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Mar 31, 2020
Quad Q1 2020 Earnings Report
Quad's first quarter performance exceeded expectations until mid-March, but was impacted by COVID-19, the company swiftly implemented cost reductions and focused on employee health and client service.
Key Takeaways
Quad reported a net sales decrease of 14.4% to $823 million, driven by industry volume and COVID-19 impacts. Net loss from continuing operations was $9 million, an improvement from the previous year. The company increased net cash provided by operating activities by $103 million and free cash flow by $116 million, and reduced net debt by $49 million.
Developed and launched Quad’s Safe-at-Work Program to proactively protect employee health and well-being during the COVID-19 pandemic.
Delivered strong first quarter despite reduction in near-term client demand due to the COVID-19 pandemic.
Swiftly implemented risk-mitigating efforts and cost reductions across the Company, which supported a $103 million increase in net cash provided by operating activities and a $116 million increase in Free Cash Flow compared to the first quarter of 2019.
Reduced net debt by $49 million in the quarter and reduced the Debt Leverage Ratio to 3.0x as of March 31, 2020, net of excess cash.
Revenue by Segment
Forward Guidance
The company is planning for the reopening of the economy under multiple scenarios based on clients’ advertising and marketing needs, expecting a gradual ramp-up to a ‘new normal’ as the economy emerges from the pandemic.
Positive Outlook
- Experience in managing significant change over the last decade has prepared Quad to be agile and decisive as needed.
- Quad 3.0 strategy provides the right tools and platform to be stronger than prior to the pandemic.
- Diverse product portfolio.
- Cash flow needed to continue to accelerate our long-term strategic transformation as a marketing solutions partner.
- Ability to quickly innovate new products, services and solutions for our clients – and for our employees – to help navigate the impacts of the pandemic.
Challenges Ahead
- Uncertain negative impacts the coronavirus (COVID-19) will have on the Company’s business, financial condition, cash flows, results of operations and supply chain, as well as the global economy in general
- The impact of decreasing demand for printed materials and significant overcapacity in the highly competitive environment creates downward pricing pressures and potential underutilization of assets
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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