Conference Transcript - CMPR 2026-08-26

Philip Cooper, Analyst — Three Part Advisors

Welcome everybody to the Midwest Ideas Investor Conference. I'm Phillip Cooper with three-part advisors. Our next presentation comes from one of our investor relation clients, Simpris, that's traded on the NASDAQ exchange under the ticker symbol CMPR. Simpris is a mass customization print business serving small and medium-sized businesses that fuel our economies. Presenting for the company today is Simpris's Chief Financial Officer, Sean Quinn. Sean.

Sean Quinn, CFO

Thanks a lot, Philip, and welcome, everyone. And as Philip said, my name is Sean Quinn. I'm the CFO at Simpress, and I want to just extend my thanks to the three-part advisors team for having us today for a very full day, which is great. And today I'm here to discuss Simpress, which is the leader in print mask customization. Maybe just as a little bit of background for this slide, and we are webcasting the slides today are mostly kind of to try and get everyone a baseline understanding of who we are what we do because there are a lot of new folks to the story that are that are here today I will share a little bit about our plans for for this year and and the year after maybe just two advertisements one is that we do have an upcoming investor day at the end of September and so if you're looking for more details you know in that event we'll go deeper into some of our recent progress but also our plans looking forward so I would encourage you to to attend that hopefully see you there it is it is virtual the other thing if you're newer to the story I would just encourage you to check out the annual letter to investors that Robert Keene our founder chairman and CEO he writes every year that was published at the end of July and I think you'll find that very interesting and informative in terms of kind of who we are how we think about capital allocation, but also just some recent examples of our progress and where we're focused. Great. Let's get into it. As we always do, just a quick safe harbor statement. I will talk a little bit about our future today. We could be wrong about that, and so I just encourage everyone to check out the risk factors that are outlined here on this slide, but also are outlined in far more detail in our most recently filed 10K, which we filed earlier this month. We do have some non-GAAP measures throughout the presentation. On our IR site, which is at ir.sympress.com, you can find all the reconciliations to that. We provide quite a bit of information there, so again, if you're newer to the story, there's a financing and operating metric spreadsheet that you might find quite useful in terms of historical information and so forth if you're looking to model things out. Great. Well, let's get into who we are. So SimPress helps millions of businesses build their brands, stand out and grow. And we do that through custom print and promotional products. We're the market leader in what we do in this mission today. Our businesses serve over 15 million customers each year. And we serve them with custom marketing materials, signage, logo apparel promotional products custom packaging labels you can see some examples of the types of customers on this slide and and how we serve them going to the next slide here just a high level on some of the get you grounded and you know kind of some of the metrics that indicate our scale and also the market that we're in and our offerings this last year we're a june 30 fiscal year end so the year that ended june 2026 we had 3.7 billion dollars in annual revenue That was 7% reported growth. It was 4% organic constant currency revenue growth. Off of that revenue, we had $1.7 billion in gross profit, $458 million in adjusted EBITDA, and adjusted free cash flow of $122 million. It was a year of particularly high capital expenditures, which is why the adjusted free cash flow last year was a bit lower than our normal conversion. And all of that resulted from our continued shift and our focus towards what we call elevated products, and I'll go into that a little bit, but also, importantly, improvements in how we acquire and retain higher-value customers, and again, I'll talk a bit more about that and continue to further advance the advantages, which are very significant, that we have in our manufacturing and supply chain. We operate in a really large market. We estimate that that's over $100 billion in total, and we have teams spread across 25 countries. We have over 3 million square feet of production space located across North America, Europe, Australia, India, and Brazil, so very much global scale. And as I said before, we successfully serve over 15 million customers annually, and we do that with over 23,000 unique product offerings and millions of product variants. each year we fulfill over 30 million orders just to you know so you put that in perspective 3.7 billion in revenue over 30 million orders all those orders by definition are custom for that customer we do that across five reportable segments which you can see on the bottom right there and that includes vistaprint which typically in the u.s environment is the brand that most people are familiar with given the strength of the vistaprint brand in the u.s market and vistaprint is where the business started. Let me just spend a few minutes on the market. As I mentioned on the prior slide, we have a total addressable market that exceeds $100 billion, and that's just for North America, Europe, and Australia, so a very large market, and that's really just for the part of the print market that would be relevant for us to serve, which is small and medium print runs. So this is not commercial printing. This is small and medium print runs and that's really where we seek to kind of bring our mass customization model to continue to disrupt this market you can see on the right here the market sizing is divvied up across four product categories small format there the bottom in the orange is where we started but today we have a a broad and deep offering of marketing and branding products that cuts across all these, and we're pushing even further into categories like packaging and labels and signage and promotional products, each of which, as you can see, are massive markets. And with the investments that we've made, we're able to serve more and more of that market. The market's really fragmented. It's still the case that most of this market, about 60 percent of it, is served by traditional print businesses. Many of them, you know, I often use the example of if you're just driving around whatever town or city you live in, you'll see these traditional small kind of non-scale print businesses. They're the local sign shops or print shops. And those types of shops have been in decline for decades and for some obvious reasons. And they are ceding share. That in the aggregate is ceding share to scale mass customization players like ourselves as the leader we think that um sorry let me go back here we think that there's still a long runway of growth opportunity and really that comes from two main drivers one is share gains as we continue to um to to push into that market dynamic that i just described but also new product introduction and this has really been a a meaningful driver of our recent growth, and we're able to bring this mass customization paradigm to more and more products over time. Like I said, we started with small format printing like business cards, more recently things like packaging are an area that we can push more deeply into to serve customers in a way that they haven't been able to be served in the past with lower order quantities of branded, beautiful branded packaging at a great price with a great ordering experience and great quality. I talk about web-to-print mass customization, which is something that most people wouldn't have heard about before. Let me just spend a minute on what that is. This really speaks to producing custom products, but doing so with the reliability, the quality, the affordability of mass production, even though we're doing it in small quantities. This is a business model that Robert Kean, our founder, really invented. It's something that we excel at and have been at for now almost three decades. This model has a lot of benefits to customers. We help our customers build their brands. We help to get them products fast. We give them a very broad product selection. We have highly competitive prices, we have great quality, the convenience for customers of ordering online like they do for most things in their life, and we allow customers to order the quantity that's right for them, which is really, really important, even very low quantities, oftentimes minimum water quantities of one. This is not easy to do. We've led in this discipline, and we have very significant scale-based advantages across our value chain that have been specifically designed to serve customers in this way and it takes the orchestration of those advantages across that entire value chain to really make this work. It's very hard to do what we do. It's hard to build. It's hard to replicate. And we've invested very significant capital over the last decades to make this possible and allow us to continue to grow. Speaking of which, you know, because of the value that we offer our customers, but also the significant scale-based advantages that we have. And we've continually invested in extending those. We have a long history of growth and profitability. On this slide, there's two charts. On the left is our revenue since 2011, and then on the right is our adjusted EBITDA. Obviously, you can see the direction there. We've consistently taken market share. It's a large addressable market, as I went through earlier, and through that continued growth from a top-line perspective, we've remained strongly profitable and also cash flow positive. I would mention even at times of macroeconomic decline or going through the pandemic or the post-pandemic supply chain inflation and disruption, and you can see that on the right in terms of our profitability. As I said before, we're at June 30 year end, so the 2027 column, which is the second from the right, the dark blue there, the first one of the dark blue, is our guidance for fiscal 27. I'll go into this in a little bit more detail later, but the guidance is from a revenue perspective, 7% reported revenue growth, at least 3% organic constant currency revenue growth, and then you can also see our expectations for fiscal 28, which is the second of the dark blue bars there, which is 4-6% organic constant currency revenue growth. On the right hand, just to touch on our guidance for Fiscal 27, we expect at least $520 million in adjusted EBITDA. That is significant growth from Fiscal 26, and there's a number of components to that I'm happy to get into in the Q&A. And then in Fiscal 28, we expect adjusted EBITDA of at least $615 million, which again is a significant growth. I should note that that is up from, in our last earnings release at the end of July, we updated that from previously what was at least $600 million, so we raised that to at least $615 million. And that's with 45% free cash flow conversion as well, which if you do the math gets you to at least $277 million of free cash flow, so significant profit growth, significant cash flow growth. I'm going to go through that in a little bit more detail later, but I think if you're new to the story, this is probably one area that I would point you to to make sure you really try and dig into and understand and ask us questions on. I think this is fundamental to kind of the story over the next few years in terms of both how we're currently valued and what that could look like over the next two years as we execute on this. Just moving to the next slide, a couple things in terms of capital allocation and some background on us. Our focus is always on per share value creation. We've always taken a long-term approach to capital allocation. You'll see that in the annual letters that I referenced earlier if you have a chance to read them and you can go back in time and see kind of how our thinking has evolved and how we've thought about capital allocation. We have roughly 30 percent of our shares are represented on our board. That includes both our one of our largest shareholders but also our founder and chairman and CEO so there's great alignment between the way we make decisions and the things that our long-term investors care about we have a history of successful organic investment across our businesses last year and the year that we're now in in our fiscal 27 we have had a heavier year year and years of capex investment really focused on how do we continue to extend our manufacturing and supply chain advantages. Those are allowing us to introduce more new products, but also to drive significant efficiencies in our production. And those investments really are a key driver to both the revenue and profitability growth that we expect over the next few years. I mentioned things like the deeper push into categories like packaging, allowing us to serve a broader part of our addressable market. We've been also executing on a pipeline of tuck-in acquisitions within what we call our upload and print businesses. Those acquisitions that we've done are really specifically designed to accelerate the things that we're focused on strategically, namely accelerating our push into what we call elevated products, so expanding product selection there, but also the focus on manufacturing and supply chain advantages. So those are very much in focus as we think about tuck-in acquisitions. We closed four transactions over the last few quarters, the largest of which was an acquisition that we closed in early July. To put it in perspective, the larger one, the net cash outflow after some financing stuff, would be around $90 million U.S. dollars, just to put it in perspective. I think, importantly, for these four acquisitions that we've done recently, we've said as we did all of them that the base case returns on capital we expect to exceed 20 percent that's the base case so we feel very comfortable with these we think it's a a great capital allocation opportunity and as we execute on those synergies they'll have more meaningful impact in fiscal 27 we outlined some of those details in our guidance and we'll talk more about this at our upcoming investor day too in terms of the rationale there and also looking at some the ones we've done in the past as sort of archetypes for how this could look going forward. Over time we've also cut our shares outstanding by over half, so we've been significant repurchasers of our shares. We do expect share repurchases will continue to feature in our capital allocation, even as we bring our leverage down. And just on leverage, we do plan to exit this year with leverage of approximately two and a half times trillion 12 months EBITDA. As we continue the profit growth and the cash flow generation growth in fiscal 28, we expect to be below 2.0 times as we exit fiscal 28, while still having ample opportunity for capital allocation, including share repurchases if that's attractive. So again, I think that's another kind of fundamental part of the story if you're newer to it, to understand kind of how that works because, yeah, we do expect pretty significant delevering over the next two years while we're still allocating capital for the future. As I mentioned, with our plans for significant profit and cash flow growth, really the foundation for that comes from the investments that we had been making in the years prior and that are allowing us to achieve that. There's just a few of them that I'll mention at a high level. One is we had gone through a phase of pretty major technology replatforming. that's now behind us that's allowing us to get more leverage from our mass customization platform as we've modernized that tech stack it's also not only eliminated allowed us the opportunity to eliminate cost but also to pretty rapidly accelerate the pace of new product introduction which is really important but also to drastically allow us to improve the customer experiences and have our businesses start to collaborate more effectively, including the way that we share our kind of production capabilities and resources, consolidating volumes into what we call focused production hubs, which really allows us to get access to the lowest cost of production, do new product introduction more quickly, but importantly also improve capacity utilization for our new investments, which as I said before have been more sizable over the last year and will be this year as well we're we're tapping into new growth opportunities in elevated products promotional products apparel and gifts packaging and labels signage all those categories are growing nicely and it's because of some of these investments we've made over recent years that we're able to access those markets we expect continued nice growth in those categories these are the types of products though that have they They have higher order values compared to our legacy products like business cards or flyers, brochures. But they also allow us to better serve high value customers with a broader set of needs. Those customers also tend to have a higher propensity to repeat, and we're starting to see that in our underlying metrics. And we're growing while I share with them while we increase the lifetime value of those And that's really been kind of maybe the main, the most significant driver of our financial results over the last few years, including in fiscal 26, growing the value of our customers. And we're doing that because we're expanding our product selection and improving our experience based on all the investments that we've made. Our competitive advantages, I think, are apparent across the entirety of the value chain. And as I said, it takes the orchestration across that entire value chain to do what but I think they're most significant within our manufacturing and supply chain capabilities and you know I think in a world of AI there's a lot of things in our value chain that will that will get modified get disrupted be opportunities for us to to get more efficient but the one thing that AI is not changing is you know how these physical products are made this is where we're the best in the world, we're continuing to invest in those capabilities. So AI is very relevant in terms of the opportunities it presents across our P&L, as it is for most companies. But I think, if anything, it's our belief that AI and broader access to design can bring more volume to the model that we have and allow us to really show the manufacturing supply chain advantages that are present in our business. You know, I think all of these things have led for us to be strategically positioned quite well in the current environment. In our recent earnings, we did talk about our new strategic partnership with Canva. Many of you may be familiar with Canva. It's one of the world's largest design platforms. They serve hundreds of millions of monthly active users. and this relationship with Canva will give us a meaningful new customer on-ramp at scale and also gives Canva a trusted production partner for its print shop strategy and we think it's a very interesting growth opportunity for both companies. Maybe just a little bit of a quick overview on our segment and geographic mix. As I said, Vistaprint's our largest business, largest segment. in terms of revenue and profitability but everything else that you see here all these are businesses that we've acquired over the years and together they drive meaningful profits and cash flow as well but Vistaprint that segment today still represents about half of our revenue in terms of geographical distribution you see that on the right side here pretty evenly split between North America and Europe and then we have the remaining four percent which is Australia Brazil and India. And then just in terms of how these businesses operate, we generally have our businesses operate in a pretty decentralized manner. That said, and there are reasons for that, all the benefits that you know of decentralization, in particular being able to move very quickly to serve their customers in differentiated ways. But over time, we're finding more and more opportunities while still having that decentralized model for our businesses to to get the benefits of increased sharing of capabilities, especially in manufacturing and technology and marketing. And that's actually part of the profitability growth story over the next few years, kind of getting the cost efficiencies from that increased sharing as well. From a balance sheet perspective, strong balance sheet on the left here is just the components of our net debt. net, we have high yield notes, we have term loan B, we have no near term maturities. Our high yield is 2032, we redid our term loan B last quarter, that's now 2033. So no near term maturities. On the chart on the right is just the shape of our net leverage over time. You can see we ended last year at 2.9 times. And we've brought our leverage down over the last few years relative to the years prior to that, while still investing organically, but also more recently in M&A, as I said. And then over the last three years, we've done nearly, I think, $285 million in share repurchases over the last three years, all while bringing our net leverage down. But as I'll outline in a moment, we do have plans for significant further delevering over the next two years which is pretty meaningful still while having the opportunity to allocate capital so let me now just go through our outlook for 27 and 28 and then we'll open it up for q a this is all guidance that we first published in our july 29th earnings release there's more detail there on some of the assumptions that underpin this but i'll just go through this at least the headlines we expect revenue growth this current fiscal year of at least seven percent That includes some of the acquisitions that we did, it also includes currency as well. And then we expect at least 3% growth on an organic constant currency basis. For profitability, we expect net income of at least $125 million and adjusted EBITDA of at least $520 million. And then on the cash flow side, we expect operating cash flow of approximately $370 million and adjusted free cash flow of approximately $200 million, which is up significantly from last again you can check out our earnings release for some more commentary on the guidance assumptions we also there break out specifically what the contribution is from recent m a so you can see that as well and then turning to fiscal 28 and again if you're new to the story i'd really encourage you to um to dig in here and understand um you know how this works how we're going to achieve this and and ask questions of us on that topic for fiscal 28 we basically you know about one year ago, we provided this framework for what we think we can achieve over the next three years. And the reason we did that is because, as I said, we had been through a period of pretty significant investment, and we felt obligated to make sure that it was clear to shareholders what we expect to do on the back of that investment in terms of the profit and cash flow growth that we anticipate. So we're now, you know, we're one year into that. I just talked about fiscal 27. That's the second year of that. This is Fiscal 28, the third year of that. We have increasing conviction on our ability to deliver on the targets that we set out for Fiscal 28. In our July 29 earnings release we actually updated and increased the targets for Fiscal 28, which are now revenues the same, but the profitability and cash flow increased. On the revenue side, 4-6% organic constant currency revenue growth. And then for adjusted EBITDA, at least $615 million, which includes significant efficiency gains, primarily in our cost of goods sold line and our operating expenses, including from the focused AI initiatives that we have. And then on the free cash flow side, we expect that EBITDA to convert to free cash flow at approximately 45%. So if you do the math, that's at least $277 million of free cash flow. uh so that's uh that's a brief overview uh i would say i've been at the company for 17 years now it's a very exciting time at the company um i can't uh i can't uh say enough how focused we are on achieving what we've laid out for this year and next year um when we do that when we execute on this we think it can deliver a lot And we're remaining focused on it.

Sean Quinn, CFO

So, for that, I don't have to take any questions that anyone has.

Sean Quinn, CFO

Surely. So the question in the room was for adjusted free cash flow, you know, what's the formula for that? What's included? I'll just walk you down that. So if we go from EBITDA, we take out CapEx and Capitalize Software. And I'll give you some other commentary as I go here, which for this year we expect to be pretty flat to fiscal 2020. So capitalized software, CapEx comes out. Cash taxes come out. We expect cash taxes this year to be actually a little bit lower than they were last year. Working capital gets, I would say, included, and that comes out because our structurally, the way we're set up, we have negative working capital, and so as we grow, working capital for us in a typical year would be a source of cash. So we include working capital. and then we have cash interest payments as well which for this year are expected to be about $95 million. So that's the walk. Sure. So this year so the question was on you know kind of capital allocation expectations and plans I think you know for the upcoming year and and specifically with a mention of share repurchases or dividends. Let me start with the latter because that's easier On dividends, we've never paid a dividend, and we have no expectations of doing so. It's not something that we've entertained, and so we have no expectations of doing that. On the share repurchase side, we've been opportunistic over time. I mentioned we bought in over 50% of our shares over the last 15 years or so, 10 years, and we would love to continue to take advantage of opportunities when we feel like there's price dislocation. Even this past year, as we had clear commitments on where we were going to end the year from a leverage perspective, we still allocated over $50 million to share repurchase in fiscal 26. We'll continue to be opportunistic about that. So I would expect that this year, next year, we'll continue to look at it. But we really are also taking seriously the deleveraging commitments that we've made. So there will be a balance there. Yeah, so the question was kind of what is the composition, maybe recently what is the composition of our organic growth amongst market share gains, new product introduction, pricing, et cetera. On a total basis, I would say pricing, we're always looking at that and we're always dynamically experimenting with price, but on a total basis I would say there's some Some products where we're decreasing price, some where we're increasing price. And so price has not been the main driver of our growth. And as it relates to our guidance, we don't have a big component of price as the driver of growth, but there will be some of that. New product introduction is probably one of the bigger drivers in terms of the components of our incremental growth. And as I said, we are pushing more deeply into some of these categories that are newer for our space. Packaging I think is one of the great examples of that. Take things like branded corrugated packaging or branded flexible packaging. These are things that small businesses need for their business. oftentimes these are things that are kind of fundamental to how they how they package their product or how they serve their product to their customer and it wasn't possible ten years ago to get branded packaging that was of high quality at a price that was affordable for that type of a customer but also in a quantity that was right for them because they didn't need to order you know tens of thousands of these things they needed them in you know maybe hundreds or thousands because they have a variety of products etc and the lead times were historically very long because oftentimes those supply chains originated in China so long lead times high quantities prices that didn't work unless you did it in very high quantities so that didn't work so now these types of customers can get access to you know low quantities of beautifully branded corrugated packaging flexible packaging you know coffee cups you know coffee sleeves food food packaging and you name it I mean I would encourage you to it's always interesting coming to an event like this and sometimes we get questions of you know isn't some of this stuff you know physical products going away you know there's less business cards exchanged admittedly at this conference than there would have been 10 years ago but as you leave this room just keep Keep your eyes open and you will see the lanyards that everyone is wearing, you'll see retractable banners everywhere to say where everyone needs to go and advertise the ideas conference. When you go up to the registration booth, there's a personalized tablecloth that has the three-part advisors and the ideas conference in the lobby. There's signage everywhere. There are all sorts of, in front of everyone here there are booklets that someone had made specific to this event in small order quantities, and I could go on and on and on. These physical products are everywhere. But not all of these products have been accessible in low order quantities is my main point, and so new product introduction is a core piece of that. And then I think that there's just the continued market share dynamics of this market is still, a lot of it, especially in kind of the legacy products that we have, still majority served by the local print shops that we all see as we drive around. And, you know, there's just this, we publish some of the data, the census data. you can see that every year, you know, there's a steady decline of these businesses for obvious reasons, right? It's, you know, the owner's not passing that to their child, doesn't want to run that business, or, you know, they're not able to keep up with the innovations in capital equipment and the investments in capital equipment. They're concentrated in some of the legacy stuff and don't have the ability to invest in, you know, what's really the new stuff like we are. And so So that market share dynamic is the other element. So the market share dynamic and new product introduction, I would say, are the core components. Pricing will differ year by year, but there is a little bit of help. That's right. Let me just, for the webcast, try and repeat that, which is a great question. It was really about kind of the pricing dynamic. Given the market share dynamic that I described, the question is, you would think that that might lead to pricing benefits, as there's less competition from those traditional providers. but is it different than that because there are online competitors as well and that is the case it is a competitive competitive market I think you know where where we are I mean we're the market leader unmatched scale but also unmatched product selection and you know so what's you know we want to make sure that we can serve customers really really well such that they'll come back for their next need and be able to shop across the catalog. When they do that, they are very valuable to us. And so we'll sort of continue to optimize for that versus like being able to take price on an individual transaction per se. But it is a competitive market for sure. And I would say that the price sensitivity, as you might expect, is higher on legacy products like small format print where there's more competition and I would say relatively less in some of those new categories where those capabilities just aren't as prevalent in the market at least today. I think we're at time. Thanks everyone for joining on the webcast and thanks everyone in the room for joining. Appreciate the questions.