Quad/Graphics Reports 4% Net Sales Drop, Increase in EBITDA, Free Cash Flow
SUSSEX, Wis. — May 4, 2016 — Quad/Graphics Inc. has reported results for its first quarter ending March 31, 2016.
"We are pleased with our first quarter 2016 results, which reflect our ongoing efforts focused on productivity improvement and sustainable cost reduction," remarks Joel Quadracci, Quad/Graphics chairman, president and CEO. "We remain disciplined in how we manage all aspects of our business to minimize the impacts of ongoing industry and economic uncertainties, and to position us as the industry’s high-quality, low-cost producer. At the same time, we continue to strengthen the balance sheet by paying down debt and generating significant Free Cash Flow. As we look forward, we will continue to innovate by creating new, complementary products and marketing services that will help our clients drive improved performance. Our focus is on helping clients improve both the efficiency and effectiveness of their media spend across multiple channels."
Net sales for the first quarter 2016 were $1.0 billion, a decrease of 4% due to ongoing volume and pricing pressures. First quarter Adjusted EBITDA was $120 million compared to $103 million for the same period in 2015, and Adjusted EBITDA margin was 11.5% compared to 9.5%. The increase in Adjusted EBITDA and Adjusted EBITDA margin primarily reflect the impact of enhanced operational efficiency from ongoing improvements in manufacturing productivity and sustainable cost reductions.
First quarter 2016 Free Cash Flow was $86 million, an increase of $64 million from the same period in 2015. The increase primarily reflects the impact from ongoing improvements in working capital levels and increased cash from earnings, as well as reduced capital expenditures.
"Our strategic actions to implement sustainable operational efficiencies and improve the earnings power of the business have positioned Quad/Graphics to be a significant Free Cash Flow generator in 2016 and beyond," shares Dave Honan, Quad/Graphics EVP and CFO. "Our Free Cash Flow supports our disciplined capital deployment strategy, which includes deleveraging the balance sheet. Since September 2015, we have reduced debt by $245 million, improving our Debt Leverage Ratio to 2.62x from 3.07x. In addition, we remain committed to maintaining our annual dividend of $1.20 per share, which represents less than 30% of Free Cash Flow. As we move forward in this challenging industry environment, we remain focused on creating value for our stakeholders."
Quad/Graphics’ next quarterly dividend of $0.30 per share will be payable on June 17, 2016, to shareholders of record as of June 6, 2016.
At the forefront of innovation for 45 years, Quad/Graphics (NYSE: QUAD) is a leading print and marketing services provider focused on helping brand owners market their products, services and content more efficiently and effectively across media channels. With a consultative approach, worldwide capabilities, leading-edge technology and single-source simplicity, Quad/Graphics has the resources and knowledge to help a wide variety of clients in distinct vertical industries, including but not limited to retail, publishing, healthcare, insurance and financial.
The Company helps its clients perform better in today’s rapidly changing world through the integration of print products with complementary services to improve efficiencies, reduce costs, create engagement, lift response and increase revenue. Quad/Graphics provides a diverse range of print and related products, services and solutions from multiple locations throughout North America, South America and Europe, and strategic partnerships in Asia and other parts of the world.