RR Donnelley & Sons (RRD)

Brian Feeney SVP, IR
Daniel Knotts President & CEO
Terry Peterson CFO
Charlie Strauzer CJS
Jamie Clement Buckingham Research
David Phipps Citi
Call transcript
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Welcome to the R.R. Donnelley's First Quarter of 2019 Earnings Call. My name is Justin, I will be your operator for today's call. At this time, all participants are in a listen-only mode. After remarks from the company representatives, we will conduct a question-and-answer session. that is note recorded. Please Instructions] today's being call [Operator to the R.R. I turn over Brian will now call Feeney, Donnelley's Senior Vice President of Investor Relations. Please sir. go ahead

Brian Feeney

Justin everyone you XXXX and RRD's you, quarter call. results for first conference Thank joining thank

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

investor prepared have be a slides of today's call at we can the As which found on rrd.com. for supplemental section website our reminder,

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

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

Daniel Knotts

leading Thank examples capabilities you, also during helping overview initiatives and today, us. RRD and an expand as we a further business On effectively them campaigns and I joining complexities more quarter you and a I'll recap first to Good Brian. marketing in we are progress relationships our how morning and existing service client everyone leveraging the our advancing clients strategic essential company. the share business our for call couple win will performance communications. new made our marketing and marketing the to execute of and executing quarter reinforce our thank provide of manage of their by clients that with business their communications

solid made quarter, X, our accelerate we priorities. capital improving cost our strengthen to approach core, for and our and To flexibility. our the our debt our an our disciplined our line reduce results with our and allocation reducing our of maintain to in services, expectations in serve, on a value grow progress Turning extend clients, emphasis to with financial capabilities with to were and higher executing products Slide strategic growth

long-term growth RRD strategy to constant. Our successfully position sustainable for remains

we evolve, driving game serve ever-changing the to adjusting diligently is continue support focus to improve our our our our markets by embedded our throughout and an are client in new and and communications these executional cost to business performance. market capture environment being created opportunities teams taking actions within plan clients' XXXX and as and deeply structure Our Company challenges, the growing conditions necessary business are changes, we our operating the and geographies

QX expected on half X, in Slide lower shared call, the growth earnings to driven the and Census. with business we we including organic organic a in first softer the as half by [ph] second Turning wins the sales our new New start Year XXXX to

prior X.X% the For sales operating were unfavorable organic improved our quarter, first income versus both and margins from by our adjusted while operations the year.

actions our our performance to with We new of our execute cost while our revenues. cost line are better aggressively improve pipeline top strong our we to match sales simultaneously opportunities pursuing takeout

Let's was the and Business more and with income our higher improved starting shift volume year. by businesses, reported than print outsourcing, experienced business sales and margin decline value to growth organic services. Business labels with Services. segments Organic commercial process offset two logistics within in versus prior declines operating our operating adjusted Services a in X.X% of

and we the core the commercial strengthen exit we further business our continue to margin During very We quarter, as took we actions platform important consolidated our to several closed our performance competitive challenging business. the print of the are in executing serve. our mix, in our we to structure, cost Brazil. a enhance environment, backdrop markets and business Against our position plans our we business improve rigorously lower low

capturing remain opportunities within being also our on the We created targeted business focused markets. highly

of our Our to strengthen their enhance with the relationship are teams the customers. helping business the communications they impact services and their actively clients efficiency improve utilize

communications. their inform, to our our solutions and clients the face is that multitude business are and our services help differentiated differentiated capabilities time. drive executing our outsourcing team way our communications greater example providing to With us requirements. extensive clients' to communications an firm. capabilities a this challenge we relationships expanded services with and one large digital customers ongoing achieve with of statements client's with requirements. over expanded communication our relationship business transact like deeper enhance with execution execute how provided comprehensive efficiency to improve compliance the same and their execute outsourcing, internal to build to those clients services service, We effectively of this client's compliance scale efficiency. to leveraging the consistency and a to with for compliance to consulting client financial global solution we and After greater build this a services, manage consultative global creative required recently their came this Our This at workflows. managing effectively leveraged address capabilities, stringent and provide continue quality client, looking business of better of business our engagement, and To of I'd customers our

shift and adjusted digital Organic Marketing compliance associated an of Solutions in margin. provided from marketing our sales in team growth operating organic than services comparison direct traditional quarter our of delivery negative X.X% our value was the services. with The and business managed to reported In shift the income pre-media away higher we second creative with and critical year. by business of offset content this decline our will in this more organic services related communications. digital associated our an Our statements these team strategic creation conclude operating decline decline in segment, services

online Solutions offline a see and powerful can executing continue and be those campaign within to diligently are our our working are our teams capabilities to driven performance. Marketing growth We that both and providing before, after with our channels. performance tools Through segment across to of financial and used improve to during, we combination while our opportunities integrated optimize capture marketing plans marketers opportunities insights, data

tool to marketing progress significant complement our broaden capabilities. year, have Over in set made Marketing we out building past both our and execution the Solutions existing

into Our set shoppable transform expanded email production experiences to test to Acuity by which marketers before RRD interactive tool enables mail marketers [ph] Kellogg's and includes which web, campaigns enables and across mobile direct Digicom, channels.

a in effectiveness to of further marketing step with how our how performance. marketers optimization important Marketing and impacting marketing that Solutions to recognized I'd are provide This are Marketing their the as example to solutions. show measurement capabilities and commercial took Solutions to Solutions the Marketing agreement new further investments a Forrester During agreement we a insights we leveraging their company with expand set further a an client marketing to win capabilities provide strengthens sales new by demonstrates tool business. activities our needed their adding the through quarter, set tool directly like our Marketing Evolution, by measure leader

most and direct deliver opportune in integrated together of information identify client time. offers while use regional In was to marketing were deliver the an teams targeting highly most effectiveness those consultation target seeking mail cycle. improve their new customer's bank looking way a buy specific more with that create then to relevant products and clients partnered to the to the Our client, relevant purchase deliver search analytics we recently developed the and at to data highly This direct to a spend. insights to marketing they to likely to and their solution effective customers

improve insights future capabilities analytics data and data understand this the effectiveness our We client's of to those are then further response using campaigns. deploying back-end analysis using customer to marketing

expansion Solutions markets serve. Marketing With capabilities, in of value are gaining the our the strategic we we our and recognition for clients we important are continued creating

with from our competitors this new the just clients such RRD Interactive, after as has Advertising XX and traditional Age ability Accenture over XX broadly Solutions segment inclusion listed disciplines collaborators marketing Sapient. on-site. channels Marketing providers list, been Solutions both Just Publicis top agencies online, the Marketing included this non-traditional and within optimize marketing Marketing all Report. week, that formed year and communications to our US all Annual the further respected year offline Solutions is largest was This in compete top XXth Thompson was the to joining Agency and help solutions first demonstrates in Wunderman on across a

on back XXXX, line our As we of organic of remain year. the to to an our balance return the in focused growth we look actions the to half top

new reducing our to continuing and focus I'll our are new flow XXXX in to cash cost with and as implementations are and business communications. profitability and work turn into confident of our sales and ability provider new marketing pipeline our on deliver RRD a that, opportunities to over continued call on our advance strong client Terry. of With leading further wins structure, business the commitments converting we We

Terry Peterson

our operations, We reduction supplemental you, sales performance for net snapshot well. quarter report did Print and I products in the a X significant decline our by that low reported continued as year. associated an expect planned in were margin profitability portions and decline RRD. of volume XX.X% Despite the sales trend quarter year sales in Brazil provides reduction the begin during On Logistics first consolidated our of by a of commercial Thank low Dan. was was business. sale in domestic page X% print last impacted recently sales the increase by reduction our net the planned of a geography remarks. in very and margin which my refer approximately percentage Page secular we impacted for down our estimate X decline, sales commercial Please the normal business negatively X.X and sales segment services The very the secular quarter a points reductions as to basis, This sales. closed category shows in and by with the Page quarter products to quarter. by print the slides by Brazil closure improve future rate organic in profitability included first

down previous quarter first on slide. were I sales in in the commercial lower the X.X% due volume Our included which primarily print business to products reduction services organic described

year in As the positive as I contract. XXXX sales performance quarters of year clients organic declines with continued for planned ramp Census in to we the quarter, this expect two up first we we associated the mentioned half back and including new last large of the

million closure In the quarter XXst. Brazil second a On XXXX. of March the operations of income Page in the million on our was sold adjusted beginning quarter the XXXX. result as which will operations The of calculation organic from $XX.X logistics excluded first from addition, results in XXXX declining print sales $X.X the business the in included higher of was X, versus be July

and in versus same bad in million cost corresponding increased XXXX and rates, operating the margins impacted combination initiatives, foreign of $XX ongoing period from benefit X.X% Our in debt approximate changes results in lower expenses to X.X% our The positively XXXX reduction exchange from an XXXX. healthcare this year.

services by quarter the However, $X.XX Adjusted the down business in ongoing paper segment, were our million our to $XXX.X labor and diluted first product quarter's costs. per quarter the or and million pressure our unfavorable expense results cost $X.XX as loss higher serve. reflecting negatively efforts year X.X% loss to prior reported the of and was first mix, SG&A volume in from $XX.X is year modest a to Adjusted impacted period. reduce in price share prior the compared in

usual is low seasonal disproportionately a a the operating business income situation and we tax seasonally the because the loss been portion high at in the nonsensical benefit. tax rate As first which has effective of a adjusted do record quarter, of our for bit not a

XXX% last of adjusted Similar generate the year, in quarter the last seasonally half to Our rate we XXXX. to effective earnings. tax rate first year the higher expect was we normalize as the of in

We expense in will expect efforts reduce years. ongoing continue future rate to help to interest our tax among effective initiatives other reduce our

of results costs. quarter associated Our and and GAAP costs termination $XX.X other $X.X $X.X facility million China lease with for restructuring which and for our pre-tax million the employee the charges included other included closure of primarily million for termination

lower and attributable expense. the the included XXXX currency addition, to associated translation quarter results for In the gain million $X.X bankruptcy mostly adjustments with also interest Brazil a

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

an segments. However, creative from traditional marketing market remaining modest million income statements. from in XXXX and result our versus improved our Net down $X.X for from was income more basis. the million year increases. logistics the pressure. for products to in of of Profitability The and reported Adjusted shift An sales mix, quarter the for year pre-media as and solutions exchange will million volume partially expected million primarily unfavorable offset productivity Marketing print million down our quarter increase services $X.X $XX.X from period. quarter. a related inflationary increases, non-core in impact Solutions and business unfavorable of Adjusted was inflationary and to decline operations segment foreign volume million mix away to was digital after organic $X.X and a cost offset in continued products, $X.X favorable on price by up the cost both the was next and this volume operations of product conclude rates prior and strategic $XXX.X in prior than our were by of direct down due X.X% commercial shift

Improvements decreased $XX.X non-GAAP used million, quarter $X.X operating expenses corporate improvement which On was Page unallocated net First $XX.X from million million, XXXX XX, of XXXX. of by cash $XXX activities was XXXX an working million $XX.X as Capital payments. expenditures of the period. million were offset compared higher to to XXXX period. $XX.X capital partially tax higher compared the million were in by

China XXXX includes the the construction amount reminder, the and project. Census XXXX facility incremental a for new investments As the of

Total was March $XXX.X XXXX, Turning the December as availability hand balance compared debt $XXX.X down on the of XX, the on now which billion outstanding was facility to $X.XX of total million to as credit sheet; XXst. million of XXst. $XX.X was remaining March we and cash million, had

you of our Next, I like update to with priorities. ongoing provide capital would an

to As facility in and to I and organic past our potential by completed this facility evaluate second value. stated to acquisitions stockholder investments in our are strategic in expect printing of new to portfolio old as the we vacate the including regards pending for the quarters, printing In track business optimize make year. our Shenzhen, opportunities continuously recently we investments of China, facility both construction sale the we of quarter on end

complete the Based buyer's on to in at the obtain third the necessary gain collect previous and the the We the redevelop obtained transaction estimate to approvals to of one our site. experience, government non-refundable the approvals a time to will expect mid-XXXX we they the will will plans deposit Once the their required record on regarding to continue close that move, also additional work buyer from early expect be we we quarter significant XXXX. in sale. will which

the the is entire if reminder, obtained. approval to our them not with requires price contract government's a buyer even pay As purchase the

improving those balance and proceeds flexibility. notes February our credit from of focus to We on our balance sheet will XXXX million an using $XXX On facility. notes Xst, our also matured outstanding with repaid senior continue we

those XX bore was issuance outstanding As various which reminder, Page of XX.XX%, most year capital of in the at interest notes slides expensive our a structure. shows XXst. the the of our debt by supplemental March maturities as

locations from accelerate cash in international to are transfer addition, the opportunities In debt to order reduce certain excess we outstanding. exploring of

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

of March reduced guidance and guidance income were to not income reaffirmed which in the except does as closure from our Brazil significantly expected all losses We due net quarters expected on closure The for our the offset third Brazil have fourth be sales, previously the we by to second operations impact XXst. have operations in quarter.

our I up comments, wrap like I of my year. comment Before to expected for the quarter would the second performance on

to structure of and plans. will productivity cost through execution new business onboard our continue and clients our large the reduce improvement We initiatives our

Logistics which XXXX business, In from business and drive in the expected are down the the second reported to business, be net on the which sales of sales capital relocating our in XXXX. second We the of focus quarter of in million net which sale work, million our $XX closure the expenditure China Census XXXX to our our quarter sales due addition, reported primarily both higher of and of expect Print levels in second $XX we net do Brazil continuing quarter. printing in to preparing to of are XXXX for

incur well certain both of the expect in sourcing onboarding as the generate costs are in low to planned census last a products our US also the work and continued for prepare printing softness closure client currently from Sales the US From we performing of we in US print the cost in half a in as we expected and to are China. to organic new facilities perspective, year. help reductions expect We growth related as the production. work Census startup commercial

passing be transition but on Additionally, during to during the paper costs QX, impact printers these facility production client Higher to margins make our our outsource increases progress to continue impacted expect negatively to to will third-party and also plan will labor this China relocation disruptions negatively minimize to do clients. our we further new to we period. as

diluted cost factors these We Interest expect expected adjusted into the these considered reported offset all of have following pressures open consideration, let's our these per Also, line FX. inflationary And of tax in favorable expense now and is guidance. factors expected to be partially reductions to operator, share and our through favorable is to each repayment in higher. our similar the expense expect Taking full-year to XXXX be of last be to quarter year's for up notes continued loss we amount. questions. the been our


CJS. with Charlie First line of Instructions] [Operator the Strauzer of

Your line open. is

Charlie Strauzer

Good a bit. morning. of little discuss A to things like couple I

going on there little paper longer-term? more of got in of kind good you've First a what's you some side, in quarter the have to closures that -- bit hands I facilities price paper the your doing front. expansion sounds margin on and paper and expand been like near-term and know the the and what's it paper of had maybe is and the margin the on the headwinds in you around some labor can

Daniel Knotts

print see very call, on have a to spot plans impacted situation, paper market in which types, very, at those I'll paper negating a paper that. the our from broader and as mills pressure communication increases you a are price focused that think continuing seeing of as that we industry in our that tested consolidation of to primarily of and machines get noise shifting as and standpoint -- paper paper improvement the ahead demand right time, of and the the execute I to it. that, along obviously as do we that know paper prior on XXXX price we along settle general well lot pass different as quickly out of market the within to that expect leveling we've from the to types of we volumes, know work for impact, the ebb but select see we when of and our are we and industry, to It's to continue of about demand And pass Relative to in the exist pricing becomes select day that current opportunity the has demands will but see there. now, are increases paper being further as continuing over products, a take the more we standpoint take contractual gradual we to continue the to we'll and one types on we end and discussed horizon. client down piece price and there different bit the as balanced, from capacity flow see in and and the that to believe can and of all have we the for we possibly supply increases as experience and for out a of

Terry Peterson

and year initiatives we of volume then And losses. have our the Charlie, locations, key to it on the started and locations priorities core strategic at business commercial where look we where one were enough operations operating was of last our hard is the locations some strengthening closing just started print taking and really and a facilities on our in didn't focus smaller really of smaller

see to do been that journey, the second line we've a not impact on and able contributing not continued margin transfer in some those having facility. of when top into again that you existing all but nearby we're quarter in into last able to expansion on year, that we're of We business hold So is first positive cases, the and a some that on now started through referenced, quarter some to to sales. impact

Charlie Strauzer

historically. should a you you think sort information but should gave in there and QX gave of QX about is how from we of see I'm not us QX, looking again sales versus but trend a actually, we year? that sequentially lot sure this down good segue QX if sorry at It's that good That's QX, usually in slightly -- sales, a

Terry Peterson

going I that an similar trend, know you expect organic there, if is would remember a I said that QX no the sequentially we for decline situation, is sales out prepared my core just is [ph] our conducting slightly mean longer also we shut QX. be it of but fairly down out of organic to it down Again, as Brazil there. that moving and to a actually are literally and Yes, little on from remarks reporting in moving our business our do see we numbers because we down there's bit look

from So will reported those that would been that longer be there. sales operation no have

that be side. pressure a little and year. a have more bit impact on will neutral the on Obviously, profitability the So for that a of the the sales quarter balance will positive downward of for

Charlie Strauzer

from QX was million in I basically, it said you $XX So about Brazil. think

Terry Peterson

last $XX million of year. in QX was Brazil

it numbers. be to reported is we year's since So be to last that small won't able too will report the operations, not restate we're since -- discontinued as that

be associated million $XX reduction Brazil. reported So there will a with

do However, of present will that. numbers, report out adjusted it our when we and be organic

comparison So be in period. Brazil will without clean that a either

Charlie Strauzer

and impacts How it. we QX as for should QX about Got think well? Brazil

Terry Peterson

but maybe that seasonally similar strong fourth a just QX for impact slightly vast very business quarter. will of was Brazil up to majority be the

a and and testing down there assets with see because and in did we sales decrease would a So much that the operations on that work impact was that was profitability large of the the where fourth was negative amounts we all activity. quarter quarter Brazil larger of is associated fourth

Charlie Strauzer

forma looking noticed basis? logistics I'll organically then just and but it volumes on in an number I What still down lower was down percentage even Thanks. what's on a year-over-year. was the driving pro queue, briefly And there? back that at jump And basis, year-over-year organic

Terry Peterson

You on of one second driving on know, you kind what's I'll Maybe here. let the… hold comment

Daniel Knotts

loads carry three services. quarter courier of related From while down that Charlie continue third-party business, logistics We'll our that and the a DLS tracks first relative the Worldwide that is and of a to LTL components of theories lack down full shifting to to increases or those this and expedited to major we within across full to which loads impact trucks volume that to break a that and we -- business, the new between the expedited feverishly et stations The of a impact growth brokerage each our of -- Lots last availability that started last standpoint are truck start truck QX year and softness year there across reality softness over number explanations year going business that year. Terry full availability our work this on into quarter. weather of back to of for country. is overall in saw our price different restore working We of the DLS on of from of pursuing the saw cetera. standpoint addition impact, continue courier, the and Worldwide business

pin difficult to thing So very it particular to is one do. on

growth working and are to forward. caused I that things that working hard organic that be think of improve and it's to hard we're going have multitude a going business restore and to that we

Terry Peterson

organic And around was rate Charles, right X%. in decline the logistics


Research. Next Buckingham [Operator Clement line Jamie Instructions] we have of the

Your is open. line

Jamie Clement

first, I just -- goal one's listen volume, margin ask on just come wasn't would've assumed mean ask in substantially. terms had to that better hard quarter. did report like to grow first margins your do, even that mean you would DLS, you is but not like were that, were know that it off way, down year-over-year profitably spot contract rates probably that's way, like the spot How, I a your and I I expanded going logistics? contract, you this want I the all to the organic with mix but in in but obviously it's to because a in obviously of have do if lower but have should I business between probably have don't and probably I'll I met mean revenue freight segue business this finished hard to I of Charlie brokerage the

Terry Peterson

second here. One

Jamie Clement

And -- you I check guess to while that. to continue

would you worried a in rates spot the on to lower could later logistics worse? Just move year you little that the with continue, actually get that as be business

Terry Peterson

was Yes, slight flat. characterize on to year-over-year amount would more it's a a but up it basis, just where actually profitability close I as probably enough

Jamie Clement

in terms if spot guidance I of forward, Amazon about like, factored rate rate being mean to business Okay, but scenario analysis? concerns and think form your spot the going I this -- guidance want concerns in stays just that about way, kind sure your in there are you the some some or evaluate down are there of worse that is gets in shape make and

Terry Peterson

have the that modeled we situation in are guidance, to well as current we simulate take profitability Yes, there to into at cost of actions out there. also additional looking sales what through our further actions terms as absolutely can

reflected with that have view on our best gone reflected We through pretty that have hard and is in current absolutely best and guidance. that our visibility

Daniel Knotts

a have clients in are day every of of to it's Just business the without a standpoint but through carrying getting out is the business, given that amongst competing spot and you're in period you're for there scenario from detail of -- to those weigh short second, tremendous and that obviously loads brokering ways and multiple impact brokerage it's that both for and for rates on nature relatively declining against the that into availability of brokers. time, a complex because of goes sort choices

being because along on to capture back and on up team. individual even our by for I issue of to the the downswing a the out loads there. don't are who's and faced being order a giving business contracts that who's go win and bid relative stuff So it's upswing that the challenge daily that's it when there's are in dynamic the contractually passing that and that think carried quite most with down rates

network pricing actually of grow to and again. that So will against historical back that are when that it ultimately load those actions you're who's or point, a see who do and which impact that segment there's trucks carriers or that you're is from approach that that us. going direction lag actually an because volume back large we I that we've to of general the availability for challenge come that and the determines carriers safe operate we have what pass when historical think and that into are the to matter which a does important with to it I think for markets an in rates being taken for we've on back they away is competing the I continuing that our decreasing, grow basis and take will increasing, we utilizing the LTL interesting mentioned it's take it's opportunity while a and carrier of believe it spot Amazon the Amazon I there are us business and factor consistent do to into the as business will the and ability passing scenarios and business modeled there To previously, they rates or to as at, which we goes. year We're interesting is our existing retaining various Terry's is closely -- as on takes It's unfold. actions say there, is It The watching how will spot those that of to overall there capturing within passing wherever know think end existing that out down. up little standpoint guidance a that for rates are as from a thinking to marketplace going very the a margin network response more half putting the actually be which be the be out those one it takes, forward.

Jamie Clement

I is and helpful appreciate. Okay, that phenomenally

us? can kind to Can cost over in three it's conversation. Census, been quarters the as help the Census this on well work of out since how as understand profitability months anticipate know you general of you of cadence kind know you, cadence, of the revenue terms for Moving us kind you just six you to

Terry Peterson

year. I right our particular didn't will the perspective know and how on or update impact contract you that our Yes, now, current guidance that

ago be third So year was QX million of estimated more that kind were the and relates we as to some that ultimately expecting as was the a the XXXX. so and will fourth on a balance $XXX balance in we're come of quarter that on million depending our views whatever then in of quarter that essentially to contract you would we guidance, in in where quarter would land XXXX is pretty that and in what lands QX the -- know through sales midpoint our had similar XXXX $XX reminder about and really it just our it of is

activity you where later the investments impact quarter P&L come and some activity big around the most So coming we've will is when that big on There's this revenue that actually now. and window will of Right CapEx and the profit now early got, through. They happen QX. in just right know, year year. four are is more of straddling next that are the QX, results through year

Jamie Clement

is exactly like seem X, -- could I look Page where question your sections, I may breakdown, see but this And this segment at silly where exactly a revenue that. if -- several

Terry Peterson

is be some marketing commercial in Services that will one It primary of Business reflected. our that be sections. several It will also area in up some in be that also -- be print… done Direct will work will

Daniel Knotts

the be impact -- area logistics is commercial leveraging third stitching standpoint, do the the as impact our you'll printed. So, to and we see of that We'll its see will end that the the that. definitely destination. to actually of kind the freight in inserting that that within we an where to a commercial to marketing over platform is be that and Jamie print as carry side lay We'll shift going of out, to direct we -- see bulk you'll see from

Jamie Clement

mentioned the an the Is actually did kind just going census there reason commercial is you I in production The stitching of print? -- you and print Is I help on the margins thing. this of that opportunity when could there think just I absorb is ask it just presses that productivity, overall and help capacity boost kind specifically or utilization better the is capacity something know you on mean for time last stitching stuff. the

Daniel Knotts

within facility Yes, that's will done the it and direct web-based Jamie marketing. not it's within print print, is direct be of the spot within our commercial sweet where side marketing

Jamie Clement

that So shouldn't absorb thing. there know you enhancing I capacity margin you it? kind -- will everything, of be of mean it though know help it for should kind forever

Daniel Knotts

right. Absolutely,


David line of [Operator the Instructions] Next, we Citi. Phipps of have

Your line is open.

David Phipps

for different in what talk industry? my little Can and about a bit other a what taking we spot versus Thanks from were players question. we've some we heard Europe? the was So from bright that expecting

Terry Peterson

$XXX out always, little just million but you're in many but revenue right, there. we've in reported been the reported operation quarter, It over up. not our there. a of the several very a of have quarters of growth Yes, recent quarters, is got actually growth over small We've it reporting recent

So out it small in the pop our dollars wise, but European few big growth particular revenue of other packaging from It's -- too, it's growth coming seeing not in areas. the any some seen as huge several dollars over we of but in in have not as work really a UK some certainly there. here of quite different does well, it's really it's and some area, work that quarters but in we've our also the markets we're base is concentrated, in not because places,

David Phipps

get for on growth you go we organic the as think can year we Asia? year through Asia, And do positive to the in

Daniel Knotts

Yes, I do.

but on and have in as the the that disruption population transition think that I've the clients their of and some to time second like come work the really certainly get heavier from printing third yes through there's spoken I over and really some quarters, actually some dependencies technology we look we'll with that that of year. what of to volumes there will too

see but growth can unknowns there, back we to get some that do we So organic absolutely there.

David Phipps

look from on it on and that takes final line puts some there's the color in margin, sales what expenses given we good the the like come and that sounds question, maybe in And -- sequentially will should expect from second your has somewhat second flat some or been been -- been up margins and quarter, here roughly have has back or the lower. EBITDA quarter been price first changes either it's

have that of decline about kind should small what small? all seasonality the in So as or we puts or or we would takes EBITDA large maybe and put a think we sequentially together,

Terry Peterson

call an our basis, we flattish this about a little guidance, from of anticipating standpoint. spent talking time on were into Really look a the I in as roughly our you last -- kind midpoint of it overall of well. a was of back -- if you if EBIT a Yes, kind dollar full-year flat kind pretty

because be actually that get quarter as our leverage we you that, sales. that improvement and EBITDA of fourth QX. suggest an -- seasonally for So strong pattern is that most from the would in margin. that would as be similar in on lower slightly sales QX coming can than obviously for the know, The operations quarter. both first well to better QX the is all,

of too. Sometimes can our bit percentage in but that margin and all cost quarters the would there it that little basis, a a our certainly less on we again to impact can it's positive each focused of improving be a on have expect we're close too remaining And structure quarters. benefit three


for it phone, And happy queued Dan be turn with remarks. to closing back by Knotts any I'll no further questions to here

Daniel Knotts

strategy employees our ongoing all hard like your continued thank your you. commitment, for to work back business. In Company, to to I just improve we clients and our our the drive sheet balance your thank as know Great, to that, around efforts growth, greatly turn closing, Please your profitable of with call appreciated. continues commitment that fuel to our and to our will our are Brian. I'd fundamentally transform work world the over And

Brian Feeney

Dan. Thanks,

XXXX the in which call. posted first quarter first Thank us access our found a of to be results press first quarter investors section and As RRD's call can the replay is joining of information XXXX you our website RRD's of that a rrd.com. earnings on quarter release, reminder, a at concludes telephonic for copy


concluded. connected, do very you still gentlemen Executive AT&T's and using your participation Ladies for all We now for and this the has thank morning Service. much Teleconference conference of

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