“Our second quarter results were consistent with our expectations and we remain on track to achieve our 2014 objectives,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “We are pleased with our decision to acquire Brown Printing as it supports our ongoing strategy to create value for our clients and shareholders. Our integration efforts are underway and include a strong focus on serving our clients well while also improving the efficiency and productivity of our platform and driving future cost savings.”
For the second quarter of 2014, net sales were $1.1 billion, down 1% compared to the same period in 2013. Second quarter 2014 Adjusted EBITDA was $102 million as compared to $111 million for the same period in 2013, and Adjusted EBITDA Margin was 9.3% as compared to 10.0% in 2013. The quarterly results reflect expected volume and pricing pressures, as well as an $8 million decrease in Adjusted EBITDA due to certain event-driven favorable gains in 2013 that did not repeat in 2014, such as the resolution of certain legal, environmental and Worldcolor bankruptcy matters. These decreases were partially offset by lower employee related costs, including labor productivity improvements.
For the first six months of 2014, net sales were $2.2 billion, down 2% compared to the same period in 2013. Year-to-date Adjusted EBITDA was $209 million as compared to $225 million for the same period in 2013, and Adjusted EBITDA Margin was 9.5% as compared to 10.0% in 2013. The year-to-date results reflect trends that are consistent with those highlighted for the second quarter.
“We are increasing guidance for net sales and Adjusted EBITDA to reflect the contribution from the Brown Printing acquisition,” said Dave Honan, Quad/Graphics vice president and CFO. “We currently estimate full-year 2014 net sales to be in the range of $4.8 billion to $4.9 billion, increased from a prior guidance range of $4.6 billion to $4.8 billion, and full-year 2014 Adjusted EBITDA to be in the range of $535 million to $560 million, increased from a prior guidance range of $520 million to $550 million. We reiterate our annual 2014 guidance of Free Cash Flow to be between $155 million and $165 million, which reflects the EBITDA contribution from Brown Printing offset by the integration costs that are front-end loaded.
“As we move forward, we will continue to drive productivity improvements and implement sustainable cost reductions to be a low-cost producer,” Honan added. “We will also continue to manage our debt to maintain a strong balance sheet. The new debt capital structure we completed in April 2014 enhances our company’s financial flexibility by extending and staggering our debt maturity profile, further diversifying our capital structure, and providing more borrowing capacity to better position us to execute on our strategic goals.”
Quad/Graphics’ quarterly dividend of $0.30 per share will be payable on Sept.19, 2014, to shareholders of record as of Sept. 8, 2014.