Quad Reports 1Q 2023 Results

Quad/Graphics, Inc. reported results for the first quarter ended March 31, 2023.

Net sales were $767 million in the first quarter of 2023, an increase of 3% compared to the same period in 2022, despite the impact from the sale of the company’s Argentina print operations in December 2022. Net sales growth in the first quarter was primarily driven by higher print product sales in the US and in Mexico and also increased Agency Solutions sales.

Reported net loss of $25 million compared to net loss of $1 million in the first quarter of 2022, while growing adjusted EBITDA by $11 million or 24% to $60 million in the first quarter of 2023, compared to adjusted EBITDA of $49 million in the first quarter of 2022.

“We continue to experience positive momentum and top-line growth, achieving a 3% increase in net sales in the first quarter of 2023 due to higher sales in our print product and Agency Solutions offerings,” Joel Quadracci, chairman, president and CEO of Quad, said.

“High-profile brands and marketers continue to recognize that better marketing is built on Quad,” Quadracci added. “As a marketing experience, or MX, company, we have uniquely scalable, cross-channel solutions and extraordinary household reach, which power our integrated marketing offering, improving results while reducing friction and creating a more efficient overall marketing process.
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“Economic uncertainty has prompted some clients to take a more conservative approach to the start of the year and, in many instances, reallocate where they invest their marketing dollars,” he continued. “Our integrated marketing offering easily supports these shifts in marketing spend to maximize results. We are able to offset softness in offerings, such as national magazines, while leaning into growth opportunities in others, like agency solutions, packaging and instore. We have flexibility and agility to pivot and meet changing client needs.”

Free cash flow decreased $43 million from last year to negative $79 million in the first quarter of 2023. The decline in free cash flow was primarily due to the timing of working capital and increased capital expenditures to invest in our platform to drive sales growth and automation efficiencies. As a reminder, the company historically generates the majority of its free cash flow in the fourth quarter of the year.

“We started 2023 strong, building on the momentum from clients embracing our innovative integrated marketing offerings combined with disciplined cost management,” Tony Staniak, CFO of Quad, said. “This resulted in 3% net sales growth and 24% adjusted EBITDA growth in the first quarter compared to 2022. We also returned value to shareholders during the first quarter by continuing to repurchase shares. We are expecting to achieve the low end of our long-term targeted debt leverage range of 2.0x-2.5x by the end of 2023.”