Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Quad/Graphics Fourth Quarter 2015 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 last night's earnings release. Alternatively, you can access the slide presentation on the Investors section of Quad/Graphics website under the Events & Recent Presentations link in the left-hand navigation bar. Following today's presentation, the conference call will be opened for questions. [Operator Instructions]. Please also note this event is being recorded. I will now turn the conference over to Kyle Egan, Quad Graphics' Manager of Treasury and Investor Relations. Kyle, please go ahead.

Thank you, operator. And good morning, everyone. With me today are Joel Quadracci, our Chairman, President and Chief Executive Officer; and Dave Honan, our Executive Vice President and Chief Financial Officer. Joel will lead off today's call with highlights of our financial results along with a more detailed discussion of our path forward in 2016. Dave will follow with a more detailed review of our fourth quarter and full year 2015 financial results and a summary of our 2016 guidance 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. Our 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. The replay of the call will be available on the Investors section of our website shortly after we conclude. The slide presentation will remain posted on Quad/Graphics website for future reference. I will now hand the call over to Joel.

Thank you, Kyle. And good morning, everyone. Today, I am pleased to report that our fourth quarter results were better-than-expected thanks to our team's focused efforts to aggressively manage costs and improve manufacturing productivity. Our team took swift action following a challenging third quarter and helped to offset the increased pricing and volume pressures that had accelerated in the second half of 2015. As a result net sales for full year 2015 were $4.7 billion consistent with revised guidance and our preliminary results released on January 6th. Full year 2015 net sales by product line and geography are shown in Slide 3. Adjusted EBITDA, adjusted EBITDA margin, free cash flow and debt leverage ratio were all significantly better-than-expected and exceeded both revised guidance and our preliminary results. Moving onto Slide 4, as we look ahead the global economic climate remains very much in flux. Therefore, we will continue building on our cost control momentum through aggressive, innovative cost management and improve labor productivity all of which supports our goal to be the industry's high quality, low cost producer. At the same time we will continue to transform our company by repositioning our true benefits to our clients and our role as a printer to align with the new world of marketing. This is our focus in Chapter 3 of our company's journey. As I have shared with you before, we refer to our company's 45 year journey in chapters. Chapter 1, our first 40 years was characterized by tremendous organic growth. Chapter 2, which began in 2010 has been about our role as a disciplined industry consolidator. Today, we continue to do our transition to Chapter 3, which is about transformational opportunities in a multichannel media world. In Chapter 3, our five strategic goals remain consistent. One, strengthen of the…

Thanks, Joel and good morning, everyone. Our fourth quarter financial results reflect swift and decisive cost reduction actions to address our third quarter financial performance shortfall. Thanks to the focus and efforts of all Quad employees we were able to reduce our cost structure by $100 million on a run rate basis for 2015. This was completed ahead of schedule and therefore benefitted our fourth quarter financial results, primarily by reducing our manufacturing costs within our cost of sales line. Fourth quarter cost of sales as a percentage of sales was 79.3% flat with 2014 despite a 6% reduction in sales. These cost reductions primarily consist of reducing our main factory footprint through the closure of four facilities, two of which were announced and closed in the fourth quarter, our Augusta, Georgia and East Greenville Pennsylvania facilities and two of which were announced in early 2016 are Lenexa, Kansas and Atglen, Pennsylvania facilities. The print volumes from these plants are primarily being consolidated into a more efficient mega plant facility where we can realize greater manufacturing and distribution efficiencies. For each closed facility we take great care in the well being of our displaced employees, providing them with outplacement services or the opportunity to transfer to other facilities where we are concentrating volume and are in need of additional skilled labor. Despite the impact of the closures on these employees they have shown great pride in their work as they have continued to perform for our clients and we thank them for this dedicated service to Quad. Additionally our production teams have worked hard to improve manufacturing productivity as they fix the productivity issues we discussed during our third quarter earnings call, which were primarily due to the hiring and training of a significant amount of new workers in our…

We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Jamie Clement from Macquarie. Please go ahead.

Joel, obviously we are in kind of a weird economic situation, where I don't know, maybe we go into recession maybe we don't. I don't think anybody really knows. But in terms of -- as you look at how this year progresses and obviously considering you've got pretty tremendous seasonality. What are the things that you are going to be looking for in terms of signs over, let's say the next four to five months? That would indicate, okay, there's another leg down versus we've stabilized here. And follow-up question. And maybe this would go to Dave. If there's a broader macro problem that this country faces, what are the buckets that you can go after kind of for next round of cost savings, if that becomes necessary?

Well Jamie, I think that the question is a pretty broad one but it's probably one of the more important questions I think that would be asked today. And I think what that really is, is about cost management and really adjusting for whichever way this thing goes. I think myself and along with a lot of other CEOs from a lot of different industries have been kind of nervous for longer than the headlines would say, about what '16 was going to look like. We for instance could see it in sort of some of the upfront costs that our customer is trying to [indiscernible] as they adjust based on what they are seeing. And obviously the fall was a tough time for retailers with the warm weather, et cetera. But the big deal here whether it happens or not, we are managing this as if we are going into a recession plain and simple. I don’t like missing quarters. I don’t think any CEO of a public company likes missing a quarter like we did in the third quarter. My reasons are a little bit different than most because I happen to represent the largest shareholder base with my siblings and myself and then we have quite a few shareholders who also rely on it and many of whom are my thought management and my employee base on a pretty broad base. And so for us it's about running a company for the long term, but to be successful over the long term the path to get there is to be successful in the short term too and so that's where the third quarter when we were -- we were surprised and its completely unacceptable to my own employees as I was getting emails from people on the…

Both side and Jamie I think the other thing I would just add is that it's about this atmosphere and culture of continuous improvement. So many of those things that we are working on have been projects that were started and will continue to yield results for us well into the future. And it's about configuring to find that next innovative project that's going to allow us to take costs out over the future. So that strong CI culture that really started at Quad within the production core has migrated itself across the entire enterprise since we added them in and so you see a whole enterprise wide kind of lean environment that we have created here at Quad and will continue to yield cost savings into the future.

And if I could ask just one more. Joel, I noticed the Virtual Reality Player in this week's Sports Illustrated. Can you provide any sense of how -- I think I saw one article that was describing it positive. We have been talking with the folks at Sports Illustrated, now that the magazine has gone out, are people actually using that?

Well it's too soon to tell. I am sure they are.

I don’t know I used it pretty quickly.

And our data is coming back and that you spent a lot of time on it. But this isn't new. I mean Google has a version of it that is more corrugated. It's a stronger one but more expensive one. We did this with some of our knowledge in commercial packaging to create something interesting. I have seen it being used with apps where you go on and it's like you are on a roll -- you are on a roller coaster literally at a theme park and you can turn your head and get whatever view of what's going around you including what's behind you and see what the roller coaster looks like when you are doing a loop, a 360 degree loop. So I think we saw a lot of discussion about virtual reality in the news lately from the Googles and the Facebooks of this world. It's technology that's moving very quickly and to be able to -- on a very low cost basis be able to take the phone and a printed piece to create a very different experience is pretty exciting. So I applaud SI for doing it, because that issue gets a lot of attention and it’s a perfect example where that technology can work. But I could see it being used by retailers to go on a virtual shopping experience of their retail stores. So it's those types of things that we have been innovative about and maybe not always the first in some of it but making sure that we bring it to market in ways to grow our client's top line. We are kind of shifting from trying to just be a low cost person in the views of our customers in helping them adjust the efficiencies of print alone to be a partner of that hopes you grow your revenue. And it's truly started to happen. So we are very excited about that.

And then last one, Joel, I guess [indiscernible] increase should be rolling off I guess in a couple of months and I think that's what [4% change]. Any sense of what that might do for example to catalog growth?

Yes. I mean direct mail on catalog is the highly susceptible ones to -- well they are all susceptible to rate changes. It's just that catalogers and direct mail have more of an ability to kind of flex their volumes based on costs because they just pull back on the prospect if there is a big increase. Let's not forget though that there was a rule change at the post office last year with their automated FSS system that was essentially another price increase to people who had lighter weight books. So I am looking forward to that [engine] rolling off because that could help correct some of those challenges and create some opportunity for people to reinvest in prospecting again. So time will tell because you got this whole overlap to your point of this weird economic backdrop that people are trying to figure out and I think part of what's driving things is you got a consumer who has had a reset of how they think about spending money. I mean most of the people who have entered the economy in the last five years of that age group have grown up in a tough economy. And so in their spending years they don’t need as much. They are buying fewer things per order. So it is a very strange backdrop and it's something we will watch. But I am planning in running this company as if there is a recession and I hope there isn't

Thank you all as always for your time.

Operator do we have more questions.

The next question comes from Katja Jancic with Sidoti & Company. Please go ahead.

One quick question. Your focusing on lowering costs closing facilities. You lowered your capital expenditures. Are you concerned that this could backfire in the future when it comes to generating sales?

Absolutely not. Keep in mind that through all this integration process, this sort of long term mega plans that Quad had and in the entire platform Quad had was very well maintained. When we acquired World Color, we acquired Vertis, we acquired Brown, these were companies that were -- having to squeeze into muscle by pulling back on maintenance. So we have invested over the past several years in those platforms that we haven't closed to really base line the equipment back up to where it needs to be and that's not cheap. We have literally rebuilt the presses. And then start a sustainable maintenance program. So a lot of the spending that we have had to do to update that stuff has gone, we aren’t pulling back on investment in things like digital presses, we are not pulling back on investment in things like automation that pull labor cost out. It's just that we can now pull back on the stuff that the big integrations required us to do because we have an acceptable way a platform should run in our mind and if it's not acceptable either its closed or we invest the capital to bring it up to speed. And so no, I am very comfortable with where we are from a CapEx standpoint, because in our case it's not about squeezing down the platform. We are actually – it’s an amazing story that these guys are telling in my plants here. One example, we have lots of paper warehouses and Dave mentioned lean practices in CIC, continuous improvement. I mean we have millions of square feet just tied up with paper and one of the reasons we are pushing paper sales is we manage our paper that we supply to customers somewhere around in the 25 days of paper on the floor at a given time. On average our customer supply paper is over 50 days. So we have increased the percent of paper that we supply to our customers by over 11% in the past year. I am sorry from above 30% to 41% of our total paper. In addition to that our lean people took a look at how we are dealing with today's rule sizes and such. And they did a lot of studies and in one case we cut the required square footage of paper warehouse down by 50% in one plant. Well guess what, these mega plants are really efficient. So any square feet that I can increase for utilization as we consolidate the industry helps us produce products at a lower cost in these lower cost plans. Does that make sense?

Yes. When you mentioned consolidating the industry and I know you said you are focusing right now on in a way internal integration. Are you still looking for potential acquisitions?

Well we are always keeping our eyes open for acquisitions. Like I said we did two packaging acquisitions and an in-store acquisition in 2015. But it's been kind of nice to be on a hiatus from large ones because it's been the first time we could step back and kind of address I think what a lot of companies are having to address over the past several years, alone by just looking at the total company. So, we get things across our desk all the time and it has to be compelling. We have been very disciplined about the use of capital. We have talked to you about that. We have showed you the results of it. We have talked to you about when we walk away from things and we don’t talk to you about when we walk away from things. So we will be opportunistic and strategic but it's got to make sense.

Okay. Thank you so much.

Thank you Katja. Operator?

This concludes the question-and-answer session. I will now turn the call back to management for any closing remarks.

Well thank you all. I know this is a more usually -- more of a lengthy conversation readapt yearend, but I think a very important one. I am extremely proud of what we have done. It's been nothing short of amazing and I am speaking to the people in the plants right now, because you all have proven that you are True Blue Quad and that you know how to react. And so I thank you for that. And I thank you all for joining the call. See you next quarter.

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