11.04.16
Quad/Graphics, Inc. reported results for its third quarter ending Sept. 30, 2016.
Net sales for the three months ended Sept. 30, 2016, were $1.1 billion, a 7.0% decrease from the three months ended Sept. 30, 2015. Organic sales decreased 4.6% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.0% impact), foreign exchange (-0.5% impact) and pass through paper sales (-2.9% impact). This decrease is consistent with annual guidance of down 4% to 7%. GAAP net earnings improved to $11 million during the three months ended Sept. 30, 2016.
The improvement in earnings year-over-year was due to better operating performance from ongoing improvements in manufacturing productivity and labor management, sustainable cost reductions, lower depreciation and amortization expense and lower restructuring and non-cash impairment charges. Third quarter Adjusted EBITDA increased $2 million to $122 million compared to $120 million in 2015, and Adjusted EBITDA margin improved to 11.5% compared to 10.5% last year. The increase in Adjusted EBITDA and Adjusted EBITDA margin primarily reflect enhanced operational efficiency and sustainable cost reductions.
“We are pleased with our third quarter performance, which reflects our ongoing focus on driving sustainable cost reductions, productivity improvements and operational efficiencies across our platform,” said Joel Quadracci, chairman, president and CEO of Quad/Graphics. “Our solid earnings and cash flow in the quarter further strengthened our balance sheet and support our sustainable dividend policy.”
Net sales for the nine months ended Sept. 30, 2016, were $3.1 billion, a 4.6% decrease from the nine months ended Sept. 30, 2015. Organic sales decreased 3.7% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.9% impact), foreign exchange (-0.7% impact) and pass through paper sales (-2.1% impact). GAAP net earnings improved to $7 million during the nine months ended September 30, 2016. Year-to-date Adjusted EBITDA increased $26 million to $340 million as compared to $314 million in 2015, and Adjusted EBITDA margin improved to 10.9% as compared to 9.6%. These year-to-date financial trends are consistent with the explanations provided for the third quarter.
GAAP net cash provided by operating activities was $260 million for the first nine months of 2016, an increase of $81 million, or 45%, over 2015. Correspondingly, Free Cash Flow was $202 million compared to $68 million in the first nine months of 2015, an increase of $134 million over 2015. Quad/Graphics generated three times more Free Cash Flow during the first nine months of 2016 than was generated through the same period of 2015. These improvements are due to the beneficial impacts from ongoing improvements in working capital levels, lower ongoing capital expenditures needs and increased earnings.
“Our operational efficiency and cost reduction programs have propelled us to stronger earnings and cash flow generation during the first nine months of 2016,” said Dave Honan, EVP and CFO. “We’ve used the strong cash flow to reduce debt by $346 million, or 23%, since peak debt levels at Sept. 30, 2015. The debt reduction, combined with increased earnings, resulted in a significant reduction of the debt leverage ratio from 3.07x at Sept. 30, 2015, to 2.37x at September 30, 2016. Our 2.37x leverage is well within our stated long-term targeted leverage range of 2.0x to 2.5x. We are also committed to our annual dividend of $1.20 per share, which represents less than 25% of Free Cash Flow.”
Quad/Graphics’ next quarterly dividend of $0.30 per share will be payable on Dec. 9, 2016, to shareholders of record as of Nov. 28, 2016.
Net sales for the three months ended Sept. 30, 2016, were $1.1 billion, a 7.0% decrease from the three months ended Sept. 30, 2015. Organic sales decreased 4.6% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.0% impact), foreign exchange (-0.5% impact) and pass through paper sales (-2.9% impact). This decrease is consistent with annual guidance of down 4% to 7%. GAAP net earnings improved to $11 million during the three months ended Sept. 30, 2016.
The improvement in earnings year-over-year was due to better operating performance from ongoing improvements in manufacturing productivity and labor management, sustainable cost reductions, lower depreciation and amortization expense and lower restructuring and non-cash impairment charges. Third quarter Adjusted EBITDA increased $2 million to $122 million compared to $120 million in 2015, and Adjusted EBITDA margin improved to 11.5% compared to 10.5% last year. The increase in Adjusted EBITDA and Adjusted EBITDA margin primarily reflect enhanced operational efficiency and sustainable cost reductions.
“We are pleased with our third quarter performance, which reflects our ongoing focus on driving sustainable cost reductions, productivity improvements and operational efficiencies across our platform,” said Joel Quadracci, chairman, president and CEO of Quad/Graphics. “Our solid earnings and cash flow in the quarter further strengthened our balance sheet and support our sustainable dividend policy.”
Net sales for the nine months ended Sept. 30, 2016, were $3.1 billion, a 4.6% decrease from the nine months ended Sept. 30, 2015. Organic sales decreased 3.7% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.9% impact), foreign exchange (-0.7% impact) and pass through paper sales (-2.1% impact). GAAP net earnings improved to $7 million during the nine months ended September 30, 2016. Year-to-date Adjusted EBITDA increased $26 million to $340 million as compared to $314 million in 2015, and Adjusted EBITDA margin improved to 10.9% as compared to 9.6%. These year-to-date financial trends are consistent with the explanations provided for the third quarter.
GAAP net cash provided by operating activities was $260 million for the first nine months of 2016, an increase of $81 million, or 45%, over 2015. Correspondingly, Free Cash Flow was $202 million compared to $68 million in the first nine months of 2015, an increase of $134 million over 2015. Quad/Graphics generated three times more Free Cash Flow during the first nine months of 2016 than was generated through the same period of 2015. These improvements are due to the beneficial impacts from ongoing improvements in working capital levels, lower ongoing capital expenditures needs and increased earnings.
“Our operational efficiency and cost reduction programs have propelled us to stronger earnings and cash flow generation during the first nine months of 2016,” said Dave Honan, EVP and CFO. “We’ve used the strong cash flow to reduce debt by $346 million, or 23%, since peak debt levels at Sept. 30, 2015. The debt reduction, combined with increased earnings, resulted in a significant reduction of the debt leverage ratio from 3.07x at Sept. 30, 2015, to 2.37x at September 30, 2016. Our 2.37x leverage is well within our stated long-term targeted leverage range of 2.0x to 2.5x. We are also committed to our annual dividend of $1.20 per share, which represents less than 25% of Free Cash Flow.”
Quad/Graphics’ next quarterly dividend of $0.30 per share will be payable on Dec. 9, 2016, to shareholders of record as of Nov. 28, 2016.