Quad Reports Second Quarter and Year-to-Date 2020 Results

Recent Highlights
*Aggressively implemented risk-mitigating and cost-reduction efforts while growing print segment share through its integrated marketing solutions for clients.
*Generated positive cash flow during the second quarter and increased year-to-date net cash provided by operating activities by $51 million and increased Free Cash Flow by $79 million, compared to the first half of 2019.
*Reduced net debt by $125 million over last 12 months to end the quarter with a Debt Leverage Ratio of 3.18x, net of excess cash.
*Maintained significant liquidity as of June 30, 2020, including $70 million of cash on hand and up to $465 million in unused capacity under Quad’s revolving credit agreement.
*Sold Versailles, Ky., book manufacturing facility on July 1 as part of ongoing efforts to optimize product portfolio.

“Our second quarter performance was strong despite the significant economic impact from the COVID-19 pandemic. We proactively aligned our cost structure with lower demand while also continuing to improve productivity, leading to higher Adjusted EBITDA margin and increased cash flow. Throughout the quarter, we remained unwavering in our focus to: 1) maintain our employees’ health and well-being; 2) provide high-quality, on-time delivery for our clients; and 3) ensure the long-term financial health of the Company,” said Joel Quadracci, Quad Chairman, President and CEO.

“I am extremely proud of our team’s ability to come together and act with urgency to not only navigate this unprecedented period in history, but to continue to innovate for our clients,” Quadracci added. “We continue to advance our strategic transformation as a marketing solutions partner, making investments in talent and technology, and innovating new integrated solutions that help our clients simplify their executional requirements to deliver content and campaigns more efficiently and effectively. Our Quad 3.0 strategy provides us with the right tools, talent and platform to exit the COVID-19 pandemic from a position of strength. Despite the disruptive impact of COVID-19, we continue to demonstrate our value to clients by offering innovative solutions such as content workflow re-engineering, freeing clients to focus on developing strategies that will drive response and revenues.”

Quadracci concluded: “As we look forward, we will continue to closely monitor the COVID-19 pandemic and its impacts on our clients and the worldwide economy, and adjust our priorities accordingly to support our financial objectives, all while continuing to keep our employees safe and serving our clients’ evolving needs.”

Results for the three months ended June 30, 2020, included:
*Net Sales (excluding discontinued operations) — Net sales were $585 million in 2020, down 38% from 2019. Sales declined 36% during the quarter, excluding the impact of the January 2020 sale of the Omaha packaging plant primarily due to the economic impact from the COVID-19 pandemic, and ongoing print industry volume and pricing pressures.
*Net Loss From Continuing Operations — Excluding the results from discontinued operations, net loss from continuing operations was $15 million in 2020, or $0.29 diluted loss per share, compared to net loss from continuing operations of $3 million in 2019, or $0.07 diluted loss per share.

Results for the six months ended June 30, 2020, included:
*Net Sales (excluding discontinued operations) — Net sales were $1.4 billion in 2020 as compared to $1.9 billion in 2019, down 26%. Sales declined 25% during the six months ended June 30, 2020, after excluding the impact of the January 2020 sale of the Omaha packaging plant primarily due to the economic impact from the COVID-19 pandemic, and ongoing print industry volume and pricing pressures.
*Net Loss From Continuing Operations — Excluding the results from discontinued operations, net loss from continuing operations was $24 million in 2020, or $0.46 diluted loss per share, as compared to net loss from continuing operations of $16 million in 2019, or $0.31 diluted loss per share.
*Net Cash Provided by Operating Activities — Net cash provided by operating activities was $67 million for the six months ended June 30, 2020, an increase of $51 million from 2019, primarily due to improvements in working capital.
*Free Cash Flow — Free Cash Flow was $29 million for the six months ended June 30, 2020, an increase of $79 million from 2019, primarily due to improvements in working capital and a $37 million decrease in capital expenditures. As a reminder, the Company historically generates the majority of its Free Cash Flow in the fourth quarter of the year.
details at: https://3nnerh28sqwvgg6t51x2xsl2-wpengine.netdna-ssl.com/wp-content/uploads/2020/08/Quad-Q2-2020-Earnings-Release.pdf

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