Quad/Graphics, Inc. (NYSE:QUAD) Q4 2023 Earnings Call Transcript

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Joel Quadracci: Yes. I think you have to look at debt levels and leverage in conjunction with the business you’re in and your ability to manage challenges. In a growth business, people would say we’re underleveraged. In a business like this, I think we’re being very prudent because of those unknowns. And I would tell you, we will continue to pay down debt until I see something different. And that’s why I like the balance of a sustainable dividend we’re doing, being able to still opportunistically look at share repurchases, but I want to see that same question answered. And therefore, we want to continue to keep paying debt down, which is why we changed our guidance on the leverage range. Tony?

Anthony Staniak : We have — you heard this when we went through the slides, but roughly speaking, 50% of our debt is fixed, 50% of it is floating interest rate. And so with the rates where they are right now, in addition to just being prudent on debt leverage to Joel’s point, it saves real money as we can pay down debt, and then use that lower interest spend, use the cash from that to put it into growth of the company. We still dedicate 2% of our revenue to capital expenditures. Yes, some of that is maintenance, but there’s also large prices that we’re putting in, in automation to continue to make things more efficient, and more technology spend as we continue to innovate. So you’ll see us move money in that direction, lowering debt helps in that regard, and happy to do the dividend.

Joel Quadracci: And another thing, Barton, if you look back at where we come from in our strategy, when we started playing a consolidator in the core business that — where the product lines are shrinking, it was about managing good, strong free cash flow by making sure you put the work in the most efficient plants and then squeezing down the platform as volume went down. So it’s not just the cash isn’t just on a regular basis, isn’t just from yearly free cash flow. It’s from expected sales of those assets that you close and sell as the organic decline happened. And so the two of them have resulted in that huge ability to pay down debt, mean we went through a pandemic, and we’re still paying down debt. That’s because we treated all cost as variable with closed plants as the volume dictated it. And so that ability is there to manage what goes to us. But meanwhile, this flywheel of all the other services and driving other large invoices in print will continue to go.

Barton Crockett: Okay. That’s very helpful. Thank you, guys.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Joel Quadracci for closing remarks.

Joel Quadracci: Okay. Thank you, everyone, for joining today’s call. I just want to close by reiterating my confidence in our team and our strategy and in our future as a marketing experience company. Our pipeline for new business remains strong thanks to our unique offering, and we will continue to prioritize growth in verticals and product lines with the greatest expansion opportunities while managing all aspects of our business for long-term strength and stability and shareholder value creation. So with that, we look forward to speaking to you next quarter.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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