Quad/Graphics, Inc. (QUAD) Q3 2024 Earnings Conference Call October 29, 2024 8:30 AM ET

Company Participants

Katie Krebsbach - Investor Relations Manager
Joel Quadracci - Chairman, President and CEO
Tony Staniak - Chief Financial Officer

Conference Call Participants

Kevin Steinke - Barrington Research Associates
Barton Crockett - Rosenblatt

Operator

Good morning and welcome to Quad’s Third Quarter 2024 Conference Call. During today’s call, all participants will be in 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 Presentations link. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

Please note this event is being recorded. I will now 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 third quarter and year-to-date 2024 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 will be available on the Investor 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. Our third quarter results were in line with our expectations. Third quarter net sales declined versus prior year due to lower paper and agency solution sales. However, we achieved improvements in both adjusted EBITDA and adjusted EBITDA margin with adjusted EBITDA margin increasing by 54 basis points to 8.7%.

We also continued to be a strong cash generator, using these funds to pay down debt, strengthen our balance sheet and return capital to shareholders through a quarterly dividend. Despite full year 2024 net sales trending toward the higher end of decline in our guidance range, we are maintaining the midpoints of our guidance for adjusted EBITDA and free cash flow. We are also reducing anticipated year end net debt leverage from approximately 1.8 times to 1.5 times pending the sale of the majority of our European operations by year end.