Good morning ladies and gentlemen. Welcome to Quad’s Fourth Quarter and Full Year 2021 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 the earnings release. Alternatively, you can access the slide presentation on the Investors section of Quad's website under the Events & Recent Presentations link. Please note that this event is being recorded. I will now turn the conference over to Katie Krebsbach, Quad’s Investor Relations Manager. Katie, please go ahead.

Thank you, operator and good morning everyone. With me today are Joel Quadracci, Quad’s Chairman, President, and Chief Executive Officer; and Tony Staniak, Quad’s Chief Financial Officer. Joel will lead off today’s call with a business update, and Tony will follow with a summary of Quad’s fourth quarter and full year 2021 financial results as well as 2022 financial 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 two. 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, adjusted diluted earnings per share from continuing operations, free cash flow, net debt, 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 will now hand over the call to Joel.

Thank you, Katie and good morning everyone. I am pleased to report that our sales growth and strong execution helped us drive strong full year 2021 results, including a 3% increase in net sales when excluding divestitures as highlighted on slide three. Those results were supported by higher print volumes, including print segments share gains from new clients, continued growth in agency solutions, as well as increased pricing in response to inflationary cost pressures. At the same time, we continue to pay down debt. In fact, over the past two years, we reduced net debt by $410 million or 40%, and return to our long-term targeted leverage range of 2 to 2.5 times. Throughout 2021, our team worked diligently to offset economic challenges that included significant paper and supply chain disruptions, inflationary cost pressures, and labor shortages. Our efforts to mitigate impacts included initiating price increases to offset inflation. On slide four, our consistent strategic priorities are powered by three key competitive advantages that distinguish us. They are; integrated marketing platform excellence, innovation, and culture and social purpose. When it comes to platform excellence, we use our data-driven integrated marketing platform to help clients strategically plan, produce, manage, and measure their content across multiple media channels rapidly at-scale and without handoffs that compromise quality, consistency, and timeliness. Through this platform, we give brands and markers a more efficient, effective, and frictionless way to go-to-market and reach consumers. Through our marketing strategy expertise, we help clients better understand and connect with a target audience using our data insights and analytics, campaign planning and media services. Through our robust creative solutions, we help clients produce quality content quickly at scale with our campaign development, photo and video production, adaptive design and cross media production services. Through our media deployment expertise, we help…

Thanks, Joel and good morning everyone. Slide 11 provides a snapshot of our fourth quarter and full year 2021 financial results. As Joel mentioned, we delivered strong financial results considering headwinds of supply chain disruptions especially with paper supply, a tight labor and freight market and inflationary cost pressures. Despite these challenges, we achieved or exceeded our 2021 financial guidance. We achieved 3% net sales growth excluding divestitures, which was at the high end of our 1% to 3% growth guidance range. We generated adjusted EBITDA of $246 million in 2021, which was within our guidance range. And finally, due to very strong cash flows in 2021, we reduced our net debt leverage to 2.5 times which not only was a substantial beat to our guidance of 2.75 times but also represents a return to our long-term targeted debt leverage range. Building upon this business momentum, we will continue to focus on revenue growth, productivity improvements, automation investments and debt reduction. Net sales were $855 million in the fourth quarter up 1% from 2020. Excluding the June 2021 divestiture of QuadExpress, a third-party logistics business that was a small part of our overall logistics business net sales increased 5% from 2020. The increase during the quarter was due to 4% growth in print product sales and 4% growth in Agency Solutions sales. Both print and agency sales growth were driven with existing clients and we also gained print segment share with new clients. Although we are pleased with our net sales growth, we were limited in our ability to further grow sales in the fourth quarter due to paper constraints. For the full year, net sales were $3 billion up 1% from 2020 and excluding divestitures net sales increased 3% compared to 2020. The increase was due to 1% growth…

Thank you, Tony. Because we compiled questions in advance of today's call, we will not ask for callers to enter the queue. Thank you. To everyone who submitted a question. We have four top questions that were submitted. Our first question relates to industry trends. It asks, can you speak to recent client trends you've seen in the fourth quarter and in early 2022?

Yeah. We update you this on every call about this. And they really want to kind of split it out between large scale print, targeted print and our Quad agency solutions. And so, when you look at large scale print, this is the category where we continue to expect decline because of the nature of the product. It's probably the least sophisticated product from a targeting standpoint on the marketing side, but then it also is made up of publications where that's seen pressure over the years. But if I break that out and I look at retail inserts, it's off 20% for the year, which is really expected, and I'll remind you that the retail relationships we have are with just about all the big names out there, both in big box and in grocery. But these are customers who like to buy a lot of our services. And as they look at adjusting their budgets based on like a retail insert that often gets shifted over to other areas of products on the execution side such as direct mail and in-store marketing. And so while you see that decline, it doesn't mean that these are not an important category for us because it still creates significant free cash flow, but also is a place where we can sell more into our clients in those -- in that category. On the publication side USPS volume for the year was off 5%. Quad was only off 1% and that's due to segment share gains that we had throughout the year. But then getting into the targeted print area catalog we were up 13% for the year which is significant given that the industry was pretty much flat at 0. And so most of that -- a lot of it I should say were from segment share gains. But also we saw some great clients who've been in catalog for a long time actually start increasing and reinvesting further into the catalog world a trend we continue to see which is good news. Direct mail was up 5% for the year and pretty close to what the industry was. That is going to continue to be an area, I think of growth as people are looking to be more targeted using data to drive direct mail as opposed to the generic direct mail. And then packaging is up 3% pretty much in line with the industry. And then finally, in-store was up 19% for the year and over 25% for the quarter. So in-store continues to benefit from the consulting aspect of our relationship with a lot of our big retailers, so very excited about that growth. And finally, if I look at Quad Agency Solutions, we were up 7% and that really reflects the fact that we're really starting to scale it. And so overall, those are the trends that we see and I'm pretty pleased with the growth in the right areas.

Great. Thanks, Joel. Our next question touches on the supply chain, including paper. It reads, you mentioned that you expect supply chain and labor issues as well as inflationary pressures to continue. Can you elaborate on what you're experiencing in those areas? And specifically in terms of paper supply and pricing, what steps are you taking to mitigate the impacts of low paper supply?

Yeah. So, everyone is dealing with the supply chain disruptions and shortages and labor shortages. And we are experiencing the same thing. But probably the biggest part of the shortage area in supply chain is paper, as the industry is experiencing a pretty significant shortage based on capacity versus demand. And I'll remind you that we supply about, 50% of the paper that goes through our plants and the other 50% would be supplied by customers. And for the part we supply, it is a pass-through. So we don't take risk on pricing. So as the pricing has changed in this environment that gets passed along. However, we've seen the shortages create delays. We've seen customers who supply their own paper not be able to supply, the amount of paper they need. And so that's where Tony referenced that, our revenue in 2021 could have been greater, if we had the ability on the paper side to not have those disruptions. And I think as we go forward into 2022, we see the supply chain disruption in paper continues to persist. Inflation continues to persist. It is not transitory, at least not proven yet. So we're expecting to plan for that. But I think on the paper side, we're making headway. I've got concerns but we're having, to bring in inventory well ahead of the norm to get the paper based on the balance that our suppliers have. This has also been exacerbated by one of the big suppliers in Europe, who's on strike. And so with that, I think that, we have lots of opportunities from a segment share standpoint. I worry about the paper situation. But I think we're managing it well because we have a wide portfolio of suppliers because of our size. And with that, it…

Sure. Okay. Thanks, Joel. Our next question is regarding the USPS. It asks can you discuss the recent postal reform and the impact it would have on Quad.

Yes. So, we haven't talked about this in a while. But as many know on the print side of Quad, the biggest cost for our clients typically is postage. It's usually over 65% of their total cost and so the increases that we've seen in postage over the years, really impacts our customers. And the problem is the post office needs reform to be able to not have that happen. We've actually been working with the industry. I've testified in front of Congress multiple times over the years here. I think it feels like a decade, we've been working on getting a bill to help fix the post office. Very happy to say that a bill finally made it to the floor and was -- had bipartisan support in the House and passed. What that does is it basically takes about $50 billion in 10-year liability out of their system. They had to prepay retirement healthcare. Also what's happened here is, they're having all their employees now get to fully enroll in Medicare, which they're already paying for rather than remaining on the USPS health plan, which is paid for by postage. They've been required to do things no other government agencies had to do from this standpoint or any other company. And so we're very pleased that there was great progress here to relieve this $50 billion liability. There was a glitch. Washington is not a great place these days. They accidentally sent the wrong version of the bill of the Senate. So I wish I was saying today that it was fully passed as a law, but we do expect that it will get worked out and early March should make it to the floor. With more bipartisan support, it will be passed. That's a big deal for those of you who've been following the print side of the industry. I think that's very good news.

Definitely. Thanks for the update. Okay. Our last question is regarding capital allocation. It reads given the significant debt reduction over the past two years and the current position of the balance sheet, are you considering reinstating the dividend or share repurchases?

Thanks, Katie. We are proud of how we've reduced debt in this difficult operating environment and that operating environment is continuing, so we're going to remain focused on reducing debt. I think that's good for the business and for our shareholders. We are going to implement a more balanced capital allocation over time. We do have a previously authorized share buyback program of up to $100 million. We've also been a dividend payer before and over the long-term plan to be a dividend payer again. But in the meantime, we're going to have to remain nimble in this difficult operating environment and adjust our capital allocation priorities based on it.

Yes. And I'll remind you that when the pandemic came out, we cut the dividend right away, because again, we believed that the sustainability of the business is really winning in the long-term here with our transformation and all that we're doing for our clients is about a strong balance sheet, and we proved that we would do that. And I think as we continue to prove a sustainable and more, I guess, stable operating environment and manage through the issues that we talked about, we will be very prudent and thoughtful about those uses of capital.

Thank you both. This concludes the Q&A portion of today's call. And now I would like to turn the call back to Joel for closing remarks.

Thanks Katie, and thank you everyone for joining today's call. I just want to close by reiterating my thanks to all of our employees for their continued hard work and ability to adapt and to adjust in these crazy times. I also want to thank our clients for believing in us and really starting to invest in us in ways that they hadn't been before in all the services and products that we've created. And so with that, I look forward to updating you in the coming quarters, and thank you again for joining the call. Take care.

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