Company Achieved Revenue Growth from Continuing Transformation
to Marketing Solutions Provider; Board Authorizes New $100 Million
Share Repurchase Program
Quad/Graphics, Inc. (NYSE: QUAD) ("Quad/Graphics" or the
"Company") today reported results for its second quarter ending
June 30, 2018. For full financial results, please see the
accompanying information.
Second Quarter Financial Highlights
- Increased net sales 5% to
$1 billion.
- Increased net earnings by
$2 million to $9 million and diluted earnings per share
by $0.05 to $0.18.
- Achieved Non-GAAP Adjusted EBITDA and
Margin of $90 million and 8.8%, respectively, and generated
Non-GAAP Adjusted Diluted Earnings Per Share of $0.23.
- Repurchased $37 million of
Quad/Graphics stock and launches a new $100 million share
repurchase program authorized by the Board of Directors.
- Declares quarterly dividend of $0.30
per share.
"Our results for the second quarter of 2018 were in-line with
our expectations and reflect the positive impact on revenue from
our transformation to a marketing solutions provider," said Joel
Quadracci, Quad/Graphics Chairman, President & Chief Executive
Officer. "Our integrated marketing platform is unique and enables
our clients to strategically plan, produce, deploy, manage and
measure their marketing content across traditional and digital
channels. By having a fully integrated offering, we reduce
complexity, improve process efficiencies and enhance marketing
spend effectiveness for our clients."
Quadracci added: "Our investments in Ivie & Associates and
Rise Interactive continue to strengthen our integrated marketing
platform and the client value we create. Recent wins validate that
our strategy is working, especially in the digital marketing and
technology solutions spaces. For example, one of our large national
retail clients recently partnered with Quad for digital services
including paid search, social and display placement, spend
optimization, and analytics reporting in addition to the
traditional services we already provide for them including
creative, production, media planning, printing and distribution. As
we move ahead, we will continue to strengthen our integrated
marketing platform to ensure our products and services continue to
help our clients and generate additional revenue across all our
businesses."
Summary Results
Net sales increased 5.4% during the second quarter 2018 to
$1 billion, reflecting the impact of the Ivie & Associates
and Rise Interactive investments as part of the Company’s
transformation to a marketing solutions provider. Organic sales
declined 2.2%, after excluding acquisition sales impact of 6.2%,
increased pass-through paper sales of 1.6% and a -0.2% foreign
exchange impact. The results reflect ongoing print industry volume
and pricing pressures, and are consistent with the Company’s
previous guidance. Net earnings increased 40% during the second
quarter 2018 to $9 million and diluted earnings per share
improved by $0.05 to $0.18 compared to $0.13 in 2017. Non-GAAP
Adjusted Diluted Earnings Per Share for the second quarter 2018
declined 4% to $0.23 compared to $0.24 in the second quarter of
2017. Second quarter 2018 Non-GAAP Adjusted EBITDA was
$90 million compared to $94 million in second quarter
2017, and Adjusted EBITDA Margin was 8.8% compared to 9.7% in
2017.
Net sales increased 1.1% during the six months ended June 30,
2018. Organic sales declined 3.7%, after excluding acquisition
sales impact of 4.1% and increased pass-through paper sales of
0.7%, reflecting print industry volume and pricing pressures. Net
earnings for the six months ended June 30, 2018, decreased
$26 million to $6 million, or $0.11 per share, and
included a special non-cash charge of $22 million for an
employee stock ownership plan contribution as part of the benefit
of tax reform and $21 million in higher restructuring charges.
Excluding the special contribution and restructuring changes,
Non-GAAP Adjusted Diluted Earnings Per Share improved 5% to $0.80
during the six months ended June 30, 2018, compared to $0.76 for
2017. Year-to-date Non-GAAP Adjusted EBITDA was $200 million
compared to $213 million for 2017, and Adjusted EBITDA margin
was 10.1% compared to 10.8% in 2017.
Net cash provided by operating activities was $41 million
for the first six months of 2018 compared to $112 million in
2017, and Free Cash Flow was negative $13 million. The decline
to 2017 was primarily due to expected timing differences in 2018
versus 2017 for cash generated from working capital, which will be
weighted more toward the fourth quarter, and includes an
intentional build-up in paper inventories in anticipation of supply
constraints. As a reminder, the Company generates the majority of
its Free Cash Flow in the second half of the year.
"We delivered second quarter results in-line with our
expectations and we remain on track to deliver on our 2018
financial guidance," said Dave Honan, Executive Vice President and
Chief Financial Officer for Quad/Graphics. "Our Debt Leverage Ratio
of 2.34x remains well within our long-term targeted range of 2.0x
to 2.5x and includes the impacts from $37 million of share
repurchases in the quarter and $71 million in strategic
investments made for Ivie and Rise in 2018. We believe the strength
of our balance sheet gives us the ability to balance our use of
capital between investing back into our business and returning
capital to our shareholders, including our consistent dividend and
our share repurchases. We are pleased to announce our Board of
Directors authorized a new $100 million stock repurchase
program to provide sufficient capacity for us to repurchase shares
in the future. We remain stringently focused on transforming our
business and driving shareholder value as we move forward."
Quad/Graphics’ next quarterly dividend of $0.30 per share will
be payable on September 7, 2018, to shareholders of record as of
August 20, 2018.
Quarterly Conference Call
Quad/Graphics (NYSE: QUAD) will hold a conference call at
10 a.m. ET on Wednesday, August 1, to discuss second quarter
2018 results. The call will be hosted by Joel Quadracci,
Quad/Graphics Chairman, President & Chief Executive Officer,
and Dave Honan, Quad/Graphics Executive Vice President & Chief
Financial Officer. The full earnings release and slide presentation
will be concurrently available on the Investors section of
Quad/Graphics' website at http://investors.qg.com.
Participants can pre-register for the webcast by navigating to
http://dpregister.com/10120920.
Participants will be given a unique PIN to gain immediate access to
the call on August 1, bypassing the live operator. Participants may
pre-register at any time, including up to and after the call start
time.
Alternatively, participants without internet access may dial in
on the day of the call as follows:
- U.S. Toll-Free: 1-877-328-5508
- International Toll: 1-412-317-5424
Telephone playback will be available shortly after the
conference call ends, accessible as follows:
- U.S. Toll-Free: 1-877-344-7529
- International Toll: 1-412-317-0088
- Replay Access Code: 10120920
The playback will be available until September 1, 2018.
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 decreasing demand for printed
materials and significant overcapacity in the highly competitive
commercial printing industry creates downward pricing pressures and
potential underutilization of assets; the impact of electronic
media and similar technological changes, including digital
substitution by consumers; the inability of the Company to reduce
costs and improve operating efficiency rapidly enough to meet
market conditions; the impact of changing future economic
conditions; the failure of clients to perform under contracts or to
renew contracts with clients on favorable terms or at all; the
impact of increased business complexity as a result of the
Company's transformation into a marketing services provider; the
impact of regulatory matters and legislative developments or
changes in laws, including changes in cyber-security, privacy and
environmental laws; the impact of fluctuations in costs (including
labor and labor-related costs, energy costs, freight rates and raw
materials) and the impact of fluctuations in the availability of
raw materials; the failure to attract and retain qualified
production personnel; the impact of changes in postal rates,
service levels or regulations; the fragility and decline in overall
distribution channels, including newspaper distribution channels;
the failure to successfully identify, manage, complete and
integrate acquisitions and investments; the impact of risks
associated with the operations outside of the United States,
including costs incurred or reputational damage suffered due to
improper conduct of its employees, contractors or agents;
significant capital expenditures may be needed to maintain the
Company's platform and processes and to remain technologically and
economically competitive; the impact of the various restrictive
covenants in the Company's debt facilities on the Company's ability
to operate its business; 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
an other than temporary decline in operating results and enterprise
value that could lead to non-cash impairment charges due to the
impairment of property, plant and equipment and other intangible
assets; 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 to the extent 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, Free Cash Flow, Debt Leverage Ratio and Adjusted Diluted
Earnings Per Share. Adjusted EBITDA is defined as net earnings
(loss) attributable to Quad/Graphics common shareholders excluding
interest expense, income tax expense (benefit), depreciation and
amortization, restructuring, impairment and transaction-related
charges, net pension income, employee stock ownership plan
contributions, loss (gain) on debt extinguishment, and equity in
(earnings) loss of unconsolidated entity. 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. Debt Leverage Ratio is defined as
total debt and capital lease obligations divided by the last twelve
months of Adjusted EBITDA. Adjusted Diluted Earnings Per Share is
defined as net earnings (loss) excluding restructuring, impairment
and transaction-related charges, employee stock ownership plan
contributions, loss (gain) on debt extinguishment, equity in
(earnings) loss of unconsolidated entity, discrete income tax items
and net (earnings) loss attributable to noncontrolling interests,
divided by diluted weighted average number of common shares
outstanding.
The Company believes that these Non-GAAP measures, when
presented in conjunction with comparable GAAP measures, provide
additional information for evaluating Quad/Graphics' performance
and are important measures by which Quad/Graphics' management
assesses the profitability and liquidity of its business. These
Non-GAAP measures should be considered in addition to, not as a
substitute for or superior to, net earnings (loss) as a measure of
operating performance or to cash flows provided by operating
activities as a measure of liquidity. These Non-GAAP measures may
be different than Non-GAAP financial measures used by other
companies. Reconciliation to the GAAP equivalent of these Non-GAAP
measures are contained in tabular form on the attached unaudited
financial statements.
About Quad/Graphics
Quad/Graphics (NYSE:QUAD) is a leading marketing solutions
provider. The Company leverages its strong print foundation as part
of a much larger, robust integrated marketing services platform
that helps marketers and content creators improve the efficiency
and effectiveness of their marketing spend across offline and
online 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 multiple vertical industries, including
retail, publishing and healthcare. Quad/Graphics provides a diverse
range of digital and 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. For additional information visit www.QG.com.
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three
Months Ended June 30, 2018 and 2017 (in millions, except per share
data) (UNAUDITED)
Three Months Ended June
30, 2018 2017 Net sales $ 1,015.5 $
963.2 Cost of sales 826.7 765.0 Selling, general and
administrative expenses 99.2 104.3 Depreciation and amortization
58.3 58.5 Restructuring, impairment and transaction-related charges
10.4 5.3 Total operating expenses 994.6 933.1
Operating income $ 20.9 $ 30.1
Interest expense 18.4 17.6 Pension income (3.1 ) (2.6 )
Earnings before income taxes and equity in (earnings) loss
of unconsolidated entity 5.6 15.1 Income tax (benefit)
expense (3.7 ) 8.3 Earnings before equity in
(earnings) loss of unconsolidated entity 9.3 6.8 Equity in
(earnings) loss of unconsolidated entity (0.2 ) 0.1
Net earnings 9.5 6.7 Net earnings
attributable to noncontrolling interests (0.1 ) —
Net earnings attributable to Quad/Graphics common
shareholders $ 9.4 $ 6.7
Earnings per share attributable to Quad/Graphics
common shareholders Basic $ 0.19 $ 0.14 Diluted $
0.18 $ 0.13
Weighted average number of
common shares outstanding Basic 50.8 49.5 Diluted
52.5 51.7
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Six Months
Ended June 30, 2018 and 2017 (in millions, except per share data)
(UNAUDITED)
Six Months Ended June 30,
2018 2017 Net sales $ 1,983.0 $ 1,961.8
Cost of sales 1,619.1 1,546.1 Selling, general and
administrative expenses 186.1 202.9 Depreciation and amortization
114.5 117.2 Restructuring, impairment and transaction-related
charges 35.3 14.5 Total operating expenses 1,955.0
1,880.7
Operating income $ 28.0
$ 81.1 Interest expense 35.7 35.8 Net pension
income (6.2 ) (5.2 ) Loss on debt extinguishment — 2.6
Earnings (loss) before income taxes and equity in
(earnings) loss of unconsolidated entity (1.5 ) 47.9 Income
tax (benefit) expense (7.0 ) 15.0 Earnings before
equity in (earnings) loss of unconsolidated entity 5.5 32.9
Equity in (earnings) loss of unconsolidated entity (0.5 ) 0.8
Net earnings 6.0 32.1 Net
earnings attributable to noncontrolling interests (0.1 ) —
Net earnings attributable to Quad/Graphics common
shareholders $ 5.9 $ 32.1
Earnings per share attributable to Quad/Graphics
common shareholders Basic $ 0.12 $ 0.65 Diluted $
0.11 $ 0.62
Weighted average number of
common shares outstanding Basic 50.5 49.3 Diluted
52.3 51.6
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2018 and
December 31, 2017 (in millions) (UNAUDITED)
June 30, December 31, 2018
2017 ASSETS Cash and cash equivalents $ 8.9 $ 64.4
Receivables, less allowances for doubtful accounts 510.4 552.5
Inventories 290.7 246.5 Prepaid expenses and other current assets
68.1 45.1 Total current assets 878.1 908.5
Property, plant and equipment—net 1,306.8 1,377.6 Goodwill 56.1 —
Other intangible assets—net 128.5 43.4 Equity method investment in
unconsolidated entity 3.5 3.6 Other long-term assets 96.9
119.3 Total assets $ 2,469.9 $ 2,452.4
LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $
396.1 $ 381.6 Accrued liabilities 272.1 316.7 Short-term debt and
current portion of long-term debt 36.9 42.0 Current portion of
capital lease obligations 5.4 5.6 Total current
liabilities 710.5 745.9 Long-term debt 993.2 903.5 Capital
lease obligations 12.3 13.7 Deferred income taxes 44.9 41.9 Other
long-term liabilities 205.7 225.0 Total liabilities
1,966.6 1,930.0 Shareholders' equity Preferred stock — —
Common stock 1.4 1.4 Additional paid-in capital 854.5 861.1
Treasury stock, at cost (55.0 ) (52.8 ) Accumulated deficit (182.7
) (162.9 ) Accumulated other comprehensive loss (133.4 ) (124.4 )
Quad/Graphics' shareholders' equity 484.8 522.4 Noncontrolling
interests 18.5 — Total shareholders' equity and
noncontrolling interests 503.3 522.4 Total
liabilities and shareholders' equity $ 2,469.9 $ 2,452.4
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months
Ended June 30, 2018 and 2017 (in millions) (UNAUDITED)
Six Months Ended June 30, 2018
2017 OPERATING ACTIVITIES Net earnings $ 6.0 $
32.1 Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization 114.5 117.2
Employee stock ownership plan contribution 22.3 — Impairment
charges 11.5 0.7 Loss on debt extinguishment — 2.6 Stock-based
compensation 9.1 9.7 Gain from property insurance claims (18.3 )
(5.0 ) Gain on the sale or disposal of property, plant and
equipment (2.1 ) (7.1 ) Deferred income taxes 1.1 6.4 Other
non-cash adjustments to net earnings 1.2 2.6 Changes in operating
assets and liabilities—net of acquisitions (104.8 ) (47.0 ) Net
cash provided by operating activities 40.5 112.2
INVESTING ACTIVITIES Purchases of property, plant and
equipment (53.8 ) (42.8 ) Proceeds from the sale of property, plant
and equipment 8.9 21.8 Proceeds from property insurance claims 14.5
5.0 Loan to an unconsolidated entity — (5.0 ) Acquisition of
businesses—net of cash acquired (71.4 ) — Net cash used in
investing activities (101.8 ) (21.0 )
FINANCING
ACTIVITIES Proceeds from issuance of long-term debt — 375.0
Payments of long-term debt (21.5 ) (409.2 ) Payments of capital
lease obligations (3.4 ) (4.2 ) Borrowings on revolving credit
facilities 896.6 270.6 Payments on revolving credit facilities
(791.9 ) (287.4 ) Payments of debt issuance costs and financing
fees — (4.7 ) Purchases of treasury stock (36.7 ) — Proceeds from
stock options exercised 4.0 2.4 Equity awards redeemed to pay
employees' tax obligations (7.5 ) (5.9 ) Payment of cash dividends
(32.2 ) (31.7 ) Other financing activities — (4.1 ) Net cash
provided by (used in) financing activities 7.4 (99.2 )
Effect of exchange rates on cash and cash equivalents (1.6 ) (0.5 )
Net decrease in cash and cash equivalents (55.5 ) (8.5 ) Cash and
cash equivalents at beginning of period 64.4 19.2
Cash and cash equivalents at end of period $ 8.9 $ 10.7
QUAD/GRAPHICS, INC.
SEGMENT FINANCIAL INFORMATION For the Three and Six Months Ended
June 30, 2018 and 2017 (in millions) (UNAUDITED)
Restructuring,
Impairment and Operating Transaction-Related
Net Sales Income (Loss)
Charges (1)
Three months ended June 30, 2018 United States Print and
Related Services $ 919.5 $ 33.3 $ 8.1 International 96.0 1.6
2.0 Total operating segments 1,015.5 34.9 10.1 Corporate —
(14.0 ) 0.3 Total $ 1,015.5 $ 20.9 $ 10.4
Three months ended June 30, 2017 United States Print
and Related Services $ 872.3 $ 40.7 $ 2.8 International 90.9
3.3 1.8 Total operating segments 963.2 44.0 4.6 Corporate —
(13.9 ) 0.7 Total $ 963.2 $ 30.1 $ 5.3
Six months ended June 30, 2018 United States Print and
Related Services $ 1,787.3 $ 53.6 $ 28.5 International 195.7
7.3 3.0 Total operating segments 1,983.0 60.9 31.5 Corporate
— (32.9 ) 3.8 Total $ 1,983.0 $ 28.0 $ 35.3
Six months ended June 30, 2017 United States Print
and Related Services $ 1,774.5 $ 103.2 $ 9.9 International 187.3
8.1 2.8 Total operating segments 1,961.8 111.3 12.7
Corporate — (30.2 ) 1.8 Total $ 1,961.8 $ 81.1
$ 14.5 ______________________________
(1)
Restructuring, impairment and transaction-related charges
are included within operating income (loss).
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES EBITDA, EBITDA MARGIN,
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN For the Three Months
Ended June 30, 2018 and 2017 (in millions, except margin data)
(UNAUDITED)
Three Months Ended June 30,
2018 2017 Net earnings attributable to
Quad/Graphics common shareholders $ 9.4 $ 6.7 Interest expense 18.4
17.6 Income tax (benefit) expense (3.7 ) 8.3 Depreciation and
amortization 58.3 58.5 EBITDA (Non-GAAP) $ 82.4 $
91.1 EBITDA Margin (Non-GAAP) 8.1 % 9.5 % Restructuring,
impairment and transaction-related charges (1) 10.4 5.3 Net pension
income (2) (3.1 ) (2.6 ) Equity in (earnings) loss of
unconsolidated entity (3) (0.2 ) 0.1
Adjusted EBITDA
(Non-GAAP) $ 89.5 $ 93.9
Adjusted EBITDA Margin (Non-GAAP) 8.8 %
9.7 % ______________________________
(1)
Operating results for the three months ended June 30, 2018
and 2017, were affected by the following restructuring, impairment
and transaction-related charges:
Three Months
Ended June 30, 2018 2017 Employee
termination charges (a) $ 2.5 $ 3.0 Impairment charges (b) 3.6 0.3
Transaction-related charges (c) 0.1 0.4 Integration costs (d) 0.1 —
Other restructuring charges (e) 4.1 1.6 Restructuring,
impairment and transaction-related charges $ 10.4 $ 5.3
______________________________ (a) Employee termination
charges were related to workforce reductions through facility
consolidations and announced separation programs. (b) Impairment
charges were for certain property, plant and equipment no longer
being utilized in production as a result of facility
consolidations. (c) Transaction-related charges consisted of
professional service fees related to business acquisition and
divestiture activities. (d) Integration costs were primarily costs
related to the integration of acquired companies. (e) Other
restructuring charges were primarily from costs to maintain and
exit closed facilities, as well as lease exit charges, net of a
gain on the sale of facilities of $3.4 million during the three
months ended June 30, 2017. (2)
Due to a change in United States GAAP that
requires pension income to be excluded from operating income, the
Company will report Adjusted EBITDA excluding net pension income.
This change is reflected in all periods presented.
(3) The equity in (earnings) loss of unconsolidated entity includes
the results of operations for an investment in an entity where
Quad/Graphics has the ability to exert significant influence, but
not control, which is accounted for using the equity method of
accounting.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (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. The Company believes that
these Non-GAAP measures, when presented in conjunction with
comparable GAAP measures, provide additional information for
evaluating Quad/Graphics' performance and are important measures by
which Quad/Graphics' management assesses the profitability and
liquidity of its business. These Non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These Non-GAAP measures may be different than Non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES EBITDA, EBITDA MARGIN,
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN For the Six Months Ended
June 30, 2018 and 2017 (in millions, except margin data)
(UNAUDITED)
Six Months Ended June 30,
2018 2017 Net earnings attributable to
Quad/Graphics common shareholders $ 5.9 $ 32.1 Interest expense
35.7 35.8 Income tax (benefit) expense (7.0 ) 15.0 Depreciation and
amortization 114.5 117.2 EBITDA (Non-GAAP) $ 149.1 $
200.1 EBITDA Margin (Non-GAAP) 7.5 % 10.2 % Restructuring,
impairment and transaction-related charges (1) 35.3 14.5 Net
pension income (2) (6.2 ) (5.2 ) Employee stock ownership plan
contribution (3) 22.3 — Loss on debt extinguishment (4) — 2.6
Equity in (earnings) loss of unconsolidated entity (5) (0.5 ) 0.8
Adjusted EBITDA (Non-GAAP) $ 200.0
$ 212.8 Adjusted EBITDA Margin
(Non-GAAP) 10.1 % 10.8 %
______________________________ (1) Operating results for the
six months ended June 30, 2018 and 2017, were affected by the
following restructuring, impairment and transaction-related
charges:
Six Months Ended June 30, 2018
2017 Employee termination charges (a) $ 13.1 $
5.9 Impairment charges (b) 11.5 0.7 Transaction-related charges (c)
0.8 1.2 Integration costs (d) 0.2 — Other restructuring charges (e)
9.7 6.7 Restructuring, impairment and transaction-related
charges $ 35.3 $ 14.5
______________________________
(a) Employee termination charges were related to workforce
reductions through facility consolidations and separation programs.
(b) Impairment charges were for certain property, plant and
equipment no longer being utilized in production as a result of
facility consolidations. (c) Transaction-related charges consisted
of professional service fees related to business acquisition and
divestiture activities. (d) Integration costs were primarily costs
related to the integration of acquired companies. (e) Other
restructuring charges were primarily from costs to maintain and
exit closed facilities, as well as lease exit charges, net of gains
on the sale of facilities of $2.2 million and $7.1 million during
the six months ended June 30, 2018 and 2017, respectively. (2)
Due to a change in United States GAAP that
requires pension income to be excluded from operating income, the
Company will report Adjusted EBITDA excluding net pension income.
This change is reflected in all periods presented.
(3) The Company made a $22.3 million non-cash contribution to the
Company's employee stock ownership plan during the six months ended
June 30, 2018. (4) The $2.6 million loss on debt extinguishment
recorded during the six months ended June 30, 2017, relates to the
second amendment to the Company's April 28, 2014 Senior Secured
Credit Facility, completed on February 10, 2017. (5) The equity in
(earnings) loss of unconsolidated entity includes the results of
operations for an investment in an entity where Quad/Graphics has
the ability to exert significant influence, but not control, which
is accounted for using the equity method of accounting.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (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. The Company believes that
these Non-GAAP measures, when presented in conjunction with
comparable GAAP measures, provide additional information for
evaluating Quad/Graphics' performance and are important measures by
which Quad/Graphics' management assesses the profitability and
liquidity of its business. These Non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These Non-GAAP measures may be different than Non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES FREE CASH FLOW For the
Six Months Ended June 30, 2018 and 2017 (in millions) (UNAUDITED)
Six Months Ended June 30, 2018
2017 Net cash provided by operating activities
$ 40.5 $ 112.2 Less: purchases of property, plant and
equipment (53.8 ) (42.8 )
Free Cash Flow (Non-GAAP)
$ (13.3 ) $ 69.4
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (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. The Company believes that
these Non-GAAP measures, when presented in conjunction with
comparable GAAP measures, provide additional information for
evaluating Quad/Graphics' performance and are important measures by
which Quad/Graphics' management assesses the profitability and
liquidity of its business. These Non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These Non-GAAP measures may be different than Non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES DEBT LEVERAGE RATIO As
of June 30, 2018 and December 31, 2017 (in millions, except ratio)
(UNAUDITED)
June 30,
December 31, 2018 2017 Total debt and capital
lease obligations on the condensed consolidated balance sheets $
1,047.8 $ 964.8 Divided by: Trailing twelve months Adjusted
EBITDA for Quad/Graphics (Non-GAAP) (1) $ 435.4 $ 448.2 Pro forma
Adjusted EBITDA for Ivie & Associates (Non-GAAP) (2) 12.1
— Trailing twelve months Adjusted EBITDA (Non-GAAP) $
447.5 $ 448.2
Debt Leverage Ratio
(Non-GAAP) 2.34 x 2.15 x
______________________________ (1) The calculation of
Adjusted EBITDA for the trailing twelve months ended June 30, 2018,
and December 31, 2017, was as follows:
Add Subtract
Trailing Twelve Months
Ended
Year Ended Six Months Ended December 31,
June 30, June 30, June 30,
2017 (a)
2018 2017 2018 Net earnings attributable to
Quad/Graphics common shareholders $ 107.2 $ 5.9 $ 32.1 $ 81.0
Interest expense 71.1 35.7 35.8 71.0 Income tax (benefit) expense
(16.0 ) (7.0 ) 15.0 (38.0 ) Depreciation and amortization 232.5
114.5 117.2 229.8 EBITDA (Non-GAAP) $
394.8 $ 149.1 $ 200.1 $ 343.8 Restructuring, impairment and
transaction-related charges 60.4 35.3 14.5 81.2 Net pension income
(b) (9.6 ) (6.2 ) (5.2 ) (10.6 ) Employee stock ownership plan
contribution — 22.3 — 22.3 Loss on debt extinguishment 2.6 — 2.6 —
Equity in (earnings) loss of unconsolidated entity — (0.5 )
0.8 (1.3 ) Adjusted EBITDA (Non-GAAP) $ 448.2 $ 200.0
$ 212.8 $ 435.4 ______________________________
(a) Financial information for the year ended December 31,
2017, is included as reported in the Company's 2017 Annual Report
on Form 10-K filed with the SEC on February 21, 2018. (b)
Due to a change in United States GAAP that
requires pension income to be excluded from operating income, the
Company will report Adjusted EBITDA excluding net pension income.
This change is reflected in all periods presented.
(2)
As permitted by the Company's senior
secured credit facility, certain pro forma financial information
related to the acquisition of Ivie & Associates ("Ivie") was
included in calculating the Debt Leverage Ratio as of June 30,
2018, and December 31, 2017. As the acquisition of Ivie was
completed on February 21, 2018, the $12.1 million pro forma
Adjusted EBITDA represents the period from July 1, 2017, to
February 20, 2018. Adjusted EBITDA for Ivie was calculated in a
consistent manner with the calculation above for Quad/Graphics.
Ivie's financial information has been consolidated within
Quad/Graphics' financial results since the date of acquisition. If
the eight months of pro forma Adjusted EBITDA for Ivie was not
included in the calculation, the Company's Debt Leverage Ratio
would have been 2.41x as of June 30, 2018.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (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. The Company believes that
these Non-GAAP measures, when presented in conjunction with
comparable GAAP measures, provide additional information for
evaluating Quad/Graphics' performance and are important measures by
which Quad/Graphics' management assesses the profitability and
liquidity of its business. These Non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These Non-GAAP measures may be different than Non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES ADJUSTED DILUTED
EARNINGS PER SHARE For the Three Months Ended June 30, 2018 and
2017 (in millions, except per share data) (UNAUDITED)
Three Months Ended June 30, 2018
2017 Earnings before income taxes and equity in (earnings)
loss of unconsolidated entity $ 5.6 $ 15.1 Restructuring,
impairment and transaction-related charges 10.4 5.3
16.0 20.4 Income tax expense at normalized tax rate (1) 4.0
8.2 Adjusted net earnings (Non-GAAP) $ 12.0 $
12.2 Basic weighted average number of common shares
outstanding 50.8 49.5 Plus: effect of dilutive equity incentive
instruments 1.7 2.2 Diluted weighted average number
of common shares outstanding 52.5 51.7
Adjusted diluted earnings per share (Non-GAAP) (2)
$ 0.23 $ 0.24
Diluted earnings per share attributable to Quad/Graphics
common shareholders (GAAP) $ 0.18 $ 0.13 Restructuring, impairment
and transaction-related charges per share 0.20 0.11 Income tax
(benefit) expense from condensed consolidated statement of
operations per share (0.07 ) 0.16 Income tax expense at normalized
tax rate per share (1) (0.08 ) (0.16 ) Equity in (earnings) loss of
unconsolidated entity from condensed consolidated statement of
operations per share — —
Adjusted diluted earnings
per share (Non-GAAP) (2) $ 0.23
$ 0.24 ______________________________ (1)
A normalized income tax rate of 25% was
used for the three months ended June 30, 2018, which reflects
changes related to the Tax Cuts and Jobs Act that was enacted in
December 2017. The Company used a normalized income tax
rate of 40% for the three months ended June 30, 2017, consistent
with the normalized rate used prior to the enactment of the Tax
Cuts and Jobs Act.
(2)
Adjusted diluted earnings per share
excludes the following: (i) restructuring, impairment and
transaction-related charges; (ii) discrete income tax items; (iii)
equity in (earnings) loss of unconsolidated entity; and (iv) net
earnings attributable to noncontrolling interests.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (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. The Company believes that
these Non-GAAP measures, when presented in conjunction with
comparable GAAP measures, provide additional information for
evaluating Quad/Graphics' performance and are important measures by
which Quad/Graphics' management assesses the profitability and
liquidity of its business. These Non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These Non-GAAP measures may be different than Non-GAAP
financial measures used by other companies.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES ADJUSTED DILUTED
EARNINGS PER SHARE
For the Six Months Ended June 30, 2018 and
2017
(in millions, except per share data) (UNAUDITED)
Six Months Ended June 30, 2018
2017 Earnings (loss) before income taxes and equity in
(earnings) loss of unconsolidated entity $ (1.5 ) $ 47.9
Restructuring, impairment and transaction-related charges 35.3 14.5
Employee stock ownership plan contribution 22.3 — Loss on debt
extinguishment — 2.6 56.1 65.0 Income tax
expense at normalized tax rate (1) 14.0 26.0 Adjusted
net earnings (Non-GAAP) $ 42.1 $ 39.0 Basic
weighted average number of common shares outstanding 50.5 49.3
Plus: effect of dilutive equity incentive instruments 1.8
2.3 Diluted weighted average number of common shares
outstanding 52.3 51.6
Adjusted diluted
earnings per share (Non-GAAP) (2) $ 0.80
$ 0.76 Diluted earnings
(loss) per share attributable to Quad/Graphics common shareholders
(GAAP) $ 0.11 $ 0.62 Restructuring, impairment and
transaction-related charges per share 0.67 0.28 Employee stock
ownership plan contribution per share 0.43 — Loss on debt
extinguishment per share — 0.05 Income tax (benefit) expense from
condensed consolidated statement of operations per share (0.13 )
0.29 Income tax expense at normalized tax rate per share (1) (0.27
) (0.50 ) Equity in (earnings) loss of unconsolidated entity from
condensed consolidated statement of operations per share (0.01 )
0.02
Adjusted diluted earnings per share (Non-GAAP)
(2) $ 0.80 $ 0.76
______________________________ (1)
A normalized income tax rate of 25% was
used for the six months ended June 30, 2018, which reflects changes
related to the Tax Cuts and Jobs Act that was enacted in December
2017. The Company used a normalized income tax rate of 40% for the
six months ended June 30, 2017, consistent with the normalized rate
used prior to the enactment of the Tax Cuts and Jobs Act.
(2)
Adjusted diluted earnings per share
excludes the following: (i) restructuring, impairment and
transaction-related charges; (ii) employee stock ownership plan
contribution; (iii) loss on debt extinguishment; (iv) discrete
income tax items; (v) equity in (earnings) loss of unconsolidated
entity; and (vi) net earnings attributable to noncontrolling
interests.
In addition to financial measures prepared in accordance with
accounting principles generally accepted in the United States of
America (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. The Company believes that
these Non-GAAP measures, when presented in conjunction with
comparable GAAP measures, provide additional information for
evaluating Quad/Graphics' performance and are important measures by
which Quad/Graphics' management assesses the profitability and
liquidity of its business. These Non-GAAP measures should be
considered in addition to, not as a substitute for or superior to,
net earnings (loss) as a measure of operating performance or to
cash flows provided by operating activities as a measure of
liquidity. These Non-GAAP measures may be different than Non-GAAP
financial measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180731005965/en/
Investor Relations Contact:Kyle EganDirector of Investor
Relations and Assistant Treasurer,
Quad/Graphics414-566-2482kegan@qg.comorMedia
Contact:Claire HoManager of Corporate Communications,
Quad/Graphics414-566-2955cho@qg.com
Quad Graphics (NYSE:QUAD)
過去 株価チャート
から 9 2024 まで 10 2024
Quad Graphics (NYSE:QUAD)
過去 株価チャート
から 10 2023 まで 10 2024