The company developed and launched Quad’s Safe-at-Work Program to proactively protect employee health and well-being during the COVID-19 pandemic, as the company continued to operate as an essential business, and delivered strong a first quarter despite reduction in near-term client demand due to the COVID-19 pandemic.
Net sales were $823 million in 2020, down 14.4% from 2019. Organic sales declined 13.3% during the quarter, after excluding the impact of the sale of the Omaha packaging plant. The organic results reflect ongoing print industry volume and pricing pressures, including the initial impact from COVID-19 pandemic, and a negative 0.4% impact from foreign exchange.
Excluding the results from discontinued operations, net loss from continuing operations was $9 million in 2020, or $0.17 diluted loss per share, as compared to net loss from continuing operations of $13 million in 2019, or $0.25 diluted loss per share. Adjusted EBITDA was $75 million in 2020, as compared to $78 million in 2019, while Adjusted EBITDA margin improved to 9.2% in 2020, as compared to 8.2% in 2019.
Net cash provided by operating activities increased by $103 million and was $45 million in 2020, as compared to net cash used in operating activities of $58 million in 2019, primarily due to improvements in working capital.
Free cash flow increased by $116 million and was $16 million in 2020, as compared to negative $101 million in 2019, primarily due to improvements in working capital and a $16 million decrease in capital expenditures.
“Our first quarter performance exceeded our expectations until mid-March, when we started to feel the initial disruption from COVID-19,” said Joel Quadracci, Quad chairman, president and CEO. “Since then, we have seen a meaningful impact to customer demand in certain end markets, primarily in retail, as a result of the pandemic. As this unprecedented situation continues to evolve, our main priority is protecting our employees’ health and well-being, and serving our clients while also ensuring the financial health of the company.
“We were able to deliver strong first quarter results, in part, by taking early and swift action to align our cost structure to lower volumes in certain product categories, thereby protecting our balance sheet, and preserving cash flow and liquidity,” Quadracci added. “We are focused on taking care of our employees through Quad’s Safe-at-Work Program and are continuing to monitor and respond to the ever-changing economic landscape.
“Throughout this disruptive time, we have leveraged our unique integrated marketing platform to better serve our clients,” Quadracci continued. “I am proud of Quad’s ability to continue to quickly innovate new products, services and solutions for our clients — and for our employees — to help navigate the impacts of the pandemic. For example, to protect our employees at work, we began producing our own hand sanitizer and designed our own non-medical face masks, which are being mass-produced on our existing printing press equipment.
“We are currently planning for the reopening of the economy under multiple scenarios based on our clients’ advertising and marketing needs,” Quadracci concluded. “We expect this to be a gradual ramp-up over time to a ‘new normal’ as the economy emerges from the pandemic.”
“In the midst of this pandemic, we responded quickly with multiple cost reduction and cash conservation efforts to deliver strong first quarter operating and cash performance, including the generation of $16 million of free cash flow and lowering our debt leverage ratio to 3.0x, net of excess cash,” Dave Honan, EVP and CFO, concluded: “We have significant liquidity and no material maturities in our debt capital structure until May of 2022, which allows us to have significant financial flexibility to adapt to the uncertain economic impacts of the COVID-19 pandemic.”