Quad Graphics, Inc · NYSE:QUAD
Quad Graphics — Q2 2023 Earnings Presentation
26 slides from Quad Graphics's earnings presentation, Aug 2, 2023
Slide 1: 2nd Quarter 2023 Earnings Call
ww 2"¢ Quarter 2023 Earnings Call August 2, 2023 Lit Quad&
Slide 2: Forward-Looking Statements
This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company’s future results, financial condition,
Slide 3: Second Quarter Highlights
(1) See slide 19 for definitions of our non-GAAP measures and slide 22 for a reconciliation of Free Cash Flow Quad 3
Slide 4: Quad maximizes clients' marketing spend
Quad maximizes clients' marketing spends by reducing complexities and process inefficiencies. We provide demand-driving ideas and integrated solutions through an unparalleled marketing and manufacturing network. Print Media Packaging Analytics solutions services solutions Brand & creative In-store C
Slide 5: Strategic priorities
Deliver Integrated Service Accelerate Market Evolve Our Culture as an Excellence Penetration MX Company Quad 5
Slide 6: When things run smoothly, people notice
When things run smoothly, people notice SEE MORE… Quad 6
Slide 7: Growing client verticals
FINANCE & DIRECT-TO- RETAIL GROCERY PUBLISHING CPG HEALTH INSURANCE CONSUMER Quad 7
Slide 8: Nielsen-Massey client win
• Partnering as creative agency of record to help nationwide producer of the world’s finest vanillas and flavorings reimagine brand-building efforts and drive sustainable growth • Brand strategy • Work for Nielsen-Massey is underway and will launch in • Data and insights Q4 2023 • Creative and campa
Slide 9: New consumer brand launch
• Create a consumer brand from inception, including a product launch at select Costco stores this summer z • Consumer research • Brand and design strategy • Marketing services, including promotional campaigns for digital and social channels • Completed brand launch in 10 months – a truncated • Packa
Slide 10: AARP relationship expansion
• Expand existing relationship with AARP, the nation’s largest nonprofit, nonpartisan organization for empowering Americans age 50 and older • Printing of AARP Bulletin and AARP Magazine • Prepress services, including page processing and proofing • Image retouching and archiving • Ad traffic managem
Slide 11: Commitment to Community: Quad MKE Open House
Commitment to Community: Quad MKE Open House
Slide 12: Net Sales Mix
Integrated Integrated Solutions Solutions 10% 10% Agency Solutions 16% Agency Solutions 17% Catalogs Catalogs 10% 9% Logistics 2% Logistics 2% Targeted QuadMed Targeted QuadMed 14% Print 12% Print Direct 5% Europe Direct 6% Europe Marketing Marketing Latin Net Sales Latin Net Sales America America $
Slide 13: Second Quarter Financial Results
Second Quarter Year-to-Date US $ Millions (Except Per Share Data) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 STATEMENT OF OPERATIONS Net Sales $ 703.1 $ 757.7 $ 1,469.6 $ 1,501.9 Cost of Sales 569.8 618.1 1,187.3 1,237.7 Selling, General and Administrative Expenses 83.3 86.9 172.5 166.0
Slide 14: Net Debt and Liquidity
Net Debt(1) Blended Interest Rate Unused Capacity Under Revolver and as of June 30, 2023 as of June 30, 2023 Cash on Hand as of June 30, 2023 Floating Debt Leverage Ratio(1) Next Significant Debt Maturity as of June 30, 2023 of $88 Million Fixed (1) See slide 19 for definitions of our non-GAAP measu
Slide 15: 2023 Guidance
Financial Metric 2023 Guidance Annual Net Sales Change 0% to 5% decline Full-Year Adjusted EBITDA(1) $210 to $250 million Free Cash Flow(1) $50 to $90 million Capital Expenditures $65 to $75 million Year-End Debt Leverage Ratio(1)(2) Approximately 2.0x (1) See slide 19 for definitions of our non-GAA
Slide 16: Key takeaways
• Featuring through-the-line marketing solutions deployed across offline and online channels • Accessing additional revenue opportunity in advertising and marketing services industry • Serving 2,900 clients across growing verticals such as retail, publishing, consumer packaged goods, finance and ins
Slide 17: 17
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Slide 18: Supplemental Information
Supplemental Information
Slide 19: Non-GAAP Measure Definitions
• In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), this presentation also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow,
Slide 20: Second Quarter Adjusted EBITDA Reconciliation
Second Quarter Three Months Ended June 30, US $ Millions 2023 2022 Net earnings (loss) $ (6.1) $ 5.3 Interest expense 17.0 10.9 Income tax expense (benefit) (2.1) 1.1 Depreciation and amortization 32.0 35.3 EBITDA [non-GAAP] $ 40.8 $ 52.6 EBITDA Margin [non-GAAP] 5.8% 6.9% Restructuring, impairment
Slide 21: Year-to-Date Adjusted EBITDA Reconciliation
Year-to-Date Six Months Ended June 30, US $ Millions 2023 2022 Net earnings (loss) $ (30.7) $ 4.3 Interest expense 33.3 20.2 Income tax expense 6.7 1.4 Depreciation and amortization 65.7 71.8 EBITDA [non-GAAP] $ 75.0 $ 97.7 EBITDA Margin [non-GAAP] 5.1% 6.5% Restructuring, impairment and transaction
Slide 22: Year-to-Date Free Cash Flow Reconciliation
Year-to-Date Six Months Ended June 30, US $ Millions 2023 2022 Net cash provided by (used in) operating activities $ 0.3 $ (23.5) Less: purchases of property, plant and equipment 45.2 33.5 Free Cash Flow [non-GAAP] $ (44.9) $ (57.0) Quad 22
Slide 23: Net Debt and Debt Leverage Ratio Reconciliation
US $ Millions June 30, 2023 December 31, 2022 Total debt and finance lease obligations on the balance sheets $ 615.4 $ 570.2 Less: Cash and cash equivalents 11.3 25.2 Net Debt [non-GAAP] $ 604.1 $ 545.0 Divided by: trailing twelve months Adjusted EBITDA [non-GAAP] (1) $ 258.3 $ 252.2 Debt Leverage R
Slide 24: Condensed Balance Sheet
US $ Millions June 30, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 11.3 $ 25.2 Receivables, less allowances for credit losses 318.4 372.6 Inventories 200.6 260.7 Prepaid expenses and other current assets 44.5 46.0 Property, plant and equipment—net 662.7 672.1 Operating lease right-of-u
Slide 25: Second Quarter Adjusted Diluted EPS Reconciliation
Second Quarter Three Months Ended June 30, US $ Millions (Except Per Share Data) 2023 2022 Earnings (loss) before income taxes $ (8.2) $ 6.4 Restructuring, impairment and transaction-related charges 9.6 3.2 Adjusted net earnings, before income taxes [non-GAAP] 1.4 9.6 Income tax expense at 25% norma
Slide 26: Year-to-Date Adjusted Diluted EPS Reconciliation
Year-to-Date Six Months Ended June 30, US $ Millions (Except Per Share Data) 2023 2022 Earnings (loss) before income taxes $ (24.0) $ 5.7 Restructuring, impairment and transaction-related charges 35.6 6.8 Adjusted net earnings, before income taxes [non-GAAP] 11.6 12.5 Income tax expense at 25% norma