Net earnings improved during the second quarter of 2017 to $7 million, a $15 million increase, versus an $8 million net loss in 2016, despite a 6.7% decrease in net sales to $963 million. Organic sales decreased 4.8% due to ongoing industry volume and pricing pressures after excluding pass-through paper sales (-1.7% impact) and foreign exchange (-0.2% impact).
Second quarter 2017 non-GAAP adjusted EBITDA decreased $1 million to $97 million compared to $98 million in 2016; however, adjusted EBITDA margin improved to 10.0% from 9.5% in 2016.
Net earnings improved for the six months ended June 30, 2017, to $32 million, a $36 million increase, versus a $4 million net loss in 2016, despite a 5.4% decrease in net sales to $2.0 billion. Organic sales decreased 3.7% due to ongoing industry volume and pricing pressures after excluding pass-through paper sales (-1.5% impact) and foreign exchange (-0.2% impact). Diluted earnings per share improved to $0.62 during the six months ended June 30, 2017, compared to a $0.08 loss in 2016.
GAAP net cash provided by operating activities was $112 million for the first six months of 2017, a decrease of $107 million from 2016. Free cash flow was $69 million compared with $179 million for the previous year. This decrease over prior year was due to an expected reduction in benefits from ongoing working capital improvements, and a reduction in employee-related liabilities.
“Our second quarter results were in-line with our expectations and reflect our consistent, disciplined approach to improving productivity and sustainably reducing costs, which helps us remain the industry’s high-quality, low-cost producer,” said Joel Quadracci, chairman, president and CEO of Quad/Graphics. “We continue our strategic transformation into a marketing services provider that helps brand owners market their products, services and content more efficiently and effectively. We do this by leveraging our strong print foundation in combination with our deep expertise in workflow re-engineering and optimization, content management and data-driven marketing, including personalization, across all media channels. This transformation, which we refer to as ‘Quad 3.0,’ creates significant value for our clients by addressing their urgent marketing needs to improve process efficiencies and spend effectiveness.”
“We delivered second quarter results in-line with our expectations and, as we enter the seasonally busy second half of the year, we remain on track to deliver on our 2017 financial guidance,” said Dave Honan, EVP and CFO for Quad/Graphics. “As the industry’s high-quality, low-cost producer, we will continue to drive EBITDA enhancement through ongoing sustainable cost reductions and productivity improvements while remaining focused on our Quad 3.0 transformation. Equally important, we continue to focus on strengthening an already healthy balance sheet through ongoing debt reduction, while also continuing to invest in our business to accelerate our transformation and return capital to our shareholders through our quarterly dividend, among other priorities.”