Slide 1: Quad/Graphics 1st Quarter 2011 Earnings Conference Call
Quad/Graphics 1st Quarter 2011 Earnings Conference Call May 11, 2011 Joel Quadracci Chairman, President & CEO John Fowler Executive VP & CFO
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements To the extent any statements made in this investor presentation contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this presentation also contains non-GAAP measures, specifically Adjusted EBITDA and Adjusted EBITDA Margin. They are presented to provide additional infor
Slide 4: Today's Call
Today’s Call Introduction Overview of Quarter Financial Overview Concluding Remarks
Slide 5: Today's Call
Today’s Call Introduction Overview of Quarter Financial Overview Concluding Remarks
Slide 6: Overview of Quarter: Results In Line With Expectations
Overview of Quarter Results In Line With Expectations Business trends from 4th quarter 2010 continued Revenue up slightly versus pro forma 2010 Positive impact from: Higher paper and byproduct revenues Higher legacy Quad/Graphics volumes Downward pressure from: Lower legacy Worldcolor volumes Pricin
Slide 7: Initiating Quad's First Dividend
Initiating Quad’s First Dividend We have initiated our first dividend as a public company based on our confidence to: Successfully complete Worldcolor integration Continue to generate sustained strong future cash flows Continue to pay down debt Quarterly dividend of $0.20 per share payable on June 1
Slide 8: Overview of Quarter: Balancing our priorities
Overview of Quarter Balancing our priorities to: Meet the needs of our customers Continue effective execution of the integration plan Optimize operational efficiencies Invest in the platform Pursue growth opportunities Moving aggressively to complete the integration and implement sustainable cost re
Slide 9: Continued Effective Execution of the Integration Plan
Continued Effective Execution of the Integration Plan Three additional plant closures announced in 2011 10 total plants announced for closure Announced closures and other restructuring actions to date will result in: A gross reduction of 5,000 employees The closure of more than 5 million square feet
Slide 10: Continued Effective Execution of the Integration Plan: Synergies
Continued Effective Execution of the Integration Plan We remain confident that we will achieve somewhat more than the $225 million of synergies on an annual run-rate basis within 24 months of closing We continue to seek additional cost savings opportunities Strong integration progress to date was a
Slide 11: Continued Effective Execution of the Integration Plan: ERP Conversion
Continued Effective Execution of the Integration Plan First full plant conversion to Quad’s proprietary ERP software This suite includes more than 40 integrated programs that: Streamline processes Improve visibility Enable decision-making that leads to productivity improvements Enhance customer tool
Slide 12: Investments in Platform
Investments in Platform $15 million investment to enhance the Book platform in Martinsburg, WV Investments in Quad’s Direct Mail platform as part of a $40 million capital spending plan In Commercial Print platform, substantial expansion of Burlington, WI, facility to accommodate several new state-of
Slide 13: Balancing Quad's Priorities
Balancing Quad’s Priorities Operationally impatient Focus on managing costs and capacity Work to strengthen Quad’s competitive position Strategically disciplined With the implementation of the integration firmly in place, we are focused on identifying growth opportunities Disciplined approach to pur
Slide 14: Today's Call
Today’s Call Introduction Overview of Quarter Financial Overview Concluding Remarks
Slide 15: Financial Overview
Financial Overview Millions $ 2011 1st Quarter As Reported 2010 1st Quarter Pro forma (1) Net Sales $1,102.3 $1,095.6 Cost of Sales 853.4 840.5 SG&A 109.0 117.6 Restructuring, Impairment and Transaction–Related Charges 34.8 36.3 Interest Expense 29.9 33.3 Adjusted EBITDA (2) $140.7 $140.2 Adjusted E
Slide 16: Financial Overview: Net Sales
Financial Overview 1st Quarter 2011 Net Sales of $1.1 billion – up slightly versus pro forma 2010 Positive impact from: Higher paper and byproduct revenues Higher legacy Quad/Graphics volumes Downward pressure from: Lower legacy Worldcolor volumes Pricing headwinds due to overcapacity in industry Lo
Slide 17: Financial Overview: Cost of Sales
Financial Overview 1st Quarter 2011 Cost of Sales of $853.4 million – up 1.5% versus $840.5 million pro forma 2010 As a percent of sales, cost of sales increased due to: Higher paper sales sold at lower margin than manufacturing sales Increased energy and commodity costs Incremental retirement and c
Slide 18: Financial Overview: SG&A, D&A and Interest
Financial Overview 1st Quarter 2011 Selling, General & Administrative Expenses: $109.0 million – down 7.3% versus $117.6 million pro forma 2010 Driven by synergy savings Depreciation & Amortization: $90.5 million and Interest Expense of $29.9 million Both in line with expectations Restructuring, Imp
Slide 19: Financial Overview: Restructuring, Impairment and Transaction-Related Charges
Financial Overview Restructuring, Impairment and Transaction-Related Charges
Slide 20: Financial Overview: Adjusted EBITDA and Margin
Financial Overview 1st Quarter 2011 Adjusted EBITDA: $140.7 million and Adjusted EBITDA Margin at 12.8% A $0.5 million increase versus pro forma 1st quarter 2010 results of $140.2 million despite: Reduction in legacy Worldcolor volumes Pricing headwinds due to overcapacity in industry and contractua
Slide 21: Financial Overview: As Reported Net Loss and Diluted Loss Per Share
Financial Overview 1st Quarter 2011 As Reported Net Loss and Diluted Loss Per Share Net loss of $7.3 million, or $(0.15) per diluted share compared to net loss of $8.5 million, or $(0.30) per diluted share in 2010 Excluding restructuring, impairment and transaction-related charges, net earnings woul
Slide 22: Balance Sheet March 31, 2011
Balance Sheet March 31, 2011 (US $ Millions) The strength in our balance sheet and strong cash flows were key factors in initiating the dividend earlier than expected
Slide 23: Well Capitalized
Well Capitalized (US $ Millions) All amounts are as of March 31, 2011 and July 2, 2010 or for the trailing 12 months ended March 31, 2011 and July 2, 2010. (1) Excludes Worldcolor pension and other postretirement liabilities. (2) Interest coverage defined as LTM pro forma adjusted EBITDA divided by
Slide 24: Debt Metrics
Debt Metrics $530 million revolver had $53 million drawn at March 31, 2011 at 3.8%, down from $57 million on December 31, 2010 Blended interest rate of 6.2% Outstanding principal is 54% floating and 46% fixed Long-term fixed rate debt consists of private placement bonds Weighted average interest rat
Slide 25: Guidance – 2011
Guidance –2011 2011 – Guidance Adjusted EBITDA: Slightly in excess of $700 million Depreciation and Amortization: $345 - $365 million Interest Expense: $105 - $115 million Capital Expenditures: $170 - $200 million Cash Taxes: Less than $10 million for 2011 $24 million payment in 1st quarter related
Slide 26: Today's Call
Today’s Call Introduction Overview of Quarter Financial Overview Concluding Remarks
Slide 27: Concluding Remarks
Concluding Remarks Dividend initiated today – reflects confidence to: Successfully complete Worldcolor integration Continue to generate sustained strong future cash flows Continue to pay down debt Continue to make great progress on integration Focused on our customers Remain operationally impatient
Slide 28: Questions?
Questions? For more information contact: Barb Bolens barb.bolens@qg.com
Slide 29: Supplemental Information
SUPPLEMENTAL INFORMATION 8 ‘QuadGraphics Innovative People Redefining Print
Slide 30: Pro Forma Adjusted EBITDA Reconciliation to GAAP
Pro Forma Adjusted EBITDA Reconciliation to GAAP
Slide 31: QuadGraphics Innovative People Redefining Print
& QuadGraphics Innovative People Redefining Print B euadcraphics innovative People Redefining Print