Quad/Graphics' Q4 2015 Free Cash Flow Results Exceed Expectations
SUSSEX, Wis. — February 23, 2016 — Quad/Graphics Inc. has reported fourth quarter and full-year 2015 results.
Fourth Quarter and Full-Year Highlights:
- Delivered $1.3 billion in net sales during the fourth quarter and $4.7 billion in net sales for full-year 2015.
- Achieved $154 million in fourth quarter Adjusted EBITDA and $462 million in full-year Adjusted EBITDA.
- Generated $147 million in Free Cash Flow during the fourth quarter bringing full-year Free Cash Flow generation to $215 million.
- Improved yearend Debt Leverage Ratio to 2.92x, reduced from 3.09x as of September 30, 2015.
- Declared quarterly dividend of $0.30 per share.
- Confirms 2016 financial guidance for net sales of $4.4 billion to $4.6 billion, Adjusted EBITDA of $420 million to $460 million, and Free Cash Flow of $190 million to $230 million.
“We are pleased to report that our fourth quarter 2015 results were better than we expected following our focused efforts to aggressively manage costs and improve manufacturing productivity,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “I am proud of our team which took swift action to offset increased pricing and volume pressures that had accelerated in the second half of 2015. We were able to incrementally reduce our cost structure by $100 million on a run rate basis for 2016 – ahead of schedule – while driving increased productivity. Further, as a result of our efforts, we surpassed our expectations for Free Cash Flow, which is the foundation of our strong balance sheet and sustainable dividend.”
Quadracci added, “The global economic climate remains in flux. Therefore, we will build on our cost control momentum with aggressive, innovative cost management and improved labor productivity in support of our goal to hold the line on Adjusted EBITDA margins, and generate strong Free Cash Flow that supports value-creating opportunities. As always, we remain committed to being the industry’s high-quality, low-cost producer while delivering an exceptional client experience.”
Net sales for the fourth quarter 2015 were $1.3 billion, down 6% from the same period in 2014. Fourth quarter 2015 Adjusted EBITDA was $154 million compared to $183 million for the same period in 2014, and Adjusted EBITDA margin was 11.5% compared to 12.8%. The decline on the top-line and Adjusted EBITDA margin variance primarily reflects the impacts of ongoing pricing and volume pressures.
For full-year 2015, net sales were $4.7 billion versus net sales of $4.9 billion for the previous year. Full-year 2015 Adjusted EBITDA was $462 million compared to $543 million for fiscal 2014, and Adjusted EBITDA margin was 9.9% compared to 11.2% for the previous year. Full-year 2015 Free Cash Flow was $215 million compared to $154 million for the previous year. Free Cash Flow increased $61 million or 40% over the prior year due to sustainable reductions in ongoing working capital needs.
“Quad/Graphics continues to be a significant Free Cash Flow generator, which is important to maintaining a strong and flexible balance sheet that supports our disciplined capital deployment strategy,” said Dave Honan, Quad/Graphics executive VP and CFO. “Our strong Free Cash Flow in the fourth quarter enabled us to reduce debt and improve our yearend Debt Leverage Ratio to 2.92x, reduced from 3.09x at Sept. 30, 2015. In addition, the significant Free Cash Flow allows the Company to maintain an affordable and sustainable annual dividend of $1.20 per share, representing less than 30% of Free Cash Flow.”
Quad/Graphics confirmed its previously announced 2016 guidance, originally released on Jan. 6, 2016, as follows:
Honan concluded: “We expect 2016 Adjusted EBITDA margin to be approximately 10% at the midpoint of our guidance, which is essentially flat with the 2015 Adjusted EBITDA margin. Our ongoing efforts to implement permanent improvements to Quad/Graphics’ cost structure and working capital levels will give us the ability to sustain the strong Free Cash Flow we generated in 2015 into the foreseeable future.”
Quad/Graphics’ next quarterly dividend of $0.30 per share will be payable on March 18, 2016, to shareholders of record as of March 7, 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.