InnerWorkings, Inc. Q1 2009 Earnings Call Transcript

May. 8.09 | About: InnerWorkings, Inc. (INWK)

InnerWorkings, Inc. (NASDAQ:INWK)

Q1 2009 Earnings Call

May 7, 2009 5:30 pm ET

Executives

Eric Belcher - CEO

Joe Busky - CFO

Analysts

George Sutton - Craig-Hallum Capital Group

Franco Turrinelli - William Blair & Company

Jeff Blaeser - Morgan Joseph & Co.

Naved Khan - Jefferies & Company

Kevin Kopelman - Cowen & Company

Operator

Good day, and welcome, everyone, to the InnerWorkings Incorporated quarterly earnings conference call. This call is being recorded.

At this time, I would like to turn the call over to InnerWorkings' Chief Financial Officer, Mr. Joe Busky. Please go ahead, sir.

Joe Busky

Thank you, Kayla. Good afternoon, everyone, and thank you for joining us on our first quarter 2009 earnings call. This is Joe Busky and I am the Chief Financial Officer at InnerWorkings. Joining me on the call today is our Chief Executive Officer, Eric Belcher.

Before we begin, I'd like to note that this call will include forward-looking statements relating to future results that are made pursuant to the Safe Harbor provisions of the federal securities laws. These statements are subject to a variety of risks, uncertainties and assumptions that may cause actual results to differ materially from those stated or implied by the forward-looking statements. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Listeners to the call are advised to review our SEC filings, including the risk factors contained in our most recent form 10-K. Please note that this call is intended for investors and analysts and may not be reproduced in the media in whole or in part without our prior consent.

At this time, I will turn the call over to our Chief Executive Officer, Eric Belcher, who will provide an overview of the first quarter highlights and business drivers. I will then spend a few minutes on our financial results. Eric will then offer concluding remarks and we will finish with your questions. Eric?

Eric Belcher

Thanks, Joe, and thanks, everyone, for joining us on our call today.

I'm pleased to report that InnerWorkings has extended our track record of achieving profitable growth during the period, and we are well-positioned for accelerated success in the $170 billion U.S. printing industry.

Our first quarter was marked by strong sales momentum in the face of a declining market, as we continued to further penetrate our existing customer base while, at the same time, initiating important new customer relationships.

During the period, we realized revenue of $94.3 million, which is an 8% gain over the first quarter of 2008, and generated operating cash flow of $7.6 million. Our sales pipeline is as strong as ever as we signed eight new organic enterprise clients in the first quarter, and the second quarter is shaping up nicely as well.

Our numerous enterprise wins from 2008 are ramping at a rate that's consistent with our expectations. As a result, we firmly believe the company is poised for healthy and sustained organic growth in the months and years ahead.

While we made important progress toward our new and long-term goals, business in the first quarter continued to be significantly impacted by current economic conditions. Reduced budgets for print and promotional products resulted in fewer and smaller shipments. This excess capacity created by the reduction in overall print volume led to a price drop in the market, which put additional downward pressure on our first quarter revenue.

Our quarterly performance was also negatively impacted by credit-related issues, which are a byproduct of today's overall economic environment. The liquidation of two former customers, combined with a difficult but necessary decision to no longer extend credit to one of our top 25 customers, had a meaningful impact on our first quarter results.

Our well researched and responsible credit decisions have been made in the best interest of our shareholders, and we are comfortable with the credit profile of our current customer base.

Regarding the state of our market, we've begun to see greater stabilization in volumes and pricing versus the recent substantial declines across the print and promotional products industries. The market does not appear to have fallen beyond the lows we experienced at the end of 2008. However, business has not yet returned to levels experienced as recently as October and November of last year.

That said, we believe this is a short-term dynamic, not a permanent, underlying shift in demand for printed products and that there will be a return to historical spending levels in the industry.

While the macroeconomic environment depressed our first quarter results, it has also presented our company with an opening to capture market share at an accelerated pace. I'm proud to report that we are capitalizing on that opportunity.

The combination of our growing reputation and a business environment that continues to put intense focus on cost management remains a driving force for InnerWorkings' ability to capture market share. Further, an end-user of print looking for a safe destination for their print and promotional dollars is increasingly drawn to InnerWorkings, given our stability and financially sound condition. This is an important advantage versus traditional alternatives, many of whom are struggling with significant losses and liquidity concerns.

Today, InnerWorkings is growing much faster than the print market's current short-term contraction. This dynamic underscores our strong positioning for rapid, profitable growth when print spending regains its historical realignment with overall GDP.

The significant cost savings we deliver to the marketplace and our technology advantage have combined to give our sales team substantial momentum. The eight new enterprise accounts we added during the first quarter are evidence that we continue to experience a good selling environment for our solution.

Both the number of sales audits and detailed contractual discussions we are having with prospective clients are steadily increasing. We have every reason to believe that this trend will continue throughout the year.

Now I'd like to talk more specifically about a few customer wins that our business development team achieved in the first quarter.

As we previously announced, Samsung Electronics signed a multi-year, multi-million dollar enterprise business process outsourcing agreement with InnerWorkings in March. We'll be providing Samsung with our sourcing, production management, e-commerce, warehousing and fulfillment services.

Our work for Samsung is core to their operations and their financial results, and we're proud of the fact that they've trusted InnerWorkings to manage these critical elements of their business.

The Samsung agreement incorporates one service offering that I'd like to highlight; our e-commerce stores. Our growing number of online e-stores, of which we have more than 160 in place today, automates the ordering process for items such as customized point-of-sale, promotional products and corporate identity materials. These stores, along with our staffing solution, proprietary technology and other value-added services help cement our client relationships and further integrate us into the fabric of their business.

In the first quarter, we were also awarded enterprise contracts with Lord & Taylor and Iron Mountain, along with several other recognizable brand names, which require confidentiality and cannot be publicized at this time.

While the new enterprise wins are exciting, I want to remind everyone that the revenue associated with these new relationships will ramp over the course of 2009 and 2010 rather than have an immediate significant impact. The 27 enterprise accounts initiated 2008, which we estimated would generate approximately $50 million in 2009 revenue, are on track to meet that goal.

In fact, in the first quarter, we generated approximately $10 million in revenue from our new enterprise clients signed in 2008. Given our historical retention rates, we expect to do business with these companies for many years to come.

Speaking of our client retention track record, excluding customers with credit and bankruptcy issues, we're doing business with 24 of our top 25 clients from the first quarter of 2008. We believe this statistic demonstrates that our key relationships remain healthy and stable. In addition, our current client base continues to have upside for InnerWorkings and our shareholders.

We've learned a great deal from our successes and are using this experience to refine our sales approach and implementation efforts to further enhance our growth opportunities. Today, we have 60 customers that we have billed at least $1 million in the past 12 months. That's up from just 13 clients three years ago. Customer concentration from our top 10 accounts dropped to 37% of our total revenue in the first quarter compared with 42% in the first quarter of 2008.

Taken together, our improved sales traction and significant customer retention have yielded market share gains for InnerWorkings in a shrinking environment for printed and promotional materials. This sets us up favorably to expand even more rapidly when the print market recovers.

Next, I'd like to talk about recruiting and M&A.

As you know, recruiting top quality sales talent to our organization is an important component of our overall growth strategy, and we added 10 talented commissioned sales executives during the first quarter. As a fast growing technology-enabled company and one of the world's largest buyers of print, InnerWorkings is the most exciting company in the industry and the destination of choice for highly driven and talented sales executives. The combination of our model and compensation practices allows us to attract and retain the top producers.

Moving on to the M&A environment. Our acquired companies are, on average, performing well. We are pleased with our integration efforts to date. As a result of these efforts, we have also grown our roster of talented and proven salespeople who are contributing directly to our selling efforts.

Leads generated from personnel associated with our acquired companies have led to some of our most high profile enterprise wins, as we have combined their customer relationships with our technology, reputation and scale to win important new business.

We are continuing to look for the best M&A opportunities in the marketplace. Our focus is on small, easily integrated acquisitions with the primary objective of growing the size and skill level of our sales force.

In the quarter, we completed two small tuck-in acquisitions and while their combined revenue will only be about 2% of our annual revenue, these partnerships enabled us to add several talented new sales professionals to the company.

We remain extremely selective in our process and will not overpay for any acquisition. While we're in a number of discussions at the moment, we are finding that many sellers remain unrealistic about the value of their respective businesses in the current environment.

As the most active and credible buyer in the market, we'll only acquire companies that meet our valuation and structure criteria. We are highly confident in our ability to identify the right businesses and partner with them under our terms.

I'll now address our cost containment efforts. The cost-cutting initiatives undertaken in late January, while difficult, will yield positive results, particularly throughout the remainder of the year. We expect these actions to generate cost savings of approximately $6 million on an annualized basis.

Moving forward, we'll continue to maintain a sharp focus on managing the business by leveraging our flexible cost structure to ensure our expenses scale in tandem with the growth of our company.

On that note, I'll turn it over to Joe Busky, our CFO, for a more detailed discussion around our financials and ongoing cost management initiatives.

Joe?

Joe Busky

Thanks, Eric. I will now take you through our financial results for the quarter, as well as provide some additional color around those metrics.

Our revenue for the fiscal first quarter was $94.3 million. This represents an 8.1% increase over revenue of $87.2 million in the prior year quarter, and was driven by gains made across both enterprise and transactional clients.

New enterprise accounts from 2008 contributed approximately $10 million of revenue in the first quarter of 2009. The revenue from these new client wins was more than offset by three key factors, which caused our overall business to decline organically by 19%, or $17 million, in the first quarter of '09 versus the year earlier period.

Let me walk you through these three key factors.

First, we lost approximately $4 million of revenue due to the liquidation of two companies and our decision to no longer extend credit to one of our top 25 accounts.

Second, we lost an account which contributed $3.5 million of revenue in the first quarter of '08. In 2008, this client accounted for $6.5 million in revenue.

Third, and most significantly, we experienced a same-store, apples-to-apples organic decline within existing customers of $19 million. This, of course, is a result of today's macroeconomic environment.

Enterprise client growth, however, remained strong and continues to exhibit excellent momentum. In fact, we are well on our way to our estimated $50 million in revenue from our new '08 enterprise accounts.

Overall, enterprise revenues increased 10% quarter-over-quarter to $61.4 million with a customer base of 151 enterprise accounts versus 121 at this time last year.

Looking at our transactional business, revenue from this source increased slightly quarter-over-quarter to $33.1 million, and we serviced over 3,000 customers in the first quarter of '09 versus roughly 2,900 in the year earlier period. For the quarter, enterprise sales represented 65% of total revenue and transactional sales represented 35%.

Gross profit for the quarter was $23 million versus $21.6 million in the year ago quarter. Gross margin was 24.4% during the period versus 24.7% reported in the first quarter of '08. This 30 basis point drop in GP margin percentage is due primarily to the greater proportion of enterprise revenue versus transactional revenue.

For the quarter ended March 31, 2009, our SG&A expenses were $20.6 million. This represents a decrease of $4.2 million versus the fourth quarter of 2008. On a percentage of revenue basis, SG&A expenses decreased from 23.7% of revenue in the fourth quarter of '08 to 21.9% of revenue in the first quarter of '09. Both the dollar and percentage of revenue decreases are due to less bad debt expense in the first quarter of '09 and a favorable partial impact from our headcount reduction implemented in late January.

Regarding earnings per share, our earnings per share for the quarter was $0.01 versus $0.08 last year during the same period. This drop in earnings per share from the first quarter of '08 to the first quarter of '09 is due primarily to the following factors: sluggish topline growth due to weakness in the overall economy in the first quarter, higher D&A of $800,000 from 2008 acquisitions, higher net interest expense of $1 million from increased borrowings. Combined, this increase in D&A and interest expense negatively impacted results by $0.02 per share in the quarter.

Turning our attention to the balance sheet now.

For the first quarter, we generated $7.7 million of operating cash flow versus $1.8 million in the first quarter of '08. We ended the quarter with $19 million of cash and auction rate secure investments. A strong cash position, coupled with our low requirements for capital and our highly variable cost structure, drives our financial flexibility and significant growth potential.

During the quarter, we reduced our borrowings on our existing bank credit facilities by $600,000, bringing total gross debt to $42 million and net debt to $23 million as of March 31, 2009. We have approximately $30 million of available liquidity on our bank credit facility and an additional $19 million of cash in auction rate securities.

As an asset light business with low inventory, a short cash conversion period and strong working capital, we believe InnerWorkings' financial position represents a significant competitive advantage and provides us with much needed stability in a volatile market.

Looking ahead to the rest of 2009, we are reiterating the revenue and EPS guidance initially provided in February. Our first quarter results, coupled with seasonality effects, give us confidence that our '09 revenue will be in the range of $450 million to $475 million, with resulting annual EPS in the range of $0.35 to $0.39.

Going forward, we will respond swiftly to new market challenges, manage our expenses carefully through this period of economic uncertainty and invest in those areas that are critical for our long-term growth strategy. We are responding proactively to this rapidly changing landscape and will manage our business through cost control measures as we remain focused on initiating and expanding profitable enterprise relationships.

I will turn the presentation back over to Eric before we open it up for Q&A. Eric?

Eric Belcher

I want to reiterate the progress that we're making, particularly as it relates to market share gains, which are primarily being driven by major new enterprise client relationships. Today, many of the world's most respected brands trust our professionals to source and distribute their critical printed and promotional materials, and we're gaining momentum daily.

In times like these, ambitious companies with clear direction distinguish themselves in the marketplace. We have assembled the greatest collection of talent in our industry, and we're capitalizing on the instability found in the historical supply chain serving our market. We'll continue to seize every opportunity to gain profitable market share.

InnerWorkings is a technology-based company that is creating a revolutionary new efficiency channel in a massive, fragmented and mature industry. In a very short period of time, we've become one of the largest and most influential buyers of print and print-related materials in the world. More importantly, most of our opportunity as a company lies ahead of us

Kayla, let's open it up for questions now please.

Question-and-Answer Session

Operator

(Operator Instructions) We will take our first question from George Sutton with Craig-Hallum.

George Sutton - Craig-Hallum Capital Group

I understand the challenges in Q1 from a revenue perspective, but the one surprise from my perspective was actually your revenues came in a bit better than we had anticipated. Was there anything that occurred late in the quarter that might have started to improve the results that you saw for the quarter?

Eric Belcher

Well, as we just mentioned, the major enterprise accounts that we landed in 2008 have begun ramping quite well early in 2009. In addition, we did also receive contributions from accounts that we landed early in the quarter in 2009. So no help from the economy, but our sales force is delivering.

George Sutton - Craig-Hallum Capital Group

Now, you had mentioned a couple of tuck-in acquisitions in the quarter. How are those deals being structured differently than deals you might have struck a year ago?

Eric Belcher

Both the amount that we put down on day one and the ultimate multiple paid for the business are lower today, as you might imagine, than they were even just 6 to 12 months ago. They are being structured very conservatively. We believe with the best interest of our shareholders in mind.

George Sutton - Craig-Hallum Capital Group

Now I know with new contracts, you are trying to structure those a little bit differently so that you can actually take on work more quickly. Is that actually happening through the contracting process? Are you also being able to build in gain share into many of these new contracts?

Eric Belcher

Well, the answer on the gain share question is yes. We are able to structure some upside for our team if we perform above and beyond the original expectation. Regarding the contracts themselves, one new element of our contracts that we've put in place in just the last several months are penalties for our customers for underperformance when their revenue doesn't materialize as planned.

So that incents our customer base to also ensure that they convert their supply chain over to the InnerWorkings solution as quickly as possible. So that's been quite helpful.

Operator

We'll go next to Franco Turrinelli with William Blair.

Franco Turrinelli - William Blair & Company

Can you talk to us, first of all, I was interested in your comments on the lower pricing and the impact that that had on revenue, but how does that affect, if at all, your ability to deliver cost savings for your customers? How does it affect your ability to capture some of those savings in your profitability?

Eric Belcher

Well, the lower pricing in the marketplace, Franco, doesn't affect our relative ability to buy versus print procurement individual, who does not have the technology or scale or knowledge that our team has. So there is no impact on a relative basis, despite the fact that everybody is able to buy in this market better than they were able to 6 to 12 months ago, as an example.

Regarding our pricing, there has been no impact from a percentage margin perspective. In other words, our pricing, though, of course, the total revenue associated with a given job is down because the price associated with that job is down as well.

Franco Turrinelli - William Blair & Company

To go back to George's question, how does it work in a gain share arrangement, though? I mean if overall industry pricing is coming down, aren't you saving people more money and do you get to capture some of that?

Eric Belcher

Well, the contracts are actually quite sophisticated and they take into consideration differences in substrate costs and also the relative opportunities to buy on a spot basis. So that dynamic is captured. We're not picking up a windfall, if you will, due to baselining to an environment where pricing was higher. It's controlled in the detail of the contractual discussions with our clients.

Franco Turrinelli - William Blair & Company

Then one other sort of macro question, and again, I'll just get back into line then with some more housekeeping stuff. Obviously, the printing industry generally is suffering fortunately, less than others, but do you see any structural changes likely in the industry, either at the supplier level, the broker level or anywhere else in the value chain?

Eric Belcher

No. Not over time. There will certainly be less manufacturers here a year from now than a year ago, but the amount of printing presses and the available capacity in the industry won't change dramatically as companies that might go out of business will find their presses sold off at auction for pennies on the dollar, and a new entrepreneur or an existing printing company that's more healthy will pick them up and install them and keep running them. So we don't see any macro structural changes in the printing industry as a result of this deep recession.

Operator

We'll go next to Jeff Blaeser with Morgan.

Jeff Blaeser - Morgan Joseph & Co.

If I remember correctly, Pulte Homes was a key enterprise ad I think you announced last quarter or the quarter before, and they just announced a pretty big acquisition on their part. Does that add any opportunities for you near term or long-term to expand that business?

Eric Belcher

It does, both near term and long-term. We don't know exactly how much incremental revenue to expect from the Pulte contract due to that major acquisition, but we know there is upside.

Jeff Blaeser - Morgan Joseph & Co.

They are still in control of the printing, at least on their end?

Eric Belcher

Correct.

Jeff Blaeser - Morgan Joseph & Co.

And you also mentioned that on the positive side, the weak economy is bringing in more calls to your sales base, looking for inquiries as to potential cost savings. Are you seeing any initial benefit on new enterprise wins in terms of a larger piece of the business as customers maybe looking for bigger savings quicker than they may have a year or two ago?

Eric Belcher

We are. There is an urgency in corporate America that didn't exist a year or two ago, and we're benefiting from that.

Jeff Blaeser - Morgan Joseph & Co.

Payables was up pretty sizably year-over-year. Is there something driving that number? Is that a trend that we can expect going forward?

Joe Busky

Nothing particular driving that. Actually, if you look at AP and accrued liabilities together on the balance sheet, it's really a fairly minimal increase. But there's nothing systematic there.

Jeff Blaeser - Morgan Joseph & Co.

You are maintaining your guidance with a quarter into the books. Are you more encouraged about a second half turnaround or is it still too early to tell?

Eric Belcher

Jeff, really no change from what we discussed at the February call when we established the guidance. There is clearly seasonality to our business. With our Q1 performance and with the seasonality effects, we're very confident we'll hit the guidance.

Operator

We'll take our next question from Youssef Squali with Jefferies.

Naved Khan - Jefferies & Company

This is Naved Khan for Youssef. Actually, I had a question on the 19% organic decline that you mentioned. How do you calculate that number?

Joe Busky

As we've said in the past, we look at the acquisition impact for 12 months after we bought that company. So for the first 12 months after acquisition, that's outside of organic growth or decline. Once you're outside a year of the acquisition date that becomes part of the organic. So that organic decline of 19%, it includes just the same-store apples-to-apples decline in existing customers.

Naved Khan - Jefferies & Company

Can you tell us how much was the decline within the enterprise segment?

Joe Busky

Well, the enterprise segment was up 10% year-over-year.

Naved Khan - Jefferies & Company

No. I mean organic.

Joe Busky

It's consistent with the 65/35 split. It's relatively consistent with that split for Enterprise/transactional.

Naved Khan - Jefferies & Company

So should I take 65% of the 19% and that would be the number for enterprise?

Joe Busky

Yes. That's a pretty close way to do it.

Naved Khan - Jefferies & Company

Just looking at your EPS guidance, it seems to imply significant margin improvement in the next six to nine months. Can you clarify this for us and how you plan on achieving this?

Joe Busky

Well, we don't give quarterly guidance. The only guidance out there is the annual guidance. If you look at our historical results, you will see the seasonality effects. So we've always seen a ramp-up in the second half of the year and I see no difference this year.

Eric Belcher

I'll add to that that incremental revenue from where we are right now delivered in a quarter adds to the bottomline at an accelerated pace, as we've got our cost structure covered.

Naved Khan - Jefferies & Company

Lastly, you reiterated the revenue guidance but that includes $9 million to $10 million from acquisitions that you did in the last quarter. I think when you initially gave the guidance, you said it was all organic. So does it mean that effectively the organic guidance has been lowered?

Joe Busky

No. The acquisitions we did in the first quarter are pretty immaterial, less than 2%. With that immateriality, as well as the fact that we've got a 20% organic decline in the first quarter, we're not changing our guidance. If we do more acquisitions going forward, we will reassess the guidance and potentially change it if need be, but at this point, it's just not material.

Naved Khan - Jefferies & Company

Then lastly, the one of the top 25 account that you lost, can you go into specifics of why the relationship was terminated?

Eric Belcher

Sure. That client was a business unit of a large consumer package goods company that, frankly, is struggling right now and went through, at the end of 2008, a complete overhaul of their strategy and management team and brought in a new advertising agency and removed us and their former creative partner from the picture.

So it was really just a complete management overhaul of a struggling business unit. We are very proud of the fact that 24 of the 25 customers we worked with in the first quarter of '08 continue to work with us here in 2009.

Operator

We'll go next to Jim Friedland with Cowen & Company.

Kevin Kopelman - Cowen & Company

It's Kevin Kopelman in for Jim. First, on the transactional side of the business, could you give us any color on how that's doing quarter to date and how the growth rate looks compared to the first quarter? Do you have how many transactional clients there were in the first quarter?

Joe Busky

Yes. Kevin, on the transactional business, that was 35% of the total revenue, so $33.1 million up slightly from first quarter '08. The number of customers serviced was a little over 3,000 versus just over 2,900 in the year earlier period. If you look at the organic decline, again, consistent with what I said earlier about the enterprise component, about 35% of that organic decline was related to the transactional business. It was pretty consistent 65/35 spread.

Kevin Kopelman - Cowen & Company

Just as far as what you've seen so far, April, is there any way you could talk about just how the trends continue there?

Joe Busky

Yes. Again, we don't give quarterly guidance. So I'll just stick with the comments that Eric made earlier that we have seen some stabilization relative to the lows we saw in December.

Kevin Kopelman - Cowen & Company

Just quickly, on the costs. Could you give us a sense from the savings, from the headcount reduction, how much of that came into Q1? Also, were there any restructuring charges or anything like that related to that reduction that were in Q1 costs? Thanks.

Joe Busky

We did not get the full impact of that cost reduction in Q1. We got probably slightly less than half of that impact because most of the actions took place in February. The restructuring cost for that action is in our Q1 numbers. It's fairly minimal. Its a couple hundred thousand, it's fairly minimal, but there's definitely some impact in there.

Operator

We'll go again to Franco Turrinelli with William Blair.

Franco Turrinelli - William Blair & Company

Could you kind us walk us through those revenue numbers, the year-over-year decline that you talked about. I think what I wrote down was you lost about $4 million of revenue due to the bankrupt client, $3.5. Well, do you mind just going back over those numbers for us?

Joe Busky

Yes. No problem. The first item was lost approximately $4 million of revenue due to the liquidation of two companies and the decision to no longer extend credit to one of our top 25 customers. The second impact was the lost account which contributed to $3.5 million of decline in the first quarter of '09 relative to the first quarter of '08.

Franco Turrinelli - William Blair & Company

That's the 25th out of 25 clients Eric referred to.

Joe Busky

Exactly.

Franco Turrinelli - William Blair & Company

Okay.

Joe Busky

Then the third piece is the same-store apples-to-apples organic decline of $19 million.

Franco Turrinelli - William Blair & Company

So if I had done my math right, last year 87.2, I take those three categories out, that gets me to 60.7, and then obviously, we have added back 33.6 million year-over-year, which I guess is acquisitions and new customers. Is that the way I think you read it?

Joe Busky

You got it. The $10 million is the number that Eric and I referenced of the new account growth from 2008 and the remainder is acquisition growth.

Franco Turrinelli - William Blair & Company

Again, I'm not actually trying to get quarterly guidance. My understanding is that with the enterprise accounts, you're more on the inside, so to speak. You have a little bit more visibility to people's printing, plans, a little bit further ahead with the transactional. What are you seeing as you sit around those tables? Are people feeling any better? Are they looking to do some more promotional spend or kind of get back to printing a little bit more, or is it still real tough?

Eric Belcher

It's still tough, but we're seeing enough in the way of daily order volume as well as those discussions you referenced regarding planning upcoming programs to give us the confidence to reiterate our 2009 guidance. We're also quite certain that, over the medium to longer term, we'll see a complete rebound in the printing industry regarding printed and promotional products.

Operator

Ladies and gentlemen, that is all the time that we've allotted for questions today. Thank you for your participation in the call.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!