Despite Loss, Quad Exceeds Q4 and 2011 Guidance

SUSSEX, WI—Quad/Graphics Inc. recorded fourth-quarter and full-year 2011 results that surpassed management’s previously announced guidance. The report included the company’s Canadian operations, which are in the process of being sold, unless otherwise noted.

“We are pleased with our 2011 fourth-quarter results, which reflect our ongoing focus on improving productivity and aggressively managing costs, while continuing to pay down debt to strengthen our credit metrics and balance sheet,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “Given our strong finish to the year, as well as the strength of our recurring free cash flow and lower risk profile that our recent leverage reduction has provided, we are pleased to declare a 25 percent increase in our quarterly dividend…”

Quad’s net sales for the fourth quarter of 2011 were $1.31 billion, down from $1.39 billion for the same period in 2010. It recorded a net loss of $6.8 million for the quarter, compared to net earnings of $26.5 million in the four quarter of 2010. Adjusted EBITDA was $197 million versus $224 million for the same period in 2010.

These results were adversely impacted by volume and pricing pressures, primarily in Canada and in the U.S. retail insert and book product lines, as well as by higher bad debt provisions in 2011 and non-recurring gains in 2010. Offsetting these impacts were productivity improvements, and incremental synergy savings, which totaled $44 million during the quarter and $196 million since the Worldcolor acquisition.

For the full-year 2011, net sales were $4.67 billion, compared to pro forma net sales of $4.76 billion for the previous year. Quad’s net loss of $46.6 million was an improvement over its net loss of $250 million for fiscal 2010. Adjusted EBITDA was $638 million for 2011 and, due to stronger fourth quarter performance, the company surpassed revised 2011 guidance of $610 million to $625 million.

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