Achieves 2023 guidance, including Net Debt
Leverage of 2.0x, and continues commitment to debt reduction by
lowering long-term targeted Net Debt Leverage range to 1.75x to
2.25x
Reinitiates quarterly dividend of $0.05 per
share
Quad/Graphics, Inc. (NYSE: QUAD) (“Quad” or the “Company”), a
global marketing experience company, today reported results for the
fourth quarter and full year ended December 31, 2023.
Recent Highlights
- Achieved 2023 guidance and reported Net Sales of $3.0 billion
in 2023 compared to $3.2 billion in 2022.
- Anticipating $60 million of cost savings from recent plant
capacity and labor reduction initiatives in response to ongoing
external headwinds, including significant postal rate increases and
economic uncertainty that negatively impact print volumes.
- Recognized a Net Loss of $55 million in 2023 compared to Net
Earnings of $9 million in 2022 primarily due to lower sales, higher
restructuring expenses and increased interest costs despite
decreasing debt.
- Achieved Adjusted EBITDA of $234 million and Adjusted EBITDA
Margin of 7.9% in 2023, compared to Adjusted EBITDA of $252 million
and Adjusted EBITDA Margin of 7.8% in 2022.
- Generated $148 million of Net Cash Provided by Operating
Activities and Free Cash Flow of $77 million in 2023.
- Reduced Net Debt by $564 million or 55% over the past four
years as part of a multi-year debt reduction strategy, achieving
Net Debt Leverage of 2.0x at December 31, 2023.
- Introduces 2024 guidance including using continued strong cash
generation to reduce Net Debt Leverage to approximately 1.8x and
lowering long-term targeted Net Debt Leverage range to 1.75x to
2.25x.
- Returned capital to shareholders by repurchasing 2.9 million
shares of Quad Class A common stock in 2023, bringing total
repurchases to 5.9 million shares since commencing buybacks in
2022, representing approximately 11% of Quad’s March 31, 2022,
outstanding shares.
- Reinstated quarterly dividend of $0.05 per share, and expect to
continue to be opportunistic in terms of our future share
repurchases.
Joel Quadracci, Chairman, President and CEO of Quad, said: “We
delivered solid full-year results primarily due to our strong
operating performance, which was partially offset by revenue
challenges created by significant postal rate increases and ongoing
economic uncertainty that negatively impacted print volumes.
Despite these challenging macro factors, we achieved our 2023
financial guidance, and were pleased with our cash generation,
which we continued to use to strengthen our balance sheet through
debt reduction. We ended the year having reduced net debt by $564
million or 55% since January 1, 2020.
“Our distinction as a global marketing experience, or MX,
company continues to gain traction with brands and marketers
because we offer a tailored suite of solutions that is flexible,
scalable and connected, and streamlines the complexities of
marketing, removing friction from wherever it occurs in the
marketing journey. As a result, our integrated marketing platform
provides a better marketing experience for our clients so they can
focus on delivering the best customer experience to theirs.
“We continue to make strategic investments to grow our business,
especially in areas such as data and analytics, media and client
technology. Earlier this month, we announced our acquisition of
DART Innovation, an in-store digital media solutions provider,
which further bolsters Quad’s retail expertise and offerings. With
DART’s capabilities and technology, we aim to revolutionize the
shopping experience for retailers, consumer packaged goods
companies and consumers by delivering targeted promotions on
digital screens right at the store shelf – the most critical moment
in the purchasing decision. This strategic investment expands and
seamlessly integrates into Quad’s suite of solutions, and enables a
frictionless consumer purchasing journey across home, online and
in-store.
“Looking ahead to 2024, our pipeline for new business remains
strong. We will prioritize growth across verticals and product
lines with the greatest expansion opportunities while continuing to
manage through headwinds in our core print business, including
expected postal rate increases for our clients in 2024. Despite
these headwinds, which also include the loss of a long-standing
client, we expect sustained strong cash generation in 2024, and we
will continue to strategically invest in innovative solutions and
superior talent to support future diversified revenue growth.”
Added Tony Staniak, Chief Financial Officer: “As always, we
remain focused on delivering top-quality service and solutions to
our clients while further enhancing our financial strength.
Although revenue headwinds will continue into 2024, we expect to
increase our Adjusted EBITDA margin due to an anticipated $60
million in cost savings from recent plant capacity and labor
reduction initiatives. We will use our continued strong cash
generation to further reduce Net Debt, and are lowering our
long-term targeted Net Debt Leverage range to 1.75x to 2.25x. While
reducing debt, we will also invest in accelerating our competitive
position as an MX company and return capital to shareholders
through our reinstated quarterly dividend. We also expect to be
opportunistic in terms of our future share repurchases.”
Summary Results
Results for the fourth quarter ended December 31, 2023,
include:
- Net Sales — Net Sales were $788 million in the fourth quarter
of 2023, a decrease of 11% compared to the same period in 2022
primarily due to lower paper, print and logistics sales, as well as
the 2022 divestiture of the Company’s Argentina print
operations.
- Net Loss — Net Loss was $22 million in the fourth quarter of
2023 compared to Net Loss of $9 million in the fourth quarter of
2022. The decrease is primarily due to lower sales, increased
interest expense from elevated interest rates, and lower pension
income, partially offset by benefits from improved manufacturing
productivity and savings from cost reduction initiatives.
- Adjusted EBITDA — Adjusted EBITDA was $66 million in the fourth
quarter of 2023 as compared to $79 million in the same period in
2022. The decrease was due to lower sales and lower pension income,
partially offset by benefits from improved manufacturing
productivity and savings from cost reduction initiatives.
- Adjusted Diluted Earnings Per Share — Adjusted Diluted Earnings
Per Share was $0.23 in the fourth quarter of 2023, as compared to
$0.41 in the fourth quarter of 2022, primarily due to lower
adjusted net earnings and partially offset by the beneficial impact
from the Company repurchasing Class A shares totaling approximately
11% of its outstanding shares beginning in the second quarter of
2022, for a total purchase price of $23 million.
Results for the year ended December 31, 2023, as compared to our
2023 financial guidance, include:
Financial Metric
2023 Results
2023 Guidance
Annual Net Sales Change
8% decline
7% to 9% decline
Full-Year Adjusted EBITDA
$234 million
$220 million to $240 million
Free Cash Flow
$77 million
$60 million to $80 million
Capital Expenditures
$71 million
$70 million to $75 million
Year-End Debt Leverage Ratio
2.0x
Approximately 2.0x
- Net Sales — Net Sales were $3.0 billion in 2023, a decrease of
8% from 2022 primarily due to lower print, paper and logistics
sales, as well as the 2022 divestiture of the Company’s Argentina
print operations.
- Net Loss — Net Loss was $55 million in 2023, compared to Net
Earnings of $9 million in 2022. The decrease is primarily due to
lower sales, higher restructuring and impairment charges, increased
interest expense from elevated interest rates, and lower pension
income, partially offset by benefits from improved manufacturing
productivity and savings from cost reduction initiatives.
- Adjusted EBITDA — Adjusted EBITDA was $234 million in 2023,
compared to $252 million in 2022. The decrease was primarily due to
$11 million of lower pension income as well as the impact of lower
sales, partially offset by benefits from improved manufacturing
productivity and savings from cost reduction initiatives.
- Adjusted Diluted Earnings Per Share — Adjusted Diluted Earnings
Per Share was $0.52 in 2023, compared to $0.89 in 2022.
- Net Cash Provided by Operating Activities and Free Cash Flow —
Net Cash Provided by Operating Activities was $148 million in 2023,
compared to $155 million in 2022. Free Cash Flow was $77 million in
2023, compared to $94 million in 2022. The decline in Free Cash
Flow was primarily due to $11 million of increased capital
expenditures as the Company continues to invest in its automation
initiatives and $7 million of lower Net Cash Provided by Operating
Activities.
- Net Debt — Net Debt decreased by $75 million to $470 million at
December 31, 2023, as compared to $545 million at December 31,
2022. The Debt Leverage Ratio decreased to 2.0x at December 31,
2023, from 2.2x at December 31, 2022.
Dividend
Quad’s Board of Directors reinstated a regular quarterly cash
dividend of $0.05 per share. The dividend will be payable on March
12, 2024, to shareholders of record on February 27, 2024.
2024 Guidance
The Company’s full-year 2024 financial guidance is as
follows:
Financial Metric
2024 Guidance
Annual Net Sales Change
5% to 9% decline
Full-Year Adjusted EBITDA
$205 million to $245 million
Free Cash Flow
$50 million to $70 million
Capital Expenditures
$60 million to $70 million
Year-End Debt Leverage Ratio (1)
Approximately 1.8x
(1) Debt Leverage Ratio is calculated at
the midpoint of the Adjusted EBITDA guidance.
Quarterly Conference Call
Quad will hold a conference call at 10 a.m. ET on Wednesday,
February 21, to discuss fourth quarter and full-year 2023 financial
results. The call will be hosted by Joel Quadracci, Quad Chairman,
President and CEO, and Tony Staniak, Quad CFO. As part of the
conference call, Quad will conduct a question-and-answer
session.
Participants can pre-register for the webcast by navigating to
https://dpregister.com/sreg/10185829/fb6defbb6a. Participants will
be given a unique PIN to gain access to the call, bypassing the
live operator. Participants may pre-register at any time, including
up to and after the call start time.
Alternatively, participants may dial in on the day of the call
as follows:
- U.S. Toll-Free: 1-877-328-5508
- International Toll: 1-412-317-5424
An audio replay of the call will be posted on the Investors
section of Quad’s website shortly after the conference call ends.
In addition, telephone playback will also be available until March
21, 2024, accessible as follows:
- U.S. Toll-Free: 1-877-344-7529
- International Toll: 1-412-317-0088
- Replay Access Code: 9599617
Forward-Looking Statements
This press release contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include statements regarding,
among other things, our current expectations about the Company’s
future results, financial condition, sales, earnings, free cash
flow, margins, objectives, goals, strategies, beliefs, intentions,
plans, estimates, prospects, projections and outlook of the Company
and can generally be identified by the use of words or phrases such
as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,”
“plan,” “foresee,” “project,” “believe,” “continue” or the
negatives of these terms, variations on them and other similar
expressions. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause
actual results to be materially different from those expressed in
or implied by such forward-looking statements. Forward-looking
statements are based largely on the Company’s expectations and
judgments and are subject to a number of risks and uncertainties,
many of which are unforeseeable and beyond our control.
The factors that could cause actual results to materially differ
include, among others: the impact of decreasing demand for printing
services and significant overcapacity in a highly competitive
environment creates downward pricing pressures and potential
under-utilization of assets; the impact of increased business
complexity as a result of the Company’s transformation to a
marketing experience company; the impact of changes in postal
rates, service levels or regulations, including delivery delays;
the impact of fluctuations in costs (including labor and
labor-related costs, energy costs, freight rates and raw materials,
including paper and the materials to manufacture ink) and the
impact of fluctuations in the availability of raw materials,
including paper, parts for equipment and the materials to
manufacture ink; the impact macroeconomic conditions, including
inflation, high interest rates and recessionary concerns, as well
as cost and labor pressures, distribution challenges and the price
and availability of paper, have had, and may continue to have, on
the Company’s business, financial condition, cash flows and results
of operations (including future uncertain impacts); the inability
of the Company to reduce costs and improve operating efficiency
rapidly enough to meet market conditions; the impact of a
data-breach of sensitive information, ransomware attack or other
cyber incident on the Company; the fragility and decline in overall
distribution channels; the failure to attract and retain qualified
talent across the enterprise; the impact of digital media and
similar technological changes, including digital substitution by
consumers; the failure of clients to perform under contracts or to
renew contracts with clients on favorable terms or at all; the
impact of risks associated with the operations outside of the
United States (“U.S.”), including trade restrictions, currency
fluctuations, the global economy, costs incurred or reputational
damage suffered due to improper conduct of its employees,
contractors or agents, and geopolitical events like war and
terrorism; the failure to successfully identify, manage, complete
and integrate acquisitions, investment opportunities or other
significant transactions, as well as the successful identification
and execution of strategic divestitures; the impact negative
publicity could have on our business and brand reputation;
significant capital expenditures and investments may be needed to
sustain and grow the Company’s platforms, processes, systems,
client and product technology, marketing and talent, and to remain
technologically and economically competitive; the impact of the
various restrictive covenants in the Company’s debt facilities on
the Company’s ability to operate its business, as well as the
uncertain negative impacts macroeconomic conditions may have on the
Company’s ability to continue to be in compliance with these
restrictive covenants; the impact of an other than temporary
decline in operating results and enterprise value that could lead
to non-cash impairment charges due to the impairment of property,
plant and equipment and other intangible assets; the impact of
regulatory matters and legislative developments or changes in laws,
including changes in cyber-security, privacy and environmental
laws; the impact on the holders of Quad’s class A common stock of a
limited active market for such shares and the inability to
independently elect directors or control decisions due to the
voting power of the class B common stock; and the other risk
factors identified in the Company’s most recent Annual Report on
Form 10-K, which may be amended or supplemented by subsequent
Quarterly Reports on Form 10-Q or other reports filed with the
Securities and Exchange Commission.
Except to the extent required by the federal securities laws,
the Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Non-GAAP Financial Measures
This press release contains financial measures not prepared in
accordance with generally accepted accounting principles (referred
to as non-GAAP), specifically Adjusted EBITDA, Adjusted EBITDA
Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted
Diluted Earnings Per Share. Adjusted EBITDA is defined as net
earnings (loss) excluding interest expense, income tax expense,
depreciation and amortization and restructuring, impairment and
transaction-related charges. Adjusted EBITDA Margin is defined as
Adjusted EBITDA divided by net sales. Free Cash Flow is defined as
net cash provided by operating activities less purchases of
property, plant and equipment. Debt Leverage Ratio is defined as
total debt and finance lease obligations less cash and cash
equivalents (Net Debt) divided by the last twelve months of
Adjusted EBITDA. Adjusted Diluted Earnings Per Share is defined as
earnings (loss) before income taxes excluding restructuring,
impairment and transaction-related charges and adjusted for income
tax expense at a normalized tax rate, divided by diluted weighted
average number of common shares outstanding.
The Company believes that these non-GAAP measures, when
presented in conjunction with comparable GAAP measures, provide
additional information for evaluating Quad’s performance and are
important measures by which Quad’s management assesses the
profitability and liquidity of its business. These non-GAAP
measures should be considered in addition to, not as a substitute
for or superior to, net earnings (loss) as a measure of operating
performance or to cash flows provided by operating activities as a
measure of liquidity. These non-GAAP measures may be different than
non-GAAP financial measures used by other companies. Reconciliation
to the GAAP equivalent of these non-GAAP measures are contained in
tabular form on the attached unaudited financial statements.
About Quad
Quad (NYSE: QUAD) is a global marketing experience company that
helps brands make direct consumer connections, from household to
in-store to online. Supported by state-of-the-art technology and
data-driven intelligence, Quad uses its suite of media, creative
and production solutions to streamline the complexities of
marketing and remove friction from wherever it occurs in the
marketing journey. Quad tailors its uniquely flexible, scalable and
connected solutions to clients’ objectives, driving cost
efficiencies, improving speed to market, strengthening marketing
effectiveness, and delivering value on client investments.
Quad employs approximately 13,000 people in 14 countries and
serves approximately 2,700 clients including industry leading
blue-chip companies that serve both businesses and consumers in
multiple industry verticals, with a particular focus on commerce,
including retail, consumer packaged goods, and direct-to-consumer;
financial services; and health. Quad is ranked as the 14th largest
agency company in the U.S. by Ad Age (2023), and the second-largest
commercial printer in North America, according to Printing
Impressions (2023).
For more information about Quad, including its commitment to
ongoing innovation, culture and sustainable impact, visit
quad.com.
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
For the Three Months Ended
December 31, 2023 and 2022
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended December
31,
2023
2022
Net sales
$
787.9
$
885.2
Cost of sales
633.1
707.6
Selling, general and administrative
expenses
89.5
101.8
Depreciation and amortization
31.1
34.7
Restructuring, impairment and
transaction-related charges
30.7
32.4
Total operating expenses
784.4
876.5
Operating income
3.5
8.7
Interest expense
19.0
16.1
Net pension income
(0.4
)
(3.1
)
Loss before income taxes
(15.1
)
(4.3
)
Income tax expense
6.9
4.4
Net loss
$
(22.0
)
$
(8.7
)
Loss per share
Basic and diluted
$
(0.47
)
$
(0.18
)
Weighted average number of common
shares outstanding
Basic and diluted
47.2
49.1
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
For the Years Ended December 31,
2023 and 2022
(in millions, except per share
data)
(UNAUDITED)
Year Ended December
31,
2023
2022
Net sales
$
2,957.7
$
3,217.0
Cost of sales
2,381.2
2,618.8
Selling, general and administrative
expenses
344.5
358.6
Depreciation and amortization
128.8
141.3
Restructuring, impairment and
transaction-related charges
77.5
44.8
Total operating expenses
2,932.0
3,163.5
Operating income
25.7
53.5
Interest expense
70.0
48.4
Net pension income
(1.7
)
(12.6
)
Earnings (loss) before income taxes
(42.6
)
17.7
Income tax expense
12.8
8.4
Net earnings (loss)
$
(55.4
)
$
9.3
Earnings (loss) per share
Basic and Diluted
$
(1.14
)
$
0.18
Weighted average number of common
shares outstanding
Basic
48.4
50.7
Diluted
48.4
52.5
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
As of December 31, 2023 and
2022
(in millions)
(UNAUDITED)
December 31, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
52.9
$
25.2
Receivables, less allowances for credit
losses
316.2
372.6
Inventories
178.8
260.7
Prepaid expenses and other current
assets
39.8
46.0
Total current assets
587.7
704.5
Property, plant and equipment—net
620.6
672.1
Operating lease right-of-use
assets—net
96.6
111.1
Goodwill
103.0
86.4
Other intangible assets—net
21.8
46.9
Other long-term assets
80.0
80.8
Total assets
$
1,509.7
$
1,701.8
LIABILITIES AND SHAREHOLDERS’
EQUITY
Accounts payable
$
373.6
$
456.6
Other current liabilities
237.6
249.1
Short-term debt and current portion of
long-term debt
151.7
61.1
Current portion of finance lease
obligations
2.5
0.8
Current portion of operating lease
obligations
25.4
27.8
Total current liabilities
790.8
795.4
Long-term debt
362.5
506.7
Finance lease obligations
6.0
1.6
Operating lease obligations
77.2
87.1
Deferred income taxes
5.1
9.3
Other long-term liabilities
148.6
128.8
Total liabilities
1,390.2
1,528.9
Shareholders’ Equity
Preferred stock
—
—
Common stock
1.4
1.4
Additional paid-in capital
842.7
841.8
Treasury stock, at cost
(33.1
)
(23.5
)
Accumulated deficit
(573.9
)
(518.5
)
Accumulated other comprehensive loss
(117.6
)
(128.3
)
Total shareholders’ equity
119.5
172.9
Total liabilities and shareholders’
equity
$
1,509.7
$
1,701.8
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the Years Ended December 31,
2023 and 2022
(in millions)
(UNAUDITED)
Year Ended December
31,
2023
2022
OPERATING ACTIVITIES
Net earnings (loss)
$
(55.4
)
$
9.3
Adjustments to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
128.8
141.3
Impairment charges
25.2
2.2
Stock-based compensation
5.6
6.0
Gain on the sale or disposal of property,
plant and equipment, net
(10.9
)
(2.3
)
Loss on the sale of a business
—
23.1
Deferred income taxes
(3.7
)
2.4
Other non-cash adjustments to net earnings
(loss)
2.0
2.2
Changes in operating assets and
liabilities - net of acquisitions and divestitures
56.0
(29.6
)
Net cash provided by operating
activities
147.6
154.6
INVESTING ACTIVITIES
Purchases of property, plant and
equipment
(70.8
)
(60.3
)
Cost investment in unconsolidated
entities
(0.7
)
(3.3
)
Proceeds from the sale of property, plant
and equipment
31.7
4.6
Loan to an unconsolidated entity
(0.6
)
—
Acquisitions of businesses
(1.5
)
(2.6
)
Other investing activities
(4.5
)
1.1
Net cash used in investing activities
(46.4
)
(60.5
)
FINANCING ACTIVITIES
Payments of current and long-term debt
(51.9
)
(235.9
)
Payments of finance lease obligations
(2.6
)
(2.1
)
Borrowings on revolving credit
facilities
1,437.9
995.7
Payments on revolving credit
facilities
(1,442.6
)
(995.0
)
Proceeds from issuance of long-term
debt
0.6
3.1
Purchases of treasury stock
(12.6
)
(10.0
)
Equity awards redeemed to pay employees’
tax obligations
(1.7
)
(2.5
)
Payment of cash dividends
(0.1
)
(1.4
)
Other financing activities
(0.6
)
(0.6
)
Net cash used in financing activities
(73.6
)
(248.7
)
Effect of exchange rates on cash and cash
equivalents
0.1
(0.1
)
Net increase (decrease) in cash and cash
equivalents
27.7
(154.7
)
Cash and cash equivalents at beginning of
year
25.2
179.9
Cash and cash equivalents at end of
year
$
52.9
$
25.2
QUAD/GRAPHICS, INC.
SEGMENT FINANCIAL INFORMATION
For the Three Months and Years
Ended December 31, 2023 and 2022
(in millions)
(UNAUDITED)
Net Sales
Operating
Income (Loss)
Restructuring,
Impairment and Transaction-Related Charges
(1)
Three months ended December 31,
2023
United States Print and Related
Services
$
700.2
$
18.6
$
24.5
International
87.7
(1.9
)
5.4
Total operating segments
787.9
16.7
29.9
Corporate
—
(13.2
)
0.8
Total
$
787.9
$
3.5
$
30.7
Three months ended December 31,
2022
United States Print and Related
Services
$
781.1
$
43.3
$
5.0
International
104.1
(20.0
)
26.2
Total operating segments
885.2
23.3
31.2
Corporate
—
(14.6
)
1.2
Total
$
885.2
$
8.7
$
32.4
Year ended December 31, 2023
United States Print and Related
Services
$
2,554.3
$
56.6
$
66.3
International
403.4
18.3
9.6
Total operating segments
2,957.7
74.9
75.9
Corporate
—
(49.2
)
1.6
Total
$
2,957.7
$
25.7
$
77.5
Year ended December 31, 2022
United States Print and Related
Services
$
2,794.7
$
108.3
$
12.1
International
422.3
(4.5
)
30.7
Total operating segments
3,217.0
103.8
42.8
Corporate
—
(50.3
)
2.0
Total
$
3,217.0
$
53.5
$
44.8
______________________________
(1) Restructuring, impairment and
transaction-related charges are included within operating income
(loss).
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
EBITDA, EBITDA MARGIN, ADJUSTED
EBITDA AND ADJUSTED EBITDA MARGIN
For the Three Months Ended
December 31, 2023 and 2022
(in millions)
(UNAUDITED)
Three Months Ended December
31,
2023
2022
Net loss
$
(22.0
)
$
(8.7
)
Interest expense
19.0
16.1
Income tax expense
6.9
4.4
Depreciation and amortization
31.1
34.7
EBITDA (non-GAAP)
$
35.0
$
46.5
EBITDA Margin (non-GAAP)
4.4
%
5.3
%
Restructuring, impairment and
transaction-related charges (1)
30.7
32.4
Adjusted EBITDA (non-GAAP)
$
65.7
$
78.9
Adjusted EBITDA Margin
(non-GAAP)
8.3
%
8.9
%
______________________________
(1) Operating results for the three months
ended December 31, 2023 and 2022, were affected by the following
restructuring, impairment and transaction-related charges:
Three Months Ended December
31,
2023
2022
Employee termination charges (a)
$
18.5
$
4.5
Impairment charges (b)
9.4
1.6
Transaction-related charges (c)
3.1
1.2
Integration costs (d)
—
0.3
Other restructuring charges (e)
(0.3
)
24.8
Restructuring, impairment and
transaction-related charges
$
30.7
$
32.4
______________________________
(a) Employee termination charges were
related to workforce reductions through facility consolidations and
separation programs.
(b) Impairment charges were for certain
property, plant and equipment no longer being utilized in
production as a result of facility consolidations and other
capacity reduction activities, as well as right-of-use assets.
(c) Transaction-related charges consisted
of professional service fees related to business acquisition and
divestiture activities.
(d) Integration costs were primarily costs
related to the integration of acquired companies.
(e) Other restructuring charges primarily
include costs to maintain and exit closed facilities, as well as
lease exit charges, and are presented net of a gain of $9.2 million
on the sale of a facility during the three months ended December
31, 2023. A $23.1 million loss on the sale of its Argentina print
business was recognized during the three months ended December 31,
2022.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP), this earnings announcement also contains non-GAAP
financial measures, specifically EBITDA, EBITDA Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt
Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company
believes that these non-GAAP measures, when presented in
conjunction with comparable GAAP measures, provide additional
information for evaluating Quad’s performance and are important
measures by which Quad’s management assesses the profitability and
liquidity of its business. These non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These non-GAAP measures may be different than non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
EBITDA, EBITDA MARGIN, ADJUSTED
EBITDA AND ADJUSTED EBITDA MARGIN
For the Years Ended December 31,
2023 and 2022
(in millions)
(UNAUDITED)
Year Ended December
31,
2023
2022
Net earnings (loss)
$
(55.4
)
$
9.3
Interest expense
70.0
48.4
Income tax expense
12.8
8.4
Depreciation and amortization
128.8
141.3
EBITDA (non-GAAP)
$
156.2
$
207.4
EBITDA Margin (non-GAAP)
5.3
%
6.4
%
Restructuring, impairment and
transaction-related charges (1)
77.5
44.8
Adjusted EBITDA (non-GAAP)
$
233.7
$
252.2
Adjusted EBITDA Margin
(non-GAAP)
7.9
%
7.8
%
_________________________________
(1) Operating results for the years ended
December 31, 2023 and 2022, were affected by the following
restructuring, impairment and transaction-related charges:
Year Ended December
31,
2023
2022
Employee termination charges (a)
$
35.1
$
7.3
Impairment charges (b)
25.2
2.2
Transaction-related charges (c)
4.2
2.0
Integration costs (d)
1.0
0.7
Other restructuring charges (e)
12.0
32.6
Restructuring, impairment and
transaction-related charges
$
77.5
$
44.8
_________________________________
(a) Employee termination charges were
related to workforce reductions through facility consolidations and
separation programs.
(b) Impairment charges were for certain
property, plant and equipment no longer being utilized in
production as a result of facility consolidations and other
capacity reduction activities, as well as software licensing and
related implementation costs from a terminated project and
right-of-use assets.
(c) Transaction-related charges consisted
of professional service fees related to business acquisition and
divestiture activities.
(d) Integration costs were primarily
related to the integration of acquired companies.
(e) Other restructuring charges primarily
include costs to maintain and exit closed facilities, as well as
lease exit charges, and are presented net of a gain of $9.2 million
on the sale of a facility during the year ended December 31, 2023.
A $23.1 million loss on the sale of its Argentina print business
was recognized during the year ended December 31, 2022.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP), this earnings announcement also contains non-GAAP
financial measures, specifically EBITDA, EBITDA Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt
Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company
believes that these non-GAAP measures, when presented in
conjunction with comparable GAAP measures, provide additional
information for evaluating Quad’s performance and are important
measures by which Quad’s management assesses the profitability and
liquidity of its business. These non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These non-GAAP measures may be different than non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
FREE CASH FLOW
For the Years Ended December 31,
2023 and 2022
(in millions)
(UNAUDITED)
Year Ended December
31,
2023
2022
Net cash provided by operating
activities
$
147.6
$
154.6
Less: purchases of property, plant and
equipment
70.8
60.3
Free Cash Flow (non-GAAP)
$
76.8
$
94.3
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP), this earnings announcement also contains non-GAAP
financial measures, specifically EBITDA, EBITDA Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt
Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company
believes that these non-GAAP measures, when presented in
conjunction with comparable GAAP measures, provide additional
information for evaluating Quad’s performance and are important
measures by which Quad’s management assesses the profitability and
liquidity of its business. These non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These non-GAAP measures may be different than non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
NET DEBT AND DEBT LEVERAGE
RATIO
As of December 31, 2023 and
2022
(in millions, except ratio)
(UNAUDITED)
December 31, 2023
December 31, 2022
Total debt and finance lease obligations
on the condensed consolidated balance sheets
$
522.7
$
570.2
Less: Cash and cash equivalents
52.9
25.2
Net Debt (non-GAAP)
$
469.8
$
545.0
Divided by: Adjusted EBITDA for the year
ended (non-GAAP)
$
233.7
$
252.2
Debt Leverage Ratio (non-GAAP)
2.01
x
2.16
x
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP), this earnings announcement also contains non-GAAP
financial measures, specifically EBITDA, EBITDA Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt
Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company
believes that these non-GAAP measures, when presented in
conjunction with comparable GAAP measures, provide additional
information for evaluating Quad’s performance and are important
measures by which Quad’s management assesses the profitability and
liquidity of its business. These non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These non-GAAP measures may be different than non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
ADJUSTED DILUTED EARNINGS PER
SHARE
For the Three Months Ended
December 31, 2023 and 2022
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended December
31,
2023
2022
Loss before income taxes
$
(15.1
)
$
(4.3
)
Restructuring, impairment and
transaction-related charges
30.7
32.4
Adjusted net earnings, before income taxes
(non-GAAP)
15.6
28.1
Income tax expense at 25% normalized tax
rate
3.9
7.0
Adjusted net earnings (non-GAAP)
$
11.7
$
21.1
Basic weighted average number of common
shares outstanding
47.2
49.1
Plus: effect of dilutive equity incentive
instruments (non-GAAP)
2.8
1.8
Diluted weighted average number of common
shares outstanding (non-GAAP)
50.0
50.9
Adjusted diluted earnings per share
(non-GAAP) (1)
$
0.23
$
0.41
Diluted loss per share (GAAP)
$
(0.47
)
$
(0.18
)
Restructuring, impairment and
transaction-related charges per share
0.61
0.64
Income tax expense from condensed
consolidated statement of operations per share
0.14
0.09
Income tax expense at 25% normalized tax
rate per share
(0.08
)
(0.14
)
Effect of dilutive equity incentive
instruments
0.03
—
Adjusted diluted earnings per share
(non-GAAP) (1)
$
0.23
$
0.41
______________________________
(1) Adjusted diluted earnings per share
excludes the following: (i) restructuring, impairment and
transaction-related charges and (ii) discrete income tax items.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP), this earnings announcement also contains non-GAAP
financial measures, specifically EBITDA, EBITDA Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt
Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company
believes that these non-GAAP measures, when presented in
conjunction with comparable GAAP measures, provide additional
information for evaluating Quad’s performance and are important
measures by which Quad’s management assesses the profitability and
liquidity of its business. These non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These non-GAAP measures may be different than non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
ADJUSTED DILUTED EARNINGS PER
SHARE
For the Years Ended December 31,
2023 and 2022
(in millions, except per share
data)
(UNAUDITED)
Year Ended December
31,
2023
2022
Earnings (loss) before income taxes
$
(42.6
)
$
17.7
Restructuring, impairment and
transaction-related charges
77.5
44.8
Adjusted net earnings, before income taxes
(non-GAAP)
34.9
62.5
Income tax expense at 25% normalized tax
rate
8.7
15.6
Adjusted net earnings (non-GAAP)
$
26.2
$
46.9
Basic weighted average number of common
shares outstanding
48.4
50.7
Plus: effect of dilutive equity incentive
instruments (1)
2.3
1.8
Diluted weighted average number of common
shares outstanding (non-GAAP)
50.7
52.5
Adjusted diluted earnings per share
(non-GAAP) (2)
$
0.52
$
0.89
Diluted earnings (loss) per share
(GAAP)
$
(1.14
)
$
0.18
Restructuring, impairment and
transaction-related charges per share
1.53
0.85
Income tax expense from condensed
consolidated statement of operations per share
0.25
0.16
Income tax expense at 25% normalized tax
rate per share
(0.17
)
(0.30
)
Effect of dilutive equity incentive
instruments
0.05
—
Adjusted diluted earnings per share
(non-GAAP) (2)
$
0.52
$
0.89
______________________________
(1) Effect of dilutive equity incentive
instruments for the year ended December 31, 2023 is non-GAAP.
(2) Adjusted diluted earnings per share
excludes the following: (i) restructuring, impairment and
transaction-related charges and (ii) discrete income tax items.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP), this earnings announcement also contains non-GAAP
financial measures, specifically EBITDA, EBITDA Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt
Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company
believes that these non-GAAP measures, when presented in
conjunction with comparable GAAP measures, provide additional
information for evaluating Quad’s performance and are important
measures by which Quad’s management assesses the profitability and
liquidity of its business. These non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These non-GAAP measures may be different than non-GAAP
financial measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220625792/en/
Investor Relations Contact Don Pontes Executive Director
of Investor Relations 916-532-7074 dwpontes@quad.com
Media Contact Claire Ho Director of Marketing
Communications 414-566-2955 cho@quad.com
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