Quad/Graphics, Inc. (NYSE: QUAD) (“Quad/Graphics” or the “Company”) today reported first quarter 2018 results. For full financial results, please see the accompanying information.
Financial Highlights
• Delivered net sales of $968 million and a net loss of $3.5 million, or a $0.07 diluted loss per share.
• Increased Non-GAAP Adjusted Diluted Earnings Per Share by 12% to $0.58.
• Achieved Non-GAAP Adjusted EBITDA and Margin of $111 million and 11.4%, respectively.
• Increased ownership to a majority interest in Rise Interactive, an award-winning digital marketing agency.
• Continues to successfully integrate Ivie & Associates, a leading marketing services provider.
• Declares quarterly dividend of $0.30 per share.
“Our results for the first quarter of 2018 were in-line with our expectations as we continue to transform our company as part of Quad 3.0,” said Joel Quadracci, Quad/Graphics Chairman, President & Chief Executive Officer. “As a marketing solutions provider, we address our clients’ marketing challenges and solve their unique problems through a comprehensive offering. Our recent acquisition of Ivie & Associates and additional investment in Rise Interactive continue to accelerate our transformation, creating a powerful integrated marketing platform. Not only are we able to fulfill traditional agency roles, but we also provide integrated marketing execution across channels. In this way, we deliver increased value, helping our clients reduce complexity while improving process efficiencies and marketing spend effectiveness.”
Quadracci added: “To fuel our Quad 3.0 transformation, we have a strong and engaged workforce, backed by state-of-the-art technology that continues to drive productivity improvements to generate the earnings and cash flow necessary to further advance our value-creating transformation. Our goal, as always, is to remain the high-quality, low-cost producer across the continuum – from traditional print to multichannel execution.”
Net sales for the first quarter ended March 31, 2018, were $968 million, representing a 3.1% decrease as compared to 2017. Organic sales declined 5.1% due to ongoing print industry volume and pricing pressures after excluding acquisitions (2.0% impact), pass-through paper sales (-0.2% impact) and foreign exchange (0.2% impact), and is consistent with previous guidance. The Company incurred a net loss of $3.5 million, or $0.07 per share, for the three months ended March 31, 2018, which included a special $22 million non-cash employee stock ownership plan contribution as part of the benefit of tax reform. Excluding the special contribution and restructuring charges, Non-GAAP Adjusted Diluted Earnings Per Share for the first quarter of 2018 improved 12% to $0.58 compared to $0.52 in the first quarter of 2017. First quarter 2018 Non-GAAP Adjusted EBITDA was $111 million compared to $119 million in the first quarter of 2017, and Adjusted EBITDA Margin was 11.4% compared to 11.9% in 2017.
Net cash provided by operating activities was $2 million for the first quarter 2018, compared to $63 million in the first quarter of 2017, and Free Cash Flow decreased $62 million to a negative $22 million. These variances were primarily due to expected timing differences in 2018 versus 2017 for cash generated from working capital, which will be weighted more towards the fourth quarter. As a reminder, the Company generates the majority of its Free Cash Flow in the second half of the year.
“Our first quarter results were as expected and we remain on track with our 2018 guidance,” said Dave Honan, Quad/Graphics Executive Vice President & Chief Financial Officer. “We ended the first quarter of 2018 with a Debt Leverage Ratio of 2.28x, which includes the impact from the Ivie and Rise investments. Our leverage continues to be well within our long-term targeted range of 2.0x to 2.5x. We believe the strength of our balance sheet gives us the ability to balance our use of capital and provide sufficient opportunity for investment in our Quad 3.0 transformation.”
Quad/Graphics’ next quarterly dividend of $0.30 per share will be payable on June 8, 2018, to shareholders of record as of May 21, 2018.
more detail at: http://investors.qg.com/phoenix.zhtml?c=231687&p=irol-newsArticle&ID=2346148