Cimpress plc

Good day and welcome to the Centris Q4 and fiscal year 2022 earnings conference call. I will now introduce Meredith Burns, Vice President of Investor Relations and Sustainability. Please go ahead.

Thank you, Vaishnavi, and thank you, everyone, for joining us today. We decided to host this earnings follow-up webcast in light of increased investor focus on macroeconomic uncertainty, as well as the fact that our annual investor day will be in September. which is later than it has been in recent years. With us today are Robert Keene, our founder, chairman, and chief executive officer, and Sean Quinn, EVP and chief financial officer. I hope you've all had a chance to read our earnings document and annual letters to investors. There's a lot of information in these documents, and we appreciate the time that you have dedicated to understanding our results, our commentary, and our outlook. This live Q&A session will last 45 minutes to an hour, and we'll answer both pre-submitted and live questions. You can submit questions live via the Ask a Question box at the top right of the screen. Before we start, I'll note that in this session, we're likely to make statements about the future. Our actual results may differ materially from these statements due to risks that are outlined in detail in our SEC filings and the documents we published yesterday on our website. We invite you to read them. And now I will turn things over to Sean for some brief remarks before we take questions.

Great. Thanks a lot, Meredith. And let me echo our thanks to those who have joined the webcast today. Before we take your questions, I just want to highlight a few salient points from the information we released yesterday. In the fiscal year that just ended, June 30th, Sympress delivered record revenue and gross profit in the face of significant cost inflation, supply disruption, and lingering impacts of the pandemic. Our organic constant currency revenue growth accelerated in the second half of the year and to 19% in the fourth quarter. Our value creation trajectory is clear in our upload and print businesses, in National Pen, in Build-A-Sign, in Printchi, and you'll see strong results across each of those businesses. But it's worth highlighting that our upload and print businesses as a whole, which now represents 30% of our consolidated revenue, had record revenue and record combined segment EBITDA this past fiscal year, despite these macro conditions and also currency headwinds. And the two largest businesses in the group had record new customer acquisition during this past quarter as evidence of the continued shift from offline to online, which we believe accelerated in the current environment. So very strong results there. In our largest business, Vista, revenue growth wasn't as strong as many of our other businesses, and profitability this past fiscal year and also in the fourth quarter was significantly weighed down by high levels of discretionary investment and also cost inflation that increased in the second half of the year, and was not offset by price increases, although we believe there's opportunity for that in the near term that we've started to take action on. In Vista, we're progressing on our multi-year transformation journey with stronger foundations. Vista is now nearly complete with the migration to our new tech stack, which is launched in all but one small market. That effort has required an almost three-year dedication of almost all of Vista's engineering resources and constrained our bandwidth to innovate and improve our customer offering, but as we look forward, It's a crucial enabler in product development, in data and analytics, in personalization, and in accelerated new product introduction. With our foundational investments in place, the VISTA team now has a clear focus on demonstrating that VISTA's transformation can now yield rapid improvements to customer value and the financial returns on the significant investments that we've made. And we look forward to sharing tangible examples of that at our September Investor Day. To offset some of the cost inflation that's baked into our cost structure as we head into this next fiscal year, but also to further prioritize our focus on areas with near-end financial returns, we've been proactive to reduce costs in parts of SimPress as well. The savings from actions outlined this quarter and also in last quarter should result in annualized savings of about $25 million. In the annual letter, we also described important liquidity and risk management topics that allow us to keep our focus on operational execution despite increased volatility. We have ample liquidity. We have no material debt maturities until May of 2026. We have a robust currency hedging program and a portion of our debt denominated in Euro amongst other balance sheet hedging. And we have a mix of fixed and floating rate debt, coupled with the use of interest rate swaps to mitigate the impact of interest rates. In our letter, we once again shared our range of estimated steady state free cash flow, which shows a decrease from our pre-pandemic high due to VISTA's financial results, and in particular, the impact of cost inflation and also product mix changes, which is partly offset by increases in our other businesses. There are plenty of external inputs, like the impact of inflation, the impact of currency swings, and the like, that are anything but steady state right now, but nonetheless, this range that we've disclosed implies an intrinsic value per share that's significantly higher than where our share price is trading today. We've also provided forward-looking commentary by component in our annual letter, I'm not going to go through all that here, but in summary, we see Simpress as being competitively advantaged and able to continue to grow profitably for years to come. In Vista, where we've been investing significantly, we expect annual organic constant currency revenue growth in the year ahead to accelerate from where it was in FY22, which was 5%. And on the profit side, we expect that the shape of Vista's profitability improvement will start to be visible in FY2023. and that over the next several years, VISTA's segment EBITDA and Unlevered Precash Flow can return to historical highs. With that, Meredith, let's open it up for questions.