RRD - Earnings call transcript Q4 2017

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Operator

Welcome to the R.R. Donnelley Fourth Quarter of 2017 Results Conference Call. My name is Justin and I'll be your operator for today's call. At this time, all of your participant phone lines are in a listen-only mode. And after remarks from company’s representatives, we will conduct a question-and-answer session. that is note recorded. Please Instructions] today’s being call [Operator call to Brian I like the over would now turn to Feeney, R.R. Donnelley’s of Investor President Senior Vice Relations. ahead. go Please

Brian Feeney

R.R. results Thank fourth Justin and you for you, thank quarter call. conference joining XXXX everyone Donnelley's

yesterday. during take Joining posted will prepared Therefore, from and Donnelley's and forward-looking call me in strategy, website and on remarks, this Peterson, risks Chief to Throughout at we Dan, outlook on Chief will R.R. also statements, the be our and involve At our will uncertainties. Terry President the furnished financial results Financial our of and differ the current Terry of on Officer. was press in are Investors questions. actual Officer which the rrd.com. conclusion addressed SEC Knotts, including that This more filed call fourth Form our our comments this today's all refer reviewed section release, materially The Dan call, information Executive copy to which of a could is information I is on today's our expectations. detail of we quarter X-K

over company's informational non-GAAP measures only. appropriate however, is for Any references way company's differ We that non-GAAP the concerning the investors performance. useful information. XX-Q filings provide earnings with other purposes complete supplementary information financial and operations on are provided of an GAAP to comparable the the the are, a the call They non-GAAP the and Form to financial evaluate of results refer website ongoing annual under we now on Dan. further Form section quarterly tab. Further, will our our detailed to press reconciled Investors turn report financial I cause measures discuss and reports XX-K, presentation cautionary release please factors with the will discussion SEC. results believe actual to and Presentation our to our statement the For included our materially, to could release in in in our of the

Dan Knotts

Great. us RRD. today. Good to delivered fourth everyone a Thank for year thank and call strong a our quarter for very joining you, successful We morning, close Brian. you out on

our manage generate Our flow future grow and results cost invest to our ability and in revenue, to strong demonstrate fourth improve cash balance sheet. quarter our

business full customers results them from Our company and and breadth strategic creating our helping that the our critical significant journey, as proud customers advance generate We're strategy. by for we marketing communications to serve business their programs of those clients brand. connect I'm and also of forward made their in a value validate across path progress XXXX a reinforce the the our customers marketing customer new with to the communications, services

for we're We’re cost. investing aggressively improvement our long business improving We're reduce to sheet. term balance our growth and our initiatives driving

While committed to working hard drive there's our more to do, work transformation. and we are ongoing focused,

services in improved me the growth segments. highlights and our Let strategic print variable X.X%, line top posted year-over-year international driven We the segment within quarter. growth by strong performance review and for our of

year. rates, increases our scaling a to operating In and execution represents which in driven results some impact increased job reporting the our for executing provide for the income shift our our delivered and prior our sizable our seeking the increased thirteen organic clients our are multi-channel More performance organic transformation delivering best services, from segments growing within marketing of five our performance like freight expense international external operations the RRD of initiatives, our further we organic as and and on summarize, raw operational non-GAAP favorable Our operating as material of including platform QX improvement our basis, despite our best our of negative differentiated XX% our last first variable to to quarterly as I now servicing which million, company. the headwinds, communications in standalone sales compared of performance the $XXX profitably a of update was quarter our a quarter. capital by our maintaining of sales share, for lower year, cost Eight year, quarter. XXXX. and XXXX, our X.X% our also primarily of to extending delivered We our approach to remain with the performance, business, services Through XXXX. represents follows; On across connect print XX% completed combination tax diluted increased products to to strategic our year since fourth teams capabilities, from ongoing financial customers. Asia, the our strategic since the of quarter. earnings units their our I’d the per actions and evolve delivered core quarter introduced favorable to leading business logistics which priorities sales cost as Those excellence and growth businesses, did and the platforms ever, foreign sales terrific versus than quarterly by business their disciplined grew $X.XX clients improved deliver non-GAAP interest allocation. performance to by company, best To ways priorities a impact of better we an up journey. currency the an

to of and our must their they clients communication they center in the recognize of challenges order put increase, customers innovation at the that As accelerates be successful do. pace everything

communications leveraging of our business customer examples business them our value services capabilities customers like offline client's on and [ph] reducing will simplifying engagements our while complexity helps to that solutions to innovative site, and as well national service their qualitative Together, touch across the current cost. improve improve a and customer as solutions couple and powerful business platform Utilizing with operating and all based to of initiative. drive enable how generated for reach efforts. providing and marketing marketing I'd working engagement online, points, are we're share our future insights solutions their segmentation with the We we're segments research, strategic our of a clients loyalty customer We're of classify optimize clients. customer management and client drive market data effectiveness customer customers to the and resource our through developing that retailer better quantitative maximize behavior and help performance.

that maximize marketing a execution the also portal like highly to our approach operational customers client strategic which offset to provide assemble multichannel customized collate, and both leveraging for share to continuing capabilities new with materials excellence marketing As engage performance allocation. and their This efficient touch to equally customized of optimizing dental working client for manner. customers. on welcome personalized request to created and services their capital execute a We're we enables and and We solution we’re ship. and enables then their highly them impact business streamlined you I’d of custom point clients simple, our through on-demand with to a kits two we’re objectives; also practices our maintaining how use a to items important spend. specifications a based client's digital this partner, customer, promotional our each web this the that in disciplined to

operations to lower and We serve. are continuing streamline our business cost to implement our improvement to plans

improve overall our to cost, out results. we while cost growth waste eliminating and strategic our identifying structure, are improvements aggressively teams process aggressively operating Our a capital objectives manage allocation. And we our are approach driving and deploying to our execute disciplined

accelerate debt our by and reduced back we’ve our the communications invested the With $XXX year, our that, solutions Over Terry. marketing I’ll turn past capabilities, million $XXX while business we to our expand over to business million, call offerings. into

Terry Peterson

million call flat production quarter earlier that diluted and share be our earnings certain Investors higher, seasonal a combination refer organic organic basis, our variable Non-GAAP quarter XXXX. is segment, as in for shared segment the quarter decline in of XXXX Fourth versus and Asia a partially of the increased sales billion year. to and we benefited expectations. reported in gross business. XXXX improvements and better our GAAP with in of a than $XXX reconciliation X.X% have presentation new non-GAAP wins delivered in results primary successfully sales our my grew strongest on well following and comments million am slight section from that report million international impact segment. from the year-over-year initiatives, costs productivity be non-GAAP to in wins delivered also The I of to net most X.X%, was of per This since sequentially international the compared quarter. factors startup we the inefficiencies our digit fourth within due offset was net we as material earnings the the or million the end one-time and The Dan. strategic website digital and double reduction to to our the logistics. reported continue the Non-GAAP most net in in clients the Please fourth sales cost lift erosion businesses as would performance exceeded last compares on to performance, a basis XXXX. performance near quarter, quarter across the the amount performance strong, higher our was our growth per in Quarter in strong services up we quarter higher the tab those results. $X.X sales last strategic priorities. print top segments organic year direct reported transportation higher you, XXXX million, drove of $X.XX as to see in fourth guidance. fourth client XXXX profit we $XX.X previous of by under the price coming across press an the will of quarter pleased charge of On share raw Net we and diluted against X.X% XXXX and and Thank of expected to included these an Asia, businesses, notably and third print Client relationships costs focus a of amount schedules and non-GAAP benefit and top expanded our and existing Organic year-over-year expected segment. all our our sales of primarily On for release was that and results from the it volume commercial the rate and The modest both logistics fourth print the decline. mail as expectations, measures. $XXX.X significant of $X.X the segment, of variable end and execute in I favorable in our

percentage non-GAAP $XXX.X from SG&A Lower million, negative XX% up current our nearly sales, foreign was which The a of more compensation, in XXXX XXXX. amortization as was non-GAAP quarter in sales, period million. XXXX. decline $XXX.X unfavorable partially to rates, quarter quarter incentive from the was a and SG&A, changes gross quarter. changes initiatives impact million Fourth XX.X% than rates. expense from variable compared and year's net net a of and gross depreciation quarter reduction of profit non-GAAP $XX.X cost accounted foreign lower XX.X% to offset million the As lower and year. in XX.X% was for of profit offset benefits last Fourth Fourth as in $X.X income last fourth $XX percentage XXXX exchange higher in of which versus XXXX by included compared SG&A were operations exchange million

operations, expense diluted $X.XX increased of per X.X% of X.X% of non-GAAP As XXXX earnings $X.XX effective a and lower last from quarter a income to per up net the Non-GAAP reported interest year. prior income significantly period. from rate, from Higher contributed share from reported that the in in tax share each year increase. operations income percentage sales, was lower

million deemed repatriation of new tax represents company's charge the liabilities. deferred and for or per a legislation’s results foreign charge tax and earnings GAAP The tax for million assets million untaxed reform. revaluation $X.XX accumulated share $X.X includes related charge estimate of impact to expense to on of provisional tax included SEC recent the Our $XXX.X under The quarter the the a guidance. the $XXX.X

in ongoing pretax may XXXX. primarily estimate charges becomes effort year of available, also the segment. company structure. included primarily our cost Results our $X.X and As this new GAAP restructuring results included charges of for print the other million, reduce variable for impairment intangible and assets a asset update pretax prior other our $XXX.X quarter information other of during the restructuring and related to to the impairment, goodwill for million,

for were in detail. was in variable since of our performance net Next, strongest segments the segment our I in more each XXXX. print highlights our which sales Organic will organic the discuss quarter, flat

growth business plus mail saw impact our mail the improved in services sector of particularly direct programs, Our an significantly increase We client the quarter. in of results earlier new financial with in wins the from reflect year. reported direct XX.X% in the

in from also In wins offset labels new our secular softness addition, in forms. continued in businesses digital growth helped the and printing statement commercial print and declines and

price net the which sales and growth XXXX the amounts $X.X $X.X sales In Non-GAAP related for postage up versus in included increase amount fuel $XX.X in of one-time to Non-GAAP of expectations election softness While offset higher organic million a income was versus by erosion. in strategic sales $XX.X from $XX.X and services offset period. plus up segment, and by million of exceeded partially XXXX from million digital through quarter. modest logistics businesses. pass reductions, XXXX year the surcharges specialty operations $XX.X higher included operations in due in period, cost print income The million Volume services and million were card net million and were digital a quarter, commercial our primarily $X.X our of a X.X% prior our creative the million. volumes. sourcing lower declined was charge

segment period the by growth expected, from of million While quarter, driven in savings Net sales XXXX as reductions a primarily were on the negatively net XX.X% packaging the sales we international period. going Asia in basis cost by $X transportation achieve impacted over our in continued the to up our initiatives, which Organic for quarter. grew business. to nearly cost higher reported our was into continued compared XX%, as

process million was year inefficiencies businesses. in prior changes price outsourcing, reported versus increases, start and raw in and cost down Unfavorable period. rates, Asia business up America from $XX.X global million our Latin We also growth income turnkey solutions, Non-GAAP Canada of modest $XX.X operations exchange foreign drivers corporate partially erosion the material by and offset expense, reduction quarter non-GAAP XXXX. reduction partially by cost Cost this initiatives million compensation variable lower versus unallocated expenses quarter debt expense. volume. the the XXXX improved by of $XX.X only of Fourth higher additional were fourth $X.X of reduction, offset initiatives million primary were bad in

would a Before continuing were cash like Net and organic year flow X.X% $X.XX our billion, an full discuss basis. basis results the the sheet, briefly to I I year balance summarize on and flat operations. from reported for XXXX sales for on up

sales XXXX. up operations slightly best our And $XXX.X of $XXX.X diluted increased XXXX. non-GAAP was Non-GAAP represent income $X.XX per earnings share per share XXXX from performance the in results from since million organic Our diluted substantially $X.XX in of from reported million reported XXXX.

a represented of performance XXXX step goal Our growth. to we as significant achieved returning forward, our

end, guidance throughout the last in many year the XXXX to well million exceeded XXXX operating issued the or includes XXXX. compared P&L year provided we to cash $XXX.X Net challenges of in and related all achieved spinoff by components for cash full $XXX.X activities teams was of our million responded either million payments. as $X Our approximately The amount February. in the

million and flows cash include $XX in Financial prior plus $XXX.X related not Capital flow expenditures amounts million of operations. have September $XXX.X related to reminder, versus XXXX, which discontinued your spinoff through cash restated. XXXX from a the payments As of Donnelley and approximately were $XX in cash million been LSC million XX

to sheet. now Turning the balance

at reduced of drawn $XXX December EBITDA outstanding our and nearly against had including debt total plans availability which we outstanding benefit credit last retirement post from XXXX Remaining in of be are improved $XX at to of credit $XX was all approximately other cash $XXX plans to other as under and million, income under level XX, adjusted by from Versus the lowered plans XXXX. and on of facility $XXX year, the million million on XXXX funded our million billion, we underfunded million. flat the and Required December million pension retirement our $XXX.X XX. million we contributions year-end, our of $XXX has will as were at ratio facility. to the Also, all pension at debt $XXX.X expected $X.XX hand post million, XX%. total As approximately by by end debt

US expense As a most from reclassified income is reminder, with SG&A required in beginning to of accordance in XXXX, be this to income GAAP. non-operating

results of period earnings lower and to on to have in impact reclassification like be income, the our would shift While this for share reclassified income non-operating and now will impact prior expectations maintain will operations per consistency I will from no XXXX. to it presentation. increase

share sales expected year, $X.XX billion to from in to to X.X per For as from full net $X.XX X.X XXXX. $X.XX Non-GAAP to billion XXXX. to billion effective range share as expect diluted to several for compared the we a earnings factors per to as range higher year XXXX, X.X compared outlook There is tax range share due the an negative our to key The estimated in rate. impact compared per impact including $X.XX includes XXXX the are following. that

of price years. rates to sales erosion be the net comparable higher past the to XXXX and modest reflecting at expect We at midpoint our flat volumes range, to few

well continue throughout We as expect XXXX cost the increases in in material raw which of year. started as costs transportation, to

increase normalize target. if further expense an in We may expect we in variable to achieve which XXXX, expense our compensation our result in

executing continuing our inflation offset the price our of cost various modest erosion of we impact in our which will business items, strong expect and including on are each segments. focus We plans, improvement

XXXX in less basis. be on to rates exchange foreign of impact a negative a expect year-over-year We

which expect amortization and expense quarter before have million we Depreciation is the the negative further we with impact. quarters, more to quarter, in one $XXX $XXX However, as first expected prior comparisons range from year we reflect unfavorability to million. do have

for expense between non-GAAP rate tax expect a rate XX%, domestic XX.X% result which in as the our tax rate on earnings million now interest higher per year accounts XXXX. The reform. be a $XXX is new anticipated And to limitations diluted effective expense reduction tax We deduction interest The is to $XXX the primarily higher $X.XX full share than be company's per in roughly approximately significantly million. share. of and due higher is to

discrete to expected cash $XXX.X benefit from XXXX. million expect we not range reported In also payments, expenditures contemplates addition, to million, capital included related payments. which are improvements $XXX to recur adjustments, to from range XXXX This cash compares range flow certain our Shifting in million in tax rate include XXXX flow, from which working the are of $XXX the higher operations million to to tax an XXXX. $XXX to estimated million $XXX interest reform, and million. lower will $XX expected to Capital which

expected the our for quarter Next, would the year. first performance to on like I comment of

While and comparable we unfavorable results costs we to be and negatively transportation foreign exchange our to material variances. be estimate by net our higher impacted XXXX, expect raw sales to

rate effective our tax in into one-time first of taking the consideration XXXX. nearly diluted of share $X.XX after the of higher significantly reform Additionally, and will per quarter impact tax be benefit a significant

in have year All of full these been factors guidance. our considered

of ongoing questions, like capital up open the priorities. we would Before call I our remind to for you

stockholder acquisitions As we past stated organic investments our value. evaluate I to our potential portfolio strategic optimize continuously quarters, for opportunities business, both investments to and and have in expect including we make in strategic

to remain line to open And now shares And our questions. the each dividend, the although dividend let’s expect repurchase operator, foreseeable committed quarterly future. In addition, up board in do does quarter. not for our our we we recommendation review

Operator

the line [Operator CJS to Instructions] of we’ll with Strauzer go Charlie Securities. First,

Charlie Strauzer

guess I customer driver main I international. up mentioned driven into that's in the have growth that putting ramping that Asia that for we’re money performance good assume that you facility by it's in the international previously and Hey, of there? the

Terry Peterson

at Yeah. impact. a but tail Absolutely. full have end quarter started of the did third That producing fourth very revenue we really quarter, very,

increase see So, that did through. you coming

Charlie Strauzer

is to balance thing? And of how XXXX Asia. a that QX of tail the of it for growth through be going year or continuing the and international about just that more and to kind in the starts should we segment off, kind think Is of kind particularly

Terry Peterson

that of Yeah. the benefit is we'll We're We very a significant optimistic on essentially primarily sales that three continue generate three have our quarters where first Asia. will do international the off net and to produce contract, new first which quarters nicely. in contract, performance, so

little time, Some rate in that taper the lapping from of XXXX growth will be at quarter, in a of we bit, by fourth off fourth all will that, the quarter generation contract here. initiation because the in of revenue likelihood, point that that

So, continuing we growth pretty about feel overall, throughout XXXX but that good here.

Dan Knotts

And Charlie, it’s Dan.

bit in to Just to chime are more -- a add to bit think that, important I think points to there little about. there little a two there

actual the growth are of and client. that The particular the first new of producing product is one is facility to new for launch the that we a related startup that

associated producing because second there's the about the how or demand capture in we we market. performs actually drive with have products that for have think the in product performs product support they that that didn't as So is that And XXXX, the have growth that our how overall will in product past. that point of performs there how product that we to

levels predicated the product. end growth XXXX. new potential on the or of new the as And the associated performance the -- with be the product you of are volume towards a and then know, launch to the additional there products then, it's that of impact going launch particular other So is adding of opportunities,

So as out. how we'll that out We'll plays how see plays that see well.

Charlie Strauzer

growth versus look those segments year? especially for the Great. should the of two year, that variable at got variable, you've you about declines segments And in coming we two midterm elections in how and up other think strategic this kind if

Dan Knotts

Yes.

on growth Dan continual start variable print put relative with of the segment the mode it’s this to kind of the I’ll again. Charlie, So and market.

that which in printing. about be challenged end to general to general, the about digital print, we what come I’ll market of in, market, all is the be commercial as call, lower thinking continuum, continues revenues the and a we’re As primarily on commercial where year, talked related election

base teams Consolidated our there. challenged in market here, our So our be continues network to of continues general to a to position former market. That's and there, as Print Commercial read leverage hard combination that the be, client working platform further are expand to extremely existing our Graphics the in penetrate but you and RRD a

other the the got and continuum, particularly our and our talked And hand On direct of mail well. was strong, was quarter, labels. performance we've XXXX, mail the performance good in good in as about fourth very labels our we direct as statement printing was

a that So, end, continuum to direct extent, labels other growth it's the bit statement within of print. across secular of of could It mail, a printing digital the and happen forms. and businesses that decline a on continues smaller also to commercial include,

As versus that that more the for see outside publishing have going to in we offering standpoint, the forward then the business about two and creative sourcing services, particularly digital thresholds retail print our growth sourcing From continue that consciously we from catalog standpoint, a truly opportunities on making parts expect those that, of evaluating production we and expect from the there digital meet historically margin and I and strategic side expectations. we we And are a creative that. traditional a to physical segment. solutions the One sure the saw logistics. think is servicing of that type

that line the that top looking to rate drives the within just not a sourcing. a for a for looking margins growth there, at to grow we're continued do but So at rate and going we're it

Charlie Strauzer

of little a little And just account out terms about modeling maybe take should QX, thoughts and into discussion then and we kind how abnormal should that could how Terry the we we of for bit? QX about a year-over-year it any think on have in to model variances

Terry Peterson

Yeah.

to in there, to you quarters, to of us. that likelihood, headwind still a was little had look looking although mentioned in some per That was of other share we nearly material we've the tax before And quarter I at seeing along still of along. able at bit impact and we’re tax seen share. there a of elevated from there the If we us biggest as our just quarter pass there, bit transportation to be We're on through is from really of in help year and of but negative the of be, length time a some the typically there's headwinds then customers, bit the Asia, of will along Probably creating our varying the compared a same is all actually but charges. the -- our that that first lag that create those can will particular, in really drivers it contributing extent some that too then last going quarter, on the customers, we a We're passed first factor pass it costs and cost much delay a we’ll changes negative for a internationally. FX, other passed that $X.XX at be in to side. year. have parts that can back to Again, also benefit And when key lingering the but can bit per raw a the world in recover not well quarter. will last of get some it's little -- of past a headlines about prior couple for $X.XX see,

So, those the are of really drivers. big kind

Charlie Strauzer

the mostly stuff, right? throughs those on right, side, all That the and impacts pass profitability

Terry Peterson

not the is That side. side, is correct. profitability the revenue Yeah. That

Charlie Strauzer

in for revenue think we And terms year-over-year? trends how about just of should QX

Terry Peterson

flattish last year. from our coming -- abnormally just almost some got well. specialty about, what bit cards Pretty there. declines is will lift I had very we're really businesses little international, in of talking side, but overall mean, like we'll down a expecting print you variable we have the quarter a will in be as have some That first secular print

expect we strength either. repeat So, don't that to

Charlie Strauzer

That's talking stuff that? about, a you’re pokémon like things

Terry Peterson

cards. Specialty

Charlie Strauzer

Got you.

for Okay. the we how Great. EPS of year top at year? kind of -- if And full then just going gave you back should EBITDA think and you to line, guidance, about look kind

Terry Peterson

Yeah.

you the If going up of from you'll ranges pretty bottom using of into you I we you guidance be the but model efficiently, be the to taking taking the there, gave side, into that tax interest the should the top last able some that rate, a consideration, to get look but side data the all and down that through D&A, the pieces are the year's pretty reasonable gave, some range. actual on and

Charlie Strauzer

I – the reasonable? of sound flattish Because Yeah. kind that Does am year-over-year at it’s midpoint.

Terry Peterson

That’s not line. out No. of

Operator

Citigroup. of Phipps David have we up, Next

David Phipps

because Can a the you you sales guess bit when growth in sector, high I'm the little it strong continuing I see was factoring the was. had in talk at in a to end look little I little surprised bit quarter as -- organic of a components, as about the the growth was only fourth some and high of range bit the that international

in from one bit away little you of So are year a the services are there variable kind just strategic called are being that factors transition there conservative? things, the time-ish that are any or the out, things big and things print that during

Dan Knotts

describe would XXXX I for guidance approach. a our as taking Dan. it’s David, balanced

performance anomaly so, those Charlie's that I the the the look line, the products reporting case. much our on pretty Asia, of at at with look the wouldn’t there, in look we and for I logistics as demand our in in in that as continuum question challenges are mentioned if to growth of clients' or go having growth our but go the an happened Asia and secular particular there's along like I’ve it’s we product say as forms, particular demand As products take top of as mentioned, for at we predicated that top XXXX, all line

of always a trying a challenge. So is for that project looking bit to XXXX at

So continue to Asia growth to return in growth, approach we an mail balanced in from growth. direct that a we’re business. saw standpoint. trying but to maintain Logistics, the QX, expect We our a

contrast As Terry when had wins that in sudden direct into also new mentioned, a performance, or there, decline the or saw we volume. but to came that mail financial services that we of ’XX QX stop compare play

balanced about So, mail bit confident there we're our by position direct a in of there's taking a a and space approach. the unknown

and side and print, that of the print overall XXXX. for and challenged the of challenged believe we’ll We commercial forms, bit other We -- you market in a we in market if mentioned, market digital commercial think outperformed the in I XXXX. the strongly a believe and about As I digital product. terms jump mentioned again outperform a to demand

So, balanced through a approach number businesses, if individual factors of describe line there different the we towards a go is as it each but I for XXXX. of guidance would top

David Phipps

that cash of we touch impact, one-time believe would $XX the XXXX so quoted if it? addition then if taxes, in back Is maybe paid cash or you that to you in And recast is have tax what high can million to taxes. kind more I you in on

Terry Peterson

tax coming under That’s guidance would cash any would some computed new we're reform, and probably law really if that or shifts the $XX say be developing is million income had going of generated. the our old years payments bodies in increase. what tax regulatory versus line under that's in normal, we other the I where tax of for out is from taxes, seeing to been reform that absent our have looking tax at, more old about under impact a

So the a of I'd foreign is past transition task that that past get earnings period. over that say gets X-year that paid an out for can until that we more norm

will payments is because cash be obviously, done. that that us, So we’ll behind down after come

David Phipps

XXXX call were? what taxes the cash you out Did

Terry Peterson

-- the Cash company taxes for were pretty were nominal. overall

David Phipps

out would expenses Okay. charges unusual XXXX? expect what pension do And versus look in you what XXXX, then any you are they when into be cash there or the restructuring were

Terry Peterson

The $XX flat payments about will be will and million. pension cash add for

I think, XX.X million for there XXXX. was

say side and of P&L. would at between not income expense $XX That through be too flat net would flowing actually million income, pension OPEB we there. have The ’XX again we our that, ‘XX. flat So in

Operator

Next, to we’ll Carey go RBC. Bosch the of line of

Carey Bosch

in So the questions. recent bond guys I investor previously, couple most centric presentation. you of of turns. your I'm holder. you that in leverage a a X.XX had didn't presentation investor I've that to targeting One, bond see were got holder put X.XX

since back other if is to I back a working you if you range, difficult guidance I So far not comfortable now into something still sort guys so, going are to because but it EBITDA, provided as have you're you I just to question past as said you just that math the that’s we not about it, be I it. and you're then get guess providing able providing to X.X is be know guys if a you a turns in specifically on and could little the color be to going or provide wondering think could forward still something correct? of on my we're at you is might think that target And committed there? how

Terry Peterson

ahead go This me Terry. and Let that. is take

to it few the all ago, So, have updated first for leverage a a us. to And X.XX from the leverage, term remain does target, still guidance not target in we that of long times. the X.XX reference quarters

very for on reduce, but we will our well of the to to very to, committed take do in to will this number looking the opportunity, focused company are of it execute both of driven as as net gross larger continue a continue to years leverage We reduce years take it as to strategy, that. a a and number absence event the the

would So continuing of initiatives also advantage at what take sorts to of looking other down. flow that it that we free to do might well as accelerate generation help we or through as are us bringing opportunities cash

guidance, the have target leverage then that have focus not to to all we're the have we compute situation And we is regarding X.XX continuing where given pieces again, updated but of it's EBITDA it. term not So a bring and providing it, to down not comfortable we that long -- media the X.XX.

range reasonable ranges might had can and D&A the similar if we very had a to published mean you range look that we information. very the calculate looked the EPS have range between for I for compute if interest, something and you So and that at provided

the in year. So, produce I both for come that estimate and all very and end there think the with bottom our up to range reasonable with, a a would using is top would between and data anything at say, next the up come EBITDA for

Operator

to Bill go Baird. we’ll Next, Mastoris line of the of

Bill Mastoris

follow how debt you a kind Terry a your of reduction. I'd prior about thinking up you're on like question could maybe bit little articulate and to about

beyond due which you we are longer dated XX.XX the to expect think next going purchases is a of market have open bonds, in about that, easier debt, that? You bit is should to in that the if of maybe that And February. you bank or how thinking do little reduction coming your be are maybe some

Terry Peterson

handful pull maturities. of we and more reasonable our focus down because the on out finalize immediate we that That's just $XXX and pretty to an some a the our now plan is immediate. mean, consider the we basis, on and certainly option in that those to we that’s to opportunity those of but look depending out so longer of debt, I to go our on at it's on come on are start with option, tender took would the take stuff continuing million is earlier next months would to but bank and the year just ahead is now, On that at focus rates on upon that say here basis. down to happens next is day-to-day we Yeah. did coming as opportunistically term us. our debt on table strong up what to take for opportunity the between an first quarter to and out a most the will focus really pay those the Depending a where day-by-day easy we're I in really year, is that the put credit them need credit plans, XXXXs as facility. facility, say

out the the current consider would we consider wouldn't we well. there like opportunistic something XXXXs the, although opportunities said, some the even to maturities again, XXXXs, of focusing I've as some take As on more or maybe

First focus facility and finalizing and on and reducing and stuff XXXXs the reductions. obviously it through the on is day-to-day facility plans credit those credit the foremost,

Bill Mastoris

a could be initiatives you reduce be on greatly of maybe used And little you that bit to other debt, a mentioned expand that number could that appreciated? also would if

Terry Peterson

where That's Yeah. mention too look selling assets we've focused it’s other we I selling a just to monetize mean, not more -- of efficiently. or location portfolio. another that opportunities always is include our we That another an strictly can either did asset at that utilize an parts business. property idle got, or also I can on

like So liquidate consolidation provides opportunities sometimes, real estate. to things

event opportunities You our saw types and that be look are driven more so of that those at to opportunities we things would -- the debt reduce that leverage.

Operator

of Capital. McCaffery Michael Next we’ll go Shenkman to

Michael McCaffery

a I guess have I couple.

question is, debt. as free flow if last far The to on cash up just the can first as I follow using retire

loan, the take versus plus where back longer the and given reason or in quarter, what trade dated aggressive haven't some down the discount, the pay revolver? paying there a of but You some the to revolver to why bonds term did the in particular open the market, term is discount at the during use more return of those those been guess, you that a the buying out not down XXX I is

Terry Peterson

when ones taken mid-term get which we we you the we looked at included that did longer-term and go maturities. Again, Yeah. recall, maturities some of those the group. for And ones, tender, if below did we out at longer-term the those did of after $XXX collection million par

recall, about did and XXXXs, start And further on you So, tender. execution the also on biggest not as also were discount the we that we maximum reach those part the felt the and very tender if good of our was that. that

literally into us that So to those willing was turn everybody did.

end to inter-quarter, quarter bonds on alive. maintain very able balances facility XXXX that accommodate, putting to credit being but still the the maturity having to and and trying retire flexibility enough have feel credit facility, going not credit versus facility. We're the the more some have that pretty aggressively so we're that’s to option attacked addressing down through here end having as again, mid-XXXX. to an trying balances, options that right month it around now maintain really we So, flexibility good process options tender hard multiple those the in currently that on of the pretty and to or first terms coming by after that stuff option for quarter only paying from looking opportunity keep And about the at well flexibility opportunistic of to inter-month up as

picking we've off in the actively open opportunistic been not repurchases. So aggressively market,

Michael McCaffery

of And couple questions. guess then clarifying just a I

can about was and just driven customer is based as more through by you to call, the As this the should explain, single I broad relates that international, throughout it think to follow you something is made the comments continue during growth it a or XXXX.

Terry Peterson

and I not of a one Yeah. not certainly just reported our segment a standpoint on the quarter. our of had Asia just single piece businesses mean, top business good very, line just had Every businesses international that have new very one growth, bit, growth degree. varying single to about overall piece but our of part talked a packaging reported every the just has large of It’s results. Asia had a we that quite actually one business the

had So, good parts we talk that other bit really of in tend would a expect to we but a some strength but quarter as not we only fourth about to continue, the that more, little Asia well. and piece,

Dan Knotts

particular of we number product, as we new is the about, And China reporting to talked significant unit, product to Yeah. think but clients there. certainly that, Asia, a one for the just serve us, we add and about which in

clients. So it’s spread out across multiple

there to client grow broader that base. continuing are across expectations Our

to said, in addition Latin as and turnkey America also well. businesses what drove in our Terry Canada global BPO growth In we

So, client. a strong very it overall to directly performance tied international, one is not just

Michael McCaffery

international you the just growth, a GDP, economies I organic growth strength drove operate, GDP, the that? growth, is it the or characterize not share having gains guess as in of you and just well but Would largely market function that which

Dan Knotts

would the I versus more as much it latter the describe former.

Michael McCaffery

that XXXX? add starting growth a than broadly quarter was balance, fourth impact made ramp. And the the then the you you XXXX that is of for volume to comment XXXX, balance just that more guess in I on you from had the much in clients of positive really new On more had the year in How lot clients rate? earlier on did versus signed were

Dan Knotts

going service to, base say forward we to would with every I we’ll calls in updates only a on we're try company, subsequent and to our go QX, had one new client the so examples overall you I expand to and had, calls calls. on our have as It's wins our a to single in we we for service and that would offering, client So of continues of clients opportunity sell to we bring or we clients, and differentiates continue believe our offerings and one get them QX looking from particular the those performance represents our about on sell on back do things talked of general, that significant continuing a doing to us provide services represents industry those the products we're to we the a across say base. lot a once the as that. we lot clients in, products we and that portfolio onboard product within others focused through significant are to other acutely of to

services also or as one help wins, costs. going through to expanding our number call them reduce products selling have certainly of chain their simplify additional them after help those then time wins, new for please. And we well aggressively but clients, supply as operator, of new the more position So complexity

Operator

Ridge. of Lastly, we’ll line Ron Elm go of Gutfleish to the

Ron Gutfleish

you. Thank

this but I think you check. answered later, I want to because,

as would penalizing That your capital that do, to acquisitions. You are you interest thinking seem nondeductible. very thing with deployment a mentioned given of that possibly is

Terry Peterson

tax but interest Yeah. evaluate we is advancing the opportunities with acquisition. you're right, and what Ron, we associated to so take reform, with additional strategy likes, debt that into as another that like with the we've look we're talked acquisitions as about us books does place deduction on out in -- like associated with that there either is quarters cost helped would past consider well, synergies, the take the and consideration

to So, there, be of potentially more consider is -- a so is open obviously domestic generated, lot That would factors create but that would acquisition. to that income a up there's that hypothetical where in income interest deducted.

where that So it depending reform again the or by on circumstances and is, or be. it be of impacted may may not tax the may acquisition may not, geography

Ron Gutfleish

penalized thought reform above and domestic, have carries would be at do you forward It although tax but hurdle what you a level, backward. though And for? a leverage interest would the to that on seem you still, certain get if it that deduct it's can't underneath even that also I

if this don't going you pickle call, to it pickle, if out doesn't that be you seem get the pickle, of out So this of get you this get really if get of and out you're this back. to in

Terry Peterson

rate true for opportunities not again and go planning would That can that us. indefinitely that, deducted we access that ways carried provide for to get and interest is up to that as is and forward will causing and that future is relief absolutely so to looking for being tax the something the rate look be

Dan Knotts

I and to earlier, acquisitions, we Terry and our a would bit continue of we in we're relative evaluate what will as as portfolio little businesses And going continue like growth the to just the portfolio at color newer clients our or on all have a service Ron, look add going we said past to forward going overall going to to the portfolio, are forward, our going of our into all capabilities going elements forward of that we and need our to markets, that extend businesses up we're position basis. businesses look at options make to, our

scenario, and with help relative level the specific cost level appropriate a multiple the particularly EBITDA the to deduction at So in be because relative it those particular increased at think about of increased commentary interest on the to are side opportunities interest to rate to of buying I actually right driving answer is synergies acquisitions, the them accurate has there with to which the the acquisitions, look think acquisitions. we associated your -- question, as at

our that of we and and to way. that drive opportunities of growth profitable we portfolio businesses going all long-term do to So we will evaluate to strategy need value to our as are those continue shareholder the we execute along enhance evaluate

thank turn please? back you, Operator, Well, over everyone. Okay.

Operator

Certainly.

further questions it to for turn certainly to remarks. host in happy So closing be with our queue, no I’d any

Dan Knotts

Okay. Great.

again on you our members today. our to dedication thank the like team to take us commitment talented call a I'd your minute everyone for thank joining world clients. So and for around to serving the

for our and marketing clients, execute communication they implement experts are in markets serve. employees strategies. They their business and solutions develop, which support powerful Our in the

journey. us have our we to continue a We on forward transformational team as carry great

our I markets. positioned in As marketing in earlier, well expanding mentioned and path company. we our presence as strategic markets. confident in We're growth our We're are a solutions communications core new business

models. business our enhancing We’re

needs market our support sharpening the execution of to to our go evolving clients. We’re

to We’re balance our as aggressively cash our performance managing we sheet. flow increase our future our in cost operating improve and invest and

stronger our company final XXXX that, a profitable with on entering clear We’re to for executing to growth over With long-term drive focus as I'll RRD. for a you. over points. it strategy hand Brian some Brian,

Brian Feeney

Thanks, Dan.

of replay quarter quarter As results posted the Thank our XXXX call access joining concludes of press in reminder, of on fourth that website is Donnelley XXXX R.R. earnings to the and Donnelley’s rrd.com. you the fourth us a release, morning be copy our fourth this a can section for call. Investors which information quarter found telephonic at R.R.

RR Donnelley & Sons (RRD) 28 Feb 182017 Q4 Earnings call transcript