrd.com. and also including risks furnished this refer Throughout information in

in information. of provides we cautionary other non-GAAP website of included will the XX-K, We under company’s reports cause financial I will release GAAP included investors They that to factors and Form over company’s SEC. a quarterly with reconciled on way only. the useful now Further, our measures with our actual on are non-GAAP the results press call earnings our measures the presentation evaluate filings provided non-GAAP section to the turn believe information to an in For tab. Form statement the appropriate differ financial factors Investors Any our the annual report are results XX-Q for performance. discuss to references our please and the financial discussion the could of to comparable purposes complete ongoing operations materially, informational refer is release in the risk our concerning and supplementary and Dan. Presentation the to

Dan Knotts

Great. expectations completed also over and Thanks, update profile, followed morning I Terry, the Good you our our financial On an excellence. on segment debt would everyone share of I and joining recognizing reduction call to adjusted supplier plans and help Brian. Starting will for our line today, a on number awards quarter marketing our of flow. to business turning us. our with performance. third thank we in as debt improve the of like We with we our and our with meaningful their was communications. cost performance better we increased operating cash pleased create executing in X, am from operating delivered continue to organic report progress growth. margin through income and that fourth quarter sales connections their improved overview recently innovation for refinancing performance by and to our both focus discuss the operations our our maturity consecutive we an I to received call our with clients quarter And before Slide we customers our provide

and to quarters, in product and enhance quarter adjusted year-over-year of X.X% our multiple employee-related service XX and the growth growth higher effective engagement driven increased sales On innovative increase the of our costs. last spanned lines and and to X top customer through positive delivered line, and our which a a several margin businesses operating product categories in performance. income the provide business From combination productivity of than several multiple probability geographies. FX increased within offset was from challenges product drive organic our mix perspective, volume in to our favorable similar broad-based differentiated and reflecting and our cost more our operations management, organic ability sales solutions

focus we During resulted X.X% serve prior lowering our cost SG&A quarter, in which continued on the our overall to over strong reduction a cost the year. our in

Our operating initiatives. drive efforts sustained significantly cash working also reflecting flow improved our capital our to team’s

guidance. of As our we to enter operating our in our plans year, full confident ability and we our execute seasonally year the strongest quarter achieve remain

first second Before two ongoing our would to proceeds turning which an $XXX gross to remains provide growth one like to call, of sale strategy. one of performance, reposition our on close. second efforts update the on balance the XXXX we in support I our international our quarter quarter our On segment of which locations, a for million track of the discussed and for closed in accounts sheet

plan. January a our to our closed improved on from XXXX our financial our announced important to and notes Since important XXXX step represent that portion took used this also and to significant facility. Together, flexibility. these we path QX business We XXXX. actions balance The by on key million our milestones print were net an of credit borrowings sheet of matures proceeds in revolving sale the reduce facility loan facility reposition our a on optimization term to successfully component under of that call then, our we retire representing B closing another portfolio logistics $XXX

utilized providing supply our interactions. solutions important further an In personalized expertise our as speed repeat role strengthen and business interaction we are our their ability we capabilities With promise. over customers our customer segment to global commercial From with process are X acquire and their print with our they the clients we are with focused brand Solutions our digital entire customer In inspirations their chain in labels companies need the offerings we Business helping the insights, powerful service, our communicate with enabling customers marketing we clients clients and activate each Slide they their used new and with tools continue their refine better programs the make Marketing optionality customers. campaigns target to in helping to representative they efficiently are clients the connect their to with a Services to of we segment, convey and customers to inform how entire And our to through those of packaging and combination optimize well providing time. audiences, supporting engagement to With relationship. playing focused relationships business efficiency. as communications are brand. and as the our they are the on and with and with their our across to more inspire service logistics transact outsourcing on Turning our clients and marketing communication

clients their marketing in our Our data driven spend. insights optimizing assist

our and Our capabilities. through create as offering communications customer home can clients offline inspired include continued their a customer last interactive on their our to across the recently the fixed performance to and the supply online, money and and work predict our Within heels to dynamic learn through meaningful leverages communications. time. And media. communications. and understand And Google RRD program by business they into projected testing Alexa our can business marketing needs our all invest conduct the in campaigns. well assistance statements digital direct-mail new transform their data their smart technology digital that customers by we fraction captures in to marketers communication. winning creative recently price set to and attention campaigns across we SuperDoc Acuity lower updates, to significant our DC+ capabilities solutions business or preproduction And complexity, lower a effectiveness and expanding RRD, analysis their we are need we operating services, use interactions we marketing print and their driven to to simplify their on offering of clients’ provides award have enhance the Acuity Home. With call of enable marketers chain more. our information ask our validate capabilities on-site response and business before expanded evolve, continued of increase consumers how assist that rates our platform also status offering portfolio delivery this better enabled they retrieve announced to their statements questions, reminders, at access positioned launch to With within marketing comes which bills extensive cost and time to of personal like devices voice launched This our

with America examples of leading quarter business sales, Juul to reported strong X.X% was continued company our to order how performance Juul Services quickly year a began Now operations our growth, so our to continued a began organic partnership produced fifth income next North electronic help several Juul from margins. operations income relationship. favorable over expanding packaging, very over for did and organic strategic represented execute help in like year our to this small significant Juul’s the and Slide initiatives production successfully our services, quarter cigarette and – became our sales our business were a would offerings client prior order to a I packaging. lower our grew BPO for when This to label our continue to operating the $XX The and services team of share relationships. with delivered let’s Juul’s chain we consecutive production Adjusted enhance needed we improvement ago. artwork this line We on teams working turn supply top are work few the production in creative projects as grow worldwide. labels to a logistics, segment. and as awarded effort partner increases X, and with on recently our Organic operating growth margins. for In XXXX Business of additional serve all performance. packaging and million as development will cost We drive engaged we segment from primary support

and recently with a designer expanded large also our audio equipment retailer. relationship We

well As part mid-XXXX. new agreement distributed booklet throughout packaging that full printing be manual rigid audio of inbox a color this and printing for will America as as in of will headsets and new provide North box line we

design national of created all we the Our will product produce inbox all and in-house team packaging in materials prototypes China. the

services were attributable shift primarily the Solutions, our Marketing down away non-core sales to market prior year, total X.X% versus pre-media to Turning net segments. from traditional for strategic

growth the delivered Adjusted we to consecutive our primarily organic volume. prior of offset $XX offering. direct million partial declined a year income from sales quarter our operations fourth lower of sales in As due mail from

our agreement, marketing new examples our our to marketing working of this execute Our a development and front-end teams how like I’d improving a solutions large programs. capturing by provide we to and national recently replacing few our lowering to structure. hard with focused management business We capabilities their relationship mix opportunities, are design using cost with chain. sales solutions our are restaurant performance technologies operating new our are and we own marketing clients menu menu improve extended platform. full-service our Under

Our demand. to management will menu individual corporate this end-to-end directly assets menu franchise creative content on solution ability employees in customize access and the provide and client’s

the regional while through produce to for menus order menu recent services market. to to with platform reduce solutions extended marketing solution integration clients each vertical to increasing In examples, two will brand our consistency, retail group. current location. in-store and complete we We work management other using include our time delivery print reducing our distributed cost provides speed in This ensures that

user assignment management and First, kit supplement store we for nutritional store. for system for greater profiling large front-end our kit because customization the accuracy won retailer, a monthly includes of that the

will client kits this store further to reorders. waste their with reorders monthly Our combine allow and technology solutions reducing

effectiveness clients’ Sally We to will with relationship include distribution system marketing our our more marketing overall efforts. Holdings, a built marketing services. on of company Beauty large also the to supply efficiency common assets, consistency, and we a set By bring beauty tapping in-store content into utilize direct to

the turning have would like awards call to recent operational Before number I share received and back Terry, we excellence. a related of to technology to

XXXX in of with the Efficiency. NASSCOM Excellence presented Service Award category we Process First, a Customer were

process outsourcing implementation business of and events automation are outsourcing our as successful for have of robotic in recognized been the for We information one largest process honored Experian world UK. to technology the

in management were ETQ-reliant XXXX to software. by quality we solve acknowledges customer first of ingenuity of won our business in the Second, one vendors, challenges. awards, ways place in which a innovative recognized ETQ, Innovation RRD Excellence ETQ implementing software leading provider

that, XXXX suppliers the Terry, contributions. will Supplier over recognized which I Award And Finally, Building for Recognition to more and at solutions the Controls’ we Procurement outlook. details are with our Leadership with to was and The Controls key annual Excellence. performance Johnson presented outstanding on our and recognized over Technologies by to to award performance division supply for Quality event, in chain financial the Terry and turn Excellence you? Solutions Supplier the Johnson call provide business

Terry Peterson

will focus Dan. non-GAAP measures. you, primary certain The Thank and of results be my comments on

participants continue print the sales logistics percentage print the adjusting net third For we logistic the X On up After X.X% as chain X, XXXX results deck Page supplemental on please work new in in points million Page and geography see These X.X% a period. the Page the third were the categories, for quarter from shows favorable organic consecutive as of benefit XX growth for net of supply sales BPO the quarter in quarter, mail, are our This sale business, existing On reported in segment included of business, were who snapshot trend in is we by my reduction beginning following our quarter those with services remarks. up the were by X management, consolidated from with second organic and X.X products growth. expanded was logistics, client sale sales down line and at slides, associated sales quarter the clients. expectations a the the X of fourth provides refer $XX.X quarter. services quarter and year. versus which a along quarter. income with sequentially I our and Page to by X have and direct and RRD. experienced packaging, million our net of of the basis operations the products performance reported begin we labels. the a by of to for third million consolidated $XX.X $X.X adjusted wins of with Organic

XXXX exchange X.X% of primarily of in the driven RMB the from XXXX. $XX increased early Rupee exchange levels year approximately China's by to also rates positively Indian weakening and impacted in dollar. the margins versus X.X% corresponding foreign impact same to – period Changes million in Our U.S. last against in results returning rate XXXX, XXXX the

Logistics improvement favorable of were inventory as a legal the impact by which in of sale majority the reserve the XXXX, both – benefit as offset the inventory business. was an the recorded However, FX settlement, well and by of Print of

expenses, prior higher price unfavorable in Adjusted cost were modest Services. and reduction pressure $X.XX was per healthcare offset in to addition, period. reported volumes higher our In and diluted initiatives earnings Business by the compared product share in mix, compensation performance-based year and the $X.XX quarter as

income and Although effective tax the the The period. XXXX by tax XX.X% driven to year, XXXX was expense were both compared prior in higher adjusted operations in adjusted reduction rate. was XXXX effective the from interest favorable XX.X% a as to rate

to as discrete to XXXX. has by rate previous pretax items, reform, impacted the XXXX significantly but be quarters, the and expected, compared profits mix by jurisdictions tax our in As improved from continues two the negatively

ongoing and tax in reduce profitability expense other rate our among help efforts future. our expect We effective improve to initiatives will the interest reduce

Our the GAAP initiatives. than and included charges related in charge the restructuring other the the year, of $XX primarily cost to for million pretax period for segment. our million included $XX.X of are $XX.X results Marketing which goodwill a last charges Solutions reduction These lower million ongoing same impairment quarter

provisional favorable a tax benefit reform. quarter associated million results to included addition, recorded related tax also December the In with taxes XXXX $XX.X to adjustments for the last of

of X.X% a our of highlights $XX.X segments. down adjusting of Next, sales Business XXXX million billion will disposition, Logistics $X.XX or for rate which Services After Page X.X% exchange third foreign year. On Print I for net each quarter. the of compared the discuss for segment X, sales quarter million our and the decline the organic accounted in changes, in prior the increased $XXX.X effect to were

Excluding our business, in we five the of this growth sale our of product reported in Logistics Print eight volume segment. categories

volume business strategies versus a from was win Adjusted up $XX.X in cost pressure reduction adjustment of the the than Print Profitability to million our XXXX, foreign Our teams execute inventory and of rate in successfully $XX.X go-to-market initiatives as Logistics sale. new we serve. favorable period. continue which changes, XXXX markets result gains, operations improved mix, to million in income impact reserve unfavorable offset price more the favorable a product of exchange modest

XX, both Turning an in Marketing are products the in the increase The offset the productivity third volumes net of by modest were other Solutions from partially $XX or declines offset our from as an income year down to products operations Mail sales $X.X basis. million organic segment in than in down Page was the of $X for and and of Adjusted million more prior million XXXX quarter to prior our Direct $XXX.X million in was sold product lower reported mix quarter categories. unfavorable of by initiatives. impact was year X.X%

Third higher $XX quarter $XX.X activities increased XXXX, improvement as On operating which primarily XXXX million $XX an million, million cash XX, non-GAAP settlement bad of in by expense. Page unallocated healthcare higher and period. a debt favorable corporate $XX.X expenses legal expenses, to net million compared XXXX of driven the was was provided by

we quarter continued benefits reported first $XX.X the capital included the million in in the period. XXXX provide capital compared from a million As logistics $X.X reverse the which unfavorable of in our adjustment. initiatives quarter print proceeds third our believe working and of were of $XX.X were the working the preliminary million of working Net XXXX sale expected, quarter, fourth the ongoing higher Capital to quarter XXXX. further build has capital will in to expenditures business

of outstanding of billion, credit hand against $X.XX credit total on as the our was drawn Turning $XXX million Remaining we total million availability of the debt as including XX, September facility of $XXX to XX. balance of million facility. $XXX sheet cash had now September and

asset-based shift our fund XXXX, Before the we from on expectations borrowing secured were a I to like I closed a cash of to our of you our term credit XX, October announced we facility. an ongoing update proceeds show million addition $XXX XXXX capital and XX outstanding facility. provide under to and certain used of borrowed Net that back would unsecured in for of financing Page the our tender of after the as October it senior $XXX On notes priorities. loan supplemental with million amounts B new maturities pro year and million of the XX maturities $XX giving credit slides the by our to various XX repayment a XXXX use debt to that of senior September proceeds. revolving forma

initially the offering slide opportunistically an $XXX As and our extend to given shows, the financing We of size have the maturities. significantly us increase of we seeking reduced of to financing allowed maturities This million. XXXX we than now XXXX $XXX were million planned. the launched initially able our mid-term more and demand to

$XXX credit Our $XXX our tenders increased million. we $XX facility from million million down by to paid and

utilize repay senior As $XXX asset-based due reminder, under February our facility availability a of we revolving notes million to plan to our XXXX. in coming credit

our make quarters, stated As facilities progress sale XXXX, we continuously our our opportunities In expect we XXXX. value logistics and in a strategic print past acquisitions our constructing assets. portfolio to of evaluate like business will and rates in during business, to stockholder new and make potential land with optimize business existing into organic strategic investments we an investments used I facility to we in other regards facility planned have the and and to the both pending sale continued sale including of move for international the of that

we that expect us the deposits two enable meet XXXX. additional collect in required to that will nonrefundable will milestones also We

cost remaining expect construction the XXXX. these as use associated as cost deposits relocation in to We well fund to help

the remains We a purchase require governmental gain in transaction the to believe on close, of track on XXXX. we will price. approvals At the portion collect the receive the and also project which time final will significant sale unpaid

of are slides. supplemental on XXXX the the Page XX Our expectations for reflected year full

billion operator, we to expenditures note expect a full open $XX approximately range expected a do to of senior the XXXX our $XXX million. from Shifting $X.XX billion. the flow, we share For tenders pre-tax $X.X on to to million. $X.XX are $X.XX, up year, record range per earnings to but diluted flow expect from sales we on for net operations to million approximately range to Adjusted to basis, cash GAAP-only expect completed let’s cash to the Capital $XXX related million is from $XXX And expected line be from questions. October to XX. now charge

Operator

Thank from of will question you. line go Securities. [Operator the ahead. Our Charlie of first CJS Instructions] come Strauzer Please

Charlie Strauzer

Hi, good morning.

Dan Knotts

Charlie. morning, Good

Terry Peterson

Hi, Charlie.

Charlie Strauzer

of a Hey, questions. couple

side things with Just Can of there in percentage business business in and those kind growth you mix the had the of think almost shift services to declines about you in how looking equal starting services got business other and drivers kind then bit declines, QX? what’s then more services then about starting good at growth an services on the might of market the causing and are segment, of the we side, marketing also talk and there about you little Thanks. decline. sustainable what’s they way and

Dan Knotts

Yes.

So Dan it’s question. will take I Charlie, the

that I all for chain in delivered as the first about with performance performance think product believe drive continue our as growth business that within we our continue forward we logistics, favorable that we BPO, quarter. markets organic favorable have the think think the our drivers to packaging, of And those business to we lines management, were performance those labels think services, about our lines, to opportunity our we key going supply growth those continue about services. to the the segment of starting particular product in

better capture client building will I a digital analytics data media towards as in execution capabilities that digital And the that about as and believe expanding markets. services to capabilities exist is the think there expanding away space non-core dynamic well to from base. for key aligns on that is As with and programmatic there our our really strategic and a we shift marketing include available solutions, that’s to pre-media going traditional to call channel that insights shift that media, our one what I our do – opportunities

away So the will of from impact quarters. pre-media the another be services traditional couple of shift there for

continuing our expanding capabilities digital our are data the Solutions around clients within the we the focus While to and we segments media from have segment targeted in shift channel analytics, Marketing to execution.

Charlie Strauzer

help bit Terry the a QX then with and how it. segments split little Got given, you the be if the you there? can maybe two us guidance the have And between might

Terry Peterson

a is As is strong feel this we have was left comps side. year what challenging we see actually look full quarter, more back the a ahead are get for But kind guidance that quarter, it fourth the going quarter pretty last a will fourth But in the can revenue our like you quarter quarter on reminder, year to given segments. the reflected so of into that guidance. the both to we we our are one going little to with

more performance up But from Our would the through we we election quarter, in but stronger that the categories with, of product of of comps. some product that to into part side services services Marketing media of good the shift are to non-corporate the business categories in strong our away in early active Solutions little will couple is quarter. continue be against so next quarters fourth and year. that that of help a to many we come of also expecting be good quarter strategic bit strong But businesses we reflect expect – be continue to will our performance again fourth on and going again do into deliver some more a we for more used will

Charlie Strauzer

growth that Got look do in be have it. about think there the that think looks you into have it four out the last do in seen comps organic you too that you will think continue And and there? tough at the guidance obviously you the given quarters, QX when the you to QX,

Dan Knotts

Yes.

that strong quarters mean to be us quarter our fourth biggest for I certainly think last the think that against I But continue it’s possible, more are fourth quarter far. year. by I challenging will

Charlie Strauzer

And other over great. now you there sheet, us kind big if better give gears a it, to the Got then roadmap shifting balance is just obviously a – refi a and of can balance the next longer-term now to there, plan de-leveraging X have the flexibility sheet? the you more years and to of that kind got of much years goal de-lever X and

Dan Knotts

Yes.

build Charlie I maintain our a the business, allocation to that to would maintain our a capabilities stated our our solutions between expand addressable we disciplined capital in we within of for the appropriate going and have expand our – and have question answer addressable to previously market market particular within in space. marketing find offering think approach position to absolutely where capture are investing to into the that out we balance and opportunity our be space opportunities as us back that

required to the forward. maintain So that flexibility we to is balance with operate back investing the that of company going business into our operating leverage and believe ongoing commitment reduce our financial overall

in asset As our took step like on be out it we continue to looking non-core at QX call our those sales will monetizing announced and QX. QX call, laid another focus on our we

to need. the of investments Our our the on to optimization that continue And side activity organic with other align a capabilities strategy it include the activity we portfolio potential of also of at evaluation opportunities focus the M&A that capabilities appropriate out there trade our to M&A looking and truly time. the will build will portfolio on and and choice over continue the out or between also

we have path forward. a So

maintain focus on disciplined to will confident path we We our approach capital allocation. the and absolutely forward that are in our

Charlie Strauzer

on little that sale and but can if additional maybe some you that been sales, for can? your there picking of And on I asset more you assets come, are bit there some potentially up know media could recently, kind talk the in complement come a

Terry Peterson

have Yes. rumors to more potential announcement. public before Terry. practice Obviously a we our made Charlie, comment specific is this on not or is transactions structured

looking I that not continuing be evaluate we are opportunities to will for best in shareholders also think to media comment is prepared makes our Dan where optimize and and certainly we and a evaluate as as won’t the our you interest capability as specific I the upon referring necessarily my we regarding take the our is to, to that reiterated So portfolio to portfolio of sense, able in and said comments, owning that. strategy are those we and feel But it options on continue where dependent action business.

Charlie Strauzer

that’s you just proceeds, to will to balance proceeds, that’s with tax net this Terry the but you of in gross that’s use property here have sheet, going sticking for be in with in close than pay are to just you patriated obviously XXXX, once look And proceeds on the the full proceeds lower those when year on going the that U.S. down that that you you can just the again at Okay. debt sale think? the net or going

Terry Peterson

We over United significant be portion here pay a to debt use to get in to of sent the little extra here. proceeds take will time back will States. down those able a back that money the likelihood there It withholdings and that expect debt. use repatriation related after money to certainly be States. will closes get we And some back to retire small that sale But tax to all United back to that just

Charlie Strauzer

very you Thank much. Excellent.

Dan Knotts

Thanks, Charlie.

Operator

your Clement, BRG is from next of open. line in Jamie the The you. Thank line

Jamie Clement

morning Good gentlemen.

Dan Knotts

Jamie. Good morning

Terry Peterson

Jamie. Hi

Jamie Clement

after three months give a basis give you that? new kind from do net there, on the can taxes mean move you land all question mean any terms So are now of you we facility, more the would you on after there, a Charlie more last kind announcement clarity just following-up initial the what in guidance additional of business on have transaction the pay after I us to of

Dan Knotts

bring taxes some that portion and back, be Yes. time That fund approaching even – in perhaps taxes think of that’s as think with well we retroactive of a be available well will range. much the excess We the said other like by a $XXX in million I local procedure of costs $XXX to fund million as substantial going it relocating kind business. to as of as but that

Jamie Clement

constructing of so and cost the local all-in, then and that stuff Okay. And here moving that’s the taxes, that’s the… business

Dan Knotts

Absolutely.

Jamie Clement

us help Shifting is through versus there talk up, dealing you Dan terms back other of mean companies there are I costs kind prices obviously been of inflation you where lot obviously got lines lag, are can in of more with great. bit your inflation? business, understand pass more through customers the a freight paper about gears product Okay, of are business, has because you that little to can the ability up, have some go a general where to of a immediately to

Dan Knotts

and sure can't on and time industry Yes, things contracts with is is things is by is, of pass covering well Jamie that individual those limitations contractual is long-term focus talked we when business going when that And well. challenges necessarily we’re contractual, aware look before, and at we you of business, was really would as that, think regardless as appropriately we new at terms new we contractual in. those that within escalating we you and And there about addressing are existing contractual our forward. that pass obligations time opportunities I inflationary not same I – rights, in you on about that, on wins, Sure. really if renew build we but the around the contracts. long you what of contractual the as tell way that as can is – you're is focus in timing contracts making our have the What it as will, is securing or clients our think

different a We’re climate. very environment operating in

costs more coming material et of long-term cost driving and and those component making about, that profitable happen. play think having think frequently the If pass factors on you we’re the if a cetera, you on critical growth and paper, are costs our think very is talk labor focused those labor rising to into you ability particularly you if related about availability as the about about all to freight

Jamie Clement

you doesn't, – Okay, surface the factors from in alright. you’re good I or get just That's like feeling that expectation you’re during mean, squeezed third more it these It right. any all that squeezed some pretty a in you little might Is on a there Thanks. quarter. look the doesn’t fourth bit about? of

Dan Knotts

drive very costs impact would through top-line into convert continue earnings, same the I we’re time and saying at the by the of to top-line that growth hard to those supply performance. initiatives, chain. that working of minimize to hard in it the very cost to managing And those future we're answer to rising hard growth while working incremental is our we’re lower our effectively and extremely actions critically working alternative all a or of third three workstreams company important component as overall our are that to serve

Jamie Clement

Okay. year your was that ‘XX And RRD that here profitable new fourth it were very the very, I expect in business you question, last you Would training, The ‘XX for more quarter got then may. business came were be to if guys. last international you business, extra business an for year, under packaging in hiring, of belt? some you because just versus you on

Dan Knotts

build you for very efficiency and opportunity everything that, out take establish the go over Yes. that associated that challenges overall to starting of to that and last and a profile clients, with figuring operations client have up us through it business the That’s relationship. situations on those you real on one on year time groups the a that And where that to your the clients, drive particular a and and inefficiencies your and and making match or from may is associated you you new be. for product go facility better doing how people situation hiring with deliver and cost of trumps the focus credibility improve work the time revenue of you’re and those on sure that, really structure that then quality was you to your whatever that aligning

QX. that, very into ongoing waste that our very, cetera et that at efficiency, on focused the latter XXXX, look good went and start-up with about along we part, progress which in our operating improving our as we performance been our So is heading feel we’ve

Jamie Clement

Very Right. good.

Terry Peterson

new other ago a other our the fairly incurring thing, to I fourth for past being were actually cost Jamie, of quarter year start-up year, was so headwind the now. in obviously last that that still running, facility some was also a that, Yes, quarter thing, were and were we us mean, Jamie, terms up of

Jamie Clement

of Yes, part what Terry. right. that’s much. Right, that, Thank I very was talking you Appreciate about.

Operator

Please you. go the Thank we’ll go line Citi, Dave to next from ahead. of The Phipps.

Dave Phipps

Hi. European strong Thank growth, you remained of question. what's Can the bit talk little and some for you that? some my of that taking about driving a

Dan Knotts

geography not we’re like one we’re category, much got actually just in other the that seeing parts of too, We’ve one or growth but area seeing to the or Yes. product several. one coming from geographies

the So, are and good and three Europe sold in to certainly particular, it growth been we’re contributing a seeing of is that the all just And it Commercial slowing still a our it’s in have European in lot FX, on more and for growth, supply Print is based or packaging has units double-digit to year some Europe, also that that’s is chain actually FX having past is growth. it and nice nice of few over quarters, more that we business having slowing them year based, services those Asia has front, more then is large but Europe numbers? really been this

Terry Peterson

grow lap now from new quarter Yes. quite business right is does range little The negative the and way a business impact. be that FX as in last a so here, small some continuing other strong starting piece growth have of still of so would but happening is to the bit what’s there to digit we really bring that in for in that packaging now. double the But on is year, third new customers well still that an are

Dan Knotts

insisting there becomes facility is we new of client, ramped QX, lapping so starting David offering year product so from QX, last as you last announced the year. seeing QX were that talked are QX up about QX as effect Terry additional activity the year, up that insisting and that may what recall we for we a to in a support lapping we QX annualized you the last

Dave Phipps

this fourth I so facility that the question out facility probably we quarter, margins fair were would quarter, my into to quarters a should leads the that last is starting then and the as largest you operating And quarter, is little the fourth about expect a so year assume enough. fourth a we assessment? better Fair of look

Dan Knotts

and mean our the I brings and Absolutely, in helps margins that’s that leverage volume our family biggest business volume out. extra Yes. better product particular for

Dave Phipps

had to And then are finally that you $XXX that February maturity hand? with going you assume on cash repay if X, on would I million

Dan Knotts

Yes.

will facility use credit repay We actually to the lending really asset driving based that.

Dave Phipps

Okay. Thank are my Those questions. you.

Dan Knotts

Alright. Thanks David.

Operator

Thank will un-mute. ahead. Company this Bill Baird Mastoris. you. Mr. open if of the you line Please please Then your is we go side, to on from line go Mastoris and muted

Bill Mastoris

little there been you you doing some could Dan I up will fact you in others that increase that. more there the holding Sorry organic that that kind are well that were really are some falling bit industries down and would better sales falling if have and were by the are industries drill that kind of mentioned prepared industries than your of are fairly off, a that about certain remarks are to that were what wayside? the of the you hinted – doing what other actually like industries that

Dan Knotts

Yes.

services six about we as our And so products had to industry the what offerings talked XX we service the organic of when that are really perspective. products have my refer was we quarters. for referring really and delivered about the to – think I industry and if we I that comments in we think provide versus growth

business, projections didn’t some through that unfavorable and creative offerings products nicely are non-core at are is those the and products look that and that a do the feel organic those will is away expect get driving space are to Overall digital the in important we of forms that and and ongoing one is space about continue. continuing we talked of look of to for you a mix. We shift the base the going-forward across front. some our offerings to some our products each unfavorable us those for if digital of product if continue decline and year-over-year industry broad think the in I projections on forms challenges for different performance associated happening projections delivering the other to or And you you the I the other tell see But from product that that has go the product what services at for performance lines. within for secular would come creative doing forms about growth. from those

and clients and look to we surpasses penetrate our continue product based bit extend little in expect all sell and with of broad those differently a to our client clients. clients base differentiated XX,XXX extensive However, with our we to offering, and that those relationships offerings our further

impact seeing think continue and been of as I a we large the part are that to able driving. we are why growth have that of So organic you drive to

Bill Mastoris

given now maintain Okay, Thank liquidity feel a level. year And do be follow-up you. cash, you then market? any of excess bonds would alright. for in what burden kind to that is be right position prudent should easing consider need on throughout Terry, actually that and And Terry have question then now question near-term a of debt actually you repurchasing maturities seasonal emphasis would you your you the if open the the that the

Terry Peterson

year before either agreement Well, are and there our due term take the would as loan then be just inside the part the B likely allows of provisions to those million itself. to plan But that up have out to let it right facility. certainly those or is maturities in of us facility to of I availability in draw on mean, to term that the cash facility cash maturities, the just is out before there first maturity relates $XXX that due redirected XXXX B in credit to retire due to term to loan loan next excess does as date more hand February its coming a for debt so there become repayments B available, the use

terms see up and our going will. built quarter is have our for where we peak of needs be true in busy will credit our kind of on low that that in and the borrowings of end if point we year will see fourth year we So facility as as typically again kind this our the being capital early quarter of our season working third you into

our is this the tend to the of So highest. where of and to be the needs tend needs we kind time be cash borrowing our year

on – And and facility of credit we approach those we terms becomes able provide mean XXXX pretty are to October, make will obviously then have we happened we of those into will payments inside we selling how I use logistics use business in next are where to the proceeds make that at now the we now. are got comfortable and on the to decisions retire were we to right from debt. print to comfortably activities the facility with plans have really able in go refinancing would that cash kind we the we based available. with extra and capacity So and as as to year, down events thoughts maturities extra the

Bill Mastoris

Okay.

to or term flow really just loan of all excess basically kind So recap is go any excess cash go any am towards to have you I correct? facility, our I cash that going that B have do

Terry Peterson

facility up basis, the asset-based go and borrowings on No. On day-to-day lending a down. my those

through earlier are other or retire manage sale expense have try use lending coming that it The pay-downs. for, on reinvest versus time business, were are I facility. all there into business used a than different some back payments that under event proceeds and agreement, I things there and But the that days use extent qualifying cash to receivable use to flow that that when There period. asset-based accounts payable day-to-day, collections but that something borrow it I other XXXX credit from we can through items. interest money that are need also can like I lower to that January maturities can due the depending to to asset-based saw So lending get managed I excess

got to back normal either in CapEx. would use retire or into those have invest I or through M&A how business I terms proceeds of debt So options

Bill Mastoris

and your behemoth that Okay. about really your does I how you maybe combination know in you strategy wondering Quad but of products created been am Graphics customers? seemed a and does in And far overlap, much the then change of both you and LSC, the your cause that final rethink question to there services had industry. what’s that certainly the And be in as past some that with just anyway I approach to haven’t as

Dan Knotts

you what and to company. we through understanding that opportunities. are on newswires market We We the advance as focused communications And drive the RRD. about the business to believe learned, emerging our evolving is is profitable learned we continuing I would question tell a strategic have our transaction we this remain to long-term needs in morning. strategy, for we Dan, RRD about marketing your in clients a path deep this And confident of growth intently

Bill Mastoris

much. very you thank Okay,

Operator

go questioners, will you. turn Knotts. with no Thank Dan Then other Please to back we over ahead.

Dan Knotts

the the joining are Thank key today. our on Slide XX thank call us Great, A the recap listed of for for on you messages quarter, of deck. you.

energy purchase agreement like have China Apple transitioned XXX% reaffirmed I’d to our Apple. share to renewable to transitioning protect we of support consistent its proud our sustainability. longstanding our to commitment a a of is energy, entire through Apple’s the safety with example our commitment that this to a new sustainability public. new, an in its am renewable agreements. facilities clients our commitment of be we the and is of with powered And reduce our and through employees, series while health power to by share renewable have closing, commitment on it Before supply chain I In carbon focus footprint to to

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Your efforts back over will appreciated. Brian. to turn that, the with greatly I are And call

Brian Feeney

in results a RRD our A RRD’s reminder, Finance Raton, like us of which third the America/Merrill team of be Also found RRD’s Leveraged Lynch Florida X. as quarter section is joining that of I the for the rrd.com. access at quarter XXXX to third everyone Dan. on Thank Thanks, inform Bank information third Boca XXXX copy you our in and call. of December will to management call would posted on in concludes press release. replay be can quarter participating earnings website Investors the telephonic Conference that Tuesday,

Operator

your teleconference executive AT&T services. and using participation for thank gentlemen, and you for Ladies

You disconnect. may now