Quad/Graphics Financials in Line With Expectations

SUSSEX, WI—Quad/Graphics Inc. has reported results for its first quarter ending March 31. Net sales for the first quarter of 2014 were $1.1 billion, down approximately 2 percent quarter-over-quarter. First quarter 2014 adjusted EBITDA was $107 million compared to $114 million for the same period in 2013, and first quarter 2014 adjusted EBITDA margin was 9.7 percent compared to 10.1 percent in the first quarter of 2013.

The company said that adjusted EBITDA decline reflects ongoing industry volume and pricing pressures, as well as $3 million in favorable gains in 2013 that did not repeat in 2014 primarily related to a gain on the sale of the company’s business in Recife, Brazil.

“Our first quarter results were in-line with our expectations,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “We continue to focus on ways to grow market share and remain disciplined in our approach to improve productivity and create sustainable cost reduction initiatives; maintain a strong and flexible balance sheet; invest in our business; and pursue value-driven consolidation opportunities like Brown Printing. This acquisition is consistent with our ongoing strategy to transform Quad/Graphics and create value for our clients and shareholders.

“The combination of Quad/Graphics and Brown will enhance the many ways in which we help publishers and marketers drive top-line revenues while better controlling their overall total cost of print production and distribution.”

First quarter 2014 free cash flow was negative $13 million versus positive $93 million for the same period in 2013. According to Quad, the variance is primarily attributable to an estimated $70 million benefit realized in the first quarter of 2013 from the restoration of normalized working capital levels following the company’s January 2013 acquisition of Vertis Inc., which was acquired without normalized levels of accounts payable and accrued liabilities. The remaining variance primarily reflects $18 million in higher capital expenditures in 2014 due primarily to carryover projects from 2013, as well as working capital fluctuations.

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