Quad/Graphics(US:QUAD)2025-02-21 02:39Revenue and Sales Performance - The United States Print and Related Services segment accounted for approximately 87% of the Company's consolidated net sales in 2024, down from 86% in 2023[222]. - The International segment represented about 13% of consolidated net sales in 2024, compared to 14% in 2023[223]. - The Company's total net sales decreased by $285.5 million, or 9.7%, from $2,957.7 million in 2023 to $2,672.2 million in 2024[251]. - Product sales declined by $234.9 million, or 10.1%, primarily due to a $142.1 million decrease in paper sales and a $91.4 million decrease in print product lines[252]. - Service sales decreased by $50.6 million, or 8.1%, mainly due to a $44.2 million decrease in marketing and medical services[253]. - Net sales in the United States Print and Related Services segment decreased by $224.8 million, or 9.0%, from $2,554.3 million in 2023 to $2,329.5 million in 2024[266][267]. - International segment net sales decreased by $60.2 million, or 15.7%, from $384.4 million in 2023 to $324.2 million in 2024, driven by lower paper sales and print volumes[273][274]. - Total net sales decreased to $2,672.2 million in 2024 from $2,957.7 million in 2023, a decline of approximately 9.6%[367]. Financial Performance and Income - The Company's operating income for 2024 was $19.2 million, down from $25.7 million in 2023, reflecting a decrease of 25.3%[251]. - EBITDA for the year ended December 31, 2024, was $122.5 million, a decrease of $33.7 million or 21.6% compared to $156.2 million in 2023, with an EBITDA margin of 4.6% down from 5.3%[261][263]. - Net loss for 2024 was $50.9 million, an improvement from a net loss of $55.4 million in 2023, with interest expense decreasing to $64.5 million from $70.0 million[264]. - Operating income for the United States Print and Related Services segment increased by $56.2 million, or 99.3%, to $112.8 million in 2024, primarily due to reduced restructuring charges and improved manufacturing productivity[269]. - Operating loss for the International segment was $45.7 million in 2024, a decrease of $64.0 million compared to an operating income of $18.3 million in 2023, largely due to increased restructuring charges[276]. - Total comprehensive loss increased to $(64.5) million in 2024 from $(44.7) million in 2023[370]. - Net loss improved to $(50.9) million in 2024 compared to $(55.4) million in 2023, representing a reduction of about 8.1%[370]. Debt and Liquidity - The Company's consolidated debt and finance lease obligations decreased by $143.5 million during the year ended December 31, 2024[232]. - The Company generated $112.9 million in cash provided by operating activities, contributing to the reduction in debt[232]. - Total liquidity as of December 31, 2024, was $328.1 million, consisting of $298.9 million in unused capacity under the revolving credit arrangement and $29.2 million in cash and cash equivalents[283]. - The Debt Leverage Ratio decreased from 2.01x as of December 31, 2023, to 1.56x as of December 31, 2024, due to a $119.8 million decrease in Net Debt[298]. - Total debt and finance lease obligations decreased from $522.7 million as of December 31, 2023, to $379.2 million as of December 31, 2024[296]. - The Company expects its future cash flows from operating activities to be sufficient to fund ongoing operating requirements and service debt for the next 12 months and beyond[284]. Cost Management and Expenses - The cost of product sales decreased by $248.3 million, or 12.5%, primarily due to lower paper costs and improved manufacturing productivity[254]. - Selling, general, and administrative expenses rose by $12.3 million, or 3.6%, increasing as a percentage of net sales from 11.6% in 2023 to 13.4% in 2024[256]. - Depreciation and amortization expenses decreased by $26.3 million, or 20.4%, due to plant closures and fully depreciated assets[257]. - Restructuring, impairment, and transaction-related charges increased by $24.0 million, or 31.0%, totaling $101.5 million in 2024[259]. - The Company expects to incur additional restructuring and integration costs in future periods to align its cost structure with acquisitions and strategic investments[248]. Cash Flow and Investments - Net cash provided by operating activities decreased by $34.7 million to $112.9 million for the year ended December 31, 2024, compared to $147.6 million in 2023[285]. - Net cash provided by investing activities increased by $59.1 million to $12.7 million for the year ended December 31, 2024, compared to a net cash used of $46.4 million in 2023[286]. - Net cash used in financing activities increased by $75.5 million to $149.1 million for the year ended December 31, 2024, compared to $73.6 million in 2023[287]. - Free Cash Flow decreased by $21.1 million to $55.7 million for the year ended December 31, 2024, compared to $76.8 million in 2023, primarily due to a decrease in operating cash flows[291]. Pension and Employee Obligations - The net underfunded pension obligations decreased by $7.8 million from $63.4 million at December 31, 2023, to $55.6 million at December 31, 2024, primarily due to a $5.3 million decrease in defined benefit plan obligations[309]. - The Company continues to focus on reducing pension obligations through cash contributions, lump-sum settlements, and plan design changes[310]. - The Company has established a withdrawal liability for Multiemployer Pension Plans (MEPPs) based on information from MEPP trustees, following its withdrawal from underfunded plans[416]. Risk Management and Market Conditions - The Company anticipates that industry challenges, including elevated interest rates and reduced demand for printed products, will continue to impact its operations through 2025[245]. - The USPS is expected to implement changes in service standards in 2025, which could impact demand for print services[240]. - The USPS has confirmed plans for twice a year price increases for 2026 and 2027, which may lead clients to reduce mail volumes[242]. - The Company has established a risk management strategy for energy costs, including natural gas hedges, but may not fully pass on increased energy prices to clients[342]. - An allowance for credit losses was established at $21.5 million as of December 31, 2024, reflecting the uncertainty in the global economy and client payment capabilities[337]. Shareholder Returns and Equity - Cash dividends declared were $0.20 per share, totaling $10.3 million for the year ended December 31, 2024[1]. - The Company has $77.5 million of authorized repurchases remaining under its share repurchase program as of December 31, 2024[312]. - The Company’s total equity decreased to $49.9 million by December 31, 2024, down from $172.9 million at the beginning of 2023[1]. - Stock-based compensation expenses increased to $7.3 million in 2024 from $5.6 million in 2023, reflecting higher employee compensation costs[1]. - The Company’s treasury stock purchases amounted to $12.6 million during the reporting period, indicating a strategy to manage share count[1].