Temporary working capital

Quad Achieves 19% Net Sales Increase From Q2 2020, Raises Full Year Outlook

Quad / Graphics, Inc., has released its results for the second quarter of 2021.

Recent Highlights

  • Net sales increase of 19% compared to the second quarter of 2020 thanks to higher sales of printing, logistics and agency solutions, which rebounded from the period affected by the pandemic in 2020, as well as print segment share gains.
  • Increase in net income from continuing operations of $ 49 million to $ 34 million for the second quarter of 2021, compared to a net loss from continuing operations of $ 15 million for the second quarter of 2020.
  • Achieved $ 60 million in adjusted EBITDA in Q2 2021, stable year-over-year, despite a one-year year-over-year benefit in 2020 of approximately $ 30 million in reductions in temporary costs.
  • Increase in cash flow from operating activities to $ 89 million and free cash flow to $ 62 million in the first six months of 2021, increases of $ 22 million and $ 33 million, respectively .
  • Year-to-date net debt reduction of $ 120 million, improving the company’s debt ratio to 3.0x as of June 30, 2021, from 3.35x as of December 31, 2020.
  • Sold QuadExpress, a third-party logistics company (3PL), for $ 40 million, which is an adjusted EBITDA multiple of more than 8 times.
  • Raises and broadens the financial outlook for the full year for 2021 net sales, adjusted EBITDA and debt leverage.
Joel quadracci

Joel quadracci

“With strong operational and financial performance, our team delivered second quarter results that exceeded our expectations,” said Joel Quadracci, Chairman, President and CEO of Quad. “Our net sales increased 19% compared to the same period last year, driven by organic growth and new sales. This positive trend reflects the hard work of our employees and the success of our integrated marketing offer in the market. We remain committed to delivering value to customers through our unique solutions, and will continue to build and expand our relationships with leading brands and marketers.

Quad financial overview shared during quarterly conference call.

Quad financial overview shared during quarterly conference call. Click to enlarge.

“We also sold our 3PL freight business, QuadExpress, for a total of $ 40 million at the end of June. This divestiture, which represented a small portion of our global logistics business, was in line with our established strategy to optimize our product and service portfolio and invest in the parts of our business that can accelerate our growth and position us as as a marketing solutions partner. We are happy to have found a great home for the QuadExpress team.

“As the advertising market and the economy as a whole continue to recover and return to growth, our innovative team remains committed to increasing market share, including new revenues from our expanded marketing services product offering. , while attracting new customers from new verticals. As always, we will remain nimble and adapt to changing market demand while maintaining our disciplined approach to how we manage all aspects of our business to improve our financial strength and create value. for shareholders. This includes continuing to develop and invest in the talent, technology, products and services that will further advance our strategy as a marketing solutions partner. “

Quad's 2021 outlook, which was shared on the quarterly conference call.

Quad’s 2021 outlook, which was shared on the quarterly conference call. Click to enlarge.

(1) Due to the sale of QuadExpress on June 30, 2021, the annual change in net sales excludes sales of QuadExpress for the second half of 2020
(2) The debt ratio is calculated at the midpoint of the adjusted EBITDA outlook

Summary of Findings

The results for the quarter ended June 30, 2021 include:

  • Net sales – Net sales amounted to $ 694 million in the second quarter of 2021, up 19% from the same period in 2020. Net sales increased in printing, logistics and agency solutions primarily thanks to organic growth, which rebounded from the pandemic period in 2020, as well as print segment share gains from new customers.
  • Net profit (loss) from continuing operations – Net income from continuing operations was $ 34 million or $ 0.66 diluted earnings per share from continuing operations in the second quarter of 2021, an increase of $ 49 million over the second quarter of 2020, which had recorded a net loss of $ 15 million or a diluted loss of $ 0.29 per share. Net income increased due to higher profit from a 19% increase in net sales, a gain of $ 21 million on the sale of QuadExpress in the second quarter of 2021, a gain of $ 14 million from the sale and leaseback of the production facility in Chalfont, Pa. in the second quarter of 2021, and $ 9 million in reduced restructuring, impairment and transaction charges, partially offset by approximately $ 30 million in temporary one-time cost savings in 2020 mainly related to pay cuts and time off due to the COVID pandemic.
  • Adjusted EBITDA – Adjusted EBITDA was $ 60 million in the second quarter of 2021, consistent with the same period in 2020. The increase in net sales resulted in higher profits, offset by approximately $ 30 million in 2020 reductions temporary costs related to COVID.

The results for the six-month period ended June 30, 2021 include:

  • Net sales – Net sales amounted to $ 1.4 billion during the six-month period ended June 30, 2021, down 1% from the same period in 2020, mainly due to the impacts of the COVID-19 pandemic in the first quarter, almost offset compared to the previous year. increased sales of printing, logistics and agency solutions in the second quarter.
  • Net profit (loss) from continuing operations – Net income from continuing operations was $ 45 million or $ 0.85, diluted earnings per share from continuing operations for the six-month period ended June 30, 2021, an increase of $ 69 million from the same period in 2020, which had recorded a net loss of $ 24 million or $ 0.46 diluted loss per share. Net income was higher due to a decrease of $ 26 million in restructuring, impairment and transaction charges, an increase of $ 24 million from gains on sale of businesses and a gain of $ 14 million from the sale and leaseback of Chalfont, Penn., production facility in the second quarter of 2021. These increases were partially offset by temporary one-time cost savings of approximately $ 30 million in 2020 .
  • Adjusted EBITDA – Adjusted EBITDA was $ 126 million for the six-month period ended June 30, 2021, compared to $ 135 million for the same period in 2020. Strong growth in net sales in the second quarter and the related impact of Adjusted EBITDA partially offset the year-over-year impact the benefits in 2020 were primarily related to approximately $ 30 million in temporary cost reductions and a $ 12 million benefit in 2020 from the vacation policy change .
  • Net cash provided by operating activities – Free cash flow from operating activities increased by $ 22 million to $ 89 million for the six-month period ended June 30, 2021, compared to $ 67 million for the same period in 2020, mainly due to improved working capital.
  • Free movement of capital – Free cash flow increased by $ 33 million to reach $ 62 million for the six-month period ended June 30, 2021, compared to $ 29 million for the same period in 2020, mainly due to an increase in cash flow of net cash generated from the operating activities described above; and one million reduction in capital expenditure.
  • Net debt – Debt less cash and cash equivalents decreased by $ 120 million to $ 753 million as at June 30, 2021, compared to $ 873 million as at December 31, 2020. The reduction is mainly due to the 62 millions of dollars in free cash flow and cash generated from asset sales. , mainly related to the sale of QuadExpress. Over the past twelve months, net debt has decreased by $ 225 million, which represents a 23% reduction in net debt. The debt ratio improved by 35 basis points to 3.0x as of June 30, 2021, compared to 3.35x as of December 31, 2020.

Dave Honan, Executive Vice President and Chief Financial Officer, concluded: “Our performance in the first half and, in particular, the second quarter, exceeded our expectations. We have strong sales momentum heading into the second half of 2021, laying the groundwork for our improved and expanded financial outlook for fiscal 2021. Our full year outlook brings our net sales outlook to an increase of 1 % to 3% from 2020, and we expect further significant debt reductions in the second half of the year through the end of 2021 with a debt-to-equity ratio of around 2.75x. “

Source: Quad

The previous press release was provided by a company not affiliated with Printing of fingerprints. The views expressed do not directly reflect the thoughts or opinions of Printing of fingerprints.


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