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Quad/Graphics Reports Double-Digit Decline in EBITDA, Lower Net Sales

November 7, 2012
SUSSEX, W—Nov. 7, 2012—Quad/Graphics Inc. has reported results for its third quarter ending Sept. 30, 2012.

Highlights:
  • Third-quarter net sales of $1.04 billion.
  • Adjusted EBITDA of $155 million and Adjusted EBITDA margin of 14.9 percent for the quarter.
  • Repaid $16 million in debt during the quarter and $148 million year-to-date.
  • Announced intent to acquire substantially all the assets of Vertis Holdings.

“Our third quarter performance was in line with our expectations,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “We were able to expand and renew multiple major customer agreements. This was accomplished while we remained diligent in our efforts to implement sustainable cost reductions and improve productivity. Further, our ability to generate significant cash flow and strengthen our balance sheet through consistent debt paydown has allowed us to be flexible with our plans for capital deployment and take advantage of opportunities, such as our recently announced agreement to acquire Vertis.

“The combination of Quad/Graphics and Vertis is a natural and strategic fit that further strengthens and expands our offerings, allowing us to better serve our clients while achieving additional efficiencies and building long-term value for our shareholders. We expect the closing to occur sometime in the first quarter of 2013, subject to Bankruptcy Court and customary regulatory approvals. Until then, it is business as usual and, given ongoing economic and industry challenges, we will remain focused on performing well for our clients, improving productivity and aggressively managing costs,” added Quadracci.

Quad’s net sales for the third quarter of 2012 totaled $1.04 billion vs. $1.11 billion for the same period in 2011. Third-quarter Adjusted EBITDA was $155 million compared to $174 million for the same period in 2011, and Adjusted EBITDA margin was 14.9 percent vs. 15.6 percent in 2011.

The quarterly results reflect expected volume declines as well as pricing pressures on print and byproduct sales. Partially offsetting these impacts in the quarter were lower selling, general and administrative costs and $23 million in incremental synergy savings.

For the first nine months of 2012, the company’s net sales were $2.96 billion vs. net sales of $3.11 billion for the same period in 2011, reflecting expected volume and price pressures. Year-to-date Adjusted EBITDA was $393 million vs. $431 million in 2011, reflecting lower volumes and pricing pressures on print and byproduct sales, partially offset by lower selling, general and administrative costs and incremental synergy savings. .

John Fowler, executive vice president and chief financial officer, commented, “We are proud of the progress we continue to make in managing our debt to maintain a strong balance sheet, which provides us with the flexibility to adjust to changing economic conditions. Despite being in our peak season for working capital, we repaid $16 million in debt during the quarter and $148 million year-to-date.”

About Quad/Graphics
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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