Quad/Graphics(US:QUAD)2021-05-05 19:45Financial 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]