- Earnings call transcript Q3 2022

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Operator

Good morning. And welcome to Veritiv Corporation's Third Quarter 2022 Financial Results Conference Call.

As a reminder, today's call is being recorded.

We will begin with opening remarks and introductions. At this time. turn and over Investor to Vice-President Scott like Finance of Relations. would the to call Palfreeman, I

Scott Palfreeman

Thank as you. by Abbate Colby will Steve's on conclude performance, joined XXXX Steve on followed and After share good, morning, call will an update Smith. third as comments, our everyone. an by update our rest CEO, -quarter remarks, will Sal my outlook and on CFO, well by today's more the our on Sal I business details perspective provide who initial Sal Steve, our After for revised on financials. some providing of XXXX. am

We will questions. your the then call for open

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

and presentation reconciliation comparable these at will the and section information filed Relations the At GAAP differ to includes time. contained financial the cause SEC. slides available company's website. on SEC statements exhibits company's non-GAAP reports this our to other Sal. also included and slides call from measures Today's publicly the I the the those risks factors could turn in contain measures are factors presentation This and the Investor measures, is Additional U.S. end-of-the over non-GAAP the can forward-looking of found will be XXXX Form in other and of results filings. call XX-K to our with described in that in the

Sal Abbate

record on XX% revenue quarter the the EBITDA first Today and recent EBITDA morning of impact despite thank year. had during of and of we strong the adjusted adjusted another third growth joining the We good for we and divestitures. us. everyone and reported -quarter the organic Scott strength Thanks, financial margin, for year-over-year performance, building half reported you

XXXX. quarter from than $XXX quarter representing Third more third adjusted growth million, the of of XX% EBITDA was

of marked expansion XXX -quarter in XXth margin year-over-year $XX year-over-year EBITDA of prior margin diluted an the at third approximate was third share XXX% improvement the The in It record time year. past the is to quarters. income prior basis-point a adjusted the EBITDA grew adjusted X.X%, a to compared third resulting growth itself the quarter The XXX%. year several earnings million, net reflecting the dramatic in as the over quarter worth per over income -quarter consecutive The record $X.XX. improvement was highlighting Net

quarter quality recall that You did third of net when XXXX, provide the improved we may significantly. earnings our guidance of not until income

months generated more Over XXXX through we total of net the total last XX XXXX. income produced in net the double income was company founded was the $XXX since million in than which

year Canada compared last For the third revenue quarter after XX% organic divestiture. grew on an nearly adjusting to for our basis packaging

While packaging's slightly to declined continue third outperform U.S. the during Flexible total performance market. -quarter, volume the volume Corrugated broader and

During box the the declined X.X%. market third shipment quarter U.S.

was volume was Veritiv outperformance offset basis-points, in our European businesses. by by our outperform this quarters. XXX in market Volume benchmark in corrugated industry and U.S. consistent which U.S. approximately However, Asian weakness our prior growth with

were million, pricing to positive X% representing nearly rate. impact organic continued cushing, the growth we organic increases from logistics under quarter anticipate of ancillary Supplier categories record above and increases a growth into growth sales tapes as third third e-commerce product During verticals year. manufacturing health-care, for lagged perspective, the to other industry segment's in such XXXX. verticals or Packaging consumer quarter at these such a categories and generated EBITDA positive and as compared and industry these as bags electronics corrugated growth a volume the the slow. adjusted as From prior cost products increased so to driven $XXX

quarter consecutive expansion adjusted XXth our quarter. with margin a third XX.X% marked of quarter EBITDA for third record year-over-year the of margin The

of We pleased our businesses. all segment, Packaging the of with but performance not only the strong are

commercial operational efficiency initiatives of third we The Our and organic on initiatives which improvement initiatives performance simultaneously are these during strong revenue all focused profitability. continuous our fuel marketing while continue and to actions growth waves These segments optionality financial this continued across to Since success quarter. will recession. helped launched we the company contribute and event long-term to of drive top-line continue performance operational strategic to and and multiyear have profitable the a growth. provide strength commercial accelerated we several potential are financial expected XXXX, and in of initiatives expect

customer high market. cost-to-serve on and unprofitable initiatives strategic to print infrastructure well the changing the We focused business as as made decisions We Some of relationships. the and to support our customer exit of supply-chain high-risk our redistribution business within print and skew-based model reconfigured rationalization. with needs and align first the low-margin exit

our of customers distribution rationalized efficiently XXXX segments. of center footprint, since the meet needs also all We across warehouses December more to exiting our XX of

changed our go-to-market comprehensively to align commercial our we strategy sales with growth. profitable drive Additionally and model

invested be We growth believe what serve also long-term in industries. better support to we to model our

uncertain focus an and environment. position which efficiency into not strong believe these profitability, revenue macroeconomic list, examples While, we exhaustive going will our help financial on demonstrate our relentless XXXX in maintain growth, the

of the important foundational strategy. management our initiatives now efforts. next build implementing are to our remain strategic sales to commercial We price Cost focused and on upon wave

policies strategically opportunities to margin pricing enhancing benefit tools pricing continue through from disciplined customer drive and skew-based new training. We and

we purchasing in consumer we can hub Customers simple experience, be our the and omnichannel believe payment solely online benefit the companies experience with in-person electronic type are robust realize digital our This pandemic a capabilities that in a industry-leading. BXB demonstrated will technology in will of the Additionally selling. investing be from offering of growth. now capabilities. e-commerce setup revenue will space want Customers requirement on no it typical support but an that maybe from to customers' easy longer e-commerce digital and perspective,

our on optimizing focusing further also supply-chain We capabilities. are

driving our digital focus of the experience, initiatives next-generation business. supply while and supporting will Our chain customer efficiencies on improving

evaluating We to optimize are capabilities. and footprint further expand our omnichannel warehouse our methods also

operational ratio. sustainable We strategic on to into our are time of one benefits lower not wave very initiatives. the return improvement benefited just one our initiatives, that nature growth, ROIC the strategically future. metric margin, capital benefits efficiency business. has the higher commercial is from There of in lower believe next or packaging significant Adjusted of ROIC improvement been of EBITDA divested are the focus as majority initiatives. completed margin efficiency a our our and on higher ROIC We proven and be businesses We execution well invested also the as in provide high-level confidence our proud of track-record from a successful will

the in During of ending ROIC lower how second-quarter well the an for for X% our After the brokerage business assets, from XXXX, business provide approaching on in XX I'll improved turn XXXX. his Steve's are as ROIC balance the improvement of remarks. divested will Steve will our prepared Veritiv provide data the our update performance third the about the we level during our detail has quarter Steve call ROIC now remarks. our and roughly segment third we Solutions financial nearly This the Through prudent of Steve? as lower XX. more quarter. XX% follows Logistics to XXXX sheet as guidance XXXX VLS. to on I over talk of September margin, choice months to divestiture freight last

Steve Smith

will million, record. the Higher of basis, Thanks, organic both Starting segment a to market an were business, revenue Year-over-year, improved as day details to Packaging we previous our Sal. third topics, the we well segment's flow, X.X% recently-completed speak results, of growth. and $XXX reported a was Canada with days revenue on and Today, I of when Please Logistics on quarter business. I the would our as including freight same note our third organic On program that brokerage note basis, related a excluding provide results but XXXX third a the, had leverage, referring the year's the Packaging to segment, of ROIC. Veritiv sale segment of Solutions prices driver are X.X% the the of count primary impact third basis. revenue more selling as grew repurchase our reported handful that updates quarter on number performance cash share quarter our quarter.

positive and e-commerce vertical, generated low-single also growth manufacturing quarter. manufacturing our to U.S. digit verticals market the during product during of generated industry domestic healthcare quarter. industry the strongest and mid-single-digit for growth third third the our double-digit growth and third had growth care with volume health compared growth last was the revenue growth revenue third categories the All verticals produced solid in e-commerce volume like year, quarter. in several Volume verticals Within the quarter. industries Key

prior compared of which was record adjusted reported improvement For our EBITDA million Packaging's year. the was margin over adjusted X.X% year. XX.X% a of quarter segment improvement the an record-high a of which Packaging basis-point the third prior EBITDA XX $XXX.X to was also

now third year Solutions $XXX.X the million. revenue the for XX.X% prior the Facility Moving versus quarter declined to segment. Reported to

by organic growth grew year. price. Solutions revenue sale the driven Solutions Revenue to Canada an adjusted segment on X.X% basis Facility primarily compared for the However revenue of was business, in last activity growth year. liners quarter Facility towels our to away-from-home foodservice last within for and all volume tissues third from benefit to had the entertainment can continued within positive verticals. the Products and categories compared hospitality the

the over Solutions year. million, improvement X.X% representing Facility EBITDA was prior Shifting the Third quarter basis-point XXX margin quarter was the segment. adjusted Solutions which third Adjusted all-time for the prior year. was to of XX.X% Print EBITDA for growth high of an $X.X over

margin Print adjusted to million quarter I'll to grew XX.X% quarter. In continues Sal Third during should million an the $XXX.X high minutes. current and few Print third why EBITDA organic and provide of all-time Solutions' while global the third basis market EBITDA last XX.X%. Adjusted the a demand year. levels. with in and Domestic the increased XX.X%. print margin international third our a category. to believe domestic our compared finish an view EBITDA increased adjusted Solutions record in EBITDA $XX.X outpace margins supply on quarter. revenue was other to on to the remain reported is quarter revenue we of pre-pandemic business Corporate color elevated adjusted will review compared

to and activity sale disclosed, of other its Corporate our Veritiv we completed brokerage Solutions Historically reported in Logistics within category early-September. sale previously we VLS the financial and business freight or the the VLS was As for VLS reflects the businesses. reason the in our our portfolio decline to in business ROIC quarter shift was -- the ROIC continued was lower revenue. a reported lower-margin, higher and higher-growth sale third

to cash-flow. Moving

After now the from quarter, third end-of-the quarter, Shifting EBITDA flow capital our months earnings cash-flow share third capital to times. of from leverage $XXX subtracting $XX.X during of to million. a we adjusted our at previously-announced At of million expenditures net-debt generated ratio operations completed of XX cash-flow the trailing operations program record-low million on repurchase For the free-cash based allocation. $XX.X was We end $X.X quarter. from reached September. million X.X the our

the the per program, in repurchased have Over March average we a repurchased shares X.X of of share. average an repurchases reduction shares reflects shares X.X $XXX we course price share Since roughly resuming million at of which of XX% $XX at million share. XXXX, in price outstanding an per

higher strategic packaging. track-record both most successful as efficiency five VLS. improved approximately redistribution attention us which Rollsource, first lower-margin, our business, capital to then in since our made businesses our prioritize XXXX. contributed the ROIC. intensely the Since, businesses. and X%. improvement when focused initiatives retail decision doing on our and and are have launched exit was divestitures In mentioned, of initiatives. like ROIC working been Canada Sal improved Those The -- so capital initiatives initiatives ROIC of as were stores, working strategic ROIC significantly well recently capital the ROIC These In wave to improvements to operational to ongoing XXXX, allocating attractive ROIC we've commercial we have allowed strategic most lower continued businesses to capital our we to As

For going we to customer working relationships. so-far certain reduced customer improve capital aggressively risk as the exit to our quality of example, high-risk

centralized decisions those and expense over benefited inventory XXXX to levels last bad inventory should from large historical While we of expense. bad we inventory debt which balances and Both continue lower of management from than warehouse in to the XXXX, optimize future from helped we debt our From to and several the reduction in in benefit a reduce drag absorbed on perspective continue revenue a years. footprint. an

these September of and ROIC points for result XX ended actions, the improvement of As a a many months was XX%, record XX other an for XX percentage XXXX.

of to turn continue to we pleased the it very since our the I'll investments are improvement now lens We through will most attractive with evaluate XXXX return. Sal. back ROIC further and ROIC

Sal Abbate

an the now outlook I'll the Steve. for update of rest on year. Thanks, the provide

seen past and also provide few volatility economic months, perspective XXXX. over on we've disruption the an will market Given I the initial

are range of $XXX the strong million. XXXX a guidance our in full-year range performance to, $XXX Given from EBITDA million third to a $XXX adjusted of raising quarter, XXX we million to million, our

We million $XX be be and income expect share range per per to in full the to $XX.XX year earnings full the range year $XXX in to net million $XXX of to of share. diluted

dividend strength cash the Finally we capital XXXX. health we performance level capital free The to to the have share quarterly for share announce expect quarterly dividend. our million a the which of are initiate cash expenditures recent The and continue an payout pleased $XXX for $XX and full-year estimated of to sheet approximately dividend. From business and expected would of of to initiation estimated approximately cash-flow yield allocation X% flow provides the a a our balance dividend of the million $X.XX based approximately of confidence price. our model, equate our per on will of outlook the perspective,

pleased capital benefits. are of experience synergistic to of we quarters, opportunities prior while on active strategic Consistent optionality. pipeline with remain inorganic considering allocation focused a also and priorities customer with dividend, an continue capability our While enhanced improvements the we our with on execute initiation

of price In Packaging peaked but trends turn preclude methods likely options. product our for continue the this the of as now from subsided, increases segment specific corrugated of increases industry mechanisms rest continue capital impact through pass-through provide of of strategic resin at from and portfolio XXXX, tailwind will to not other half changes increases. most XXXX. price our rapid a their shareholders least Packaging pricing prices experiencing We suppliers volatility. unique during commodity XXXX. the to the-market will We Approximately dividend is earlier believe believe the Corrugated categories. price continue significant the for operate efficiently to our price witnessed which price are the segments potential product to these of to XXXX are believe segment's and the and are to and as and elevated that We resistant customer initiation for more customized and driven year first-quarter have may evaluate our will year. prices to will Packaging XXXX the remainder still to to return we commodity to We solutions disciplined revenues I this not sensitive we supplier resin additional

our almost thirds to index. an not Additionally, tied two of underlying packaging are directly revenues

as While our not increases this as impacted susceptible has volatility commodity-based have to products. portfolio, of packaging price portion been it the

hospitality we potential care be by Our will lower staples in focus Solutions continue environment. to partially recession-resilient health demand and away-from-home negative believe industry Facility we strength consumer like office may offset entertainment verticals on be what mitigate industries to believe like the from impact like the a downturn. and in In economic somewhat

and outlook consistent in we given will our operational For near-term relatively margins Print Solutions, Solutions. both now I Facility for address initiatives. expect and the commercial the Packaging

or As conversions. industry has we last market over due believe structurally either print of global North-America indicated XX% the that in has few capacity we to nearly estimate years. left graphic the Since closures quarter, paper XXXX, past the we changed

on further the market. believe the study understand result heading, analyze additional years. likely will a next commissioned and data prices we capacity independent As supply exit several print XXXX. into points, this study domestic where be Based independent we and an we outpaced market other the over to may early demand believe continue to demand global recently To industry print

In but will compared to suggests in declines historical demand rates. severe less resume addition, insight market much XXXX,

global higher We lost prices for reductions well also may believe cause In production several the elevated in we capacity continued likely international short, costs domestic or volatility. imports in are the the next believe to not replace slightly may decline to due as quarters. but as to near-term supply-chain remain energy demand

over believe the several the we've last we be Solutions' relatively industry foundational our margins improvements will the adjusted the EBITDA business believe fourth made both years, the and to prior margin and structural positioned to quarter XXXX Given the changes of adjusted of print quarters a mild are into XXXX of we for in retain specific Print with even we event our the consistent XXXX EBITDA XXXX. improvements majority Furthermore in recession.

this Before call, we you've what move heard the me morning. summarize Q&A to the portion of let

and of provide earnings Our our next believe commercial to and momentum we continue continue will strong wave operational to initiatives so initiatives. do we with

with solutions our customer to higher-growth potential on above-market our to make positions ROIC to and experience diverse value-added help growth. economic with mix investments focus that a vertical sustainable contribute will higher believe us handle products We will end-use customer continue downturn. well and We that align product

updated We confidence of margins Print sustainability market into our business. print the perspective global longer-term have in an Solutions that builds our in the

While the remains are macro concludes remarks. delivering committed are employees to and financially solutions heightened uncertainty operationally heading customers that our Colby ready into we stakeholders. prepared now year, prepared believe we next our market delight we take to This questions. and

Operator

Instructions] of Sandra from [Operator line first Liang question Bank Your of America. the comes from

Your line open. is

Sandra Liang

morning. Good everyone. Hi,

had another And so as know, conference. George you Staphos

So of his have couple on I questions just behalf. a

Sal Abbate

morning. Good

Sandra Liang

might could improvement, speak if you on you it's are be in process If XQ talk remaining that XXXX from outlook on that in restructuring folding morning. the that result would left happening is benefits how please there about what is great. business? possible does could boxboard carton Good affect? to the could and, or be also in What And the

Sal Abbate

And thank Sandra. morning, good Sure, you.

industry box down shipments about morning the third outpacing on as basis for Just X.X% of were mentioned those numbers for corrugated down regarding question the been about I'll We've X.X% our market XXX both the And and by the full-year. XXX to the for in points. this of we start quarter business.

the through the did first-half be than that two significant seeing pandemic. we least There year by fourth of through market that the quarter last outperformance that market what indications the And were So the quarter, will of slower fourth to beat the XXXX expect quarter. do in continue. the we're increases e-commerce third And, XXXX that that in market last at this for are and years, for from, the year. recall the we

expecting by are we and to -- I quarter, did improvement So little the just we around then years. next over for that we've your is done ahead a several the third add and we process of degree same years second then a please the the to market might stay be in and over the comp last year. ensuing question bit the let be highlight tougher expected what reiterate do continue but to plan Steve, to committed to the fourth what full for and me to to will quarter next just several But in. -- remaining and things over speak the

customer and higher So serve, rationalized we've to highly skews, to mix, our starting focusing back-in XXXX on and our customized. mix lower cost margin our 'XX, really really channel

for Solutions customers. those

example with say on as in Facility channel business along well the Solutions Solutions comments, business and Facility for our, side, redistribution in and I our so business would Print, And as we our as well. Rollsource Saalfeld exited retail Steve mentioned his as

We lower-margin like and also segments and businesses exited VLS. Canada

adjusted margins last and are significantly in EBITDA contributing XXXX. foundational to then improved year saw all you our that those So

as overall these price would our footprint the with from approximately. to say foundational of really then XXXX As optimized margin decade last market instituted to processes with to improvements priorities. well as of our the high-growth out our all as our decline square expect go-to-market or our we taking our And our continue. DC the in of locations realigning to to footage verticals sales management our strategic Again XX% our XX% align well matched commercial cost I so. and or growth roughly strategy particularly part of contributing balance disciplined we plan those compensation initiatives, as we lastly. overall print secular the footprint

So you've to enhancement things seen to-date. those really strong all contributed of the margin

always we management wave next side a e-commerce and have commercial a and the that looking-forward improving primarily rationalization the in our we're optimize ways in looking initiatives looking automate do of major therefore which and warehouse our our to our like commitment cost-to-serve, the next as market into cost in we, count reduce customers movements network forward to help are 'XX did anticipate our and in are and on And then supply-chain. XXXX skew beyond. footprint in area the ways our we lastly will don't our warehouse well margins, while at businesses any those or footprint, so serve our as our price to to across we're print Moving and transfer footprint which business ways and our

Steve Smith

FS including with items just our continue will Yeah, in includes sales remarks two Sal. help the And higher-margin of year-to-date, prepared Those to and enhances broader concept expense believe The so we And broader of have are we a think now us portfolio and bad around third margins. just kind quarter fourth one one debt specific Sandy specific I mix beyond. in Veritiv's item. the is consolidated which so. two which of which supplement of our Packaging which asset the and commentary that what sustainability in impacted very undertook the we'll that quarter a toward item secondly, and lower sales is the implied initiatives EBITDA mix-shift help that then adjusted the us concept we said a to was

Sandra Liang

you. a follow-up just Thank And question.

if of it's if I touched that more drivers could strong this guidance as be bit comment of paper the you I assume because part a, increase. on clarity as such helpful. more anything increases it little price quarter, on think the is of but also provide possible you could If the would to you

Sal Abbate

be the we would I in as driver guidance that say the clear of increase price Yes. a will increases mentioned there. And

are those, into and say close While mailers fourth we're the year year second occurred price middle as and case are increases bags. the corrugated third in in the and later to starting such other lapping our last resin there the in product year price earlier I'd carrying to get that and increases that and sustainable the in of quarter category quarter the the cushioning. team

so packaging our really portfolio that is prices which portion drive portfolio, quarter. that And the of of into increased roughly fourth will our XX%

point bit in a increase which and For right entertainment Facility very what's and there that's revival cruise office of guidance. are reevaluation and the end-of-the And theme is confidence Solutions, again the that so to robust very return the Steve's in would our say to raising historical I healthy line is hospitality supply-and-demand a expect much there moment driving And a speculation particularly contributing that park more now. guidance bad norms that packaging the specifically. I and year. business the it's for quarter from in a the some say quarter. would ago, improved the lower continue business debt business are fourth then that sustainable imbalance to market, been support is lastly happening our also fourth in fact our the to to our the And we the third and help prices also of our than in Print lastly.

of a guidance. full-year stronger And are to contributing so all those

Sandra Liang

over. turn it you, Thank guys. I'll

Sal Abbate

Thank you.

Operator

for There call-back I are remarks. this now questions at closing over will Sal further Instructions] to Abbate turn [Operator no time. the

Sal Abbate

grateful we these am believe commitment to commercial initiatives a financial our look-forward we fourth I will with you several years. of quarter have Veritiv continue success Colby initiatives early our into maintained continued position The tough speaking Colby. results. team call call. and extremely full next the future. joining and XXXX strengthened you, for Thank And over today. this the very past entire again years and environment operational the has our stability efficiency review over company's the the Thank sales we when the and resiliency you us several year past incredible throughout provide year to financial on will for the concludes Great.

Operator

today's concludes call. This conference

You may now disconnect.

Veritiv (VRTV) 8 Nov 222022 Q3 Earnings call transcript