Quad Reports 2Q, Year-to-Date 2023 Results

Quad/Graphics, Inc. reported results for the second quarter ended June 30, 2023.

Net sales were $703 million in the second quarter of 2023, a decrease of 7% compared to the same period in 2022 primarily due to lower paper and print sales, as well as the 2022 divestiture of the company’s Argentina print operations.

Net loss was $6 million in the second quarter of 2023 compared to net earnings of $5 million in the second quarter of 2022.  The decrease is primarily due to lower sales, higher restructuring and impairment charges from recent plant closures, increased interest expense from rising interest rates, and lower pension income, partially offset by benefits from improved manufacturing productivity and savings from cost reduction initiatives.

Adjusted EBITDA was $50 million in the second quarter of 2023 as compared to $56 million in the same period in 2022.  The decrease was due to lower sales, partially offset by benefits from improved manufacturing productivity and savings from cost reduction initiatives.

“Our results for the second quarter of 2023 were in line with our expectations as we continue to advance as a marketing experience, or MX, company that brings together all the resources companies need for frictionless marketing execution,” said Joel Quadracci, chairman, president and CEO of Quad. “Through our uniquely integrated marketing platform, we help companies reduce the complexity they experience from working with multiple agency partners and vendors; increase their marketing process efficiency; and maximize the effectiveness of their marketing efforts.

“Our ability to seamlessly connect every facet of the marketing journey is the centerpiece of our new brand campaign, Built on Quad.  We launched the campaign in June in conjunction with the Cannes Lions Festival of Creativity – the premier gathering of the global advertising and creative communications industry.  Our uniqueness as an MX company resonates with brands and marketers.  Because we provide a better marketing experience for our clients, they can focus on delivering the best customer experience.

“While some marketers have reduced print volumes due to economic uncertainty and postage rate increases, we continue to help them through our holistic marketing solutions.  As these companies contemplate where and how to invest their marketing dollars, we remain ready to meet their needs with an integrated marketing platform that easily supports their shifts in marketing spend.  Printing continues to be a core part of our business, and a clear and competitive differentiator from traditional agencies.  Our reputation for quality, on-time production, ongoing investments in automation and equipment, and a well-trained, skilled workforce enables us to continue to gain segment share across all categories of print.”

Net sales were $1.5 billion in the six months ended June 30, 2023, a decrease of 2% from the same period in 2022 primarily due to lower paper sales and the divestiture of the company’s Argentina print operations.

Net loss was $31 million in the six months ended June 30, 2023, compared to net earnings of $4 million in the six months ended June 30, 2022.  The decrease is primarily due to lower sales, higher restructuring and impairment charges from recent plant closures, increased interest expense from rising interest rates, and lower pension income, partially offset by benefits from improved manufacturing productivity and savings from cost reduction initiatives.

Adjusted EBITDA was $111 million in the six months ended June 30, 2023, an increase of $6 million compared to the same period in 2022.  This increase was primarily due to benefits from improved manufacturing productivity and savings from cost reduction initiatives, partially offset by lower sales.

Free cash flow improved $12 million from last year to negative $45 million in the first six months ended June 30, 2023, and included $34 million of free cash flow generation in the second quarter of 2023. 

Net debt increased by $59 million to $604 million at June 30, 2023, as compared to $545 million at December 31, 2022, primarily due to the negative $45 million of free cash flow in the six months ended June 30, 2023. Compared to March 31, 2023, the company lowered the debt leverage ratio by 5 basis points to 2.34x, which is within its long-term targeted leverage range of 2.0x – 2.5x.