Joel Quadracci: Yes. I mean, at this point in the year, a lot of that stuff, our customers are pretty locked and loaded. There is some ebb and flow in it, and specifically, maybe between months, sometimes. But December is one that kind of sort of materializes later in the game, but we feel very good about where things are at for the rest of the year.
Kevin Steinke: Okay. Any thoughts — I know you haven’t given guidance for next year, but just beyond the end of this year, do you think, I guess it’s dependent on the economy, but how do you think volumes might trend in the industry. I suppose interest rates will continue to be a headwind in the financial services area, but do you think there’s some pent-up marketing spend that starts to come back? Or it’s just going to continue to follow like what the consumer is doing or — just I mean, any thoughts on — from your industry experience, how you might expect volumes to trend or react in this environment?
Joel Quadracci: Well, I think, if you give me a glimpse of your economic crystal ball that I could answer it better. But yes, I think it has a lot to do with how this plays out. I mean, even like in the financial community, you have that shock of interest rates, but ultimately, they still got to market to their customers, right? So they freeze up really quickly, but ultimately, you have to get back to doing it. So I’d see probably some relative return to being out there. In terms of volumes, hard to predict at this point, just given the economic headwinds, but we’re not kind of waiting around, like hope is an operating strategy. Even in direct mail, we’ve had a lot of strategy of how we’re going to grow that in the future. And unfortunately, one of that — and we just closed a plant, which helps with the volume shortfall now but strategically allows us to really shore up and create more opportunity for the type of direct mail we sell in the future.
So I think we always look at all these categories when there’s a softness like that, and we don’t wait to make sure that we can manage through it. But on the sales side, we’ve got a ramp-up of a lot of stuff that’s happening on the marketing experience category. And that’s why we keep trying to show these case studies because these are not bland brands. I mean Titleist is a major brand here, and we feel really good about those wins because a lot of those things we show you, our wins that are, yes, it’s maybe agency of record, but ultimately, we believe, will create a lot more downstream revenue and is normally proven out that way. And remember, any time you get down into targeted print from integrated solutions, you’re dealing much bigger invoices.
So we’ve been very good at bringing in a lot of really good talent. I talked about Josh Lowcock, who’s helping on the media side and the data side and analytics. But we’re going to gear up very quickly to go after a lot of new brands who never knew Quad. So despite what our normal customers are seeing economically in 2024, we expect to keep feeding it with new seeds.
Anthony Staniak: And Kevin, I mean you’ve now participated in a few of our calls, you know that during uncertain economic times, we’re going to continue to focus on strength of the balance sheet, debt reduction. We talked about going — further decreases on debt reduction, getting below 2.0 leverage as we look out into 2024. So yes, as we’ll continue to invest in growth as Joel has said, we’re going to continue to support shareholders. We can do all that because of the strong free cash flow that we provide.
Kevin Steinke: Yes, absolutely. That’s a great point, Tony. And so — and you did mention there, and I wanted — I was planning to ask about this, but the — you highlighted a couple of nice new wins in your slide deck. But maybe just talk about the overall pipeline for your agency solutions and how the messaging around your unique end-to-end integrated marketing solutions is being received in the current economic environment.
Joel Quadracci: Yes, it’s actually being received well. I think that it goes to the ecosystem that’s out there for brands and how they market it is, it’s fairly broken. Like we always say, it’s not very integrated. And in one of my answers before I mentioned, the more a client allows us to look at their process, their content, how they go to market, the more we can help integrate those processes, not just in how they would interact with us in producing it versus a big holding company, but also within their own 4 walls. We’re very good at helping them squeeze the cost out that, that can happen because of cost takeout. So it’s been received very well. And I’d say that I always believe that never waste a soft environment because that’s when a lot of our marketers are under more pressure.
It’s under more pressure to try and find audience, convert them to customers, but also under more pressure to find cost takeout. And so they tend to want to listen a lot quicker in a downturn, but our marketing team has done an outstanding job over the past 2 years of making us known to a whole group of clients who never knew us before. And so we feel very good about the growth of the pipeline and the types of services we’re being asked to do and the fact that the integration part is playing out. And so again, sometimes it takes a little while for someone to start with being an AOR, but then cascade down into us doing in-store or packaging for them. But when they do that, that’s when you start to see the revenue pop from each of the accounts.
So like I said — we’re very ambidextrous. Yes, I’m like a little disappointed that on the print side, we have to manage for some pullback, but I’m super excited on the marketing experience side because it’s really reign true to what people are looking for.
Kevin Steinke: Okay. Great. I just ask maybe a couple more here. But — when you talk about the increases in postage rates and how your clients have reacted to that, you specifically called out the catalog piece. Do you think that’s something they eventually adjust to or you work with them to help them out on that side? I know you already do that in terms of trying to lower their postage expenses. But how do you think that situation ultimately plays out or resolves?
Joel Quadracci: Yes, I think it’s twofold. When you get a rapid increase in your biggest cost, you get a quick reaction until you can adjust for it. So historically, when you see the post office do increases that are outsized, you see a quick pullback. And then ultimately, though, people still have to market, right? So they adjust, they get smarter about who they’re mailing to. They really start to focus more on what’s your response per piece and how can we make that better. That all lends to understanding your data better of audience and who you’re going to and what you’re sending to them. And then — which plays into all the things we’re doing about helping people with analytically figuring out what’s the best use of their dollar.
