Delivers Fourth Consecutive Quarter of Sales
Growth, Achieving Net Sales Increase of 5% or Net Sales Increase of
9% Excluding Divestitures; Continues Strategic Investments to
Accelerate Growth as a Marketing Experience Company
Quad/Graphics, Inc. (NYSE: QUAD) (“Quad” or the “Company”),
today reported results for the first quarter ended March 31,
2022.
Recent Highlights
- Increased Net Sales 5% in the first quarter of 2022, or 9%
sales growth excluding divestitures, driven by increased pricing in
response to inflationary cost pressures; print segment share gains
from new clients; and Net Sales growth in Targeted Print and Agency
Solutions.
- Reported Net Loss of $1 million and Adjusted EBITDA of $49
million in the first quarter of 2022, compared to Net Earnings of
$10 million and Adjusted EBITDA of $70 million in the first quarter
of 2021.
- Implemented additional price increase, effective May 15, 2022,
to help offset inflationary cost pressures.
- Continued making strategic investments in talent, equipment,
technology, products and services to accelerate growth as a
marketing experience company.
- Increased inventory levels of commercial printing paper and
other materials to protect clients from ongoing supply chain
disruptions and prepare for the seasonally higher production period
in the second half of the year.
- Maintained significant liquidity including $138 million of cash
on hand and up to $397 million in unused capacity under Quad’s
revolving credit agreement as of March 31, 2022.
- Paid remaining $209 million on the unsecured 7.00% senior notes
on May 2, 2022.
Joel Quadracci, Chairman, President & CEO of Quad, said:
“Our continued positive sales growth momentum included print
segment share gains from new clients and Net Sales growth in our
Targeted Print and Agency Solutions offerings. Our unique platform
helps brands reimagine their marketing experience to be more
streamlined, impactful, flexible and frictionless. We will continue
to make investments in the platform, including in our talent,
equipment, technology, products and services, to further expand our
through-the-line marketing offering to drive profitable growth.
“We were also not immune to macro-economic headwinds, including
ongoing supply chain disruptions that impacted productivity and
cost inflation, such as labor. We continue to work diligently to
mitigate these impacts and, given the pace of inflation,
implemented an additional price increase, which will go into effect
May 15.
“As always, we remain focused on enhancing Quad’s financial
strength and creating shareholder value and, to that end, will
continue to prioritize growth while improving productivity and
reducing debt during 2022. As a company committed to creating ‘a
better way,’ we will continue to leverage our more than 50-year
heritage of platform excellence, innovation and strong culture and
social purpose to create a better, more purposeful and sustainable
way forward for all our stakeholders.”
Summary Results
Results for the first quarter ended March 31, 2022, include:
- Net Sales — Net Sales were $744 million in the first quarter of
2022, reflecting topline growth up 5% from the same period in 2021.
Excluding the divestiture of QuadExpress, a third-party logistics
(3PL) business, Net Sales increased 9% from the first quarter of
2021. The Net Sales increase during the first quarter was due to
increased pricing in response to inflationary pressures, print
segment share gains from new clients, and Net Sales growth in
Targeted Print and Agency Solutions.
- Net Earnings (Loss) and Adjusted EBITDA — Net Loss was $1
million in the first quarter of 2022, a decline of $11 million
compared to the first quarter of 2021, which recorded Net Earnings
of $10 million. Adjusted EBITDA was $49 million in the first
quarter of 2022, as compared to $70 million last year. These
declines were primarily due to the negative impact of supply chain
disruptions on our productivity, investments in hiring and training
labor in advance of peak production season during the second half
of the year, and cost inflation, which was partially offset by
revenue growth. Given the increasing rate of cost inflation, we
have implemented a price increase, effective May 15, 2022, to help
offset the impact of cost inflation on our profit margins.
- Adjusted Diluted Earnings Per Share — Adjusted Diluted Earnings
Per Share was $0.04 in the first quarter of 2022, as compared to
$0.19 in the first quarter of 2021.
- Net Cash Provided by (Used in) Operating Activities and Free
Cash Flow — Net Cash Used in Operating Activities was $17 million
in the first quarter of 2022, as compared to the first quarter of
2021 with Net Cash Provided by Operating Activities of $73 million.
Free Cash Flow decreased $92 million from last year to negative $36
million in the first quarter of 2022. The decline in Free Cash Flow
was primarily due to higher working capital needs in 2022 due to
supply chain challenges with resulting longer lead times, and to
prepare for the seasonally higher production period in the second
half of the year. As a reminder, the Company historically generates
the majority of its Free Cash Flow in the fourth quarter of the
year.
- Net Debt — Debt less cash and cash equivalents increased by $40
million to $664 million at March 31, 2022, as compared to $624
million at December 31, 2021, primarily due to investments in
working capital, talent and equipment to enable continued sales
growth.
2022 Guidance
The Company’s full-year 2022 financial guidance is unchanged and
is as follows:
Financial Metric
2022 Guidance
Annual Net Sales Change (1)
3% to 7% increase
Full-Year Adjusted EBITDA
$230 to $270 million
Free Cash Flow
$70 to $100 million
Capital Expenditures
$55 to $65 million
Year-End Debt Leverage Ratio (2)
Approximately 2.25x
(1)
Annual Net Sales Change excludes the Net
Sales impact from the divestiture of QuadExpress, which was sold on
June 30, 2021.
(2)
Debt Leverage Ratio is calculated at the
midpoint of the Adjusted EBITDA guidance.
Tony Staniak, CFO of Quad, said: “We are pleased to have
delivered 9% Net Sales growth excluding divestitures as more and
more brands and marketers recognize the unique value of our
through-the-line marketing offering. Our strong liquidity enabled
us to pay off the remaining $209 million of our unsecured 7.00%
senior notes on May 2, 2022, as part of our multi-year debt
reduction plan, which includes achieving 2.25x debt leverage by the
end of 2022. We will remain nimble as we manage supply chain
challenges and cost inflation while continuing to invest in our
business to drive revenue in our seasonally higher production
period in the back half of the year, and accelerate our growth as a
marketing experience company.”
Quarterly Conference Call
Quad will hold a conference call at 10 a.m. ET on Wednesday, May
4, to discuss first quarter 2022 results. As part of the conference
call, Quad will conduct a question and answer session. Investors
are invited to email their questions in advance to IR@quad.com.
Participants can pre-register for the webcast by navigating to
https://dpregister.com/sreg/10165069/f219d3e6d1. Participants will
be given a unique PIN to gain immediate access to the call on May
4, bypassing the live operator. Participants may pre-register at
any time, including up to and after the call start time.
Alternatively, participants without internet access 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 June
4, 2022, accessible as follows:
- U.S. Toll-Free: 1-877-344-7529
- International Toll: 1-412-317-0088
- Replay Access Code: 11233437
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 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 and the materials to manufacture
ink; the impact of inflationary cost pressures and supply chain
shortages; the impact of decreasing demand for printed materials
and significant overcapacity in a highly competitive environment
creates downward pricing pressures and potential under-utilization
of assets; the negative impacts the COVID-19 pandemic has had and
will continue to have on the Company’s business, financial
condition, cash flows, results of operations and supply chain,
including rising inflationary cost pressures on raw materials,
distribution and labor, and future uncertain impacts; the failure
to attract and retain qualified talent across the enterprise; the
impact of increased business complexity as a result of the
Company’s transformation to a marketing experience company; the
impact of digital media and similar technological changes,
including digital substitution by consumers; the inability of the
Company to reduce costs and improve operating efficiency rapidly
enough to meet market conditions; the impact of changes in postal
rates, service levels or regulations, including delivery delays due
to ongoing COVID-19 impacts on daily operational staffing at the
United States Postal Service; the impact of a data-breach of
sensitive information, ransomware attack or other cyber incident on
the Company; the impact negative publicity could have on our
business; the impact of changing future economic conditions; the
failure of clients to perform under contracts or to renew contracts
with clients on favorable terms or at all; the fragility and
decline in overall distribution channels; 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 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 risks
associated with the operations outside of the United States
(“U.S.”), including costs incurred or reputational damage suffered
due to improper conduct of its employees, contractors or agents,
and geopolitical events like war or terrorism; significant
investments may be needed to maintain the Company’s platforms,
processes, systems, client and product technology and marketing 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 COVID-19 may have on the
Company’s ability to continue to be in compliance with these
restrictive covenants; the impact of regulatory matters and
legislative developments or changes in laws, including changes in
cyber-security, privacy and environmental laws; and 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 (Loss) Per Share. Adjusted EBITDA is defined as
net earnings (loss) excluding interest expense, income tax expense
(benefit), depreciation and amortization, restructuring, impairment
and transaction-related charges, gains from sale and leaseback,
loss on debt extinguishment, equity in earnings of unconsolidated
entity, and the Adjusted EBITDA for unconsolidated equity method
investments (calculated in a consistent manner with the calculation
for Quad). Adjusted EBITDA Margin is defined as Adjusted EBITDA
divided by net sales. Free Cash Flow is defined as net cash
provided by (used in) 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 (Loss) Per Share is
defined as earnings (loss) before income taxes and equity in
earnings of unconsolidated entity 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 (used in) 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 reimagine their marketing to be more streamlined,
impactful, flexible, and frictionless. Quad’s strategic priorities
are powered by three key competitive advantages that include
integrated marketing platform excellence, innovation, and culture
and social purpose. The company’s integrated marketing platform is
powered by a set of core specialties including business strategy,
insights and analytics, technology solutions, managed services,
agency and studio solutions, media, print, in-store, and
packaging.
Serving over 4,600 clients, Quad has more than 15,000 people
working in 14 countries around the world.
Please visit quad.com for more information.
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
For the Three Months Ended March
31, 2022 and 2021
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended March
31,
2022
2021
Net sales
$
744.2
$
705.8
Cost of sales
619.6
559.8
Selling, general and administrative
expenses
79.1
80.5
Depreciation and amortization
36.5
41.9
Restructuring, impairment and
transaction-related charges
3.6
2.6
Total operating expenses
738.8
684.8
Operating income
5.4
21.0
Interest expense
9.3
14.5
Net pension income
(3.2
)
(4.1
)
Earnings (loss) before income taxes and
equity in earnings of unconsolidated entity
(0.7
)
10.6
Income tax expense
0.3
0.5
Earnings (loss) before equity in earnings
of unconsolidated entity
(1.0
)
10.1
Equity in earnings of unconsolidated
entity
—
(0.1
)
Net earnings (loss)
$
(1.0
)
$
10.2
Earnings (loss) per share
Basic
$
(0.02
)
$
0.20
Diluted
$
(0.02
)
$
0.19
Weighted average number of common
shares outstanding
Basic
51.5
51.4
Diluted
51.5
52.8
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
As of March 31, 2022 and December
31, 2021
(in millions)
(UNAUDITED) March
31, 2022
December 31,
2021
ASSETS
Cash and cash equivalents
$
138.3
$
179.9
Receivables, less allowance for credit
losses
341.7
362.0
Inventories
249.1
226.2
Prepaid expenses and other current
assets
45.1
41.0
Total current assets
774.2
809.1
Property, plant and equipment—net
716.3
727.0
Operating lease right-of-use
assets—net
119.2
125.7
Goodwill
86.4
86.4
Other intangible assets—net
68.2
75.3
Other long-term assets
73.9
66.5
Total assets
$
1,838.2
$
1,890.0
LIABILITIES AND SHAREHOLDERS’
EQUITY
Accounts payable
$
396.3
$
367.3
Other current liabilities
248.2
314.3
Short-term debt and current portion of
long-term debt
251.5
245.6
Current portion of finance lease
obligations
1.4
1.8
Current portion of operating lease
obligations
28.6
28.1
Total current liabilities
926.0
957.1
Long-term debt
547.9
554.9
Finance lease obligations
1.4
1.4
Operating lease obligations
93.3
99.8
Deferred income taxes
12.8
11.9
Other long-term liabilities
119.5
128.1
Total liabilities
1,700.9
1,753.2
Shareholders’ equity
Preferred stock
—
—
Common stock
1.4
1.4
Additional paid-in capital
838.6
839.3
Treasury stock, at cost
(14.6
)
(14.9
)
Accumulated deficit
(528.8
)
(527.8
)
Accumulated other comprehensive loss
(159.3
)
(161.2
)
Total shareholders’ equity
137.3
136.8
Total liabilities and shareholders’
equity
$
1,838.2
$
1,890.0
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the Three Months Ended March
31, 2022 and 2021
(in millions)
(UNAUDITED)
Three Months Ended March
31,
2022
2021
OPERATING ACTIVITIES
Net earnings (loss)
$
(1.0
)
$
10.2
Adjustments to reconcile net earnings
(loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
36.5
41.9
Impairment charges
0.1
0.8
Stock-based compensation
1.9
3.0
Gain on the sale or disposal of property,
plant and equipment
(0.4
)
(7.0
)
Deferred income taxes
0.3
0.1
Other non-cash adjustments to net earnings
(loss)
0.7
0.5
Changes in operating assets and
liabilities—net of acquisitions and divestitures
(55.0
)
23.4
Net cash provided by (used in) operating
activities
(16.9
)
72.9
INVESTING ACTIVITIES
Purchases of property, plant and
equipment
(19.1
)
(16.9
)
Cost investment in unconsolidated
entities
(1.9
)
(0.3
)
Proceeds from the sale of property, plant
and equipment
0.5
11.4
Other investing activities
1.8
(0.2
)
Net cash used in investing activities
(18.7
)
(6.0
)
FINANCING ACTIVITIES
Payments of long-term debt
(3.7
)
(33.9
)
Payments of finance lease obligations
(0.8
)
(0.8
)
Borrowings on revolving credit
facilities
25.5
4.4
Payments on revolving credit
facilities
(23.1
)
(5.7
)
Equity awards redeemed to pay employees’
tax obligations
(2.5
)
(1.1
)
Payment of cash dividends
(1.4
)
(1.4
)
Other financing activities
(0.1
)
(2.9
)
Net cash used in financing activities
(6.1
)
(41.4
)
Effect of exchange rates on cash and cash
equivalents
0.1
(0.1
)
Net increase (decrease) in cash and cash
equivalents
(41.6
)
25.4
Cash and cash equivalents at beginning of
period
179.9
55.2
Cash and cash equivalents at end of
period
$
138.3
$
80.6
QUAD/GRAPHICS, INC.
SEGMENT FINANCIAL INFORMATION
For the Three Months Ended March
31, 2022 and 2021
(in millions)
(UNAUDITED)
Net Sales
Operating Income
(Loss)
Restructuring, Impairment and
Transaction-Related Charges (1)
Three months ended March 31,
2022
United States Print and Related
Services
$
651.1
$
11.8
$
1.7
International
93.1
3.7
1.6
Total operating segments
744.2
15.5
3.3
Corporate
—
(10.1
)
0.3
Total
$
744.2
$
5.4
$
3.6
Three months ended March 31,
2021
United States Print and Related
Services
$
634.6
$
32.5
$
1.1
International
71.2
1.5
0.8
Total operating segments
705.8
34.0
1.9
Corporate
—
(13.0
)
0.7
Total
$
705.8
$
21.0
$
2.6
(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 March
31, 2022 and 2021
(in millions, except margin
data)
(UNAUDITED)
Three Months Ended March
31,
2022
2021
Net earnings (loss)
$
(1.0
)
$
10.2
Interest expense
9.3
14.5
Income tax expense
0.3
0.5
Depreciation and amortization
36.5
41.9
EBITDA (Non-GAAP)
$
45.1
$
67.1
EBITDA Margin (Non-GAAP)
6.1
%
9.5
%
Restructuring, impairment and
transaction-related charges (1)
3.6
2.6
Other (2)
—
0.2
Adjusted EBITDA (Non-GAAP) (3)
$
48.7
$
69.9
Adjusted EBITDA Margin
(Non-GAAP)
6.5
%
9.9
%
(1)
Operating results for the three months
ended March 31, 2022 and 2021, were affected by the following
restructuring, impairment and transaction-related charges:
Three Months Ended March
31,
2022
2021
Employee termination charges (a)
$
1.1
$
4.7
Impairment charges (b)
0.1
0.8
Transaction-related charges (c)
0.2
0.2
Other restructuring charges (income)
(d)
2.2
(3.1
)
Restructuring, impairment and
transaction-related charges
$
3.6
$
2.6
(a)
Employee termination charges were related
to workforce reductions through separation programs and facility
consolidations.
(b)
Impairment charges were for certain
property, plant and equipment no longer being utilized in
production as a result of facility consolidations.
(c)
Transaction-related charges consisted of
professional service fees related to business acquisition and
divestiture activities.
(d)
Other restructuring charges include costs
to maintain and exit closed facilities, as well as lease exit
charges, and are presented net of gains or losses on the sale of
facilities and businesses. Gains included in other restructuring
charges were $7.8 million during the three months ended March 31,
2021.
(2)
Other includes the following items: (a)
the equity in earnings of unconsolidated entity, which includes the
results of operations for an investment in an entity where Quad has
the ability to exert significant influence, but not control, and is
accounted for using the equity method of accounting; and (b) the
Adjusted EBITDA for unconsolidated equity method investments, which
was calculated in a consistent manner with the calculation above
for Quad.
(3)
The Company made a change in its
definition of Adjusted EBITDA to include net pension income. This
change is reflected in both periods presented.
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 (Loss) 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 (used in) 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 Three Months Ended March
31, 2022 and 2021
(in millions)
(UNAUDITED)
Three Months Ended March
31,
2022
2021
Net cash provided by (used in) operating
activities
$
(16.9
)
$
72.9
Less: purchases of property, plant and
equipment
(19.1
)
(16.9
)
Free Cash Flow (Non-GAAP)
$
(36.0
)
$
56.0
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 (Loss) 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 (used in) 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
DEBT LEVERAGE RATIO
As of March 31, 2022 and December
31, 2021
(in millions, except ratio)
(UNAUDITED)
March 31, 2022
December 31,
2021
Total debt and finance lease obligations
on the condensed consolidated balance sheets
$
802.2
$
803.7
Less: Cash and cash equivalents
138.3
179.9
Net Debt (Non-GAAP)
$
663.9
$
623.8
Divided by: trailing twelve months
Adjusted EBITDA (Non-GAAP) (1)
$
239.3
$
260.5
Debt Leverage Ratio (Non-GAAP)
2.77 x
2.39 x
(1)
The calculation of Adjusted EBITDA for the
trailing twelve months ended March 31, 2022, and December 31, 2021,
was as follows:
Add
Subtract
Trailing Twelve Months
Ended
Year Ended
Three Months Ended
December 31, 2021 (a)
March 31, 2022
March 31, 2021
March 31, 2022
Net earnings (loss)
$
37.8
$
(1.0
)
$
10.2
$
26.6
Interest expense
59.6
9.3
14.5
54.4
Income tax expense
9.5
0.3
0.5
9.3
Depreciation and amortization
157.3
36.5
41.9
151.9
EBITDA (Non-GAAP)
$
264.2
$
45.1
$
67.1
$
242.2
Restructuring, impairment and
transaction-related charges
18.9
3.6
2.6
19.9
Gains from sale and leaseback
(24.5
)
—
—
(24.5
)
Loss on debt extinguishment
0.7
—
—
0.7
Other (b)
1.2
—
0.2
1.0
Adjusted EBITDA (Non-GAAP) (c)
$
260.5
$
48.7
$
69.9
$
239.3
(a)
Financial information for the year ended
December 31, 2021, is included as reported in the Company’s 2021
Annual Report on Form 10-K filed with the SEC on February 23,
2022.
(b)
Other is comprised of equity in earnings
of unconsolidated entity and Adjusted EBITDA for unconsolidated
equity method investments.
(c)
The Company made a change in its
definition of Adjusted EBITDA to include net pension income. This
change is reflected in both periods presented.
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 (Loss) 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 (used in) 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 March
31, 2022 and 2021
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended March
31,
2022
2021
Earnings (loss) before income taxes and
equity in earnings of unconsolidated entity
$
(0.7
)
$
10.6
Restructuring, impairment and
transaction-related charges
3.6
2.6
Adjusted net earnings, before income taxes
(Non-GAAP)
2.9
13.2
Income tax expense at 25% normalized tax
rate
0.7
3.3
Adjusted net earnings (Non-GAAP)
$
2.2
$
9.9
Basic weighted average number of common
shares outstanding
51.5
51.4
Plus: effect of dilutive equity incentive
instruments (1)
2.0
1.4
Diluted weighted average number of common
shares outstanding (Non-GAAP)
53.5
52.8
Adjusted diluted earnings per share
(Non-GAAP) (2)
$
0.04
$
0.19
Diluted earnings (loss) per share
(GAAP)
$
(0.02
)
$
0.19
Restructuring, impairment and
transaction-related charges per share
0.07
0.05
Income tax expense from condensed
consolidated statement of operations per share
—
0.01
Income tax expense at 25% normalized tax
rate per share
(0.01
)
(0.06
)
Adjusted diluted earnings per share
(Non-GAAP) (2)
$
0.04
$
0.19
(1)
Effect of dilutive equity incentive
instruments for the three months ended March 31, 2022 is
non-GAAP.
(2)
Adjusted diluted earnings per share
excludes the following: (i) restructuring, impairment and
transaction-related charges; (ii) discrete income tax items; and
(iii) equity in earnings of unconsolidated entity.
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 (Loss) 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 (used in) 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/20220503006241/en/
Investor Relations Contact Katie Krebsbach Investor
Relations Manager, Quad 414-566-4247 kkrebsbach@quad.com
Media Contact Claire Ho Director of Corporate
Communications, Quad 414-566-2955 cho@quad.com
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