Quad Reports Second Quarter, Year-to-Date 2022 Results

Quad/Graphics, Inc. reported results for the second quarter ended June 30, 2022.

Net sales were $758 million in the second quarter of 2022, reflecting topline growth of 9% from the same period in 2021. Excluding the divestiture of QuadExpress, a third-party logistics (3PL) business, net sales increased 14% from the second quarter of 2021. Net sales growth was achieved across all of our offerings due to increased pricing in response to inflationary pressures, print segment share gains and onboarding new clients in Agency Solutions.

Net earnings were $5 million in the second quarter of 2022 as compared to net earnings of $34 million in the second quarter of 2021. Adjusted EBITDA was $56 million in the second quarter of 2022, a decline from $63 million of adjusted EBITDA in the same period last year.

“Our second quarter net sales increase of 14% excluding divestitures exceeded our expectations,” Joel Quadracci, chairman, president and CEO of Quad, said. “This strong growth included print segment share gains and net sales growth across all of our offerings. Increasingly, brand owners and marketers are recognizing our unique value as a marketing experience company.

“Our team continues to work diligently to mitigate the impacts of macro-economic headwinds, including ongoing supply chain constraints that impacted productivity and cost inflation,” Quadracci added. “This included implementing an additional price increase in mid-May. We also made investments in the first half of the year to serve our clients well and drive higher sales and profitability during our seasonally busier second half of the year, where we see continued strong demand.”

Net sales were $1.5 billion in the six months ended June 30, 2022, up 7% from the same period in 2021, or up 12% excluding the QuadExpress divestiture. Net sales growth was achieved across all offerings due to increased pricing in response to inflationary pressures, print segment share gains and onboarding new clients in Agency Solutions.

Net earnings were $4 million in the six months ended June 30, 2022, as compared to net earnings of $45 million in the six months ended 2021. The decrease is primarily due to $35 million ($26 million, net of tax) of gains in 2021 on the sale of QuadExpress, and sale and leaseback of the Chalfont, PA, facility.

Adjusted EBITDA was $105 million in the six months ended June 30, 2022, a decline from $133 million of adjusted EBITDA in the same period in 2021. These declines were primarily due to the negative impact of supply chain disruptions on productivity, investments in hiring and training labor in advance of the peak production season during the second half of the year, and cost inflation, which was partially offset by net sales growth.

Free cash flow decreased $119 million from last year to negative $57 million in the six months ended June 30, 2022. The decline in free cash flow was primarily driven by higher working capital in 2022 including increased inventory levels from higher costs on commodities and supply chain challenges with resulting longer lead times. 

“We continue to deliver a one-of-a-kind marketing experience to our clients and achieved a fifth consecutive quarter of net sales growth,” Tony Staniak, CFO of Quad, said. “We are poised to serve our clients well while growing sales and profitability in the second half of 2022 due to client demand of our through-the-line marketing offering, combined with our proactive measures to hire and train labor, and build inventory levels heading into our peak production period.”