Quad/Graphics reports strong Q4 revenue and earnings, declares dividend of $0.30 per share
Net sales for the fourth quarter 2013 were $1.3 billion versus $1.1 billion for the same period in 2012
SUSSEX, Wis. – February 26, 2014 — Quad/Graphics, Inc., today reported fourth quarter and full-year 2013 results. Prior year financial results do not include the acquisition of Vertis, Inc. (“Vertis”), which was acquired on January 16, 2013. For full financial results, including reconciliations of non-GAAP financial measures, please see the accompanying information.
“Our fourth quarter and full-year 2013 results met our expectations, and we were especially pleased with our continued strong cash flow generation,” said Joel Quadracci, Quad/Graphics Chairman, President & CEO. “Our ability to generate significant cash flow and maintain a strong balance sheet while simultaneously reducing our pension and debt obligations has allowed us to remain flexible with how we deploy capital. We have invested in our business to strengthen and expand our offering to clients, returned cash to our shareholders through quarterly cash dividends, and taken advantage of several unique acquisition opportunities, including Vertis and the recently announced UniGraphic transaction.”
Net sales for the fourth quarter 2013 were $1.3 billion versus $1.1 billion for the same period in 2012. Fourth quarter 2013 Adjusted EBITDA was $198 million compared to $174 million for the same period in 2012. The increase in net sales and Adjusted EBITDA was due to the Vertis acquisition. Adjusted EBITDA margin was 14.7% compared to 15.3% for the same period in 2012. The Adjusted EBITDA margin variance primarily reflects ongoing industry volume and pricing pressures as well as the dilutive impact of Vertis’ historically lower margin profile compared to Quad/Graphics’ core business.
For the full-year 2013, net sales were $4.8 billion versus net sales of $4.1 billion for the previous year. Full-year 2013 Adjusted EBITDA was $577 million compared to $566 million for the previous year, and Adjusted EBITDA margin was 12.0% compared to 13.8% for the previous year. Recurring Free Cash Flow was $380 million compared to $375 million for the previous year, continuing the Company’s track record of solid cash flow generation. Free Cash Flow, including restructuring payments and excluding the favorable impact of an estimated $90 million in Vertis working capital restoration, was $202 million. Going forward, the Company is amending its non-GAAP financial measures to report Free Cash Flow instead of Recurring Free Cash Flow. Free Cash Flow is defined as net cash provided by operating activities less purchases of property, plant and equipment.
“Our ability to generate significant Free Cash Flow supports our disciplined approach to capital deployment, which we adjust based on current circumstances and what we think is best for shareholder value creation,” said John Fowler, incoming Vice Chairman and Executive Vice President. “We also continue to closely manage our pension and debt liabilities to maintain a strong balance sheet which, in turn, provides us with the ability to adjust to changing economic and industry conditions. We reduced our pension, post-retirement and MEPPs obligations by $191 million for full-year 2013, and $360 million since the July 2010 acquisition of Worldcolor. We continued to reduce debt after the Vertis acquisition, achieving a yearend Debt Leverage Ratio of 2.44x, which is within our targeted range of 2.0x to 2.5x.”
David Honan, incoming Vice President & Chief Financial Officer, concluded: “We anticipate our 2014 net sales will be in the range of $4.6 billion to $4.8 billion. In addition, we expect 2014 Adjusted EBITDA will be between $520 million to $550 million, and 2014 Free Cash Flow to be between $155 million and $165 million. As we move forward in this challenging industry environment, we continue to be disciplined in how we manage all aspects of our business, especially improving productivity and sustainable cost reduction initiatives to remain a low-cost producer. We will also continue focusing on maintaining a strong and flexible balance sheet to adjust to changing industry conditions while also investing in our business, pursuing compelling acquisition opportunities, and returning capital and creating long-term value for our shareholders.”
Quad/Graphics’ next quarterly dividend of $0.30 per share will be payable on March 21, 2014, to shareholders of record as of March 12, 2014.