QUAD - Earnings call transcript Q4 2017

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Quad/Graphics' Fourth Quarter 2017 Conference Call.

During today's call, all participants will be in listen-only mode. [Operator Instructions] A slide presentation accompanies today's webcast and participants are invited to follow along, advancing the slides themselves. follow posted webcast, earnings last the release. access the in instructions night's To access on Presentations slide of you the Alternatively, can presentation left-hand bar. under Events the Quad/Graphics' the the & in Recent link navigation website section Investors

ahead. of will Kyle, over Following opened [Operator Quad/Graphics' to event being Kyle for this please now will Manager be recorded. today's Egan, note conference I Please Treasury turn questions. Relations. the is presentation, go and call Investor Instructions] the Senior conference

Kyle Egan

Operator, fourth morning, President with are Chief the Dave results and of XXXX provisions release & discussion today's Honan, good follow you, by will Joel everyone in of today's are with review outlined Quadracci, full-year and today Executive acquisition announcement Dave lead of our Ivie today Thank With me like to Joel webcast call call President highlights our and with everyone. and that Financial our Safe to subject more news of statements and as our summary Vice remind slide this our financial and more and is a will presentation outlook Associates. Slide our on along of a detail I Officer. on X. off results Chief our quarterly Chairman, the Executive Officer; would being quarter XXXX forward-looking in Q&A. detailed Harbor followed and financial

Generally prepared with in Accepted are results accordance Principles. financial Accounting Our

adjusted flow adjusted debt and However, this contains measures, margin, EBITDA leverage presentation also cash free financial EBITDA, non-GAAP ratio. including

future will The will A shortly over I of measures will hand in replay to call reconciliations after the Investors website for Joel. to measures. section reference. now financial Quad/Graphics remain non-GAAP be we included these on presentation, financial slide the conclude. website on presentation have available We of the posted slide the call our GAAP of

Joel Quadracci

in results and Kyle, everyone. that and line I morning, quarter pleased XXXX to of fourth expectations our consistent and you, full-year showed with priorities. our were execution report Thank our good am strategic

will free further to shareholder consistent the terms evolutions sheet, Quad evolution strategically we of As our sustainable provide we with generate our flow history and to forward, describe accelerate and in We company's strong on in earnings of move transformation value building continue X.X. the strengthen previous each our long-term one. successive balance cash strengths

Quad have Today's and strong our strong their its we create product channels, as effectively As environment, a continue a more to offering these we the company Quad will cases, Quad over to to while and internal part expand past all all more offerings. no clients over consolidator. they X.X, also marketplace evolved growth role the past leverage measure values across content the distribution creators focus that Quad and consolidating and business. industry began operations in our manufacturing many marketing face print organic XXXX disruption. our place and outsource their XXXX. a began X.X tremendous X.X our with incredible disciplined media and remains innovators In for both robust company's a next, on platform. with of we and a as marketing our partner today content XX that X.X Quad way, create talent leading, automated, efficiently in multi-channel shifts across evolution layers added we align better platform. ongoing built highly efficient in integrate, ourselves our to replaces on single In evolve, continue time, on continues has offerings. the trusted industry offering and evolution, greater and provider. covered marketing need this help period we marketers along opportunity In this based founding expanded which many provided years foundation but and today. the as formed to solutions create, much offline. product integrated in value for deploy, seismic to years the marketing clients a established And culture functions expand to resources online them with of our growing larger and In that efficiencies as Over

Our campaigns. their agencies, X.X to drive we strong and engaged improvements. decrease and our reliance Quad continued multiple reduce platform on marketing more effectively helps transformation, have To state-of-the-art backed integrated productivity clients a cost, marketing technology fuel workforce by execute

as way. quality the solve instances, significant earnings our the approach a advance within. goal, to accomplish their necessary to producer, so further take creating building to to that to our quickly opportunities from is appropriate transformation. transformation. to problems. the high we hire disciplined partner, appropriate always, X.X X.X have offering remain build, Key Quad our we industry's marketing value we success and cash flow in our generate cost conversation help The in capabilities and acquire scale Quad our addressing low clients' capability accelerate some a In the about and by the challenges Our is is talent can expand this, To resources to our ability build support

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such financial understanding are in experience. specializes our a a fast to track We solutions where Interactive partner with helps a The as critical we commodity one business agency investment. role analytics, media, other hold our fill whose move specific Rise partner. a companies digital expertise beyond of will partner conversation us help who the our trusted marketing also we instances, marketing professional help gap in vendor and needs us customer hiring close In the offering. clients’ is and

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reduce than XXXX number at client of than more content solution to locations creating increase more which is department. professional possible as marketplace. doubled creation stronger, our focus execution With they marketing we powerful and more the of do and is own In roles content. only addition way, have rate marketing onsite make assets. on in what a them best employees for and agency fulfill sell and more clients XX marketing Together locations products, execution. our working the marketing amazing of more dedicated process helping of traditional now Ivie, the than the able can spend to believe in marketing efficiency services, extension internal complexity an this Combined, by they that are we are serving creative the effectiveness, but we also we client's Not we unmatched we so

with stickiness offering associated expanded our day. and is investors, each clients team our as provides by our side newly side For recurring every revenues and strong working

is sincere and to and and company hard done soon. leaders, onboard we to all future. and you I thanks offering closing hand very our on Graphics' Rene in Dave, Together, X X% alongside I'd are X% In impact my am momentum Ivie BlueSoHo categories. before all to solutions family of Ivie. those it welcome our to and forward acquisition like net pro call dedication, their personally and to I We work. the Brandon, you they've by greeting all for line in pricing also revenue. media XXXX the pressures. and will Slide ongoing warm Warren, bright many at of like in generated from to a ongoing Quad geography. help over Quad shows thrilled of our forma Ivie and the already I for building other have new continue determination would associates XXXX employees look to to volume the extend working. in further significant including our product The business extend X.X positively offset a industry to I would I the want sales grows and to also will have Further, foundation do revenue Kate, helping place. to strong Ivie strategy product diversifies thank incremental to

form our employees' we the company's You they I'm contributed our are to that stock XXXX that vested which and we our to company invest contribution keeping Legislation of retirement taking philosophy employees Tax the by us $XX match, vital future. had how and reason it's another strong care our pleased approximately To return of better to Quad our that continue in how end with helps This made Graphics' future. we're their in longstanding important Reform possible our of in XXX(NYSE:K) in accounts. million to special are in complements of year are contribution transformation employees, making announce a

valued customers that, are With employees to Quad take important and of care make Our will now and the our company's Dave. strong asset. hand They Graphics' a competitor. I over our call most

Dave Honan

objectives year on and report positive executed Thank We're impact continue financial Quad X.X. to our solid We XXXX. pleased to performance morning from everyone. good of you, in Joel, a strategic well another see and

was in free expectations sales, our and line cash EBITDA guidance net flow. financial Our adjusted performance including and with

ongoing on negative Quarter XXXX volume impact no ranges. the sales guidance to sales excluding with down and sales quarter organic Full-year sales X.X% sales to declined for leverage or organic Net by a XXXX and X% sales and through decline $X.X ability also paper organic exchange X.X%. employees, goal shareholders. the debt our After in X.X% from of were due X provides impact as financial a a X.X Slide ratio Quad stated an in already results snapshot to our reduced to invest XXXX. and the X strength our to quarter balance us our full-year we've below strengthens and Additionally, XXXX long-term transforming our lowered leverage. X.X% sheet. of and within industry from where and provide foreign net XXXX, provides declines past $XXX XXXX X.X billion were full-Year billion healthy The X.X%. debt XX% This quarter million flexible sales down times net during healthy pressures from fourth the pricing and from $X.X were dividend compared

investment cost in in $XX our our talent to sustainable as quarter $XXX diligence adjusted net incremental guidance in full-year productivity XXXX. As Joe XX.X% X.X. as the expanded expected driving at and print of million for range organic $XXX Quad came Adjusted services marketing the revenue of EBITDA the to compared EBITDA $XXX sales in hiring the a and to marketing and and to going offering integrated declined decline X.X as expected fourth from by noted, margin $XXX million at our employees Adjusted some services improvements. X.X% Quad to decrease I'm million help reduced for of EBITDA XXXX offset a representing reductions due the million in Due million our overall midpoint declines.

flat Our margin adjusted at year-over-year a remains XX.X%. EBITDA

to the continues the structure cost face our to printing industry. of realities we on in matching team Our revenue pressures proactively focus the

is at drive As we've stated previous to minimum million reduce a of goal improvements $XX cost continuous our annually. to sustainable by on calls least

invested we some transformation. business however fund savings these into back have We to the of

ongoing Free just marketing investing to generated necessary free to XXXX, This previous top XXXX. year-over-year in working We million we leading to every our an manufacturing talent to create in flow of infrastructure generated industry and cash million capital requirements high build increase distribution XXXX the leading, we've improvements conversion automated made and due the cash hold support from and flow foundation in X% represents levels services of industry of flow amount had in driven cash we obligations million transformation. in our $XXX our capital is guidance XXXX adjusted underfunded platform. flow in $XX every XXX higher pleased Free adjusted been we lease pension flow flow net that Quad our a EBITDA and flat capital our we over from Slide X.X million believe rate. free SG&A and our free we've of cash cash EBITDA. of with will liability. our by was $X.XX while capital end X, of in the ended deployment efficient our increased represents of disciplined strategy During investment cash conversion debt free we're flow We're hire million of free also for able at $XXX On investments net Sustainable transformation. see range. case is you margins which dollar $XXX and in or and a expenditure the earnings. cash dollar to a increase lower The

debt XX% We reduced XXXX. one-third pension obligations which debt our by million to with generation net us by Our is strong and snapshot reduced by leverage our capital XX% provides X.X during million XX obligations finished or XXXX. debt by a flow of reduce free that million since pension in nearly cash All during a more enables ratio underfunded leverage we've $XXX XXXX. highlighted ratio. XXXX times. Slide or a or structure, debt than of $XX We improving $XXX

$XX with our down typical the debt. higher pay $XX that $XX year-end cash balance to cash. million cash further finish also we we This year in is However, and excess than of million million use

year leverage and which leverage. lowest times, which consistent our well to times history. Our the represents below X X.X of long-term debt targeting ratio or This X.XX Quad's at is policy debt leverage the in ended is below

to range the leverage over X.X that believe appropriate the operating times X to target. long-term is in the continue We

this it's outside a investment depending strategic on range However, of compelling we may the operate reminder timing opportunities.

Our capital of XX% XX% interest is floating advantageous X.X%. rate structure debt and fixed with an blended

all million the XX, $XX continued investment until SG&A We million have additional services our and price to in $XX.X support guidance, marketing of $XXX X.X guidance. sales We no $X of available Slide from of as $XX forma is to in post X.X acquisition the net still certain XXXX scale XXXX debt for which billion, times million hiring $XXX within $XXX financial acquisition of leverage guidance as integration. Initial talent annual XXXX a which will midpoint $XX cash well and and earned summarizes XXXX reflects adjusted $XX anticipate as December EBITDA. offering. that above we We've transformation. building under XXXX result XX. approximately X.XX the of approximately leverage to pro of approximately in increase to adjusted January the flat price EBITDA purchase an infrastructure our of the a million million revolver potential the announced approximately and transactions approximately maturities are times Ivie net is X.XX $X.X revenue purchase own sale impact includes will year Ivie's liquidity million million today with for rails. guide our our of The million range up when significant to to acquisition our a annual included $XXX of Quad and achieved the was be in of before of capabilities generates in the drives further a of Quad Ivie. million financial The metrics that Ivie and billion revenue portion in

X.X% to continued million to the improved XXXX declines adjusted excluded U.S. the assumptions from guidance organic of a XXXX, by X Our also downward in X X%. Quad requires Ivie acquisition trends X.X sales sales net an $XXX from but change Beginning of also include income declines net EBITDA operating sales consolidated include net of price from gap also organic to adjusted income in that be we net includes sales approximately in volume without pressure The and pension from will both our due EBITDA. revenue. report non-GAAP in income incremental pension mix to

of $XX million reported As to to change, to XXXX easier made $XXX comparisons EBITDA adjustment a down allowed to exclude pension this that we've previously pro forma and result of income million guidance. a of was for reduce $XXX XXXXs adjusted million also

from $XXX We a $XXX decline adjusted at be to representing of the the XXXX our by approximately and investment $XX SG&A infrastructure contribution expect midpoint a guidance in reflects higher in the million ongoing our EBITDA and talent cost guidance million continued very to acquisition transformation. XXXX X% adjusted $XX offset million range. million of from range Quad EBITDA XXXX Ivie for X.X

print always, offset As will productivity industry sustainable efforts continue improvements we reduction sales resulting cost from and help net lower to pressures.

$XXX of the million XXX guidance the depreciation represents EBITDA, lower capital. of cash from taxes interest in range $XX range contribution XX cash the contribution lower adjusted million, $XX guidance remainder XXXX controllable cash the of $XXX to million. to in expense benefit and $XX of from working early This of our capital of includes The $XX of expenses We of range million a flow in cash range million of higher at $XX the and million due $XX expect in $XX million. the less the the cash midpoint to approximately to and $XXX reduction million. taxes range to amortization million, restructuring million million in from free million, range of expenditures Pension to XX to $XX in

we XX our tax Three; Two; from gain we in lower unremitted tax have new net this of increase at will midpoint to reform of primarily to tax will the we deductions by earnings As million benefit fourfold, The carryover Quad we This we we estimate tax to tax did Quad a $XX foreign the Color at XXXX fourth; provides by taxes our increase in deferred are is net The no recent deduction; inherited lower operate liability have to XXXX our primarily acquisition. position transition it XXXX rate taxes, on placed interest in approximately a effective tax income XX%. did on decline earnings. impact million impact and as but relates points in cash impacts rate. significant of realize reform finally not XXXX will XXXX United in the of normalized estimate our expense first; due adjusted guidance. World $XX U.S. rate increase on our States. XXXX EBITDA the limitations from the from revaluing

years. did we deduction, the be as will we we at the same to While past not this take lose level won't in able as deduction

million look As We've ways guidance a income lower with benefit a value. we excluded will drive to of contribution result employees in as of alliance and retention pay the employees. This X% EBITDA from to contribution base our shareholder created of of adjusted and Part this Quad/Graphic will the continue charge in way to which The to to by create retirement of shares. our which we redeploy employee's non-cash X.X growth, savings this our through back $XX into taxes, especial continue X more is financial as XXXX be to a represents drive their adjusted component that million is net stock shareholders special the of the our EBITDA. at and tax reinvestment reform, a also approximately ownership. of of of in roughly represents of not stock. tax eligible interest benefit Quad A is transformation our development our greatest transformation benefit invest invested will assets, reform the and key

$XXX to we which our share shareholders. million our also from key program be which continue especial our XX, in offset part dividend, to the of repurchase value retirement continued in way is We to Slide shows repurchasing dilution as a opportunistic impact return help our to this commitment will contribution. shares

as We our and payable quarterly is flow on next March cash dividend shareholders to $X.XX of yielding X% XX, paid of or annual represents dividend our March of the share guidance. at XX, record of dividend XXXX. per our per consistently quarterly a midpoint approximately free XX% of $X.XX XXXX only be a Our share will

marketing future We to effectiveness. spend process transform and clients for as that complexity, improves to more about marketing create our we efficiencies reduces continue are platform Quad's Quad excited integrated value to increases

our we the continue to and productivity on facilitate back like hold low cash to earnings goal to to adjusted producer with questions. forward strong your manage industry's consistent taking And This move generating our and EBITDA high and XXXX, to focused I us our flow. quality, now the call as in that, turn we allows cost will position As on margins. remain cost line would operator, the free who maintain

Operator

comes Please from you. We'll [Operator Company. the Sidoti Instructions] Dan now question Thank Jacome of ahead. question-and-answer session. begin Our go & first

Dan Jacome

Hey, guys. How you? are good morning

Joel Quadracci

morning. Good

Dan Jacome

Okay. Thank you for time. the

I in the 'XX a you may one have EBITDA adjusted said correct? it, missed expect couple change factors housekeeping, questions, first for income, So, the of the is you think but adjusted -- that in I just outlook it, that pension

Joel Quadracci

Yes, it does.

EBITDA. out of we $XX pulled income to also So, on had for our pulled in pro been we've historically million 'XX. our basis, guidance $XX million That's it of a XXXX. pension adjusted And of forma out

Dan Jacome

those that And different? regulatory from the missed are or tax I something Okay. as reform changes well.

Joel Quadracci

pension income below was forward. it out just in income it that No, going pulled that accounting income and operating put pronouncements of change operating out really the

Dan Jacome

Okay, all right.

Joel Quadracci

So We [ph] too. this operating it pulled the same-store we've adjusted of is -- out EBITDA income.

Dan Jacome

Okay. I'll going on forward. next question. Yes, brush accounting FASB my up

if a us Ivie much before at flavor lot. this Just information as trying juncture some was Can find dig for the couple to bit you call, could on their give couldn't margins you guys or more versus I color the have them base. you and up the numbers, A business, what how their computing up color little stack of been discuss you they years. at can't last customer on what least, in

going was mentioned what have lastly, Quad. positively think what much And revenue from that customers other segments, I like just retail, Ivie that excited streams how you you they really then to impact or curious mentioned you about. are retail,

could that great. would So be if answer those you

little questions three So in there.

Dave Honan

our would it to But talk come of out I'll acquisition. little about we Thanks, dilutive in margins. this Joel a the I'll Ivie turn and more as over start initially a perspective, Ivie to Dan. from scope financial

made a we've an us the reduction. the cost where of within the space industry key acquisition seen the very top driver typical acquisition is a you've through our However, for acquisition, in that, much growth consolidating improve acquisition make where is driven to us, by like this is line. margins not past This

what so now of well beyond which synergies to of revenue would believe, companies we're the we this fleet coming we our for is And right put as the business, averages margins combined going out ultimately, look together. improve power two

Dan Jacome

Okay.

Joel Quadracci

as so and into to And be rest clients there's your in how Joel. about what this helping services more You in to also effectively. the the it. create be helped of of And X.X? in offline, that efficiently them X.X lot to typically that's and the why zeros a market revenues attached going getting it's of of But our take online media campaign, of spend, we we better a questions, print And does more kind whether And we are to the our also help it is is revenues, have people account execution ask about, more part because incremental margin has well, revenue deploy print. sector clients. and that that saw to going 'XX.

over impact XX plan, to print, to that's agencies vendor, online to our But consolidate partner. time on operated really include clients, replace been and that Many will in-store whole radio, and to for the really signage, TV, the So as a just created of help how it'll embedded Take through a a include but it not get their have like a XX customers, hole that's different will execute does continue back-to-school et with as agencies as many it so, search, things. and cetera. it. use campaign, include will our campaign, as is

a help can come rid as those as with help measurement having with kind to your could problem we're at of we channels, why, is it doesn't what today. full waste And Because medial There that and in the think through of we where, the There execution, it, agencies therefore very of such of all love creating circle all exists. so a know. it streamline different we digital different really tremendous get actually to We as because effective it's look work. of hard a approach And understand what's spend what disintegrated we ton the many to how marketing waste use actual amount of in decline But of approach the measure overall a partner, when. in and ROI. is really and lack is works of what of lot because them of and them is medium. media a sort we spend you doing come ways that is a of where digital, measurement is working and

one very of generation the short record. guys. became and all then example, are one. them helped agencies in planning in-store went and the who placement. but XXX the down printer in to years. through pervious for guys, more nice And media to now when order, not sales agency XX showed of ads, And We'd big we we in-store regular guess choice so They many both that what, we cetera. retail the next X.X were place retailer for from about capabilities work newspapers, them have one in We in the sales sized things, traditional we, their We their whether it's while increased often flat in and of down not has proving retail inserts, type et of over the the of so the stores, one came small signage, to

have people lines managing to in and been, can in, is of but in they get I That when whether look it's come of, disrupted look to that a power they in-house pressure when with different really are figure greater them. that have XX key whole are marketing that's today we my my deal in with where Ivie disrupted, the as product further with that the way. creative people take be. different staff because be or not Quad/Graphics the extreme are also of us, And being When whole at network can't magazines a and got this yes, staff we're help over understand disruption of important under to to to do and be how manage And X.X have will you But to being care seeing what we're at retail, being come wow, this volumes under don't be there's So disrupted. plugged or they have what's realize I is concept pressure that them. taking I might out things better execution. and continue agencies, or working. staff, and working opportunity they a into from

play four we walls. scalable walls that Now have your four have to all within your be in resources don't at

important Although because being of really in is a on. lot there's that goes communication there

over they've a And by just be buying. beauty for is that And they've people, "Hey, gentleman proven they rest the true do have Warren of media a in and of that gone done to and is and well as can way way, of or as quality take so the family production Warren partner. just Ivie are family from let's his the come just, all creative the person, -- the you"

do digital, public or doing they relations involved also media traditional, broadcast, but they placement buy in communications. and things buy then just They'll buy planning in concepts. radio. packaging And get they like they even they're So we are like

cost people you're we them to that resonating, which a is of million important going a away, to more for more on this of But you then all the is so really Retail opportunity or understand the the do that customer maybe marketing disruption but traditional being channels will our war. assets, the are the content people then need marketer. very years. accounts. we are that through. I of many important is anything. and nothing has so we've the with think deployment cash XX not is that four the could I business I and disrupted. going so at what most magazines we not front of Ivie whether not who versus and effective are for $XX is partner further. is content for spend win marketing print more talk that scale but We world the about ultimately measurement believe register work, need walls clicks services become they truly the more And and that's even the buy. who a why from to demand, to the much a to measure going effective But ones build the rings from away, have I'm been the need agency doesn't on with it to done creation, that And We And sort lot someone's clients. overspend needed are And their We've the works that's set. ones because measurement. win not of customer see is that as over on going what inside become streamline measurement very who have with

And so very a this not new one relationship, understand well. it's is we other each

need we our very that client base, people based demand. straightforward values. and and of up are the We with sense on there's urgency a have cultures to keep strong in And

our And acquisition not about as just solutions this an print print. stronger so a of this of but company much a just to staying excited this who strategic own acquisition, concept we're happens add-on marketing long-term around, part is also because becoming very is

Dan Jacome

you. got a lot appreciate There's Okay, in there. it. I

Joel Quadracci

Yes.

Dan Jacome

a dramatically think see already prospecting that I'm different is need guys on the cycle, business like But what know you just of we customer digital your to anything Rise new from like… like versus Ivie it is in on Like marketing like there Ivie, for end, there place? trying sales or to is any

Joel Quadracci

Yes.

relationships So, staff no, they'll typically someone's putting four walls. you're within because be long-term

Dan Jacome

Right.

Joel Quadracci

that of mouth organically word their mostly of thorough successes. grown because say they've I'd

do within experience and talent other of side, movement going a huge actually to they've list as of they other going industry but media incredible have word to of not or On in then not huge of able for been packaging through whether from this just note there's companies cataloguers integration and So brands, the world looking CPGs be people same our the them they're I to their mouth. of all that and a lot retailers as think as opportunity or is in or markers magazines logos we the well the and CPG the growth channels. or whole

already various much to we be for Ivie's all think what sales more front a concept actually the relationships table without to have we so, is logos leveraging the And I bring with. strong aggressive it to

Dan Jacome

I missed contribution XX fantastic. acquisition revenue provide deck I just Okay, you on the the And on the that saw Slide do from that terrific.

Joel Quadracci

Yes.

Dan Jacome

Okay, you there? of peers on favorable. yes, business share looked one looked is good, it thoughts that will much to know any don't you but on this be will than on, of more level industry -- be in too high the expected, heavy I so I digital you anything book hop upon dollars have kind meaningful and it's of that last you side know continue here can your share invest I question good. pocket Do a want book of Anything the to can business

Joel Quadracci

Kentucky very Yes, is runs investment produce assets past this because no, our print assets has digital the push automated such and over that there digital is and traditional do plant gone need book significant of inventory really we could a the that's to investment in We I a love we we made it. significant digital year which compete rid years. and industry it's why effectively helping of need down made the WordPress today the past presses in with because in so what getting both the big publishers about several and traditional length

effective demand, even do getting we high low to without for worry have to being on versions down is our huge the so having the digital volume from to do send assets ability we about but bridge more an important pay depending to most the client assets has one either seamlessly sometimes the initial volume can on the it. order but them same we thing traditional all digital we really economics then traditional the gotten cell, within have the to to products with but So strong the is got able that totally you've gap we a one sell of do like have

importance And customization at so, and and we look and going see you the away, be book that quite clients, world also the is personalization. in for the we to inventory obviously but it's I can think certainly over the growth our they're years not so able they bringing make rid more when is efficient they're everyone of frankly it get start that thought

Dan Jacome

fantastic. Okay,

thank now, very I for think out I'm of much. you so questions

Joel Quadracci

Okay, Dan. Thank you.

Dave Honan

Dan. Thanks,

Joel Quadracci

Operator?

Operator

Our of comes Please Bill ahead. go Baird. next Mastoris question from

Bill Mastoris

little Thank still you've now given fact you out very end M&A realistic of much. low Hey, the things your this how that of the for kind our ratio. businesses activity they a first out and leverage question. are of fill price what of guess you, might multiples gap that the that that with that's you about see Dave? of start target And into to of their very a can raising one maybe iv kind with sellers bit bit at I'd more you're I like additional little we type plays with sell rates to my

Dave Honan

Yes, this is Joel.

to Let answer that. think the of We we to now look on but Look, spend pretty we we've of a demand continue the a it X.X me strategic buyer that either I much partner. will opportunities will continue fill little for lot bit depending gap. build think help

the do about side We to to know I make know down. but and out multiples healthy where two say very platform. probably I still consolidating how multiples do be more consolidation that continue a to that think really capital about to to out can know two deploy the over a to will think more see there look how X.X We the of Chapter we to that we at I they've consolidating not on consolidating evaluate but of come secondarily them. then to the point as us also lot you'll we that side there's opportunistic point I acquisitions is and is opportunities So I'd of for would people how like looking so Chapter it. continue and acquisitions probably and that that think on strengthen

that marketplace flexibility so up, our out So the over we is I what opportunity sheet proving have always your depending the consistently his time that range we job a I'm want do pleased and need capital to And incentive done options the with we excellent we've history balance as or the I long much in considering very what pleased cash are like an going okay think we're that industry there's row gives it what's demands lowest we do done that as team back that. company, we to now we've the year-end us we being above we've our so think is done of to the Dave? being do which at down and point then, very and on and when acquisitions at come basically and say talked we're Dave with a feel

Joel Quadracci

That's acquisition about try deployment with I well in heard a said. had And us we Ivie, you very a our to capital what be for great talk in with opportunity we us at think, ability to also the comes We industry. the reduction happening is talked disruption Phil which repurchase did really not balanced of shares our all only script despite buying times. were debt do that what But the we lot our this about. also at market in during and we opportunistic and dividend XXXX shares opportunistically with in and XXXX so just

a will as – out we and this deployment. continue you sheet think, disciplined of on of I maintaining So policy in that our balance very see balanced will to consistent capital

Bill Mastoris

you. My relates Thank also second question very little bit helpful. That's a Okay. Ivie. to

books, to flattening seems that kind long have you if as all at least your and are seems But such in curve, of you If sub margins segment the right to seems many going be though Ivie correctly, print products. wondering as which and you decline out. to it's of better that print we to heard future actually turn going curve over half, supplement

and seven and top give type and number just out on Ivie, mail. could you us some would catalogs maybe major magazines retail expect even that we or top even categories research color decline flatten maybe might is organic maybe see If you slide going to that we that up. line of outlined some of with might be four on maybe study some to direct some the the How,

Joel Quadracci

to we it's of are scaling But inserts, that works in said like pages. major the to magazine we and people to continue continue see a stack are point the ad I scaling the be to what of print is services of away, you doesn't not concern, but that within a pretty print and again we where retail and Retail also other are but inserts opening revenue X.X, people is the disruption again guess augmented will underway stores, two closing Retail down see, areas a people which go there going you incremental and lot there. work. obvious show that is as it's so with shakeout Yes, offer what operations them.

think to of see think if off to like will will. the including magazine have frequency ball, and are the catalogs, timing at we in the some I to not. and going long-term, them a a downward When short-term they see XXXX was on also it's mail, growth are and uncertainty of we at and plan and continue But a we when personalize don't of I crystal I experience to I see to those that up both areas tittles reform really going but are narrative it on we've will within feel, who the say, But you DM this incredible. bifurcation of people there that the of with down specifically have that with in is is postal look the which you sort DM paper when some on not see, almost day. we get I great front we just then, a combining help But magazines or you crappy everybody. pages be specifically space, start use I'd seen which effectiveness are will there you decline really have standpoint, always are is from transitioning experience, on built But are survive. an and cost at into book the a book some quite some up area every data mail. area areas our retail direct we you if and direct you is have guidance focus. X% to or thing to effectiveness think so I postal data continue consolidation those of growth, lot pressure start you store, of or you you change the industry, pressure And may to in all X%. which to our see on people use pressure increases Those as through, as a actually because try think you the to working some say look the will same bills continue a

mail lot go So people be Does there segment. packaging space one, that in then, to seeing direct is a anything the we grow we reinvest are there? are we -- within of happy And continue that long-term. we place smaller in in will obviously but the a way, some

Bill Mastoris

there would the I follow-up catalogs? care of thing only the that, to actually No, for and retail inserts may kind forecast a throw be to you,

Dave Honan

know I'd You probably forecast if world right I in today the be disruption, what, Vegas of could now.

So cautious that. we very are about

of on impact detailed whole of gave pricing our we think pretty think I and across line, units. we the from volume what talked general split So is fleet business we guidance in and top the

declines about talk X% a much So, of too you think an is and line detail, just on to go basis. elements into overall each but especially give that's we product of forecast, X%, ours, those like net know, in I industry to volume what

the run… going on of long across kind what's So

Joel Quadracci

plants think different each use they thing hit equipment. the we all to point run different product they have as because to, with the actually lines possible; other, requirements, I specialize is And don't as much our We the plants. we and when another way

and put plants capabilities that And have so, we have you as plants, see retail catalog outdated consolidated place. on closed magazine suddenly in

kind manage that plants the we point, it, the capacity versus of view one Dave's portfolio offset actually in to we because and so, of manage decline other. to that's happen And how the a might at look

Bill Mastoris

appreciate the do Okay, all I color. fair really enough.

Joel Quadracci

next Thank welcome. You're Operator, you. question?

Operator

conference over any remarks. session. to concludes back I like the question-and-answer turn This closing would our to for management

Joel Quadracci

employees you asset. us you thank be I'll to Well, management for a for down in Okay. the couple at Texas. headquarters in joining actually and your creating thank and the IV to employees know, you today, great hours Quad such and team specifically of all a

see Thank today. that, with so all you. you we quarter. And will enjoy next And

Operator

now today's has Thank you conference for concluded. attending presentation. The

You may now disconnect.

Quad/Graphics (QUAD) 21 Feb 182017 Q4 Earnings call transcript