Quad/Graphics, Inc. (QUAD) Q2 2022 Earnings Conference Call August 3, 2022 10:00 AM ET

Company Participants

Katie Krebsbach - Investor Relations Manager

Joel Quadracci - Chairman, President, and Chief Executive Officer

Tony Staniak - Chief Financial Officer

Conference Call Participants

Operator

Good morning, ladies and gentlemen. Welcome to Quad's Second Quarter Conference Call. During today's call, all participants will be in a listen-only mode. [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’d now like to turn the conference call 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 off today's call with business update, and Tony will follow with a summary of Quad's second quarter 2022 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 two. 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 three, I am pleased to report our results were in line with our expectations, delivering a fifth consecutive quarter of sales growth, achieving a 14% increase in net sales when excluding divestitures. This strong growth included print segment share gains and net sales growth across all of our offerings.

Throughout the quarter, we continued to face macroeconomic headwinds, such as an ongoing supply chain constraint that impacted productivity and cost inflation on waiver and other areas. We worked diligently to mitigate these impacts, including implementing an additional price increase in mid-May in response to inflationary cost pressures, while continuing to make investments to prepare for our seasonally busier second half of the year, including increasing inventory levels for paper and other key manufacturing materials and hiring and training employees for our manufacturing operations far earlier than usual.