Net sales were $3.9 billion in 2019 as compared to $4 billion in 2018, down 1.6%. Organic sales declined 3.5% after excluding sales related to the acquisitions of Ivie and Periscope, and investment in Rise Interactive.
The organic results reflect new sales generated from the company’s Quad 3.0 growth strategy, offset by ongoing print industry volume and pricing pressures, and a negative 0.6% impact from foreign exchange.
Net loss attributable to Quad common shareholders was $156 million in 2019, or $3.12 diluted loss per share, as compared to net earnings of $9 million in 2018, or $0.16 diluted earnings per share. Adjusted EBITDA was $335 million in 2019, as compared to $428 million in 2018, and the adjusted EBITDA margin was 8.5% in 2019, as compared to 10.7% in 2018.
Net sales in 4Q 2019 were $1.1 billion in 2019, down 4.9% from 2018. Organic sales declined 5.9% during the quarter, after excluding sales related to the January 2019 acquisition of Periscope. The organic results benefitted from new sales generated from the Company’s Quad 3.0 growth strategy, which were offset by ongoing print industry volume and pricing pressures, and a negative 0.3% impact from foreign exchange.
Net earnings attributable to Quad common shareholders in 4Q 2019 were $8 million in 4Q 2019, or $0.15 diluted earnings per share, as compared to net loss of $21 million in 2018, or $0.42 diluted loss per share. Adjusted EBITDA was $96 million in 2019, as compared to $118 million in 2018, and adjusted EBITDA margin was 9% in 2019, as compared to 10.5% in 2018.
“I am pleased to report that our fourth-quarter results exceeded expectations, driven by continued execution against our strategic priorities, including aggressive cost management and increased manufacturing productivity. We had one of the best quarters in the past decade in terms of customer service performance, achieving strong quality and on-time delivery for our clients in their busiest season. This strong performance is due, in large part, to our decision to invest $40 million to increase hourly production employees’ wages, as we saw significant productivity gains throughout the quarter,” said Joel Quadracci, chairman, president and CEO.
“In 2020, we will continue to make prudent, long-term decisions as we accelerate the transformation of our company as a marketing solutions partner with a strong foundation in print,” Quadracci continued. “This transformation, which we call Quad 3.0, is focused on counteracting ongoing print industry vol-ume declines in order to reposition the business toward growth. During 2019, this strategy led to $225 million of organic incremental sales growth, helping to significantly offset print sales decline. Our ultimate goal is to completely offset the organic sales decline through the growth of our higher-margin marketing solutions, which drive revenue across all our products and services.
“We continue to win segment share, which reflects the strength of our offering as well as the long-term financial and operational stability of our company,” added Quadracci. “We recently secured 100% of print volumes from two large national magazine publishers, and are onboarding that multi-year work now. We also continue to optimize our product portfolio for the long term through the lens of Quad 3.0. Most recently we divested our Omaha packaging plant to focus on our higher value packaging solutions that help clients create a cohesive brand experience across channels. This follows our decision to divest our book business and sell our industrial wood crating business in 2019.”
Free cash flow, excluding $61 million in payments from a terminated acquisition, was $106 million in 2019, as compared to $164 million in 2018, primarily due to lower net earnings and increased capital expenditures on long-term investments in automation and productivity improvements in the manufacturing platform.
“In fiscal 2020, we remain disciplined in our efforts to manage our costs, and drive earnings and free cash flow growth to reduce our leverage and further strengthen our balance sheet,” said Dave Honan, EVP and CFO. “In line with these goals, we have doubled our previously announced $50 million cost reduction program to $100 million, which we expect to fully realize in 2020. Looking ahead, these efforts, and the ongoing success of our Quad 3.0 strategy, are expected to continue to significantly offset ongoing print industry volume and pricing pressures.”