Cimpress PLC

NASDAQ:CMPR

Earnings Call Transcript 2023-Q4

[Operator]

Welcome to the Cimpress Quarter for Fiscal Year 2023 Earnings Call. I'd like to introduce Meredith Burns, Vice President of Investor Relations and Sustainability.

[Meredith Burns, VP, IR]

Thank you, Abigail, and thank you, everyone, for joining us. With us today are Robert Keane, our Founder, Chairman and Chief Executive Officer; and Sean Quinn, EVP and Chief Financial Officer. I hope you've all had a chance to read our earnings document and our annual letter to investors book published yesterday. We appreciate the time you have dedicated to understand our results, commentary and outlook. This live Q&A session will last 45 minutes to an hour, and we'll answer both presubmitted and live questions. You can submit questions live via the questions and answers box at the bottom left of your screen.

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 non-GAAP reconciliations for our financial results and outlook on our IR website. We invite you to read them. And now I will turn things over to Sean for some brief remarks before we take questions. Sean?

[Robert Keane, Founder, Chairman & CEO]

If we have lost Sean, I will give me a few more moments. This is Robert speaking. I'd be happy to jump in.

[Meredith Burns, VP, IR]

Absolutely, Robert, why don't you go for it?

[Robert Keane, Founder, Chairman & CEO]

Okay. Apologies for the technical glitch everyone. So thank you, I'm Robert Keane, CEO. And let me just start by saying, as I said in the letter, we had a strong finish to FY '23. We delivered results that were meaningfully above the profitability and net leverage guidance we provided last quarter. I think this outperformance was largely driven at Vista and our Upload and Print businesses. Our revenues on a consolidated basis grew 9% in organic constant currency or even as our Upload and Print businesses, we're lapping price increases and nearly 50% organic constant currency growth last year in Q4. So it was a tough comp, and we still grew the 9% constant currency.

Consolidated gross profit -- gross profit, excuse me, grew 11%, excluding the impact of currency. And that paints a very different picture compared to last year when we had a sizable gross margin contraction given the impact of cost inflation. Consolidated adjusted EBITDA grew $76 million year-over-year to $114 million, which represents an increase of about 200% or over 200%. We mentioned this in yesterday's release, but to put this in perspective, the last 2 quarters, our trailing 12-month adjusted EBITDA increased by $112 million to end fiscal year '23 with adjusted EBITDA of $340 million. And importantly, this improvement includes one full fiscal quarter of benefit from the $100 million of annualized cost reductions we've implemented. And with just one quarter, we see a lot of those opportunities ahead of us in cost reduction.

Adjusted free cash flow did decline year-over-year despite our higher adjusted EBITDA and this was due to restructuring payments this year connected to the cost reductions as well as working capital timing differences. Q4 last year was very favorable in terms of working capital. I'm not going to go through all of the segments. But given the significance of the profitability expansion in Vista, let me share some of the highlights there. This is revenue grew 12% on an organic constant currency basis. with a nice balance across regions and across our core product categories. This quarter's growth was supported by better pricing and also strong growth in new customers and new customer bookings.

Vista's segment EBITDA grew $66 million year-over-year, which was by far the biggest contributor to our consolidated Cimpress adjusted EBITDA growth and the profitability expansion in Vista was very well balanced with about 1/3 coming from gross profit, 1/3 coming from advertising efficiency and 1/3 from lower operating costs. We ended the quarter with cash and marketable securities of $173 million, and that's after having spent $45 million to repurchase $52 million of notional value in our high-yield bonds during the quarter. As we've talked about in recent calls from a balance sheet perspective, we have been prioritizing liquidity, and we were able to continue to do that while allocating significant capital to these higher returns, which also helped support targeted reductions in net leverage.

We ended the fiscal year at a net leverage of 3.9x EBITDA as defined by our credit agreement. This was ahead of our guidance or better than our guidance of being below 4.5x, which we provided last quarter. And just 2 quarters ago, our net leverage was we think our ability to delever this quickly demonstrates the underlying profit and cash flow characteristics of our business model.

Moving to our outlook. Given our strong Q4 performance, we are raising our FY '24 adjusted EBITDA guidance to be at least $420 million, and we continue to expect to convert free cash flow at about 40% of EBITDA. We also introduced organic constant currency revenue guidance of at least 6% and which reflects the lapping of the price increases we had last year. The cost reduction actions that we communicated in March drove $24 million of improvement in FY '23, that's slightly ahead of what we had previously outlined, and we expect they'll drive another $76 million of incremental year-over-year fiscal year benefit in FY '24. We now expect to bring net leverage to below 3.25x by the end of fiscal '24, which is also ahead of the guidance we provided last quarter. given our raised EBITDA and the resulting cash flow guidance for FY '24.

And finally, I'd point out that I'd encourage you to read the annual letter, which we sent, which I send every year, when we step back from the quarter and the financials to assess our strategic performance, our capital allocation and to estimate our steady-state free cash flow. A consistent with the direction you see in our reported financial results, you'll also see that our estimates of steady-state free cash flow have also increased, and I'd encourage you to read that letter for more details. Now a lot has changed from a year ago, and we see that very positively reflected in our Q4 results. But importantly, just in the tone and tenor of the teams and the operational focus of the teams, which we think bodes well for the coming year. With that, Meredith, we open for questions, just check if we were able to get Sean back on the line.

[Meredith Burns, VP, IR]

We have been able to get Sean back on the line. So I think we are good for questions. So as a reminder to folks that are on the call, you can submit questions using the questions in the answers box at the bottom left of your screen. We also have received a number of presubmitted questions. There were some overlapping areas, so I'm going to use some representative questions so that we can get all of the topics that are on everybody's mind out on the call. So we're going to go to the first question that I am going to throw over to Sean. And this is what specifically drove the outperformance in Q4 versus the previously communicated expectations for Vista and Upload and Print?

[Sean Quinn, EVP & CFO]

Yes, I'll take that, Meredith. Let me just make sure you can hear me, right?

[Meredith Burns, VP, IR]

I can hear you.

[Sean Quinn, EVP & CFO]

Okay. And my apologies to everyone might audio cut out a very inopportune time. So yes, in terms of the outperformance for Q4, most of the overperformance was in Vista and the finish -- the quarter there finished strong relative to what we were expecting. And in terms of where that overperformance was, really, it was slightly better throughout the entire P&L. Revenue growth was a little bit higher. Gross margins were a little bit higher, ad spend a little bit lower. And then we also had some additional operating cost savings from the recent cost actions. So -- and part of that is just some delay in backfilling roles and so on. So that was a little bit more favorable than we had expected as well.

I should also mention Upload and Print though, that was part of the overperformance as well. And that one in the Print Group segment was really concentrated on gross margins in terms of overperformance. And then the segment was on higher revenue.

[Meredith Burns, VP, IR]

Excellent. Thank you so much, Sean. I'm going to stick with you for the next question. And this is about gross margins in Vista. So gross margins in Vista were still down slightly year-over-year as we showed the growth for revenue was slightly higher than the growth for gross margin is why haven't they increased if pricing improved throughout the year?

[Sean Quinn, EVP & CFO]

Yes. Very fair question. And just to put this in perspective, on a consolidated basis, we had gross margin expansion. But as we report gross margins in Vista we did not, although they were up sequentially from Q3. In the last year quarter, so Q4 of FY '22, we had a benefit of a little under $8 million in gross profit from the gain on the sale of land that was attached to a manufacturing asset. And so that's why it was in gross profit.

If you were to exclude that benefit last year, Vista's gross margins actually did increase over last year. And just to be clear, that gain is also excluded from EBITDA as well. But if you exclude that, business gross margin sort of in real terms, did expand about 170 basis points versus Q4 last year. We had pricing benefits throughout the year. as we've been talking about, and you see reflected in the Q4 results. We also had costs that continue to increase, especially in the first half of the year versus last year. And it's only been recently in the last months that we've seen that cost pressure subside and then the start of cost favorability, but that really -- that favorability really didn't have any material impact on Q4.

There's more opportunity there as we get into FY '24, but definitely a favorable result seeing year-over-year gross margin expansion we'll still, as we go forward, and this is the case in Q4 to have some headwind from the areas of the Vista business that are growing the fastest from a category perspective and specifically in our promotional products category. There's a lot of other good things coming from that, but that is a little bit of a headwind that we had in Q4, and we'll continue to have as we get into next year as well.

[Meredith Burns, VP, IR]

Great. Thank you so much, Sean. Robert, I'm going to ask you a couple of questions that we got on the annual letter. So the first question. So on Page 6 of the shareholder letter, you mentioned growth investments for FY '24 are likely to be similar to the roughly $109 million that we spent in FY '23, is it safe to assume that the investments by business will be roughly the same?

[Robert Keane, Founder, Chairman & CEO]

Yes. That's correct.

[Meredith Burns, VP, IR]

All right. And then next follow-on question in this category. Within Vista, the investment areas have shifted over time with LTV-based advertising and product development and marketing, making up most of the investment activity recently. Are the investments you're underwriting today higher or lower than the ROI you thought you were getting a few years ago?

[Robert Keane, Founder, Chairman & CEO]

I think they can be higher for different reasons. So let me break the components you mentioned up into the 2 different components. So first of all, the lifetime value-based advertising is simply us recognizing that a portion of the advertising spend takes longer to pay back than a year, but it is really instrumental in moving our brand perception and it also allows us to spend lower in -- spend less in lower funnel channels. So they really go together that -- those 2 types of advertising. And that also helps us in areas, for example, of discounting where we've been able to significantly bring down our discounting over the past 4 years. and it impacts our ability to serve higher-value customers, which if you look at the last year, a lot of our growth came from higher average order values and the top deciles that we have in our business.

The second thing you mentioned was the grouping of product development and marketing. Just for clarity. Most of that is product development and data. There's a bit of marketing team senior overhead there. But it represents -- this category represents the heart of our efforts to improve our customer experience, to drive product experience-driven growth. And that would be an example of easier user experience, more personalization, incorporating a broader set of design capabilities and all those things, if done well, drive profitability downstream through our physical products. So the incremental margins at Vista are quite high and so a better product experience through this product development investment can drive changes in average order value, retention rates, conversion rates, which can be really meaningful from a return perspective. And I think also comparing back to several years ago or more, today, we're well past our migration.

Our teams who were working on the migration I have now been organized into clear product domains. Each product domain has multiple product teams and a much higher percentage of the time is spent on understanding customer needs and building new solutions for that. And that's really the core of where we're focused on our as an example of the core of where we're focused in terms of execution for FY '24. So to step way back to your question, yes, I think they can be higher returns than we thought we would have gotten a few years ago.

[Meredith Burns, VP, IR]

Thanks, Robert. Robert, I'm going to stick with you for a couple of quick hits. Just clarifying questions on Vista. Can you remind us what's in the other geographical segment for Vista, so from a regional perspective or breakdown that we provide. Is this where Japan was included, hence the decrease?

[Robert Keane, Founder, Chairman & CEO]

Yes, correct. We pulled out of Japan, and so that drove that decrease. Sean or Meredith correct me, India is also in there, but that's growing. And then we also exited by the way, National Pen exited Japan. So you'd see a similar decrease there as well.

[Meredith Burns, VP, IR]

Great. And on a related note, how material is Vista Corporate Solutions to Vista overall?

[Robert Keane, Founder, Chairman & CEO]

It's about $50 million of annual revenues, but growth has been very strong over the last years, and we expect it to continue to grow.

[Meredith Burns, VP, IR]

All right. So I'm going to shift into -- we had -- we actually had quite a few questions come in around the concept of pricing, both backward-looking and forward looking. So we're going to combine all of these things into one topic, and we're going to cover everybody's questions here.

So representative questions, can you touch on pricing and volume trends by business. On price, do you expect increases will stick? Or are they transitory in nature? And help us understand in your 6%, at least 6% organic constant currency revenue growth guidance for FY '24. What have you assumed in terms of volume, price and macro impact.

[Sean Quinn, EVP & CFO]

Yes, I'll take this one, Meridith. And the answer is quite nuanced because there are different circumstances in each of our businesses in terms of when they took pricing increases when we're lapping that and so on. And so I'll stick with Vista and upload and print because that represents the vast majority of our revenue, and then I'll share some thoughts about FY '24 as well. In Vista in Q4, about half of our growth was from pricing. And then we also had strong volume growth in 2 of our highest average order value categories as well. As we look forward into next year, there's still an opportunity with in Vista on the pricing side. And in Q1, we'll still have some of that favorability because we won't have fully lapped all the pricing changes that we've made over the last year.

But even beyond that, there's still, we believe, opportunity on the pricing side, which I categorize as optimization, but that's still opportunity, and we do expect that we'll continue to have relatively higher growth in those higher AOV categories, which from a mix perspective, when you think about revenue growth is helpful. In Upload and Print in Q4, and you see this in the results, we lapped the more sizable pricing changes that we put in place last year. And there was still some year-over-year pricing favorability in but we've now lapped those biggest changes. So as we look ahead to FY '24 for Upload and Print, we expect that the vast majority of their growth for this next year will come from volume. So it's different business by business.

If I were to try and summarize it on a consolidated basis as we look forward to this next fiscal year, we've given guidance of at least 6% growth from a revenue perspective. I'd say it's about 1/3 of that growth is from price or changes in mix and about 2/3 of that from volume. Keep in mind, that 6% -- at least 6% guidance that we provided is lower than the growth that we just experienced in this last fiscal year, just given that we're lapping price increases, we have, of course, factored that into the guidance. And then we haven't made any specific assumptions about prices coming down in fiscal '24 for the most part, but we do feel like we've left sufficient room in our planning and in this guidance as well if we were to experience some of that.

[Meredith Burns, VP, IR]

Fantastic. Thank you so much, Sean. All right. So we're squarely into outlook territory now, and I have a couple of questions about the EBITDA targets for FY '24 that came in. One is around what are the levers that brought our expectations from at least $400 million that we provided last quarter to now at least $420 million. And taking that a step further, we've got someone who has done some work. Adjusted EBITDA this year was $340 million. So that's FY '23, and you mentioned that you expect $420 million next year. cost savings alone would get us to $415 million. And once we adjust for the $20 million of expected currency movements, we'd be at 3.95%. Getting to 420 seems very doable given it would assume 6% growth with no margin expansion, which seems unlikely. Are we thinking about this the right way? Or are there certain unknowns that might make getting to the $420 million not as straightforward?

[Sean Quinn, EVP & CFO]

Yes. I'll answer both of those together. And when I do, I'm going to be actually quite specific because I think we've provided all these -- or most of these components in our guidance. And so I'll do my best to kind of package them together for everyone. So just in terms of the first part of the question, which was on the levers that allowed us to raise the guidance for FY '24. If you recall back in January, that was the first time with our Q2 earnings release that we gave guidance for fiscal '24. And at that time, we said we would achieve at least $400 million of EBITDA. And then in our call in late March, we provided a lot of detail on how we would get there. And in that guidance, we had bridged from our trailing 12-month EBITDA at the time to that $400 million, and so I'll try and keep that same framework as I go through this.

If you continue to fast forward in the time line, our actuals for Q3 were $7 million higher than the high end of our guidance that we had provided. And then at that time, last quarter, we raised our Q4 guidance as well when we released earnings last quarter. Our actuals then for Q4 that we reported yesterday were then $20 million above the high end of our upward revised guidance range. And so those are really the levers in that bridge that just mathematically get you to at least the $420 million.

If you take our exit rate of EBITDA, which is $340 million, and you do the math with the other guidance, which is to the point of the second question there, let me just walk you through that. So starting point, $340 million as we exit FY '23. We still have $76 million of our cost savings from what we communicated back in March that are yet to be reflected in our actuals. So that will be a benefit for this next fiscal year. We've then given revenue guidance of at least 6% growth. If you look at our -- and this is in our reported results, if you look at our contribution margin on a consolidated basis for this last year, just as a starting point, that was a little bit over 31%. So if you take the 6% growth in our guidance or at least 6% growth, and you take, let's call it, a roughly 30% flow-through on that in terms of our contribution margin. That's another $55 million or slightly more than that of benefit in FY '24 from the flow-through of that growth.

So at that point, you're at just over $470 million. You then have to factor in that we have approximately $20 million of currency headwinds we expect next year. So that brings you down to $450 million. And then the last piece is that there are normal inflationary increases in our operating cost, things like merit increases on our compensation base or technology costs that either have an inflationary component or they go up with volume. And so that has to be factored in as well. and then that gets you to the at least $420 million in this next fiscal year. So to answer the question, I think you're thinking about it the right way. Hopefully, that walk-through makes it clear for everyone kind of what the components of the guidance are.

[Meredith Burns, VP, IR]

Wonderful. Thanks, Sean. All right. We're going to stick with the guidance here with another pre-submitted question for the at least $420 million in EBITDA and 40% free cash flow conversion. Would you expect it to be front half or back half weighted?

[Sean Quinn, EVP & CFO]

Yes, we didn't give quarterly guidance, although this is a clever way of trying to ask for it. We have normal seasonality to our profitability, and you can look back over many years and see some of those patterns. Q2 so the December quarter is typically our strongest for profitability. And then Q4, the June quarter is usually the second highest in terms of profitability, and that's a pattern that we do expect to continue in this next fiscal year.

In fiscal '23, it was actually the first time ever that our adjusted EBITDA in Q4 was higher than Q2. That won't be the norm. So you can expect that more kind of typical pattern Q2 being, we expect the highest quarter and then Q4, the second highest. So given that December quarter seasonality, I think it's fair to assume that we expect adjusted EBITDA to be a little bit more front half weighted to the point of the question. Keep in mind that the cost savings that we have will continue to come in throughout the year. And that's going to be mostly in our run rate by the time we get to the end of Q3. And so because of that, I'd expect that the year-over-year growth in our adjusted EBITDA that year-over-year growth should be higher in the first half of the year because more of those cost savings will be impacting that year-over-year comparison.

From a cash flow perspective, again, if you look at our historical cash flow patterns, you see some pretty typical patterns there quarter-by-quarter. Typically, our Q2 and Q4 are also the most favorable from a cash flow perspective. because it's the highest EBITDA quarters, but also given our working capital patterns. And again, we expect that to be the case for next year as well. So that should mean from a cash flow perspective, it's also slightly more front half loaded, but it really -- there really depends on some of the timing of working capital.

[Meredith Burns, VP, IR]

Thanks, Sean. All right. Sean, I'm going to stick with you. Can you speak to the long-term margin potential in the business? Could it get back to the mid or high teens? And if so, how do we get there?

[Sean Quinn, EVP & CFO]

Yes. We haven't giving guidance that far out. But if you maybe as a starting point, just do the math on the guidance that we've provided for this next fiscal year, that would yield about a 13% EBITDA margin. So heading in the right direction relative to 11% in FY '23. And what we've laid out for FY '24, and you'll see this in Robert's letter as well, is not -- certainly not the destination. That's just the next kind of point on the line, and we expect the trend of our results to continue favorably. And therefore, we expect that there is continued margin expansion opportunity in the years that follow that.

So I think that's probably as specific as I'll be. So I think we could get back to mid-high teens. I think we certainly could. And frankly, the reason that we don't talk a lot about that is because some of that is dependent on the level of investment -- organic investment that we have in any given year. And I think frankly, it can be a little bit misleading if we were to have that target because that can fluctuate year by year depending on organic investment levels. That's why we tend to focus more on the dollars of contribution as opposed to the market.

[Meredith Burns, VP, IR]

Thanks, Sean. We've got a live question that came in here on advertising for Vista. The question is how sustainable is the reduction in lower funnel advertising spend for Vista, which you can see in the earnings document and also a shout out for our financial and operating metrics spreadsheet where you can see the trend of these results as well.

[Sean Quinn, EVP & CFO]

Yes. I would encourage people to actually look at advertising spend altogether because what we're more and more as we continue to shift the mix of the channels that we're using, that mix between lower funnel and mid- and upper funnel should continue to evolve. I think that would be a very healthy thing. We're doing a lot of experimentation there. And so I would not look at lower funnel in any given quarter in isolation, I would look at that in total. That said, if you do look at it in total, year-over-year, as a percentage of revenue, our advertising is down quite a bit. There's about 700 basis points of margin leverage year-over-year.

I think last quarter, I had said that I expect that 15% to 17% of revenue on an annual basis is a fair range to assume. In Q4, we happen to be at the low end of that. We were at 15% of revenue. and I do think that, that is sustainable to be at the 15% to 17% which, again, is lower than where we go from. Certainly, if you look back kind of prior to the beginning of our transformation journey in Vista, we were at roughly 22% of revenue on a regular basis, this 15% to 17% is, I think, is absolutely sustainable, and we'll see quarter-by-quarter fluctuations in that. But on an annual basis, I think that's a fair range to continue to assume.

[Meredith Burns, VP, IR]

Thanks, Sean. Okay, quick hit. Are you done with cash restructuring payments after Q4?

[Sean Quinn, EVP & CFO]

There's $8 million left largely to go out in Q1. Some of that is from the cost reductions that we outlined back in March, which are focused on Vista and our central teams -- and then some of that is some time ago, we had disclosed that National Pen was migrating its European manufacturing from Ireland to Czech Republic, and that's coming to completion now. And so in Q1, we'll have some of the payments there. So $8 million is what's left for FY '24.

[Meredith Burns, VP, IR]

Thanks, Sean. All right. So a nice meta question here. What are the 1 or 2 biggest risks to meeting your guidance? Just a general recession?

[Sean Quinn, EVP & CFO]

I'll take this one and Robert, please jump in if you have anything to add. Certainly, a general recession would be one. I think we've fared well in the past in recessions. But I think in general, macro uncertainty would be on that list. But we can't control that until I'll try and highlight 1 or 2 things that would be in our control. I think just to take a step back, we feel quite confident in our profitability and our cash flow guidance based on the plans we have. And so there's always risk we've incorporated that to -- for everything that we know in our plants. We feel quite confident in that guidance and the plans that we have to support that.

That said, I think the 2 biggest risks that are outside of the kind of general macro are on the revenue side of the equation. And it would be, one, just making sure that we deliver the volume growth that we expect because we're lapping the pricing increases. And so more of our growth will come from volume. As I outlined earlier, we brought down our revenue growth expectations because of that. So again, we feel confident in our plans there, but that would be one risk. And then the second one is just after a period of higher prices, and there was a question that kind of was getting to this earlier. Does any of that pricing benefit reverse if we see a more favorable cost environment over the next year?

I think -- so those are the 2 risks I think we feel like we have plenty of levers when it comes to profitability and cash flow if any of those things were to happen. Input costs have stabilized, and we think there's opportunity for that in FY '24. If you think about our advertising spend, it's now more focused. We've driven a lot of efficiency there, and we're continually experimenting. So we feel good about the advertising spend line. And then we have a lot of control of our operating expenses, which we've now reduced. And so I think it really comes back to delivering the revenue. Our guidance is for at least 6% growth. That already reflects the fact that we've -- we're lapping price increases, as I said. If there were to be some reversal in pricing, I think that would most likely be because costs are coming down. And so from a profitability and cash flow perspective, I think there's less risk there.

[Meredith Burns, VP, IR]

Great. Thanks, Sean. All right. While we're talking about macro factors, Robert, this one's for you. Thus far, in Q1, have you seen any softening in the business environment across the various countries that Cimpress operates? Has there been any discounts or roll back to pricing by you or your competitors?

[Robert Keane, Founder, Chairman & CEO]

The short answer is no to both of those questions. From a regional perspective, Q4 was pretty balanced in terms of performance. There certainly there's nothing signaling that we'll see a change in that going forward. We have not seen signs of broad weakness, and we've not seen the need to do more discounting and roll back pricing. We do actively monitor competitive pricing, and there's nothing that we see at this time. We actually think there's still some price optimization available.

If in the future, pricing levels will retract in any categories as our costs come down and as the input costs for the industry come down, if that were to happen, just as in the past, when we had pricing pressure from competitors, we would not give up market share since we believe we can outlast our competitors and we certainly would be seeing in that situation. anyways, we're seeing costs come down and so we might have a revenue impact, but much less of an impact in terms of gross profit or EBITDA. So a quick summary is we don't see anything here. We continue to monitor it as always, but that's a quick summary.

[Meredith Burns, VP, IR]

Thanks, Robert. Okay. Let's get into some capital allocation and capital structure questions now. Sean, why don't you take this one? Why did you buy back bonds versus loans in Q4? Loans interest expense is likely higher due to the base rate.

[Sean Quinn, EVP & CFO]

Yes. We think this is a great use of capital. The weighted average interest rate on our outstanding term loan B debt was about 7.7%, if you include our at the end of June year. So yes, to the point of the question, the current rates are a bit higher for the term loans than the 7% coupon on our bonds. But the bonds were trading at a deeper discount than our loans. So the yield was much higher for those repurchases. And if you -- just to put that in perspective, during the window that we were buying, our bonds traded between 84% and 89% and our average purchase price was about 87%.

The U.S. dollar tranche of our term loan B during the same time period was trading in the 95% to 96% range. So again, a discount on our bonds at the time was much higher. The yield to maturity on our bond repurchases that we did in Q4, which, again, was referenced in the opening remarks, but we spent $45 million to buy $52 million of notional. The yield on that was 12%. Although if you were to assume that we refinance our bonds in advance their maturity, then the yield gets higher, you can make your own assumption there. The bonds also mature 2 years before our term loan B. And so maturity is something that we factor to those considerations as well. But again, we think this is a great use of capital, supports our delevering and very high yield.

[Meredith Burns, VP, IR]

Great. So a couple of questions here on a related note. So what do you view to be an adequate liquidity position? And do you view further bond repurchases as a capital allocation priority? And are you expecting to buy back bonds further? And what are the steps taken towards refinancing? So sorry, there's a couple of different types of topics in that one, but they're all related.

[Sean Quinn, EVP & CFO]

Okay. Well, I think right now, we have an adequate liquidity position. It's the cash and investments that we hold are in excess of what we view to be a minimum cash level. And so we're adequate now and -- but we're going to continue to build that liquidity or to say it another way, we expect to continue to reduce our net debt in FY '24. Do we expect to do further bond repurchases. I will give the exact same answer that we've given probably for 4 quarters now, which is, we look at it regularly, just like we look at any capital allocation opportunities. Over the last year, we've prioritized making sure that we have been building liquidity and we were able to continue to do that in Q4 despite spending significant capital on bond repurchases. So it's really dependent on yield and other opportunities but remains a priority for us to delever. So we'll remain focused on that, and we'll continue to look at opportunities to buy bonds if that opportunity is there.

In terms of steps taken towards refinancing, just for everyone's benefit. Our bonds have a 2026 maturity, our Term Loan B is 2028. So there's nothing that we need to be doing right now. Our focus will continue to be on delivering against the guidance that we've provided, which implies continued delevering and continued reduction of our net debt and quite a bit of continued expansion of our EBITDA delivering on those things will put us in a good position to, at the right time, refinance our bonds, but there's nothing we need to be doing in the near term. Again, it's something that we look at continually. We have views on when we should be doing that. But I think delivering on our FY '24 plans will put us in a position to take advantage of market opportunities when they exist after that. And so we'll keep our eye on that, but nothing to report right now.

[Meredith Burns, VP, IR]

Thanks, Sean. Robert, I'm going to throw this next one over to you. What are your goals for leverage on the business? And what would lead the Board to institute a dividend?

[Robert Keane, Founder, Chairman & CEO]

Okay. For the first question, we've said in multiple places, we -- yesterday, that we expect to exit FY '24 with net leverage below 3.25x our trailing 12-month EBITDA. And beyond FY '24, we're going to have flexibility to deploy capital opportunistically depending on what we see then, obviously, with the objective of increasing our per share intrinsic value. Now we almost said we hope to expect to maintain leverage similar or below our pre-pandemic levels. We don't have a specific leverage target but hopefully, that commentary is helpful to you in terms of the direction and what we expect this year and beyond.

We do not have any plans to implement a dividend. We believe there's other uses of capital that are better options for us. So it'd be not possible to even outline what we would lead us to institute a dividend. It's not in the picture and our capital allocation for the foreseeable future.

[Meredith Burns, VP, IR]

Thanks, Robert. Sean, a question for you. Where is the cash held, how much is held in the U.S. and is truly available?

[Sean Quinn, EVP & CFO]

Our main banking partners just in terms of our deposits, or JPM, Bank of America, HSBC, Citi, so that's probably not that surprising for folks. We -- in terms of where our investments are, we invest our excess cash based on our investment policy we have, that investment policy prioritizes principal protection over everything else. That's first and foremost. And then it also our policy has restrictions on things like weighted average maturity and so on. Our investments are in money market funds, government agencies, the highest credit corporate paper. You can see more details on that in our disclosure in our Ks and Qs.

The -- in terms of where the -- where our cash is held, it's held in multiple jurisdictions, just given the footprint of our business. And as an Irish company, our cash doesn't have to be in the U.S. or moved to the U.S. to be available. So that might be a little bit of a different context than whoever was asking the question. The vast majority of our cash, it is not trapped, so it's available. But again, it doesn't have to be in the U.S. to be available, which I think is what the question was getting at. We also have -- we use the notional cash flowing arrangement. So that allows our cash to be more accessible even if it's not in the same location at a given time.

[Meredith Burns, VP, IR]

Thanks, Sean. Robert, what leverage level do you want to achieve before resuming stock buyback and/or M&A?

[Robert Keane, Founder, Chairman & CEO]

Well, we've said we need to get our leverage to 3.25 by the end of the year. And after that, we look at other allocation opportunities. So I think it's certainly that or below. And we think our trajectory in our profits and cash flow should continue. And we've also said we want to operate at our pre-pandemic levels of leverage.

[Meredith Burns, VP, IR]

Great. Thanks, Robert. All right. So we've got one more question here that came in, and it was about a comment that we made in the annual letter that you made, Robert. So in the annual letter, you wrote that Cimpress plans to bring mass customization model to new products and categories. What type of specific products and categories are you referencing?

[Robert Keane, Founder, Chairman & CEO]

So they're very much in line with what we've done for the last 30 years where we've expanded our physical typically printed or other forms of personalization, so it can be promotional products, packaging, labels, books, catalogs, magazines, these are all products you can see on at least one or more of our sites right today. And then it's a question also of just going and expanding the depth of our product offering in any given category and the breadth of that offering. So it could be different variations available in terms of finishing, being competitive at multiple different levels of quantities. We're never going to get into very high volume printing, but expanding up into mid volumes. So it's nothing that would surprise anyone who is familiar with what we've done over the last 30 years.

[Meredith Burns, VP, IR]

Thanks, Robert. I know I'm looking forward too. A lot more innovation to come from all of our businesses on that front over the next years. So with that, those are the questions that we've had for the call. So Robert, why don't you sign us off here with a few parting remarks.

[Robert Keane, Founder, Chairman & CEO]

Okay. Well, thank you, Meredith. Thank you, Sean. And of course, thank you all for listening. We finished up another fiscal year where I think we've demonstrated our ability to deliver financial results that were in line with guidance, which when we gave it, I know that people were saying, well, how are you going to expand that quickly and certainly delivering those financial results and line with that guidance is important to me, to others on the Board and our senior leaders. We all have aligned economic incentives that are consistent with the incentives or alignment we would need for our long-term shareholders. And so as I've discussed in the annual letter, which we published last night, we certainly look forward to FY '24. And that year, we're going to be very focused on improving our customer value proposition further and gaining operational momentum and execution momentum on a very clear strategy that we have in a very large market.

So I would, once again, encourage you all to read that letter to understand how we think about capital allocation and intrinsic value per share. And that really gives you a complementary perspective in addition to the quarterly release, we also put out last night. So thank you very much for all your questions. Thank you for your interest in Cimpress, and we look forward to speaking to you in the not-too-distant future.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.