Quad Reports Second Quarter, Year-to-Date 2024 Results

Quad/Graphics, Inc. reported results for the second quarter ended June 30, 2024.

Net sales were $634 million in the second quarter of 2024, a decrease of 10% compared to the same period in 2023 primarily due to lower print volumes, a higher mix of lower unit price gravure versus offset print in our magazine and catalog offerings from segment share wins, and lower paper and agency solutions sales, including the loss of a large grocery client.

Net loss was $3 million in the second quarter of 2024 compared to $6 million in the same period in 2023. The improvement is primarily due to benefits from increased manufacturing productivity, savings from cost reduction initiatives and a $4 million gain on the sale of the company’s minority investment in Manipal Technologies, partially offset by the impact from lower net sales.

Adjusted EBITDA was $52 million in the second quarter of 2024 compared to $50 million in the same period in 2023, primarily due to the same reasons as the improvement in net loss.

“During the second quarter, we continued our focus on differentiating ourselves as a marketing experience company, including investments in innovative solutions and superior talent,” Joel Quadracci, chairman, president and CEO of Quad, said. “We joined all of our creative business lines under a single agency called Betty, pairing the strategic creative services of an Agency of Record with our global production platform to offer highly scalable content at elevated speeds without sacrificing brand consistency or quality.

“We further enhanced our creative capabilities with the launch of 3D Commerce by Quad, the first commercially available automated and scalable 3D scanning solution in North America for creating photorealistic 3D assets for a range of applications, including product videos and virtual try-ons,” Quadracci added. “Meanwhile, we advanced our In-Store Connect retail media network, or RMN, through a partnership with Swiftly, a prominent retail technology and media company whose industry-leading platform will help us bring the best elements of digital commerce into physical store environments.

“As always, we remain focused on enhancing Quad’s financial strength and creating shareholder value and will continue to prioritize growth while further reducing debt in 2024.”

“During the second quarter, our adjusted EBITDA margin increased by 100 basis points primarily due to higher manufacturing productivity and cost savings from completed restructuring actions that are ultimately expected to generate $60 million of savings in 2024,” added CFO Tony Staniak. “We generate cash from free cash flow driven by our cost discipline as well as proceeds from asset sales, including $22 million in the second quarter of 2024 from the sale of our minority investment in Manipal Technologies.

“Net sales declined in the second quarter reflecting pressure from ongoing external headwinds, including significant postal rate increases and the impact of elevated interest rates on financial services clients,” Staniak noted. “Despite lower net sales, with our margin improvement and strong cash generation we are reaffirming our full-year guidance, including approximately 1.8x debt leverage, and we will continue to invest in accelerating our competitive position as a marketing experience company while returning capital to shareholders through our quarterly dividend. We also expect to be opportunistic in terms of our future share repurchases.”

Net sales were $1.3 billion in the six months ended June 30, 2024, a decrease of 12% compared to the same period in 2023 primarily due to lower print volumes, a higher mix of lower unit price gravure versus offset print in our magazine and catalog offerings from segment share wins, and lower paper and agency solutions sales, including the loss of a large grocery client.

Net loss was $31 million, or $0.65 diluted loss per share, in the six months ended June 30, 2024, compared to net loss of $31 million, or $0.62 diluted loss per share, in the same period in 2023. Adjusted EBITDA was $102 million in the six months ended June 30, 2024, a decrease of $8 million compared to the same period in 2023.

Free cash flow was negative $82 million in the six months ended June 30, 2024, compared to negative $45 million in the same period in 2023. Net debt was $532 million at June 30, 2024, compared to $470 million at Dec. 31, 2023, and $604 million at June 30, 2023