Quad Reports Third Quarter and Year-to-Date 2021 Results

Quad/Graphics, Inc. reported results for the third quarter of 2021.

Net sales were $706 million in the third quarter of 2021, up 4% from the same period in 2020. Excluding the divestiture of QuadExpress, a third-party logistics (3PL) business, organic net sales increased 7% from 2020, driven by higher print volumes, including print segment share gains from new clients, as well as a continued positive trend in Agency Solutions net sales.

The company increased net earnings from continuing operations by $12 million to $14 million during the third quarter of 2021 as compared to 2020, and achieved a 6% increase in adjusted EBITDA to $64 million during the third quarter of 2021 as compared to 2020. Quad has reduced net debt by $140 million or 15% over the past 12 months.

“Our third quarter results were strong with higher print volumes, including print segment share gains from new clients, as well as a continued positive trend in Agency Solutions, all of which contributed to year-over-year organic growth of 7% in net sales,” Joel Quadracci, chairman, president and CEO of Quad, said.

“Our integrated marketing offering continues to be a competitive differentiator and a key driver behind our company’s overall organic growth,” Quadracci noted. “We are proud that some of the world’s most recognizable brands have chosen to partner with us for strategic marketing solutions, reflecting the strength of our offering and ability to deliver more value through reduced complexity, increased efficiencies and enhanced marketing spend effectiveness across all media channels. We continue to build out and invest in the talent, technology, products and services that will further advance our value as a marketing solutions partner.”

Net sales were $2.1 billion in the nine months ended Sept. 30, 2021, up 1% from the same period in 2020. Excluding recent divestitures, organic net sales increased 2% compared to 2020. The net sales increase during the nine months ended Sept. 30, 2021 was due to a 13% increase in year-over-year logistics net sales and a 9% increase in year-over-year Agency Solutions net sales, while print net sales were flat between years (which includes a 14% decrease in first quarter net sales due to year-over-year impacts from the COVID-19 pandemic).

Net earnings from continuing operations were $59 million or $1.12 diluted earnings per share in the nine months ended Sept. 30, 2021, an increase of $80 million compared to the same period in 2020, which recorded a net loss of $21 million or $0.41 diluted loss per share from continuing operations.

Adjusted EBITDA was $190 million in the nine months ended Sept. 30, 2021, as compared to $196 million in the same period in 2020. The $6 million decrease was due to $39 million of temporary COVID-19 pandemic related cost savings in 2020, a $12 million benefit in 2020 from a change in the vacation policy, and the negative impact of cost inflation, partially offset by higher profit from increased net sales and a $9 million net gain from property insurance claims.

Net cash provided by operating activities decreased by $85 million to $22 million for the nine months ended Sept. 30, 2021, as compared to $107 million in the same period in 2020. Free cash flow decreased by $76 million to negative $20 million for the nine months ended Sept. 30, 2021, as compared to the same period in 2020.

Debt less cash and cash equivalents decreased by $74 million to $799 million as of Sept. 30, 2021, as compared to $873 million at Dec. 31, 2020.  The reduction was primarily due to cash generated from asset sales, including the divestiture of QuadExpress, a third-party logistics (3PL) business, and the sale and leaseback of the Chalfont, PA and West Allis, WI facilities.

“We achieved strong operational and financial performance in the third quarter as we grew net sales, adjusted EBITDA and adjusted EBITDA margin despite significant challenges from inflationary costs and supply chain disruptions,” Dave Honan, EVP and CFO, said. “As we look to the fourth quarter, our strong sales momentum and continued drive for operational excellence provides us with the confidence to reaffirm our full-year 2021 outlook.”