QUAD/GRAPHICS, INC. | Quad/Graphics Reports Third Quarter and Year-to-Date September 2014 Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results Remain In-Line with Company's Expectations Third Quarter Highlights:
SUSSEX, Wis.--(BUSINESS WIRE)--Nov. 5, 2014-- Quad/Graphics, Inc. (NYSE: QUAD) ("Quad/Graphics" or the "Company") today reported results for its third quarter ending September 30, 2014. The reported results include Brown Printing from the day of acquisition on May 30, 2014. Prior year financial results do not include the acquisition of Brown Printing. For full financial results, including reconciliations of non-GAAP financial measures, please see the accompanying information. "Our third quarter results were in-line with our expectations and we remain on track to achieve our 2014 financial objectives," said Joel Quadracci, Quad/Graphics Chairman, President & CEO. "We continue to move forward with our disciplined integration of Brown Printing, which includes a strong focus on serving our clients well while improving the efficiency and productivity of our platform to drive future cost savings. As always, we are committed to our priorities to maintain a strong and flexible balance sheet, invest in our business, pursue profitable investment opportunities, and create long-term value for our shareholders and clients." For the third quarter of 2014, net sales were $1.2 billion, an increase of 2.5% compared to the same period in 2013 due to the Brown Printing acquisition. Third quarter 2014 Adjusted EBITDA was $151 million as compared to $154 million for the same period in 2013, and Adjusted EBITDA Margin was 12.2% as compared to 12.8% in 2013, which reflect the impacts of ongoing volume and pricing pressures. For the first nine months of 2014, net sales were $3.4 billion, consistent with the same period in 2013. Year-to-date Adjusted EBITDA was $360 million versus $379 million for the same period in 2013, and Adjusted EBITDA Margin was 10.5% as compared to 11.0% in 2013. "Year-to-date Free Cash Flow generation was in line with our expectations, and we continue to be a significant annual cash flow generator," said Dave Honan, Quad/Graphics Vice President and CFO. "We realize our strongest volumes in the back half of the year due to seasonality and, as a result, our Free Cash Flow is primarily generated in the fourth quarter of the year." Quad/Graphics' quarterly dividend of $0.30 per share will be payable on December 19, 2014, to shareholders of record as of December 8, 2014. Quarterly Conference Call Quad/Graphics (NYSE: QUAD) will hold a conference call at 10 a.m. ET / 9 a.m. CT on Thursday, November 6, to discuss third quarter 2014 results. To access the conference call, it is recommended that you listen via computer at: http://engage.vevent.com/rt/quadgraphics~110614http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fengage.vevent.com%2Frt%2Fquadgraphics%7E110614&esheet=50977831&newsitemid=20141105006846&lan=en-US&anchor=http%3A%2F%2Fengage.vevent.com%2Frt%2Fquadgraphics%7E110614&index=1&md5=9117b38982f54b3fabde824a5225f8f3. If for any reason you are unable to stream, you can listen to the audio via the telephone by calling:
The replay will be available for 30 days following the conference call by dialing (855) 859-2056 or (404) 537-3406 and entering the Conference ID number 19905873 and Security Code 31833. Forward-Looking Statements This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company's future results, financial condition, revenue, earnings, free cash flow, margins, objectives, goals, strategies, beliefs, intentions, plans, estimates, prospects, projections and outlook of the Company and can generally be identified by the use of words or phrases such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "project," "believe," "continue" or the negatives of these terms, variations on them and other similar expressions. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those expressed in or implied by such forward-looking statements. Forward-looking statements are based largely on the Company's expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. The factors that could cause actual results to materially differ include, among others: the impact of significant overcapacity in the highly competitive commercial printing industry, which creates downward pricing pressure and fluctuating demand for printing services; the inability of the Company to reduce costs and improve operating efficiency rapidly enough to meet market conditions; the impact of electronic media and similar technological changes, including digital substitution by consumers; the impact of changes in postal rates, service levels or regulations; the impact of changing future economic conditions; the failure to renew long-term contracts with clients on favorable terms or at all; the failure of clients to perform under long-term contracts due to financial or other reasons or due to client consolidation; the failure to successfully identify, manage, complete and integrate acquisitions and investments; the impact of increased business complexity as a result of the Company's entry into additional markets; the impact of fluctuations in costs (including labor-related costs, energy costs, freight rates and raw materials) and the impact of fluctuations in the availability of raw materials; the impact of regulatory matters and legislative developments or changes in laws, including changes in privacy and environmental laws; the impact on the holders of Quad/Graphics class A common stock of a limited active market for such shares and the inability to independently elect directors or control decisions due to the voting power of the class B common stock; the impact of risks associated with the operations outside of the United States; significant capital expenditures may be needed to maintain the Company's platform and processes and to remain technologically and economically competitive; and the other risk factors identified in the Company's most recent Annual Report on Form 10-K, as such may be amended or supplemented by subsequent Quarterly Reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. Except as required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Financial Measures This press release contains financial measures not prepared in accordance with generally accepted accounting principles (referred to as Non-GAAP), specifically Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow. Adjusted EBITDA is defined as net earnings (loss) attributable to Quad/Graphics common shareholders plus interest expense, income tax expense (if applicable), depreciation and amortization, restructuring, impairment and transaction-related charges, and loss on debt extinguishment, and less income tax benefit (if applicable). Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales. Free Cash Flow is defined as net cash provided by operating activities less purchases of property, plant and equipment. These measures are presented to provide additional information regarding Quad/Graphics' performance and because they are important measures by which Quad/Graphics assesses the profitability and liquidity of its business. These measures should not be considered alternatives to net earnings as a measure of operating performance or to cash flows provided by operating activities as a measure of liquidity. About Quad/Graphics Quad/Graphics (NYSE: QUAD), a leading global printer and media channel integrator, is redefining print in today's multichannel media world by helping marketers and publishers capitalize on print's ability to complement and connect with other media channels. With consultative ideas, worldwide capabilities, leading-edge technology and single-source simplicity, Quad/Graphics has the resources and knowledge to help its clients maximize the revenue they derive from their marketing spend through channel integration, and minimize their total cost of print production and distribution through a fully integrated national distribution network. The Company provides a diverse range of print solutions, media solutions and logistics services from multiple locations throughout North America, Latin America and Europe.
Restructuring, impairment and transaction-related charges are included in Operating Income/(Loss) above.
______________________________ (1) Operating results for the three months ended September 30, 2014 and 2013 were affected by the following restructuring, impairment and transaction-related charges:
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In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. They are presented to provide additional information regarding Quad/Graphics' performance and because they are important measures by which Quad/Graphics assesses the profitability and liquidity of its business. These measures should not be considered alternatives to net earnings (loss) as a measure of operating performance or to cash flows provided by operating activities as a measure of liquidity.
______________________________ (1) Operating results for the nine months ended September 30, 2014 and 2013 were affected by the following restructuring, impairment and transaction-related charges:
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In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. They are presented to provide additional information regarding Quad/Graphics' performance and because they are important measures by which Quad/Graphics assesses the profitability and liquidity of its business. These measures should not be considered alternatives to net earnings (loss) as a measure of operating performance or to cash flows provided by operating activities as a measure of liquidity.
______________________________ (1) Includes an estimated $77 million benefit realized in the nine months ended September 30, 2013 from the restoration of normalized working capital levels following the January 2013 acquisition of Vertis, which was acquired without normalized levels of accounts payable and accrued liabilities. In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. They are presented to provide additional information regarding Quad/Graphics' performance and because they are important measures by which Quad/Graphics assesses the profitability and liquidity of its business. These measures should not be considered alternatives to net earnings (loss) as a measure of operating performance or to cash flows provided by operating activities as a measure of liquidity.
______________________________ (1) The calculation of Adjusted EBITDA for Quad/Graphics for the trailing twelve months ended September 30, 2014 and December 31, 2013, was as follows:
(2) As permitted by our April 28, 2014 $1.6 billion senior secured credit facility, we included certain pro forma financial information related to the acquisition of Brown Printing when calculating the Debt Leverage Ratio as of September 30, 2014. As the acquisition of Brown Printing was completed on May 30, 2014, the $19.9 million pro forma Adjusted EBITDA represents the period from October 1, 2013 to May 29, 2014. Adjusted EBITDA for Brown Printing was calculated in a consistent manner with the calculation above for Quad/Graphics. Brown Printing's financial information for the months of June 2014 through September 2014 have been included within the trailing twelve months Adjusted EBITDA for Quad/Graphics as the results of Brown Printing have been consolidated with Quad/Graphics' financial results since the date of acquisition. If the eight months of pro forma Adjusted EBITDA for Brown Printing was not included in the calculation, the Company's Debt Leverage Ratio would have been 2.91x. In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. They are presented to provide additional information regarding Quad/Graphics' performance and because they are important measures by which Quad/Graphics assesses the profitability and liquidity of its business. These measures should not be considered alternatives to net earnings (loss) as a measure of operating performance or to cash flows provided by operating activities as a measure of liquidity.
______________________________ (1) Adjusted Diluted Earnings Per Share excludes: (i) restructuring, impairment and transaction-related charges and (ii) discrete income tax items. (2) Represents the impact of dividends distributed to non-vested stock option holders in accordance with the two-class method of calculating GAAP earnings per share. In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. They are presented to provide additional information regarding Quad/Graphics' performance and because they are important measures by which Quad/Graphics assesses the profitability and liquidity of its business. These measures should not be considered alternatives to net earnings (loss) as a measure of operating performance or to cash flows provided by operating activities as a measure of liquidity.
______________________________ (1) Adjusted Diluted Earnings Per Share excludes: (i) restructuring, impairment and transaction-related charges, (ii) the loss on debt extinguishment and (iii) discrete income tax items. (2) Represents the impact of dividends distributed to non-vested stock option holders in accordance with the two-class method of calculating GAAP earnings per share. In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. They are presented to provide additional information regarding Quad/Graphics' performance and because they are important measures by which Quad/Graphics assesses the profitability and liquidity of its business. These measures should not be considered alternatives to net earnings (loss) as a measure of operating performance or to cash flows provided by operating activities as a measure of liquidity. Source: Quad/Graphics, Inc.
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