Quad/Graphics, Inc. (QUAD) CEO Joel Quadracci on Q1 2019 Results - Earnings Call Transcript

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About: Quad/Graphics, Inc. (QUAD)
by: SA Transcripts
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Earning Call Audio

Quad/Graphics, Inc. (NYSE:QUAD) Q1 2019 Earnings Conference Call May 1, 2019 10:00 AM ET

Company Participants

Kyle Egan - Director of IR and Assistant Treasurer

Joel Quadracci - Chairman, President and CEO

Dave Honan - Executive VP and CFO

Conference Call Participants

James Clement - Buckingham Research Group

Dan Jacome - Sidoti and Company

Operator

Good morning, ladies and gentlemen and welcome to the Quad's First Quarter 2019 Conference Call. During today's call, all participants will be in listen-only mode. [Operator Instructions] A slide presentation accompanies today's webcast and participants are invited to follow along advancing the slides themselves. To access the webcast follow the instructions posted in this morning's earnings release.

Alternatively you can access the slide presentation on the Investors section of Quad's website under the Events and Recent Presentations link. Following today's presentation, the conference call will be open for questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kyle Egan, Quad's Director of Investor Relations and Assistant Treasurer. Kyle, please go ahead.

Kyle Egan

Thank you, operator, and good morning, everyone. With me today are Joel Quadracci, Quad's Chairman, President and Chief Executive Officer; and Dave Honan, Quad's Executive Vice President and Chief Financial Officer. Joel will lead off today's call with a discussion of our continued Quad 3.0 transformation. Dave will follow with a summary of Quad's first quarter 2019 financial results followed by Q&A.

I would like to remind everyone that, this call is being webcast and forward-looking statements are subject to Safe Harbor provisions as outlined in our quarterly news release and in today's slide presentation on slide 2.

Quad's financial results are prepared in accordance with generally accepted accounting principles. However, this presentation also contains non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, free cash flow and debt leverage ratio. We have included in the slide presentation reconciliations of these non-GAAP financial measures to GAAP financial measures.

Finally, a replay of the call and the slide presentation will be available on the Investors section of quad.com shortly after our call concludes today.

I'll now hand the call over to Joel.

Joel Quadracci

Thank you, Kyle, and welcome, everyone. Our first quarter 2019 results were in line with our expectations and reflect consistent execution against our strategic priorities. As always we remained disciplined in how we run all aspects of our business and continue to make the necessary strategic investments to ensure we grow our business profitably, while strengthening our core business and maintaining our industry position as the high-quality low-cost producer.

We continue to work toward completing the acquisition of LSC communications and expect the all-stock transaction to close in mid-2019. Quad shareholders voted to approve the issuance of shares in connection with the acquisition at a special meeting held on February 25th.

In a separate meeting, LSC shareholders voted to adopt the agreement and plan of merger. We are enthusiastic about the value and stability this transaction will create for our clients and shareholders.

As outlined in slide three, through this business combination, we will enhance our highly efficient print platform to fuel our Quad 3.0 transformation and strengthen the role of print in a multi-channel world, deliver time and cost savings opportunities to clients from our complementary platforms to maintain the long-term relevance print and preserve the long-term strategic vision of the Quad/Graphics family as we move forward in a disrupted marketplace, generate synergies and additional strong free cash flow to create more profitable company and enhance stability by maintaining our strong and healthy balance sheet from the all-stock transaction structure.

In turn, this will enable us to adjust for ongoing digital media disruption and offset print industry declines to growth in our integrated services offering in Quad 3.0. We continue to build on our Quad 3.0 momentum. Our recent acquisition of Pariscope, a leading independent creative agency accelerates our transformation with its best-in-class capabilities and strategy, creative analytics, media buying and more.

Through our Integrated Marketing Solutions platform, we create more value than the traditional siloed agency approach that exist today. Our clients benefit from reduced complexity, increased efficiencies and improved marketing spend effectiveness as well as cycle time reduction.

On Slide 4 we show some Pariscope's exceptional creative work, that is winning recognition. The team recently won multiple awards at the show 2019 and annual event sponsored by the Advertising Federation of Minnesota, honoring exceptional creative work from agencies. Pariscope took home the coveted best of show, plus an incredible 25 order wins for clients such as Trolli Candy, the Minnesota Lottery, Great Clip Hair Salons and Transfers & Foods for work related to social media execution, TV and internet commercial, integrated advertising campaigns and more.

This is a huge honor and reflect how Pariscope delivers on its mission to do things people want. In addition, Quad also earned several other awards including a Gold AVA Digital Award for video work and American Advertising Award or ADIS for social media work. As a marketing solutions partner, our focus is on solving problems for our clients, which in-turn, generates more revenue for Quad across all our business categories.

These categories which are shown on Slide 4, 5 include integrated services, which has experienced 40% growth since 2017 and is now nearly 20% of total revenues. Targeted execution set a strong base for Quad 3.0 growth and large-scale execution, which provides the scale and cash flow necessary for future investment opportunities.

Our Quad 3.0 strategy is working, as evidenced in the new and expanded relationships with clients and is a significant driver behind our best quarterly organic sales performance since 2014. The work we are doing today for omni-channel retailer Bed Bath & Beyond is a great example of how we're partnering with our clients to advance their strategies and goals through innovative use of our integrated marketing solutions platform.

We have had a 20 year relationship with Bed Bath & Beyond and over that time, we've built a strong relationship settled on mutual respect and trust and commitment to innovation. Bed Bath & Beyond selected us as an innovative partner to collaborate and execute on a solution that would allow them to better leverage available data, to more precisely target campaign content and offers and do it efficiently at scale.

Our solution have the added-benefit of simultaneously reducing costs and production cycle time, a win-win. This excess open the door for us to do more for Bed Bath & Beyond including data services in whole logistics services. I'm pleased to share that, Bed Bath & Beyond recently signed a contract extension with us.

Series XM, the world largest audio entertainment company is another client with whom we partnering to deliver the Quad 3.0 solutions, focused on improving response rates. Recently Series XM successfully completed the migration of its direct-mail business to Quad as part of a new five-year multimillion dollar contract.

Now that this migration is complete, Series XM look forward to exploring additional strategic opportunities with Quad and we are prepared to deliver. The work we're doing for clients like Bed Bath & Beyond and Series XM shows that our Quad 3.0 strategy is working. Our Integrated marketing solutions platform, which includes marketing strategy and creative through execution across all channels, reduces complexity, increases efficiency and improves effectiveness.

As we continue to evolve our offering and deliver more value to our clients, we remained focused on a consistent priorities to make long-term strategic investments that further accelerate our transformation and proactively address the changing needs of our clientele, generate sustainable strong free cash flow, drive the EBITDA enhancement, strengthen the balance sheet and demonstrate our ongoing commitment to providing long-term shareholder returns.

I want to thank all of our employees for the important role they play in our ongoing transformation as a marketing solutions partner. Together, we are creating a better way for our clients, our shareholders and our collective future.

With that, I will now turn the call over to Dave.

Dave Honan

Thank you, Joel, and good morning, everyone. Our first quarter results were in line with our expectations, and we remain on track for delivering our full year 2019 financial guidance. For competitive purposes, the first quarter of 2019 includes the acquisition of Periscope, which was completed on January 3, 2019.

Slide 6 provides a snapshot of our first quarter financial results. Net sales increased 3.8% to $1 billion, driven by a 4.4% increase from the Periscope, IV and Rise acquisitions, partially offset by organic sales declined a 0.6%.

Included in the organic sales decline was a 0.8% negative impact from foreign exchange losses. Excluding those foreign exchange losses, first Quarter 2019 organic sales grew by 0.2%, our first organic sales increase since 2014.

We continue to realize incremental revenue from expanding client relationships as part of our Quad 3.0 offering, which helps us to offset some of the organic declines in print, due to ongoing print industry volume and price pressures, primarily in our large-scale execution category related to magazine, retail inserts and directories. Our annual sales guidance assumptions continue to include downward price pressures of 1% to 1.5% and print volume declines of 1% to 4%

First quarter of 2019 adjusted EBITDA of $70 million was at the midpoint of our guidance range of $65 million to $75 million. This compares to $110 million of adjusted EBITDA from the first quarter of 2018, a $40 million decrease was due to $22 million in non-recurring benefits in 2018 that did not repeat in 2019, which included a gain on property insurance claim and a change in employee vacation policy.

The remainder of the decrease was an $8 million impact on strategic investments made to increase our reproduction wages in our multi-competitive labor markets and the impact from organic print pricing and volume declines primarily in magazines, retail inserts, and directories.

As a result of these variances and the dilutive impact on our margins from increased pass through paper sales, adjusted EBITDA margins declined to 7% from 11.4% in 2018. As we discussed on our last earnings call, we anticipated a decrease in adjusted EBITDA on the front half of 2019 in the back half. Within the front half of 2019,we expect a sequential improvement in adjusted EBITDA in the second quarter as compared to our first quarter and expect second quarter adjusted EBITDA to be in range of $70 million to $80 million.

Within the back half of the year, we expect year-over-year growth due to increased synergies from acquisitions and revenues in our Quad 3.0 integrated services offering as well as productivity improvements from the additional long-term investments in employees and in automation. Free cash flow was negative $101 million, as compared to negative $22 million in the first quarter of 2018 and was in line with our expectations.

The decrease is primarily due to increased capital expenditures of $21 million from the long-term investments in automation and productivity in our manufacturing platform, $19 million in lower net earnings and an expected decrease in cash provided from seasonal working capital changes.

In addition, we incurred $3.3 million of LSC transaction related payments in the first quarter of 2019, which we exclude from free cash flow. As a reminder, we've realized our strongest volumes in the back half of the year due to seasonality, and as a result, the majority of our free cash flow will be generated in the fourth quarter of the year.

Slide 7 includes a summary of our debt capital structure as of March 31st. We completed an amendment and extension of our credit facility during the quarter, which provides us with the liquidity and structural flexibility for the pending acquisition of LSC Communications and maintains our strong and flexible balance sheet.

The amendment increased our existing debt capital structure by $725 million and extended maturities of the revolving credit facility and Term Loan A through 2024 and the Term Loan B through 2026.

Debt increased $201 million to end the first quarter at $1.1 billion, primarily due to a $120 million of net cash paid for the Periscope acquisition and seasonal negative free cash flow as previously discussed. We finished the first quarter of 2019 with a debt leverage ratio of 2.99 times. As we've noted before, at times we may operate outside our long-term targeted leverage range of 2 to 2.5 times depending on the timing of compelling strategic investment opportunities, such as January 2019 acquisition of Periscope. Therefore our current priority for the use of cash will be debt reduction until we're back in our long term leverage target range.

Additionally, the pending all stock acquisition of LSC will also increase leverage. However, we do expect to be back within the 2 to 2.5 times targeted leverage range within two years of completing the LSC acquisition. This is consistent with our history of de-leveraging back into our long-term targeted leverage range within two years of completing a significant acquisition as we've demonstrated with the World Color and BROWN Printing acquisitions.

During the quarter, we entered into a five year $130 million interest rate swap to convert variable rates in the fixed rate debt. Including the impact of the swap, our debt capital structure is now 66% fixed and 34% floating with a blended interest rate of 6.4% as of March 31, 2019.

We estimate that our current blended interest rate of 6.4% will decrease to approximately 5.7% upon the completion of the LSC acquisition, as delayed drawn Term Loan A will then fully fund at a lower interest rate. Available liquidity under our $800 million revolver was $516 million as of March 31st, and we have no significant maturities until May of 2022. We believe we have sufficient liquidity for current business needs, pursuing future growth opportunities and returning value to our shareholders.

Slide 8 shows our continued commitment to our dividend, which is one of the ways in which we return value to our shareholders. Our next quarterly dividend of $0.30 per share will be payable on June 7 to shareholders of record as of May 20, 2019. We consistently paid a quarterly dividend and our annual dividend of a $1.20 per share is yielding approximately 10%, that represents less than 40% of our free cash flow at the midpoint of our 2019 guidance.

In addition, the free cash flow yield on our stock price at the close of business yesterday was approximately 27%, which is significant in today's market. While left of the year still remains in front of us, we're pleased that our first quarter results were in line with our expectations and that we remain on track for delivering our 2019 financial guidance.

We've made significant investments such as the Periscope, IV and Wise acquisitions to expand our offering beyond print production to include an integrated stack of higher marketing services. This expanded offering, at a time of continued media disruption, provides us with the unique opportunity with our clients and we believe makes Quad a compelling long-term investment for our shareholders.

We continue to work towards completing the acquisition of LSC Communication, a combination that we believe will strengthen our print platform to fuel our Quad 3.0 strategy and create greater value for our clients. Given our experience of acquisitions of this nature and scale, we are confident in our ability to execute on this integration and create future value for all shareholders.

And now, I'd like to turn the call back to our operator to facilitate taking your questions. Cole?

Question-And-Answer Session

Operator

Thank you. We will now begin the question and answer session. [Operator Instructions]. And our first question today comes from Jamie Clement with Buckingham Research Group. Please go ahead.

James Clement

Good morning gentlemen.

Joel Quadracci

Good morning Jamie.

James Clement

Hey, Joe. If I can, so, obviously, top line performance back in 2014, can you talk a little bit about where the strength came from and kind of how much of this is integrated services, how much this is more on the execution side and also the blend of the two, like turning execution customers into services customers and vice versa?

Joel Quadracci

Yeah. I mean everything is really more seems towards this 3.0 sale and it's really making a difference. But let me just kind of walk you through, the different categories. When I look at retail inserts, that industry continues to be down about 12% for the quarter, but we fared significantly better, being above 7% or so, due to some recent wins there. And again, retailers have a lot of need for help right now, and the whole story about the integrated marketing really resonates with them. So, while we might be down a little bit in retail inserts there, we're also offering a lot of different services, such as in-store signage with recent wins that we've done there as well as some of the creative services that we have to offer.

The catalog industry is off about 2% and I think that, they tend to be second half heavy. When I look at publications, they're the ones who continue to struggle to compete with the digital media out there and they struggle with turning their offering in the printed world into pages.

They were off about double-digit, we're a little bit worse than that, just from the standpoint of some shuttered titles that's happened and some frequency change. But also, as they can - one evidenced of how they continue to compete here or try to compete, ESPN Magazine, they just announced that, they're going to cease the print edition, they'll continue to do some special items there, but that's something coming in the future.

And then when I look at books, books has been a better story as of late than I think people thought, but it's still a challenged area. And, they were off about 4% if you look at the industry, but also a big announcement this morning, which really shows how they have to continue to navigate this digital world and how they compete with it is Cengage and McGraw Hill just announced the merger this morning.

James Clement

That was my second question. So, go ahead.

Joel Quadracci

Yeah. Well, you can see that everyone is trying to figure out how to navigate it, I mean, books are not going away, but they have to be able to compete with, digital offerings in terms of lower cost items with online education and things like that, which is stated in their press release.

But a real great story here this quarter, especially is direct mail. The industry had head-to-head growth in it, but we had significant growth this quarter. We were well into the double-digit percent growth in direct mail. I mentioned SiriusXM was a major win for us, but we've had multiple wins, and these are 3.0 wins. We are using things like accelerated insights, which is our virtual testing platform to help people figure out how are they going to drive data and use aggressive personalization in print.

And I want to keep reiterating the capability we have not just in direct mail, but in catalogs and magazines is we can really drive tremendous amounts of personalization, if people are using the data correctly. And because we're helping them use the data correctly, we're seeing in direct mail, when people personalize, and when they work with us to figure out what is the right data, we're seeing double-digit increases in response rates, which as you know is a significant deal for our customers.

And so, we continue to see that, the direct mail space will very much grow in the complexity of billing. And I have to tell you, my hats are off to all the employees who work on personalization at Quad, not just in direct mail, but on the catalog side. I'm always amazed at what they can do with every piece can be completely different. And it shows in the response rate changes.

So, while we have challenges in certain categories, we're very proud of the best organic growth that we've had in a long time. And it really is because of the way we're selling prints and helping people make it more responses as well as the additional services and other forms of print that come with it.

James Clement

Okay. Alright. Thank you for that, Joel. And I if I could get third here, on, I think my numbers are pretty close to right here, but if I take the full year, the 380 midpoint, full year EBITDA guidance, I think that implies your - if I did I take the midpoint of kind of 70 to 80 that you discussed in the second quarter. I think you're looking at kind of somewhere to the tune of like up $20 million? Can you help us bridge that a little bit? Because, I mean, I would, I know you mentioned acquisition synergies, but I mean, I can't imagine you've got $20 million of synergy with Periscope.

Joel Quadracci

Yeah, I know. It's a combination of things and Jamie, it's a really good question. Your numbers are right on, based on how we're guiding the year, that's a midpoint of the guidance. The majority of where you're going to see improvement from us is in the productivity and cost reduction standpoint, we've made a lot of investment into our platform in terms automation, but we've also when we talked about this in the third quarter of last year, made significant investments into starting wages and very competitive wage markets and our plant.

That has had the result of reducing turnover in our facilities and getting us to more full employment levels, which in turn with our training and education of those employees is allowing us to drive productivity through those facilities. It is not a light switch. So, it takes some time to come around and we're starting to see that happen in the first quarter this year and that's building. Predominantly, we've waited that in our guidance to the back half of this year, as we've continue to see that improvement in productivity.

Dave Honan

I'll just further point out Jamie. If you look at last year, last fall, we always strive for better productivity, but last fall was down from '17. And so, we know when we have the right people and we were not struggling to find bodies and train them up. We know we can get back there. And we've seen a drastic improvement in our pipeline of people, not just in getting bodies, but also in the quality of people coming in.

And so we've really put a lot of the emphasis on training, because we know we can get right back there on the productivity. And that's a big part of what you're going to see.

Joel Quadracci

Yeah, and I think that's the final thing I would just say about the cost reductions side is, with the amount of available capacity in this industry, there's a lot of excess capacity. You essentially carry that to produce in the highest seasonal peak for volumes, which is into the third quarter and beginning of the fourth quarter.

What you'll see from a cost reduction standpoint, and then we'll be able to address some of those fixed costs once we come through that busy season into the like fourth quarter. And so some of that is also built into the fourth quarter, as we've projected this year.

James Clement

Is it also fair to say, if you're investing in automation in the plans, that it's not just the capital investment but you've also got, I don't know, whether it's training and just kind of whether that impacts your productivity temporarily also. So, it's a little addition by subtraction, is that something that goes away? Is that also a little bit trick?

Dave Honan

Yes, it's all kind of layered together. So, you have a multiple prong in approach and how we have to manage the platform and automation is certainly a big part of it.

Joel Quadracci

Yes, you saw a CapEx in the first quarter was up $21 million over last year. And then that is the timing of that automation investment which started a pretty heavy in back half of last year as we were dealing with the full employment levels and trying to get to those more employment levels, but also the ability to take fixed costs out of the platform and being able to automate and upgrade equipment and the continued investment we make in our customers, so that we can offer more substantial personalization in the four walls of our plans.

James Clement

Okay. I will pause for now and get back in the queue. Okay.

Joel Quadracci

Thank you.

Dave Honan

Thank you. Operator?

Operator

And our next question comes from Dan Jacome with Sidoti and Company. Please go ahead with your question.

Dan Jacome

Good morning. Can you hear me?

Joel Quadracci

Yes.

Dan Jacome

Can you talk a little bit more about this engage? Actually, I know you work through them. Something I'm seeing here on in 2017, at least and I know it's probably too early to tell, but how do you think this transformation us we heard this morning across the industry could impact things like book fulfillment and then industry pricing, in the next couple years? I'm just trying to understand, do you think it's going to be, and it sounds like yes, but do you think it can be a net positive or neutral or how are you looking at it just on this initial glance?

Joel Quadracci

Well, I think, I can't speak for them. But in release, they did talked about a big part of the reasons to better compete with digital alternatives. And that stuff is real, so to me, it's a net positive because, I want them to be healthy, I want them to be strong and I want them to be able to print books, and together both those companies, we've worked with them on lowering inventory levels be more just in time, and really providing that digital print side that we've talked about in the past that really helps to them manage the print side even better.

So, I look at it as a net positive. And it also goes to show you that they still have to navigate this challenging multi-channel world.

Dan Jacome

Okay, great. And then my next question was just on the approval process for the other states, the financing is there you have the shareholders approving, did you get any additional requests or anything to that matter from regulators in the last couple of months? I'm just curious more than anything.

Joel Quadracci

Yes, I mean those process is what the process is, which is they asked for information and we respond with it. And so, we've been in active dialogue with them all the way long way and we expected the process that we're in. And so, nothing really changed here. We expect to close midyear.

Dan Jacome

Great. Thank you.

Joel Quadracci

Thanks, Dan.

Dave Honan

Thanks, Dan. Operator any more questions?

Operator

We have a follow-up question from James Clement with BRG. Please go ahead.

James Clement

Hey, guys. Thanks In terms of the timing from regulatory approval to actual close just kind of if the weeks ago and that kind of things just kind of for a modeling purposes and that sort of stuff like, once it's approved, assuming it is approved, how long it would take to close?

Joel Quadracci

Jamie, we expect as soon as possible after receiving that approval to move ahead to close. So, we still thinking it's kind of the midyear guidance, but we're actively working with the DOJ right now and trying to help them complete the review.

James Clement

Okay. So like, I mean, but not a matter of months, I mean, you're talking way less than that, right?

Joel Quadracci

Yes.

James Clement

From an approval to close, like, I don't know what's it's going to be approved, obviously, okay. And then just in terms of like, the decision and timing of the investment in the plants, whether it be automation or whether it be maybe additional staff, it is part of this any anticipation of the deal? Like in other words, more volume is ultimately is going to be floating is this I mean, it also like this is money part of your $135 million, dollar for dollar calculation on cost for synergies or we're not there yet?

Joel Quadracci

Well, it's all kind of mix in, so hard to delineate, because we automate anyway and make investments in the platform anyway, but we are doing - the two company that are still competing.

James Clement

Sure.

Joel Quadracci

So there is not a lot of planning in between the two companies, but we certainly plan and are planning on our side of the steps we need to take when it closes and that includes some of investment that we've made in these mega plans to really make sure that it's ready for whatever decisions we have to make. So, yeah, I mean, this length of time to go through a process like, this is challenging, because you want to get in and plan more together, but we're doing a lot of stuff on our side.

And as you know this isn't our first ride in the rodeo. We've certainly done integrations in the past and I think we pretty much done everything we have said, we've exceeded, typically with what we have said we would do.

And so, what's great about it too when I think I talked about this in the past, we have a PMO losses that really knows how to kind of handle and manage this and when we were doing acquisitions, they actually just stayed in place and help us to manage cost. So, it's not like we have to fire up the capability that we had several years ago and capability is continue to operate in a different mode and now very easily it's transitioning over to the integration side.

James Clement

Okay. And then, Dave, I mean, obviously the stock going to do, what stock is going to do, but if you - once you close this, I can't remember exactly what you said your average borrowing cost was, but it was in the fives. You conceivably I mean if it was right now, I mean, your dividend yield would be twice of your average borrowing cost. Is there anything in the new facilities that would preclude you're going to into the market and being opportunistic in buying back stock as you have periodically over the years?

Dave Honan

No. Our debt agreement allow that flexibility to be very balanced with our capital approach. I did say in my prepared remarks that, our primary use is going to be debt reduction. We like to operate in that 2 to 2.5 times leverage range. It gives us a lot of opportunity to take advantage of this placement in the marketplace or just have the ability to make the right investments that really fit 3.0 strategy.

So, I think you have seen in our past Jamie, we continue to be balanced about this opportunistically. There have been times we got into the market and bought some shares. We have a $100 million share repurchase authorization as Evergreen and so we can take advantage at the right time. But again, I really point to my commentary, which is about debt reduction and that's really important for us to have even stronger balance sheet as we move forward.

Joel Quadracci

And Jamie I can't over emphasize my excitement around 3.0. I'm seeing things happen that really interesting and we're going to want to take advantage of investments that we might want to make in a future on whether it's in talent, capability or development from innovation standpoint. And so, again, we see this is a real shift happening and to be honest, I'm actually seeing people that used Print before, starting to try it, and my favorite quote I heard from a customer, who I won't name, from the Millennial Group after seeing the results of some direct mail was, wow, the stuff really works, doesn't it?

So, it looks like a new technology for some people but..

James Clement

I get it. I get it, but all I was getting at was like, I mean, obviously if you're retiring shares, those are dividend checks, you don't have to payout. It's actually cash flow accretive, you know what I meant?

Joel Quadracci

Correct.

James Clement

Most dividends are cash flow accretive, I'm just - that's why I was asking. Okay, guys thanks very much. I appreciate the time as always.

Joel Quadracci

All right. Thanks Jamie.

Operator

And this will actually conclude our question and answer session. So I'd like to turn the conference back over to Mr. Joel Quadracci for any closing remarks.

Joel Quadracci

Thank you operator and thank you all for joining us. We will certainly continue to update you as appropriate on, the process we're in on the acquisition side, but also as the world turns with 3.0 and we'll see you next quarter. Thank you.

Operator

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