Net sales increased 3.8% during the first quarter ended March 31, 2019, to $1 billion, primarily from the impact of the Periscope acquisition. Organic sales declined 0.6% after excluding a 4.4% acquisition sales impact. The organic results reflect ongoing print industry volume and pricing pressures partially offset by an increase in paper sales.
Net loss attributable to Quad common shareholders during the first quarter of 2019 was $22.5 million, or $0.45 loss per share, as compared to a loss of $3.5 million, or $0.07 per share, in 2018.
The company achieved non-GAAP adjusted EBITDA of $70 million, within the company’s anticipated Q1 2019 guidance range of $65 million to $75 million, and non-GAAP adjusted diluted loss per share of $0.15.
“Our first quarter results were in-line with our expectations and reflect our consistent execution against strategic priorities,” said Joel Quadracci, Quad Chairman, president and CEO. “These priorities include making long-term strategic investments that further accelerate our Quad 3.0 transformation, such as our recent acquisition of Periscope, a leading independent creative agency that further enhances our integrated marketing solutions platform. We also continue to prepare for and work toward completing the acquisition of LSC Communications and expect the all-stock transaction to close in mid-2019. We believe this combination will strengthen our print platform to fuel our Quad 3.0 transformation and create further stability and value for our clients and shareholders. Our Quad 3.0 strategy is working as evidenced in new or expanded work with clients and is a significant driver behind our best quarterly organic sales performance since 2014.”
Free cash flow was negative $101 million as compared to negative $22 million in the first quarter of 2018. As a reminder, the company generates the majority of its free cash flow in the fourth quarter of the year.
“We remain on track for delivering our 2019 financial guidance,” said Dave Honan, Quad EVP and CFO. “We continue to expect a decrease in adjusted EBITDA in the front half of the year with growth in the back half of the year due to increasing synergies and revenues related to our Quad 3.0 integrated services offering as well as sustainable cost reductions and productivity improvements from the additional investments in our employees and automation.”