Cimpress plc

Welcome to the SIEMPRESS Q4 FY2024 earnings call. I will introduce Meredith Burns, Vice President of Investor Relations and Sustainability.

Thank you, Dee. And thanks, everyone, for joining us. With us today are Robert Keene, Founder, Chairman, and Chief Executive Officer, and Sean Quinn, EVP and Chief Financial Officer. We appreciate the time that you've dedicated to understand our results, commentary, and outlook. This live Q&A session will last about 45 minutes and will answer both pre-submitted and live questions. You can submit questions via the questions and answers box at the bottom left of your webcast screen. Before we start, I'll note that in this session we will make statements about the future. Our actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and the documents we published yesterday on our website. We also have published non-GAAP reconciliations for our financial results on our IR website, and we invite you to read them. And now I will turn things over to Sean.

Great. Thanks a lot, Meredith, and thanks to everyone who's joined us today. Before we get into questions, I'm just going to highlight a few things from the two documents that we published yesterday. That first document was our earnings document that we normally publish, and then the second one is Robert's annual letter to investors. As we noted in the earnings documents, Sympress had a strong finish to a strong year. In Q4, consolidated revenue grew 6 percent on both a reported basis and organic constant currency basis. For the full year, revenue grew 7 percent on a reported basis and a little over 5 percent on an organic constant currency basis. Adjusted EBITDA grew $5 million year-over-year in Q4 to $119 million off of a tougher comp last year that had some one-time benefits. and we had year-over-year currency headwinds of a little more than $3 million as expected. For the full year, adjusted EBITDA grew $129 million year-over-year to $469 million, which is 38 percent growth. And that growth is inclusive of year-over-year currency headwinds of $19 million, which is consistent with the expectation for currency impact that we set at the beginning of the year. Our full-year adjusted EBITDA margins We're up over 300 basis points to 14.2% in fiscal 2024, and that was driven by a combination of revenue growth, gross margin expansion, and then also the cost reductions that we announced last March. From a segment perspective, every segment accelerated revenue growth sequentially this quarter, with the exception of National Penn, where we made a choice to reduce advertising spend, and that impacted the revenue growth rate but significantly improved profitability. In VISTA, we continue to see growth in per customer value, which is a trend that we've been talking about for several years now. And we had our sixth consecutive quarter of growth in the number of customers we're serving as well. Those two things combined are having a positive impact, and that's been driving a lot of incremental, that's been driven by a lot of incremental improvements in the customer experience, but also new product introduction that's supporting the attraction and retention of higher value customers across our geographic markets. Over the last two years, the value of VISTA's new customer cohorts has been strong. And over time, what we're seeing is that starting to have more impact on the health of repeat customer performance as well. Adjusted free cash flow was $117 million for Q4 and $261 million for the full year, a great result that benefited from our strong profit growth that I just went through, but also strong working capital inflows. Q4 did include proceeds from the sale of a building for just over $17 million. That was something that we referenced last quarter. But nonetheless, very strong cash flow result. It was our highest ever for a fiscal year and also for a fourth quarter. During fiscal 2024, we repurchased 1.7 million shares for $157 million at an average price per share of $91.09. That represents a 7% reduction to the shares outstanding at June 30 of 2023. And we're able to do that while substantially reducing leverage and increasing liquidity. Of that total fiscal 2024 repurchase, we repurchased 638,000 shares in Q4 for $56 million at an average price per share of $88.20. We finished the quarter with net leverage at June 30 of just under 3.0 times trillion 12-month EBITDA as defined by our credit agreement. and that's down from 3.9 times last year. Our multi-year outlook remains both positive and also unchanged. We expect to grow organic constant currency revenue at mid-single-digit rates, possibly a little higher. We expect to grow adjusted EBITDA slightly faster than revenue, and we expect a multi-year conversion rate of adjusted EBITDA to adjusted free cash flow to be approximately 45% to 50% with fluctuations from year to year. In our earnings document, we also shared some housekeeping items that hopefully will be helpful for all of you as you seek to estimate our profitability and free cash flow for FY25. I'm not going to go through all those details here, but I'm happy to take any questions that you may have on that. And our plans for this next fiscal year, fiscal 2025, will be done all within the context of the leverage policy and commentary that we introduced last quarter, which also remains unchanged. This is a strong year. It's a year that just ended and now all of our focus is on continuing to build on that progress in fiscal 2025 and the years ahead. I'd encourage everyone to read Robert's annual investor letter that was also published last night and gives an update on our strategic progress. After years of hard work through transformation, technology migrations, increased investment, we feel we're poised to continue the progress that we had in fiscal 2024, leveraging our scale-based advantages that we're seeking to build upon including in the area of production and supply chain, where we'll be investing more in CapEx in the year ahead to take advantage of opportunities there. So with that, Meredith, why don't we get into questions?