Quad/Graphics Reports Fourth Quarter and Full-Year 2016 Results

Quad/Graphics, Inc. (NYSE: QUAD) (“Quad/Graphics” or the “Company”), today reported fourth quarter and full-year 2016 results.

Earnings Highlights
• Delivered fourth quarter 2016 net sales of $1.2 billion and full-year 2016 net sales of $4.3 billion.
• Reported fourth quarter 2016 GAAP net earnings of $38 million and full-year 2016 GAAP net earnings of $45 million.
• Achieved fourth quarter 2016 Adjusted EBITDA of $140 million and Adjusted EBITDA margin of 11.7%.
• Increased full-year 2016 Adjusted EBITDA by $11 million to $480 million and increased Adjusted EBITDA margin by 90 basis points to 11.1%.
• Increased full-year 2016 Adjusted Diluted Earnings Per Share by $0.85 per share to $1.52 per share.

Cash Flow & Balance Sheet Highlights
• Increased full-year 2016 GAAP cash flow from operations by $4 million to $353 million, and increased full-year 2016 Free Cash Flow by $31 million to $246 million.
• Reduced debt and capital leases by $218 million during 2016.
• Amended and extended the Company’s $1.1 billion revolving credit facility and Term Loan A to 2021, and swapped $250 million of variable-rate debt into fixed-rate debt to lock in 62% of the Company’s debt as fixed-rate debt.

“We are pleased with our fourth quarter and full-year 2016 results, which exceeded our expectations and show that we more than accomplished what we set out to achieve at the start of the year,” said Joel Quadracci, Quad/Graphics Chairman, President & Chief Executive Officer. “Throughout 2016, we continued to transform both our business and the industry through strategic investment in our assets and through the creation of new and innovative solutions designed to drive greater value for our clients. We also continued to implement sustainable cost reductions and productivity improvements while maintaining our focus on revenue to drive EBITDA enhancement.”

Quadracci added: “As we look forward to 2017, we plan to continue to take advantage of our unique position in the industry as both a global printer and a marketing services provider. We will leverage our growing BlueSoho integrated marketing agency, as well as our strategic investment in Rise Interactive, to create innovative, end-to-end solutions for our customers that will allow them to improve both the efficiency and effectiveness of their media spend across multiple channels. Further, we will remain diligent in our aggressive management of costs and productivity to hold the line on Adjusted EBITDA margins. This will allow us to meet our goal of being the industry’s high-quality, low-cost producer, and generate strong Free Cash Flow to support value-creating opportunities as part of our company’s ongoing transformation as a global marketing services provider.”

Summary Results
Net sales for the three months ended December 31, 2016, were $1.2 billion, an 8.8% decrease from the three months ended December 31, 2015. Organic sales decreased 6.3% due to ongoing industry volume and pricing pressures, after excluding foreign exchange (-0.3% impact) and pass-through paper sales (-2.2%). The organic sales decrease is consistent with the Company’s previous guidance. GAAP net earnings improved to $38 million and GAAP diluted earnings per share improved to $0.73 per share during the three months ended December 31, 2016. The improvement in earnings and diluted earnings per share was due to better operating performance from ongoing improvements in manufacturing productivity and labor management, sustainable cost reductions, lower depreciation and amortization expense and lower restructuring and non-cash impairment charges. Fourth quarter 2016 Adjusted EBITDA decreased $14 million to $140 million compared to $154 million in 2015 due to lower net sales, and Adjusted EBITDA margin remained flat at 11.7% year-over-year due to lower cost of sales and selling, general and administrative expenses driven by enhanced efficiency and sustainable cost reductions.

Net sales for the year ended December 31, 2016, were $4.3 billion, a 5.8% decrease from the year ended December 31, 2015. Organic sales declined 4.5% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.4% impact), foreign exchange (-0.6% impact) and pass-through paper sales (-2.1% impact). GAAP net earnings improved to $45 million and GAAP diluted earnings per share improved to $0.90 per share during the year ended December 31, 2016. Full-year 2016 Adjusted EBITDA increased $11 million to $480 million compared to $469 million in 2015, and Adjusted EBITDA margin increased to 11.1% in 2016 compared to 10.2% for the previous year. Adjusted Diluted Earnings Per Share improved by $0.85 per share during the year ended December 31, 2016 to $1.52 per share. The increases in Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Diluted Earnings Per Share primarily reflect enhanced efficiency and sustainable cost reductions and, for Adjusted Diluted Earnings Per Share, lower depreciation and amortization.
more at:  http://investors.qg.com/phoenix.zhtml?c=231687&p=irol-newsArticle&ID=2247970

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