Quad Reports 3Q, Year-to-Date 2023 Results

Quad/Graphics, Inc. reported results for the third quarter ended Sept. 30, 2023.

Net sales were $700 million in the third quarter of 2023, a decrease of 16% compared to the same period in 2022 primarily due to lower print, paper and logistics sales, as well as the 2022 divestiture of the company’s Argentina print operations. Net loss was $3 million in the third quarter of 2023 compared to net earnings of $14 million in the third quarter of 2022.

Net sales were $2.2 billion in the nine months ended Sept. 30, 2023, a decrease of 7% from the same period in 2022 primarily due to lower paper, logistics and print sales, as well as the 2022 divestiture of the company’s Argentina print operations. Net loss was $33 million in the nine months ended Sept. 30, 2023, compared to net earnings of $18 million in the nine months ended Sept. 30, 2022.

Adjusted EBITDA was $57 million in the third quarter of 2023 as compared to $69 million in the same period in 2022. The decrease was due to lower sales and lower pension income, partially offset by benefits from improved manufacturing productivity and savings from cost reduction initiatives.

Adjusted EBITDA was $168 million in the nine months ended September 30, 2023, as compared to $173 million in the same period in 2022.

Quad increased net cash provided by operating activities by $71 million for the nine months ended Sept. 30, 2023, compared to the same period in 2022, and increased free cash flow by $61 million for the nine months ended Sept. 30, 2023, compared to the same period in 2022.

Free cash flow improved $61 million from last year to negative $18 million in the nine months ended Sept. 30, 2023, and included $27 million of free cash flow generation in the third quarter of 2023.

Overall, Quad reduced net debt by $132 million over the last 12 months to end the third quarter with a debt leverage ratio of 2.36x, which is within the company’s long-term targeted leverage range of 2.0x – 2.5x.

“Our flexible operating model and disciplined approach to managing all aspects of our business enabled us to deliver consistent, year-over-year EBITDA margins, strong free cash flow and reduce debt despite a challenging revenue environment that led us to lower our annual net sales guidance,” Joel Quadracci, chairman, president and CEO of Quad, said.

“We are on track to achieve our adjusted EBITDA, free cash flow and debt leverage ratio guidance and, by year end, will have reduced debt by over $560 million or 55% since January 1, 2020. With our strong balance sheet, we are able to continue making strategic investments in our business, accelerate our competitiveness as a marketing experience company, and position the business for improved growth opportunities as the economy improves, while returning capital to shareholders.

“Our distinction as a marketing experience, or MX, company resonates with brands and marketers because we seamlessly unite all the essential resources required for frictionless, scalable marketing execution,” Quadracci added. “As we continue to scale our integrated marketing offering, print will remain a core component of our business and the largest portion of our revenue mix. While we remain confident in our ability to manage for short-term cyclical impacts as well as long-term expected organic declines in certain print product lines, such as retail inserts, we are focused on driving investment in the complementary areas of data and analytics, media, client technology and more to ensure we fulfill our clients’ ever-expanding marketing needs.”

“Due to industry-wide print volume reductions, we are lowering our annual net sales guidance,” Tony Staniak, CFO of Quad, said. “Print volumes declined further than our projections in response to continued economic uncertainty, postal rate increases and the impact of rising interest rates on specific clients. Despite the top-line impact, our flexible business model and focus on cost management and labor productivity enabled us to maintain the midpoint of our guidance ranges for adjusted EBITDA and free cash flow.

“We continue to expect our debt leverage ratio to be approximately 2.0x by the end of 2023, representing the low end of our long-term targeted debt leverage range of 2.0x-2.5x, and we intend to reduce debt further in 2024,” Staniak added.