4 th Quarter 2021 Earnings Call February 23, 2022 Call Participants & Forward-Looking Statements Tony Staniak Chief Financial Officer Joel Quadracci Chairman, President & Chief Executive Officer Forward-Looking Statements This communication contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company's future results, financial c ...

3 rd Quarter 2021 Earnings Call November 3, 2021 Call Participants & Forward-Looking Statements Joel Quadracci Chairman, President & Chief Executive Officer Dave Honan Executive Vice President & Chief Financial Officer Forward-Looking Statements This communication contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company's fut ...

Financial Data and Key Metrics Changes - The company reported net sales of $706 million in Q3 2021, a 4% increase from 2020, with organic net sales up 7% excluding divested businesses [32] - Year-to-date net sales reached $2.1 billion, up 1% from the same period in 2020, with organic growth of 2% [33] - Adjusted EBITDA for Q3 was $64 million, a 6% increase, with an adjusted EBITDA margin of 9.1%, up from 8.9% in 2020 [35] - Year-to-date adjusted EBITDA was $190 million, a 3% decrease from 2020, with a margin of 9.0% compared to 9.4% in 2020 [37] - Free cash flow was negative $20 million for the first nine months of 2021, a decrease of $76 million compared to the same period in 2020 [38] Business Line Data and Key Metrics Changes - Print product sales grew by 10% in Q3, while Agency Solutions sales increased by 8% [32] - Year-to-date logistics business saw a 13% growth, and Agency Solutions sales increased by 9% [33] - Direct mail experienced single-digit growth year-to-date, while catalog saw a 14% increase in the number of books and a 19% increase in pages per book [55] Market Data and Key Metrics Changes - The company faced significant supply chain challenges, particularly with paper shortages impacting sales growth [58] - Labor market conditions remained tight, necessitating increased investments in wages and hiring incentives [65] Company Strategy and Development Direction - The company is focused on debt reduction, having reduced net debt by approximately 15% or $140 million over the past 12 months [12] - A price increase for select materials and a manufacturing surcharge were introduced to offset rising costs [10] - The company continues to invest in data and analytics to enhance marketing solutions for clients [14] Management's Comments on Operating Environment and Future Outlook - Management expects supply chain issues and inflationary pressures to persist, but remains proactive in adapting to changes [10] - The company reaffirmed its 2021 outlook, anticipating organic growth of 1% to 3% and adjusted EBITDA guidance of $240 million to $260 million [44] - Management emphasized the importance of maintaining a sustainable operating environment before reinstating dividends [69] Other Important Information - The company extended its $1 billion bank debt agreement to November 2026, enhancing financial flexibility [31] - A comprehensive ESG report is set to be released, detailing the company's sustainability initiatives [24] Q&A Session Summary Question: What trends are you seeing from marketers as it relates to the holiday season? - Management noted a chaotic year with visibility challenges due to pandemic impacts and supply chain issues, with retail inserts continuing to decline [51][52] - Catalogs have seen reinvestment and growth, outperforming industry trends [55] Question: Can you elaborate on supply chain challenges and labor shortages? - The biggest challenges have been paper shortages and a tight labor market, with significant inflation across cost inputs [57] - The company is addressing these issues as if they are not transitory, ensuring operational readiness [58] Question: What are your latest thoughts on reinstituting a dividend? - Management expressed a desire to return to dividends but emphasized the need for a stable operating environment and reduced debt leverage [69][70]

PART I — FINANCIAL INFORMATION Details Quad/Graphics' unaudited financial statements and management's analysis for Q3 and YTD 2021 [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Presents Quad/Graphics' unaudited financial statements, showing improved net earnings and reduced debt for Q3 and YTD 2021 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details Q3 and YTD 2021 operating results, showing increased net sales and significant improvement in net earnings Q3 Financial Performance (Three Months Ended Sep 30) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Total Net Sales** | $706.1M | $679.3M | | **Operating Income** | $28.0M | $6.3M | | **Net Earnings Attributable to Quad** | $14.3M | $1.6M | | **Diluted EPS** | $0.27 | $0.03 | Year-to-Date Financial Performance (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Total Net Sales** | $2,105.8M | $2,086.3M | | **Operating Income** | $97.0M | $8.5M | | **Net Earnings (Loss) Attributable to Quad** | $58.9M | ($34.3M) | | **Diluted EPS** | $1.12 | ($0.68) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the balance sheet as of September 30, 2021, highlighting reduced total debt and increased shareholders' equity Balance Sheet Comparison (in millions) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $743.0 | $679.2 | | **Total Assets** | $1,842.0 | $1,927.7 | | **Total Current Liabilities** | $867.7 | $682.7 | | **Long-Term Debt** | $563.8 | $902.7 | | **Total Liabilities** | $1,697.3 | $1,842.9 | | **Total Shareholders' Equity** | $144.7 | $84.8 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows for YTD 2021, showing decreased operating cash flow and significant debt payments Cash Flow Summary (Nine Months Ended Sep 30, in millions) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $22.1 | $107.4 | | **Net Cash from Investing Activities** | $67.4 | $7.0 | | **Net Cash from Financing Activities** | ($117.1) | ($99.9) | | **Net (Decrease) Increase in Cash** | ($27.8) | $14.2 | | **Cash at End of Period** | $27.4 | $92.9 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Provides detailed disclosures on accounting policies, revenue, discontinued operations, and debt covenant amendments - The company's Book business results are reported as discontinued operations for 2020 periods following its sale, which was completed in 2020[29](index=29&type=chunk)[41](index=41&type=chunk) Restructuring, Impairment & Transaction-Related Charges (in millions) | Charge Type | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Employee termination | $1.0 | $3.3 | $8.5 | $25.4 | | Impairment charges | $0.3 | $— | $2.0 | $4.2 | | Other restructuring (income) | $6.1 | $5.4 | ($14.3) | $16.4 | | **Total** | **$7.4** | **$9.8** | **($3.4)** | **$49.0** | - On November 2, 2021, subsequent to the quarter's end, the company amended its Senior Secured Credit Facility to extend the maturity of a portion of its revolving credit and term loan facilities to November 2026 and modify certain covenants[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2021 financial performance, strategic priorities, market trends, and liquidity [Overview](index=41&type=section&id=Overview) Outlines the company's strategic priorities and discusses key industry trends and operational challenges - The company's strategic priorities include expanding client relationships, growing in key verticals (e.g., healthcare, direct-to-consumer), making disciplined investments, and strengthening its core integrated marketing platform[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Management highlights significant industry headwinds, including digital substitution, excess manufacturing capacity, and competitive pricing pressure[139](index=139&type=chunk)[163](index=163&type=chunk) - The company is experiencing inflationary cost pressures and supply chain shortages in raw materials, distribution, and labor, which are expected to continue through at least the end of 2021[171](index=171&type=chunk)[172](index=172&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Analyzes Q3 and YTD 2021 operating results, highlighting sales growth, increased operating income, and EBITDA Q3 2021 vs Q3 2020 Operating Results (in millions) | Line Item | Q3 2021 | Q3 2020 | $ Change | | :--- | :--- | :--- | :--- | | **Total Net Sales** | $706.1 | $679.3 | $26.8 | | **Total Cost of Sales** | $574.1 | $543.3 | $30.8 | | **Operating Income** | $28.0 | $6.3 | $21.7 | - The increase in Q3 operating income was primarily driven by higher print volume, a **$10.8 million gain** from a sale and leaseback, a **$9.1 million net benefit** from property insurance claims, and a **$6.1 million decrease** in depreciation and amortization[174](index=174&type=chunk)[180](index=180&type=chunk) EBITDA Reconciliation (Non-GAAP, in millions) | Period | Net Earnings | Interest | Taxes | D&A | EBITDA | | :--- | :--- | :--- | :--- | :--- | :--- | | **Q3 2021** | $14.3 | $15.0 | $2.3 | $38.7 | $70.3 | | **Q3 2020** | $1.6 | $17.9 | ($12.0) | $44.8 | $52.3 | | **YTD 2021** | $58.9 | $45.1 | $4.1 | $119.3 | $227.4 | | **YTD 2020** | ($34.3) | $52.2 | ($17.5) | $138.9 | $139.3 | [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses liquidity, cash flow, and debt leverage, noting a decrease in operating cash flow and improved debt ratio - Total liquidity was **$490.6 million** as of September 30, 2021, with no borrowings outstanding on the **$500.0 million** revolving credit facility[251](index=251&type=chunk) Free Cash Flow (Non-GAAP, in millions) | Line Item | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22.1 | $107.4 | | Less: purchases of property, plant and equipment | ($41.6) | ($50.7) | | **Free Cash Flow** | **($19.5)** | **$56.7** | Debt Leverage Ratio (Non-GAAP) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Debt & Finance Leases | $826.1M | $928.2M | | Less: Cash | $27.4M | $55.2M | | **Net Debt** | **$798.7M** | **$873.0M** | | Trailing 12-Mo Adjusted EBITDA | $254.0M | $260.4M | | **Debt Leverage Ratio** | **3.14x** | **3.35x** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses market risks including interest rates, foreign currency, credit, and commodities, and their mitigation strategies - The company manages interest rate risk on its variable-rate debt by using interest rate swaps to effectively fix the rate on **$380.0 million** of its debt[281](index=281&type=chunk) - The economy in Argentina has been classified as highly inflationary since June 30, 2018, requiring the functional currency of its Argentine subsidiaries to be the U.S. Dollar[286](index=286&type=chunk) - Commodity risk is primarily related to paper, ink, and energy, with the majority of paper supplied by clients and most ink produced in-house, mitigating price and supply volatility[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures with no material changes in internal controls - The company's management concluded that disclosure controls and procedures were effective as of the end of the reporting period[296](index=296&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[297](index=297&type=chunk) PART II — OTHER INFORMATION Presents other required information, including risk factors, equity sales, and exhibits [Item 1A. Risk Factors](index=73&type=section&id=ITEM%201A.%20Risk%20Factors) States no material changes to previously disclosed risk factors from the 2020 Annual Report - No material changes to risk factors were reported compared to the disclosures in the 2020 Form 10-K[299](index=299&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales of equity securities or share repurchases during Q3 2021 - The company did not repurchase any of its Class A common stock during the third quarter of 2021[301](index=301&type=chunk) - As of September 30, 2021, **$100.0 million** remained authorized for future repurchases under the existing program[301](index=301&type=chunk) [Item 6. Exhibits](index=74&type=section&id=ITEM%206.%20Exhibits) Lists exhibits filed with the report, including CEO/CFO certifications and iXBRL financial data - The exhibits filed with this report include certifications from the CEO and CFO as required by the Securities Exchange Act of 1934, and financial data in iXBRL format[303](index=303&type=chunk)

2nd Quarter 2021 Earnings Call August 4, 2021 0112490 EARS Y Call Participants & Forward-Looking Statements Joel Quadracci Chairman, President & Chief Executive Officer Dave Honan Executive Vice President & Chief Financial Officer Forward-Looking Statements This communication contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the C ...

Quad/Graphics, Inc. (QUAD) Q2 2021 Earnings Conference Call August 4, 2021 10:00 AM ET Company Participants Katie Krebsbach - Investor Relations Lead Joel Quadracci - Chairman, President & Chief Executive Officer Dave Honan - Executive Vice President & Chief Financial Officer Operator Good morning, and welcome to the Quad's Second Quarter 2021 Earnings Conference Call for Analysts and Investors. [Operator Instructions] I would now like to turn the conference over to the Quad management team. Please go ahead ...

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements present the company's financial performance, balance sheet, and cash flows for the three and six months ended June 30, 2021, and 2020 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved a significant turnaround in Q2 2021 with net earnings of $34.4 million, compared to a net loss of $23.5 million in Q2 2020, driven by higher sales and favorable restructuring charges Q2 and Six-Month Financial Performance (2021 vs. 2020) | Financial Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Net Sales** | $693.9 M | $584.5 M | $1,399.7 M | $1,407.0 M | | **Operating Income (Loss)** | $48.0 M | $(2.8) M | $69.0 M | $2.2 M | | **Net Earnings (Loss) to Shareholders** | $34.4 M | $(23.5) M | $44.6 M | $(35.9) M | | **Diluted EPS** | $0.66 | $(0.46) | $0.85 | $(0.71) | - A gain from a sale and leaseback of **$13.7 million** was recognized in Q2 2021, contributing significantly to operating income[10](index=10&type=chunk) - Restructuring, impairment, and transaction-related charges were a net credit of **$(13.4) million** in Q2 2021, compared to a charge of **$16.4 million** in Q2 2020, marking a significant positive swing[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income attributable to common shareholders showed a substantial recovery, reaching $39.1 million in Q2 2021 versus a loss of $21.4 million in the prior-year period Comprehensive Income (Loss) (2021 vs. 2020) | Period | Comprehensive Income (Loss) Attributable to Quad Shareholders (2021) | Comprehensive Income (Loss) Attributable to Quad Shareholders (2020) | | :--- | :--- | :--- | | **Three Months Ended June 30** | $39.1 M | $(21.4) M | | **Six Months Ended June 30** | $45.1 M | $(57.4) M | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2021, reflects reduced total assets and liabilities, a significant decrease in long-term debt, and an increase in shareholders' equity Key Balance Sheet Items (June 30, 2021 vs. Dec 31, 2020) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $98.3 M | $55.2 M | | **Total current assets** | $626.7 M | $679.2 M | | **Total assets** | $1,789.1 M | $1,927.7 M | | **Long-term debt** | $589.0 M | $902.7 M | | **Total liabilities** | $1,657.0 M | $1,842.9 M | | **Total shareholders' equity** | $132.1 M | $84.8 M | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2021, net cash from operations increased, investing activities provided cash primarily from asset sales, and financing activities used cash for debt repayments Six-Month Cash Flow Summary (2021 vs. 2020) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $88.9 M | $67.2 M | | **Net cash provided by investing activities** | $45.9 M | $6.1 M | | **Net cash used in financing activities** | $(91.5) M | $(81.5) M | | **Net increase (decrease) in cash** | $43.1 M | $(8.5) M | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased significantly to $132.1 million by June 30, 2021, driven by net earnings and other comprehensive income adjustments - Quad's shareholders' equity grew to **$132.1 million** as of June 30, 2021, up from **$84.1 million** at the end of 2020[21](index=21&type=chunk) - The primary drivers for the equity increase in the first six months of 2021 were net earnings of **$44.6 million** and positive other comprehensive income adjustments[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail revenue disaggregation, the impact of discontinued operations, restructuring activities, debt structure, and dividend and share repurchase program status - The company's business is seasonal, with net sales and operating income typically higher in the **third and fourth quarters** due to back-to-school and holiday-related advertising[24](index=24&type=chunk) - The **COVID-19 pandemic** has had, and is expected to continue to have, a negative impact on the company's business, financial condition, and results of operations[27](index=27&type=chunk) - The sale of the company's Book business was completed in 2020, and its results are reported as **discontinued operations** for the 2020 periods presented[26](index=26&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a strong Q2 2021 recovery, improved liquidity, reduced debt, and strategic priorities focused on client relationships and financial strength [Overview](index=39&type=section&id=Overview) The company is a worldwide marketing solutions partner with strategic priorities focused on client-centric growth, disciplined investment, and enhancing financial strength - The company's strategy focuses on transforming into a **marketing solutions partner** to help clients reduce complexity and increase marketing effectiveness across multiple channels[139](index=139&type=chunk) - Strategic priorities include growing market share in key verticals like **consumer technology, healthcare, and direct-to-consumer**, while defending its position in retail and publishing[141](index=141&type=chunk) - Capital allocation priorities are **deleveraging the balance sheet** through debt and pension liability reduction, making compelling investments, and pursuing value-driven industry consolidation[146](index=146&type=chunk) - The company faces significant trends including media disruption, intense competition in the printing industry, and potential impacts from **USPS financial issues and rate changes**[158](index=158&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q2 2021 net sales increased 18.7% year-over-year, and operating income improved significantly, driven by organic growth, a sale-leaseback gain, and reduced restructuring charges Q2 2021 vs Q2 2020 Performance | Metric | Q2 2021 | Q2 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Net Sales** | $693.9 M | $584.5 M | +$109.4 M | +18.7% | | **Operating Income (Loss)** | $48.0 M | $(2.8) M | +$50.8 M | N/A | | **Restructuring Charges (Income)** | $(13.4) M | $16.4 M | -$29.8 M | -181.7% | | **EBITDA (Non-GAAP)** | $90.0 M | $35.1 M | +$54.9 M | +156.4% | Six Months 2021 vs 2020 Performance | Metric | 6M 2021 | 6M 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Net Sales** | $1,399.7 M | $1,407.0 M | -$7.3 M | -0.5% | | **Operating Income** | $69.0 M | $2.2 M | +$66.8 M | N/A | | **Restructuring Charges (Income)** | $(10.8) M | $39.2 M | -$50.0 M | -127.6% | | **EBITDA (Non-GAAP)** | $157.1 M | $87.0 M | +$70.1 M | +80.6% | - The significant improvement in operating income for both the three and six-month periods was heavily influenced by **gains on asset sales** and reduced restructuring expenses, including a **$20.9 million gain** on the sale of a business in Q2 2021[167](index=167&type=chunk)[182](index=182&type=chunk)[207](index=207&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity of $561.4 million, increased cash from operations, more than doubled Free Cash Flow, and reduced its Debt Leverage Ratio - Total liquidity stood at **$561.4 million** as of June 30, 2021, consisting of **$98.3 million** in cash and **$463.1 million** in unused revolving credit capacity[243](index=243&type=chunk) Key Liquidity Metrics (Six Months Ended June 30) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Net Cash from Operations** | $88.9 M | $67.2 M | | **Free Cash Flow (Non-GAAP)** | $61.7 M | $29.2 M | - The Debt Leverage Ratio improved to **3.00x** at June 30, 2021, down from **3.35x** at December 31, 2020, primarily due to a **$120.2 million** decrease in Net Debt[256](index=256&type=chunk)[258](index=258&type=chunk) - The company was in compliance with all financial covenants as of June 30, 2021, including its Maximum Total Net Leverage Ratio, which was **3.03 to 1.00** against a requirement of **4.25 to 1.00**[259](index=259&type=chunk)[260](index=260&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, foreign currency, credit, and commodities, which are managed through various mitigation strategies - Interest rate risk is managed through the use of interest rate swaps, which have converted **$380.0 million** of variable-rate debt to fixed-rate, leaving **$212.4 million** exposed to variable rates[270](index=270&type=chunk) - The economy in Argentina is considered **highly inflationary**, requiring its financial results to be remeasured into U.S. dollars, which resulted in foreign currency losses of **$0.9 million** for the first six months of 2021[276](index=276&type=chunk) - Credit risk is considered moderate due to a large, diverse client base; the allowance for credit losses was **$31.1 million** as of June 30, 2021[277](index=277&type=chunk) - Commodity price risk is mitigated as the **majority of paper is supplied by clients**, and the company produces most of its own ink, controlling quality, cost, and supply[280](index=280&type=chunk)[281](index=281&type=chunk) [Controls and Procedures](index=70&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal controls - The company's management concluded that **disclosure controls and procedures were effective** as of the end of the period covered by the report[284](index=284&type=chunk) - **No material changes** were made to the internal control over financial reporting during the quarter ended June 30, 2021[285](index=285&type=chunk) [PART II — OTHER INFORMATION](index=70&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Risk Factors](index=70&type=section&id=ITEM%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - The company reports **no material changes** to its risk factors from those disclosed in its 2020 Annual Report on Form 10-K[287](index=287&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased in Q2 2021, and the company is currently prohibited from repurchases by its credit facility covenants - **No shares were repurchased** during the three months ended June 30, 2021[289](index=289&type=chunk) - As of June 30, 2021, **$100.0 million** remained authorized under the share repurchase program, but repurchases are currently prohibited by debt covenants until after the Covenant Relief Period[289](index=289&type=chunk) [Exhibits](index=71&type=section&id=ITEM%206.%20Exhibits) This section indexes the exhibits filed with the report, including officer certifications and iXBRL-formatted financial statements - The report includes standard exhibits such as **officer certifications** (31.1, 31.2, 32) and **iXBRL financial data** (101, 104)[291](index=291&type=chunk) [Signatures](index=72&type=section&id=Signatures) The report was duly signed and authorized by the CEO and CFO on August 4, 2021 - The Form 10-Q was signed on **August 4, 2021**, by the company's Principal Executive Officer and Principal Financial Officer[294](index=294&type=chunk)

Financial Data and Key Metrics Changes - Net sales were $706 million in Q1 2021, down 14% from the same period in 2020, marking the third consecutive quarter of improvement in net sales trends since the pandemic's peak [32][30] - Adjusted EBITDA was $66 million in Q1 2021, compared to $75 million in 2020, while adjusted EBITDA margin improved to 9.3% from 9.2% in 2020 [33][30] - Free cash flow increased to $56 million in Q1 2021, up $40 million from 2020, primarily due to higher net cash from operating activities and a decrease in capital expenditures [34][30] Business Line Data and Key Metrics Changes - The agency and print segments recorded new business wins that will drive long-term growth, contributing to improved financial performance [6] - The retail segment experienced a decline of over 30% in Q1 2021 compared to the previous year, while the catalog market was up 3% [45][48] - The packaging segment showed an 8% increase, indicating a bright spot for the company [51] Market Data and Key Metrics Changes - The overall publications industry was down about 12%, while Quad's performance in the catalog market was better than the industry average [48] - Direct mail and commercial divisions were in line with industry trends, which were down about 11% [49] - The retail industry continues to provide significant revenue opportunities despite challenges faced by newspaper inserts [46] Company Strategy and Development Direction - The company is focused on transforming into a marketing solutions partner, emphasizing integrated marketing platform excellence and innovation [7][10] - Quad is expanding its marketing consulting, creative technology, and data analytics capabilities to drive revenue growth [11] - The company is committed to reducing environmental impact and enhancing diversity, equity, and inclusion within its operations [21][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of net sales as clients embrace marketing solutions in a strengthening economy [37][55] - The company expects full-year net sales to improve, ending the year flat to down low single digits compared to 2020 [37][56] - Management highlighted the importance of adapting to changes in the demand landscape and maintaining financial flexibility [28][42] Other Important Information - The company reduced net debt by $61 million in Q1 2021, improving its debt leverage ratio to 3.24 times [35] - The nearest debt maturity is $239 million in senior unsecured notes due in May 2022, with options for refinancing or paying off the balance [36] Q&A Session Summary Question: Trends in Quad's business segments and end markets as the economy reopens - Management noted that the retail segment has seen significant declines, while the catalog market has performed well, and packaging is a bright spot with an 8% increase [45][51] Question: Update on Quad's plan for the 2022 senior unsecured notes - Management confirmed ongoing evaluations of options for the $239 million notes due in May 2022, including refinancing or paying off the balance [52][54] Question: Quad's outlook for the remainder of the year - Management expects continued momentum in net sales trends, with a projected increase of 10% to 13% in Q2 2021 compared to Q2 2020 [56][55]

[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Quad/Graphics reported a net earning of $10.2 million in Q1 2021, reversing a prior-year loss, driven by lower restructuring charges and reduced operating expenses, despite decreased net sales Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Total net sales** | **$705.8 million** | **$822.5 million** | | Operating income from continuing operations | $21.0 million | $5.0 million | | Net earnings (loss) attributable to Quad common shareholders | $10.2 million | $(12.4) million | | **Diluted earnings (loss) per share** | **$0.19** | **$(0.25)** | Condensed Consolidated Balance Sheet Summary | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $633.7 million | $679.2 million | | **Total assets** | **$1,837.2 million** | **$1,927.7 million** | | Total current liabilities | $628.7 million | $682.7 million | | **Total liabilities** | **$1,744.1 million** | **$1,842.9 million** | | Total shareholders' equity | $93.1 million | $84.8 million | Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$72.9 million** | **$44.7 million** | | Net cash (used in) provided by investing activities | $(6.0) million | $14.3 million | | Net cash (used in) provided by financing activities | $(41.4) million | $70.7 million | | **Cash and cash equivalents at end of period** | **$80.6 million** | **$207.8 million** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail key accounting policies and financial activities, including revenue disaggregation, restructuring charges, debt management, and discontinued operations - The COVID-19 pandemic has negatively impacted the business, leading to cost reduction initiatives and an amendment to the Senior Secured Credit Facility for financial covenant relief through September 30, 2021[28](index=28&type=chunk) Disaggregated Revenue (Q1 2021 vs Q1 2020) | Revenue Category | Q1 2021 (Million) | Q1 2020 (Million) | % Change | | :--- | :--- | :--- | :--- | | **Total Products** | **$526.0** | **$645.0** | **-18.4%** | | - US Print & Related | $459.9 | $563.6 | -18.4% | | - International | $66.1 | $81.4 | -18.8% | | **Total Services** | **$179.8** | **$177.5** | **+1.3%** | | - US Print & Related | $174.7 | $173.0 | +1.0% | | - International | $5.1 | $4.5 | +13.3% | | **Total Net Sales** | **$705.8** | **$822.5** | **-14.2%** | Restructuring, Impairment and Transaction-Related Charges | Charge Type | Q1 2021 (Million) | Q1 2020 (Million) | | :--- | :--- | :--- | | Employee termination charges | $4.7 | $12.6 | | Impairment charges | $0.8 | $2.5 | | Other restructuring charges (income) | $(3.1) | $6.5 | | **Total** | **$2.6** | **$22.8** | - The company's Book business is reported as a discontinued operation following its sale in 2020, generating a loss from discontinued operations of **$3.8 million** net of tax for Q1 2020[27](index=27&type=chunk)[39](index=39&type=chunk) - As of March 31, 2021, total debt was **$888.1 million**, down from **$923.4 million** at December 31, 2020, with the company in compliance with all debt covenants, including a Maximum Total Net Leverage Ratio of **3.18 to 1.00** against a covenant of **4.50 to 1.00**[65](index=65&type=chunk)[70](index=70&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 14.2% YoY decline in net sales primarily to ongoing print industry volume pressure and decreased pass-through paper sales, while improved profitability stemmed from reduced restructuring charges and SG&A expenses - The company's strategic priorities include growing as a marketing solutions partner, strengthening its core integrated marketing platform, empowering employees, and enhancing financial strength through disciplined capital management and debt reduction[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) Key Performance Metrics (Q1 2021 vs Q1 2020) | Metric | Q1 2021 (Million) | Q1 2020 (Million) | | :--- | :--- | :--- | | Net Sales | $705.8 | $822.5 | | Operating Income | $21.0 | $5.0 | | EBITDA (Non-GAAP) | $67.1 | $51.9 | | Free Cash Flow (Non-GAAP) | $56.0 | $15.7 | - The Debt Leverage Ratio decreased to **3.24x** at March 31, 2021, from **3.35x** at December 31, 2020, due to a **$61.0 million** decrease in Net Debt, though it remains above the target range of **2.0x-2.5x** due to pandemic impacts[207](index=207&type=chunk)[208](index=208&type=chunk) - Total liquidity was **$543.7 million** as of March 31, 2021, comprising **$80.6 million** in cash and **$463.1 million** of unused revolving credit facility capacity, deemed sufficient for ongoing requirements[195](index=195&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Total net sales fell 14.2% to $705.8 million in Q1 2021, primarily due to decreased product sales, while improved profitability was driven by significant reductions in SG&A and restructuring charges Consolidated Operating Results Summary (Q1 2021 vs Q1 2020) | Line Item | Q1 2021 (Million) | Q1 2020 (Million) | % Change | | :--- | :--- | :--- | :--- | | Total net sales | $705.8 | $822.5 | -14.2% | | Total cost of sales | $559.8 | $647.7 | -13.6% | | Selling, general & administrative expenses | $80.5 | $99.6 | -19.2% | | Restructuring, impairment and transaction-related charges | $2.6 | $22.8 | -88.6% | | **Operating income from continuing operations** | **$21.0** | **$5.0** | **+320.0%** | - Product sales decreased by **$119.0 million**, driven by a **$59.5 million** decline in print product lines, a **$52.4 million** decrease in pass-through paper sales, and a **$7.5 million** decrease from the divestiture of the Omaha packaging plant[166](index=166&type=chunk) - SG&A expenses decreased by **$19.1 million**, primarily due to an **$8.7 million** decrease in employee-related costs, a **$6.1 million** decrease from foreign translation impacts, and a **$4.4 million** decrease in credit loss expense[170](index=170&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity remains strong with $543.7 million available, driven by significantly increased net cash from operating activities and improved Free Cash Flow, alongside debt reduction and covenant compliance Free Cash Flow (Non-GAAP) | Component | Q1 2021 (Million) | Q1 2020 (Million) | | :--- | :--- | :--- | | Net cash provided by operating activities | $72.9 | $44.7 | | Less: purchases of property, plant and equipment | $(16.9) | $(29.0) | | **Free Cash Flow** | **$56.0** | **$15.7** | - Net cash from operating activities increased by **$28.2 million** year-over-year, mainly due to a **$35.0 million** positive change in operating assets and liabilities[197](index=197&type=chunk) - The company was in compliance with all financial covenants as of March 31, 2021, with limitations on dividends and share repurchases during the 'Covenant Relief Period' (through September 30, 2021) if the Total Net Leverage Ratio is above **2.75x**[210](index=210&type=chunk)[211](index=211&type=chunk)[215](index=215&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks from interest rates, foreign currency, credit, and commodity prices through strategies like interest rate swaps, client diversification, and contractual clauses - To manage interest rate risk, the company uses interest rate swaps to classify **$380.0 million** of its variable-rate debt as fixed-rate debt, with **$246.7 million** in variable-rate debt and **$645.9 million** in fixed-rate debt as of March 31, 2021[220](index=220&type=chunk) - Foreign currency translation risk applies to net current assets of foreign subsidiaries, which stood at **$34.1 million**, where a hypothetical 10% adverse change would result in a **$3.4 million** decrease[222](index=222&type=chunk) - Credit risk is managed through client evaluation and monitoring, with an allowance for credit losses of **$33.3 million** as of March 31, 2021, and no single client exceeding 5% of net sales in Q1 2021[226](index=226&type=chunk)[227](index=227&type=chunk) - Commodity risk is mitigated as most paper is client-supplied, the company produces its own ink, and price adjustment clauses in contracts help offset raw material price volatility[229](index=229&type=chunk)[230](index=230&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2021[233](index=233&type=chunk) - No changes occurred during the fiscal quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[234](index=234&type=chunk) [PART II: OTHER INFORMATION](index=64&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=64&type=section&id=ITEM%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020[237](index=237&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares under its $100.0 million program due to debt covenant restrictions but did acquire shares from employees for tax withholding purposes - The company has a **$100.0 million** share repurchase program, but no shares were repurchased during the three months ended March 31, 2021, with the full **$100.0 million** remaining available[238](index=238&type=chunk)[241](index=241&type=chunk) - The company is currently prohibited from repurchasing capital stock due to restrictions in its Senior Secured Credit Facility, which are in effect during the Covenant Relief Period ending September 30, 2021[241](index=241&type=chunk) - In March 2021, **258,670 shares** of Class A common stock were transferred from employees to the Company to satisfy tax withholding requirements in connection with vesting restricted stock[241](index=241&type=chunk) [Item 6. Exhibits](index=65&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including CEO and CFO certifications and financial statements formatted in iXBRL

Financial Performance - Net sales decreased from $822.5 million to $705.8 million[16] - Adjusted EBITDA decreased from $75.4 million to $65.8 million[16] - Adjusted EBITDA margin increased slightly from 9.2% to 9.3%[16] - Free cash flow increased significantly from $15.7 million to $56.0 million[16] - The debt leverage ratio improved from 3.35x to 3.24x[37] Debt and Liquidity - Cash on hand was $81 million[21] - Unused capacity under the revolver was $463 million[21] - Next significant debt maturity is $239 million in May 2022[21] - 72% of debt is fixed rate[20] Outlook - The company expects full-year net sales to be flat to down a low single-digit percentage compared to 2020[22] - For the second quarter, the company expects net sales to increase by 10% to 13% compared to Q2 2020[23] - The company expects to further improve the Debt Leverage Ratio to be at or near 30x by the end of 2021[25]