Earnings call transcript Q4 2022

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Operator

Good morning and welcome to Veritiv Corporation's Fourth Quarter and Full Year 2022 Financial Results Conference Call.

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

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

Scott Palfreeman

an and will by everyone. XXXX. conclude and our After financials. followed comments, will Steve Colby fourth Steve's year on business After more quarter our am outlook details today's the Smith. performance, share Sal remarks, call CEO, Steve, my will on good, you. for full I and who morning, by joined CFO, update provide Thank Sal Sal our Abbate on

for your call will the We then questions. open

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

contained factors Additional Form filings. differ SEC. cause SEC publicly those and in This filed that includes to and the is the the factors and results available XXXX the could our information reports described in exhibits risks company's in on other from company's other XX-K statements the forward-looking with

slides financial end-of-the presentation and comparable be are of the at call our non-GAAP Relations measures, included Investor U.S. and GAAP website. contain can to the these of presentation found slides also measures Today's section reconciliation measures the will in non-GAAP

Sal. At turn call this the time. over I to will

Sal Abbate

I execute you, relentlessly us. against Thank you we years. our performance extremely financial last made several good term record of am and breaking over of proud our to for company everyone long XXXX and thank and Scott morning joining year another the as objectives. the operational was for continue achievements strategic Veritiv

teammates businesses efficiency business all discipline with print low XXXX price was who year hard and growth divested talented low and approximately margin, businesses actions any and of work contributed on maintained objectives strategic day segments. delighting across segment. we success our and for market focused XXXX, This our cost publishing efficiency two Veritiv’s our our our for history our During synergies, and combined of These the We best earnings on diverse possible non above made by performance customers. performance within focused management initiatives. in and packaging to every the

margin, and This adjusted per quarter year morning, we income, the XXXX. adjusted fourth share record and earnings full both for the net EBITDA, diluted announced EBITDA

XXXX year XX% year-over-year year, organic sales prior EBITDA compared EBITDA For growth. of the year achieved also XX.X%. million growth the the of record we year-over-year to digit We full of marked of double adjusted reported $XXX than more growth year. third for representing consecutive the XXXX adjusted

despite segments business the three year. earlier Canada all the Additionally, reported divestiture full adjusted EBITDA of year in our record

was year more approximately XXXX. margin tripled XXXX, adjusted a over we've XXX of than basis Full margin EBITDA EBITDA margin. Since representing adjusted record our expansion X.X% points

to our We a operational strategic During details initiatives adjusted the of strategic attention in provide initiatives. growth I'll minutes. we the the executing several is undertaken. and majority this time, efficiency higher we sustainable years while over and on our few due operational initiatives more businesses efficiency have margin EBITDA commercial these and improvement margin higher past focused to believe the

million nearly contributed a XX in $XXX was earnings $XX diluted XX%. the guidance income Adjusted XXX%. diluted share share This expectations. aggregate, exceeded during our three end year growth We top XXXX and our per was meaningfully earnings increased initial two strategic our and times record the XXXX guidance of outperformed per adjusted approximately representing The of in that, million EBITDA divestitures our EBITDA net Full were for was net results. by higher range XXXX. despite during initial and year growth year-over-year year-over-year income XXXX Both XXX%. reflects approximately XXXX than of of $XX.XX resulting times

returned of over XX% in first program income of top and our December form by and guidance to year, initial our repurchase in million end respectively. XX% the also beat dividend $XXX range we shareholders paid XXXX. and share earnings diluted Net of This per the share a past

the in design, invested experience. the as packaging also customer service improve business We end-to-end to offerings, our value well as added including

ROIC six invested at the both which XX%, or working a return since Our year expansion and of reflects as increase margin a fold ended capital result improvements, record initiatives. on capital, a XXXX nearly

positions For XX% scorecard a groups XXXX. at in we from with to history, I am of the senior We first proud strategic new hire say aligns incentives. we set time mid a least this to in established our target that to management level exceeded goal. underrepresented

Workplace safety area another Veritiv. for remains key

our network. environment class best screenings our support rating for employees, a and a in across and safety safer investments Our chain work supply

our to our result, metrics our addition meaningful rate XXXX, In its for in target progress a total These corporate beat against are goals. injury achieved year. As goals. we sustainability the

we next initiatives report We sustainability goals. XXXX support forward corporate publish corporate sustainability annual better a customers being own Our look help providing and our quarter. when achieve Veritiv citizen, more sustainability details our our their on achievements to

of by and expected offset our weaker sales XXXX segments which packaging Turning now fourth Organic XXXX. sales offset facility the lower growth was primarily solutions organic in organic X.X% of prices growth the market This business. as by than to during quarter compared within to fourth grew partially fourth driven volume. more revenue sales drove print Higher our the was quarter XXXX. and of quarter solutions than

of year-over-year fourth diluted reflecting per was $X.XX, a EBITDA of quarter was the resulting of fourth quarter $XXX quarter fourth for that also $XX growth margin X.X% year-over-year for share more EBITDA Net earnings year. which quarter to fourth record XX income a year. growth was quarter prior XX% as was Adjusted million, and and record reflected The margin represented the of of reflecting million XX%. Adjusted down for record the than adjusted compared EBITDA a consecutive the the prior growth of quarter, versus was slightly X% expansion.

across during packaging, unusually American declined weakened couple XXXX. progressed with range of high inconsistent verticals. the unreliable the accumulate North fourth industry believe In and to in down we December We volumes weeks last with chain quarters weak. most during as the performance supply led of conditions of volume the Sales through quarter, fourth the customers single inventory excess digit quarter two being last

teens a range the believe behavior existing consistent had customers in and two, industry quarter. times activity segment quarter purchasing their high destocking suppliers print the stop began fourth during past we customers sold believe demand that as negatively excess the inventory volume through improve. impacted and through quarter. their inventory up or lead As decline for the existing The result trends, with the this over print experienced We to work built and solution

the facility will more showed quarter. of customer to and inventories end begin by customer during range the expect we fourth and the categories. Within facility strengthen quarter to the for that December. pronounced quarter, packaging were the was results lower solutions, January to solutions segment the the of home digits offset customer equipment inventory categories second preliminary the in our of our print quarter within relative fourth within XXXX. businesses an skincare although solutions by quarter sales believe support away levels the was packaging in in fourth during improvement Finally, destocking personal inventory volume declined normalize Early and during than protective in indications first destocking volume more as belief we we normalize significant mid from effects single anticipated customer primarily

total and demonstrated diversified XXXX representing We model. customers to of from believe in performance revenue. earnings wide support with range the We half of business any specific small more customer strength ranging not the than Fortune a X% balanced record exposure and is more businesses XXX well industry. than to industry our vertical resiliency of our also Our overweight of no

from we perspective, and segment products only comes based underlying thirds manufacturing. resistant such to susceptible as of directly from are are X/Xrd supply a tied to commodity an we product These approximately commodity balance in volatility that tied more of Additionally, industries, packaging have index. remaining index. of healthy an packaging’s seen our as a products. consumer not From products to two not healthcare, staples, The underlying comes heavy products the recession revenue revenue

and on next next These now include chain supply E-commerce discussed, and wave are strategic we relationships our our omni-channel previously of strengthening generation and management enhancing As further focused sourcing model. portfolio capabilities we will our evaluating strategic the initiatives. practices,

have upon the our service. build portfolio our rationalization expect and round aligning we the initiatives cost product of removing who terms success management strategic provide and on next price, we past, by will in price prior high with focused of best combination products While suppliers costs and serve and to

value believe this better will result for our in We customers.

investing in customer To to system are with tools to experience. later capabilities end this enhancing expected enhancements back also investments offering, and the support capabilities experience improve are improve digital our the We that launch geographies and year. and also new digital to with are this we for select and technology employee end front customer

supply the next continue Finally, to efforts. we generation our our of chain our evaluate to to ways evolving sales meet and digital customers support needs optimize

I call to that earnings over Sadly, want to nine be tenure dedication, retire Steve's financial Before plans Smith as quarter, remind provide segment Steve more fourth as on the to for he balance Steve sheet to announced comment performance, the level well I turn the that everyone Veritiv. loyalty for thank personally his fall Veritiv. this I of in and will call year XXXX. Steve the to guidance last want with over from Veritiv his with

XXXX. second the He when and Veritiv be don't Steve. sorely all that of missed formed know, those employee happiness levels will best For the was in was by hired of health organization, Steve

Steve's Steve? our on I'll provide details After remarks, guidance. XXXX

Steve Smith

of excluding full Canada basis, we as I related the would business count note to Please well fourth details Rollsource day brokerage quarter flow, the leverage results, Thanks Today, had and XXXX good logistics year. selling impact same performance cash we the our as Sal. are morning our when of business as the freight year the that And previous organic on allocation. segments fourth sales of capital year and will more Veritiv business. our solutions, that referring On everyone. result updates reported to our number speak I days and note quarter full to and both a provide of the

third XXXX, one Looking quarter day of to XXXX third selling the XXXX. less has than the of ahead quarter

reported to declined quarter. on XX.X% on an basis packaging was to million year. revenue the fourth $XXX segment X.X% results, Turning basis, for revenue Segment a but the compared prior organic declined

fourth uncertain result in quarter earlier, environment. slowdown mentioned inventory was concern over we customers experienced a the during the Sal of As that customer's and sales the destocking believe economic their we the

Volume in the more than declines. offset than our were the was mid with offset industry fourth for single was our and within in and more by beverage. pricing quarter. food sales growth and fourth verticals. market Favorable by Fourth quarter volume manufacturing, logistics wholesale weakness retail growth was strongest digit strongest healthcare, strength quarter vertical, This healthcare in

in over was margin EBITDA a with the XX.X%, quarter prior a to Our year. points market Packagings year of corrugated EBITDA adjusted million, a the The was line improved basis a $XX fourth margin volume grew the compared performance fourth to reported XX segment which XX% quarter of EBITDA fourth adjusted adjusted point index. basis quarter for XXXX record was the year. packaging adjusted record $XXX prior representing and million decline to XX Full EBITDA XX.X%. decline

declined our the quarter versus million Canada primarily fourth to the segment. divestiture Solutions set Moving driven $XXX to prior Facility of by the Reported year for the revenue XX.X% business.

our Healthy within an on to service quarter skincare home solutions sales the to compared fourth the activity basis, tissues grew declines within and offset equipment within entertainment categories. the revenue X.X% Facility organic vertical. from strong protective helped from benefit year. categories performance away quarter prior and However, food and personal continue revenue towel, hospitality fourth

the on year. for prior year that The included $XX fourth adjusted of since solutions Note reflecting X.X% year-over-year divested decline basis. a quarter we of [Canada] facility to was quarter compared Sale XX% exclude EBITDA for improved business impact the the have the we prior adjusted the million, EBITDA if fourth

EBITDA divestiture million in reported for XXX X.X% EBITDA due was $XX the Canada was the an margin lower all adjusted the which prior and fourth of margin adjusted basis and business. the Full of records at to adjusted Our part time were XXXX EBITDA a year X.X%, year margin point high quarter over improvement respectively.

to Print the the X.X% while quarter or declined their We to the Moving EBITDA the weekend segment. year. organic record Fourth to which year-over-year two. $XXX X.X% had growth worked XX%. Adjusted fourth compared was quarter quarter revenue built a Solutions million demand of revenue prior representing reported million, increased through quarter levels, up believe customers $XX in as existing inventory over past of fourth

XXX% record pricing $XXX adjusted market compared organic primary Favorable of to of a our the margin and year the Full for solutions revenue higher million, was fourth growth full driver the flow. growth the XXX from results year over was to representing than a year EBITDA points segment's quarter. cash XX.X% basis XXXX Print was earnings adjusted the shifting prior year. EBITDA record prior approximately consolidated

For was flow quarter. the of basis, On free subtracting fourth $XX.X was during the cash flow quarter cash cash capital flow expenditures, million from and $X.X we After $XXX.X a $XXX.X flow million from cash of operations year was full free million. generated million. operations million $XX.X

earnings cash adjusted of As we a strong debt record healthy X.X XXXX the balance ratio our record leverage EBITDA year very and sheet times. net a and of result ended low with flow, to a

quarter. $X.XX returned allocation From our pay were approximately XX we capital perspective, in million shareholders dividend December share, very doing to $X.X to a on fourth quarter during so of pleased first the per and

$XXX the including we share payment program. repurchase as a returned $XXX year as million shareholders, both to full dividend well the For million approximately XXXX

the strong deployment an we growth. believe capital capabilities we shareholder to and optionality long organic in of to discipline perspective, additional will believe financial top We with line our making to position term the our that commercial value. company technology contribute drive strategic investments enhance are growth provides From

perspective, inorganic we and capabilities an enhanced evaluate of active pipeline an from synergies. potential to with opportunities While continue

As we to options our multiple we a at same favorable on believe result time. of the allocation capital position, capital have the execute flexibility

ended points our balance was for significant operational mentioned, long of divestiture due and points resulted as earnings improvement more percentage ROIC record commercial the performing by Finally, lower XXXX and XXXX XX a along Sal an in with to percentage from XX year XX% of efficiency XXXX. improvement. enabled a has improvement of businesses, ROIC initiatives, from sheet efficient

a which all transition were for guidance, the smooth this is [indiscernible] for Before team. board especially last constituents Sal, XXXX think to to passing a the the especially few me let to challenging call employees, back a listening years. and to years, my call. since Sal take earnings minute during such senior our for XXXX

patients for efforts today for during your shareholders employees, years. largest next And to of Sal? up the fellow Our during chapter. to for my challenging hard work finally the those and period

Sal Abbate

for Thank and of company progress of considerable for execution past net Veritiv has you, initiatives it's years. capital the made I'm all management Steve, proud contributed cost our over the you've stakeholders. income several to done XXXX. a and with we over strong financial a improvement year of $XXX million share XXXX per and We contend an share us ended of a $XX diluted potentially help in earnings per will exceptionally ahead. since challenging that believe improvement position Disciplined

some XXXX we I'll for year now and provide color thoughts full performance on our XXXX solutions our better then Within packaging, and by product XXXX driven added continue expect value our segment market broad mix. in guidance. level to provide than

for relative anticipate offset are customer times our We and pressure, and under enhanced allows price also this headwind. prices containerboard management demand While to which expected capabilities will category last supplier year, levels. remain lead improved improve will inventory to

to XXXX. both EBITDA relative improve As EBITDA adjusted will a and result, believe adjusted we margin

is in well high complex our by portfolio that Facility efforts as from market focusing and expected industry expertise. product customers solutions overall chain supply as benefit XXXX verticals to on large growth and outperform broad the

verticals home areas and Traditional focus XXXX. continue leading with of for customers. away suppliers we key for to work government Like obtain packaging, will our value from industry to are

XXXX. to result adjusted improve a management adjusted believe margin category initiatives, and EBITDA market relative will both As we EBITDA of and outperformance

Moving to on print solutions.

elevated will Customer during to XXXX. quarter. by we We expected the end expect this remain the demand the of of believe inventories But to challenged. are stabilize half remain first second situation

stronger it prior to few EBITDA be adjusted expect for position than the solutions was we print a the a year. than is years Despite result, fundamentally lower decline, a ago. XXXX in As

adjusted our the levels of last improvement the business undertaken the pre-pandemic majority efficiency EBITDA to and to due margin a several relative years retain to commercial initiatives expect this operational We has over

of to to diluted shares EBITDA outstanding. is To million per range based we XXXX income and summarize, $XX the in range million expected fully of $XXX in in to adjusted of earnings $XXX on expect to Diluted full be expected range million share to the million be be the million. XX.X year net is $XXX to $XXX $XX

cash provided capital as full expect activities We million we operating expenditures by $XXX approximately less free year define cash net of which flow

estimated million Capital capital total technology $XX to and expenditures to related investments. for XXXX support approximately expenditures are traditional

several of event sustainably contributed and of mild pullback. past in as capital have our the our ongoing earnings improved discipline economic actions disciplined strategic should our ratio $XXX to initiatives, these the years, We've significant approximately Over leverage flow well execution low even of improvement the free flow. cash net cash generate working with a as the million of free believe combined

XXXX, expect to the past market I are business a have years have in healthier, more about optimistic in deliver a and improvements to made positioned company. we challenging we the well the above believe resulted for XXXX significant in the Veritiv over market While remain future we resilient growth

This ready concludes now are we our prepared remarks. questions. to Colby take

Operator

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

Your line open. is

Sandra Liang

Sal, Bank for is on good George from of traveling and conference. Scott Liang morning you This America. Steve know Sandy Congratulations the quarter. Hi, as the

Sal Abbate

Sandy. morning. you, good And Thank

Sandra Liang

computing great. chain that morning, you're could your still in that arrangements comment any capabilities, you restructuring optimize also Good you that's or on were please could the if if the XXXX benefits or about little forward warehouse omni-channel from comment further all. you process generation And footprint bit specifically hoping on we to any talk would the exploring next and the Thank on moving that projects a methods improvements. be cloud supply

Sal Abbate

in please blanks start here. I'll the Sure. Yes. question Steve, And the Sandy. fill

it. from substantially this restructuring had our point, it which behind at initiatives complete number So is recall you of plan, as a XXXX

the warehouse warehouse our footprint Veritiv our actually existence, out about the footprint, we geographical footprint. of beginning around since question of the of your to First, XX% taken have

couple was last not years. the pronounced as continues or it as So that over of elevated work

we our we right So believe right now. But optimize look we ways footprint. to that are continually size at

For print serve XXXX consolidated hubs the to example, early late into market business we XXXX XXXX, or efficiently. our more

for And so to to continuing ways optimize look our we're footprint.

and efficiency looking Within chain automation the continue in spectrum, considering to to supply gain we warehouses. future, to are the though technology our

So year to two begin we'll roll that speak or out. as coming about more over the those

our and we efforts, restructuring discipline efficiency year last our initiatives Another side, so of our key price element calls, and and last was on and these we Packaging commercial from of had respect strategic gains but as solutions. substantial XXXX, in the in we've in category particularly management, initiatives referenced sourcing ongoing and waves Facility of to in have cost couple do these with our commercial

So those you speak and will to in mechanism as the the throughout see XXXX to softness a out some inflationary us of pressures the marketplace. combat demand

You omni-channel also commerce and mentioned our digital capabilities.

And between in we our capital this quarter, capital. traditional so split out

our on common together particularly where better geographies of commodity more lower back property, connectivity and our about one that customers. cloud plant back So really ordering end. and the aimed a our end, And is it's will our cost from operating streamlined machinery our systems, systems efficiencies. front is from The think, downstream is computing. racking employee having two to And the digitally mechanism, our And more provide computing at really a system. what cloud allowing various experience serve customers equipment a we and into and operating to ability. and all tie One the making for warehouse becoming smaller, it us closer really about better like office it's

Steve, to are -- anything us efficiency expected and XXXX add value So to those beyond. give and

Sandra Liang

very much. I solutions. improvement margin as And then plan to you on Print just you in retain if curious the you how it just before comment could over, a follow Thank up, turn

headwinds something the mentioned you. or there's in there keep or the Is should as something Thank up quarter. we negotiations as I far that contract mind? lengths think in you some contract second

Sal Abbate

the challenging with you, XXXX part being that's inventory. caused XXXX respect Thank clearly Sandy. to the really Yes, most from of from spillover

expect overall XXXX So volume in we range. two that we that reflected in expect expect somewhat challenge we three guidance be do and more to approaches. the do first now or XXXX while four first in the remain decline But seen and quarter acute is years, to than have beyond to as our frankly we've softening quarters

that's year. capacity from margins our this the help expecting that Print to one us things the this just effect is of two the whiplash again, situation that's inventory continued are And maintain business. come of last The out we really

coming So a or year while over of and an X%. come has system less X% the been to that be we X% closure years, unplanned capacity the around than XXXX, for be somewhere expected again, each announced just that, capacity of about out last the three XXXX, could little recently, has there out says

issue XXXX capacity from pricing much that the really and around chain. overdue mills from of and the sustainability needed the XXXX up long other overwork strain taking is maintenance to under the downtime The catch are supply and

print So but half to demand those pricing that. further expected is not likely those two full in two for risk and But guidance only factors of reflects year, year. respect the the are maintain first decline elements most always challenge XXXX. the prices to There our being could stable, regarding with that

couple combined our EBITDA XXXX. is used they further that be last businesses. majority the of to going our operations, gain is And third have suggest the two there's improvements to we efficiency there. margin we The in are of years to why that over And we that print maintain and adjusted separate element publishing

Steve Smith

DCs I was print. were connect over is lowered Yes, first the was, point which three third segment, that question the the the your just the because consolidated going of operational segments, that print efficiencies, breakeven Sal second in your points the particularly time, including which company, to to that including of the the is supplement question, of to all on have

in have, believe because efficiencies, operational you going majority 'XX then will the both mentioned one even and costs two, in with as of mentioned margin we that we the improvement of forward. the that and in points past So volatility those price volume you and in still and

Sal Abbate

Steve. Thanks,

Sandra Liang

you, Thank and Thank you. luck in good the year.

Sal Abbate

Thank you.

Steve Smith

you, Sandy. Thank

Operator

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

Sal Abbate

month, for their work approximately dedication our and to customers. our Every Thank hard day you to members products team members delight one you work earlier thank to to all team solutions us that is Thanks joining dedication today. for our of This customers. our want companies. a admired XXXX class XXXX milestone and Veritiv world's our truly and a for this fortunes hard delivering was team most Thank tirelessly working named I their world achievement our testament company. Colby. members

earnings For call May will Eric look joined soon. Garin, our we current of Colby be Officer the finance, this speaking SVP next who our role assume Chief in Financial by again will We forward you of our now to on call. concludes with March X.

Operator

This concludes today's conference call.

now may disconnect. You

Veritiv (VRTV) 28 Feb 232022 Q4 Earnings call transcript