Veritiv Corporation (NYSE:VRTV) Q4 2015 Earnings Conference Call - Final Transcript

Mar 15, 2016 • 10:00 am ET


Veritiv Corporation (NYSE:VRTV) Q4 2015 Earnings Conference Call - Final Transcript


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Mary A. Laschinger

we had one less shipping day in the first quarter of 2015 compared to the number of shipping days in the first quarter of 2014. This had a negative impact on revenues for all of 2015 versus 2014 of about 40 basis points. Currency headwinds, primarily associated with the weakened Canadian dollar, amounted to 1.3% of the reported 6.4% decline for the full year.

Facility solutions was especially impacted by the element, as approximately 20% of the segment's revenue stream is generated in Canada. Lastly, excluding the effect of foreign currency and day count differences, our core business decline was 4.7% of the reported 6.4% decline. This core decline was largely driven by strategic customer choices, softness in the industrial sector, challenging economic conditions in Canada and the structural decline in the paper industry. There is a component of our core performance on which I would like to provide additional context. The impact of our strategic voluntary customer count decisions amounted to 1.8% of the 4.7% core revenue decline for the year. These decisions were made prior to the fourth quarter and will take a full year's time to fully lap the decreased volume associated with these decisions. We expect the impact of these decisions to tail off during the first half of 2016. However, we are confident in the decision that we have made as we saw in 2015, the benefit of improved adjusted EBITDA as a percentage of net sales from Veritiv as a whole.

2015 proved to be a foundational year and I'm proud of the stride that we have made as an organization and the company culture we are building in the process. There are few accomplishments, in particular I would like to highlight that we are both fundamental to our integration progress today and set the stage for the future direction of Veritiv. First, we accelerated the capture of our planned synergies, which were primarily driven by a effective execution of our sourcing strategies and operational initiatives, such as warehouse consolidation and fleet optimization. For example, since the merger, we have been able to remove approximately 8% of our fleet assets from the road through initiating the route optimization of our distribution network. This has enabled us to manage the delivery functions of our business more efficiently and reduced our fuel consumption, all while maintaining our high levels of customer service.

Second, we completed our U.S. operating entities simplification and achieved Sarbanes-Oxley compliance for our internal control, which are significant milestones for the combined company. Lastly, we made meaningful investments in positioning our organization for the future, especially in our strategy and human resource function. More specifically, we formalized a new strategy department with the charge to identify and lead growth opportunities that will shape the future success of Veritiv. This was also our first full year of using our performance management processes which support our pay for performance culture and passion for results. Looking to 2016, there are a few primary factors that are