Quad/Graphics, Inc. (NYSE: QUAD) (“Quad/Graphics” or the “Company”) today reported results for its third quarter ending September 30, 2013. The reported results include Vertis Holdings, Inc. (“Vertis”) from the day of acquisition on January 16, 2013. Prior year financial results do not include the acquisition of Vertis. For full financial results, including reconciliations of non-GAAP financial measures, please see the accompanying information.
“We are pleased to reaffirm annual guidance for Recurring Free Cash Flow, which is the foundation of our strong balance sheet and supports our disciplined capital deployment strategy,” said Joel Quadracci, Quad/Graphics Chairman, President & CEO. “Third-quarter volumes across our U.S. platform were as expected, but our results were adversely impacted by ongoing industry pressures, economic and political challenges in Latin America and a slower-than-expected turnaround in the underlying Vertis business. That said, the integration is going well and we remain confident in our process to drive future cost-savings, and improve the efficiency and productivity of our platform. Overall, we remain pleased with our strategic decision to acquire Vertis as we believe it will provide long-term value for our clients and shareholders.”
Net Sales for the third quarter 2013 increased to $1.2 billion versus $1.0 billion for the same period in 2012 primarily due to the Vertis acquisition. Third quarter 2013 Adjusted EBITDA was $154 million as compared to $155 million for the same period in 2012, and Adjusted EBITDA margin was 12.8% as compared to 14.9% for the same period in 2012. These results primarily reflect Vertis’ historically lower margin profile compared to Quad/Graphics’ core business as well as ongoing volume and pricing pressures.
For the first nine months of 2013, Net Sales were $3.4 billion versus $3.0 billion for the same period in 2012. Year-to-date Adjusted EBITDA was $379 million versus $393 million in 2012, and Adjusted EBITDA margin was 11.0% as compared to 13.2% for the same period in 2012. Recurring Free Cash Flow was $178 million for the first nine months of 2013 compared to $220 million for the same period in 2012 due to increased capital expenditures and lower net cash earnings during 2013.