Q3 2025 Cimpress PLC Earnings Call

May 1, 2025

Barry This Barnes Vice President of Investor Relations and sustainability. Please go ahead.

Speaker Change: Thank you Carmen and thank you everyone for joining us are with US today are Robert Keane, our founder Chairman and Chief Executive Officer, and Sean Quinn, Our EVP and Chief Financial Officer. We appreciate the time that you have dedicated to understanding our results our commentary in our outlook. This live Q&A session will last about 45 minutes or so.

Speaker Change: I'll answer both pre submitted and live questions you can submit questions via the questions and answers box at the bottom left of the screen before.

Speaker Change: Before we start I'll note that in this session. We will make statements about the future. Our actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and in the documents we published yesterday on our website. We also have published and non-GAAP reconciliations for our financial results on our IR website, and we invite you to read them.

Robert Keane: And now I will turn things over to Robert.

Robert Keane: Thanks, Meredith and thank you to our investors for joining us today.

Robert Keane: I'm going to start with some overall mark remark that I will pass it to Sean to cover our Q3 results and the tariff topic.

Robert Keane: Then we'll go to your questions.

Robert Keane: As I noted in the earnings document and the water that was attached to that which we published yesterday.

Robert Keane: In the third quarter, we remain focused on the exact same things we've been talking about through out this year.

Robert Keane: That consistent focus and the operational product growth, which we've made gives me.

Robert Keane: And gives us confidence that we can deliver attractive growth and per share cash flow over the coming years. Despite what is a pretty noisy backdrop right now.

Robert Keane: At the highest level there were a few themes for the quarter.

Robert Keane: First we continue to see strong growth in what we now refer to as elevated products.

Isn't it in the letter that was attached to that which we published yesterday.

Robert Keane: Examples of these are promotional products apparel signage packaging and labels.

In the third quarter, we remain focused on the exact same things we've been talking about through out this year.

Robert Keane: Spanning into elevated products helps us serve customers with a higher lifetime value because it both increases our share of wallet with existing customers.

That consistent focus and the operational progress, which we've made gives me.

And gives us confidence that we can deliver attractive growth and per share cash flow over the coming years. Despite what is a pretty noisy backdrop right now.

Robert Keane: And helps us acquire new customers directly into these categories. For example at this stage the number of new customers acquired by assignments packaging and labels in Q3 grew more than 10% over the prior year and we think these markets have a lot of opportunity ahead of them.

At the highest level there were a few themes for the quarter.

First we continue to see strong growth in what we now refer to as elevated products.

Robert Keane: Another bright spot is.

Examples of these are promotional products apparel signage packaging and labels expanding into elevated product helps us serve customers with a higher lifetime value because it both increases our share of wallet with existing customers.

Robert Keane: Cross Sim press fulfillment, which continues to grow quickly. This is when one business unit in <unk> produces for another and cross sell press fulfillment is both accelerating our rate of new product introductions and lowering our cost of goods.

And helps us acquire new customers directly into these categories. For example at Vista, the number of new customers acquired via assignment packaging and labels in Q3 grew more than 10% over the prior year and we think these markets have a lot of opportunity ahead of them.

Robert Keane: Likewise at Pixar ratings, we have their new production facility lies in the U S. Auto schedule that facility is already fulfilling for Vista, that's allowing for new product introductions and access to lower cost production much of it which was outsourced in the U S.

Another bright spot is.

Robert Keane: S market and it's things, we've honed in Europe, and our upload and print businesses for quite some time.

Cross Sim press fulfillment, which continues to grow quickly. This is when one business unit in <unk> produces for another and cross sell press fulfillment is both accelerating our rate of new product introductions and lowering our cost of goods.

Robert Keane: Likewise, Pixar printing will soon be launching its U S website, Pixar printing dot com over the coming month or two and ask you to mark our entry into the U S upload and print market.

Likewise at Pixar printings.

Robert Keane: So we have a lot of strong progress throughout the company.

Have their new production facility lies in the U S on schedule that facility is already fulfilling for Vista.

Robert Keane: The other hand, as we've discussed over recent quarters, we do face headwinds in some of our legacy products and legacy channels that are reducing our consolidated growth rate.

Allowing for new product introductions and access to lower cost production much of it which was outsourced in the U S market and it's things, we've honed in Europe, and our upload and print businesses for quite some time.

Robert Keane: Of course, a lot of our time this past quarter was spent dealing with tariffs and the threat of future tariffs the uncertainty of what that market those tariffs are going to be.

Likewise, Pixar printing will soon be launching its U S website, Pixar printing dot com over the coming month or two and ask you to mark our entry into the U S upload and print markets.

Robert Keane: Our teams across <unk> have responded with impressive velocity and are focusing on.

Robert Keane: On how to assess a ever changing situation to develop action plans.

So we have a lot of strong progress throughout the company.

Robert Keane: <unk> scenarios, depending on what happens and to reduce our impact on.

On the other hand, as we've discussed over recent quarters, we do face headwinds in some of our legacy products and legacy channels that are reducing our consolidated growth rate.

Robert Keane: Our customers and our shareholders.

Robert Keane: Based on what we know today, we have a good handle on that impact for tariffs, we have a relatively strong position and we're confident in our plans to help you understand where we stand as of now.

Of course, a lot of our time this past quarter was spent dealing with tariffs and the threat of future tariffs the uncertainty of what that market those tariffs are going to be.

Robert Keane: An 8-K filing in early March we provided a framework for how tariffs impact our business and we have updated that information in last nights earnings documents.

Our teams across <unk> have responded with impressive velocity and are focusing.

On how to assess a ever changing situation to develop action plans action scenarios, depending on what happens and to reduce our impact on our customers and our shareholders.

Robert Keane: We certainly do not enjoy the volatility of the tariffs are imposed on us or on our market.

Robert Keane: That being said.

Robert Keane: It's often in times of volatility that we've shown that our competitive advantages can become even clearer.

Based on what we know today, we have a good handle on that impact for tariffs we have a <unk>.

Robert Keane: And we've always strive to build a transformational enduring business, we value customer focused innovation learning from mistakes.

Relatively strong position and we're confident in our plans to help you understand where we stand as of now in an 8-K filing in early March we provided a framework for how tariffs impact our business and we have updated that information in last nights earnings documents.

Robert Keane: Data driven decision, making in attracting and retaining great talent driving for greater scale.

Robert Keane: And all of that is in service of disrupting the market. So that we can profitably serve the world's small medium businesses, which power so much of the economy.

We certainly do not enjoy the volatility of the tariffs are imposed on us or on our market that.

Robert Keane: Now those traits, which we've pursued for decades.

That being said.

It's often in times of volatility that we've shown that our competitive advantages can become even clearer.

Robert Keane: Have served us well over our history, including in multiple periods of adversity that could be startup challenges long ago. It could be the global financial crisis. It could be the challenges of staying nimble as we get big.

And we've always strive to build a transformational enduring business <unk>.

We value customer focus innovation learning from mistakes.

Robert Keane: Pandemic post COVID-19 supply chain challenges through all of that we've not only navigated those periods.

Data driven decision, making in attracting and retaining great talent driving for greater scale.

All of that is in service of disrupting the market. So that we can profitably serve the world's small medium businesses, which power so much of the economy.

Robert Keane: Of adversity, but we've extended our industry leadership, we've leveraged our scale basis advantages and we've taken market share. So we're focused on doing the same thing here and we look forward to the longer term because of that.

Now those traits, which we've pursued for decades.

Have served us well over our history, including in multiple periods of adversity that could be startup challenges long ago. It could be the global financial crisis. It could be the challenges of staying nimble as we get big.

Robert Keane: Response, we're able to bring to this period of.

Robert Keane: Challenge of adversity from tariffs, let me now turn things over to Shaun to go through our financial results and our tariff response as well as some outlook commentary.

Covid pandemic.

<unk> supply chain challenges through all of that we've not only navigated those periods.

Shaun: Great. Thanks, a lot Robert for that overview and thanks, everyone for joining us today.

Shaun: I'll just start with a brief overview of our financial results first on the revenue side. Our consolidated revenue grew 1% on a reported basis and 3% on an organic constant currency basis.

Adversity, but we've extended our industry leadership, we've leveraged our scale basis advantages and we've taken market share. So we're focused on doing the same thing here and we look forward.

Shaun: In Vista, we had 3% organic constant currency growth in there as Robert alluded to key growth categories of promotional products signage packaging and labels.

To the longer term because of that.

Response for able to bring to this period.

Challenge of adversity from tariffs, let me now turn things over to Shaun to go through our financial results and our tariff response as well as some outlook commentary.

Shaun: Those all grew at double digit rates, which is a continuation of the strength that we've seen there for some time being able to serve higher value customers. We also returned to 5% growth in the consumer products category effort. After a disappointing decline in holiday focused Q2.

Shaun: Great. Thanks, a lot Robert for that overview and thanks, everyone for joining us today.

Shaun: I'll just start with a brief overview of our financial results first on the revenue side. Our consolidated revenue grew 1% on a reported basis and 3% on an organic constant currency basis.

Shaun: Business performance remains strong in Europe, despite some macro headwinds there, which is good to see and thats been a consistent trend as well in the U S business revenue and profitability continue to be affected by the organic search algorithm changes that we discussed during Q2 earnings.

Shaun: In Vista, we had 3% organic constant currency growth and Theyre as Robert alluded to key growth categories of promotional products signage packaging and labels.

Shaun: Those changes have had a more significant impact on the business cards, and stationery product category, which in total that category declined 3% year over year, a slight improvement from the 4% decline last quarter.

Shaun: That we've been doing there to optimize organic search for those changes start to show improvement, particularly in March relative to the first two months of the quarter and you can see that that was evident in the Vista. The U S results in the month of March.

Shaun: Business performance remains strong in Europe, despite some macro headwinds there, which is good to see and thats been a consistent trend as well in the U S. This is revenue and profitability continue to be affected by the organic search algorithm changes that we discussed during Q2 earnings.

Shaun: Turning to profitability consolidated adjusted EBITDA declined by $3 $5 million year over year, a few things to point out from a profitability perspective.

Shaun: And those changes have had a more significant impact on the business cards, and stationery product category, which in total that category declined 3% year over year, a slight improvement from the 4% decline last quarter.

Shaun: Gross profit was impacted by a $2 $6 million impairment charge related to the planned sale of a national Penn facility, which is backed out of EBITDA, but impacts gross profit that plant sale has been in progress for some time, but we met the conditions from an accounting perspective to write down the book value this quarter.

Shaun: Work that we've been doing there to optimize organic search for those changes did start to show improvement, particularly in March relative to the first two months of the quarter and you can see that that was evident in the Vista U S results in the month of March.

Shaun: We also had around $1 $1 million in preproduction startup cost in our cost of goods sold related to our new Pixar printing facility in the United States.

Shaun: We began taking orders in March and if you exclude those two items gross profit would have increased modestly during the quarter ads.

Shaun: Turning to profitability.

Shaun: <unk> adjusted EBITDA declined by $3 $5 million year over year.

Shaun: Few things to point out from a profitability perspective.

Shaun: AD spend was flat as a percentage of revenue year over year, and we do continue to expect that spend to be lower year over year in Q4, and just as a reminder, that's due to the elevated mid and upper funnel spend that we had for Vista in Q4 of last year.

Shaun: And then finally operating expenses that impacted adjusted EBITDA were up about $3 million year over year, and we do expect to continue to drive efficiencies and opex over time, and we've constrained opex in the current environment over the last quarter or so as well.

Shaun: For some time, but we met the conditions from an accounting perspective to write down the book value this quarter.

Shaun: We also had around $1 $1 million in preproduction.

Shaun: <unk> startup cost in our cost of goods sold related to our new Pixar printing facility in the United States.

Speaker Change: On the tariff front and the earnings document as Robert mentioned, we updated our overview of impact on the call last quarter. There were a lot of questions on this topic in most of those questions related to our production in Canada, or Mexico, and how that was going to be impacted.

Shaun: Which began taking orders in March and if you exclude those two items gross profit would have increased modestly during the quarter.

Speaker Change: We estimate that the U S MCA and the informational product exclusions that we've outlined cover about 90% of the relevant cost for products that have a country of origin, Canada and Mexico.

Speaker Change: We also still benefit from the de minimus exemption for individual orders below $800 for those two countries.

Speaker Change: Thats applicable for much of the remaining 10% and so the impact for Canada and Mexico at this time remains minimal.

Shaun: On the tariff front in the earnings document as Robert mentioned, we updated our overview of impact on.

Shaun: On the call last quarter, there were a lot of questions on this topic in most of those questions related to our production in Canada, or Mexico, and how that was going to be impacted.

Speaker Change: Our primary exposure as we outlined in last night's document relates to the increased tariffs on Chinese source raw materials, particularly in the PPA category and here, we've been hard at work as well.

Shaun: We estimate that the U S MCA and the informational product exclusions that we've outlined cover about 90% of the relevant cost for products that have a country of origin.

Speaker Change: <unk> alternative sourcing and other mitigation actions and it will take a few months for that to be fully implemented by through the supply chain actions that we plan to take we do expect to substantially reduce our exposure to less than $20 million annually for direct sourced PPG materials from China, We do plan.

Speaker Change: Ananda in Mexico.

Speaker Change: We also still benefit from the de minimus exemption for individual orders below $800 for those two countries.

Speaker Change: And that's applicable for much of the remaining 10% and so the impact for Canada and Mexico at this time remains minimal.

Speaker Change: To increase prices as well as to at least partially offset increased costs, where that's applicable and then we can adjust that approach quickly if things change.

Speaker Change: Our primary exposure as we outlined in last night's document relates to the increased tariffs on Chinese sourced raw materials, particularly in the PPG category and here, we've been hard at work as well.

Speaker Change: Given the uncertainty of the tariff and trade environment, and how that may or may not continue to change and also any impact on demand where price increases are implemented we have withdrawn as you would've seen last night, our guidance for FY 2025 and beyond.

Speaker Change: Identifying alternative sourcing and other mitigation actions and it will take a few months for that to be fully implemented but through the supply chain actions that we plan to take we do expect to substantially reduce our exposure to less than $20 million annually for direct source PPG materials from China, We do plan.

Speaker Change: Generally speaking our fourth quarter that we're now in is seasonally a higher profit and a higher cash flow quarter and so while we do expect some near term impact from tariffs. We do expect also to finish the year with increased liquidity from where we ended Q3 and that puts us in a position to be able to take advantage of opportunities as we approach our next.

Speaker Change: To increase prices as well to at least partially offset increased costs, where that's applicable and then we can adjust that approach quickly if things change.

The school year fiscal 'twenty six.

Speaker Change: We will continue to balance capital deployment between organic growth investments, reducing leverage and then also taking advantage of what we believe is today, an exceptional opportunity to repurchase our shares at attractive prices I'm sure. We'll talk about that some more in the questions and so with that Meredith why don't we why don't we turn it over to the questions great. Thank you Sean as a reminder.

Speaker Change: You can submit questions. During this webcast, we had a questions and answers box at the bottom left of the screen.

We did receive a number of pre submitted questions Sam in overlapping areas and so we will combine some of these to make sure that we're thoroughly addressing what's on People's minds.

Speaker Change: And we look forward to your live questions as well which are coming in.

Speaker Change: Fiscal year fiscal 'twenty six.

Speaker Change: We'll continue to balance capital deployment between organic growth investments, reducing leverage and then also taking advantage of what we believe is today, an exceptional opportunity to repurchase our shares at attractive prices.

Speaker Change: As I speak.

Speaker Change: So I'm going to start with the tariff topic I think we should start there.

Speaker Change: My first question I'm going to throw at you, Robert which customer verticals do you consider most exposed to tariffs impacts in their businesses and what percentage of revenue do they each represent.

Speaker Change: I'm sure, we'll talk about that some more of the questions and so with that Meredith why don't we why don't we turn it over to the questions great. Thank you Sean as a reminder, you can submit questions. During this webcast, we had a questions and answers box at the bottom left of the screen.

Speaker Change: Okay, we serve millions tens of millions of customers across an extremely diverse range of industries, and we have very little concentration by any customer vertical.

Speaker Change: We did receive a number of pre submitted questions Sam in overlapping areas and so we will combine some of these to make sure that were thoroughly addressing what's on People's minds.

Speaker Change: If you take a broad grouping of.

Speaker Change: Customer vertical something like health care.

Speaker Change: And we look forward to your live questions as well which are coming in.

Speaker Change: That's not our biggest vertical but as an example, a broad vertical like that.

Speaker Change: As I speak.

Speaker Change: So I'm going to start with the tariff topic I think we should start there.

Speaker Change: Represents no more than seven or 8% of our revenue, but even within that there's many thousands of sub verticals and so we don't regularly track. This on a consolidated level I think it's more helpful to think of it from a category perspective.

Speaker Change: My first question I'm going to throw at you, Robert which customer verticals do you consider most exposed to tariff impacts in their businesses and what percentage of revenue do they each represent.

Speaker Change: Okay, we serve millions tens of millions of customers across an extremely diverse range of industries and we have very little concentration by end customer vertical.

Speaker Change: As we've outlined in the earnings documents the largest exposure from tariffs right now is for promotional products apparel and gifts, what we called Pag.

Speaker Change: If you take a broad grouping of.

Speaker Change: Just given traditionally.

Speaker Change: Customer vertical something like health care.

Speaker Change: Some of the product substrates or do we have there have come from China.

Speaker Change: That's not our biggest vertical but as an example, a broad vertical like that.

Speaker Change: PPG has been one of our faster growing product categories globally in the U S for some time.

Speaker Change: Represents no more than seven or 8% of our revenue, but even within that there's many dozens of sub verticals.

Speaker Change: Also a large category.

Speaker Change: It's over 20% of consolidated revenue.

Speaker Change: So we don't regularly track this on a consolidated level I think it's more helpful to think of it from a category perspective.

Speaker Change: The U S portion itself is about 11% of global revenues now.

Speaker Change: As we've outlined in the earnings documents the largest exposure from tariffs right now is for promotional products apparel and gifts, what we called Pag.

Speaker Change: Now remember the gross margin there is lower than overall, so it's less than that from a gross profit perspective within that only a subset of that is sourcing from China.

Speaker Change: Just given traditionally right.

Speaker Change: Much of the products that are in apparel coming from southeast Asia, or central and South America again, those countries of course could be.

Speaker Change: Some of the product substrates or do we have there have come from China.

Speaker Change: PPG has been one of our faster growing product categories globally in the U S. For some time, it's also a large category or it's over 20% of consolidated revenue.

Speaker Change: Seeing tariffs imposed on them as well, but China is only a subset of that in China is where the biggest tariffs are as of now.

Speaker Change: As we mentioned in our earnings document the U S tariffs are affecting and will affect the whole of the promotional products and apparel industries not just <unk> that being said many of these products are seen as important cost effective marketing.

Speaker Change: The U S portion itself is about 11% of global revenues.

Speaker Change: Now remember the gross margin there is lower than overall, so it's less net profit perspective within that only a subset of that is sourcing from China.

Speaker Change: Mechanisms for companies of all different sizes.

Speaker Change: Much of the products that are in apparel coming from southeast Asia, or central and South America again, those countries of course could be.

Speaker Change: And for the products and do see.

Speaker Change: Increases to prices due to tariffs.

Speaker Change: We do believe there is some substitution that could happen. So if someone wants to give a promotional product they don't necessarily need to give.

Speaker Change: Seeing tariffs imposed on them as well, but China is only a subset of that in China is where the biggest tariffs are as of now.

Speaker Change: As an example drink ware with their logo on it and they can give a product.

Speaker Change: It also has your logo on it to their customers and that substitution may help us move from the highest tariff countries places like China to other areas.

Speaker Change: So that.

Speaker Change: Replacement of lower tariff country products, replacing something with a higher tariff rates.

Speaker Change: Mechanisms for companies of all different sizes.

Speaker Change: And for the products that you see.

Speaker Change: It's something we also can be pretty purposeful about in our customer experience and our merchandising experience.

Speaker Change: Increases to prices due to tariffs we do believe there is some substitution that could happen. So if someone wants to give a promotional product they don't necessarily need to give.

Speaker Change: It's also possible that there might be some trade down in quantity side size number.

Speaker Change: As an example drink ware with their logo on it and they can give a product but it also has your logo on it to their customers and that substitution may help us move from the highest tariff countries places like China to other areas.

Items ordered for products that have significant price increases.

Speaker Change: But we have actually always been very focused on having minimum order quantities of one or very low quantities. So compared to the competition, we think will be very well positioned to serve those needs.

So that.

Speaker Change: Replacement of lower tariff country products, replacing somebody with a higher tariff rates.

Speaker Change: Great. Thank you Robert.

Speaker Change: Okay.

Speaker Change: A couple questions in similar area, Sean this is going to be for you.

Speaker Change: It's something we also can be pretty purposeful about in our customer experience and our merchandising experience.

Speaker Change: It's going to take me a bit to get through the questions. So stick with me.

Speaker Change: It's also possible that there might be some trade down in quantity side size, a number of items ordered for products that have significant price increases.

Speaker Change: The letter indicates that after the supply change at our supply chain changes that will take several months there will be $20 million remaining in China Cogs subject to tariffs.

Speaker Change: Is it reasonable to expect that based on our 145% tariff rate the associated tariff expense on the remaining $20 million will be about $30 million.

Speaker Change: How much of this China tariff expense was included in the disclosure in the March 8-K, the tariff impacts would be less than $10 million in other words, how much is incremental relative to your expectations before the liberation day tariffs.

Speaker Change: Great. Thank you Robert.

Okay.

Speaker Change: A couple questions in similar areas, Sean this is going to be for you.

Speaker Change: It's going to take me to get through the questions. So I'll stick with that.

Speaker Change: What is the current annualized level of China Cogs that is planned to be shifted to other countries and what level of charges do you expect to incur in the interim.

Speaker Change: The letter indicates that after a supply change and supply chain changes that will take several months there will be $20 million remaining in China hot subject to tariffs.

Speaker Change: And in areas, where you've already raised prices in response to tariffs what has been the impact on order volumes and we had a similar line of question.

Speaker Change: Is it reasonable to expect that based on our 145% tariff rate the associated tariff expense on the remaining 20 million will be about $30 million.

Speaker Change: That covers most of those same topics and then the one that gets added with a live question.

Speaker Change: How much of that is China tariff expense was included in the disclosure in the March 8-K at tariff impacts would be less than $10 million in other words, how much is incremental relative to your expectations.

Speaker Change: Does the $20 million of exposure to China post mitigation efforts account for exposures from third party suppliers and if not what is that total exposure to China, including third party suppliers.

Speaker Change: For Liberation daycare.

Speaker Change: What is the current annualized level of China Cogs that is planned to be shifted to other countries and what level of charges do you expect to incur in the interim.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Do my best and Meredith keep me honest.

Speaker Change: Haven't picked up on some part of that so for for.

Speaker Change: And in the areas, where you've already raised prices in response to tariffs what has any impact on order volumes and we had a similar line of question.

Speaker Change: For China sourcing the math that was in the question is is this correct broadly correct.

I need to give a few caveat so for the $20 million of Cogs, that's connected to our direct sourcing in China.

Speaker Change: That covers most of those same topics and then the one that gets added with a live question.

Speaker Change: <unk>.

Speaker Change: Make changes to our supply chain. That's the number that was referenced in the document last night at $29 million would be the additional cost that's just under 45% times tens and twenties.

Speaker Change: That's not necessarily the net impact on us though.

Speaker Change: Okay.

Speaker Change: So you have to be careful about that.

Speaker Change: Yes.

Speaker Change: One we expect to have pricing changes to at least partially offset the tariffs.

Speaker Change: Do my best Meredith keep me honest.

Speaker Change: Haven't picked up on some part of that so for for.

Speaker Change: So that's one.

Speaker Change: Two.

Speaker Change: For China sourcing the math that was in the question is.

Speaker Change: I mean that could lead to lower volume on those particular products, but we also wouldn't accept losses on the sale of of of any of our any of our goods. So the net impact.

Speaker Change: Is this correct grow the correct, but.

I need to give a few caveat so for the $20 million of Cogs, that's connected to our direct sourcing in China after a rebound.

Speaker Change: It would not it would not be the $20 million.

Speaker Change: <unk> made changes to our supply chain. That's a number that was referenced in the document last night, yes.

Speaker Change: We also will have and I think Robert alluded to this we will have alternative products.

Speaker Change: $29 million would be the additional cost pressures on a 45% times tens and twenties.

Speaker Change: Available and so we believe that there is opportunity to reduce exposure either through being able to provide our customers with different products that solve that particular use case.

Speaker Change: It's not necessarily the net impact on us though.

Speaker Change: So we have to be careful about that.

Speaker Change: One we expect to have pricing changes to at least partially offset the tariffs.

Speaker Change: Or continuing to evolve our supply chain and we think that $20 million is not the end state that is just where we can get to over the next months and then we can continue to optimize after that but of course the environment will be changes so those.

Speaker Change: So that's one.

Speaker Change: Two.

Speaker Change: I mean that could lead to lower volume on those particular products, but we also wouldn't accept losses on the sale of any of our any of our goods. So the net impact.

Speaker Change: Those things are just taking a little bit more time.

Speaker Change: Keep in mind that.

Speaker Change: It.

It would not it would not be the $20 million.

Speaker Change: Where we are after our changes still sourcing product from China is likely that competitors are for the same reason because of availability of those particular products or other reasons.

Speaker Change: We also will have and I think Robert alluded to this.

Speaker Change: Have alternative products.

Speaker Change: Available and so we believe that there is opportunity to reduce exposure.

Speaker Change: Either through being able to provide our customers with different products that solve that particular use case.

Speaker Change: But.

Speaker Change: This represents like a really small portion of our products. Our overall Cogs for the last 12 months through March was about $1 $7 billion and so we didn't put it in perspective. It is it's a very small portion of our product portfolio.

Speaker Change: We're continuing to evolve our supply chain and we think that $20 million is not the end state that is just where we can get to over the next months and then we can continue to optimize after that but of course, the environment will be changes so.

Speaker Change: In terms of trying to figure out how much of this is incremental to what we outlined in the 8-K.

Speaker Change: Those things will just take a little bit more time.

Speaker Change: In the 8-K, we had talked about impact of <unk>.

Speaker Change: Keep in mind that.

Speaker Change: <unk>.

Speaker Change: $10 million or less.

Speaker Change: Where we are after our changes still sourcing product from China is likely that competitors are for the same reasons because availability of those particular products or other reasons.

Speaker Change: And in that there was a small amount of impact from the Chinese tariffs.

Speaker Change: The two things that have moved here to combine.

Speaker Change: And drive a larger impact and that is one of course, the tariff rate increase for China to a 145%.

Speaker Change: But the.

Speaker Change: This represents like a really small portion of our products. Our overall Cogs for the last 12 months through March was about $1 $7 billion and so we just put in perspective, it's a it's a very small portion of our product portfolio.

Speaker Change: And then the second one is the elimination of the de minimus exemption for Chinese source goods and we're not in that yet thats planned to take effect on <unk>.

Speaker Change: In terms of trying to figure out how much of this is incremental to what we outlined in the 8-K.

Speaker Change: Those arent finished products that are imported from China, but the materials that we import from China, where that's relevant.

Speaker Change: In the 8-K, we had talked about impact of <unk>.

Speaker Change: $10 million or less.

Speaker Change: Still impacted by the de minimus exemption because they these particular products maintained their country of origin, China designation, even though they may be decorated in North America, and so thats why de Minimis is still relevant for us on the China part of it.

Speaker Change: And in that there was a small amount of impact from the Chinese tariffs.

Speaker Change: The two things that have moved here to combine.

Speaker Change: And drive a larger impact and that is one of course, the tariff rate increase for China to a 145%.

Speaker Change: We haven't disclosed the current amount of.

Speaker Change: And then the second one is the elimination of the de minimus exemption for Chinese sourced goods.

Speaker Change: The annual cost.

Speaker Change: In terms of our.

Speaker Change: Prior sourcing from China.

Speaker Change: And we're not in that yet Thats plan to take effect on May <unk>.

Speaker Change: And the reason that we didn't do that is because we've already begun to take action.

Those arent finished products that are imported from China, but the materials that we import from China, where that's relevant.

Speaker Change: And so that number would no longer be relevant, but I think it's fair to say that that number would be would have been substantially higher than the $20 million that we that we referenced.

Speaker Change: Still impacted by the de minimus exemption because they these particular products maintain their country of origin China's designation, even though they may be decorated in North America and so that's why it de Minimis is still relevant for us on the China part of it.

Speaker Change: Finally, just for pricing actions. There was a question about what are we seeing in terms of impact on demand.

Speaker Change: So far only had to do this for a very limited set of products as of today.

Speaker Change: We haven't disclosed the current amount of the annual cost.

Speaker Change: And that's because the de minimus exemption.

Speaker Change: The removal of the de minimus exemption for China.

Speaker Change: Our our prior sourcing from China.

Speaker Change: Has not happened yet and so we don't really have any data to share there in terms of what we're seeing on impact on demand from from those price changes.

Speaker Change: And the reason that we didn't do that is because we've already begun to take action.

Speaker Change: On the the live question there was a reference to <unk>.

Speaker Change: On like fill rates and availability and were not seeing any.

Speaker Change: The impact there in terms of availability as yet.

Speaker Change: Finally, just for pricing actions. There was a question about what are we seeing in terms of impact on demand.

Speaker Change: And so we don't expect material impact there from everything that we can see today.

Speaker Change: So far only had to do this for a very limited set of products as of today and that's because the de minimus exemption.

Speaker Change: And then from a <unk> perspective it.

Speaker Change: It is correct that we will have some exposure from <unk> as well that's not part of the $20 million number.

Speaker Change: The removal of the de Minimis exception for China.

Speaker Change: The reason that we didn't specifically quantify that is that is a bit tougher because we don't have full visibility to changes that are three PFS or making in their supply chain as well, which is a very active topic.

Speaker Change: It has not happened yet and so we don't really have any data to share there on in terms of what we're seeing on impactful demand from from those price changes.

Speaker Change: On the live question there was reference to.

Speaker Change: And so it's impossible to fully quantify that but there will be some impact there too I would categorize that piece of it similarly in terms of the.

Speaker Change: Question on like fill rates and availability and were not seeing any.

Speaker Change: Impact there in terms of availability as yet.

Speaker Change: So we don't expect material impact there from everything that we can see today.

Speaker Change: Primarily PPG where were those three PFS are impacted.

Speaker Change: And then from a <unk> perspective.

Speaker Change: We will also address any increases there with price to at least partially mitigate.

Speaker Change: It is correct that we will have some exposure from <unk> as well that's not part of the $20 million number.

Speaker Change: And then we also there too will address with alternative sourcing and those conversations are very much active today and then the last thing I'd say is just the.

Speaker Change: The reason that we didn't specifically quantify that is that a bit tougher because we don't have full visibility to changes that are three PFS or making in their supply chain as well, which is a very active topic.

What we can see from for many of our <unk> in that space generally there were there was a pull forward buying of inventory prior to tariffs going into a place and so we're in a period, where that inventory is still being run out.

Speaker Change: And so it's impossible to fully quantify that but there will be some impact there too I would categorize that piece of it. Similarly in terms of the that's primarily PPG where were those three PFS are impacted.

Speaker Change: And generally theres been postponement of new buys and so we're in a period now where that impact of any increased cost hasn't been felt yet.

Speaker Change: We will also address any increases there with price to at least partially mitigate any impact.

Speaker Change: And it's probably unlikely until until June in most cases that that would start and then we'll go from there with all the other actions that we've outlined.

Speaker Change: And then we also there too will address with alternative sourcing and those conversations are very much active today and then the last thing I'd say is just the.

Sean Quinn: Thanks, Sean Super helpful.

Speaker Change: What we can see from for many of our <unk> in that space generally there were there was a pull forward buying of inventory prior to tariffs going into a place and so we're in a period, where that inventory is still being run out.

Speaker Change: Post Liberation Day April 2nd have you given any thought to offsetting tariff and demand related impact by cutting costs at what point would you do so.

Speaker Change: Yes, certainly and as the General response, I would say, yes, we are.

Speaker Change: And generally theres been postponement of new buys and so we're in a period now where that impact of any increased cost hasn't been felt yet.

Speaker Change: We've given it thought we could and would reduce costs as needed and.

Speaker Change: And it's probably unlikely until until June in most cases that that would start.

Speaker Change: Mentioned in the earlier remarks to date, we have put some constraints in place.

Speaker Change: But if we were not able to mitigate increased costs or we saw a drop in demand and we would make adjustments and I think.

Speaker Change: And then we'll go from there with all the other actions that we've outlined.

Sean: And Sean Super helpful.

Speaker Change: I think that we've shown our ability to do that in the past and so hopefully that that's been clear over over the last many years.

Sean: I'm going to stick with you for this next question.

Sean: Liberation Day April 2nd have you given any thought to offsetting tariffs and demand related impact by cutting costs at what point would you do so.

Speaker Change: As we disclose each quarter in the spreadsheet that we published on our IR site. We do have a significant amount of cost that's either variable or semi variable in nature and so we can flex that to the extent that we're seeing impact on demand for certain products and again, we've done that in the past.

Sean: Yes, certainly and as the General response, I would say, yes, we are.

We've given it thought we could and would reduce cost as needed.

As it relates to growth investments and we've indicated this in the release as well.

Sean: I mentioned in the earlier remarks today, we have put some constraints in place.

Speaker Change: We are maintaining a high bar there, but we have not made any significant changes there we think it's important to.

Sean: But if we were not able to mitigate increased costs or we saw a drop in demand and we would make justice I think.

Speaker Change: To maintain consistency there where we have conviction.

Speaker Change: And then given the fact that were in the depths of our FY 'twenty six planning right now.

Sean: I think we've shown our ability to do that in the past and so hopefully that that's been clear over over the last many years.

Speaker Change: Just cost awareness is certainly.

Speaker Change: Important topic that we're focused on.

Sean: As we disclose each quarter in the spreadsheet that we published on our IR site. We do have a significant amount of cost that's either variable or semi variable in nature and so we can flex that to the extent that we are seeing impact on demand for certain products and again.

Speaker Change: Great. Thanks, Sean.

Speaker Change: One more for you here as we shift away from the tariff topic at least for now.

Speaker Change: Can you please give an update on revenue growth in April.

Sean: Done that in the past.

Sean: As it relates to growth investments and we've indicated this in the release as well we are maintaining a high bar there, but we have not made any significant changes there we think it's important.

Speaker Change: The extent that you are seeing revenue softness thus far in the quarter or is it limited to U S based customers or not and.

Speaker Change: Got it.

Speaker Change: Related question can you comment on each segment's revenue performance for the month of April versus last year, and what trends have you noticed yes.

Sean: To maintain consistency there where we have conviction.

Sean: And then given the fact that were in the depths of our FY 'twenty six planning right now.

Speaker Change: We try to stay away from that.

Speaker Change: Generally, but I understand the importance of that question in the current environment. We certainly you don't get into the segment by segment.

Sean: Just cost awareness is certainly in the <unk>.

Sean: Topic that we're focused on.

Speaker Change: On an interim basis, but.

Speaker Change: Great. Thanks, Sean.

Speaker Change: Maybe just a few things that can provide we're not going to provide a specific update on April but.

Speaker Change: One more for you here as we shift away from the tariff topic at least for now.

Speaker Change: Actually just to start there.

Speaker Change: Can you please give an update on revenue growth in April to.

Speaker Change: It's a little bit complicated by the fact that there is some shift in timing of holidays.

Speaker Change: To the extent that you are seeing revenue softness thus far in the quarter or is it limited to usa's customers or not and.

Speaker Change: With the Easter holiday relative to last year.

Speaker Change: A related question can you comment on each segment's revenue performance for the month of April versus last year, and what trends have you noticed yet.

Speaker Change: And then.

Speaker Change: That has an impact on.

Speaker Change: Bookings and how backlog moves and so on.

Speaker Change: By the way I should mention that last year was a leap year. So there was.

Speaker Change: Yes.

We try to stay away from that.

Speaker Change: Generally, but I understand the importance of that question in the current environment. We certainly you don't get into the segment by segment.

Speaker Change: That was actually a negative in Q3, which we didn't necessarily call out but.

Speaker Change: If you if you were to normalize for the holiday timing I would describe April is stable to the trends that we're seeing in March.

Speaker Change: On an interim basis, but.

Speaker Change: Maybe just a few things that they can provide we're not going to provide a specific update on April but.

Speaker Change: And I would say that across regions. So I think that would be the way I would characterize April.

Speaker Change: Actually just to start there.

Speaker Change: It's a little bit complicated by the fact that there is some shift in timing of holidays.

Speaker Change: Thank you Sean.

Speaker Change: With the Easter holiday relative to last year.

Speaker Change: Okay. Robert This next question is for you. This is the second quarter in a row, where we have been surprised by the very low growth at national pen.

Speaker Change: And then in that.

Speaker Change: That has an impact on.

Speaker Change: Bookings and how backlog moves and so on.

Speaker Change: And what you shared in the earnings release that the reductions of mail order advertising what else is driving the lackluster growth here.

Speaker Change: By the way I should mention that last year was a leap year. So there was.

Speaker Change: That was actually a negative in Q3, which we didn't necessarily call out but if.

There really is not much to add beyond what we published last night.

Speaker Change: If you if you were to normalize for the holiday timing I would describe April is stable to the trends that we're seeing in March.

Speaker Change: Where the growth is happening is in the E Commerce channel and in cross simpler fulfillment, especially fulfilling.

And I would say that across.

Speaker Change: We're filling for both Vista, and our upload and print businesses.

Speaker Change: Across regions. So I think that would be the way I would characterize April.

You can see in our disclosures that excluding cross impressed fulfillment euro.

Speaker Change: Thank you Sean.

Speaker Change: Hey, Robert This next question is for you. This is the second quarter in a row, where we have been surprised by the very low growth at national pen beyond what you shared in the earnings release that the reductions of mail order advertising what else is driving the lackluster growth here.

Speaker Change: Europe is growing and it's North America, where the headwinds and national Penn are leading to lower overall growth.

Speaker Change: That is in the mail order channel and we are just not seeing enough.

There really is not much to add.

Speaker Change: Turns here to justify.

Speaker Change: And what we published last night.

Speaker Change: The past levels of direct mail advertising, so we reduce that and that has been a drag on revenues this year.

Speaker Change: Where the growth is happening in the E Commerce channel and in cross simpler fulfillment, especially.

Robert Keane: Thanks Robert.

Speaker Change: Fulfilling portable Vista, and our upload and print businesses.

Speaker Change: I'm going to stick with you for the next couple of questions here. So historically.

Speaker Change: You can see in our disclosures that excluding cross impressed fulfillment.

Sean Quinn: Your business has held up well during economic downturns as people turn to side hustles and in doing so you need the products that our businesses provide is there any reason to believe that this time it's different.

Speaker Change: Europe is growing and it's North America, where the headwinds are national Penn are leading to the low overall growth.

Sean Quinn: Well the specific circumstances of each downturn that we've seen over the past decades has been of course different from each other.

Speaker Change: That is in the mail order channel and we are just not seeing enough.

Speaker Change: Returns here to justify.

Sean Quinn: Generally speaking.

In the past levels of direct mail advertising, so we reduce that and that has been a drag on revenues this year.

Speaker Change: <unk> has outperformed the overall market for printing and similar products during those downturns for the reasons you bring up the rise of self employment that comes out of necessity.

Robert: Thanks Robert.

Robert: I'm going to stick with you for the next couple of questions here. So historically.

Sean Quinn: As well as larger companies.

Sean Quinn: Moving to lower quantities than they had previously and mass customization players like us are very well suited to address that shift.

Robert: Business has held up well during economic downturns as people turn to side hustles and in doing so you need the products that our businesses provide is there any reason to believe that this time it's different.

Sean Quinn: As we enter a down or is it if we enter a downturn here.

Robert: Well the specific circumstances of each downturn that we've seen over the past decades has been of course different from each other.

Sean Quinn: We would.

Sean Quinn: Expect to see some of this play out again that doesn't mean that we're immune to.

Robert: But generally speaking.

Robert: <unk> has outperformed the overall market for printing and similar products during those downturns for the reasons you bring up the rise of self employment that comes out of necessity.

Sean Quinn: Some economic slowdown or a muted profitability.

Sean Quinn: But as a company with global operations with scale advantages diverse product and customer set as well as a strong balance sheet and liquidity.

Robert: As well as larger companies.

Moving to lower quantities than they had previously and mass customization players like us are very well suited to address that shift.

Sean Quinn: We are able to navigate that quite well and then there are some as Sean alluded to in one of the prior prior questions cost levers, which we could pull.

Robert: As we enter a down or is it if we enter a downturn here.

Sean Quinn: And we've done that in the past when needed.

Robert: We would.

Robert Keane: Thanks Robert.

Robert: Expect to see some of this play out again that doesn't mean that we're immune to.

Speaker Change: Could you. Please provide any noteworthy observations on demand trends for our largest submarkets, namely small format signage promotional products and apparel and packaging and labels.

Robert: Some economic slowdown or a muted profitability.

Robert: But as a company with global operations with scale advantages diverse product and customer set as well as a strong balance sheet and liquidity.

Robert Keane: Well as I mentioned in my prepared remarks, the overall observation is.

Speaker Change: Alright.

Robert: We are able to navigate that quite well and then there are some as Sean alluded to in one of the prior prior questions cost levers, which we could pull.

Speaker Change: These products, which we now call elevated products.

Speaker Change: Our.

Speaker Change: Products that customers typically considered to be more sophisticated.

Speaker Change: There are newer to the.

Speaker Change: Mass customization paradigm, which we master so well they typically have more complex production operations and more complex design processes.

Robert: And we've done that in the past when needed.

Robert: Thanks Robert.

Speaker Change: Could you. Please provide any noteworthy observations on demand trends for our largest sub markets, namely small format signage promotional products and apparel and packaging and labels.

Speaker Change: And they are all growing rapidly across empresa as.

Speaker Change: Different businesses.

Speaker Change: These are products that often have higher order values.

Speaker Change: Well as I mentioned in my prepared remarks, the overall observation is.

Speaker Change: They have.

Speaker Change: Very often replenishment.

Speaker Change: Replenishment needs that are higher than average.

Speaker Change: Alright.

Speaker Change: These products, which we now call elevated products.

Speaker Change: They include products that our customers see as part of <unk>.

Speaker Change: Our.

Speaker Change: Product to customers typically considered to be more sophisticated.

Speaker Change: Simply delivering their own products to our customers customers as opposed to being a discretionary expense for example.

Speaker Change: There are newer to the.

Speaker Change: Mass customization paradigm, which we master so well they typically have more complex production operations and more complex design processes.

Speaker Change: Once we become part of our customers' packaging.

Speaker Change: That requires ongoing purchases.

Speaker Change: Customer to ship their product and customers of these elevated products tip.

Speaker Change: And they are all growing rapidly across different businesses.

Speaker Change: Typically have higher lifetime value than <unk>.

Speaker Change: Got it.

Speaker Change: These are products that often have higher order values.

Speaker Change: <unk> average.

Speaker Change: Higher retention rates.

Speaker Change: They have.

Speaker Change: Very often.

Speaker Change: So.

Speaker Change: Replenishment needs that are higher than average.

Speaker Change: They are desirable for us to continue to crack the code on building both our supply chain manufacturing capabilities that are competitive at all quantities are customers want that ranges from very small quantities to pretty large quantities and importantly.

Speaker Change: They include products that our customers see as part of <unk>.

Speaker Change: Simply delivering their own products to our customers customers as opposed to being a discretionary expense for example.

Speaker Change: For us to help our customers with the more complicated graphic design needs, which we referred to as design enablement and Theres a clear need for these products and offering them alongside our more legacy products helps us capture more wallet share of the highest value customers and does help us drive.

Speaker Change: Once we become part of our customers' packaging that requires ongoing purchases for the customer to ship their products and customers of these elevated products.

Speaker Change: Typically have higher lifetime value than.

Speaker Change: <unk> average.

Speaker Change: And higher retention rates.

Speaker Change: Leverage of our advertising.

Speaker Change: No.

Speaker Change: They are desirable for us to continue to crack the code on building a supply chain manufacturing capabilities that are competitive at all quantities are customers want that ranges from very small quantities to pretty large quantities and importantly.

Speaker Change: And our operating expense.

Speaker Change: Now the products.

Speaker Change: We're talking about fall into the categories. You just mentioned the signage promotional products apparel packaging labels.

Speaker Change: And even within some of the small format marketing materials are there pockets of fast growing product for us.

Speaker Change: For us to help our customers with the more complicated graphic design needs, which we referred to as design enablement and there is a clear need for these products and offering them alongside our more legacy products helps us capture more wallet share of the highest value customers and does help us drive.

Speaker Change: Books catalogs and magazines that are elevated compared to simple rectangles on paper like a flyer or holiday card or a business card.

Speaker Change: And then there are some parts of these categories.

Speaker Change: That are.

Speaker Change: Uh huh.

Speaker Change: Growing slower decline.

Speaker Change: Leverage of our advertising.

Speaker Change: <unk>.

Speaker Change: And we consider those largely be legacy products like.

Speaker Change: And our operating expense.

Speaker Change: Business cards of course for holiday cards in the mail order channel at National patent for writing is for those.

Speaker Change: Now the products.

Speaker Change: We're talking about fall into the categories. You just mentioned the signage promotional products apparel packaging labels.

Robert Keane: Thank you Robert.

Speaker Change: And even within some of the small format marketing materials, there are pockets of fast growing products for us.

Robert Keane: Next question can you. Please describe the competitive landscape in the complex products, which as we're talking about on this call the elevated product area versus the legacy products. For example business card segments. What is the specific gross margin differential between the two broader product line and why can't impress price the complex products.

Speaker Change: Books catalogs and magazines that are elevated compared to simple rectangles on paper like a flyer or holiday card or a business card.

Speaker Change: And then there are some parts of these categories.

Speaker Change: That are.

Speaker Change: Uh huh.

Robert Keane: Higher to get higher margins.

Speaker Change: Growing slower decline.

Speaker Change: <unk>.

Robert Keane: Okay. There's a lot of similarity in what I will say here with the last question, but.

Speaker Change: And we consider those largely be legacy products like.

Speaker Change: Business cards enforced for holiday cards in the mail order channel at National patent for writing yesterday.

Robert Keane: Yes, there is.

Robert Keane: Often a gross margin difference on the various product categories, but theres not always.

Robert: Thank you Robert.

Robert: Next question can you. Please describe the competitive landscape in the complex products, which as you were talking about on this call the elevated product area versus the legacy products. For example business card segment. What is the specific gross margin differential between the two broader product line and why can't impress price the complex products.

Robert Keane: For example.

Robert Keane: Signage packaging and labels.

Depending on the type of subcategories are often.

Robert Keane: Having gross margins that can be similar to some of our legacy materials.

Robert Keane: Promotional products that are.

Robert Keane: At apparel.

Robert: Higher to get higher margins.

Robert Keane: I do tend to have a lower gross margin.

Robert: Okay. There's a lot of similarity in what I'll say here with the last question, but.

Robert Keane: But.

Robert Keane: They also ranked among some of our most valuable product categories in terms of how much absolute gross profit.

Robert: Yes, there is.

Robert Keane: We generate per customer, which is very distinct from the percentage gross margin.

Robert: Often a gross margin difference on the various product categories, but theres not always.

Robert Keane: So when you think about gross margin, which you can think of describing a percentage, but not an absolute monetary value.

Robert: For example.

Robert: Signage packaging and labels.

Robert: Depending on the type of subcategories are often.

Robert Keane: I'll give you a very simple example, if we make 40% are relatively low gross margin for us on a 200 dollar promotional product order.

Robert: Having gross margins that can be similar to some of our legacy materials.

Robert: Promotional products that are.

Robert Keane: We earn $80 and gross profit.

Robert: At apparel.

Robert Keane: If we make 70% gross margin on a 50 dollar.

Robert: Do tend to have a lower gross margin.

Robert: Got it.

Robert: They also ranked among some of our most valuable product categories in terms of how much absolute gross profit.

Robert Keane: Business card order, we earned $35 and gross profit.

Speaker Change: They have different gross margin rates, but the cash flow from the PPA G products are actually quite attractive. So we're not solving for a gross margin percentage were solving to improve.

Robert: We generate our customer which is very distinct from the percentage gross margin.

Robert: So when you think about gross margin, which you can think of describing a percentage, but not an absolute monetary value.

Speaker Change: First and foremost the value we deliver to customers, which then translates to the gross profit per customer and of course a high.

Robert: I will give you a very simple example, if we make 40% <unk>.

Robert: It will be low gross margin for us on a 200 dollar promotional product order.

Speaker Change: Percentage gross margin improves our gross profit.

Speaker Change: But if volume drops because of higher pricing.

Robert: $80 and gross profit.

Robert: If we make 70% gross margin on a $50 <unk>.

Speaker Change: That does not necessarily help so it's a total revenue times gross margin that matters.

Robert: Business card order, we earned $35 and gross profit.

Speaker Change: And growing gross profit dollars in a way that delights customers and strengthens her loyalty increases or lifetime value.

Robert: They have different gross margin rates, but the cash flow from the PPA G products are actually quite attractive. So we're not solving for a gross margin percentage were solving to improve.

Speaker Change: Can be a great driving leverage elsewhere.

Speaker Change: P&L for example in advertising costs, if we have higher value across our customers' technology costs in other areas.

Robert: First and foremost the value we deliver to customers, which then translates to the gross profit per customer and of course, a high percentage gross margin improves our gross profit.

Speaker Change: So our businesses look at pricing there was a question you had about what our price higher.

Robert: But if volume drops because of higher pricing.

Speaker Change: Based on what competitors are pricing and we test around the elasticity of demand to figure out.

Robert: That does not necessarily held so it's a total revenue times gross margin that matters.

Speaker Change: We're at a price of product.

Speaker Change: Any given quantity so.

Robert: And growing gross profit dollars in a way that delights customers and strengthens their loyalty increases or lifetime value.

There has been no reach.

Speaker Change: Recent changes.

Speaker Change: Of any significance in the competitive landscape to either traditional local printers, we still serve.

Robert: Can be a great driving leverage elsewhere.

Speaker Change: The majority of this market or with online players.

Robert: P&L for example in advertising costs, if we have higher value across our customers.

Speaker Change: But it is a competitive space and.

Robert: <unk> costs in other areas.

Speaker Change: And we certainly want to ensure we have never become complacent.

Robert: Our businesses look at pricing there was a question you had about what our price higher.

Speaker Change: Just because we're the largest.

Speaker Change: Online mass customization player in print and the only one with international operations like we have it doesn't mean that we are in any way.

Robert: Based on what competitors are pricing and we test around the elasticity of demand.

Robert: You're out.

Robert: We're at a price of product.

Speaker Change: Taking this for granted so we constantly look at pricing in the overall value proposition.

Robert: Given quantity so.

Robert: There has been no.

Robert: Recent changes.

Speaker Change: That's why you will hear us talking about strengthening our scale advantages why were.

Robert: Of any significance in the competitive landscape to either traditional local printers, we still serve.

Speaker Change: Excited about the years of investment we've made in the re platforming investments, we're making as an example, right now to bring our upload and print production capabilities into the North American market and all of that should help make it easier to further grow our scale advantages and deliver ever better customer value.

Robert: The majority of this market or with online players.

Robert: But it is a competitive space.

Robert: And we certainly want to ensure we have never become complacent.

Robert: Just because we're the largest.

Robert: Online mass customization player in print and the only one with international operations like we have it doesn't mean that we are in any way.

Speaker Change: Going back to competitors there are great competitors out there, they're nimble their focus and so we have to constantly strive everyday to because to serve our customers better that's the way to win its a big market, we're never going to have the market to ourselves.

Robert: Taking this for granted so we constantly look at pricing in the overall value proposition.

Robert: That's why you will hear us talking about strengthening our scale advantages why were.

Speaker Change: Thanks Robert.

Robert: Excited about the years of investment we've made in the re platforming investments, we're making as an example, right now to bring our upload and print production capabilities into the North American market and all of that should help make it easier to further grow our scale advantages and deliver ever better customer value.

Sean Quinn: Okay. Sean. This next question is for you and it's along a similar vein so.

Speaker Change: I think people can incorporate what they've what they've heard from Robert answering the last few questions.

Sean Quinn: Part of the answer to this one.

Speaker Change: What what gives management confidence that there's not a fundamentally negative change to the long term gross margin profile of the business.

Robert: Going back to competitors there are great competitors out there, they're nimble their focus and so we have to constantly strive everyday to because to serve our customers better that's the way to win its a big market, we're never going to have the market to ourselves.

And then some some new places to add some commentary how what's impressed fail and executing on the transformation to higher lifetime value products and what specific guardrails are in place to avoid such pitfalls.

Robert: Thanks Robert.

Speaker Change: Sure.

Sean: Okay. Sean. This next question is for you and it's along the same similar vein so.

Speaker Change: Some similarity there to what Robert just outlined I think.

Speaker Change: I mean in general and this question comes up with.

Robert: I think people can incorporate.

Speaker Change: With some frequency and.

Speaker Change: In general as Robert said too we.

Robert: What they've heard from Robert answering last few questions.

Speaker Change: Don't focus on gross margin, we focus on gross profit.

Robert: Part of the answer to this one.

Robert: What what gives management confidence that there's not a fundamentally negative change to the long term gross margin profile of the business.

Speaker Change: I mean, interestingly and I'll kind of get back to some of the more recent evolution, but if you take a step back we used to get this question often times when we started to acquire into our what is now our buffalo to print portfolio.

Robert: And then you know some some new places to add some commentary how it's impressed fail and executing on the transformation to higher lifetime value products and what specific guardrails are in place to avoid such pitfalls.

Speaker Change: And.

Speaker Change: Our upload and print portfolio for a variety of reasons has structurally different gross margins that are lower than what our at least at the time when we started to acquire those businesses what our gross margins were at the time. So they were kind of gross margin dilutive.

Robert: Sure.

Robert: Some similarities there to what Robert just outlined I think.

Robert: In General and this question comes up with.

Speaker Change: And we got a lot of questions about that well.

Robert: With some frequency and.

Speaker Change: Those businesses have grown their gross profit very significantly they are growing their profit dollars very significantly and they've grown their cash flow very significantly and if you look at it in terms of the return on invested capital as we outlined in some of our annual letters.

Robert: In general as Robert said too we.

Speaker Change: Don't focus on gross margin focus on gross profit.

Speaker Change: Those businesses that we acquired and upload and print of generated more cash than the invested capital. We put in there is still growing very nicely. They still have very attractive profit generation of cash flow generation and so yes, it would be difficult to argue that just.

Speaker Change: And.

Speaker Change: Our upload and print portfolio for a variety of reasons has structurally different gross margins that are lower than what our at least at the time when we started to acquire those businesses what our gross parts with the time. So they were kind of gross margin dilutive.

Speaker Change: Because there was gross margin dilution that that was not a good thing like it was definitively a good use of capital and those are great businesses. They are just different.

Speaker Change: And we got a lot of questions about that well those.

Speaker Change: And so I think if if everything was held constant coming back to the more recent product mix evolution.

Speaker Change: Those businesses have grown their gross profit very significantly they've grown their profit dollars very significantly and they've grown their cash flow very significantly and if you look at it in terms of the return on invested capital as we outlined in some of our annual letters.

Speaker Change: You had constant order size the constant.

Repeat rate constant cost of customer acquisition constant growth opportunity and so on.

Speaker Change: Those businesses that we acquired and upload and print of generated more cash than the invested capital. We put in there is still growing very nicely. They still have a very attractive profit generation of cash flow generation and so yes, it would be difficult to argue that just.

Speaker Change: Of course, then you wouldn't you wouldn't pursue lower gross margins right. It would be better to have higher gross margins, but the reality is everything isn't constant and Robert just did some math to on.

Speaker Change: Different differences by category I think the upload and print example is another example, and the reality is that where we started at least in Vista was small format products and those are relatively simple design relatively low order values and once they got to scale. They also had high gross margins for a variety of reasons and Thats a great thing.

Speaker Change: Because there was gross margin dilution that that was not a good thing like it was definitively a good use of capital and those are great businesses. They are just different.

Speaker Change: And so I think if if everything was held constant coming back to the more recent product mix evolution.

Speaker Change: You had constant order size via constant.

Speaker Change: Yes.

Speaker Change: Things evolve technology evolve design capabilities of our production equipment evolve.

Speaker Change: Repeat rate constant cost of customer acquisition constant growth opportunity and so on.

All parts of the value chain.

Speaker Change: Of course, then you wouldn't you wouldn't pursue lower gross margins rate it would be better to have higher gross margins, but the reality is everything isn't constant and Robert just as the math two on.

Speaker Change: More complex products from our production design standpoint, starting to become possible and be possible to be done in small quantities and so.

Speaker Change: As that has happened many of those markets are very large and are still newer to come into an online marketplace and so there is there is a nice growth opportunity there and those products have just have some characteristics that are different the order sizes tend to be larger as Robert noted this tenant serve customers that oftentimes have a large.

Speaker Change: Amount of annual spend.

Speaker Change: Yes.

Speaker Change: <unk> patterns are different things like packaging the repeat patterns are different.

Speaker Change: Things evolve technology evolve design capabilities of our production equipment evolve.

Speaker Change: And that's where the growth opportunities. So we're focused on growing gross profit and contribution profit dollars in those categories. We think thats a good thing.

Speaker Change: You all parts of the value chain.

Speaker Change: More complex products from our production design standpoint, starting to become possible and the possible to be done in small quantities and so.

Speaker Change: How would we sale was part of the question and yes. There is certainly plenty of ways that we could fail, but I think fundamentally it would be if we're not serving.

Speaker Change: And that has happened many of those markets are very large and are still newer to come into an online marketplace and so there is there is there is a nice growth opportunity there and those products have just have some characteristics that are different the order sizes tend to be larger as Robert noted these tend to serve customers that oftentimes have a large.

Speaker Change: These high value customers really well in a way that makes them customers for life.

Speaker Change: And I don't know what specific guardrails I would call out to avoid pitfalls, but I think frankly, I think that in terms of guardrails that goes back to how we run the business every day.

Speaker Change: Amount of annual spend.

Speaker Change: <unk> patterns are different things like packaging the repeat patterns are different.

Speaker Change: And in these categories, especially as we push deeper into them we.

Speaker Change: And that's where the growth opportunities. So we're focused on growing gross profit and contribution profit dollars in those categories. We think that's a good thing.

Speaker Change: We have very clear objectives laid out key results laid out around those initiatives. We have kpis that we track. So we can establish how we're making progress and where we need to get better.

Speaker Change: How would we fail was part of the question and yes. There is certainly plenty of ways that we could fail, but I think fundamentally it would be if we're not serving.

Speaker Change: Clear areas that we've been investing in to attract and retain those customers.

Speaker Change: And that can range from things like expanding our expert services, which we've talked about in various investor days.

Speaker Change: These high value customers really well in a way that makes them customers for life.

Speaker Change: Heidi more assurance, how do we take friction out of the experience how do we have more dedicated customer care to handle high value use cases.

Speaker Change: And then all the things that we're doing from a capex perspective, as well to have both new product introduction, but also too.

Speaker Change: And in these categories, especially as we push deeper into them we.

Speaker Change: Be the low cost producer in some of these categories that are newer and of course, we could.

Speaker Change: A number of other things and so I think it really comes down to the.

Speaker Change: The mechanisms that we used to run the business every day and monitor performance and then making sure that we're talking to customers and getting feedback that informs our progress.

Speaker Change: Clear areas that we've been investing in to attract and retain those customers.

Speaker Change: And that can range from things like expanding our expert services, which we've talked about in various investor days.

Speaker Change: Adding more assurance, how do we take friction out of the experience how do we have more dedicated customer care to handle high value use cases.

Speaker Change: Okay.

Speaker Change: And then all the things that we're doing from a capex perspective, as well to have both new product introduction, but also.

Meredith: Hey, Meredith I just wanted to ask you that.

Speaker Change: Sorry about that.

Speaker Change: The low cost producer in some of these categories that are newer and of course, we could.

Speaker Change: Sorry about that thank you very much I was on a lot of questions coming in.

Speaker Change: A number of other things and so I think it really comes down to the.

Speaker Change: No.

Speaker Change: I was talking I was reading the next question and I was on mute sorry about that guys.

Speaker Change: The mechanisms that we used to run the business every day and monitor performance.

Speaker Change: So we're going to shift to a question on Capex for you Sean.

Speaker Change: And then making sure that we're talking to customers and getting feedback that informs our progress.

Speaker Change: Capex is higher this year, which is what you told us to expect at the beginning of the year. How long do you think this investment cycle will take a few more quarters or is this a multi year affair.

Speaker Change: Yes.

Speaker Change: Majority of the increase that we've had is in is in our Vista business in.

Meredith: Hey, Meredith I just wanted to ask you that.

Speaker Change: Our print group segment.

Speaker Change: And for the print group.

Speaker Change: Sorry about that.

Speaker Change: Sorry about that thank you very much I was on mute.

Speaker Change: We were just talking about the new U S facility. So that that includes the initial build out of the that new facility.

Speaker Change: She is coming into the year.

Speaker Change: I I I was talking I was reading the next question and I was on mute sorry about that guys.

Speaker Change: And then also of course the equipment for that facility.

Speaker Change: And that one I would characterize as a very much a multiyear plan will be increasing the capacity of that facility will be increasingly capabilities at that facility.

Speaker Change: So we're going to shift to a question on Capex for you Sean.

Speaker Change: Capex is higher this year, which is what you told us to expect at the beginning of the year.

Speaker Change: As for the next years.

Speaker Change: Long do you think this investment cycle will take a few more quarters or is this a multiyear there.

Speaker Change: And we will be doing that.

Speaker Change: As our trajectory of volumes and revenue are also ramping.

Speaker Change: Yes.

Speaker Change: The vast majority of the increase that we've had is in is in our Vista business and then in the.

Speaker Change: And I think that's that overtime as we continue to put more capex into that facility that will be while that revenue is increasing given that the facilities. Just went live so far the capex that we've had there has not been generating revenue and gross profit. So you don't see that would be a flow through yet.

Speaker Change: Print group segment.

Speaker Change: And for the print group.

Speaker Change: We were just talking about the new U S facility. So that you know that includes the initial build out of the that new facility.

Speaker Change: And then also of course the equipment for that facility.

Speaker Change: And that one I would characterize as very much a multiyear plan will be increasing the capacity of that facility will be increasing the capabilities that that facility.

Speaker Change: So thats one that I would say as a overall are multi year.

Speaker Change: Most of the year effort.

Speaker Change: For the rest I would characterize the capex is primarily ongoing choices that we have rather than.

Speaker Change: As for the next years.

Speaker Change: And we will be doing that.

Speaker Change: Multi year investment cycle, that's like preordained in any way.

Speaker Change: As our trajectory of volumes and revenue are also ramping.

Speaker Change: And Theres maintenance Capex that we have is replete with replacement capex for efficiency.

Speaker Change: And I think that's that's over over time as we continue to put more capex into that facility that will be while that revenue is increasing given that the facilities for lives. So far the capex that we've had there has not been generating revenue and gross profit. So you won't see that flow through yet.

Speaker Change: Over over our history like you could see that that can have some waves to it.

Speaker Change: And then we do have some larger pieces of equipment that are being replaced with new technology. This year, but on the growth investment side of things I think as an example.

Speaker Change: So that's one that I would say as a overall a multiyear.

Speaker Change: We have some sizable capex for expansion of our packaging range, which is something that we're excited about we see starting to impact our results. We think theres more opportunities like that if we're seeing success success, but those are all decisions that we will be able to evaluate over time based on the returns that we're generating on similar investments and so it's not necessary.

Speaker Change: A multiyear effort.

Speaker Change: For the rest I would characterize the capex is primarily ongoing choices that we have rather than more.

Speaker Change: Multi year investment cycle, that's like preordained in any way.

Speaker Change: And Theres maintenance Capex that we have is replete with replacement capex for efficiency.

Speaker Change: Really a multi year investment will take those one at a time as we go and can evaluate progress.

Speaker Change: Over over our history like you can see that that can have some waves to it.

Speaker Change: We're still right now in the process of finalizing our fiscal 'twenty six plans in each year, we go through especially on the Capex side very much a bottoms up assessment of where we're investing in capex.

Speaker Change: And then we do have some larger pieces of equipment that are being replaced with new technology. This year, but on the growth investment side of things I think you know as an example.

Speaker Change: Have some sizable capex for expansion of our packaging range, which is something that we're excited about we see starting to impact our results. We think theres more opportunities like that if we are seeing success success, but those are all decisions that we will be able to evaluate over time based on the returns that we're generating on similar investments and so it's not necessary.

Speaker Change: And we evaluate that each year both on individual products, but then also taking a step back in the aggregate and making sure that that total number makes sense relative to other opportunities.

Speaker Change: And I would say just generally that.

Speaker Change: These capex projects have in general have high and predictable returns and so we'd want to do them. If we're confident that as the high probability outcome.

Speaker Change: Really a multi year investment will take those one at a time as we go and can evaluate progress.

Speaker Change: Great. Thank you Shawn.

Speaker Change: I'm going to move on to a question.

Speaker Change: Sort of related.

Speaker Change: In thinking about capital allocation and different types of capital allocation that we can make.

Speaker Change: And we evaluate that each year both on.

Speaker Change: So given the current stock price of $40 to $45 a share how does the company think about share buybacks versus internal investments and debt paydown.

Speaker Change: In individual products, but then also taking a step back in the aggregate and making sure that that total number makes sense relative to other opportunities.

Speaker Change: Know from prior calls the company targets 12, plus percent for Opex, and Capex, given where steel prices trading from a cash flow yield perspective will capex in FY 2016, more muted to capitalize on the opportunity to repurchase shares what's management's expectation regarding timing to resume repurchasing shares assuming no I appreciate.

Speaker Change: And I would say just generally that.

Speaker Change: These capex projects have in general have high and predictable returns and so we'd want to do them. If we're confident that as the high probability outcome.

Speaker Change: Great. Thank you Shawn.

Speaker Change: I'm going to move on to a question.

Speaker Change: And share price.

Speaker Change: Yes sure.

Speaker Change: I sort of related.

Speaker Change: First of all it's absolutely a tradeoff that we think about frequently.

Speaker Change: In thinking about capital allocation and different types of capital allocation that we can make.

Speaker Change: Features in our discussions with the board with our cross the management team. So.

Speaker Change: So given the current stock price of 40 to $45 a share how does the company think about share buybacks versus internal investments and debt paydown.

Speaker Change: It's absolutely a regular feature of our discussions.

Speaker Change: From prior calls the company targets 12, plus percent for Opex, and Capex, given where steel prices trading from a cash flow yield perspective will capex in FY 2016, more muted to capitalize on the opportunity to repurchase shares what's management's expectation regarding timing to resume repurchasing shares assuming no I appreciate.

Speaker Change: Specifically on FY 'twenty six Capex, we're still as I said on the prior question, we're still working through our plans there.

Speaker Change: But as I said too there we do this bottoms up and we're evaluating individual projects and returns on those.

Speaker Change: But then we also look at that in the aggregate to and are looking at the returns on those things versus share repurchases and so thats something that will be factored in but we're still we're still finalizing the plans on FY 'twenty six capex.

Speaker Change: And share price.

Speaker Change: Yes sure.

Speaker Change: First of all it's absolutely a tradeoff that we think about frequently.

Speaker Change: I'd say just generally.

Speaker Change: With features in our discussions with the board with our cross the management team. So.

Speaker Change: We will evaluate the relative returns on all of this stuff.

Speaker Change: It's absolutely a regular feature of our discussions.

Speaker Change: And we do have a bias to internal investments like Capex. Some of the examples I mentioned like expansion in packaging or the expansion of upload and print in the United States.

Speaker Change: Specifically on FY 'twenty six Capex, we're still as I said on the prior question, we're still working through our plans there.

Speaker Change: We think that those are high probability outcomes.

Speaker Change: But as I said to the area. We do this bottoms up and we're evaluating individual projects and returns on those but then we also look at that in the aggregate to an or are looking at the returns on those things versus share repurchases and so that's something that will be factored in but we're still.

Those are things that we're going to want to do.

Speaker Change: They are beneficial from a growth perspective.

Speaker Change: They have attractive returns on the capital that we're investing there.

Speaker Change: And then we're looking at all of this stuff also with kind of a wrap around it or a view towards our net leverage target as well right. So that's the that's the balance and we've been actively managing that over the last years and I think.

Speaker Change: We're still finalizing the plans on FY 'twenty six capex.

Speaker Change: I'd say just generally.

Speaker Change: We will evaluate the relative returns on all of this stuff.

Speaker Change: Think of manage that in a good direction.

Speaker Change: The fact that we didn't buy shares in February and March.

Speaker Change: And we do have a bias to internal investments like Capex. Some of the examples I mentioned like the expansion of packaging or is the expansion of upload and print in the United States.

Speaker Change: Was largely a function of just making sure that we had to handle the tariff situation. It was a situation that is constantly evolving and frankly it was it was one that was quite complex.

Speaker Change: We think that those are high probability outcomes.

Speaker Change: Those are things that we're going to want to do.

Speaker Change: Once we felt like we had we had established sufficient clarity we updated today.

Speaker Change: They are beneficial from a growth perspective, they have attractive returns on the capital that we're investing there.

Speaker Change: Today AK in early March.

Speaker Change: And then we're looking at all of this stuff also with kind of a wrap around it or a view towards our net leverage target as well right. So that's the that's the balance that we've been actively managing that over the last years and I think.

Speaker Change: But these things take time, and we want to make sure that we have a handle on things and so.

Speaker Change: That's where our focus was.

Speaker Change: And then we also of course have our stated plans to continue to Delever. So that was in the back of our mind as well, but those are the tradeoffs that we're going to continue to actively consider.

Speaker Change: You can manage that good direction.

Speaker Change: The fact that we didn't buy shares in February and March.

Speaker Change: Including in Q4.

Speaker Change: It was largely a function of just making sure that we had to handle the tariff situation. It was a situation that is constantly evolving and frankly it was it was one is quite complex.

Speaker Change: But also as we move into FY 'twenty six.

Speaker Change: We're in a situation, where we have a strong balance sheet, we have strong.

Speaker Change: <unk>, we're in a quarter, where as we've said in the earnings document last night, we expect to be increasing that liquidity in Q4.

Speaker Change: Once we felt like we had we had established sufficient clarity we updated today.

Speaker Change: Because it's seasonally a quarter, where we have higher profitability and cash flow.

Speaker Change: That 8-K in early March.

Speaker Change: But these things take time, and we want to make sure that we have a handle on things and so.

Speaker Change: So we will be prepared to seize opportunities and we.

Speaker Change: We will stay nimble there, but we will be considering that across across the spectrum of east capital allocation choices.

Speaker Change: That's where our focus was.

Speaker Change: And then we also of course have our stated plan to Delever. So that was in the back of our mind as well, but those are trade offs that we're going to continue to actively consider it.

Speaker Change: Thanks, Sean.

Speaker Change: Okay I've got a couple of questions come in about our decision to withdraw guidance, Sean I'll stick with you on this one.

Speaker Change: Loading in Q4.

Speaker Change: But also as we move into FY 'twenty six.

Speaker Change: We're in a situation, where we have a strong balance sheet we have.

Speaker Change: Please provide color on the rationale for pulling the long term guidance is it solely due to the tariff uncertainty or has something else fundamentally changed about managements view of the go forward business opportunity.

Speaker Change: Our strong liquidity, we're in a quarter, whereas we said in the earnings document last night, we expect to the increase in net liquidity in Q4.

Speaker Change: And another very similar question, but more like thinking about hey, there's only one more quarter left.

Speaker Change: Because it's seasonally a quarter, where we have higher profitability and cash flow.

Speaker Change: So we will be prepared to two.

Speaker Change: In the year.

Speaker Change: These opportunities and we.

Speaker Change: Considering that we're already one month, then is it really that little visibility over the next few months.

Speaker Change: We will stay nimble there, but we will be considering that across across the spectrum of east capital allocation choices.

Speaker Change: Sure, Yes, I mean, as I said in my prepared remarks and completely.

Sean: Thanks, Sean.

Speaker Change: Completely get the focus on this topic in the question.

Speaker Change: Okay I've got a couple of questions come in about our decision to withdraw guidance, Sean I'll stick with you on this one.

Speaker Change: But as I said it was given the uncertainty of tariff and trade environment.

Speaker Change: Please for my color on the rationale for pulling the long term guidance is it solely due to the tariff uncertainty or has something else fundamentally changed about managements view of the go forward business opportunity.

Speaker Change: And any potential continued changes on that front, which we have seen on a pretty regular basis, and then also any impact on demand wherever.

Speaker Change: Yes that might be relevant that we withdrew our guidance and so yes. It is specifically related to.

Speaker Change: And then another really at very similar question, but more like thinking about hey, there's only one more quarter left.

Speaker Change: The uncertainty of the tariff and trade environment and any any related impacts.

Speaker Change: In the year are considering that we're already one month, then is it really that little visibility over the next few months.

Speaker Change: Now I completely get it like Hey, we're sitting here on my first and there's only two months left in.

Speaker Change: Sure Yeah, I mean, as I said in my prepared remarks, and I completely get the focus on this topic in the question.

Speaker Change: But we just.

Speaker Change: We're trying.

Speaker Change: Trying to forecast and then communicate to all of you. What the next two months are going to be like we just don't think is that helpful or an exercise given the.

Speaker Change: But as I said it was given the uncertainty of tariff and trade environment and.

Speaker Change: And then any potential continue changes on that front, which we have seen on a pretty regular basis and then also any impact on demand wherever.

Speaker Change: The uncertainties that do exist and so.

Speaker Change: We feel like we have a good handle on the impact in terms of what's in our control we've attempted to lay that out.

Speaker Change: Yes that might be relevant that we withdrew our guidance and so yes. It is specifically related to.

Speaker Change: We hope quite clearly, including in the 8-K that we provided in early March.

Speaker Change: The uncertainty of the tariff and trade environment and any any related impacts.

Speaker Change: But then also the updates that we've that we provided last night.

Speaker Change: Now I completely get it like Hey, we're sitting here on my first and there's only two months left in.

Speaker Change: And then we had long term guidance in place and including over the last three months, frankly, and I'm not so sure that that long term guidance over the last three months provided any one more certainty when the tariff discussion became the focus and so we're going to continue to operate the business as we have.

Speaker Change: But.

Speaker Change: We just.

Speaker Change: We're trying.

Speaker Change: Trying to forecast and then communicate to all of you. What the next two months are going to be like we just don't think is that helpful or an exercise given the.

Speaker Change: The uncertainties that do exist and so we're.

Speaker Change: We've communicated a lot on where our long term focus is what our objectives are and so hopefully that's been clear and none of that changes that that's where we're going to continue to focus and then we'll have an opportunity three months from now to update you on our progress.

Speaker Change: We feel like we have a good handle on the impact in terms of what's in our control we've attempted to lay that out.

Speaker Change: We hope quite clearly, including the 8-K that we provided in early March.

Speaker Change: But then also the updates that we've that we provided last night.

Sean Quinn: Thanks, Sean.

Speaker Change: Robert.

Sean Quinn: Can I switch to you on this next one did you reevaluate your leverage target during the quarter whats driving.

Sean Quinn: The net two five times leverage target seems unusually low is the target independent of where the stock prices trading up.

Sean Quinn: Well no we've not changed the net leverage target we've talked in the past about why we came up with that target and everyone's going to have different views on this.

Speaker Change: We've communicated a lot on where our long term focus is what our objectives are so hopefully that's been clear and you know that changes that that's where we're going to continue to focus and then we'll have an opportunity three months from now to update you on our progress.

Sean Quinn: We have shown our ability to delever, but also to flex.

Sean Quinn: Variability of our cost structure in the past so we could argue.

Sean: Thanks, Sean.

Speaker Change: Robert.

Can I push you on this next one did you reevaluate your leverage target during the quarter.

Sean Quinn: That we could handle higher leverage but.

Sean Quinn: We've discussed this extensively and the main reason is that when there is volatility we want to be able to stay focused on doing the right things and not have to do anything unnatural because of leverage.

Speaker Change: What's driving the net two five times leverage target seems unusually low is the target independent of where the stock prices trading up.

That target is independent of where the share prices.

Speaker Change: Well no we've not changed the net leverage target we've talked in the past about why we came up with that target and everyone's going to have different views on this.

Sean Quinn: Because the policy does provide flexibility to increase for the right opportunities and that very much includes share repurchases, which as we said today and last night, we consider to be very attractive.

Speaker Change: We have shown our ability to delever, but also to flex.

Sean Quinn: Right now the reality is it will take us longer than we.

Speaker Change: Variability of our cost structure in the past so we could argue.

Sean Quinn: We originally envisioned.

Speaker Change: That we could handle higher leverage but.

Sean Quinn: <unk> got $2 five.

Sean Quinn: Because of the opportunities you are alluding to and others, but we still view this as an appropriate.

Speaker Change: We've discussed this extensively and the main reason is that when there is volatility we want to be able to stay focused on doing the right things and not have to do anything unnatural because of leverage.

Sean Quinn: Destination.

Sean Quinn: For the reasons I just discussed.

Speaker Change: That target is independent of where the share prices.

Thanks Robert.

Speaker Change: [laughter] related related topic did you mentioned leverage as a guardrail.

Speaker Change: Because the policy does provide flexibility to increase for the right opportunities in fact very much includes share repurchases, which as we said today and last night, we consider to be very attractive.

Speaker Change: Share repurchases in their other capital allocation. So we've had a couple of questions on share repurchases from different angles.

Speaker Change: Right now the reality is it will take us longer than we.

Speaker Change: One of them what drove the hump and stock purchases. If you loved it at $69 a share why not 59 or 49 and then the other side of that coin that just came in line to be able to cope with potentially really bad economic conditions. For example, a deep recession without raising expensive new capital and given your negative working capital should you not be cautious.

Speaker Change: We originally envisioned.

Speaker Change: You got $2 five.

Speaker Change: Yeah.

Speaker Change: Because of the opportunities youre alluding to and others, but we still view this as an appropriate.

Destination.

Speaker Change: For the reasons I just discussed.

Speaker Change: Just with the buybacks and avoid a rerun of pre COVID-19 buybacks, which with hindsight were too aggressive.

Speaker Change: Thanks Robert.

Speaker Change: [laughter] related related topic, and you mentioned leverage as a guardrail.

Speaker Change: John do you want to take that one.

John: Yeah and seen the live questions come in like there's obviously different perspectives on this and depending on where you sit in the market.

Speaker Change: Share repurchases in their other capital allocation so.

Speaker Change: So we've had a couple of questions on share repurchases from different angle one of them what drove the hawk in stock purchases. If you loved it at $59 a share why not 59 or 49 and then the other side of that coin that just came in line to be able to cope with potentially really bad economic conditions for example, a deep recession without raising.

John: We mentioned in the earnings deck, we purchased a little under $4 million in January and then we didn't do anything in February and March and as I previously mentioned as well the reason for that was because.

John: We want to make sure we had a good handle on what was a pretty complex and dynamic topics, though is in.

Speaker Change: And that new capital and given your negative working capital should you not be cautious with the buybacks and avoid a rerun of pre COVID-19 buybacks, which with hindsight what youre aggressive.

John: And so we didn't do any share repurchases and so maybe go into the second question first.

John: I think that behavior indicates that we are.

John: John do you want to take that one.

Speaker Change: Yeah and seen the live questions come in like there's obviously different perspectives on this and depending on where you sit in the market.

John: We are being thoughtful about.

John: When uncertainty increases, making sure that we're not putting ourselves in a position where we're tying up liquidity.

John: Yes, we mentioned in the earnings deck, we purchased a little under $4 million in January and.

John: Might it might be needed and we ended up having to.

Speaker Change: And then we didn't do anything in February and March.

John: Raise expensive capital or something like that we were far far right.

Speaker Change: Previously mentioned as well the reason for that was because.

John: Far far away from that but we of course have learned from what we experienced in the pandemic and so that led us to be.

Speaker Change: We want to make sure we had a good handle on what was a pretty complex and dynamic topics, though is in.

Speaker Change: And so we didn't do any share repurchases and so maybe go into the second question first.

John: To not act in February and March so to that question I think you can see our behavior factor in those things.

Speaker Change: I think that behavior indicates that we are.

John: On the other side of it in terms of.

John: So you bought a 69 why not the lower levels.

Speaker Change: Yes, we are being thoughtful about it.

Speaker Change: When uncertainty increases, making sure that we're not putting ourselves in a position where we're tying up liquidity.

John: We bought just under $4 million in January.

John: Particularly a huge sum.

John: And then once the once the executive actions sorry executive orders came across that first weekend in February which has to be just after our last earnings release.

Speaker Change: <unk>.

Speaker Change: It might be needed and we ended up having to.

Speaker Change: Raise expensive capital or something like that we were far far.

Speaker Change: Far far away from that but we of course have learned from what we experienced in the pandemic and so that led us to be.

John: We didn't do anything further after that and again, we thought it was important to first prioritize making sure that we have appropriate handle on the situation and from what we've outlined we think that we do and.

Speaker Change: To not act in February and March so to that question I think you can see our behavior factor in those things.

John: We will go forward from there.

Sean Quinn: Thanks, Sean Alright, we've got time for one more question and find out from Robert So Robert.

Speaker Change: On the other side of it in terms of you know.

Speaker Change: We bought a 69 why not the lower levels.

Robert Keane: Other than stock repurchases. What other factors are you focused on to increase the likelihood that the price of <unk> shares.

Speaker Change: We bought just under $4 million in January.

Speaker Change: Particularly huge sum.

Speaker Change: And then once the once the executive actions sorry executive orders came across that first weekend of February which has to be just after our last earnings release.

Sean Quinn: Better reflect our true intrinsic value.

Sean Quinn: Okay, first and foremost and way ahead of share repurchases is constantly improving the value we deliver to our customers markets change customer needs changed or evolved and.

Speaker Change: We didn't do anything further after that and again, we thought it was important to first prioritize making sure that we have the appropriate handle on the situation and from what we've outlined we think that we do and.

Sean Quinn: Improving their customer value.

Sean Quinn: Basis is absolutely the most important driver of a great future.

Speaker Change: We will go forward from there.

Robert: Thanks, John Alright, we've got time for one more question and I'll find out from Robert So Robert.

Sean Quinn: So that's where we're focused.

Sean Quinn: And the and success there will drive.

Robert: Other than stock repurchases.

Sean Quinn: Free cash flow per share and that's what matters.

Robert: Other factors are you focused on to increase the likelihood that the price its impressive shares well better.

Sean Quinn: We are really that's what we're focused on.

Robert: Our true intrinsic value.

Sean Quinn: Next we do recognize that consistency of results and leverage levels are aspects that we think have an impact on the stock price.

Robert: Okay first and foremost way ahead of share repurchases is constantly improving the value, we deliver to our customers markets change customer needs change or evolve and.

Sean Quinn: And so we certainly want to be aware of that we've spoken about in the past.

Robert: Improving their customer value.

Sean Quinn: And then in the end what it really comes down to is <unk>.

Robert: Going basis is absolutely the most important driver of a great future.

Sean Quinn: How we allocate capital, where we can invest it or or pay down debt or using a different uses of <unk>.

Robert: So that's where we're focused.

Robert: And the and success there will drive.

Sean Quinn: Capital deployment that we can control so.

Robert: Free cash flow per share and that's what matters.

Sean Quinn: We do try to be transparent and consistently communicate with all of our shareholders all of our debt holders about where we're focused.

Robert: Now.

Robert: Really that's what where we're focused on.

Sean Quinn: Where we're investing what we are getting in return for that and how those things can impact.

Robert: Next we do recognize that consistency of results and leverage levels are aspects that we think have an impact on the stock price.

Sean Quinn: Again, our share value over time and share value for me is really the underlying ability.

Robert: So we certainly want to be aware of that we've spoken about in the past.

Sean Quinn: To generate cash per share after everything after taxes after interest et cetera, and then our share price will move around that we don't like where it is right now, but we just have to keep growing the core cash flow capabilities of the business.

Robert: Yeah.

Robert: And then in the end what it really comes down to is how we allocate capital, where we can invest it or or pay down debt or use it in the different uses of capital.

Robert: <unk> deployment that we can control so.

Sean Quinn: And.

Sean Quinn: If that's not appropriately reflected in our share price, we certainly will look to.

Robert: We do try to be transparent and consistently communicate with all of our shareholders all of our debt holders about where we're focused.

Sean Quinn: Take advantage of that ourselves.

Robert: Right.

Sean Quinn: So.

Robert: We're investing what we are getting in return for that and how those things can impact.

Sean Quinn: Let me wrap up the call. Thank you very much for your time today, we continue to execute on exactly the same strategy. We've talked about with you last September at the Investor Day, we talked about with you before that and to navigate this very strange environment of tariffs that we are all.

Robert: Our share value over time and share value for me is really the underlying ability.

Robert: To generate cash per share after everything after taxes after interest et cetera, and that our share price will move around that we don't like where it is right now, but we just have to keep growing the core cash flow capabilities of the business.

Sean Quinn: Across the economy trying to deal with there are a lot of good signs of strategic progress happening across simpler us I'm very confident that we're going to continue to strengthen how we deliver value to our customers.

Robert: And.

Robert: If that's not appropriately reflected in our share price, we certainly will look to.

Sean Quinn: We are.

Robert: Take advantage of that ourselves.

Sean Quinn: Facing as we've talked about in the past some headwinds into legacy products, but there are huge markets, where we're growing fast and.

Robert: So.

Robert: Let me wrap up the call. Thank you very much for your time today, we continue to execute on exactly the same strategy we've talked about.

Sean Quinn: We are despite the current period of tariff adversity.

Sean Quinn: We feel very comfortable that that transition is going to be continue to be a success. So let me wrap up by saying. Thank you to all of you for joining the call. Thank you for continuing to entrust their capital with us and have a great day.

Robert: You last September at the Investor Day, we talked about with you before that.

Robert: To navigate this very strange environment of terrorists or that we are all across the economy trying to deal with.

Robert: There are a lot of good signs of strategic progress are happening across impressed I am very confident that we're going to continue to strengthen how we deliver value to our customers.

Sean Quinn: And this concludes the program and you may now disconnect.

Robert: We are.

Robert: Facing as we've talked about in the past some headwinds into legacy products, but there are huge markets, where we're growing fast.

Robert: And.

Robert: We are despite the current period of tariff adversity.

We feel very comfortable with that transition is going to be continue to be a success. So let me wrap up by saying. Thank you to all of you for joining the call. Thank you for continuing to entrust their capital with us and have a great day.

Robert: And this concludes the program and you may now disconnect.

Robert: [music].

Robert: Okay.

Robert: [music].

Meredith Burns: Now I will introduce Meredith Burns, Vice President of Investor Relations and Sustainability. Please go ahead. Thank you, Carmen, and thank you everyone for joining us.

Meredith Burns: With us today are Robert Keane, our Founder, Chairman, and Chief Executive Officer, and Sean Quinn, our EVP and Chief Financial Officer. We appreciate the time that you've dedicated to understanding our results, our commentary, and our outlook. This live Q&A session will last about 45 minutes or so and will answer both pre-submitted and live questions. You can submit questions via the questions and answers box at the bottom left of the screen.

Meredith Burns: Before we start, I'll note that in this session we will make statements about the future. Our actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and the documents we published yesterday on our website. We also have published non-GAAP reconciliations for our financial results on our IR website, and we invite you to read them.

Robert Keane: Now I will turn things over to Robert. Thanks, Meredith. And thank you to our investors for joining us today.

Robert Keane: I'm going to start with some overall remarks, then I'll pass it to Sean to cover our Q3 results and the tariff topic, then we'll go to your questions. As I noted in the earnings document in the letter that was attached to that, which we published yesterday, in the third quarter, we remained focused on the exact same things we've been talking about throughout this year. That consistent focus and the operational progress which we've made gives me and gives us confidence that we can deliver attractive growth in per share cash flow over the coming years, despite what is a pretty noisy backdrop right now.

Robert Keane: At the highest level, there were a few themes to the quarter. First, we continue to see strong growth in what we now refer to as elevated products. Examples of these are promotional products, apparel, signage, packaging, and labels. Expanding into elevated products helps us serve customers with a higher lifetime value because it both increases our share of wallet with existing customers and helps us acquire new customers directly into these categories. For example, at Vista, the number of new customers acquired via signage, packaging, and labels in Q3 grew more than 10% over the prior year. And we think these markets have a lot of opportunity ahead of them.

Robert Keane: Another bright spot is... Cross Cimpress Fulfillment, which continues to grow quickly. This is when one business unit in Cimpress produces for another and Cross Cimpress Fulfillment is both accelerating our rate of new product introductions and lowering our cost of goods. Likewise, at Pixar Printings, we have their new production facility live in the U.S. on schedule. That facility is already fulfilling for Vista. That's allowing for new product introductions and access to lower cost production, much of it which was outsourced in the U.S. market. And it's things we've honed in Europe and are uploading print businesses for quite some time.

Robert Keane: Likewise, Pixar Printing will soon be launching its U.S. website at pixartprinting.com over the coming month or two, and that's going to mark our entry into the U.S. uploaded print market.

Robert Keane: So we have a lot of strong progress throughout the company.

Robert Keane: On the other hand, as we've discussed over recent quarters, we do face headwinds in some of our legacy products and legacy channels that are reducing our consolidated growth rate. Of course, a lot of our time this past quarter was spent dealing with tariffs and the threat of future tariffs, the uncertainty of what that market, that those tariffs are going to be. Teams across Cimpress have responded with impressive velocity and are focusing on how to assess an ever-changing situation, to develop action plans, action scenarios depending on what happens, and to reduce our impact on our customers and our shareholders.

Robert Keane: Based on what we know today, we have a good handle on that impact for tariffs. We have a relatively strong position, and we're confident in our plans. To help you understand where we stand as of now, in an 8K filing in early March, we provided a framework for how tariffs impact our business, and we have updated that information in last night's earnings document. We certainly do not enjoy the volatility that terrorists are imposing on us or on our market. That being said, it's often in times of volatility that we've shown that our competitive advantages can become even clearer.

Robert Keane: And we've always strived to build a transformational, enduring business. We value customer focus, innovation, learning from mistakes, data-driven decision-making, attracting and retaining great talent, driving for greater scale. And all of that is in service of disrupting a market so that we can profitably serve the world's small, medium businesses, which power so much of the economy. Now those traits, which we've pursued for decades, have served us well over our history, including in multiple periods of adversity. That could be startup challenges long ago, it could be the global financial crisis, it could be the challenges of staying nimble as we get big.

Robert Keane: COVID pandemic, the post-COVID supply chain challenges. Through all of that, we've not only navigated those periods of adversity, but we've extended our industry leadership, we've leveraged our scale-based advantages, and we've taken market share. So we're focused on doing the same thing here, and we look forward to the longer term because of that response we're able to bring to this period of challenge and adversity from tariffs.

Sean Quinn: Let me now turn things over to Sean to go through our financial results and our tariff response, as well as some outlook commentary. Great. Thanks a lot, Robert, for that overview, and thanks, everyone, for joining us today. I'll just start with a brief overview of our financial results. First on the revenue side, our consolidated revenue grew 1% on a reported basis and 3% on an organic constant currency basis. In Vista, we had 3% organic constant currency growth. And there, as Robert alluded to, key growth categories of promotional products, signage, packaging, and labels. Those all grew at double-digit rates, which is a continuation of the strength that we've seen there for some time, being able to serve higher value customers.

Sean Quinn: We also returned to 5% growth in the consumer products category after a disappointing decline in the holiday-focused Q2. VISTA's performance remains strong in Europe, despite some macro headwinds there, which is good to see, and that's been a consistent trend as well. In the U.S., VISTA's revenue and profitability continue to be affected by the organic search algorithm changes that we discussed during Q2 earnings. And those changes have had a more significant impact on the business cards and stationary product category, which in total, that category declined 3% year over year, a slight improvement from the 4% decline last quarter.

Sean Quinn: The work that we've been doing there to optimize organic search for those changes did start to show improvement, particularly in March, relative to the first two months of the quarter. And you could see that that was evident in the VISTA-US results. Turning to profitability, consolidated adjusted EBITDA declined by $3.5 million year over year. A few things to point out from a profitability perspective, gross profit was impacted by a $2.6 million impairment charge related to the planned sale of a national pen facility, which is backed out of EBITDA, but impacts gross profit. That planned sale has been in progress for some time, but we met the conditions from an accounting perspective to write down the book value of this quarter.

Sean Quinn: We also had around $1.1 million in pre-production startup costs and our cost of goods sold related to our new Pixar printing facility in the United States, which began taking orders in March. And if you exclude those two items, gross profit would have increased modestly during that time. Ad spend was flat as a percentage of revenue year-over-year, and we do continue to expect ad spend to be lower year-over-year in Q4. And just as a reminder, that's due to the elevated mid- and upper-funnel spend that we had for VISTA in Q4 of last year. And then finally, operating expenses that impact adjusted EBITDA, we're up about $3 million year over year, and we do expect to continue to drive efficiencies in OPEX over time, and we've constrained OPEX in the current environment over the last quarter or so as well.

Sean Quinn: On the tariff front in the earnings document, as Robert mentioned, we updated our overview of impact on the call last quarter. There were a lot of questions on this topic and most of those questions related to our production in Canada or Mexico and how that was going to be impacted. We estimate that the USMCA and the informational products exclusions that we've outlined cover about 90% of the relevant costs for products that have a country of origin, Canada. We also still benefit from the de minimis exemption for individual orders below $800 for those two countries, and that's applicable for much of the remaining 10%.

Sean Quinn: And so the impact for Canada and Mexico at this time remains minimal. Our primary exposure, as we outlined in last night's document, relates to the increased tariffs on Chinese sourced raw materials, particularly in the PPAG category. And here we've been hard at work as well, identifying alternative sourcing and other mitigation actions, and it will take a few months for that to be fully implemented, but through the supply chain actions that we plan to take, we do expect to substantially reduce our exposure to less than $20 million annually for direct sourced PPAG materials from China. We do plan to increase prices as well, to at least partially offset increased costs where that's applicable, and then we can adjust that approach quickly if needed.

Sean Quinn: Given the uncertainty of the tariff and trade environment and how that may or may not continue to change, and also any impact on demand where price increases are implemented, we have withdrawn, as you would have seen last night, our guidance for FY 2025 and beyond. Generally speaking, our fourth quarter that we're now in is seasonally a higher profit and a higher cashflow quarter. And so while we do expect some near-term impact from tariffs, we do expect also to finish the year with increased liquidity from where we ended Q3. And that puts us in a position to be able to take advantage of opportunities as we approach our next fiscal year, fiscal 26.

Sean Quinn: We'll continue to balance capital deployment between organic growth investments, reducing leverage, and then also taking advantage of what we believe is today an exceptional opportunity to repurchase our shares at attractive prices. And I'm sure we'll talk about that some more in the questions.

Meredith Burns: And so with that, Meredith, why don't we turn it over to the questions? Great. Thank you, Sean. As a reminder, you can submit questions during this webcast via the questions and answers box at the bottom left of the screen. We did receive a number of pre-submitted questions, some in overlapping areas, and so we'll combine some of these to make sure that we're thoroughly addressing what's on people's minds. And we look forward to your live questions as well, which are coming in as I speak.

Meredith Burns: So I'm going to start with the tariff topic. I think we should start there. So my first question I'm going to throw to Robert.

Robert Keane: Which customer verticals do you consider most exposed to tariff impacts in their businesses, and what percentage of revenue do they each represent? Okay, we serve millions, tens of millions of customers across an extremely diverse range of industries. We have very little concentration by any customer vertical. If you take a broad grouping of customer vertical, something like healthcare, that's not our biggest vertical, but as an example, a broad vertical like that. represents no more than 7% or 8% of our revenue. But even within that, there's many dozens of sub verticals. And so we don't regularly track this on a consolidated level.

Robert Keane: I think it's more helpful to think of it from a category perspective. As we've outlined in the 30s document, the largest explosion from tariffs right now is for promotional products, apparel and gifts, what we call PPHE. Just given traditionally, some of the product substrates that we have there have come from China. PPAG has been one of our faster growing product categories globally in the U.S. for some time. It's also a large category. It's over 20% of consolidated revenue. The U.S. portion itself is about 11% of global revenues. Now remember the gross margin there is lower than overall so it's less than that from a gross profit perspective.

Robert Keane: Within that only a subset of that has sourcing from China. Much of the products that are in apparel come from Southeast Asia or Central and South America. Again those countries of course could be seeing tariffs imposed on them as well but China is only a subset of that and China is where the biggest tariffs are as of now. As we mentioned in our earnings document the U.S. tariffs are affecting and will affect the whole of the promotional products and apparel industries not just Cimpress. That being said many of these products are seen as important cost-effective marketing mechanisms for companies of all different sizes.

Robert Keane: And for the products that do see increases to prices due to tariffs, we do believe there's some substitution that could happen. So if someone wants to give a promotional product they don't necessarily need to give As an example, Drinkware, with their logo on it, they can give a product that also has their logo on it to their customers, and that substitution may help us move from the highest tariff countries, places like China, to other areas. replacement of lower tariff country products replacing something with a higher tariff rate is something we also can be pretty purposeful about in our customer experience and our merchandising experience.

Robert Keane: It's also possible that there might be some trade-down and quantity size, a number of items ordered for products that have significant price increases, but we have actually always been very focused on having minimum order quantities of one or very low quantities. So, compared to the competition, we think we'll be very well positioned to serve those needs.

Robert Keane: Great. Thank you, Robert.

Sean Quinn: Okay, a couple questions in similar area, Sean, this is going to be for you.

Sean Quinn: It's going to take me a bit to get through the question, so stick with me, guys. The letter indicates that after supply chain changes that will take several months, there will be $20 million remaining in China COGS subject to tariff. Is it reasonable to expect that based on a 145% tariff rate, the associated tariff expense on the remaining $20 million will be about $30 million? How much of this China tariff expense was included in the disclosure in the March 8K that tariff impacts would be less than 10 million? In other words, how much is incremental relative to your expectations before the Liberation Day tariff?

Sean Quinn: What is the current annualized level of China COGS that is planned to be shifted to other countries? And what level of charges do you expect to incur in the interim? And in areas where you've already raised prices in response to tariffs, what has been the impact on order volumes? And we had a similar live question that covers most of those same topics. The one that gets added with the live question, does the $20 million of exposure to China post-mitigation efforts account for exposures from third-party suppliers? And if not, what is that total exposure to China, including third-party suppliers?

Sean Quinn: Yeah, let me do my best. Meredith, keep me honest if I haven't picked up on some part of that. So for China sourcing, the math that was in the question is correct, broadly correct, but I need to give a few caveats. So for the $20 million of COGS that's connected to our direct sourcing in China, after we make changes to our supply chain, that's the number that was referenced in the document last night. Yeah, $29 million would be the additional cost. That's just 145% times the cost. That's not necessarily the net impact on us, though.

Sean Quinn: So we have to be careful about that. One, we expect to have pricing changes to at least partially offset the tariffs. So that's one. Two, I mean, that could lead to lower volume on those particular products, but we also wouldn't accept losses on the sale of any of our goods. So the net impact would not be the $20 million. We also will have, and I think Robert alluded to this, we'll have alternative products available, and so we believe that there's opportunity to reduce exposure either through being able to provide our customers with different products that solve that particular use case or continuing to evolve our supply chain, and we think that $20 million is not the end state, that is just where we can get to over the next month, and then we can continue to optimize after that, but of course the environment will be changing, so those things will just take a little bit more time.

Sean Quinn: I think, you know, keep in mind that where we are after our change is still sourcing product from China, it's likely that competitors are for the same reasons because, you know, availability of those particular products or other reasons. But this represents a really small portion of our products. Our overall COGS for the last 12 months through March was about $1.7 billion. And so to put it in perspective, it's a very small portion of our product. In terms of trying to figure out how much of this is incremental to what we outlined in the 8k in the 8k we had talked about impact of 10 million dollars or less and In that there was a small amount of impact from the Chinese The two things that have moved here to combine and drive a larger impact than that is, one, of course, the tariff rate increased for China to 145%, and then the second one is the elimination of the de minimis exemption for Chinese-sourced goods, and we're not in that yet.

Sean Quinn: That's planned to take effect on May 6th. Those aren't finished products that are imported from China, but the materials that we import for China where that's relevant are still impacted by the de minimis exemption because they, these particular products, maintain their country of origin China designation even though they may be decorated in North America, and so that's why de minimis is still relevant for us on the China. We haven't disclosed the current amount of the annual cost in terms of our prior sourcing from China, and the reason that we didn't do that is because we've already begun to take action, and so that number would no longer be relevant, but I think it's fair to say that that number would have been substantially higher than the 20 million that we that we referenced.

Sean Quinn: Finally, just for pricing actions, there was a question about, you know, what are we seeing in terms of impact on demand. We've so far only had to do this for a very limited set of products as of today, and that's because the de minimis exemption, the removal of the de minimis exemption for China has not happened yet, and so we don't really have any data to share there on terms of, you know, what we're seeing on impact on demand from from those price changes. On the live question, there was a reference to a question on like fill rates and availability, and we're not seeing any impact there in terms of availability as yet, and so we don't expect material impact there from everything.

Sean Quinn: And then from a 3PF perspective, it is correct that we will have some exposure from 3PF as well that's not part of the $20 million number. The reason that we didn't specifically quantify that is that's a bit tougher because we don't have full visibility to changes that our 3PFs are making in their supply chain as well, which is a very active topic. And so it's impossible to fully quantify that. But there will be some impact there too. I would categorize that piece of it similarly in terms of that's primarily PPAG where those 3PFs are impacted.

Sean Quinn: We will also address any increases there with price to at least partially mitigate any impact. And then we also there too will address with alternative sourcing and those conversations are very much active today. And then the last thing I'd say is just what we can see from many of our 3PFs in that space. Generally there was a forward buying of inventory prior to tariffs going into a place. And so we're in a period where that inventory is still being run out. And generally there's been postponement of new buys. And so we're in a period now where that impact of any increased cost hasn't been felt yet.

Sean Quinn: And it's probably unlikely until June in most cases that that would start. And then we'll go from there with all the other actions that we've.

Sean Quinn: Thanks, Sean. Super helpful.

Sean Quinn: I'm going to stick with you for this next question. Post-Liberation Day, April 2nd, have you given any thought to offsetting tariff and demand related impacts by cutting costs? At what point would you do so? Yeah, certainly. And as a general response, I'd say yes, we, you know, we we've given it thought we could and would reduce costs as needed. And I mentioned in the earlier remarks, today, we have put some constraints in place. But if we were not able to mitigate increased costs, or we saw a drop in demand, then we would make adjustments. I think that we've shown our ability to do that in the past, and so hopefully that's been clear over the last many years.

Sean Quinn: As we disclose each quarter and the spreadsheet that we publish on our IR site, we do have a significant amount of cost that's either variable or semi-variable in nature, and so we can flex that to the extent that we're seeing impact on demand for certain products, and again, we've done that in the past.

Sean Quinn: As it relates to growth investments, and we indicated this in the release as well, we are maintaining a high bar there, but we have not made any significant changes there. We think it's important. to maintain consistency there where we have conviction. And then, given the fact that we're in the depths of our FY26 planning right now, just cost awareness is certainly an important topic. Great. Thanks, Sean.

Sean Quinn: One more for you here as we shift away from the tariff topic, at least for now. Can you please give an update on revenue growth in April? To the extent that you're seeing revenue softness thus far in the quarter, is it limited to U.S.-based customers or not? And a related question, can you comment on each segment's revenue performance for the month of April versus last year and what trends have you noticed?

Sean Quinn: Yeah, we we try to stay away from that, generally, but I understand the importance of that question. In the current environment, we certainly don't get into the segment. on an interim basis. But maybe just a few things I can provide.

Sean Quinn: We're not gonna provide a specific update on April, but the, I mean, I do actually, just to start, there is. It's a little bit complicated by the fact that there's been a shift in timing of holidays with the Easter holiday relative to last year. And that has an impact on bookings and how backlog moves and so on. By the way, I should mention that last year was a leap year, so that was actually a negative in Q3, which we didn't necessarily call out. But if you were to normalize for the holiday timing, I would describe April as stable to the trends that we were seeing in March.

Sean Quinn: And I would say that across regions. So I think that would be the way I would characterize it.

Sean Quinn: Thank you, Sean.

Robert Keane: Okay, Robert, this next question is for you. This is the second quarter in a row where we have been surprised by the very low growth at National Penn. Beyond what you shared in the earnings release about the reductions of mail order advertising, what else is driving the lackluster growth here?

Robert Keane: There really is not much to add beyond what we published last night. Where the growth is happening is in the e-commerce channel and in Cimpress fulfillment, especially I would say fulfilling for both Vista and our upload and print business. You can see in our disclosures that, excluding cross-impressed fulfillment, Europe is growing, and it's North America where the headwinds at National Penn are leading to the low overall growth. That is in the mail order channel, and we are just not seeing enough returns here to justify. the past levels of direct mail advertising, so we've reduced that, and that has been a drag on revenues this year.

Robert Keane: Thanks, Robert.

Robert Keane: I'm going to stick with you for the next couple questions here. So historically, your business has held up well during economic downturns as people turn to side hustles and in doing so need the products that our businesses provide. Is there any reason to believe that this time it's different? Well, the specific circumstances of each downturn that we've seen over the past decades have been, of course, different from each other. But generally speaking, Cimpress has outperformed the overall market for printing and similar products during those downturns for the reasons you bring up. The rise of self-employment that comes out of necessity, as well as larger companies moving to lower quantities than they had previously, and print mass customization players like us are very well suited to address that shift.

Robert Keane: As we enter a downturn, or I say if we enter a downturn here, we would expect to see some of this play out again. That doesn't mean that we're immune to some economic slowdown or muted profitability, but as a company with global operations, with scale advantages, a diverse product and customer set, as well as a strong balance sheet and liquidity, we are able to navigate that quite well. Then there are some, as Sean alluded to in one of the prior questions, cost levers, which we could pull, and we've done that in the past when needed.

Robert Keane: Thanks, Robert.

Robert Keane: Could you please provide any noteworthy observations on demand trends for our largest sub-markets, namely small format, signage, promotional products and apparel, and packaging and labels? Well, as I mentioned in my prepared remarks, the overall observation is that these products, which we now call elevated products, are products that customers typically consider to be more sophisticated. They're newer to the mass customization paradigm, which we master so well. They typically have more complex production operations and more complex design processes. And they are all growing rapidly across different business These are products that often have higher order values. They have very often replenishment needs that are higher than average.

Robert Keane: They include products that our customers see as part of simply delivering their own products to our customers' customers, as opposed to being a discretionary expense. For example, Once we become part of a customer's packaging, that requires ongoing purchases for the customer to ship their product. And customers of these elevated products typically have higher lifetime value than Cimpress's average and higher retention rates. They're desirable for us to continue to crack the code on building both a supply chain manufacturing capabilities that are competitive at all quantities our customers want that ranges from Very small quantities to pretty large quantities and importantly for us to help our customers with the more complicated graphic design needs which we refer to as design enablement and There's a clear need for these products and offering them alongside our more legacy products helps us capture more wallet share of the highest value customers and does help us drive leverage of our advertising.

Robert Keane: and our operating... Now, the product We're talking about fall into the categories you just mentioned. Signage, promotional products, apparel, packaging, labels. And even within some of the small format marketing materials, there are pockets of fast-growing products for us like books, catalogs, and magazines that are elevated compared to simple rectangles on paper like a flyer or a holiday card or a business card. And then there are some parts of these categories that are. going forward decline. And we consider those largely to be legacy products, like business cards, of course, but holiday cards and the mail order channel at National Pen for writing.

Robert Keane: Thank you, Robert.

Robert Keane: Next question. Can you please describe the competitive landscape in the complex products, which, as we're talking about on this call, the elevated products area versus the legacy products, for example, business card segments? What is the specific gross margin differential between the two broader product lines?

Robert Keane: And why can't Cimpress price the complex products higher to get higher margins? Okay, there's a lot of similarity in what I'll say here with the last question, but Yes, there is. Often, a gross margin difference on the various product categories, but it's not always. For example, signage, packaging, and labels. depending on the type of subcategory are often having gross margins that can be similar to some of our legacy materials. Promotional products and apparel do tend to have a lower gross margin, but they also rank among some of our most valuable product categories in terms of how much absolute gross profit we generate per customer, which is very distinct from the percentage gross margin.

Robert Keane: So when you think about gross margin, which you think of describing a percentage but not an absolute monetary value, I would give you a very simple example. If we make 40% a relatively low gross margin for us on a $200 promotional product order, We earn $80 in gross profit. If we make 70% gross margin on a $50 business card order, we earn $35 in gross profit. They have different gross margin rates, but the cash flow from the PPAG products are actually quite attractive. So we're not solving for our gross margin percentage. We're solving to improve, first and foremost, the value we deliver to customers, which then translates to the gross profit per customer.

Robert Keane: And of course, a high percentage gross margin improves our gross profit. But if volume drops because of high pricing, that does not necessarily help. So it's the total revenue times the gross margin that matters. And growing gross profit dollars in a way that delights customers and strengthens their loyalty, increases their lifetime value, can be great at driving leverage elsewhere in the P&L. For example, in advertising costs, if we have higher value across our customers, or technology costs in other areas. So our businesses look at pricing, there's a question you had about why not price higher.

Robert Keane: Based on what competitors are pricing, we test around the elasticity of demand to figure out... where to price a product at any given quantity.

Robert Keane: So. There's been no recent changes. of any significance in the competitive landscape to either traditional local printers who still serve the majority of this market or with online players. But it is a competitive space and we certainly wanna ensure we've never become complacent just because we're the largest online mass customization player in print and the only one with international operations like we have doesn't mean that we are in any way taking this for granted. So we constantly look at pricing and the whole overall value proposition. That's why you will hear us talking about strengthening our scale advantages, why we're excited about the years of investment we've made in the replatforming investments we're making as an example right now to bring our upload and print production capabilities into the North American market.

Robert Keane: And all of that should help make it easier to further grow our scale advantages and deliver ever better customer value. Going back to competitors, there are great competitors out there. They're nimble, they're focused, and so we have to constantly strive every day to serve our customers better.

Robert Keane: That's the way to win. It's a big market. We're never going to have the market to ourselves.

Robert Keane: Thanks, Robert.

Sean Quinn: Okay, Sean, this next question is for you, and it's along a similar vein. So, you know, I think people can incorporate what they've heard from Robert answering the last few questions for part of the answer to this one. What gives management confidence that there's not a fundamentally negative change to the long-term gross margin profile of the business? And then, you know, some new places to add some commentary.

Sean Quinn: How would Cimpress fail in executing on the transformation to higher lifetime value products? And what specific guardrails are in place to avoid such pitfalls? Sure. There's some similarities there to what Robert just outlined. I think, I mean, in general, and this question comes up with some frequency, in general, as Robert said, too, we don't focus on gross margin, we focus on gross profit. I mean, interestingly, and I'll kind of get back to some of the more recent evolution. But, you know, if you take a step back, we used to get this question oftentimes when we started to acquire into our what is now our offloader print portfolio.

Sean Quinn: And, you know, our uploaded print portfolio, for a variety of reasons, has structurally different gross margins. They're lower than what are, at least at the time when we started to acquire into those businesses, what our gross margins were at the time. So they were kind of gross margin dilutive. And we got a lot of questions about that. Well, you know, those businesses have grown their gross profit very significantly. They've grown their profit dollars very significantly, and they've grown their cash flow very significantly. And if you look at it in return on invested capital, as we've outlined in some of our annual letters, you know, those businesses that we acquire and upload and print have generated more cash than the invested capital we put in.

Sean Quinn: They're still growing very nicely. They still have very attractive profit generation and cash flow generation. And so, you know, it would be difficult to argue that just because there was gross margin dilution, that that was not a good thing, like it was definitively a good use of capital. And those are great businesses. They're just different. And so, you know, I think if everything was held constant, coming back to the more recent product mix Yeah, if you had constant order size, you have constant repeat rate, constant cost of customer acquisition, constant growth opportunity, and so on.

Sean Quinn: of course, then you wouldn't, you wouldn't pursue lower gross margins, right? It would be better to have higher gross margins. But the reality is, everything isn't constant. And Robert just hit the map to on, you know, different differences by category. I think the upload and print example is another example. And the reality is that where we started, at least in Vista was small format products. And those are relatively simple design, relatively low order values. And once they got to scale, they also had high gross margins for a variety of reasons. And that's a great thing.

Sean Quinn: You know, as as things evolve, technology evolve, design capabilities evolve, production equipment evolve, you know, all parts of the value chain. more complex products from a production design standpoint started to become possible and be possible to be done in small quantities. And so, you know, as that has happened, many of those markets are very large and are still newer to come into an online marketplace. And so there's a nice growth opportunity there. And those products just have some characteristics that are different. The order sizes tend to be larger. As Robert noted, they tend to serve customers that oftentimes have a larger amount of annual spend.

Sean Quinn: The repeat patterns are different. Things like packaging, you know, the repeat patterns. And that's where the growth opportunity. So we're focused on growing gross profit and contribution profit dollars in those categories. We think that's a good thing.

Sean Quinn: How would we fail was part of the question. And, yeah, there's certainly plenty of ways that that we could fail. But I think fundamentally it would be if we're not serving these high value customers really well in a way that makes them customers for life.

Sean Quinn: And, yeah, I don't know what specific guardrails that would call out to avoid pitfalls. But I think frankly, I think that in terms of guardrails, that goes back to how we run the business every day. And in these categories, especially as we've pushed deeper into them, we have very clear objectives laid out, key results laid out around those initiatives. We have KPIs that we track so we can establish how we're making progress and where we need to get better. We have clear areas that we've been investing in to attract and retain those customers. And that can range from things like expanding our expert services, which we've talked about in various investor days, providing more assurance.

Sean Quinn: How do we take friction out of the experience? How do we have more dedicated customer care to handle high value use cases? And then, you know, all the things that we're doing from a CapEx perspective as well to have both new product introduction, but also to be the low cost producer in some of these categories that are newer. And of course, we list a number of other things. And so I think really it comes down to the mechanisms that we use to run the business every day and monitor performance and then making sure that we're talking to customers and getting feedback that informs our progress.

Meredith Burns: Hey Meredith, I just wanted to ask you that. Sorry about that. Thank you very much.

Meredith Burns: I was on mute. A lot of questions coming in today. Yeah. No, I was talking. I was reading the next question and I was on mute. Sorry about that, guys.

Sean Quinn: So we're going to shift to a question on CapEx for you, Sean. CapEx is higher this year, which is what you told us to expect at the beginning of the year.

Sean Quinn: How long do you think this investment cycle will take? A few more quarters or is this a multi-year affair? Yeah, the vast majority of the increase that we've had is in is in our VISTA business and then in the print group segment. and for the Prick Group. We were just talking about the new U.S. facility, so that includes the initial build out of that new facility, and then also, of course, the equipment for that facility.

Sean Quinn: And that one I would characterize as very much a multi-year plan. We'll be increasing the capacity of that facility. We'll be increasing the capabilities that that facility has for the next years. And we'll be doing that as our trajectory of volumes and revenue are also ramping. And I think that over time, as we continue to put more CapEx into that facility, that will be while that revenue is increasing. Given that the facility has been live, so far the CapEx that we've had there has not been generating revenue and gross profit, so you don't see that flowing through yet.

Sean Quinn: So that's one that I would say is a, overall, a multi-year effort.

Sean Quinn: For the rest, I would characterize the CapEx as primarily ongoing choices that we have rather than, you know, a multi-year investment cycle that's like pre-ordained. And yeah, there's maintenance CapEx that we have, there's replacement CapEx for efficiency and, you know, over our history, like, you can see that that can have some waves to it. And then we do have some larger pieces of equipment that are being replaced with new technology this year. But on the growth investment side of things, I think, you know, as an example, we have some sizeable CapEx for expansion of our packaging range.

Sean Quinn: We think there's more opportunities like that if we're seeing success, but those are all decisions that we'll be able to evaluate over time based on the returns that we're generating on similar investments.

Sean Quinn: And so it's not necessarily a multi-year investment. We'll take those one at a time as we go and can evaluate progress.

Sean Quinn: We're still right now in the process of finalizing our fiscal 26 plans. And each year we go through, especially on the CapEx side, very much a bottoms up assessment of where we're investing in CapEx. And we evaluate that each year, both on individual products, but then also taking a step back in the aggregate and making sure that that total number makes sense relative to other opportunities. And I would say just generally that these CapEx projects in general have high and predictable returns. And so we'd want to do them if we're confident that it's a high probability outcome.

Sean Quinn: Great. Thank you, Sean.

Sean Quinn: I'm going to move on to a question sort of related in thinking about capital allocation and different types of capital allocation that we can make. So, given the current stock price of $40 to $45 a share, how does the company think about share buybacks versus internal investments and debt paydown? We note from prior calls that the company targets 12 plus percent for OPEX and CapEx. Given where Cimpress is trading from a cash flow yield perspective, will CapEx and FY26 be more muted to capitalize on the opportunity to repurchase shares? What's management's expectation regarding timing to resume repurchasing shares assuming no appreciation in share prices?

Sean Quinn: First of all, it's absolutely a trade-off that we think about frequently. features in our discussions with the board, with our across the management team. So, you know, it's it's absolutely a regular feature of our discussion. specifically on FY26 CapEx. We're still, as I said on the prior question, we're still working through our plans there, but as I said, too, there, you know, we do this bottoms-up and we're evaluating individual projects and returns on those, but then we also look at that in the aggregate, too, and are looking at, you know, the returns on those things versus, you know, share repurchases, and so that's something that will be factored in, but we're still, you know, we're still finalizing the plans on FY26 CapEx.

Sean Quinn: say, you know, just generally, we'll evaluate the relative returns on all this stuff. And we do have a bias to internal investments like CapEx, you know, some of the examples I mentioned, like expansion of packaging or the expansion of upload of print to the United States. You know, if we think that those are high probability outcomes, you know, then those are things that we're going to want to do. They're beneficial from a growth perspective. They have attractive returns on the there. And then, you know, we're looking at all this stuff, also with kind of a wrap around it of a view towards our net leverage target as well, right.

Sean Quinn: So that's the balance. And, you know, we've been actively managing that over the last years. And I think I think have managed that in a good direction.

Sean Quinn: The fact that we didn't buy shares in February and March. was largely a function of just making sure that we had a handle on the tariff situation. You know, it was a situation that was constantly evolving. And, you know, frankly, it was one that was quite complex. And, you know, once we felt like, you know, we had established sufficient clarity, you know, we updated through that AK in early March. But, you know, like things take time and we want to make sure that we have a handle on things. And so kind of that's where our focus was.

Sean Quinn: And then we also, of course, you know, have our stated plans to continue to lever. So that was in the back of our mind as well. But, you know, those are tradeoffs that we're going to continue to actively consider, including in Q4, but also as we move into FY26. And, you know, we're in a situation where we have a strong balance sheet. We have strong liquidity. We're in a quarter where, as we said in the earnings document last night, you know, we expect to be increasing that liquidity in Q4 because it's seasonally a quarter where we have higher profitability and cash flow.

Sean Quinn: So we'll be prepared to seize opportunities. And, you know, we'll stay nimble there, but we'll be considering that across the spectrum of ease capital allocation.

Sean Quinn: Thanks, Sean.

Sean Quinn: Okay, we've got a couple of questions come in about our decision to withdraw guidance. So, Sean, I'll stick with you on this one. Please provide color on the rationale for pulling the long-term guidance.

Sean Quinn: Is it solely due to the tariff uncertainty or has something else fundamentally changed about management's view of the go-forward business opportunity? And another very similar question, but more like thinking about, hey, there's only one more quarter left in the year. Considering that we're already one month in, is there really that little visibility over the next few months? Sure. Yeah, I mean, as I said in my prepared remarks, and as I could completely get the focus on this topic and the question, but as I said, it was given the uncertainty of tariff and trade environment, and then any potential continued changes on that front, which, you know, we have seen on a pretty regular basis, and then also any impact on demand where that may be relevant that we withdrew our guidance.

Sean Quinn: And so, yes, it is specifically related to the uncertainty of the tariff and trade environment and any related impacts. Now, I completely get it, like, hey, we're sitting here on May 1st, and there's only two months left. But, you know, like, we just. We're trying to forecast and then communicate to all of you what the next two months are going to be like. We just don't think it's that helpful of an exercise, given the uncertainties that do exist. And so, you know, we feel like we have a good handle on the impact in terms of what's in our control.

Sean Quinn: We've attempted to lay that out, you know, we hope quite clearly, including in the AK that we provided in early March, but then also the updates that we, you know, that we provided last night. And then, you know, we had long-term guidance in place, and including over the last three months, frankly, and I'm not so sure that that long-term guidance over the last three months, you know, provided anyone, you know, more certainty when the tariff discussion became the focus. And so we're going to continue to operate the business as we have, we've communicated a lot on where our long-term focus is, what our objectives are, and so hopefully that's been clear.

Sean Quinn: And, you know, none of that changes, that's where we're going to continue to focus.

Sean Quinn: And then, you know, we'll have an opportunity three months from now, you know, to update you on our progress.

Robert Keane: Thanks, Sean.

Robert Keane: Robert, I'm going to switch to you on this next one. Did you re-evaluate your leverage target during the quarter? What's driving the net two-and-a-half times leverage target? Seems unusually low. Is the target independent of where the stock price is trading at? Well, no, we've not changed the net leverage target. We've talked in the past about why we came up with that target, and everyone's going to have different views on this. We have shown our ability to delever, but also to flex the... and Dave Goldman. We've discussed this extensively. And the main reason is that when there's volatility, we want to be able to stay focused on doing the right things and not have to do anything unnatural because of leverage.

Robert Keane: That target is independent of where the share price is because the policy does provide flexibility to increase for the right opportunities. And that very much includes share repurchases, which as we said today and last night, we consider to be very attractive right now. The reality is it will take us longer than we originally envisioned to get to that 2.5. because of the opportunities you're alluding to and others, but we still view this as an appropriate destination, again, for the reasons I just discussed.

Robert Keane: Thanks, Robert. So, related topic, because you mentioned leverage as a guardrail, share repurchases and their other capital allocation.

Sean Quinn: So, we've had a couple of questions on share repurchases from different angles. One of them, what drove the halt in stock purchases? If you loved it at $69 a share, why not $59 or $49?

Sean Quinn: And then the other side of that coin that just came in live, to be able to cope with potentially really bad economic conditions, for example, a deep recession without raising expensive new capital. And given your negative working capital, should you not be cautious with the buybacks and avoid a rerun of pre-COVID buybacks, which with hindsight were too aggressive?

Sean Quinn: Sean, if you want to take that one. Yeah, and and seeing the live questions come in like that, you know, there's there's obviously different perspectives on this and depending on kind of where you sit in the market. We purchased a little under $4 million in January, and then we didn't do anything in February and March. previously mentioned as well. The reason for that was because, you know, we wanted to make sure we had a good handle on what was a pretty complex and dynamic topic still is. And, um, and so we didn't do any share repurchases.

Sean Quinn: And so maybe go into the second question first. you know, I think that behavior indicates that we are, you know, we are being thoughtful about, you know, when uncertainty increases, making sure that we're not putting ourselves in a position where we're tying up liquidity that might, you know, might be needed, and we end up having to, you know, raise expensive capital or something like that. We were far, far, far, far away from that. But we, of course, have learned from what we experienced in the in the pandemic. So, you know, that led us to be to not act in February and March.

Sean Quinn: And so to that question, I think you can see our behavior factor in those things. On the other side of it, in terms of, you know, we bought at 69, why not the lower levels? You know, we bought just under $4 million in January, not a particularly huge sum. And then, you know, once the executive actions, sorry, executive orders came across that first weekend of February, which happened to be just after our last earnings release, you know, we didn't do anything further after that. And again, you know, we thought it was important to first prioritize making sure that we have the appropriate handle on the situation.

Sean Quinn: And, you know, from what we've outlined, you know, we think that we do. And, you know, we'll go forward.

Sean Quinn: Thanks, Sean.

Robert Keane: All right, we've got time for one more question and a sign off from Robert. So, Robert. Other than stock repurchases, what other factors are you focused on to increase the likelihood that the price of Cimpress's shares will better reflect our true and intrinsic value? Okay, first and foremost, and way ahead of share free purchases is constantly improving the value we deliver to our customers. Markets change, customer needs change, they evolve. improving that customer value on an ongoing basis is absolutely the most important driver of a great future. So that's where we are focused. In the end, success there will drive.

Robert Keane: Free cash flow per share, and that's what matters. Now, really, that's what we're focused on.

Robert Keane: Next, we do recognize the consistency of results and leverage levels are aspects that we think have an impact on the stock price. And so we certainly want to be aware of that, and we've spoken about it in the past.

Robert Keane: And then in the end, what it really comes down to is how we allocate capital, where we can invest it or or pay down debt or use it in the different uses of capital deployment that we can control. We do try to be transparent and consistently communicate with all of our shareholders, all of our debt holders about where we are focused, where we're investing, what we're getting in return for that, and how those things can impact, again, our share value over time. And share value for me is really the underlying ability to generate cash per share after everything, after taxes, after interest, etc.

Robert Keane: And then our share price will move around that. We don't like where it is right now, but we just have to keep growing the core cash flow capabilities of the business. And if that's not appropriately reflected in our share price, we certainly will look to take advantage of that ourselves.

Robert Keane: So with that, let me wrap up the call. Thank you very much for your time today. We continue to execute on exactly the same strategy we've talked about with you last September and the investor day. We've talked about with you before that and to navigate this very strange environment of terrorists that we are all across the economy trying to deal with. There are a lot of good signs of strategic progress happening across Cimpress. I'm very confident that we're gonna continue to strengthen how we deliver value to our customers. We are facing, as we've talked about in the past, some headwinds and some legacy products, but there are huge markets where we're growing fast.

Robert Keane: And we are, despite the current period of tariff adversity, we feel very comfortable that that transition is gonna continue to be a success.

Meredith Burns: So let me wrap up by saying thank you to all of you for joining the call. Thank you for continuing to entrust your capital with us and have a great day.

Operator: And this concludes the program, and you may now disconnect.

Q3 2025 Cimpress PLC Earnings Call

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