LSC Communications (NYSE:LKSD) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 08:30 am ET


LSC Communications (NYSE:LKSD) Q3 2019 Earnings Conference Call - Final Transcript


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Welcome to the LSC Communications Third Quarter 2019 Earnings Call. My name is Elisa, and I will be your operator for today's call. We have just a few announcements before we begin. The slides will advance automatically throughout the presentation. If your screen freezes or the slides do not appear to be advancing as they should, please try exiting and restarting the session as it maybe an issue with your connectivity. At the bottom of your screen you will find a help icon for technical assistance. At this time, all participants will be in listen only mode. Later we will conduct a question-and-answer session. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the call over to Mike King. You may begin.

Michael King

Thank you, Elisa. Good morning, everyone, and thank you for joining LSC Communications third quarter 2019 results conference call. This morning, we released our earnings report, a copy of which can be found in the Investors section of our website at

During this call, we'll refer to forward-looking statements that are subject to uncertainty. For a complete discussion, please refer to the cautionary statement included in our earnings release and further detailed in our Form 10-K filed on February 19th, 2019, as well as in our other periodic filings with the SEC.

Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP results provides you with useful supplementary information concerning the Company's ongoing operations and is an appropriate way for you to evaluate the Company's performance. They are, however, provided for informational purposes only. Please refer to the reconciliation of GAAP to non-GAAP results included in the earnings release schedules, as well as in the appendix to the webcast presentation that is posted to the LSC website.

We are joined this morning by Tom Quinlan, Drew Coxhead and Kent Hansen.

I will now turn the call over to Tom.

Thomas J. Quinlan

Thank you, Mike. Good morning, everyone, and I also thank you for joining us today. While I'm pleased with the very strong free cash flow performance in the quarter, sales and EBITDA results were below our expectations, driven mainly by education Book volumes. The down quarter in education Books follows three quarters of strong growth ahead of the 2019 school year and while we were surprised by the drop in volume, we believe it represents a shift in timing and not a structural change in demand for printed K-12 educational materials. Volume and margin trends in our other segments were in line with our expectations as reflected in our guidance issued in July. We are updating our full year guidance to reflect the lower education Book volumes, and Drew, will walk you through that guidance in more detail shortly.

As we look ahead and continue to take the necessary steps to reduce cost and decrease leverage, we remain focused also on initiatives designed to improve operations and deepen our client relationships to further strengthen our leadership position in the industry. For today's