Company Focused on Maintaining Employee Health
and Well-Being, and Serving Clients, While Taking Decisive Action
to Protect Its Long-Term Financial Health, and Position Quad for
Post-Pandemic Success
Quad/Graphics, Inc. (NYSE: QUAD) (“Quad” or the “Company”) today
reported results for its first quarter ended March 31, 2020.
Recent Highlights
- Developed and launched Quad’s Safe-at-Work Program to
proactively protect employee health and well-being during the
COVID-19 pandemic, as the Company continued to operate as an
essential business.
- Delivered strong first quarter despite reduction in near-term
client demand due to the COVID-19 pandemic.
- Swiftly implemented risk-mitigating efforts and cost reductions
across the Company, which supported a $103 million increase in net
cash provided by operating activities and a $116 million increase
in Free Cash Flow compared to the first quarter of 2019.
- Reduced net debt by $49 million in the quarter and reduced the
Debt Leverage Ratio to 3.0x as of March 31, 2020, net of excess
cash.
- Maintained significant liquidity as of March 31, 2020,
including $208 million of cash on hand and up to $636 million in
unused capacity under Quad’s revolving credit agreement.
- Created new innovative solutions to help clients during these
unprecedented times while maintaining quality and on-time
delivery.
“Our first quarter performance exceeded our expectations until
mid-March when we started to feel the initial disruption from
COVID-19. Since then, we have seen a meaningful impact to customer
demand in certain end markets, primarily in retail, as a result of
the pandemic. As this unprecedented situation continues to evolve,
our main priority is protecting our employees’ health and
well-being, and serving our clients while also ensuring the
financial health of the Company. We were able to deliver strong
first quarter results, in part, by taking early and swift action to
align our cost structure to lower volumes in certain product
categories, thereby protecting our balance sheet, and preserving
cash flow and liquidity. We have historically treated almost all
costs as variable, and demonstrated our agility to react in
real-time during the pandemic to reduce costs. We are focused on
taking care of our employees through Quad’s Safe-at-Work Program
and are continuing to monitor and respond to the ever-changing
economic landscape,” said Joel Quadracci, Quad Chairman, President
and CEO.
“Throughout this disruptive time we have leveraged our unique
integrated marketing platform to better serve our clients,”
Quadracci continued. “This includes innovative in-store marketing
solutions that promote shopper safety through social distancing,
and content creation and execution for clients who have had
challenges staffing critical functions during the pandemic. I am
proud of Quad’s ability to continue to quickly innovate new
products, services and solutions for our clients – and for our
employees – to help navigate the impacts of the pandemic. For
example, to protect our employees at work, we began producing our
own hand sanitizer and designed our own non-medical face masks,
which are being mass-produced on our existing printing press
equipment.”
Quadracci concluded: “We are currently planning for the
reopening of the economy under multiple scenarios based on our
clients’ advertising and marketing needs. We expect this to be a
gradual ramp-up over time to a ‘new normal’ as the economy emerges
from the pandemic. We believe our experience in managing
significant change over the last decade has prepared us to be agile
and decisive as needed, and I am confident in our leadership team’s
ability to manage through the current economic disruption. Our Quad
3.0 strategy provides us with the right tools and platform to be
stronger than we were prior to the pandemic, supported by our
diverse product portfolio and the cash flow needed to continue to
accelerate our long-term strategic transformation as a marketing
solutions partner. In the meantime, I am extremely proud of our
team’s ability to come together, and act quickly and decisively to
navigate this unprecedented period in history, all while
maintaining employee safety and delivering high quality and
innovative products.”
Summary Results
Results for the three months ended March 31, 2020, included:
- Net Sales (excluding discontinued operations) — Net sales were
$823 million in 2020, down 14.4% from 2019. Organic sales declined
13.3% during the quarter, after excluding the impact of the sale of
the Omaha packaging plant. The organic results reflect ongoing
print industry volume and pricing pressures, including the initial
impact from COVID-19 pandemic, and a negative 0.4% impact from
foreign exchange.
- Net Loss From Continuing Operations — Excluding the results
from discontinued operations, net loss from continuing operations
was $9 million in 2020, or $0.17 diluted loss per share, as
compared to net loss from continuing operations of $13 million in
2019, or $0.25 diluted loss per share.
- Adjusted EBITDA (excluding discontinued operations) — Adjusted
EBITDA was $75 million in 2020, as compared to $78 million in 2019,
while Adjusted EBITDA margin improved to 9.2% in 2020, as compared
to 8.2% in 2019. The variance in Adjusted EBITDA to prior year
primarily reflects the impact from the organic sales decline of
13.3%, a $9 million decrease in print profits from the reduction in
market price for paper byproduct recoveries, a $4 million increase
in hourly production wages due to strategic investments made to
increase starting wages, partially offset by a $9 million net
non-cash benefit from a change in vacation policy, an $8 million
reduction in worker’s compensation reserves from improved
production safety initiatives, and savings from other cost
reduction initiatives.
- Net Cash Provided by Operating Activities — Net cash provided
by operating activities increased by $103 million and was $45
million in 2020, as compared to net cash used in operating
activities of $58 million in 2019, primarily due to improvements in
working capital.
- Free Cash Flow — Free Cash Flow increased by $116 million and
was $16 million in 2020, as compared to negative $101 million in
2019, primarily due to improvements in working capital and a $16
million decrease in capital expenditures. As a reminder, the
Company generates the majority of its Free Cash Flow in the fourth
quarter of the year.
Dave Honan, Executive Vice President and CFO, concluded: “In the
midst of this pandemic, we responded quickly with multiple cost
reduction and cash conservation efforts to deliver strong first
quarter operating and cash performance, including the generation of
$16 million of Free Cash Flow and lowering our Debt Leverage Ratio
to 3.0x, net of excess cash. We have significant liquidity and no
material maturities in our debt capital structure until May of
2022, which allows us to have significant financial flexibility to
adapt to the uncertain economic impacts of the COVID-19
pandemic.”
Quarterly Conference Call
Quad will hold a conference call at 10 a.m. ET on Wednesday, May
6, to discuss first quarter 2020 results.
Participants can pre-register for the webcast by navigating to
http://dpregister.com/10143254.
Participants will be given a unique PIN to gain immediate access to
the call on May 6, 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
An audio replay of the call will be posted on the Investors
section of Quad’s website shortly after the conference call ends.
In addition, telephone playback will also be available until June
6, 2020, accessible as follows:
- U.S. Toll-Free: 1-877-344-7529
- International Toll: 1-412-317-0088
- Replay Access Code: 10143254
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, sales, 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 uncertain negative impacts the
coronavirus (COVID-19) will have on the Company’s business,
financial condition, cash flows, results of operations and supply
chain, as well as the global economy in general; the impact of
decreasing demand for printed materials and significant
overcapacity in the highly competitive environment creates downward
pricing pressures and potential underutilization of assets; the
impact of digital media and similar technological changes,
including digital substitution by consumers; 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 inability of
the Company to reduce costs and improve operating efficiency
rapidly enough to meet market conditions; the impact of the various
restrictive covenants in the Company’s debt facilities on the
Company’s ability to operate its business, as well as the uncertain
negative impacts COVID-19 may have on the Company’s ability to
continue to be in compliance with these restrictive covenants; the
impact of increased business complexity as a result of the
Company’s transformation to a marketing solutions partner; the
failure to successfully identify, manage, complete and integrate
acquisitions and other significant transactions, as well as the
successful identification and execution of strategic divestitures;
the failure of clients to perform under contracts or to renew
contracts with clients on favorable terms or at all; the impact of
changing future economic conditions; the fragility and decline in
overall distribution channels, including newspaper distribution
channels; the impact of changes in postal rates, service levels or
regulations; the failure to attract and retain qualified talent
across the enterprise; the impact of regulatory matters and
legislative developments or changes in laws, including changes in
cyber-security, privacy and environmental laws; significant capital
expenditures may be needed to maintain the Company’s platforms and
processes and to remain technologically and economically
competitive; 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; 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 intangible assets; the impact on
the holders of Quad’s 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; and the other risk factors identified in the
Company’s most recent Annual Report on Form 10-K, which 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 (Loss) Per Share. Adjusted EBITDA is defined as net
earnings (loss) attributable to Quad common shareholders excluding
interest expense, income tax expense (benefit), depreciation and
amortization, restructuring, impairment and transaction-related
charges, (loss) earnings from discontinued operations, net of tax,
net pension income, employee stock ownership plan contributions,
loss (gain) on debt extinguishment, equity in (earnings) loss of
unconsolidated entity, the Adjusted EBITDA for unconsolidated
equity method investments (calculated in a consistent manner with
the calculation for Quad) and net earnings (loss) attributable to
noncontrolling interests. 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, plus LSC-related payments primarily
related to incremental interest payments associated with the 2019
amended debt refinancing and transaction-related costs. Debt
Leverage Ratio is defined as total debt and finance lease
obligations divided by the last twelve months of Adjusted EBITDA.
Adjusted Diluted Earnings (Loss) Per Share is defined as earnings
(loss) from continuing operations before income taxes and equity in
(earnings) loss of unconsolidated entity excluding restructuring,
impairment and transaction-related charges, employee stock
ownership plan contributions, loss (gain) on debt extinguishment,
and adjusted for income tax expense at a normalized tax rate,
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’s performance and are
important measures by which Quad’s 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
Quad (NYSE: QUAD) is a worldwide marketing solutions partner
dedicated to creating a better way for its clients through a
data-driven, integrated marketing platform that helps reduce
complexity, increase efficiency and enhance marketing spend
effectiveness. Quad provides its clients with unmatched scale for
client on-site services and expanded subject expertise in marketing
strategy, creative solutions, media deployment (which includes a
strong foundation in print) and marketing management services. With
a client-centric approach that drives its expanded offering,
combined with leading-edge technology and single-source simplicity,
Quad has the resources and knowledge to help a wide variety of
clients in multiple vertical industries, including retail,
financial/insurance, healthcare, consumer packaged goods,
publishing and direct-to-consumer. Quad has 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.Quad.com.
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
For the Three Months Ended March
31, 2020 and 2019
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended March
31,
2020
2019
Net sales
$
822.5
$
961.0
Cost of sales
647.7
788.3
Selling, general and administrative
expenses
99.6
94.5
Depreciation and amortization
47.4
54.2
Restructuring, impairment and
transaction-related charges
22.8
7.6
Total operating expenses
817.5
944.6
Operating income from continuing
operations
5.0
16.4
Interest expense
18.1
21.8
Net pension income
(2.7)
(1.5)
(Gain) loss on debt extinguishment
(0.6)
15.9
Loss from continuing operations before
income taxes and equity in loss of unconsolidated entity
(9.8)
(19.8)
Income tax benefit
(1.2)
(7.2)
Loss from continuing operations before
equity in loss of unconsolidated entity
(8.6)
(12.6)
Equity in loss of unconsolidated
entity
—
0.1
Net loss from continuing
operations
(8.6)
(12.7)
Loss from discontinued operations, net of
tax
(3.8)
(10.1)
Net loss
(12.4)
(22.8)
Less: net loss attributable to
noncontrolling interests
—
(0.3)
Net loss attributable to Quad common
shareholders
$
(12.4)
$
(22.5)
Loss per share attributable to Quad
common shareholders
Basic and diluted:
Continuing operations
$
(0.17)
$
(0.25)
Discontinued operations
(0.08)
(0.20)
Basic and diluted loss per share
attributable to Quad common shareholders
$
(0.25)
$
(0.45)
Weighted average number of common
shares outstanding
Basic and diluted
50.5
49.6
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
As of March 31, 2020 and December
31, 2019
(in millions)
(UNAUDITED)
March 31, 2020
December 31,
2019
ASSETS
Cash and cash equivalents
$
207.8
$
78.7
Receivables, less allowance for credit
losses
401.8
456.1
Inventories
188.9
210.5
Prepaid expenses and other current
assets
66.8
109.0
Current assets of discontinued
operations
52.3
56.6
Total current assets
917.6
910.9
Property, plant and equipment—net
1,006.7
1,036.5
Operating lease right-of-use
assets—net
91.5
97.9
Goodwill
103.0
103.0
Other intangible assets—net
131.9
137.2
Equity method investment in unconsolidated
entity
2.8
3.6
Other long-term assets
115.1
127.5
Long-term assets of discontinued
operations
—
0.5
Total assets
$
2,368.6
$
2,417.1
LIABILITIES AND SHAREHOLDERS’
EQUITY
Accounts payable
$
418.4
$
416.7
Other current liabilities
229.6
303.0
Short-term debt and current portion of
long-term debt
44.1
40.0
Current portion of finance lease
obligations
5.7
7.7
Current portion of operating lease
obligations
29.0
30.2
Current liabilities of discontinued
operations
13.9
15.8
Total current liabilities
740.7
813.4
Long-term debt
1,137.8
1,058.5
Finance lease obligations
4.9
6.0
Operating lease obligations
65.0
70.4
Deferred income taxes
3.2
2.8
Other long-term liabilities
220.1
221.1
Long-term liabilities of discontinued
operations
0.6
0.6
Total liabilities
2,172.3
2,172.8
Shareholders’ equity
Preferred stock
—
—
Common stock
1.4
1.4
Additional paid-in capital
830.7
847.4
Treasury stock, at cost
(12.7)
(31.5)
Accumulated deficit
(450.1)
(423.5)
Accumulated other comprehensive loss
(190.8)
(167.2)
Quad’s shareholders’ equity
178.5
226.6
Noncontrolling interests
17.8
17.7
Total shareholders’ equity and
noncontrolling interests
196.3
244.3
Total liabilities and shareholders’
equity
$
2,368.6
$
2,417.1
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the Three Months Ended March
31, 2020 and 2019
(in millions)
(UNAUDITED)
Three Months Ended March
31,
2020
2019
OPERATING ACTIVITIES
Net loss
$
(12.4)
$
(22.8)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
47.4
59.2
Impairment charges
3.8
1.7
(Gain) loss on debt extinguishment
(0.6)
15.9
Stock-based compensation
2.8
5.0
Gain from property insurance claims
—
(0.8)
Loss on the sale of a business
2.9
—
Gain on the sale or disposal of property,
plant and equipment
(0.8)
(3.0)
Deferred income taxes
12.6
(10.7)
Other non-cash adjustments to net loss
0.6
1.2
Changes in operating assets and
liabilities—net of acquisitions
(11.6)
(104.3)
Net cash provided by (used in) operating
activities
44.7
(58.6)
INVESTING ACTIVITIES
Purchases of property, plant and
equipment
(29.0)
(45.3)
Proceeds from the sale of property, plant
and equipment
3.6
7.8
Proceeds from the sale of business
41.3
—
Proceeds from property insurance
claims
—
0.3
Acquisition of businesses—net of cash
acquired
(1.6)
(121.0)
Net cash provided by (used in) investing
activities
14.3
(158.2)
FINANCING ACTIVITIES
Proceeds from issuance of long-term
debt
—
490.4
Payments of long-term debt
(43.9)
(534.3)
Payments of finance lease obligations
(3.1)
(1.6)
Borrowings on revolving credit
facilities
204.8
1,239.3
Payments on revolving credit
facilities
(76.7)
(990.1)
Payments of debt issuance costs and
financing fees
—
(20.2)
Equity awards redeemed to pay employees’
tax obligations
(1.0)
(6.6)
Payment of cash dividends
(9.5)
(19.2)
Other financing activities
0.1
—
Net cash provided by financing
activities
70.7
157.7
Effect of exchange rates on cash and cash
equivalents
(0.6)
—
Net increase (decrease) in cash and cash
equivalents
129.1
(59.1)
Cash and cash equivalents at beginning of
period
78.7
69.5
Cash and cash equivalents at end of
period
$
207.8
$
10.4
The Condensed Consolidated Statements of Cash Flows include the
cash flows related to the United States Book business for all
periods presented.
QUAD/GRAPHICS, INC.
SEGMENT FINANCIAL INFORMATION
For the Three Months Ended March
31, 2020 and 2019
(in millions)
(UNAUDITED)
Net Sales
Operating
Income (Loss) from
Continuing
Operations
Restructuring,
Impairment and
Transaction-Related
Charges (1)
Three months ended March 31,
2020
United States Print and Related
Services
$
736.6
$
16.3
$
20.8
International
85.9
0.3
1.3
Total operating segments
822.5
16.6
22.1
Corporate
—
(11.6)
0.7
Total
$
822.5
$
5.0
$
22.8
Three months ended March 31,
2019
United States Print and Related
Services
$
855.0
$
29.3
$
4.5
International
106.0
1.9
1.6
Total operating segments
961.0
31.2
6.1
Corporate
—
(14.8)
1.5
Total
$
961.0
$
16.4
$
7.6
______________________________
(1)
Restructuring, impairment and
transaction-related charges are included within operating income
(loss) from continuing operations.
The segment information contained in the above table does not
include the operating results related to the United States Book
business.
QUAD/GRAPHICS, INC.
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
EBITDA, EBITDA MARGIN, ADJUSTED
EBITDA AND ADJUSTED EBITDA MARGIN
For the Three Months Ended March
31, 2020 and 2019
(in millions, except margin
data)
(UNAUDITED)
Three Months Ended March
31,
2020
2019
Net loss attributable to Quad common
shareholders
$
(12.4)
$
(22.5)
Interest expense
18.1
21.8
Income tax benefit
(1.2)
(7.2)
Depreciation and amortization
47.4
54.2
EBITDA (Non-GAAP)
$
51.9
$
46.3
EBITDA Margin (Non-GAAP)
6.3
%
4.8
%
Restructuring, impairment and
transaction-related charges (1)
22.8
7.6
Loss from discontinued operations, net of
tax (2)
3.8
10.1
Net pension income (3)
(2.7)
(1.5)
(Gain) loss on debt extinguishment (4)
(0.6)
15.9
Other (5)
0.2
—
Adjusted EBITDA (Non-GAAP)
$
75.4
$
78.4
Adjusted EBITDA Margin
(Non-GAAP)
9.2
%
8.2
%
______________________________
(1)
Operating results from continuing
operations for the three months ended March 31, 2020 and 2019, were
affected by the following restructuring, impairment and
transaction-related charges:
Three Months Ended March
31,
2020
2019
Employee termination charges (a)
$
12.6
$
4.3
Impairment charges (b)
2.5
1.7
Transaction-related charges (c)
0.5
1.5
Integration costs (d)
0.7
0.8
Other restructuring charges (income)
(e)
6.5
(0.7)
Restructuring, impairment and
transaction-related charges
$
22.8
$
7.6
______________________________________
(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 include costs
to maintain and exit closed facilities, as well as lease exit
charges, and are presented net of gains on the sale of facilities
and businesses. Gains included in other restructuring charges
(income) were $0.8 million and $3.5 million during the three months
ended March 31, 2020 and 2019, respectively.
(2)
Loss from discontinued
operations, net of tax, includes the results of operations for the
Company’s United States Book business. During the third quarter of
2019, the Company made the decision to sell its United States Book
business. Accordingly, the Company has applied discontinued
operations treatment for the intended sale of its Book business in
all periods presented, as required by United States GAAP.
(3)
As required by United States
GAAP, pension components other than service cost are required to be
excluded from operating income. The Company has also excluded
pension income from the calculation of Adjusted EBITDA, which is
reflected in all periods presented.
(4)
The $0.6 million gain on debt
extinguishment recorded during the three months ended March 31,
2020, primarily relates to the repurchase of the Company’s
unsecured 7.0% senior notes due May 1, 2022. The $15.9 million loss
on debt extinguishment recorded during the three months ended March
31, 2019, relates to the third amendment to the Company’s April 28,
2014 Senior Secured Credit Facility, completed on January 31,
2019.
(5)
Other includes the following
items: (a) the equity in (earnings) loss of unconsolidated entity,
which includes the results of operations for an investment in an
entity where Quad has the ability to exert significant influence,
but not control, and is accounted for using the equity method of
accounting; (b) the Adjusted EBITDA for unconsolidated equity
method investments, which was calculated in a consistent manner
with the calculation above for Quad; and (c) the net earnings
(loss) attributable to noncontrolling interests, which is the
portion of the net earnings (loss) not owned by Quad for an
investment where Quad has a controlling financial interest.
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 (Loss) Per Share from Continuing
Operations. The Company believes that these Non-GAAP measures, when
presented in conjunction with comparable GAAP measures, provide
additional information for evaluating Quad’s performance and are
important measures by which Quad’s 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 Three Months Ended March
31, 2020 and 2019
(in millions)
(UNAUDITED)
Three Months Ended March
31,
2020
2019
Net cash provided by (used in) operating
activities
$
44.7
$
(58.6)
Less: purchases of property, plant and
equipment
(29.0)
(45.3)
Plus: LSC-related payments (1)
—
3.3
Free Cash Flow (Non-GAAP)
$
15.7
$
(100.6)
______________________________
(1)
LSC-related payments include
transaction-related costs associated with the proposed, but now
terminated, acquisition of LSC and incremental interest payments
associated with the 2019 amended debt refinancing.
The above calculation of Free Cash Flow includes the cash flows
related to the United States Book business for all periods
presented.
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 (Loss) Per Share from Continuing
Operations. The Company believes that these Non-GAAP measures, when
presented in conjunction with comparable GAAP measures, provide
additional information for evaluating Quad’s performance and are
important measures by which Quad’s 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 March 31, 2020 and December
31, 2019
(in millions, except ratio)
(UNAUDITED)
March 31, 2020
December 31,
2019
Total debt and finance lease obligations
on the condensed consolidated balance sheets (1)
$
1,192.5
$
1,112.2
Divided by: trailing twelve months
Adjusted EBITDA (Non-GAAP) (2)
$
331.9
$
334.9
Debt Leverage Ratio (Non-GAAP)
3.59
x
3.32
x
Debt Leverage Ratio—net of excess cash
(Non-GAAP) (3)
3.00
x
3.12
x
______________________________
(1)
Total debt and finance lease
obligations on the condensed consolidated balance sheets exclude
finance lease obligations related to the United States Book
business.
(2)
The calculation of Adjusted
EBITDA for the trailing twelve months ended March 31, 2020, and
December 31, 2019, was as follows:
Add
Subtract
Trailing Twelve
Months Ended
Year Ended
Three Months Ended
December 31,
2019 (a)
March 31, 2020
March 31, 2019
March 31, 2020
Net loss attributable to Quad common
shareholders
$
(156.3)
$
(12.4)
$
(22.5)
$
(146.2)
Interest expense
90.0
18.1
21.8
86.3
Income tax benefit
(24.4)
(1.2)
(7.2)
(18.4)
Depreciation and amortization
209.5
47.4
54.2
202.7
EBITDA (Non-GAAP)
$
118.8
$
51.9
$
46.3
$
124.4
Restructuring, impairment and
transaction-related charges
89.4
22.8
7.6
104.6
Loss from discontinued operations, net of
tax
100.6
3.8
10.1
94.3
Net pension income
(6.0)
(2.7)
(1.5)
(7.2)
(Gain) loss on debt extinguishment
30.5
(0.6)
15.9
14.0
Other (b)
1.6
0.2
—
1.8
Adjusted EBITDA (Non-GAAP)
$
334.9
$
75.4
$
78.4
$
331.9
______________________________
(a)
Financial information for the year ended
December 31, 2019, is included as reported in the Company’s 2019
Annual Report on Form 10-K filed with the SEC on February 19,
2020.
(b)
Other is comprised of equity in (earnings)
loss of unconsolidated entity, Adjusted EBITDA for unconsolidated
equity method investments and net earnings (loss) attributable to
noncontrolling interests.
(3)
The Company had $208 million and $79 million in cash and cash
equivalents at March 31, 2020, and December 31, 2019, respectively.
Based on the Company’s typical year-end cash balance of
approximately $10 million, Quad had $198 million and $69 million of
excess cash at March 31, 2020, and December 31, 2019, respectively.
If the excess cash was used to further pay down debt, the Debt
Leverage Ratio would have been 3.00x and 3.12x at March 31, 2020,
and December 31, 2019, respectively.
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 (Loss) Per Share from Continuing
Operations. The Company believes that these Non-GAAP measures, when
presented in conjunction with comparable GAAP measures, provide
additional information for evaluating Quad’s performance and are
important measures by which Quad’s 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 (LOSS)
PER SHARE FROM CONTINUING OPERATIONS
For the Three Months Ended March
31, 2020 and 2019
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended March
31,
2020
2019
Loss from continuing operations before
income taxes and equity in loss of unconsolidated entity
$
(9.8)
$
(19.8)
Restructuring, impairment and
transaction-related charges
22.8
7.6
(Gain) loss on debt extinguishment
(0.6)
15.9
Adjusted net earnings from continuing
operations, before income taxes (Non-GAAP)
12.4
3.7
Income tax expense at 25% normalized tax
rate
3.1
0.9
Adjusted net earnings from continuing
operations (Non-GAAP)
$
9.3
$
2.8
Basic weighted average number of common
shares outstanding
50.5
49.6
Plus: effect of dilutive equity incentive
instruments (Non-GAAP)
0.6
1.1
Diluted weighted average number of common
shares outstanding (Non-GAAP)
51.1
50.7
Adjusted diluted earnings per share
from continuing operations (Non-GAAP) (1)
$
0.18
$
0.06
Diluted loss per share from continuing
operations (GAAP)
$
(0.17)
$
(0.25)
Restructuring, impairment and
transaction-related charges per share
0.44
0.15
(Gain) loss on debt extinguishment per
share
(0.01)
0.31
Income tax benefit from condensed
consolidated statement of operations per share
(0.02)
(0.14)
Income tax expense at 25% normalized tax
rate per share
(0.06)
(0.01)
Other items from condensed consolidated
statement of operations per share (2)
—
—
Adjusted diluted earnings per share
from continuing operations (Non-GAAP) (1)
$
0.18
$
0.06
______________________________
(1)
Adjusted diluted earnings per share from
continuing operations excludes the following: (i) the results of
operations for the United States Book business; (ii) restructuring,
impairment and transaction-related charges; (iii) (gain) loss on
debt extinguishment; (iv) discrete income tax items; (v) equity in
loss of unconsolidated entity; and (vi) net loss attributable to
noncontrolling interests.
(2)
Other items from condensed consolidated
statement of operations per share is comprised of the diluted loss
per share impacts of equity in loss of unconsolidated entity and
net loss 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 (Loss) Per Share from Continuing
Operations. The Company believes that these Non-GAAP measures, when
presented in conjunction with comparable GAAP measures, provide
additional information for evaluating Quad’s performance and are
important measures by which Quad’s 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/20200505005975/en/
Investor Relations Contact Kyle Egan Director of Investor
Relations and Assistant Treasurer, Quad 414-566-2482
kegan@quad.com
Media Contact Claire Ho Director of Corporate
Communications, Quad 414-566-2955 cho@quad.com
Quad Graphics (NYSE:QUAD)
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Quad Graphics (NYSE:QUAD)
過去 株価チャート
から 7 2023 まで 7 2024