RR Donnelley & Sons (RRD)

Brian Feeney Senior Vice President of Investor Relations
Dan Knotts President & Chief Executive Officer
Terry Peterson Chief Financial Officer
Charlie Strauzer CJS
Jamie Clement Buckingham Research
David Phipps Citi
Bill Mastoris Baird
Call transcript
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Welcome to the R.R. Donnelley Second Quarter 2019 Earnings Conference Call. My name is Greg and 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] this being call [Operator

to the R.R. Investor I ahead. turn over Relations. Brian go of will now President call Feeney, Vice Donnelley's Please, Senior

Brian Feeney

second you, for thank call. and Greg, results conference you, joining Thank RRD quarter XXXX everyone,

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

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

today's As the detail we on Form call in is section the review be on second information call, was to participants our along is second we release, for themselves. also at slides This quarter the filed reference investor quarter which who of a from will rrd.com. the results in The furnished addressed X-K numbers SEC more we copy advancing during to yesterday. that follow posted on by reviewed page of website this our those press wish will supplemental slides information the

strategy, Throughout and of our this will to and refer statements, which comments differ expectations. call, current on actual outlook financial involve also including risks results our uncertainties. our from Therefore, forward-looking could we all materially

release XX-Q please the discussion on reports on risk a the Report materially, cautionary filings our actual and to quarterly refer our our our and other with different complete in of to the earnings For included the XX-K, factors cause that Form factors SEC. results could Form Annual statement included in

Any with ongoing supplementary non-GAAP information. evaluate is We our appropriate the measures operations also non-GAAP section only. release, of to information company's way comparable results reconciled the our non-GAAP to concerning discuss measures provided website. provides the believe in Investors will is company's posted They GAAP financial presentation references performance. purposes we the on an to financial financial are informational press and for are the of which useful investors Further,

the Dan. call turn I over will to now

Dan Knotts

also Great. On we're I'm Thanks, and to quarter and customers a in update morning, progress our couple the of and you executing thank today, and through second review call I'm further performance marketing our to our that how better joining helping our us. Good on going going making everyone, strategic priorities. their reinforce strategic provide connect examples share Brian. demonstrate their with client for business an we're clients communications. our direction

slide to Turning X.

our expectations. delivered Throughout for income Our quarter, successfully lower our cost-reduction to results our our drive focus initiatives We in delivered repatriation strategies the adjusted to operating flow and remained improvements cash from our accelerated with operations, operating in further EPS launched the line and we quarter were our strong. plans cash debt reduce outstanding. We our and executional aggressively we continued against cost-to-serve. and

the Let for hit quarter. the highlights me

On organic line, the performance the improved in improved segment. highlighted growth quarter, sequentially our Solutions top our first sales Marketing by organic from

in Commercial a in to and packaging, of targeted direct marketing, categories, top growth number and Logistics posted market continue we While we including primarily our print. our line categories, experience higher-value softness, digital Print labels

exiting top expected half including we in as first of our actions. has unprofitable Overall, rationalization the impact the played platform performance for the line year, our from out business

the continued see we back organic year. of in to improvement for expect ahead, Looking our the half sales performance

X.X% XX perspective, from improvement delivered income we operations margin. basis a our in operating profitability improvement point a in From and

our our businesses our productivity to we serve. actions divesting operating positive lowering are Our core favorable platforms revenues, including unprofitable performance the impact relentless maintaining match cost in cost on to focus from taking exiting our performance, our global non-core the work, rationalizing to strengthen and reflects with our better

improvement and Further, now our with margin earnings QX in quarter we consecutive three posted our performance four earnings fourth earnings in higher operating operating favorable we of improvement, expansion. our reported of quarter quarters. margin Our have a of operating consecutive achieved marks last second year-over-year

on successfully execute planned our sale two the production to important very completed prior XXXX construction quarter, continued our and exiting calls; well of and the facility, discussed the China print initiatives the on During we've Census. China of location. With and that our facility teams to relocation we've our printing regards we vacated

year. will up the new the half of production now ramp in facility begin to We in second the

XXXX the to we remain to track Census, production project on and planned. Relative we've as deliver this begun

same are assurance laser-focused teams commitment to quality level bring both every we Our executing and on client high-profile the that of with engagement. initiatives these of

report and cash that took to improving two reinforce Shifting our we sheet. balance quarter, to that debt. commitment steps to the I'm our during pleased important

finalized the the of to our we to repatriation we to our strategy international First, year, this which are accelerate outstanding U.S. cash lower debt. using

will and business our used down Second, in Terry Research cash for $XX.X the initiatives provide Development these of on details his we additional pay sold both debt. million proceeds to comments. in and

into move of stronger we full our to organic our in guidance. year improvement continued our ability are sequential the and we As sales, year, achieve second drive in seasonally execute our half confident operating plans

slide services the our are of communications. to for we help is cost our of portfolio better build to their helping challenge and X. complexity while of industry-leading effectiveness The investments. customers integrated clients, reduces for and clients communications businesses tight and Turning them acquire becoming meet that customer that continuing an challenge, enhance digital increasingly attract, and integration complicated to requires To retain physical

Through with print channels. to clients complex our their Marketing and across manage digital both our partnering we're programs execute Solutions create, capabilities, and marketing

example, global a line. client campaign product As new marketing a jewelry to a promote developed AG brand Swarovski recent

format. this for Swarovski concept a pop-up of retail broader developed campaign, store a new marketing part AG As

year to group Our overall activated and an drove prior the produce brand referrals. in five-day helping website in well interactions, transactions. sales increase resulted This by Retail event in marketing as traffic in plan as social and Solutions of a an aspect awareness, this increase and installation create, store the execute the increase over project to that engagements

we're over of course In our our face more leveraging ever customers, Business their use with options And reduce business we're and cost the expertise with communications business the complexity our business overall to clients relationship. communication clients full effectively they execute these programs their the for more helping their as to than before our to engage clients. Services, engage customers programs of

we're branding improve client order won chain. large the their in-room suppliers, recently an to loyalty We to automate products consolidate their create a to and ordering branded which of print experience engagement and print sought and resort with process a resort materials, menus programs to brand streamlining the company products Through supply for and Print their invoices. check-out a solutions, all combination platform with efficiency and customers. across locations that seamless ensure the use improve engage our include print employees process This they that of point-of-sale the Commercial to technology consistency

to customers new use with our marketing the solutions Services full clients differentiates to points, business And they is customers through Marketing and their provide from we markets a customers our are our while basis, Solutions time. for over what ability segments RRD the programs the range transact the they we communications those inspire creating further the value service with and repeat the use acquire communications to on our serve of to in touch Business and stand-alone clients inform across connect

a multiple breadth of the large new in clients' communications full marketing retail our tapping significant into to complete of support harnessing providing further won RRD and programs. very of integrated consumer this clients point, solutions recently across the that offerings, requires bank business one communications To points. card power program By our credit extensive we're touch accentuate our

with launch. Starting the

a and store Our Marketing team encourage to Mail Solutions and Direct customers, acquire is program lapse shopper traffic. online executing engagement drive new

and Services inserts customer and providing that the card experience ongoing the new the statements the credit customer Business that team accompany cards, support and managing producing producing the by monthly promotions and enrollment. is in-store Our new creating mailing forms

leveraging By of for both differentiated more and leverage cardholders and the our experience capabilities recognition for we capabilities important creating And serve. of markets clients, as the to potential smarter, to current bank. our we continue responsive the value our create customized a in we are segments, of earn we

the The are particular recognized an Foundational of awards with collaboration, scorecard the on RRD evaluation performance North Supplier extraordinary in American in the category. based award recognized in of for determined supplier are company's Year Year partnership, winners recently each the Principles Supplier Principle FCA integrity. XXXX. demonstrating of and Foundational The transparency

part to company We future. are be the the as for of FCA's proud ongoing transformation builds

product, China global packaging design. their network a create manufacturer. showcase conducted Chinese competition We annual uniqueness to exposure We leading the liquor for sharing dedicated and a engaged would global for of premier and new label ginger-fermented is to YUNJIANG, a liquor shortlisted by label the in YUNJIANG for China's also producing label designing that the first and quality competition, private were RRD Pentawards market. were bringing recognized a the to which

RRD the its label conducted extensive significance would beverage development research to of a and inform highlight origin. the the of that new

the the ability with experience clients. we're play win our starts our Around delivering world, to and all right to our for

our We honored to be performance through awards. are these and proud of recognized

to Turning slide X.

of I turning related progress to Terry, strategic our to key Before we making the the reinforce call messages are priority. a advancing to in would number over like

our performance continue plans. core divesting we productivity business, our unprofitable executing of by global non-core and our exiting cost-reduction First, and to rationalizing footprint, strengthen businesses and

Packaging, our Labels and service Digital in Second, we're higher-value Mail, and growth Print. delivering Direct categories including product

Third, for performance evidenced are over quarter. performance the -- driving we're improvement cost by cost-to-serve actions the role key earnings the four as operating our quarters. Together, last reported in aggressively reduction X.X% SG&A managing a in our margin and these we in operating playing the

approach disciplined international actions RRD we our reduce through and additional our launch of sale deployment and further cash successful Finally, the the repatriation. our to have debt of we outstanding capital remain to strategies business accelerate our to taken in

with While marketing do, RRD an we to business communications have as we industry-leading of our provider evolve to work as am progress pleased always and services. I continue more

turn Terry, I'll more the with on Terry details over outlook. to and performance call financial that you. And to to our over provide

Terry Peterson

remarks. Dan. on a products our by segment begin second snapshot supplemental page and quarter for refer to consolidated Please of X page performance Thank provides services as by the and net I you, slides my RRD. sales This geography

of our XX.X% included reduction a last associated year's the with of On sales quarter Print dollar. associated and Logistics stronger down including net point which another dispositions sale the business U.S. percentage X.X X were recent with business three a percentage in reported points basis,

X.X% in sales Commercial business. in Business by Services, impacted offset On X.X% which an in decline normal Business included organic X.X% Solutions. as as sales negatively our continue of continued Print partially In to be unprofitable an increase a of secular declines by Services, well of basis, were down exit Marketing

some including organic the decline quarter secular repeating volume between X% rate impact not X% our higher was for that election-related domestically from year year. the estimate in this Print We sales last Commercial, and second

an have recent declines We We reported due client Logistics last our with growth trends line XXXX are to current two with the year. believe is rather anomaly. by also year-over-year trends in the declines exceptionally in reported after demand. than the an performance in strong in excluding favorable for XXXX primarily Results XXXX and XXXX in quarters driven growth Logistics and issue lower the business in

a levels industry organic of experienced Last Demand performance reported Labels, have categories economy demand from Packaging two capacity capacity shippers. returned as and our and in spike sales XXXX. whole, the both normal year, to and in quarter. favorable strong levels a in growth shortages the amongst a strategic logistics

Direct Digital in favorable Marketing Digital Solutions, expected volumes. Marketing growth was In by sales Print products partially the and offset this driven performance for client and quarters. and is behind This market by in decline delivered us and services sales Fulfillment higher media traditional Creative shift our shift The Solutions from impact will now strategic not of future related non-core impact segments. continued away print to we

in mentioned we including we organic growth clients quarters XXXX year the the quarter onboard to expected two we and sales declines Census. see large year continue our to I organic expect on a of back first new as this in As first sales to call, the return of the half

sales organic second our quarter from previously result had from in on our the XX. of negatively sales as operations excluded Additionally, are March beginning been our now performance a organic the calculation closure which Brazil impacting

million $X.X On X, second was quarter of versus XXXX. adjusted operations million the page income from $XX.X of higher

business represents corresponding year. year-over-year strengthen from our in X.X% improvements to This quarter addition, core we reporting performance. consecutive XXXX margins margin as continue fourth operating In this our operating X.X% in of to our our increased

same The period mix and and benefit the in $XX and the combination product versus exchange more ongoing cost-reductions initiatives million volume unfavorable foreign in approximate of XXXX in rates, amortization lower impact an of changes from than expense XXXX. depreciation offset

Adjusted SG&A year to expense our prior ongoing second from $X.X lower our of X.X% million $XXX.X reflecting million quarter is cost-to-serve. efforts down in the the or

second compared share reported in to in loss a year quarter period. the $X.XX was the loss, per Adjusted $X.XX as prior

in the benefited period $X.X from a While interest XXXX million reduction expense.

income higher expense tax was unfavorable. adjusted And operations, from

Our effective in nonsensical. tax adjusted bit a quarter XXX.X%, current which the is rate was again once

higher lower rate tax seasonally which part at the of income, is a benefit. However, a and loss of the operating for not record disproportionate seasonal do a attributable the to combination business we

addition, in repatriation In of XXXX, million, of withholding tax with associated of the quarter expense second relating charge included foreign the to significant cash. a $X.X taxes

expect strong rate the last higher earnings. the in the year, we normalize year, generate last seasonally half to to we of Similar as

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

million, charges pre-tax the other facility. with restructuring quarter associated charges China $XX including our of of for results Our GAAP and closure the included

recognized of our the related and business also quarter. pre-tax the $X.X a of Development second sale gain to Research in We million

But to facility ruling a offset charge unfavorable that closed state in former gain on we by the a XXXX. was associated an negative with print largely tax related matter court sales

now page at end as the Remaining of facility on XXXX, X, $XXX million total flow Turning of $XXX.X sheet million. facility. cash the we on availability the and hand against And on quarter. drawn XX total cash June outstanding credit including million had of the balance the debt billion, was $XXX.X $X.XX credit to of

Improvements $XXX,XXX in activities Net partially the were as cash improvement tax and operating XXXX. by quarter offset by million second higher capital an of $XX.X provided which working restructuring payments. to compared was of was

$XX of $XX.X period. million XXXX expenditures higher to the were Capital million compared

the As the and funding Census XXXX, China of a reminder, we incremental the of throughout the facility course are XXXX new construction investments project. for

of priorities. Next, would to I ongoing capital with a like provide our you reminder,

expect investments we in to past we organic to business, strategic including stockholder value. evaluate and investments our opportunities acquisitions. optimize I potential As stated our for quarters, in both And continuously make portfolio

summary a facility sale outstanding. in on printing finished the is debt we X China, have pending completed we of the In our Page of the early facility construction second the new moving printing June, to our in reduce schedule. quarter. new actions And regards location to taken to Shenzhen, recent of we in

continues the we which obtained in the estimate will with buyer Based mid-XXXX, will The buyer's previous to sale. so to close experience, and they to complete significant government, obtain the at required necessary transaction time sale. the expect work to on we can the be record approvals approvals the a the on early gain

deposit in We our XXXX. expect non-refundable approximately quarter $XX third that we collect million the next will of of

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

to repatriation press to continue announced jurisdictions flexibility. U.S. the strategy our night's on foreign we launched we that We focus sheet improving accelerate In our balance the to last cash release, from of

U.S. reduce debt which During to the the ended of million transferred used we was outstanding. XX cash months international XXXX, six $XXX June to

to million XXXX, between current requirements and $XXX transferred regulations during U.S. amounts half procedural first to the the in the expect and year. million $XXX during we transfer on countries, foreign Based of including

Research $XX.X we which and reduce business the quarter for Development Further, million in also used in debt was sold cash, outstanding. second our to

due year, our during its usually debt that of of near the nature of highest point the second seasonal or to the at end is business. Given at, our the year quarter outstanding the

XXXX. show reducing period have made compare amount is same currently best debt the to to we comparison the of We the outstanding, believe debt, the to our in progress in

making additional XX June for equipment constructing $XXX China debt critical outstanding initiatives project. the Census incremental facility XXXX, in new purchasing like in we total while investments, and print XXXX reduced by the Since have million

notes plan repay to of of now the our XXXX the nearly retired balance to are category. supplemental we using with We February. debt outstanding on our matured $XXX are of The June, being that how of Page last an by on notes in notes, as June year, in maturities XX slide the credit the show various of $XX our to XXXX availability mature facility, those scheduled XX. balance million and current million reflected similar outstanding sheet

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

We the year. have reaffirmed all of our for guidance

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

third to our sales similar be reported We expect XXXX. net in to quarter the

Business dispositions project. Census to partially offset dispositions, will reported which of continued in recording reported of we onboarding impact the last factor those net be the sales sales by will $XX.X year, a of million The client from negative third a the and quarter expect XXXX a begin basis. new significant be on

the our and certain U.S. facilities We also as print well unprofitable in reductions commercial continued the in to softness both printing expect as of in low-performing planned related products closure China. work

early a As year we improvement locations side XX as part business have since of profit closed across our note, our last initiatives.

to make investments improvement performance our the through lower we while and productivity execution business clients, cost-to-serve strengthen We plans. will of initiatives continue our to our and new core onboard

XXXX. China quarter our facility quarter during into to third-party is be third following year regulations new Interest we favorable negatively last the our repayment in our slightly finalization to to from tax continue expected margins reform printers. expense the is our fourth the XXXX be the work expect and of effective the higher of We versus to tax impacted expected rate due year-over-year in be to notes quarter transition the as of

factors income per last of we to Taking expect reported all diluted to year's into similar adjusted amount. consideration, share these be our

guidance. full has factors these been of each Importantly, our in considered year

questions. let's lines the for up And open now operator


Okay. the [Operator Charlie ahead. CJS. line from comes from first Strauzer go Instructions] of question Your Please

Charlie Strauzer

morning. Hi, good

Dan Knotts

morning Good Charlie.

Terry Peterson

Hey Charlie.

Charlie Strauzer

little bit as a your in general. about margins more also talk well just can If Hey. and we QX

ramping, any improvement the for potential margin QX ramping in margins is contract the Just the in expected contract? there revenue if there steps it you're been ahead with you've at the just as down showing Census expenses of you look Census

Terry Peterson

for strength the operating of for profit Census report last for plan to as we us as year the year, but expect we and should to operating continue do half we and things margins the third onboard that that benefit cost-out to should provided into certainly continue our to Charlie and quarter actions report to that we've the improvement income help like relative activities our we the guidance continue sure. our going from in

Charlie Strauzer

Got it.

front should any So, cost hopefully action the enough onboarding on cost? be additional absorb to

Terry Peterson

cost? Any what

Dan Knotts


Charlie Strauzer

cost Census. for the Onboarding

Terry Peterson

been where we Yes. the case. Yes, that's do,

Dan Knotts

Yes, add The I ongoing key that think as ramping of additional get just we've factors to and levers Charlie reduction we actions the that -- margin that. well as incremental to cost from taken are cost up in driving performance as that volume well.

Charlie Strauzer

just this that quarter number organic the -- down And it. at current Got reported what was Services was that like? looked year-over-year. that decline then just looking What -- obviously, what side, Business on on the logistics the was basis, you

Terry Peterson

Print the you number last had we -- the year. from If $XX about reported contains -- Logistics million of

So, you'd million. $XX -- million, that reduction were to think $XX if by up probably reduce close about I to it's you come

Charlie Strauzer

it. Got

as see trend what front? Okay, you -- year then you great. And the you looks as And there? there half the just improvement are revenue the logistics, on seeing head the some like of in are into back

Terry Peterson

progress that tougher in comps business. we continued stabilization So, we'll and to my reasons remarks. prepared we expect still in But that cited XXXX to the continue for period the have I think

period, as if the to comparative to a would really quarters. in continued XXXX two again, been use we seeing expect we've go first that you're So, and progress that going back

Charlie Strauzer

it's we X.X% that the the then printing Anything on? keep Great. think was down, that eye looking so. at an two, can it just in And or also quarter I statements driving

Terry Peterson


through the customer two past of went through first quarter year. quarters, the ours. last of in talked a the lapsing former of working about we second On That

headwind that benefit category We'll half continues last And will client more same into we So generally a ramp. provide continue of going the large gone. new to be are the where that is year. the product to onboarding that

year from the a headwind will a customer loss absence So, the there. of ago eliminate

Dan Knotts

where the happen that simultaneously. Yes. previous new Charlie statements, client client. is transition We're don't the in in out. phase ramping Those we're up the a -- on

what's So, statement that's the really change driving there in the performance.

Charlie Strauzer

very you Thank Excellent. much.

Dan Knotts

Thank you.


next line the Your Research. comes Buckingham from Please Jamie go question of from ahead. Clement

Jamie Clement

for questions. Thanks my gentlemen. morning Good taking Hey.

Dan Knotts

Good morning Jamie.

Jamie Clement

some curious some kind little is Dan we to some if info and of sensitive product of the was are I a guess delve more bit. lines on was of your of kind Really I big one lines your of into I what economically Print. could business, curious get obviously Commercial

thought Is all you hear quarter. suggesting that business you're you organically, away -- during were that thought to probably walked about I have Terry you down X% that did think from X% the the excluding I right? you

Terry Peterson

include Yeah. think On we election-related some But a and X%. secular that from impact of because last temporary the X% basis, does between revenue year.

Jamie Clement

Yeah. Sure.

course. Of

Terry Peterson

Yeah. Yeah.


Jamie Clement

that's good a -- mean, for so I've would quarter. guess the first independents -- about activity agree you all, heard the during business I of first there I complain market. So I -- do that's you Dan pretty I And that June are suggest market? Were outperformed question. some number you're you this think the you that think

it the is market Or then specific thoughts. projects, consumer or just gains? I'm second is your just customer thing share that? cards it's curious whether like anything is, for And trading it broad-based

Dan Knotts


in of take So, of I'll time. questions one a at a them couple kind Jamie. there

outperformance we -- pay cetera. and we close similar not demand outperforming that one happening going market of are client the anecdotal to on to that is relative hear But market. in what's is about we paper one what's et an and what information have things market the is within I happening the play from believe do And first overall happening the paper what's attention from in demand going other the on market very base, The things we market. or

overall ranges to look of for uncoated XX% coated XX% paper whether in paper. two there, you're with demand going talking down of free-sheet, talking what's at ground you on the a If demand the down you're

there's -- of a one. going the believe that believe difference the do we versus market on performance satisfied rest number that's do in performance So unless that in but never we're our going,

base comes our ability the going and very particular significant that's I of Print, expanding do to play. products, those all our into relationship majority winning take have larger and of getting think to team power client after being commercial our engagements. And RRD relationships to but provide the extend our in driving able good Commercial vast calls into a with key clients only competing each form I'm some versus commercial and those of ability quarterly and what's of solely job really is offer which where a of we printing these that story the services doing our think the if that XX,XXX the of performance. with I wins player that in that we're And then are driving sell trying to opportunities sales Two over of them, overall reinforce on client to are clients -- print the driving

benefit from products answer short there given selling that and leverage in base by build and definitely market services communications given lot the us enables their the of process additional at -- our outperform to is point to any a But and and a categories. client in our for these to start us ability is

Jamie Clement

calls. Terry, are I your have logistics appreciate that. sounds earnings Were had identical some public this. to revenue But you up? me I cases you're like numbers. not that margin. also in substantial the don't to And pretty know you're lot noticing facing have companies there you fundamentals out you how in if specific -- of your -- business margins you of Okay. year-over-year, revenue saw want don't already give the other in but net a I It in holding Logistics know to take those declines improvements

Dan Knotts

seeing offering let that out From then I margin talk at the I'll we the consistent the the that the There's on first story shared some product you're intermodal story. to XXXX, pieces Terry all side. and one at is their what's sitting to that So but brokerage you're fairly consistent rail service -- in comparison on look logistics -- you to important relative offering, and a what it's and providers, over-the-road what's space, the carriers Logistics think of service XXXX of whether back anomalies, going and are Jamie carriers the fairly rail of look seeing involved if the XXXX. providers I'll to going head about take a Terry scratching within everybody as emphasize or in take

causing that, that And bit and the underlying as by industry anomaly at logs and for increased we -- homework shortages XXXX the have historical think driver performance the I quite is were and the the see and a that's standpoint. from back of at that a spike of to trend more if that you done underpinning And in go stuff weather-related -- look previous than trend and a us you excluding with shortages. more on years look demand aligned occurred of XXXX a XXXX that's demand driven really in TL

volumes the softening occurred there got occurred is spiked actually seeing demand what that that what of The with And you've on market. going a increases being price passed as reversal shortage were you're that with in within other XXXX, naturally in XXXX dynamic along. that

demand expensive. a and talking that something price about on revenue an in seeing You're They're pricing lower actually net of because the there. broker capturing etcetera of and carrier. that's aspect per by down mile their people they're that or lower element It's being prices way there's of But driven out gross revenues. talk perhaps that, about versus that's

So it's I unique will a I environment now business that right the -- really really within stabilize. it's Logistics believe believe, unique

why But we'll don't and comment to the on from margin Terry, you there. go stabilize forward it expect side? We

Terry Peterson

Yes. but versus declines, in still the side, to The year the challenge been for the comparing XXXX of period up sales where with the a we prior quarters. last those challenge have in two more quarters has reported the

favorable favorable, if XXXX profitability income quarters the you been actually to the even compare in or were a side, and there. a We're first side more little easier On to little bit operations even bit quarters. to from it's the both second XXXX and

been margins improving. actually have So They're fine.

Jamie Clement

down? Terry revenue words the there are Or prices at in And like is or specific other of, going line like is that purchase taken? you've actions a that these net are -- function -- there transportation

Terry Peterson

cost from the We well both. that part initiatives. But year. certainly the especially seeing earlier of ours improvement It's a transportation focus higher has too, on as been business of were last pressure also cost

I So both. would say

Jamie Clement

back Dan, you. Yes. to

on in Some they're an the June the in Was referenced depending weather that heavy, where impact folks business at all? geographically here quarter.

Dan Knotts

terms -- weather-related There two to what down drive I'd to are short that came happens those yes, it's that. there. of things pretty answer in Those -- it's that actually impact have the is the right? overall. -- amazing of state-specific And say what's challenges location that happening

One things that weather. get weather upon that what's how the is events is, obviously those other part -- happening upon dependent delayed But that are. significant and dependent drives

those get diverted A situations. carriers of TL and trucks LTL and to number emergency-type get diverted and both

So both business. in come Logistics our into factors play those

Jamie Clement

from years? kind of the recognizing then think direct What quarters. a in and last going seems a little move away little gears are the far a think -- have it And Dan, do over that bit then people June you -- bit. on is you mail value away too of couple that direct perhaps enjoyed little there? good of changing more folks mail Do bit pretty than

Dan Knotts

exaggerated. I Well has the direct think mail been depth Yes. greatly of

each continue marketers everything going a sight spend communications as to digital of that into marketers the we take direct communicated think how because digital the preferences to have be channels. And to as want that the able to from at the think with. standpoint digital programs I and it at it's integrated and -- look Grail look be of that goes accountability line Holy was to us I over -- on being we're

work it's not That's playing how not -- put so channel click-throughs, -- And That's that many campaign that the marketers. works. the is exactly -- know page or that, so for I on not web that many the out reality it's works.

the critical connect And digital ability through through ability connect to connect it's the it's and physical and product-specific, all to experiences the in-store through components. ability to consumer-specific. brand-specific It's channels channels, remain

important mail, longevity we to mail about we of it continue be direct continue going direct the an as will So that, forward. think of in to part marketers' campaigns, in believe

we're experience. saying, anecdote happening that's forward. to just people out that's mail, to of the going the believe one that's direct I I experience or our don't because client label think be take entire don't and it's that they marketplace not what's And one going across, that important

Jamie Clement

all much Okay. as your always. Thank you for very time

Dan Knotts

thanks Jamie. Yeah,


go of from the line ahead. Citi. question David comes next Please Phipps Your from

David Phipps

Hi, sales thanks a the my about driving was taking can the business we little improvement to Packaging and talk what turnaround quarter, maybe the that in And bit the question. also basis? like -- about for talk on maybe from a sequential the Asia in first

Terry Peterson


out come the it the up the So too. just of does business because of But from Asia of actually impact does strictly FX. geographic the some there then standpoint, -- as that a business Asia really and turnaround still but of is it's Packaging negative, show

Those X numbers not on organic numbers. reported slide are actually

business sales Packaging our and quarter the drag on customer report did coming China, There from Asia there. growth and the repeated out the first was some in of temporary year of particularly some China, in and see organic we bit creates last was the kind we pickup recovering activity just the one that quarter-type it business. of did quarter not packaging

repeat the So didn't second in quarter. obviously that

And we from Europe, the United Packaging a in in product see but continue lines in standpoint. to States of good also many the strength especially

So that's quarter. this showing through just better

David Phipps

Fair through enough. able on the bring repatriated that -- just to follow cash you're And to back.

some like as and of them the China other that figure be when scheduled of would in? think about guess Or lumpiness of are from reduction we to the should continuing payments then revolver that the that or which on are there focus I the we we million? look asset should You quarterly milestones payments $XX sale, something -- debt the at remaining with tend

Terry Peterson

only contractually-based. was that not to the happened year, this are was just million for and it be Those regular. this one They're quarter scheduled year. $XX third No. in of

So, expectation do at that another no. we'll is I be for the be early get occurs next actually closing payments And the largest piece current two the to those one year, of believe, but payments will biggest which portion closing. mid-XXXX. that once again will or

David Phipps

then roughly you us can year-over-year give third at what Fair on you look that? finally, quarter enough. commodity the And for if guidance prices

Terry Peterson

and Those stabilization you view that the year first of tell continued ones year. the and We seen there. kind the of our this have part and ago, year cost being even paper. for of really I'd one space is in escalating into our that of stabilized large the a outlook had balance

to ago. that think I few seems where issue from it quarters a So tempering certainly be as

David Phipps

Okay. Those are my questions. Thank you.

Terry Peterson

you. Thank

Brian Feeney

David. Thank you, Yes.


Next to of the Instructions] ahead. go line Baird. we'll go [Operator Please Bill Mastoris from

Bill Mastoris

the going when you. to question Thank repatriate bit your it answer to XXXX facility, payment then Terry the Or more. redeem you will maturities? you your And near-term allocate first? of could revolving a are the to to first funds I wonder that little if go the cash, this the of clarify maturities you is which is last going flow towards maybe credit

Terry Peterson

maturities. XXXX and Yeah. The XXXX the

down So, do not credit should on opposed some pay the I do being is the because those and arrives nearer-term like those at liquidity can do in when to can said, XXXXs perhaps should fastest I in real of spaces. obviously the time. am looking the that to I there But to cash and maturities thing purchases open-market that facility, -- opportunities XXXXs such be some the

So help be credit still bring bit million of enough expense faster. to at actually would $XXX on cash a enough another alternative that down as bring still outstanding facility minimum, got I've a outstanding down June the use interest to debt. that XX, little that But to actually with


Bill Mastoris

maybe start additional is maybe Okay. of a sales and Thank look we you. that some take And one at -- you for businesses. that to Dan

of expect is kind pike? sales As refine we the businesses? Or coming and there you down could your something prune be portfolio. see larger more actually Should to bite-sized that of

Dan Knotts


direction is would not relative businesses or candidates provide I But two or reasons. ongoing we may guidance this for our to divestitures. or is optimization for portfolio say I critical be are So the that what of may future think don't candidates

The first growth towards the service and value product this one core higher of offerings. categories is higher to value, emphasis overall continue mix lines to we as growth the shift higher the company and on focus narrow our product and

of looking is in our we're balance benefit that of the second financial areas. to to sheet other reposition that support the part the achieve And using those growth proceeds to help

So out are over optimizing focus -- play you on our and we see we ongoing that time. have will portfolio,

Bill Mastoris

you much. Thank very Okay.


turn this back remarks. like And I'd to to questions. closing the time, call any further Dan Knotts there at are for no

Dan Knotts

from Thank of Okay. today's XX our and key to for members like our I'd our thank the you. takeaways Slide R&D lists world your all to team around clients company. calls. our continued to commitment

hard our on you. our clients mission evidenced customers. Thank with of Your deliver better continued in and work for progress growth to position is connecting their our long-term profitable RRD

appreciated. Your greatly are efforts

with back that, the I'll over turn Brian. And to call

Brian Feeney

Thanks, Dan.

copy is telephonic As a reminder, call press the can our a the on information to of section second our posted quarter be in of rrd.com. access website RRD quarter Investors release, replay of which found XXXX results at second

and for this us earnings Donnelley quarter concludes you R.R. morning, second Thank that the joining -- XXXX call. thank


conference Ladies for your Executive you and gentlemen, that does today. for using and participation, Thank AT&T conclude TeleConference. for your

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