Quad Reports 4Q, Full-Year 2021 Results

Quad/Graphics, Inc. reported results for the fourth quarter and full year ended Dec. 31, 2021.

Quad increased net sales 1% (3% excluding divestitures) in 2021, driven by higher print volumes, including print segment share gains from new clients, growth in Agency Solutions net sales, and increased pricing in response to inflationary cost pressures.

The company reported $137 million of net cash from operating activities and free cash flow of $87 million in 2021, while divesting non-core assets, generating $166 million of cash proceeds in 2021. Quad reduced net debt by $410 million or 40% over the past two years, reaching debt leverage of 2.5x.

Net sales for the year ended Dec. 31, 2021 were $3 billion in 2021, up 1% from 2020. Excluding divestitures, net sales increased 3% compared to 2020. The net sales increase in 2021 was due to a 1% increase in year-over-year print net sales, a 12% increase in year-over-year logistics net sales and a 7% increase in year-over-year Agency Solutions net sales. Adjusted EBITDA was $246 million in 2021, as compared to $260 million in 2020.

Net sales were $855 million in the fourth quarter of 2021, up 1% from the same period in 2020. Excluding the divestiture of QuadExpress, a third-party logistics (3PL) business, net sales increased 5% from the fourth quarter of 2020. The net sales increase during the fourth quarter was due to a 4% increase in year-over-year print net sales and a 4% increase in year-over-year Agency Solutions net sales.

Adjusted EBITDA was $56 million in the fourth quarter of 2021, as compared to $64 million in the same period in 2020. The higher profit from increased net sales was more than offset by cost inflation and the negative impact on labor productivity and sales from supply chain disruptions.

“Our sales growth and strong execution helped us drive strong full-year results, including a 3% increase in net sales excluding divestitures,” said Joel Quadracci, chairman, president and CEO of Quad. “Those results were supported by higher print volumes, including print segment share gains from new clients, continued growth in Agency Solutions, and increased pricing in response to inflationary cost pressures. These results validate our business strategy as a marketing solutions partner with a complete through-the-line offering – from innovation to execution – that delivers more value to clients.

“We were able to grow and diversify sales despite a challenging operating and economic environment that included significant supply chain disruptions, inflationary cost pressures and labor shortages,” Quadracci continued. “Notably, we have reduced net debt by 40% over the past two years, and, with our strong balance sheet, we continue to invest strategically in talent, technology, products and services to accelerate our position as a marketing solutions partner.”

“New client wins and disciplined operational performance, despite significant supply chain challenges, a tight labor and freight market, and inflationary cost pressures, drove strong results in 2021 evidenced by achieving or exceeding our 2021 guidance,” Quad CFO Tony Staniak concluded. “We grew net sales excluding divestitures by 3% in 2021 while increasing sales diversification into our growth and higher-profitability offerings, and at the mid-point of our 2022 guidance we expect an additional 5% sales growth in 2022. We also continue to be a strong free cash flow generator, and we used that cash along with proceeds from asset sales to return to our long-term targeted leverage range of 2.0x to 2.5x.”