Full-Year Results Meet or Exceed Guidance
Across All Metrics; Outperformance Exhibited by Net Sales Growth of
11% When Excluding Divestitures, and Reduction of Net Debt Leverage
to 2.16x
Quad/Graphics, Inc. (NYSE: QUAD) (“Quad” or the “Company”),
today reported results for the fourth quarter and full-year ended
December 31, 2022.
Recent Highlights
- Increased Net Sales by 9%, or 11% when excluding divestitures,
outperforming the 2022 guidance range of 8% to 10% growth when
excluding divestitures, due to increased sales in all
offerings.
- Delivered Net Earnings of $9 million in 2022 compared to $38
million in 2021, primarily due to higher 2021 net non-recurring
earnings of $72.0 million ($54.0 million, net of 25% normalized
tax) from asset sales and a property insurance gain.
- Achieved Adjusted EBITDA of $252 million in 2022, near the high
end of the $235 million to $255 million guidance range, and an
increase of $5 million compared to 2021 when excluding a $13
million property insurance gain in 2021.
- Grew Adjusted Diluted Earnings Per Share to $0.89 in 2022
compared to $0.60 in 2021.
- Generated $155 million of Net Cash from Operating Activities in
2022, an increase of $18 million compared to 2021, and Free Cash
Flow of $94 million in 2022, an increase of $8 million compared to
2021.
- Reduced Net Debt by $489 million or 47% over the past three
years, achieving Net Debt Leverage of 2.16x at December 31, 2022,
and the lowest Net Debt Leverage since 2018.
- Provides 2023 guidance including using Free Cash Flow to reduce
Net Debt Leverage to approximately 2.0x, the low end of our
long-term targeted leverage range of 2.0x - 2.5x.
Joel Quadracci, Chairman, President & CEO of Quad, said: “We
delivered strong 2022 results, outperforming our top-line guidance
with an 11% increase in Net Sales when excluding divestitures.
These results reflect increased sales in all our offerings,
including increases in pricing to partially offset inflationary
costs, print segment share gains from both new and existing
clients, as well as continued growth in our Agency Solutions
offerings and international locations. Our strategy as a marketing
experience, or MX, company is effective. Increasingly, brands and
marketers recognize the unique value that only Quad can provide
through our integrated marketing platform. They are engaging us for
holistic, multichannel, through-the-line solutions that remove
friction and speed the marketing process, while improving
results.
“Throughout 2022, we navigated multiple challenges, including
paper and supply chain disruptions, inflationary cost pressures and
labor shortages. We worked thoughtfully and diligently to mitigate
the impact of these external factors on our business while
proactively managing client expectations. Of note, we reduced Net
Debt by 47% over the past three years and have a strong balance
sheet that allows us to continue to make strategic investments in
our business, accelerate our competitive position and drive
profitable long-term growth.
“While we continue to see growth in the Agency Solutions part of
our business, economic uncertainty has prompted some clients to
take a more conservative approach to the start of the year and pull
back on their near-term print advertising spend. As always, we take
a disciplined approach to managing all aspects of our business and
will continue to align our cost structure to revenue opportunities.
At the same time, we will aggressively push forward on our growth
strategy as an MX company. This includes increased investment in
our people, processes and technology, including enhancing our
Agency Solutions offerings and bringing aboard experienced business
development professionals who can sell into our critical growth
verticals.
“We remain committed to creating a better, more purposeful and
sustainable way forward for all our stakeholders. We will remain
nimble and adjust as necessary to changing economic conditions,
while looking ahead for growth opportunities as an MX company.”
Summary Results
Results for the fourth quarter ended December 31, 2022,
include:
- Net Sales — Net Sales were $885 million in the fourth quarter
of 2022, an increase of 4% compared to the same period in 2021. Net
Sales growth in the fourth quarter was driven by increased pricing
to partially offset inflationary cost pressures and growth in the
Company’s international locations and Targeted Print
offerings.
- Net Loss — Net Loss was $9 million in the fourth quarter of
2022, an improvement of $12 million compared to the fourth quarter
of 2021, which had a Net Loss of $21 million. This increase was due
to increased earnings from Net Sales growth and higher
productivity, partially offset by higher restructuring, impairment
and transaction-related charges.
- Adjusted EBITDA — Adjusted EBITDA was $79 million in the fourth
quarter of 2022, an increase of $19 million as compared to $60
million of Adjusted EBITDA in the same period in 2021. As expected,
Adjusted EBITDA increased sequentially each quarter in 2022, with
benefits from production labor staffing initiatives in the first
half of 2022, resulting in more efficient operations, high on-time
shipping and increased profits during our seasonal volume
peak.
- Adjusted Diluted Earnings Per Share — Adjusted Diluted Earnings
Per Share increased to $0.41 in the fourth quarter of 2022, as
compared to $0.10 in the fourth quarter of 2021, primarily due to
higher recurring earnings, as well as the beneficial impact from
the Company’s repurchase of 3.1 million shares of Class A common
stock for $10 million during 2022, representing more than 5% of
outstanding shares.
Results for the year ended December 31, 2022, include:
Financial Metric
2022 Results
2022 Guidance
Annual Net Sales Change (1)
11% growth
8% to 10% growth
Full-Year Adjusted EBITDA
$252 million
$235 million to $255 million
Free Cash Flow
$94 million
$70 million to $90 million
Capital Expenditures
$60 million
$55 million to $65 million
Year-End Debt Leverage Ratio
2.16x
Approximately 2.25x
(1) Annual Net Sales Change excludes the
Net Sales impact from the divestiture of QuadExpress, which was
sold on June 30, 2021.
- Net Sales — Net Sales were $3.2 billion in 2022, up 9% from the
same period in 2021, or up 11% year-over-year excluding the impact
of the QuadExpress divestiture. Net Sales growth was achieved due
to increased sales in all offerings.
- Net Earnings — Net Earnings were $9 million in 2022 as compared
to Net Earnings of $38 million in 2021. The decrease was primarily
due to higher 2021 net non-recurring earnings of $72.0 million
($54.0 million, net of 25% normalized tax) from $51.2 million in
net gains from asset sales and a property insurance gain in 2021
compared to $20.8 million in net losses from asset sales in
2022.
- Adjusted EBITDA — Adjusted EBITDA was $252 million in 2022 as
compared to $261 million of Adjusted EBITDA in 2021. The decline
was primarily due to cost inflation, investments made in hiring and
training labor in the first half of 2022 in advance of the peak
production season in the second half of the year, the negative
impact of supply chain disruptions and a $13 million property
insurance gain in 2021, partially offset by increased earnings from
Net Sales growth.
- Adjusted Diluted Earnings Per Share — Adjusted Diluted Earnings
Per Share increased to $0.89 in 2022, as compared to $0.60 in 2021,
due to higher recurring earnings as well as the beneficial impact
from the Company’s $10 million of share repurchases during
2022.
- Net Cash Provided by Operating Activities and Free Cash Flow —
Net Cash Provided by Operating Activities was $155 million in 2022,
compared to $137 million in 2021. Free Cash Flow was $94 million in
2022, an increase of $8 million compared to 2021. The increase in
Free Cash Flow was due to the increased Net Cash Provided by
Operating Activities, partially offset by a $10 million increase in
capital expenditures. The Company dedicates significant capital to
automation with $60 million of capital expenditures in 2022 and
intends to increase its capital expenditures spend in 2023.
- Net Debt — Debt less cash and cash equivalents decreased by $79
million to $545 million at December 31, 2022, as compared to $624
million at December 31, 2021. The Debt Leverage Ratio decreased 23
basis points to 2.16x at December 31, 2022, from 2.39x at December
31, 2021.
2023 Guidance
The Company’s full-year 2023 financial guidance is as
follows:
Financial Metric
2023 Guidance
Annual Net Sales Change
0% to 5% decline
Full-Year Adjusted EBITDA
$210 million to $250 million
Free Cash Flow
$50 million to $90 million
Capital Expenditures
$65 million to $75 million
Year-End Debt Leverage Ratio (1)
Approximately 2.0x
(1) Debt Leverage Ratio is calculated at
the midpoint of the Adjusted EBITDA guidance.
Tony Staniak, CFO of Quad, said: “We ended 2022 strong and
exceeded our guidance ranges by delivering 11% Net Sales growth in
2022, excluding divestitures, and generating Free Cash Flow of $94
million to reduce Net Debt Leverage to 2.16x. As we look forward,
in 2023 we anticipate continued growth in our Agency Solutions
offerings; however, with economic uncertainty, we expect the
decrease in Net Sales and Adjusted EBITDA from lower print volumes
will exceed the benefits from ongoing Agency growth. We are a
strong Free Cash Flow generator and we plan to continue using our
Free Cash Flow to reduce debt and achieve Net Debt Leverage of 2.0x
by the end of 2023, at the low end of our long-term desired range
of 2.0x-2.5x. By the end of 2023, we expect to have paid off $564
million of debt, which would be a 55% debt reduction, since January
1, 2020. This significant progress will enable us to continue to
invest in our growth as a marketing experience company and seek
opportunities to return capital to shareholders, while ensuring
Quad’s continued financial strength.”
Quarterly Conference Call
Quad will hold a conference call at 10 a.m. ET on Wednesday,
February 22, to discuss fourth quarter and full-year 2022 results.
As part of the conference call, Quad will conduct a
question-and-answer session. Investors are invited to email their
questions in advance to IR@quad.com.
Participants can pre-register for the webcast by navigating to
https://dpregister.com/sreg/10174410/f584df1a04. Participants will
be given a unique PIN to gain immediate access to the call on
February 22, 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 March
22, 2023, accessible as follows:
- U.S. Toll-Free: 1-877-344-7529
- International Toll: 1-412-317-0088
- Replay Access Code: 7664601
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 impact of decreasing demand for printed
materials and significant overcapacity in a highly competitive
environment creates downward pricing pressures and potential
under-utilization of assets; the impact of fluctuations in costs
(including labor and labor-related costs, energy costs, freight
rates and raw materials, including paper and the materials to
manufacture ink) and the impact of fluctuations in the availability
of raw materials, including paper, parts for equipment and the
materials to manufacture ink; the impact macroeconomic conditions,
including inflation, rising interest rates and recessionary
concerns, as well as ongoing supply chain challenges, labor
availability and cost pressures, distribution challenges and the
COVID-19 pandemic, have had, and may continue to have, on the
Company’s business, financial condition, cash flows and results of
operations (including future uncertain impacts); the impact of
increased business complexity as a result of the Company’s
transformation to a marketing experience company; the inability of
the Company to reduce costs and improve operating efficiency
rapidly enough to meet market conditions; the impact of changes in
postal rates, service levels or regulations, including delivery
delays; the failure to attract and retain qualified talent across
the enterprise; the impact of a data-breach of sensitive
information, ransomware attack or other cyber incident on the
Company; the fragility and decline in overall distribution
channels; the impact of digital media and similar technological
changes, including digital substitution by consumers; the impact
negative publicity could have on our business and brand reputation;
the failure of clients to perform under contracts or to renew
contracts with clients on favorable terms or at all; the impact of
risks associated with the operations outside of the United States,
including trade restrictions, currency fluctuations, the global
economy, costs incurred or reputational damage suffered due to
improper conduct of its employees, contractors or agents, and
geopolitical events like war and terrorism; the COVID-19 pandemic
continues to negatively affect the Company’s business, financial
condition, cash flows, results of operations, supply chain and raw
materials availability, as well as client demand (including future
uncertain impacts); the failure to successfully identify, manage,
complete and integrate acquisitions, investment opportunities or
other significant transactions, as well as the successful
identification and execution of strategic divestitures; significant
investments may be needed to maintain the Company’s platforms,
processes, systems, client and product technology, marketing and
talent, 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,
as well as the uncertain negative impacts macroeconomic conditions
may have on the Company’s ability to continue to be in compliance
with these restrictive covenants; 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; the
impact of regulatory matters and legislative developments or
changes in laws, including changes in cyber-security, privacy and
environmental laws; 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, Net Debt, Debt Leverage Ratio and Adjusted
Diluted Earnings Per Share. Adjusted EBITDA is defined as net
earnings (loss) excluding interest expense, income tax expense,
depreciation and amortization, restructuring, impairment and
transaction-related charges, gains from sale and leaseback, loss on
debt extinguishment, equity in earnings of unconsolidated entity,
and the Adjusted EBITDA for unconsolidated equity method
investments (calculated in a consistent manner with the calculation
for Quad). 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
finance lease obligations less cash and cash equivalents (Net Debt)
divided by the last twelve months of Adjusted EBITDA. Adjusted
Diluted Earnings Per Share is defined as earnings (loss) before
income taxes and equity in earnings of unconsolidated entity
excluding restructuring, impairment and transaction-related
charges, gains from sale and leaseback, loss 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 global marketing experience company that
gives brands a more streamlined, impactful, flexible and
frictionless way to go to market and reach consumers. Quad’s
strategic priorities are powered by three key competitive
advantages that include integrated marketing platform excellence,
ongoing innovation, and culture and social purpose. The company’s
integrated marketing platform is powered by a set of core
specialties including strategy and consulting, data and analytics,
technology solutions, media services, creative and content
solutions, and managed services.
Serving more than 2,900 clients, Quad has approximately 15,000
people working in 14 countries around the world.
Please visit quad.com for more information.
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
For the Three Months Ended
December 31, 2022 and 2021
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended December
31,
2022
2021
Net sales
$
885.2
$
854.6
Cost of sales
707.6
701.8
Selling, general and administrative
expenses
101.8
96.7
Depreciation and amortization
34.7
38.0
Restructuring, impairment and
transaction-related charges
32.4
22.3
Total operating expenses
876.5
858.8
Operating income (loss)
8.7
(4.2
)
Interest expense
16.1
14.5
Net pension income
(3.1
)
(3.5
)
Loss on debt extinguishment
—
0.7
Loss before income taxes and equity in
earnings of unconsolidated entity
(4.3
)
(15.9
)
Income tax expense
4.4
5.4
Loss before equity in earnings of
unconsolidated entity
(8.7
)
(21.3
)
Equity in earnings of unconsolidated
entity
—
(0.2
)
Net loss
$
(8.7
)
$
(21.1
)
Loss per share
Basic and diluted
$
(0.18
)
$
(0.41
)
Weighted average number of common
shares outstanding
Basic and diluted
49.1
51.3
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
For the Years Ended December 31,
2022 and 2021
(in millions, except per share
data)
(UNAUDITED)
Year Ended December
31,
2022
2021
Net sales
$
3,217.0
$
2,960.4
Cost of sales
2,618.8
2,389.9
Selling, general and administrative
expenses
358.6
326.0
Gains from sale and leaseback
—
(24.5
)
Depreciation and amortization
141.3
157.3
Restructuring, impairment and
transaction-related charges
44.8
18.9
Total operating expenses
3,163.5
2,867.6
Operating income
53.5
92.8
Interest expense
48.4
59.6
Net pension income
(12.6
)
(14.5
)
Loss on debt extinguishment
—
0.7
Earnings before income taxes and equity in
earnings of unconsolidated entity
17.7
47.0
Income tax expense
8.4
9.5
Earnings before equity in earnings of
unconsolidated entity
9.3
37.5
Equity in earnings of unconsolidated
entity
—
(0.3
)
Net earnings
$
9.3
$
37.8
Earnings per share
Basic
$
0.18
$
0.74
Diluted
$
0.18
$
0.71
Weighted average number of common
shares outstanding
Basic
50.7
51.3
Diluted
52.5
53.0
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
As of December 31, 2022 and
2021
(in millions)
(UNAUDITED)
December 31, 2022
December 31, 2021
ASSETS
Cash and cash equivalents
$
25.2
$
179.9
Receivables, less allowances for credit
losses
372.6
362.0
Inventories
260.7
226.2
Prepaid expenses and other current
assets
46.0
41.0
Total current assets
704.5
809.1
Property, plant and equipment—net
672.1
727.0
Operating lease right-of-use
assets—net
111.1
125.7
Goodwill
86.4
86.4
Other intangible assets—net
46.9
75.3
Other long-term assets
80.8
66.5
Total assets
$
1,701.8
$
1,890.0
LIABILITIES AND SHAREHOLDERS’
EQUITY
Accounts payable
$
456.6
$
367.3
Other current liabilities
249.1
314.3
Short-term debt and current portion of
long-term debt
61.1
245.6
Current portion of finance lease
obligations
0.8
1.8
Current portion of operating lease
obligations
27.8
28.1
Total current liabilities
795.4
957.1
Long-term debt
506.7
554.9
Finance lease obligations
1.6
1.4
Operating lease obligations
87.1
99.8
Deferred income taxes
9.3
11.9
Other long-term liabilities
128.8
128.1
Total liabilities
1,528.9
1,753.2
Shareholders’ Equity
Preferred stock
—
—
Common stock
1.4
1.4
Additional paid-in capital
841.8
839.3
Treasury stock, at cost
(23.5
)
(14.9
)
Accumulated deficit
(518.5
)
(527.8
)
Accumulated other comprehensive loss
(128.3
)
(161.2
)
Total shareholders’ equity
172.9
136.8
Total liabilities and shareholders’
equity
$
1,701.8
$
1,890.0
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the Years Ended December 31,
2022 and 2021
(in millions)
(UNAUDITED)
Year Ended December
31,
2022
2021
OPERATING ACTIVITIES
Net earnings
$
9.3
$
37.8
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
141.3
157.3
Impairment charges
2.2
34.9
Stock-based compensation
6.0
6.2
Gain on the sale or disposal of property,
plant and equipment
(2.3
)
(49.0
)
(Gain) loss on the sale of a business
23.1
(20.9
)
Gain from a property insurance claim
—
(13.4
)
Deferred income taxes
2.4
5.3
Other non-cash adjustments to net
earnings
2.2
1.6
Changes in operating assets and
liabilities - net of acquisitions and divestitures
(29.6
)
(23.3
)
Net cash provided by operating
activities
154.6
136.5
INVESTING ACTIVITIES
Purchases of property, plant and
equipment
(60.3
)
(50.0
)
Cost investment in unconsolidated
entities
(3.3
)
(1.4
)
Proceeds from the sale of property, plant
and equipment
4.6
126.3
Proceeds from the sale of a business
—
39.7
Proceeds from a property insurance
claim
—
15.0
Acquisition of a business
(2.6
)
—
Other investing activities
1.1
(0.2
)
Net cash (used in) provided by investing
activities
(60.5
)
129.4
FINANCING ACTIVITIES
Payments of current and long-term debt
(235.9
)
(139.5
)
Payments of finance lease obligations
(2.1
)
(3.0
)
Borrowings on revolving credit
facilities
995.7
445.1
Payments on revolving credit
facilities
(995.0
)
(440.5
)
Proceeds from issuance of long-term
debt
3.1
15.9
Payments of debt issuance costs and
financing fees
—
(5.9
)
Change in ownership of noncontrolling
interests
—
(1.9
)
Purchases of treasury stock
(10.0
)
—
Equity awards redeemed to pay employees’
tax obligations
(2.5
)
(1.1
)
Payment of cash dividends
(1.4
)
(1.4
)
Other financing activities
(0.6
)
(8.6
)
Net cash used in financing activities
(248.7
)
(140.9
)
Effect of exchange rates on cash and cash
equivalents
(0.1
)
(0.3
)
Net increase (decrease) in cash and cash
equivalents
(154.7
)
124.7
Cash and cash equivalents at beginning of
year
179.9
55.2
Cash and cash equivalents at end of
year
$
25.2
$
179.9
QUAD/GRAPHICS, INC.
SEGMENT FINANCIAL INFORMATION
For the Three Months and Years
Ended December 31, 2022 and 2021
(in millions)
(UNAUDITED)
Net Sales
Operating
Income (Loss)
Restructuring,
Impairment and
Transaction-Related
Charges (1)
Three months ended December 31,
2022
United States Print and Related
Services
$
781.1
$
43.3
$
5.0
International
104.1
(20.0
)
26.2
Total operating segments
885.2
23.3
31.2
Corporate
—
(14.6
)
1.2
Total
$
885.2
$
8.7
$
32.4
Three months ended December 31,
2021
United States Print and Related
Services
$
758.8
$
38.7
$
(8.4
)
International
95.8
(24.2
)
29.5
Total operating segments
854.6
14.5
21.1
Corporate
—
(18.7
)
1.2
Total
$
854.6
$
(4.2
)
$
22.3
Year ended December 31, 2022
United States Print and Related
Services
$
2,794.7
$
108.3
$
12.1
International
422.3
(4.5
)
30.7
Total operating segments
3,217.0
103.8
42.8
Corporate
—
(50.3
)
2.0
Total
$
3,217.0
$
53.5
$
44.8
Year ended December 31, 2021
United States Print and Related
Services
$
2,628.6
$
163.1
$
(14.5
)
International
331.8
(16.1
)
31.3
Total operating segments
2,960.4
147.0
16.8
Corporate
—
(54.2
)
2.1
Total
$
2,960.4
$
92.8
$
18.9
___________________________
(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
December 31, 2022 and 2021
(in millions)
(UNAUDITED)
Three Months Ended December
31,
2022
2021
Net loss
$
(8.7
)
$
(21.1
)
Interest expense
16.1
14.5
Income tax expense
4.4
5.4
Depreciation and amortization
34.7
38.0
EBITDA (Non-GAAP)
$
46.5
$
36.8
EBITDA Margin (Non-GAAP)
5.3
%
4.3
%
Restructuring, impairment and
transaction-related charges (1)
32.4
22.3
Loss on debt extinguishment (2)
—
0.7
Other (3)
—
0.1
Adjusted EBITDA (Non-GAAP) (4)
$
78.9
$
59.9
Adjusted EBITDA Margin
(Non-GAAP)
8.9
%
7.0
%
______________________________
(1)
Operating results for the three
months ended December 31, 2022 and 2021, were affected by the
following restructuring, impairment and transaction-related
charges:
Three Months Ended December
31,
2022
2021
Employee termination charges (a)
$
4.5
$
1.4
Impairment charges (b)
1.6
32.9
Transaction-related charges (c)
1.2
0.2
Integration costs (d)
0.3
—
Other restructuring charges (e)
24.8
(12.2
)
Restructuring, impairment and transaction-related charges
$
32.4
$
22.3
______________________________
(a)
Employee termination charges were
related to workforce reductions through facility consolidations and
separation programs.
(b)
Impairment charges were primarily
for certain property, plant and equipment no longer being utilized
in production as a result of facility consolidations, as well as
other capacity reduction and strategic divestiture activities,
including a $32.1 million non-cash impairment charge related to the
Company’s decision to sell the investment in Brazil during the
three months ended December 31, 2021.
(c)
Transaction-related charges
consisted primarily of professional service fees related to
business acquisition and divestiture activities.
(d)
Integration costs were primarily
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 for the three months ended December 31, 2021. A $23.1
million loss on the sale of its Argentina print business was
recognized during the three months ended December 31, 2022.
(2)
The $0.7 million loss on debt
extinguishment recorded during the year ended December 31, 2021,
relates to a $0.5 million non-cash loss on debt extinguishment
recorded during the fourth quarter of 2021, primarily related to
the repurchase of the Company’s unsecured 7.0% senior notes due May
1, 2022, and a $0.2 million non-cash loss on debt extinguishment
from the fifth amendment to the Company’s April 28, 2014 Senior
Secured Credit Facility, completed on November 2, 2021.
(3)
Other includes the following
items: (a) the equity in earnings 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; and (b) the Adjusted EBITDA for unconsolidated equity
method investments, which was calculated in a consistent manner
with the calculation above for Quad.
(4)
The Company made a change in its
definition of Adjusted EBITDA to include net pension income. This
change is reflected in both 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, Net Debt, 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’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
EBITDA, EBITDA MARGIN, ADJUSTED
EBITDA AND ADJUSTED EBITDA MARGIN
For the Years Ended December 31,
2022 and 2021
(in millions)
(UNAUDITED)
Year Ended December
31,
2022
2021
Net earnings
$
9.3
$
37.8
Interest expense
48.4
59.6
Income tax expense
8.4
9.5
Depreciation and amortization
141.3
157.3
EBITDA (Non-GAAP)
$
207.4
$
264.2
EBITDA Margin (Non-GAAP)
6.4
%
8.9
%
Restructuring, impairment and
transaction-related charges (1)
44.8
18.9
Gains from sale and leaseback (2)
—
(24.5
)
Loss on debt extinguishment (3)
—
0.7
Other (4)
—
1.2
Adjusted EBITDA (Non-GAAP) (5)
$
252.2
$
260.5
Adjusted EBITDA Margin
(Non-GAAP)
7.8
%
8.8
%
_________________________________
(1)
Operating results for the years
ended December 31, 2022 and 2021, were affected by the following
restructuring, impairment and transaction-related charges:
Year Ended December
31,
2022
2021
Employee termination charges (a)
$
7.3
$
9.9
Impairment charges (b)
2.2
34.9
Transaction-related charges (c)
2.0
0.6
Integration costs (d)
0.7
—
Other restructuring charges (e)
32.6
(26.5
)
Restructuring, impairment and
transaction-related charges
$
44.8
$
18.9
_________________________________
(a)
Employee termination charges were
related to workforce reductions through facility consolidations and
separation programs.
(b)
Impairment charges were primarily
for certain property, plant and equipment no longer being utilized
in production as a result of facility consolidations, as well as
other capacity reduction and strategic divestiture activities,
including a $32.1 million non-cash impairment charge related to the
Company’s decision to sell the investment in Brazil during the year
ended December 31, 2021.
(c)
Transaction-related charges
consisted of professional service fees related to business
acquisition and divestiture activities.
(d)
Integration costs were primarily
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 for the year ended December 31, 2021. A $23.1 million
loss on the sale of its Argentina print business and a $20.9
million gain on the sale of the Company’s third party logistics
business were recognized during the years ended December 31, 2022
and 2021, respectively.
(2)
The Company executed sale and
leaseback transactions of its Chalfont, Pennsylvania and West
Allis, Wisconsin facilities resulting in $24.5 million in gains
during the year ended December 31, 2021.
(3)
The $0.7 million loss on debt
extinguishment recorded during the year ended December 31, 2021,
relates to a $0.5 million non-cash loss on debt extinguishment
recorded during the fourth quarter of 2021, primarily related to
the repurchase of the Company’s unsecured 7.0% senior notes due May
1, 2022, and a $0.2 million non-cash loss on debt extinguishment
from the fifth amendment to the Company’s April 28, 2014 Senior
Secured Credit Facility, completed on November 2, 2021.
(4)
Other includes the following
items: (a) the equity in earnings 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; and (b) the Adjusted EBITDA for unconsolidated equity
method investments, which was calculated in a consistent manner
with the calculation above for Quad.
(5)
The Company made a change in its
definition of Adjusted EBITDA to include net pension income. This
change is reflected in both 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, Net Debt, 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’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 Years Ended December 31,
2022 and 2021
(in millions)
(UNAUDITED)
Year Ended December
31,
2022
2021
Net cash provided by operating
activities
$
154.6
$
136.5
Less: purchases of property, plant and
equipment
(60.3
)
(50.0
)
Free Cash Flow (Non-GAAP)
$
94.3
$
86.5
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, Net Debt, 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’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
NET DEBT AND DEBT LEVERAGE
RATIO
As of December 31, 2022 and
2021
(in millions, except ratio)
(UNAUDITED)
December 31, 2022
December 31, 2021
Total debt and finance lease obligations
on the condensed consolidated balance sheets
$
570.2
$
803.7
Less: Cash and cash equivalents
25.2
179.9
Net Debt (Non-GAAP)
$
545.0
$
623.8
Divided by: Adjusted EBITDA for the year
ended (Non-GAAP) (1)
$
252.2
$
260.5
Debt Leverage Ratio (Non-GAAP)
2.16 x
2.39 x
______________________________
(1) The Company made a change in its definition of Adjusted
EBITDA to include net pension income. This change is reflected in
both 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, Net Debt, 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’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 PER
SHARE
For the Three Months Ended
December 31, 2022 and 2021
(in millions, except per share
data)
(UNAUDITED)
Three Months Ended December
31,
2022
2021
Loss before income taxes and equity in
earnings of unconsolidated entity
$
(4.3
)
$
(15.9
)
Restructuring, impairment and
transaction-related charges
32.4
22.3
Loss on debt extinguishment
—
0.7
Adjusted net earnings, before income taxes
(Non-GAAP)
28.1
7.1
Income tax expense at 25% normalized tax
rate
7.0
1.8
Adjusted net earnings (Non-GAAP)
$
21.1
$
5.3
Basic weighted average number of common
shares outstanding
49.1
51.3
Plus: effect of dilutive equity incentive
instruments (Non-GAAP)
1.8
2.2
Diluted weighted average number of common
shares outstanding (Non-GAAP)
50.9
53.5
Adjusted diluted earnings per share
(Non-GAAP) (1)
$
0.41
$
0.10
Diluted loss per share (GAAP)
$
(0.18
)
$
(0.41
)
Restructuring, impairment and
transaction-related charges per share
0.64
0.42
Income tax expense from condensed
consolidated statement of operations per share
0.09
0.11
Income tax expense at 25% normalized tax
rate per share
(0.14
)
(0.02
)
Adjusted diluted earnings per share
(Non-GAAP) (1)
$
0.41
$
0.10
______________________________
(1) Adjusted diluted earnings per share excludes the following:
(i) restructuring, impairment and transaction-related charges; (ii)
loss on debt extinguishment; (iii) discrete income tax items; and
(iv) equity in earnings of unconsolidated entity.
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, Net Debt, 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’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 PER
SHARE
For the Years Ended December 31,
2022 and 2021
(in millions, except per share
data)
(UNAUDITED)
Year Ended December
31,
2022
2021
Earnings before income taxes and equity in
earnings of unconsolidated entity
$
17.7
$
47.0
Restructuring, impairment and
transaction-related charges
44.8
18.9
Gains from sale and leaseback
—
(24.5
)
Loss on debt extinguishment
—
0.7
Adjusted net earnings, before income taxes
(Non-GAAP)
62.5
42.1
Income tax expense at 25% normalized tax
rate
15.6
10.5
Adjusted net earnings (Non-GAAP)
$
46.9
$
31.6
Basic weighted average number of common
shares outstanding
50.7
51.3
Plus: effect of dilutive equity incentive
instruments
1.8
1.7
Diluted weighted average number of common
shares outstanding
52.5
53.0
Adjusted diluted earnings per share
(Non-GAAP) (1)
$
0.89
$
0.60
Diluted earnings per share (GAAP)
$
0.18
$
0.71
Restructuring, impairment and
transaction-related charges per share
0.85
0.36
Gains from sale and leaseback per
share
—
(0.46
)
Loss on debt extinguishment per share
—
0.01
Income tax expense from condensed
consolidated statement of operations per share
0.16
0.18
Income tax expense at 25% normalized tax
rate per share
(0.30
)
(0.20
)
Adjusted diluted earnings per share
(Non-GAAP) (1)
$
0.89
$
0.60
______________________________
(1) Adjusted diluted earnings per share excludes the following:
(i) restructuring, impairment and transaction-related charges; (ii)
gains from sale and leaseback; (iii) loss on debt extinguishment;
(iv) discrete income tax items; and (v) equity in earnings of
unconsolidated entity.
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, Net Debt, 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’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/20230221005571/en/
Investor Relations: Katie Krebsbach Investor Relations
Manager, Quad 414-566-4247 kkrebsbach@quad.com
Media: Claire Ho Director of Corporate Communications,
Quad 414-566-2955 cho@quad.com
Quad Graphics (NYSE:QUAD)
過去 株価チャート
から 6 2024 まで 7 2024
Quad Graphics (NYSE:QUAD)
過去 株価チャート
から 7 2023 まで 7 2024