Quad Upgraded by S&P to ‘BB-’ with Stable Outlook

Quad/Graphics, Inc. announced that S&P Global Ratings (S&P) upgraded its issuer credit rating for Quad to ‘BB-’ from ‘B+’ with a stable outlook. S&P also raised its issue-level rating on the company’s senior secured debt to ‘BB-’.

S&P based the rating upgrade primarily on Quad’s active debt repayment and improved leverage, and strong cost management practices amid ongoing revenue pressures.

In its research update, S&P noted: “Due to the Company’s rapid debt repayment, it now expects it will reduce its reported net leverage to 1.5x (approximately 2.3x on an S&P Global Ratings-adjusted basis) by the end of 2024.”

S&P added: “The stable outlook reflects our expectation that the Company’s S&P Global Ratings-adjusted leverage will remain below 3x and its free operating cash flow (FOCF) to debt will remain above 15% over the next 12 months, primarily due to its debt repayment (using the proceeds from its asset sales) and a modest improvement in its EBITDA margin to the 8%-9% range in 2024.”

“We are pleased to see S&P recognize Quad’s ongoing commitment to operational excellence and balance sheet strength – a reflection of our long-standing disciplined approach to managing all strategic and financial aspects of our business,” Joel Quadracci, Quad chairman, president and CEO, said. “With our strong cash generation and deleveraged balance sheet, Quad is well-positioned to continue making strategic investments in innovative solutions that align with our growth priorities as well as shareholder returns including dividends and share buybacks.”