Quad/Graphics, Inc. (NYSE:QUAD) has reported results for its second quarter ending June 30, 2011, and announced a quarterly cash dividend. Unless otherwise noted, all comparisons are to pro forma measures that assume the Company’s July 2, 2010, acquisition of World Color Press Inc. (“Worldcolor”) was completed on January 1, 2010.
- Second quarter 2011 net sales were $1,070.5 million and Adjusted EBITDA was $126.7 million versus net sales of $1,075.3 million and Adjusted EBITDA of $148.3 million in the same period of 2010.
- Progress continues on the Worldcolor integration and the Company remains confident it will achieve more than $225 million in synergy savings.
- Declared a cash dividend of $0.20 per share, payable on September 9, 2011, to shareholders of record as of August 29, 2011.
- Completed a $1.5 billion debt refinancing that provides greater borrowing capacity and financial flexibility while reducing cash interest payments by an estimated $16 million to $20 million annually.
- Signed an agreement with Transcontinental to essentially exchange Quad/Graphics’ Canadian assets for Transcontinental’s Mexican assets – a move that is expected to create positive incremental Adjusted EBITDA within 12-24 months of the transaction closing.
“Both net sales of $1,070.5 million and Adjusted EBITDA of $126.7 million met our financial plan for the quarter. We knew that the comparisons to second quarter 2010 were going to be difficult due to temporary cost reduction activities initiated by Worldcolor primarily during its bankruptcy. As a result, a decline this quarter from 2010 was expected,” said Joel Quadracci, Chairman, President & CEO.
“The Company experienced net sales declines in our book segment and continuing headwinds from industry pricing pressures. Operationally, we continued to experience temporary frictional costs resulting from the continued rapid ramp-up of facilities receiving work from those undergoing consolidation. Despite the headwinds we face, we are confident in our ability to manage short-term challenges and believe we are well-positioned for long-term success.”
The Company continues to make progress on the Worldcolor integration. “We remain confident in our ability to achieve more than $225 million in synergy savings on an annual run-rate basis within 24 months of closing the Worldcolor acquisition,” Quadracci said. “As we move forward with this very large and complex integration and enter the busiest season of the year, we are proactively managing frictional costs to achieve our profitability targets and better serve our customers.”
Given rapidly evolving changes in the book publishing industry, the Company continues to keep a close watch on industry action and activities, and is adjusting its business accordingly. “During the quarter, we saw declines in the books segment fueled by publishers reducing or altogether cancelling orders in the face of Borders’ liquidation. In addition, product mix preferences continue to change between hard cover and soft cover books. We continue to make the necessary and desired investments to meet our customers’ changing needs, including shorter runs and highly advanced digital printing capabilities for print-on-demand.”