02.22.17
Quad/Graphics, Inc. reported fourth quarter and full-year 2016 results.
Net sales for the three months ended Dec. 31, 2016, were $1.2 billion, an 8.8% decrease from the three months ended Dec. 31, 2015. Organic sales decreased 6.3% due to ongoing industry volume and pricing pressures, after excluding foreign exchange (-0.3% impact) and pass-through paper sales (-2.2%).
Net sales for the year ended Dec. 31, 2016, were $4.3 billion, a 5.8% decrease from the year ended Dec. 31, 2015. Organic sales declined 4.5% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.4% impact), foreign exchange (-0.6% impact) and pass-through paper sales (-2.1% impact).
“We are pleased with our fourth quarter and full-year 2016 results, which exceeded our expectations and show that we more than accomplished what we set out to achieve at the start of the year,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “Throughout 2016, we continued to transform both our business and the industry through strategic investment in our assets and through the creation of new and innovative solutions designed to drive greater value for our clients. We also continued to implement sustainable cost reductions and productivity improvements while maintaining our focus on revenue to drive EBITDA enhancement.
“As we look forward to 2017, we plan to continue to take advantage of our unique position in the industry as both a global printer and a marketing services provider,” Quadracci added. “We will leverage our growing BlueSoho integrated marketing agency, as well as our strategic investment in Rise Interactive, to create innovative, end-to-end solutions for our customers that will allow them to improve both the efficiency and effectiveness of their media spend across multiple channels. Further, we will remain diligent in our aggressive management of costs and productivity to hold the line on Adjusted EBITDA margins. This will allow us to meet our goal of being the industry’s high-quality, low-cost producer, and generate strong Free Cash Flow to support value-creating opportunities as part of our company’s ongoing transformation as a global marketing services provider.”
GAAP net earnings improved to $38 million and GAAP diluted earnings per share improved to $0.73 per share during the three months ended Dec. 31, 2016. The improvement in earnings and diluted earnings per share was due to better operating performance from ongoing improvements in manufacturing productivity and labor management, sustainable cost reductions, lower depreciation and amortization expense and lower restructuring and non-cash impairment charges.
Fourth quarter 2016 Adjusted EBITDA decreased $14 million to $140 million compared to $154 million in 2015 due to lower net sales, and Adjusted EBITDA margin remained flat at 11.7% year-over-year due to lower cost of sales and selling, general and administrative expenses driven by enhanced efficiency and sustainable cost reductions.
GAAP net earnings improved to $45 million and GAAP diluted earnings per share improved to $0.90 per share during the year ended Dec. 31, 2016. Full-year 2016 adjusted EBITDA increased $11 million to $480 million compared to $469 million in 2015, and adjusted EBITDA margin increased to 11.1% in 2016 compared to 10.2% for the previous year.
GAAP net cash provided by operating activities was $353 million for the year ended December 31, 2016, an increase of $4 million, or 1%, over 2015. Free cash flow was $246 million compared to $215 million for the previous year. The $31 million, or 14% increase over the prior year was due to lower capital expenditures, increased earnings, and sustainable ongoing improvement in working capital levels.
“Quad/Graphics continues to generate significant free cash flow, which is important to maintaining a strong and flexible balance sheet that supports our disciplined capital deployment strategy,” said Dave Honan, Quad/Graphics EVP and CFO. “Our strong adjusted EBITDA and free cash flow throughout 2016 allowed us to reduce debt by $218 million and improve our year-end debt leverage ratio to 2.36x, which is well within our long-term targeted range of 2.0x to 2.5x.”
Net sales for the three months ended Dec. 31, 2016, were $1.2 billion, an 8.8% decrease from the three months ended Dec. 31, 2015. Organic sales decreased 6.3% due to ongoing industry volume and pricing pressures, after excluding foreign exchange (-0.3% impact) and pass-through paper sales (-2.2%).
Net sales for the year ended Dec. 31, 2016, were $4.3 billion, a 5.8% decrease from the year ended Dec. 31, 2015. Organic sales declined 4.5% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.4% impact), foreign exchange (-0.6% impact) and pass-through paper sales (-2.1% impact).
“We are pleased with our fourth quarter and full-year 2016 results, which exceeded our expectations and show that we more than accomplished what we set out to achieve at the start of the year,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “Throughout 2016, we continued to transform both our business and the industry through strategic investment in our assets and through the creation of new and innovative solutions designed to drive greater value for our clients. We also continued to implement sustainable cost reductions and productivity improvements while maintaining our focus on revenue to drive EBITDA enhancement.
“As we look forward to 2017, we plan to continue to take advantage of our unique position in the industry as both a global printer and a marketing services provider,” Quadracci added. “We will leverage our growing BlueSoho integrated marketing agency, as well as our strategic investment in Rise Interactive, to create innovative, end-to-end solutions for our customers that will allow them to improve both the efficiency and effectiveness of their media spend across multiple channels. Further, we will remain diligent in our aggressive management of costs and productivity to hold the line on Adjusted EBITDA margins. This will allow us to meet our goal of being the industry’s high-quality, low-cost producer, and generate strong Free Cash Flow to support value-creating opportunities as part of our company’s ongoing transformation as a global marketing services provider.”
GAAP net earnings improved to $38 million and GAAP diluted earnings per share improved to $0.73 per share during the three months ended Dec. 31, 2016. The improvement in earnings and diluted earnings per share was due to better operating performance from ongoing improvements in manufacturing productivity and labor management, sustainable cost reductions, lower depreciation and amortization expense and lower restructuring and non-cash impairment charges.
Fourth quarter 2016 Adjusted EBITDA decreased $14 million to $140 million compared to $154 million in 2015 due to lower net sales, and Adjusted EBITDA margin remained flat at 11.7% year-over-year due to lower cost of sales and selling, general and administrative expenses driven by enhanced efficiency and sustainable cost reductions.
GAAP net earnings improved to $45 million and GAAP diluted earnings per share improved to $0.90 per share during the year ended Dec. 31, 2016. Full-year 2016 adjusted EBITDA increased $11 million to $480 million compared to $469 million in 2015, and adjusted EBITDA margin increased to 11.1% in 2016 compared to 10.2% for the previous year.
GAAP net cash provided by operating activities was $353 million for the year ended December 31, 2016, an increase of $4 million, or 1%, over 2015. Free cash flow was $246 million compared to $215 million for the previous year. The $31 million, or 14% increase over the prior year was due to lower capital expenditures, increased earnings, and sustainable ongoing improvement in working capital levels.
“Quad/Graphics continues to generate significant free cash flow, which is important to maintaining a strong and flexible balance sheet that supports our disciplined capital deployment strategy,” said Dave Honan, Quad/Graphics EVP and CFO. “Our strong adjusted EBITDA and free cash flow throughout 2016 allowed us to reduce debt by $218 million and improve our year-end debt leverage ratio to 2.36x, which is well within our long-term targeted range of 2.0x to 2.5x.”
