Quad/Graphics Inc provides print and marketing services to help customers market their products, services, and contents. The company operates in the commercial segment of the printing industry through three divisions: the United States print and related services segment, the international segment, and the corporate segment. The company generates almost all its revenue from the American domestic market.
Performance Overview
Quad/Graphics Inc (QUAD, Financial) reported net sales of $634 million for Q2 2024, a 10% decline from $703 million in Q2 2023. The company posted a net loss of $3 million or $0.06 diluted loss per share, compared to a net loss of $6 million or $0.12 diluted loss per share in the same period last year. Despite the revenue decline, the company achieved a non-GAAP adjusted EBITDA of $52 million, up from $50 million in Q2 2023, and delivered $0.12 adjusted diluted earnings per share, surpassing analyst estimates of -$0.02 EPS.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $634 million | $703 million |
| Net Loss | $3 million | $6 million |
| Adjusted EBITDA | $52 million | $50 million |
| Adjusted Diluted EPS | $0.12 | $0.02 |
Challenges and Achievements
The decline in net sales was primarily attributed to lower print volumes, a higher mix of lower unit price gravure versus offset print in magazine and catalog offerings, and lower paper and agency solutions sales, including the loss of a large grocery client. Despite these challenges, Quad/Graphics Inc (QUAD, Financial) managed to improve its adjusted EBITDA margin by 100 basis points to 8.2%, driven by higher manufacturing productivity and cost savings from completed restructuring actions.
Quad/Graphics Inc (QUAD, Financial) also launched several innovative service offerings, including Betty, a creative agency, and 3D Commerce by Quad, the first commercially available automated and scalable 3D scanning solution in North America. These initiatives are expected to enhance the company's competitive position in the market.
Income Statement Highlights
For the six months ended June 30, 2024, Quad/Graphics Inc (QUAD, Financial) reported net sales of $1.3 billion, a 12% decrease from $1.47 billion in the same period in 2023. The net loss for the six months was $31 million, or $0.65 diluted loss per share, compared to a net loss of $31 million, or $0.62 diluted loss per share, in the same period last year. Adjusted EBITDA for the six months was $102 million, down from $110 million in the same period in 2023.
Balance Sheet and Cash Flow
As of June 30, 2024, Quad/Graphics Inc (QUAD, Financial) reported total assets of $1.37 billion, down from $1.51 billion as of December 31, 2023. The company's net debt stood at $532 million, up from $470 million at the end of 2023. The increase in net debt was primarily due to negative free cash flow of $82 million in the first half of 2024, partially offset by $22 million in proceeds from the sale of a minority investment in Manipal Technologies.
Commentary
"During the second quarter, we continued our focus on differentiating ourselves as a marketing experience company, including investments in innovative solutions and superior talent," said Joel Quadracci, Chairman, President, and CEO of Quad.
"Despite lower net sales, with our margin improvement and strong cash generation, we are reaffirming our full-year guidance," added Tony Staniak, Chief Financial Officer.
Conclusion
Quad/Graphics Inc (QUAD, Financial) faced significant challenges in Q2 2024, including declining net sales and external headwinds such as postal rate increases and elevated interest rates. However, the company managed to improve its adjusted EBITDA margin and launched several innovative service offerings. With a focus on enhancing financial strength and creating shareholder value, Quad/Graphics Inc (QUAD) remains committed to its strategic initiatives and full-year financial guidance.
Explore the complete 8-K earnings release (here) from Quad/Graphics Inc for further details.
