Quad/Graphics posts Q2 sales decline

By David Ward, San Diego, Thursday 09 August 2012

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Sussex WI-based Quad/Graphics reported a $20.8m Q2 net loss following a 4.4% year-on-year sales decline to $934m.

Adjusted EBITDA was $112m in Q2 compared to $116m for the same period in 2011.  

While some of the loss was directly related to debt repayments company executives told business analysts the decline was due to both pricing pressure and a slowdown in volume.

"Pricing is tough and as long as there is excess capacity in the industry you’re going to have companies just trying to keep the lights on by capturing market share," chairman, president and chief executive Joel Quadracci explained.

"We’re seeing a lot of companies beginning to exit when you look at the smaller printer market, but again it continues to be tough out there."

On a year-to-date basis Quad/Graphics did generate $167m in recurring free cash flow compared to $102m during the first half of 2011.

Maintaining a positive outlook the company touted the completion of the integration of Worldcolor, which Quad/Graphics acquired two years ago. Quadracci said the company was on track to generate $275 million in annual synergy savings as a result of acquisition.  

It also announced the renewal of its deal with National Geographic for another decade and cited Quad/Graphics’ mailing and distribution infrastructure as key factor in helping National Geographic and others reduce cost.

"In the first six months of 2012, we have co-mailed 1.8m magazines, catalogs and direct mail pieces, which represents a 17% increase over 2011," Quadracci said.

"By combining the substantial volume with our unique software to merge mail streams, we are able to provide our customers with significant postal savings."

Quad/Graphic also said its Actable interactive print solution is the enabling technology behind Maxim magazine's new Maxim Motion app, which will be in Maxim’s next issue reaching news stands August 14.

Maxim Motion allows readers to launch an on-page video of cover model Bar Refaeli simply by scanning the cover image with the camera on their smartphone or other mobile device. Once Maxim readers download the free app, they can instantly interact with the printed page and launch related content directly from images, eliminating the need for QR codes.

Quadracci said: "Maxim will also be able to measure and analyze app performance through Actable’s sophisticated analytics and recording feature."

Quad/Graphic did not give a specific forecast for the future but Quadracci told analysts: "We certainly saw advertising come down in the first half by about 8%.

"It continues to be a mixed bag and we’ll continue to be cautious about it because of all the economic turmoil that’s been happening [in the US]."

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