Quad Reports 3Q, Year-to-Date 2024 Results

Quad/Graphics, Inc. reported results for the third quarter ended Sept. 30, 2024.
Recent highlights included:
• Recognized net sales of $675 million in the third quarter of 2024 compared to $700 million in 2023, and realized net loss of $25 million or $0.52 Diluted Loss Per Share for the third quarter of 2024.
• Achieved non-GAAP adjusted EBITDA of $59 million in the third quarter of 2024, increased from $57 million in the third quarter of 2023.
• Increased adjusted EBITDA margin by 54 basis points to 8.7% in the third quarter of 2024 compared to the same period in 2023.
• Received $41 million of net cash proceeds from the sale of its former Saratoga Springs, NY, manufacturing facility.
• Entered into a definitive agreement to sell the majority of its European operations for an enterprise value of €41 million (approximately $45 million) to Capmont; expects to close the transaction by year end.
• Declared quarterly dividend of $0.05 per share.
• Updates full-year 2024 financial guidance, including Net Sales trending to the higher end of decline in its original guidance range, while maintaining guidance midpoints for adjusted EBITDA and free cash flow and improving anticipated year-end 2024 net debt leverage from approximately 1.8x to 1.5x.

“During the third quarter, we continued our focus on differentiating ourselves as a marketing experience, or MX, company, including investments in innovative solutions that align with our growth priorities,” Joel Quadracci, chairman, president and CEO of Quad, said. “I am pleased to report that our in-store retail media network is expanding and producing measurable results for both retailers and consumer brands. Already, we have launched a test phase of In-Store Connect by Quad in 15 stores with The Save Mart Companies and are rolling out testing phases with two additional grocery chains by year-end.

“In the third quarter, we also announced an exciting collaboration with Google Cloud to launch AI-powered solutions that will enable brands to create highly personalized content at scale across multiple marketing channels. By combining our data expertise with Google Cloud’s advanced AI capabilities, we not only will improve audience targeting, but will also reimagine how brands connect with consumers through streamlined, automated solutions that drive impactful results without compromising their unique brand voice.

“As always, we remain focused on delivering superior service to our clients while driving profitability, further enhancing Quad’s financial strength and creating shareholder value,” Quadracci added. “Last week, we announced our agreement to sell the majority of our European operations, which represents just 5% of our total net sales, to Capmont for an enterprise value of €41 million or approximately $45 million.

“This proposed sale aligns with Quad’s ongoing strategic focus to optimize our business portfolio for growth as an MX company. We expect to use proceeds from the sale to reduce debt and make further investments in our solutions suite. We will continue to maintain state-of-the-art print operations in locations that support our MX offering, including The Americas, with North America comprising our largest base of operations.”

“Our flexible operating model, higher labor productivity and disciplined approach to managing all aspects of our business enabled us to deliver higher adjusted EBITDA margin in the third quarter and on a year-to-date basis compared to the prior year, despite net sales pressure,” added Tony Staniak, CFO of Quad. “We also continued to be a strong cash generator, including realizing $41 million of net proceeds from the sale of our former Saratoga Springs, New York, manufacturing facility, and we expect to receive approximately $32 million in cash and $13 million in debt reduction for a total enterprise value of approximately $45 million by year end from the sale of the majority of our European operations.”

“Our full-year net sales is trending toward the higher end of decline in our original guidance range; however, we are maintaining the midpoints of our guidance ranges for adjusted EBITDA and free cash flow due to increased manufacturing productivity and cost reductions,” Staniak reported. “With our strong cash generation, we expect to reduce net debt by over $700 million, or 68%, compared to January 1, 2020, to reach net debt leverage of approximately 1.5x.”