VRTV - Earnings call transcript Q1 2022

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Operator

Good morning, and welcome to Veritiv Corporation's First Quarter 2022 Financial Results Conference Call.

As a reminder, today's call is being recorded. [Operator Instructions] At this time, I would like to turn the call over to Scott Palfreeman, Vice President of Finance and Investor Relations. Mr. Palfreeman, you may begin.

Scott Palfreeman

good and Vic, you, morning, everyone. Thank on and our joined today's call Abbate; Sal CEO, our CFO, by I'm Steve Smith. After by provide share business financials. my an update on will remarks, first performance Steve, details more followed will who on our Sal quarter will comments, providing by revised Sal update a After strategic and conclude Steve's brief outlook.

the your then questions. We open will call for

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

Today's The Additional presentation the presentation the Scott, information our This Investor be time, to Relations financial GAAP found good call Sal. end Thanks, everyone. slides and other XX-K contain includes in Form Sal described non-GAAP that SEC I over of will in reconciliation morning, measures of call those could factors cause At this Abbate website. results also XXXX morning, section and the the This to turn forward-looking and to of publicly our and will are the seasonality of quarter our the reported results and almost first year the to available the financial our differ the reports comparable the due measures. across we Veritiv weakest metrics slides business. from for the being record any of filings. contained other history our typically key all in non-GAAP in quarter the despite quarter of can exhibits these risks measures company's and statements filed is in at U.S. included SEC. with company's

segments first impacts to supply and strategic in inflationary margin the challenges combination in improvement some our our quarter. ongoing market chain partnerships all industry-leading allowed customers. supply the of chain these and sales with the results effectiveness commercial mitigate to to broader suppliers our strong navigate us world-class network and and the Our revenue to The of in drive performance contributed business continued

commercial our and volume we quarter leading and $X.XX reported our of solutions. revenue or above-market our of result growth and what XXXX of provider supply quarter per income position the efforts, segments $XX established was double-digit a As all share organic diluted and further in quarter business-to-business we chain growth the Packaging to Xx earnings in XXXX. reported in $X.XX in first were Net nearly compared first first as million

history. and earnings the diluted income first for share records net in all-time Our company quarter results per any quarter were in

of which the financial or period. record the First was quarter quarter prior X.X%, $XXX trend of million first the from adjusted EBITDA marks performance margin. in performance. margin EBITDA ninth double the the sustainability consecutive consecutive was of in our year delivering adjusted Adjusted quarter EBITDA demonstrates This improvement metrics year-over-year

of initiatives earnings a years result the we and strategic in support how the the and improve consistent last two direct Our execution improvements our of of are efficiency to against our the customers. first over quarter disciplined operations needs our

margins. of within to cost our process-related segments. sustainability environment. Our continued the most Print in the through system price commercial and value volatile significant our quarter, business, be management to and particularly increases highly across a first inflation supplier-driven enable and In recovery effective and These Packaging the driver continued improvements initiatives price of drive industry-leading long-term

other driven from fuel our contributing are demand While inflationary systemic and outpace categories, to product wages, most supply factors by customers additional costs. higher chain to supply increases across continues product cost

our that closely we of ensure product and and work with our customers cost increases historic pass-through customers the to continue experienced. have level We of to suppliers timely

organically grow our delivery competitive Our coast-to-coast help and own of a share. warehouses network and advantage continue fleet to provide market to

above Supplier the scale historical lead needs levels. to suppliers environment of elevated both our support and strategically constrained to leverage our customers. size well the supply continue and efficiently and We navigate times chain remain

quarter. our the we As first on in to a was We our in Packaging and record the quarter low supplier by seasonally to update which Packaging inventory across maintained Shifting supply $X customers. typically increased lead revenue a product this pass-through revenue elevated to high categories. of on outpace billion just demand extended saw effects sectors business. now growth where for above-market an We times positions strategic the first result, Packaging of customer as in volume minimize quarter growth. of reported possible over cost in combination our a XX% driven XXXX, continued consumer and volume several year-over-year retail logistics

our of a than Our nearly businesses comprehensive half to increase packaging base to that the the EBITDA $XXX reported of quarter, XXX. spectrum adjusted differentiated spans of Packaging inventory supply from Fortune in chain XX% provided million a compared of customer level first solutions small more year. prior diverse products and We to

commercial ongoing EBITDA segment. quarter Packaging our in a Our of X.X% initiatives record first drove adjusted margin

and first The improvements and sustained packaging our packaging quarter in growth profitability. XXth to quarter and commitment EBITDA now adjusted margin illustrates in our of earnings our straight year-over-year marks long-term both improvement

These headwinds decline operate to newly despite that an As these has how decade. industry is operating and complementary over decided publishing service portfolio the that served a ahead businesses Solutions. in role more This Print flexibility across called two of combined expertise we combine for and provides our an have in important we segment look industries. have we customers, than in businesses into additional internal in print been segments change years the needs aligns adjacent of our customers secular the in to our long-term one. and The

this have their balance cash flow. working profitability, industry. We have to more and a efficient. the to source significant the proactive segment free to times of changed and favorable in great conditions, reflect improvements dramatic and make we quality fundamentally of business of businesses capital realities sheet model providing while also the market continue Even performance made new the These of

record quarter generated of adjusted our and EBITDA XXXX, million first X.X%. adjusted of margin the EBITDA Solutions $XX combined segment newly record For Print both of

Print continue on over to we'll to Steve? now more and Solutions of business pleased provide evolve financial with We to performance. are our I'll quarter Steve the the of needs with very details to the the segment, first align turn results our industry. it

Stephen Smith

you, and everyone. in more balance updates morning, will first as and the results priorities. the as on provide related Thank quarter to capital I Sal, other sheet Today, segment's our well good details

I As note go first of quarter had through the results, year's days number last that same quarter. the as our selling first

drove to growth double-digit in all quarter across in better volume XXXX. than quarter in was Moving segment margin than customer sectors segment and volume commercial year. $XX.X customer X.X%, adjusted in sectors. The now a of to our the slightly Revenue XX.X% combination adjusted of improvement the strong points growth year. and EBITDA increased both Packaging prior categories to record was first XX retail an first million, results. elevated Packaging and of of due and and volume increase prior million XXXX high year quarter price. prior EBITDA operational fourth logistics for product improvements growth or our Year-over-year $XX quarter above compared and first an with revenue growth higher We XX% revenue experienced our basis

Moving Facility now Solutions. to

primarily to Solutions showed activity resumed revenue in segment Solutions away-from-home XX.X%, due volume. the the Facility quarter higher quarter as increased Facility marketplace. across in broader recovery signs the first first of Our

return venues. improvement After categories sales above products was XX.X% traditional to portion the growth volume and divestiture Solutions to segment. First due customer for fully prior better Solutions away-from-home prior and As EBITDA daily points quarter the was combined Strong COVID-related X.X% refill of from levels Adjusted prior volume hand the despite above compared on to has revenue increased million Shifting organic Print the year our XX.X%, Solutions A part the year which the like both sectors or comparisons. from to year. price or product historical lower $XX.X prior activity volume and driven source with mix prior and products offset Print lower pre-COVID increased by the year, basis sanitizers. impact for of market. adjusted targeted quarter was first EBITDA believe margin was our our of growth. hospitality the the Facility margin industry-wide Solutions sustained increases XX we PPE large to align above products to segment, EBITDA than Facility year. in sales is XX.X% year-over-year our newly due segment improvements improvement removing with driven adjusted capabilities of Efforts entertainment roll for

was the quarter X.X% quarter the international Domestic Our in Solutions the million in margin outpace the first Print segment XXXX. first generated million in strong adjusted first of and XXXX. EBITDA $XX.X the quarter to X.X% both and EBITDA remained Adjusted to quarter demand very first first in continued to compared quarter supply. domestic $XX.X compared in

further to and strong segment. advantages unique EBITDA relationships improvements for adjusted provided led supplier the margin Our in that market scale

we of In the of together consolidated effects Packaging $XX to led supply maintained roughly to to certain investments in cash Those net quarter, the extended times sales customers. our lead now the free a of $XXX challenges and Moving on of supplier investments growth flow. cash mitigate million, with in approximately inventory first chain some first help flow million quarter. use

prior to generate to flow we of of working full expect begin increases and cash lap for capital from combination of the the approximately year million we higher price year, the XXXX. earnings As effect lower free $XXX

target below historically debt remained EBITDA long-term at net to a adjusted of Our well leverage Xx. ratio low X.Xx, our

both financial deployment optionality to Our financial and and low and leverage capital value capital enhanced record shareholders. provide and objectives strategic support of continues to of to our long-term net development our

to We continue in make leverage that customer size the growth organic to and experience. scale our investments enhance

projects $XX spend capital million We this expect approximately to year. on

approximately repurchase shares strategic back $XXX through our growth May to and products announced on turn In or We synergistic could and have our call build over outlook of to of provide and also X. share year. program a Sal? inorganic more existing I'll repurchased provide now remain we on the million for $XX March, focused capabilities. on that priorities this value details million opportunities Sal portfolio our

Sal Abbate

Thanks, Steve.

we next about we As of the to optimistic quarters years strategy, ahead. multiyear our and phase the are shift

further completed margin long-term actions in adjusted sale the recent our of Canada. week, EBITDA deliver and on packaging growth our Last to Our we improvements. support recent business goal above-market build

our the XX% than year XXXX, X% full our Canadian adjusted total sales XX% EBITDA. For of less and employee base, represented approximately our of business consolidated of total

our and our the strategic $XXX more to priorities. capital growth and sectors support products program higher customer also highly businesses. were other consider divestiture portfolio less with sales Our fully in we sales from in proceeds than moves Canada of aligns categories. Canada to will mix The fund million active and shift what This of towards lower-margin product core used XX% packaging across historical concentrated be higher-margin repurchase strategic share sale and would was

organic above-market growth. making We are further differentiate that committed to investments the in business drive will industry the in us and

several We further and customer made the We experience a consistent experience across streamlined overall and the enterprise satisfaction. the more that improve enhancements over our have provide opportunities and leaders system for to process customers. years to engaged identify

additional making now digital investments will provide are experience connectivity. in will technology improved We end-to-end facilitate that visibility and and our customers with an

a a the wallet established rates to our customer result have of of and robust performance technology will meet share customer that retention and these of or initiatives, investments the resources strategic experience, the interactions. modify exceed enable the monitor our improve expectations spectrum we alignment and process full to believe As combination gains. throughout of in of identify, customer We customer

of to service meet growth. Approximately of our to an be customers. the driver important of above-market needs customized business Our packaging continue XX% specific value-added is our offerings

Our product to of of the specialists we by to unique supported customers. aligned industry-leading our ensure remain portfolio needs essential and sector-specific are services

higher We a portfolio businesses. we of continue these investments market that which margin will share support our expand in customers' a differentiator to higher capabilities in in sustainability go-to-market offering. products remains goals Providing solutions key and and our growth believe make our

responsibility our social initiatives own in goals. outlines year Our work the foundational ESG which highlights to report, commitments completed published recently drive our our and we sustainability were last XXXX ESG corporate longer-term

have we or and growth active could capabilities drive scope potential value. a on scale disciplined of opportunities also that build focused We With our acquisitions. on remain our established and synergistic assess prudent approach to pipeline targets, inorganic

improvements evaluate net targets for leverage strategic both Our in as significant earnings provides additional fit. and optionality we

the eight the margins We both excellence. illustrate are leading vision commercial as resolute in our earnings last and to improvements business-to-business in provider and packaging solutions. and our Consistent to of our quarters over position commitment operational sustained further

Earlier across growth. adjusted we launched the the and that Packaging forward, segments. initiatives our optimization of on price identified Looking next EBITDA this I'd share believe margin improvements. of an margin discipline outlook as additional like of round recent drive the level updated remainder initiatives part this we have will year. initiatives of of continue multiyear next for a we year, now wave cost to will new build and These commercial Facility Solutions to

to price For supplier-driven supply into Packaging, and quarter. continued outpace demand second continues customer increases the have

volatile. dynamics addition, to market continued In be

price For the price continued believe Increases XXXX quarter. most categories example, second carryover the for demand second the into deliver accelerated customers risen, degree Solutions drive half that an but In continued into to XXXX. or for Packaging segment market as strengthen quarter growth Solutions went sales effect momentum trending increase our seen a Packaging product is expected this in cycle. increases Solutions, lesser Facility is of entertainment pre-pandemic second Supplier which We've have been further increased driven in and the on toward levels, due recent reopening we corrugated our of than effect in will implemented and year. in hospitality will has an for to recently a Print which just announced well balance to replenishment and have other and turn in Facility segments. the return large

very continues sustain will on the help considerably We year, but of and and at least to this largely demand strong outpace product Solutions, international improvement level availability. revenue domestic demand will Print for the supply. For domestic revenue of balance depend believe remains

As price carry a and now are expected improvements into result, XXXX. margin to

now to revenue for drive operational in above-market expected and remaining to well supplier our advantages are adjusted each at continue commercial relationships. scale expect to as above We levels the segments volume EBITDA due and combination year performance quarters of initiatives of as or margins This strong our of growth prior strategic year. the

We and this of for the in Given to outlook range earnings full year, net to income million $XXX XXXX for $XXX the now per the we strong the year remainder of diluted in so XXXX range $XX to $XXX far estimate be in million. financial XXXX year million performance of estimated favorable be share expect $XXX based to for million of $XXX fully be and expenditures cash to is EBITDA $XX on approximately be to free million flow $XX to expected shares. range approximately Adjusted with is XX.X capital now million. expected diluted be to approximately the million, the

next We now open for to our wave first are we results forward initiatives. the quarter This concludes and from pleased of remarks. with our prepared seeing call look questions. benefits Vic, will long-term our the

Operator

of Your [Operator John first question comes the Babcock. line Instructions] from

Your open. line is

John Babcock

of Good question in want for the morning, questions. and taking my understand thanks guess better earnings. primary I to first just improvement year-over-year drivers I had, the the I

by If that of you would it initiatives, could some break your internal and helpful. be down price, volume

Sal Abbate

as Sure, Sal. John. can question, and build usual, start is I'll Steve, the on it. And This

volume specific price I'm company, and XX to total roughly -- XX% yes, sorry, and and the it XX% price. volume, volume XX% For was --

segment. and So X/X bit about by little volume differed X/X price. It a

price. the a And EBITDA margin quarters. see volume to function and like we've it enhanced is more did to actually cost the eight discipline alluded six we terms continued That So last, say, over to our in of really that price Solutions our growth, in business. was actually XX-XX volume Facility of

year. efforts XXXX And sort 'XX. that started really prevalent the we're kind lapping the benefits were so back from of now throughout 'XX that the reaping And in those we're price of seeing residual quarter-over-quarter, of also and increases the and

cost first we is of carry incurred half, first this the quarter year XXXX. so goods And over really last at increases into this seeing least inflationary sold

Stephen Smith

both drove of improvement adding the revenue volume prior And over year. all John, almost and the gross driven components by profit Sal. that, the the price Yes. to of of

storage savings. some included benefits incremental other The

so, expense some we And We also contributed operating the of and our As good nearly that work to know, through year and continue we debt debt John, then footprint bad bad employees. meaningfully X. to reductions. had in lower expense reduced our reduced do our you prior many over

to Those our of dollars, combination the all So particularly expense contributed reduction, debt profit expense. bad and gross storage performance quarter-over-quarter. supply

John Babcock

all helpful. have And the then that, margins EBITDA? the sudden as -- component, a we to should how of an on Does and/or stable. price what we we does right. about effect increases, additional capture it ability lap as start environment say, pricing get All pertains is That's your more to where that price go to just into especially

Sal Abbate

quarter. provided, really So guidance and date John, baking announced any to way last the the the corrugated increases in that early price that one we're in of only we in happened that this second actually part the in

known guidance for today. So our items reflects the only

sure as on through do guidance an not We're we will price appropriate XXXX, a to particularly decrease. pass really probably there's the improvements and saw really likely is inflationary in obviously, out feel forward, decreasing for probability, our with year. suppliers we that like do to ready of higher EBITDA of in increase negotiate more price the period. that balance balance and the decreased adjusted But market, in can XXXX. give margin we the of to a Looking what's In expect we quite year-over-year we market, believe But I of we make then balance probability along year. quarter the outcome the that than this first hyper increase the look probably remain

John Babcock

it your exists? not growth? really you the then of point it current make into opportunity And as a in I to Solutions. distribution your that pertains footprint, that And mean is to to Okay. geographic just time how Or happy you about this drive distribution Print sense That's at curiosity, any organic entire wondering does expand with was particularly are company, bit setup. overall an talked across markets I helpful. necessarily out

Sal Abbate

the No, John, thanks for question.

based 'XX capabilities X-year thought our our would our we next plan, about on think footprint we I to what need. think restructuring you X- if rebalanced

we think, I with and plan roughly that residual, restructuring There's footprint a from plan the are I XX did believed experiencing a now. and other exit -- XX restructuring think few outcomes right but from footprint we're so was what we're right And from we're that where now. for we perspective, pleased offices facilities it

But are in to. and major frankly, covering absolutely possibility are markets need U.S. minor we We markets to we most every growing in the if other market open the of

to look we footprint or expansion, market a large in kitting often a acquire of business piece So expand ways have we through co-packing it's a if for whether we opportunity. our

about fungible think how very how And with and needs footprint flexible so to we're we to respect our be. it

Stephen Smith

that And commented you've in that, flip an that just in took script of quarter. Sal didn't business demand his length inventory the businesses. routes of the including shrink as business read Canada I'll to unit side add of itself a we customers we lend the geographic a productive in we that that and the particular and action our of of have ROIC of the kinds John, footprint perspective. carry we, company model our remote to the our Because the in from lack had, didn't had geographically as company And concentration distribution locations some

those And most cover we the the we opportunities, do which Sal opportunities closely we look is as at U.S., markets. but so at we in as said, look

John Babcock

category seeing packaging And of to Okay. question. talk might you're be demand And helpful. -- slowdown of the indications have? in the next you demand -- you just that would that's that be any able across if was the kind level there a that are different if substrates I of one about wondering

there commentary just would broader useful. So be

Sal Abbate

I about tell think would revenue in end-use maybe quarter, across track. that I we first. sectors every you, address I'll sector the we -- saw If John. double-digit first And growth Sure, end-use our

they across by geographies, electronics, an did manufacturing, frankly, beverage, services, fulfillment perspective. product from heavy similarly, all product at-home across and similarly And strong see our all really up, growth manufacturing, retail, retail, so we double-digit category. wholesale, every relatively end-use category, were sector And consumer light specialty food

of lot rest the high end-use really year. I frankly, don't the guidance the so those we second question the think as about that categories. quarter, around reflected our a balance all And core slowdown, demand what year see our of like, into the the look what And rates for in any remain across is and don't sectors -- does our see is product we and of strong

last As the mentioned the that continue. we maybe John, we've on going really to call, imbalance think supply-demand is

at healthy pretty in And Print segment still so there's certainly and Packaging both the backlog, as within the and suppliers our business well. in a Veritiv

kind with in And combination the so continued the of got strong backlog you've of through demand. flushing the

the so year the that balance continued should we believe of see growth. And

Operator

to there the further Mr. Presenters, Instructions] are I now call turn will [Operator questions no Abbate. back phone. the over Sal over

Sal Abbate

are remainder exceptional for men and to well with of Vic. performance the you, the Thank XXXX. Great. thank at their strong deliver are to want Well, pleased to for positioned I our believe year and the Veritiv we start all of women we to August. you. hard this you we work again second morning, these dedication when soon in all and joining you results Thanks making continued and announce Thank speaking results we us to look with our in possible. quarter for of again forward

Operator

This concludes call. today's conference

now may disconnect. You

Veritiv (VRTV) 9 May 222022 Q1 Earnings call transcript