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Quad/Graphics Posts Decline in Net Sales, Strengthens Balance Sheet

August 7, 2012
SUSSEX, WI—August 7, 2012—Quad/Graphics Inc. has reported its financial results for its second quarter and year-to-date ending June 30, 2012.

Highlights:
  • Second quarter net sales of $934 million.
  • Adjusted EBITDA of $112 million and Adjusted EBITDA margin of 12.0 percent, as compared to 11.9 percent in 2011.
  • Repayed $42 million in debt during the quarter and $132 million year-to-date.
  • Completed integration of Worldcolor and confirms annual synergy savings of more than $275 million, exceeding original guidance of $225 million.

Quad’s net sales for the second quarter totaled $934 million vs. $977 million for the same period in 2011. Second quarter 2012 Adjusted EBITDA was $112 million, compared to $116 million for the same period in 2011, and Adjusted EBITDA margin was 12.0 percent as compared to 11.9 percent in 2011.

The quarterly results reflect expected volume and pricing pressures. Offsetting these impacts were incremental synergy savings totaling $21 million and lower selling, general and administrative costs.

“We are pleased with the continued progress we have made to strengthen our balance sheet, maintain strong credit metrics and generate significant cash flow during a quarter traditionally impacted by lower seasonal volumes,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “This past July marked the two-year anniversary of the Worldcolor acquisition and, with the closing of the second quarter, we also mark the completion of a successful integration process.

“In the end, we expect to exceed our original synergy guidance by more than 20 percent, achieving over $275 million of annual savings. Our one-time cost to achieve these synergies will be less than $225 million, well within the expected range of $195 million to $240 million, resulting in a ratio of approximately 80 cents of cost for every dollar of synergy. This represents a significant achievement for the Company and a proud moment for all employees who worked hard to merge these two leading companies together during a time of significant industry transformation and economic challenge,” Quadracci added.

“We are proud of the progress we continue to make in strengthening our balance sheet through the repayment of $42 million in debt during the quarter, and $132 million in the first half of 2012,” said John Fowler, executive vice president and chief financial officer. “Our leverage ratio of 2.2x remains in our targeted range of 2.0x to 2.5x and we continue to generate significant Recurring Free Cash Flow to support our disciplined capital deployment strategy. Our quarterly dividend of $0.25 per share will be payable on Sept. 21, 2012, to shareholders of record as of Sept. 10, 2012.”

For the first six months of 2012, Quad’s net sales were $1.92 billion vs. $2.0 billion for the same period in 2011, reflecting expected volume and price pressures combined with impacts from continued economic uncertainty and secular pressures.

Year-to-date Adjusted EBITDA was $238 million vs. $258 million in 2011, reflecting lower volumes partially offset by lower selling, general and administrative costs. Recurring Free Cash Flow was $167 million for the first six months of 2012 compared to $102 million in the first six months of 2011, continuing a track record of solid cash flow generation.

About Quad
Quad/Graphics (NYSE: QUAD) is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe.

Source: Quad.
 

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