VRTV - Earnings call transcript Q4 2020

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Operator

Good morning and welcome to Veritiv Corporation's Fourth Quarter and Full Year 2020 Financial Results Conference Call.

As a reminder today's call is being recorded.

We will begin with opening remarks and introductions. At this time, I'd like to turn the call over to Scott Palfreeman, Director of Finance and Investor Relations. Mr. begin. may you Palfreeman

Scott Palfreeman

take and prepared everyone. Sal remarks Steve we our Jack you Abbate; today's will CFO, will that After hear from Smith. questions. good you On morning call and your Thank our; CEO,

in of management Before in statements results are expectations predictions forward-looking. today's that by future differ beliefs, made of intentions, Actual the the we a regarding; the note begin, and/or please material some manner. presentation company could and/or

in comments measures cause the Relations includes, of annual be Additional the factors statements to measures and the section today our which limited results in in the information in Sal. posted those the company's This forward-looking to US non-GAAP Investor our this report the contained from filings. I'd turn to to at found at could and morning XX-K but is in website. applicable the end like included the in GAAP XXXX section included that financial Non-GAAP Form call slides. these described the in can time other to is veritivcorp.com. release differ news this not Investor on risks SEC and is Relations also reconciliation slides are and over the are of our in The At presentation presentation measures of issued

Sal Abbate

us morning. this Hello joining Scott. for you, you Thank thank and

related responded minimal The were our the available Veritiv's office-based capabilities have our workers on how early and to personal team remains ongoing has employees sanitizers the to our results, essential the for our safety importance. share organization financial work-from-home disruption brief I'd our review necessary vital organization Very ensure our grown I update and to customers. to of of equipment; Before health facilitated services to protective all personnel and resulting to IT the materials like customers of ensure responded expect. The pandemic. from on, challenges quickly for a

remained operational with no have disruptions. facilities our throughout pandemic service of All the

third pleased which safety our We commitment that the long-term straight year the improved for are internal reflects safety. report to metrics have to

market employees flexible their the In of and now have dynamics evolve. to net remain to a fourth company. quarter performance, EBITDA quarter Switching the history of we with of finished and our continue fact record review customers recordable levels as XXXX income injuries our to needs Having responsive lowest the full accomplished of this for in employees year. the record and and both we in adjusted reduced all our to

cash and of part free the significant a $XXX fundamentals market Deliberate improve healthy and year in in and manner. to customer, business leverage been of Despite our sheet continue enabled strategy. record company's with our for flow finished to full step-wise margin also These million. have balance volatility We headwinds, an of choices changes the segment debt strategic expansion mix have a lowest the history. product essential our

quarterly bad pandemic-related quarter, the reduced lowering again On tactical the challenges. accounts These favorably side debt have we and our years, customer expense debt receivable portfolio efforts in impacted earnings fourth have expense. quality improved liquidity our despite the of bad recent by in

the full prior a on the best years. against becoming solutions executing expense segments in to remainder the of XX% performance services packaging progress significant team's the the XXXX strategic XXXX our priorities. debt brought products, leading value-added provider with and and short of in In COVID-XX, towards pleased vision I'm of down Our by their our year was year compared despite four of bad myriad challenges

performance flow. call and I'll key segment sheet balance details we will cash for on then into consolidated the Steve As fourth I the to highlights. our and turn quarter and cover our full more move results, year over results, business earnings

trends seeing XXXX After that plan, an Steve's quarterly As we on within addition the of dynamics. year-over-year business, our our in the discuss provide anticipated the and market projected we update results, I'll restructuring to comparisons. comparisons an are comments, and sequential we'll performance usual XXXX on provide outlook

Turning million, our quarter, for adjusted over XXXX year now full full year. XX% and fourth a EBITDA was reflecting the year prior results to increase $XXX

Our X%, margin and percentage company reached than highest rate in point the last one approximately which adjusted better EBITDA was history. full year

sequential, EBITDA in results growth improved and quarter adjusted and positive fourth Our were free consolidated flow. revenues, highlighted substantially year-over-year packaging cash by

quarter of quarter fourth improve as adjusted comparisons second as meaningful EBITDA to the contributed with in And EBITDA and lows to quarter. versus in fourth trend reductions rate. margin favorable corporate from the Our cost reductions, the operating contributed quarter and along adjusted leverage better that the continued of both Supply revenues COVID-driven of and quarter chain, XXXX. improvement dollars sequential XXXX the third well selling expense to fourth

quarter, a fourth the adjusted As consolidated was prior result, XX% million year. EBITDA a in over $XX improvement

basis XXX period. Our the margin improvement same an X.X%, was points adjusted EBITDA was of over approximately which

quarter, improve of continue saw half growth XXXX, to resulting day Our sales year compared fourth compared X% period. packaging to the prior the demand X% to during segment third and in of second per quarter of growth the

customized chain capabilities drove specialty and cold strong delivery, processing solutions sales and care retail, the health food comprehensive sectors. performance Our in

continues the sector's to e-commerce seen compared fourth levels. prior improvements Rigid for pre-COVID pattern accelerated have we which that double-digit manufacturing to We growth sequential demand revenue growth strong also order industrial packaging participated the drive And show segment, to in return The quarter in sector experienced sales in year. to growth. trends. packaging yet not the end-use continues

packaging has further We continue our our investments pleased to with packaging, be offering. rigid in product which expanded

our review will more detail. in Steve financial Now, performance

Steve Smith

good and everyone. morning Sal, you, Thank

are exchange speak differences. these excluding note, As performance, we to the net the reported foreign count please any sales adjusting core we to referring that impact results when net the of review for sales, day we and

XXXX. relates same it in of quarter day had shipping the fourth count, As fourth to we quarter XXXX, of had the the days number we as in of

extra the day in an first quarter we XXXX. reminder, As had of a

shipping XXXX. in full one day we the than So for year of had more XXXX,

Publishing review overview our have the and sheet quarter Veritiv were will fourth earnings the and having segments. year Consolidated XXXX trends improving headwinds balance primarily day -- XXXX segment XX.X% and shipping statements. core Sal than sorry decreased net consolidated sales from to from due results of sales an fourth provide the market Packaging I X.X% to of consolidated the consolidated down quarter cash Publishing Full the quarter less one XXXX. first will the of the to sequentially sales With were quarter core Print increased First prior performance, and in secular performance due quarter down the sales period. third and net well XX.X% COVID-XX The core declines XX.X% flow industries. year in sales as were were sales and our in as down from both, and XXXX, XX.X% from pandemic covered down

were Moving fourth specialty Packaging processing up in core prior now to sales to sales sectors. were X.X% revenues year. compared in X.X% our quarter were growth delivery retail bolstered up and by Packaging and quarter, the food segment, net the this

invest the double-digit continue the We prior in packaging rigid in our to experienced to year. business, which compared in sales quarter growth we

volumes $XX.X sector the to EBITDA million, quarter to accelerated yet Packaging customers compared the also particularly outside diversification. North presence in the trends XX.X% improve packaging continue and source America, Our in have but growth been to adjusted with not was returned a in Asia has fourth year. of prior industrial pre-COVID our increase Sales a of manufacturing levels.

Our sales change operations and coupled have return growth with margin. driven to step adjusted year-over-year packaging efficient a EBITDA responsive in

were and in the X.X% quarter EBITDA a increase related the fourth X% year to compared EBITDA record improvements, $XXX X.X% improvement XXXX. from of Packaging compared X.X% XXXX down of to sales to year Packaging's pandemic. adjusted compared XXX to full sales nearly points core the year in largely these was year year. Given were basis XXXX. margin fourth the adjusted X% EBITDA to for market prior Packaging's to and net was XX% margins million, COVID-XX the due all-time the prior headwinds an increased quarter the Adjusted down Full the for a high

and Facility XX.X% were current COVID-XX. our to dynamics Traditional sectors core shifting from segment. net sales continue period. prior depressed down related were to the quarter sales away-from-home be fourth by Now, the to year down In XX.X% market Solutions

hygiene-related $X.X and we Supply which XX.X% model supply Two lowered years. last market saturation handling segment significant changes was million, which choices the Solutions prior to the lower improvements over been by make lift PPE improved inventory selling However, business. strategic Solutions expenses. substantially related in is were quarter made in of more a segment Facilities our the due generated related made sales quarter for improved, in and meaningful cleared over product taken time strong. than to efficiency have back categories. as improvement and operating orders profitable end have COVID-XX personal its adjusted this the choices These The continue complete year XXXX. areas sales of of on EBITDA Fourth strategic remained to The delivery. charges chain equipment for select operating gross and fourth These Facility a protective margins products. these frame costs two

down sales lapping strategic of improvement is model performance the this efforts XXXX. choices the to $XX.X sales The were compared million, effect an year-over-year reflects XX%. our at XXXX on Despite sales which the operational was net prior business EBITDA profitability for efficiencies. year. the of in and year Solutions XX.X% the adjusted So for decline through Facility core to concluded of improve end the segment's

period. volume and and to from The Fourth XX% prior Moving its fourth year net fourth in million has improved -- margin quarter X.X% net XXXX. quarter X.X% down of with adjusted Adjusted quarter now costs were in to core the Print to business quarter the adjust continued align quickly was of EBITDA $XX.X from EBITDA and to fourth the roughly the both Print trends. segment. XXXX sales

sequentially the decreased but the XX% prior due improved ongoing quarter decline Publishing declined $XX.X fourth EBITDA For and from of adjusted expected quarter the was million. quarter XX% EBITDA was net fourth full demand. the $XX.X from the in Adjusted grocery the which book was effects year. the declined to XXXX, XXXX was year. in sales better COVID-XX. than for year third to the XX% due year, and in to year, in the Adjusted million XX% net the both than X.X% for prior and margin both Print sales core core both from year. EBITDA slightly core secular stronger sales Net prior

as in quarter to continue segments our of Veritiv play adjusted in an quarter X.X% X.X% the EBITDA role margin of and and XXXX. the was the decline both fourth to was As market, $X.X due for quarter, EBITDA effect in the secular Publishing million the of the with our ongoing segment, Print for revenue well Adjusted Publishing as the XXXX important Print improved for lower while from fourth COVID-XX. to customers. The

years portfolio Our several actions minimize of impact quality of the bad over the the last customer improve to the debt.

had to performance significant We are year bottom segments these market to line adapt in sheet changes asset-based the and approximately against million of cash to end and lending balance million. the pleased capacity available this continue Shifting facility volatility the of space. rapidly statements. December, a drawn market now $XXX borrowing will approximately of $XXX of At with had flow the we and in

ABL X.X in the is reminder, ratio X.X sequential inventory times, EBITDA and the net improved by and times was debt the quarter, of facility quarter. As prior end the receivables of At the from to from business. backed of adjusted XXXX our down the December a leverage

$XXX year-over-year XX% to Our current declined debt, has including long-term from $XXX million not the million. portion

For capital generated ended million. expenditures of flow million. from approximately the of from $XXX flow XX, year cash approximately cash cash $XX December Subtracting from we million about free flow $XXX was operations operations, XXXX,

ongoing back due the strong improve to strong primarily I earnings cash now over Our and to free working efforts the performance call will Sal. capital. flow turn was to

Sal Abbate

Thanks, Steve.

plan to the move in and last our in later to impact The provide announced for outlook July restructuring update the response XXXX. we an questions, on plan your was year in Before of to our needs. was and updated like we the announced I'd originally designed year that to business, the in on business Print the I'm Publishing our better industries. and the of structure align The target. pleased including on the ongoing on schedule with cost restructuring to pandemic plan and decline secular say acceleration plan COVID-XX is the

expect to substantially this by plan the restructuring this of complete be We year. end

year, for revenues prior expect by segment. more As be to flat comprehensive to a we performance to outlook XXXX, move relatively consolidated with varying we

impacted unfavorably the of is half During the all by with be of revenue first to year, the segments, pandemic across effects exception the expected of the COVID-XX packaging.

full factors, the the companies on $XX these in year expect we $XXX million second adjusted range of taxes XXXX most the $XXX million like economic to we anticipate EBITDA However, of income in and before broader be a to rebound in to range for million half the year. Based of million. to $XX be

to Our strategic year. continue results will coming the initiatives in the drive

margin investments remain and bad approach on will management debt. We focused to disciplined in a and high-growth sectors, cost

XXXX We expect free earnings million, discipline. and flow $XX to by cash driven continuing be our at working least capital

continue We to to will growth for in expect and $XX expenditures year million. be approximately invest capital business the

today that has approved us in and return of a program, a ratios, announced through of $XX and business program. stock flow cash capital million combination also repurchase We leverage Directors our record the a improved Board reinvest allows earnings, free low now to repurchase share

This accomplishes we repurchase are questions. investment, our as Board Operator, committed return as now of capital of concludes to We well these this and program objectives. management. stock ready team initiatives are on management remarks. Directors prudent Our highest to the both prepared with believe take

Operator

Bank Instructions] John with of [Operator America. Babcock Certainly.

Your open. line is

John Babcock

thanks and the morning, out, taking Starting I if for begin was questions. plan. restructuring could Good you my wondering, with

Just be to what's generally, talk done about left there?

Sal Abbate

Good substantially This Sal. comprehensive morning, changes that beyond. are play in pay XXXX those and And many John. done made announced last had the year for program we facets. restructuring some had and We is and trend

consolidations also expected accomplished of summer component the -- coronavirus last force We closures with third reduction to footprint. solutions year. And in map this the we component, that announced last about from balance that and year, of and and the largest is then warehouse facility third XX% our those was complete. And to future are the for packaging location really

million this we anticipate end for of $XX program in million so will $X the or XXXX less And restructuring part most we by Steve about, complete year, that don't that XXXX. the I know

Steve Smith

That's Yes. Sal. right,

John Babcock

far All pertains was there. then so the to packaging it to about, in containerboard really XQ on the right. market side, seeing that what is as piece, just to Thank continuing growth. you. wanted is sector what And you're ask hearing I another mean, strong particularly I the we're growth see in

seeing those if also, was I to could some what you're so talk you paring as color And well, that? other And of wondering, more packaging around provide then able if your about that's substrates how if are might you be and to? and

Sal Abbate

What Yes. John second is in half I'll it of that, the started say last year.

we level in the in quarter the results continuing we saw the third at and quarter, high And shared And the see with so build first we the momentum do fourth obviously that quarter that this morning. a trend.

across, the are broader And that in either depending at, so the we really haven't seeing areas the reflecting substrates. is do or market or of part, on for dynamics that And they're dependent I we slightly rebounded. you're about where end-use some aerospace all maybe just that category. large mean, tracking market. the like market most certain the But segments yet have on we are ahead customers

John Babcock

various following seeing been probably announced there. well you've we're of across fundamentals out as market grades some inflation number different then there a And increases helpful. been price the supply-demand have the as of closely very That's and given

being also the results? With us announced and in in can you increases through how remind these these just grades paper to containerboard, flow price

Sal Abbate

really John, start and some Yes. product to most then and as corrugated many commentary notably we input seen recently, paper Yes, Steve, freight. increasing lines, some it's you you pricing mentioned But add if driven costs I'll And color manufacturing resin in our the have pressures there. of grades. for including and most want of by

because have on see our increased we months fleet, and months we the freight cost then our suppliers last able And We manufacturers do freight seen. price own in and XX that discipline management will both over have or the XX to -- pass we've our customers. furthermore, don't with with some and these quite increases accordingly, our that been the our of

that customers. plan, So plans but we reductions of do most that to a do on as have onto inflation the well of combination through built our passing into have cost as we weather

Steve Smith

And John --

John Babcock

Yes. Go ahead, sorry.

Steve Smith

see add to going in was like EBITDA, necessarily rate in is to. inflation impacting the the any and that LIFO adjusted guided so we of But of greater an adjusted to commodity it's plan, EBITDA. it see extent would anticipated the than generally, you pre-tax form that, that income I you impacting that not the add-back our the we to of products

John Babcock

helpful. That's you. Got

of on Just there. we side heard shortages that is resin mean, the have that something Veritiv? some quickly. I Is impacting

Sal Abbate

We at least seen have today. not through

the We our have up hit. stocked not before any to winter have impact seen by basically driven ability storms

that but of the QX able impact expect John. of we But down And to we extent locations. some we through the haven't were seen impact were materially February, down. react the performance. for part, don't We in And did so were our storms to our to to see winter customers the we impact yet, it that to our some most

John Babcock

more on Okay. talk about Could a you that impact little the bit performance?

Sal Abbate

southwest half our conditions markets so small down again But shut the Yes. And the handle overall we in open. were to and It those was a in customers not ice closures particular a business. are if relation deliver Southern that storms. that ice we'll and typically, equipped Tennessee through the of impact impact about the in But markets, to that the dozen Arkansas. snow because our locations the Texas of road a saw are there, some market

John Babcock

direction your inflation how How at perhaps least side I about some And inflation are market from take thinking of XXXX. you may we are the hearing then baked into from broadly what next And and the is that investors guidance? just more in on things. mean, conversations about that?

Sal Abbate

freight. including So a I built of we've the into some mentioned, mean, inflation got as categories variety Steve for budget

us pass-throughs customers, mentioned improvement the just secondarily, as reduction. our our ways most again I earlier allows then is mitigate continuous two do our that; around cost ongoing to and through for discipline that; and there part to to so And one

to we that quickly that keep not this only so also continue costs, continuous out but and in continue areas. have conjunction of program inflation up. our last the year to corporate administrative launched and And more segments But with we in program will the ramps should reductions plan cost restructuring ourselves supply depending front throughout the how comprehensive chain it in have have year, not selling improvement fully maybe a in

Steve Smith

fuel And in would the of even John, we area, it that seeing if that for to kind we of not that we But that to impact an that were we're in not also the we're seeing be would measured any add extent quite yet. us dollars inflation $XX million. millions

that risk. At against movement, So you'd could would rising later fuel go there is extreme we in possible like. we costs. an some place detail And into that have protection if

John Babcock

I just Yes. That would And before be turn great. last question over. then it

it? You above be the CapEx XXXX are that above do Can a a about guided -- talk bit some have driving to you levels. of bit just investments

Sal Abbate

of technology the XXXX. Most as in investments enhancements be That's will technology overall in grade IT warehouses well John. will for food where capital enhancements customer-facing those the side. the Sure, our across expenditures board be on as predominant and various and

John Babcock

Great. for the Thanks Okay. detail.

Sal Abbate

bet. You

Operator

further questions turn final this Abbate at remarks. call for no time. Sal to are There back I CEO, over will now the

Sal Abbate

essential employees of Well, the ensure thank protocols place XXXX put in ago, necessary to environment. precautions the to I'd of one and of at About network questions. year our a time, a to significant thank home, efforts our Veritiv. we throughout year employees open in our a our employees, remained year asked as our changes for uncertainty all move their you diligent continuity historic our accomplishments virtual have work to to chain and efforts well operations health employees supply At at all and Well was for safety for as our throughout XXXX. our like pandemic. your Due office customers. the showed the adaptability. same of working employees to our in we and resilience service of In widespread

with safe the will you. we again for quarter Please forward look and we healthy needs customers you before, you on of and the employees our to talking Thank stated results. year. and continue Thank stay and in call forward May look adapt joining review when to we to to As first great another us our XXXX we today.

Operator

This We participation. concludes financial the Veritiv Corporation's conference full you call. fourth your thank XXXX results quarter for year and

may You now disconnect.

Veritiv (VRTV) 3 Mar 212020 Q4 Earnings call transcript