Quad/Graphics, Inc. (QUAD) Q1 2023 Earnings Conference Call May 3, 2023 10:00 AM ET

Company Participants

Katie Krebsbach - IR Manager

Joel Quadracci - Chairman, President, and CEO

Anthony Staniak - CFO

Conference Call Participants

Operator

Good morning, and welcome to the Quad's First Quarter Conference Call. [Operator Instructions] A slide presentation accompanies today's webcast, and participants are invited to follow along, advancing the slides themselves. To access the webcast, follow the instructions posted in the earnings release. Alternatively, you can access the slide presentation on the Investors section of Quad's website under the Events and Recent Presentations link. Please note, this event is being recorded.

I would now like to turn the conference over to Katie Krebsbach, Quad's Investor Relations Manager. Katie, please go ahead.

Katie Krebsbach

Thank you, operator, and good morning, everyone. With me today are Joel Quadracci, Quad's Chairman, President and Chief Executive Officer; and Tony Staniak, Quad's Chief Financial Officer. Joel will lead today's call with a business update, and Tony will follow with a summary of Quad's first quarter 2023 financial results, followed by Q&A.

I would like to remind everyone that this call is being webcast, and forward-looking statements are subject to Safe Harbor provisions as outlined in our quarterly news release and in today's slide presentation on Slide 2. Quad's financial results are prepared in accordance with Generally Accepted Accounting Principles.

However, this presentation also contains non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, free cash flow, net debt and debt leverage ratio. We have included in the slide presentation reconciliations of these non-GAAP financial measures to GAAP financial measures. Finally, a replay of the call and the slide presentation will be available on the Investors section of quad.com shortly after our call concludes today.

I will now hand over the call to Joel.

Joel Quadracci

Thank you, Katie, and good morning, everyone.

Beginning on Slide 3, I am pleased to report we continue to experience positive momentum in our business, achieving an eighth consecutive quarter of top line growth. Net sales increased 3% in the quarter due to higher product sales in the United States and in Mexico, and also increased agency solution sales as clients continue to embrace Quad's unique integrated marketing offering.

We also grew adjusted EBITDA by $11 million, or 24%, in the quarter due to increased profitability from net sales growth, improved manufacturing productivity and savings from cost reduction initiatives. Economic uncertainty has prompted some clients to take a more conservative approach to the start of the year and, in many instances, reallocate where they invest their marketing dollars.