Quad/Graphics' Full-Year Results In-Line with Expectations; Strong Free Cash Flow Predicted for 2015
SUSSEX, WI—February 24, 2015—Quad/Graphics Inc. has reported its fourth quarter and full-year 2014 results. The reported results include Brown Printing ("Brown Printing") from the day of acquisition on May 30, 2014. Prior year financial results do not include the acquisition of Brown Printing.
"We are pleased to report that fourth quarter 2014 results were in line with our expectations," said Joel Quadracci, Quad/Graphics chairman, president and CEO. "Our ability to generate significant cash flow and maintain a strong balance sheet continues to allow us to deploy capital in ways to generate value for the company and our shareholders despite ongoing industry challenges. We continue to strengthen and grow the business through compelling acquisitions, such as Brown Printing and Marin’s International, and make strategic investments in our platform, including the recently announced three-year plan to transform our book platform through digital press technology. We remain committed to improving our clients’ experience with us while engaging employees to produce the very best results to advance our overall strategic goals."
Net sales for the fourth quarter 2014 were $1.4 billion, an increase of 5.5 percent over the same period in 2013, which was driven by the Brown Printing acquisition. Fourth quarter 2014 Adjusted EBITDA was $183 million compared to $198 million for the same period in 2013 and Adjusted EBITDA margin was 12.8 percent compared to 14.7 percent. The Adjusted EBITDA margin variance primarily reflects the impacts of ongoing volume and pricing pressures, and the margin dilution impact of the Brown Printing acquisition, which has a historically lower margin profile.
For full-year 2014, net sales were $4.9 billion versus net sales of $4.8 billion for the previous year. Full-year 2014 Adjusted EBITDA was $543 million compared to $577 million for fiscal 2013, and Adjusted EBITDA margin was 11.2 percent compared to 12.0 percent for the previous year. Free Cash Flow was $154 million compared to $292 million for the previous year. The variance in Free Cash Flow was primarily due to an estimated $90 million one-time benefit in 2013 from the restoration of normalized working capital levels following the Vertis acquisition. Also contributing to the variance was increased working capital, including a working capital increase from the Brown Printing acquisition and lower Adjusted EBITDA.