Quad Reports Q2 and Year-to-Date 2022 Financial Results

Quad/Graphics, Inc. (NYSE: QUAD) (“Quad” or the “Company”), reported results for the second quarter ended June 30, 2022.

Recent Highlights

  • Increased Net Sales 9% in the second quarter of 2022, or 14% excluding divestitures, with growth in all product and service offerings.
  • Reported Net Earnings of $5 million and Adjusted EBITDA of $56 million in the second quarter of 2022, a decline from Net Earnings of $34 million and Adjusted EBITDA of $63 million in the second quarter of 2021, and an increase compared to Net Loss of $1 million and Adjusted EBITDA of $49 million in the first quarter of 2022.
  • Delivered Adjusted Diluted Earnings Per Share of $0.13 in both the second quarter of 2022 and the second quarter of 2021.
  • Increased investments in hiring and training labor, inventories, and capital expenditures to protect clients from ongoing supply chain disruptions, and to prepare for the seasonally higher production period in the second half of the year.
  • Paid remaining $209 million on the unsecured 7.00% senior notes on May 2, 2022, while maintaining up to $298 million of liquidity as of June 30, 2022.
  • Repurchased 1.7 million shares of Class A common stock through August 1, 2022.
  • 2022 financial guidance remains unchanged.

Joel Quadracci, Chairman, President & CEO of Quad, said: “Our second quarter Net Sales increase of 14% excluding divestitures exceeded our expectations. This strong growth included print segment share gains and Net Sales growth across all of our offerings. Increasingly, brand owners and marketers are recognizing our unique value as a marketing experience company. We have architected a better way for our clients to deploy their marketing through a discipline-led, integrated platform that addresses all efforts – from idea to execution – and includes business strategy, insights and analytics, technology solutions, managed services, agency and studio solutions , media, print, in-store, and packaging. We will continue to strategically invest in our platform excellence to give our clients a more efficient, effective and frictionless way to go to market and reach consumers, while enhancing our competitive position to drive profitable growth.

“Our team continues to work diligently to mitigate the impacts of macro-economic headwinds, including ongoing supply chain constraints that impacted productivity and cost inflation. This included implementing an additional price increase in mid-May. We also made investments in the first half of the year to serve our clients well and drive higher sales and profitability during our seasonally busier second half of the year, where we see continued strong demand.

“As we look forward, we remain focused on serving our clients well, while enhancing Quad’s financial strength and driving shareholder value, including repurchasing shares. We will continue to prioritize growth while improving productivity and reducing debt during 2022, consistent with our commitment to create a better, more purposeful and sustainable way forward for all our stakeholders.”

Summary Results

Results for the three months ended June 30, 2022, include:

  • No Sales— Net Sales were $758 million in the second quarter of 2022, reflecting topline growth of 9% from the same period in 2021. Excluding the divestiture of QuadExpress, a third-party logistics (3PL) business, Net Sales increased 14% from the second quarter of 2021. Net Sales growth was achieved across all of our offerings due to increased pricing in response to inflationary pressures, print segment share gains and onboarding new clients in Agency Solutions.
  • Net Earnings and Adjusted EBITDA — Net Earnings were $5 million in the second quarter of 2022 as compared to Net Earnings of $34 million in the second quarter of 2021. Adjusted EBITDA was $56 million in the second quarter of 2022, a decline from $63 million of Adjusted EBITDA in the same period last year. Net Earnings during the second quarter of 2021 were benefited by a $21 million gain ($16 million, net of tax) from the sale of QuadExpress, and a $14 million gain ($10 million, net of tax) from the sale and leaseback of the Chalfont , Pennsylvania, facility.
  • Adjusted Diluted Earnings Per Share — Adjusted Diluted Earnings Per Share was $0.13 in the second quarter of 2022, consistent with the second quarter of 2021.

Results for the six months ended June 30, 2022, include:

  • Net Sales— Net Sales were $1.5 billion in the six months ended June 30, 2022, up 7% from the same period in 2021, or up 12% excluding the QuadExpress divestiture. Net Sales growth was achieved across all of our offerings due to increased pricing in response to inflationary pressures, print segment share gains and onboarding of new clients in Agency Solutions.
  • Net Earnings and Adjusted EBITDA — Net Earnings were $4 million in the six months ended June 30, 2022, as compared to Net Earnings of $45 million in the six months ended 2021. The decrease is primarily due to $35 million ($26 million, net of tax) of gains in 2021 on the sale of QuadExpress, and sale and leaseback of the Chalfont, Pennsylvania, facility. Adjusted EBITDA was $105 million in the six months ended June 30, 2022, a decline from $133 million of Adjusted EBITDA in the same period in 2021. These declines were primarily due to the negative impact of supply chain disruptions on our productivity, investments in hiring and training labor in advance of the peak production season during the second half of the year, and cost inflation, which was partially offset by Net Sales growth.
  • Adjusted Diluted Earnings Per Share — Adjusted Diluted Earnings Per Share was $0.17 in the six months ended June 30, 2022, as compared to $0.31 in the six months ended June 30, 2021.
  • Net Cash Provided by (Used in) Operating Activities and Free Cash Flow — Net Cash Used in Operating Activities was $24 million in the six months ended June 30, 2022, as compared to Net Cash Provided by Operating Activities of $89 million during the same period in 2021. Free Cash Flow decreased $119 million from last year to negative $57 million in the six months ended June 30, 2022. The decline in Free Cash Flow was primarily driven by higher working capital in 2022 including increased inventory levels from higher costs on commodities and supply chain challenges with resulting longer lead times. Inventory levels have been proactively increased to prepare for the seasonally higher production period in the second half of the year. The decrease in Free Cash Flow was also due to lower profitability in the first half of the year and higher capital expenditures. As a reminder, the Company historically generates the majority of its Free Cash Flow in the fourth quarter of the year.
  • Net Debt — Debt less cash and cash equivalents increased by $60 million to $684 million at June 30, 2022, as compared to $624 million at December 31, 2021, primarily due to investments in working capital, talent and equipment to enable continued sales growth.

2022 Guidance

The Company’s full-year 2022 financial guidance is unchanged and is as follows:

Quad

Click to enlarge.

Tony Staniak, CFO of Quad, said: “We continue to deliver a one-of-a-kind marketing experience to our clients and achieved a fifth consecutive quarter of Net Sales growth. We are poised to serve our clients well while growing sales and profitability in the second half of 2022 due to client demand of our through-the-line marketing offering, combined with our proactive measures to hire and train labor, and build inventory levels heading into our peak production period. We are also pleased to show Quad’s value as an investment by repurchasing 1.7 million shares through August 1, 2022, and will pursue additional opportunities to repurchase shares during the remainder of the year under a Rule 10b5-1 repurchase plan. We are on track to achieve our full-year 2022 financial guidance, and while Annual Net Sales growth has the potential to exceed the guidance range, we remain cautious in the current macroeconomic environment and are not increasing the Net Sales guidance range at this time. We are closely monitoring the economy and are prepared to adjust as necessary to achieve our year-end debt leverage guidance, and continue enhancing our financial strength.”

Source: Quad

The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of Printing Impressions.

Leave a Reply

Your email address will not be published.

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker