Quad Reports 4Q, Full-Year 2020 Results

Noting the second straight quarter of sequential improvement in net sales since the beginning of the pandemic, Quad/Graphics, Inc. reported results for its fourth quarter and full year ending Dec. 31, 2020.

Quad improved its adjusted EBITDA margin to 8.9% in 2020 from 8.5% in 2019 despite print industry volume and pricing pressures and the impact of the COVID-19 pandemic.

Delivered cash from operating activities of $190 million and free cash flow of $129 million, increases of $35 million and $23 million compared to 2019, respectively. Meanwhile, Quad reduced debt by $184 million during 2020, ending the year with a Debt Leverage Ratio of 3.35x.

“We are pleased that our consistent and strong operating performance delivered solid full-year results with higher adjusted EBITDA margin and cash flow, which helped us overcome a year of unprecedented challenges due to the global pandemic,” said Joel Quadracci, chairman, president and CEO of Quad.

“We were able to increase print segment share while advancing our revenue diversification efforts in integrated solutions and targeted print,” Quadracci said. “We continued to strengthen our platform and position as a marketing solutions partner through the optimization of our product portfolio, which included investments in growth-focused areas of our business and divestments of our non-core assets, such as our Book platform – the proceeds of which we used to pay down debt. We also intensified our commitment to diversity, equity and inclusion.”

Net sales for the three months ended Dec. 31, 2020 were $843 million in 2020, down 21% from 2019, primarily due to the economic impact from the COVID-19 pandemic, and ongoing print industry volume and pricing pressures.

However, the fourth quarter decline represents another quarter of sequential revenue improvement during the pandemic, as compared to a 28% decline in the third quarter of 2020 and a 38% decline in the second quarter of 2020.

Net loss from continuing operations was $86 million in 2020, or $1.69 diluted loss per share, as compared to net earnings of $7 million, or $0.14 diluted earnings per share in 2019. Adjusted EBITDA was $64 million in 2020, as compared to $96 million in 2019.

Net sales were $2.9 billion in 2020, down 25% from 2019, primarily due to the economic impact from the COVID-19 pandemic, and ongoing print industry volume and pricing pressures.

Net loss from continuing operations was $107 million in 2020, or $2.10 diluted loss per share, as compared to a net loss of $56 million, or $1.11 diluted loss per share in 2019. Adjusted EBITDA was $260 million in 2020, as compared to $335 million in 2019, while adjusted EBITDA margin improved to 8.9% in 2020, as compared to 8.5% in 2019.

Net cash provided by operating activities was $190 million in 2020, an increase of $35 million from 2019, primarily due to $40 million of income tax refunds received during the third quarter of 2020 due to the CARES Tax Act.

Free cash flow was $129 million in 2020, an increase of $23 million from 2019, primarily due to a $50 million decrease in capital expenditures.

“Our increased productivity and disciplined cost management delivered increased adjusted EBITDA margin in 2020 despite the sales impact of the COVID-19 pandemic,” Dave Honan, EVP and CFO, said. “While the pandemic impacted our client base, we achieved a second straight quarter of sequential improvement in net sales. With significant cash flow conversion and our ongoing commitment to debt reduction, we strengthened our balance sheet, paying down $184 million in debt during 2020 and ending the year with a debt leverage ratio of 3.35x.”