Q1 2020 Earnings Call
Two questions first quarter Twentytwenty conference call.
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Please note. This event is being recorded I will now turn the conference over to tile Egan Quads director of Investor Relations and assistant Treasurer.
Please go ahead.
Thank you operator, and good morning, everyone with me today, our adult Grouchy Quads, Chairman, President and Chief Executive Officer, Dave Koning, Clots, Executive Vice President and Chief Financial Officer.
Joe will lead off today's call with a business update related to cope at 19, and Dave will follow with a summary of quads first quarter 2020 financial results followed by Q1 day.
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 <unk>.
<unk> financial results are prepared in accordance with generally accepted accounting principle.
However, this presentation also contain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin free cash flow and 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 a slide presentation will be available on the investors investor section of Quad Dot com. Shortly after our call conclude today I'll now hand, the call over to Joel.
Thank you Carl and welcome everyone.
The your 2020 will go down in history, it's unprecedented.
The company, our nation and our world.
We started the year with a strong first quarter building on the momentum Wellbore solid fourth quarter performance.
However, we started seeing the initial signs of disruption from the cold 19 pandemic during the last few weeks for the quarter, which required swift decisive action to fortify the business.
Since then we've seen a meaningful impact core business and certain end markets, particularly in retail.
As we continue to manage through the pandemic watch main priority is protecting our employees health and wellbeing well also protecting the companys financial health, thereby protecting our ability to perform well for our clients on into the future.
Early in the quarter or crisis management team together with the company leadership began executing on our business continuity plans with a strong sense of urgency we.
We follow guidance from the Cds to get local health authorities as walls federal and state governments and best practices and recommendations from our health care subsidiary Quad men, which has proved to be a tremendous asset during this critical sorry.
Early on we shifted approximately 2000 administrative poised to work from home within a very short timeframe to support social distancing well also testing Archie infrastructure.
We then quickly ramped up our work at home staff and today, we have well over 3000 employees, who work remotely on a consistent basis.
And our manufacturing facilities, we watched our safe at work program to protect the health and safety up our production imports.
Our program outlined on slide three includes regular communication in education on how employees can stay healthy.
Protocols for cleaning and disinfecting equipment tools and common areas daily temperature checks, which we are in the process are rolling out companywide and guidelines for social distances.
Given the scale of our equipment and our extensive use of automation our production platform, that's really lends itself to social distance.
However, our continuous improvement Ci modified processed season adapted workspace is were necessary.
The complement these efforts our in store marketing group produced signage and for graphics to remind employees how to work safely part.
Our safe at work program also includes a well defined process for assessing each potential covert 19 case using a rapid response team comprised of Perclot HR professionals.
This team helps transition impacted employees to self quarantine and performed rigorous contact Tracy.
The <unk> rapid response team also reports of daily metrics to our executive team. So we understand the real time impact of Coven 19 on our workforce.
To date, the number of confirmed or suspected cases of covert 19 remains relatively low among our employee base.
Yeah. This pandemic evolves, we will continue to take care of our employees to the best variability.
I think taking swift action to mitigate risk and implement cost reductions that protect our balance sheet preserve cash flow and liquidity.
Our leadership team has a deep experience managing through industry and economic disruptions.
Our disciplined approach includes treating almost all costs is variable to help offset the impact from volume fluctuations over both the short and long term.
We made a number of tough cost reduction decisions that Dave will detail in his section and we communicated those decisions to our employees and other stakeholders quickly and transparently.
No more than ever communications are important during this disruptive time, and we are using technology to strengthen interconnectivity with each other our culture in our values.
Both regular updates from my home office to make sure all employees here directly from me on my perspectives and insights into why we are making tough decisions to remind everyone of the good news stories that are happening every day acquired during this crisis to encourage employees to use quanta abundant resources for their physical emotional financial and social wellbeing and.
To provide the vision for to in a post cobot 19 environment, where we will be stronger than before the Pam data.
Throughout all of this I continued to be impressed with our employees unwavering spirit of innovation not only to help our clients solve problems, but also to help each other at this time of crisis.
For example, as shown on slide four employees in our CRT Inc. manufacturing Division began formulating hand sanitizer for use in our feels facilities across the country.
Employees in our direct marketing group designed to disposable nonmedical face mask that has been mass produced at our existing printing press equipment.
We were able to outfit every employee throat or nationwide network with a masking our initial production wrong.
Since then Weve continue to refine the design for easier production self assembly, and where ability and are now in our third version, which is starting up production today and will be distributed throughout our network of facilities immediately.
Covert 19 has impacted our clients in a variety of different ways, depending on vertical market product type.
For example department stores are having a particularly tough time right now given closure orders and subsequently have pulled back and media spend.
Nevertheless, the pandemic has also provided new opportunities to leverage our platform and innovate new solutions to help clients maintain Dennis business continuity and consumer engagement during this period of uncertainty.
This is where our core three portal strategy really differentiate yourselves from other printers and marketing agencies.
As a marketing solutions partner, we're focused on solving clients marketing a process challenges.
Our strategy is informed by listening to our clients needs and developing solutions to help reduce complexity and cost improved marketing spend effectiveness and profitability.
Because we have always made it a priority build relationships at all levels within the clients organization, we can better understand anticipation solve their problems.
On slide five we show a Prime example of our acquired 3.8 0.0 innovation in action.
We created our cobot 19 in store marketing tool kit to help brick and mortar retailers provide visual cues on social distance seem to keep shopper said.
The tool kit feature Standalone signage and displays for Grafix checkout protection Shields and current wraps among other products and this package buyer experts to be installed ready.
The tool kit has been an overwhelming success and isn't used by retailers at thousands of locations throughout the country, including grocery home improvement convenience and drugstores.
I'm pleased to share that this effort alone has created an excess of $5 million of incremental revenue for our company.
Through our Quach report on strategy. We've also been able to help our clients be more efficient and effective at content creation and production at a time when they have had challenges staffing those critical functions.
We were recently engaged by major quoting an accessory retailer to help with studio photography for its multiple brands.
This retailer was experiencing labor shortages due to the pandemic.
We are immediately able to step back and start photographing 500 samples per week for the retailers ecommerce sites.
When the Pandemics excite subsides and clients begin to rethink their operations in the new normal, including what function should and should not remain staffed in house, we will be ready in position to help offer them quicker path to success through the use of our content creation and production services.
During the first quarter, we are pleased to be selected by the White House and C. D. C to print a direct mail piece promoted Corona buyers guidelines for America.
We printed 42 million postcards for U.S. households in record time.
As we continue to manage day to day operations. We're also planning for the reopening of the economy under multiple scenarios based on our clients evolving advertising and marketing plans.
Our quach reporting strategy will serve us well, especially as our clients rethink how to operate in a new normal post cobot 19.
However between now and then as the economy begins its gradual recovery.
We will continue to live in a new abnormal where economic cap Tivity may still be heavily in unpredictably impacted by virus hot spots.
And this new abnormal forward thinking agile companies like Quad, we'll have the advantage are quite three portal strategy, which is focused on solving quite challenges combined with our ability to move quickly and decisively well quite successfully adjust to a new changing media consumption patterns and consumer buying habits.
I've told an uncertainty continues we will closely monitor the koeppen 19 pandemic and its impact on our clients and the worldwide economy.
While protecting our employees health and the Companys financial strength.
Thereby serving our clients with high quality on time delivery.
Before I turn the call over to Dave I want to recognize I'm thinking poised for going above and beyond during this challenging time when every aspect of their personal and professional lives has been disrupted.
I regularly receive client letters and E mails, praising our employees and even received a video. Thank you from David Radnet. The editor of the New Yorker magazine, who said I just want to thank all our friends at Claude who have done an amazing amazing job at this very strange in difficult times.
The idea that we could put out the new Yorker week after week in print moves me beyond measure and I know, that's the case with everybody at the staff.
It means the world to us all the issues or the new Yorker that have come out in the last several weeks or some of the best work, we've ever done but that would be only possible with you.
I too thank our employees, who continue to show our clients why we are true partner in their business and how that they are quad proud and dedicated to the success of our company.
With that I will now turn the call over to Dave. Thank you Joe Good morning, everyone.
As Joe mentioned, our first quarter performance was strong and better than expected up until mid March when we began to feel the economic impacts of the pandemic.
We were performing ahead of plan, both operationally and financially and we're recognizing more and more incremental benefits of our quad 3.0 strategy, helping to offset organic print declines.
Our cost reduction program and productivity improvement trend from the fourth quarter continue to Favourably impact our first quarter result.
Investments, we've made in 2019 to increase our the production wages at increased investments in automation continue to drive productivity throughout our entire platform.
Additionally, customer service performance was exceptionally strong with high quality and on time delivery metrics and great safety performance at our facilities.
The operational performance was setting the stage two finished the quarter strong in mid March customer demand substantially weakened due to the economic impact to the pandemic, we estimate that certain print product lines decreased by approximately 30% on average over the back half of March almost our.
It's higher customer base has been impacted but none more severely then brick and mortar retailers to close stores in response to date shelter at home orders.
Given the sudden decline in print and print related demand.
The lack of visibility about future demand as well the speed of reopening of the economy, we richer all financial guidance, but April 2nd.
We will evaluate providing guidance well, we have more visibility into the economic recovery.
Joel here, we acted with great care and agility to keep our employee safe during the pandemic and make tough decisions associated with protecting our financial flexibility through preserving cash and liquidity, we acted swiftly to a lighter cost structure to batch lower demand for print.
Slide six detailed the actions we took to control costs conserve cash and protect liquidity.
We suspended all domestic and international travel.
We delayed most capital expenditure projects and expect capital expenditures to be approximately $60 million now in 2020. This is a decrease of 45% from 2019.
We implemented a hiring freeze and established a coping 19 temporary furlough program through which employs taken unpaid leave of absence.
Eligible furloughed employees receive company paid medical benefits so no employees without medical coverage at this critical time.
We also implemented temporary salary reduction for more than 750 of our leaders, including a 50% salary reduction for our CEO and 35% sell their reduction for named executive officers.
We temporarily reduced director fees by 50% at the recommendation of our board of directors.
We suspended the use of vacation the vacation payouts, we suspended production at several manufacturing facilities, where the effects of the pandemic impacted our ability to operate.
We increased borrowings by $100 million to increase cash on hand to $208 million that we ended the quarter and provide sufficient liquidity to the business over the near term.
This action combined with up to $636 million of maximum available borrowings under our revolving credit agreement allowed us to finished the quarter with significant financial flexibility.
And lastly, the board of directors made the proactive decision to temporarily suspend the company's quarterly dividend.
This action can serve approximately $8 million of cash each quarter, we remain committed to paying a dividend over the long term.
It will seek to resume a dividend following the stabilization of our operating environment.
All told we temporarily reduce costs by approximately $250 million on an annualized basis, including reducing our largest variable costs category wages and benefits by over one third of pre pandemic levels to help partially offset the significant reduction in the sales.
I'm extremely proud of the quad team for the speed and agility of the reaction to the pandemic. Most of these actions were implemented in advance of our clients notify go up but other intention is to reduce those volumes.
This agility with key the conserving cash and liquidity at an unprecedented time of uncertainty and help ensure a stronger financial position as of March 30 Onest.
Slide seven provides us that side of our first quarter 2020 results.
Sales were $823 million in the first quarter down 14.4% from 2018 organic sales, which exclude acquisitions and divestitures declined 13.3% during the quarter after excluding the impact of the sale of the Omaha packaging plant.
Organic sales results reflect ongoing print industry volume and pricing pressure, including the initial impact from the cobot 19 pandemic at a negative 0.4% impact from foreign exchange.
Adjusted EBITDA was $75 million in the first quarter as compared to 78 million in 2019, and adjusted EBITDA margin improved to 9.2% as compared to 8.2% a year ago.
The variance to prior year, primarily reflects the impact from the organic sales declined to 13.3% a $9 million decrease in print profits from the reduction in market prices for paper byproduct recoveries.
And the 4 million dollar increase an hourly production wages due to strategic investments made last year to increase starting wages.
These impacts were partially offset by a favorable 9 billion dollar net noncash benefit from a change of vacation policy, a favorable $8 million reduction in workers compensation reserve from improved see production safety trends and savings from cost reductions many of which I outlined earlier.
Free cash flow increased by $116 million in the first quarter. The increase in free cash flow is primarily due to improvements in working capital and a $16 million decrease in capital expenditures.
As a reminder, the company generates a majority of the free cash flow in the fourth quarter of the year.
Slide eight includes a summary of our debt capital structure as of March 31st during the quarter, we reduced debt net of excess cash by $49 billion due to strong free cash flow and $41 million in cash provided by the sale of our Omaha packaging facility. We also took two specific action to further.
Since our interest expense and that debt.
First we completed a $38 billion tender of our private placement notes at par value. We estimate the tender will save just over $1 billion, an annual interest costs.
As of March 30, Onest $31 million of the private placement notes remain outstanding.
Second we repurchased $5 billion of our 7% senior unsecured notes at an 18% discount helping to reduce updating debt.
As of March 31st 239 billion.
Secured notes remain outstanding.
At the ended the quarter, our debt capital structure was 57% dicks and 43% loading the blended interest rate of 4.8%. We ended the first quarter with a debt leverage ratio of 3.0 times, which improved from 3.1 10 times as at December 30, Onest while this.
Leverage range is above our long term targeted leverage range of two to two ahead of time, we're pleased with the progress we made to reduce our net debt levels and overall leverage than see ended the year. Our primary use of cash will continue to be debt reduction.
We maintained significant liquidity as of March 30, Onest, including 218 $208 million of cash on hand in up to 636 million unused capacity under our revolving credit agreement, which is subject to certain covenants.
We have strong and trusted baking realistic relationships that extends to the highest executive levels of our base our top six banks in the credit agreement represent approximately two thirds of our committed capital and I'm proud to say that our relationships with these institutions averaged more than a quarter, but century.
We believe our available liquidity combined with the strength of our banking relationships are agile costs to cost Smith, our edge out approach to cost management as well as the success of our Quad 3.0 strategy will help provide substantial financial flexibility to adjust to current uncertainty in the operating environment, We will continue.
Due to make necessary actions to respond effectively to the impacts of the ruble rapidly evolving pandemic.
Our quad 3.0 strategy integrated marketing offerings can help our clients in new ways as we've all learned to do things differently. During these times.
Now I'd like to turn the call back to our operator, who will facilitate taking your question Sean.
Thank you.
We will now begin the question and answer session.
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Our first question today, we will come from Jamie Clement persist. Please go ahead.
Hi, gentlemen, good morning can you hear me okay.
Jamie how are you yeah I'm doing okay. Thanks, rising so Joel first question for you.
I think I look yourself I think it was Winston Churchill, who who said enough paraphrasing a little bit.
Nevertheless, a crisis go to waste and obviously you know you discussed adjustments to the capital spend in that kind of thing for can you take us kind of through.
With that said.
You know some of the thing strategic where you might have said you know what maybe now is the right not the right time versus some other kind of strategic directions, where you said you know what now we got to redouble. Our efforts. This is an important right now we're going to come out of is stronger than ever.
Well I think first of all whenever we see a crisis coming we've learned.
I've been in this job since 2006, and you think about the first two years with falling in the near the great recession kick in and then you had all the stuff that's going on with the Prince environment, but.
Kind of answer that in two ways, both internally and externally, but I think what happens in normal times, there's lots of good ideas, good formulated and implemented but it tends to be more incremental.
And I'd say that in the past year, we've made some significant investments in our infrastructure because I wanted to kind of make use of more video conferencing being able to do video blogs without taking down the network.
And we finish that probably have perfect timing last fall so that now as we pushed it literally with a three day notice 2000 people to work from home to really tested before were further.
It's worked out remarkably well.
And I think most of the world is figuring out at the so all the video technology as James So much you don't need to ITD people standing over your shoulder to get a video conference going so internally, we're pushing that very hard I'd also say that.
We end up making tough calls on cost reduction and capacity planning when the crisis is here and we tend to find out that while it work better than we thought or we can do more than we thought we could before and so that will go into as we see the economy open up.
Being bashful about.
In terms of how we manage that capacity on a go for basis on the external side.
What I'll tell you is the 3.0 strategy had been.
Saying thats for years now.
First of all working it's really about quad transitioning from selling people print products to really get involved in helping people solve problems. When it comes to media planning a placement campaign design.
Execution across all channels in media, which has been very fragmented during the past decade with the advent of the big holding company model and all the new sort of places you could spend your money and so while we've made huge headway in normal times with our client base.
On how we participate with them I've talked about the 80 plus locations. We now have where we have over 1200 people working within People's marketing departments.
Some of the conversation tensile also get kind of.
And incremental Ism, and I think that now that people since so many people home to work from home.
Three businesses reevaluating when when the economy opens up it's not about when we bring things back it's what do we bring back and almost more importantly, what do we decided not to bring back.
And so we see opportunity in terms of being that partner to take over execution and planning and media planning for many different customers.
So that they don't have to do hitting the mark and focus on merchandising and overall strategy. So I see this really as a time, where we can leap forward and speed up the transformation in 3.0.
Okay, Joel I appreciate that and kind of.
Can you kind of help us just understand a little bit more kind of the seasonality of.
The business lines.
Do you provided solutions that provide.
Brick and mortar retailers and really what I'm getting at is kind of the first half versus second half seasonality. It im trying to kind of get a sense of like you know if we make an assumption on.
When the economy's starts to kind of reopen up again and people can go back to stores and that kind of thing I mean sort of how much how much business what's at stake in the first half of the year versus.
Why I've always perceived as more of a stronger second half.
Let me start I'd say that clearly the most impacted has been retail I mean, one thing you get a phone call from a huge retailer to the next day every store in the country will be closed.
Currently there is it creates a rapid pullback and so the first half as you know we're a second half seasonable company from retailers catalogers magazines tend to be a little bit more spread out through the year, but the reason I kind of refer everyone over uses the new normal that's why it through in sort of the the descript driving.
And with people was which is until you get to the new normal we're in this new abnormal.
Where are the economy's trying to open up things are going to happen in fits and starts we're already seeing some of the big box.
Companies, such as coals and Dick's sporting goods as public information starting to open up their stores.
But what we hear from our clients is kind of running the gamut of a little bit gun shy because there is concern about boy as this opens up does a spike happen. Therefore did we aggressively market too much.
[noise] that'd be accused by our consumers of causing that spike So I'd say, there's trepidation and and again it just feels like this new abnormal and once as we sort of people get comfort with how all the new safety procedures are being followed throughout the country then you'll start to.
Feel like Okay. Now, we can get more visibility, but until then it's really tough to get visibility. We can't just say well. This stores opening older stores. This company is open older stores. Therefore marketing comes back right away that may be true with one but not the other it's kind of all over the board.
Okay. Let me ask you click Joel on on on the inserts business.
I've noticed.
Here in New York said, most of the grocery stores, while still open lines out the door that kind of thing.
Have largely suspended their circulars and I have asset managers and they said the reason we're doing this because we don't want to promote products that we don't necessarily.
So we can keep on our shelf. So that's an area of the economy is seemingly healthy if not.
Yes, yes, even stronger you know yet yet they can't.
Circulars, because they're not conflicts that keeps up on their shelves. So.
Any sense. It first of all do you think that's an accurate statement and second of all any any signs of kind of improvement there.
I mean, I think it like I said, it's kind of all over the board when you talk about grocery sector. They really have had a hard time predicting what they can have on the shelves I mean, only now do you see the shells full of toilet paper.
The last month or so it's been empty and we have had a lot of that now the next phases. What we're hearing through multiple partners is the shortage of meat products.
So there's certainly been a bunch of that on the other had some of the big grocers, who carry a lot of other goods like hard goods.
A couple of weeks ago, when the $600 check started hitting peoples bank accounts. They told us that they started seeing flat panel screens flying off the shelves.
So you know.
Some of the impacts of the financial incentives here or a relief might be also helping things, but that will sort of play out over the long term. So again I think its everyone's just trying to navigate a very blurry future.
It's very hard to see all for the next month I would say.
So people can predict what products they can count on.
How fast their stores come back, but it will start happening and my big concern on retail inserts is just the pressure the newspaper industry is I'll never as a result of all this and so you worry about decreased.
Circulation, which is the carrier for the retail answer, but as we've said before we've been dealing with that decline anyway, and we've been adjusting our platform, but also growing our direct metal product for those people because ink on paper does matter to them and oftentimes we hear from them that we need to find more.
Replacement, because we can't do circulars into certain market because the newspaper closed and so.
Marketers still have a strong sense that theres offline and online have to come together and yes, there is going to be shifts for different structural reasons, but we know how to manage that and we continue to where we can pivot to wherever value add can help.
Our clients market very effectively and efficiently to grow their business Thats, what our whole 3.0 model is based on is how do we hope you grow we happened to just be founded in print, where we have a lot of capability to execute but we've built out all platform here to help you on your spend elsewhere as well.
Okay. So can you just delving into that a little bit more deals. So as part of the 3.0 strategy, let let's say.
A grocery store chain in a city where.
Our newspapers closed.
Can you give us a little bit more specific details in terms of like what does that session with that customer.
That strategy session sound like immediately.
You know do you.
Direct mail, you're discussing what are the kinds of things you're discuss can you just go into little bit more detailed.
Yeah, It's a combination of things you as you know with our IB acquisition. They do a lot of media buying Vertis acquisition, we had those capabilities to we've only strengthen them and it really comes down to what's the right mix of things. So if you have.
The fall off in one place because it's not a nationwide.
Situation it happens in pockets, where we're trying to shift and say hey, let's try and make up for this may not be the perfect mix of what you wanted but at least we're making up and still driving traffic. So it's a combination of direct mail.
Shifting to other paper is shifting to things like our partnership with of Alaskans, who does a lot of.
You know couponing through the mail box that we print a lot of that for them and placed a lot of it through them and so it's and then obviously digital and so we work with them on okay, well how do we also then shifts to some digital spend or radio TV to kind of make up for that because ultimately.
That's about one ROI when I spend a dollar on marketing in a region because it proves $5 or $6 that revenue once the trajectory and if it's going the wrong way, how do we adjust to make upward. So it's sort of a whole portfolio things you have to work on with the client and it's always evolving.
Okay, and then lastly, Joel if I may it gave I don't know if you want to chime in here at all.
What do you will need to see.
Hi, too.
Think about reinstating the dividend.
Well since.
Dave really wants to chime in here okay today.
Yes.
Thanks, Joe.
We mentioned our comments.
Just about stabilization in the operating environment and as we currently see our operating environment, There's a lot of uncertainty and as I walk through tour.
I prepared result, common but when you look at volume and the comment I made about volume in the back half of March being down approximately 30%. We've seen a similar trend into April were closed April.
Although we saw similar trade there Trey trend there.
And really what's the most impacted of our customer base as we mentioned that the brick and mortar retailers, who had to take stores offline.
Those stores start to reopen we believe the near term impact on our demand should lessen.
In the meantime, we'll just keep adjusting our cost structure, but that only partially offset.
Impact of volume.
I think what you'll see from US is just an acute awareness of how to manage cash flow and how to manage liquidity. So we can stabilize that operating environment quicker. It on free cash flow I think there's a few points that investors should be aware of number one you mentioned seasonality in our business. So.
You think about seasonality of our cash flow most of that comes in in the fourth quarter. So when with the volume decline that currently hitting us.
It's a bit of the mixed blessing that its during our low seasonal point, so hopefully as the economy reopens in stores reopened.
Gradually we get to see that pressure come off of our cash flows both in the meantime will still be after those cost reduction of I mentioned on a run rate basis on an annualized basis when taken $250 million.
Out of our cost structure. So the great work, our operational administrative leaders have done to reduce costs has been tremendous also and offsetting this decline and then I think finally.
Just from a free cash flow perspective, our government did a pretty good thing for our business in the cares.
And where we feel that most is into cash flow relief that comes with some of the associated tax relief provisions such as.
Differing social security payroll tax into 2021, and 2022 and for us even more impactful the ability to carry back some net operating losses.
Into prior years, you couldn't carry back net operating losses prior to this actually had we will bring forward.
And also helps in that as you can take those net operating losses back in the years with a 35% statutory rape instead of the current 21% statutory rate were at so all told we are suffering some cash flow decline from the volume were partially offsetting that from cash conservation and cost reduction.
And then we believe we'll keep over a 40 million dollar impact just on those tax provisions I walk through to help cash flow in 2020, many of which are timing, but still at the ability to have that cash flow at this point in time Thats, a tremendous impact for our business because our primary use of cash flows.
Going to continue to be debt reduction and we think we can continue to reduce debt this year.
Jamie also one thing at.
Fits and starts when we say that we're making most cost variable, we really meaning we've actually furloughed entire plants here. During this cobot 19 problem on the books side, we closed three full plants on temporarily because of cold and 19 related issues that were going on in those states were since opening those back up again.
We've done it on the retail side and having the relief for employees being for a little does result that is helpful. Because we know that they're being taken care of with those weekly checks. So we'll continue to manage the platform aggressively and the ability I think one of the things that we've really.
Learned is how can you approvals plant in the crisis situation as opposed to just people within it.
Okay, and Joel last last thing.
Yes, you obviously through Quad med.
Do you all have any kind of insight you'd like to share in terms of like.
Observations you know on the spread of the virus and it certainly seems leased here in New York said, you know I think theres, some reason to be little bit more optimistic over the last couple of weeks, particularly over the last week or two.
Is that consistent with what you're doctors are kind of telling you.
Yes, I look at my brother in law is the head of threats surgery at Mount Sinai in New York, So he's front and center with all this in my sisters of trade.
Position as well.
Last quarter that what's really important here and what we've seen and I can't.
I'll tell you this enough.
Is our our team and how we're managing our own cases, we have 20000 employees with big plant.
We manage it right down to how we are tracking and tracing we have four different categories of quarantine. We have confirmed positive suspected positive symptomatic close contact then we have six but noncore bid.
We have people categories of interviewed needs to be interview in progress returned to work deceased we've had one deceased employ unfortunately due to coven, but less than 20 positive.
And not in any one place. So I think the messages that companies are taking it upon themselves to track and trace we've shared our whole plan with the greater Milwaukee business community.
With the governor of both of Wisconsin, as well and what it shows you is that you can manage it if you take the time to do it.
Looking at what's happened in some of the meat packing plants, where there look working closely.
If you had a tracking and tracing program in their new acting quickly I might get ahead of it and so.
I'd say that what we're hearing from Quad Matt.
From other people in the medical community is.
It's a multi layered approach to managing to take it all seriously at hand sanitizer its.
Masks, it's distancing not one of them is going to make it work all of them together is what's going to make it work and and I believe much of the country is embracing that and we've got to get this economy going again.
Okay.
As always thanks, so much for your time.
Thanks, Jamie David.
Operator this will.
This will conclude today's question and answer session I would now like to turn the call back over to management for any closing remarks, alright. Thank you Sean.
Quite successfully faced this adversity before and at this time is no different we have the team and the time tested disciplined approach to navigate change and make certain we transition into a post cobot 19 environment as a stronger company.
As the economy starts to turn back on marketing and advertising investments will be reprioritize as it happens quad stands to benefit whether it's a gradual or fast recovery due to our impactful client relationships leadership expertise quite three point on strategy, which is our unique integrated marketing platform and financial.
Strength.
In the meantime, we live in continued uncertainty and therefore, we will continue to create a better way every day for our employees and our clients. So thank you all for joining US we'll see you next quarter.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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