Quad/Graphics Reports Decline in Financial Performance, Net Losses in Q3 and YTD 2024

Quad/Graphics, Inc. reported a decline in financial performance for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Net sales for the third quarter were $674.8 million, down from $700.2 million, while year-to-date sales decreased to $1,963.8 million from $2,169.8 million. The decrease in sales was attributed to a significant drop in product sales, particularly in paper and print product lines, which fell by $180.2 million (10.5%) for the nine-month period.

Operating expenses for the third quarter totaled $679.7 million, a slight decrease from $686.5 million in the prior year. However, the company reported an operating loss of $(4.9) million for Q3 2024, contrasting with an operating income of $13.7 million in Q3 2023. For the nine-month period, the operating loss was $(0.5) million, down from an operating income of $22.2 million in 2023. The net loss for Q3 2024 was $(24.7) million, compared to a net loss of $(2.7) million in Q3 2023, and the year-to-date net loss increased to $(55.6) million from $(33.4) million.

A significant factor contributing to the losses was a sharp rise in impairment charges, which totaled $52.2 million in Q3 2024, compared to $5.2 million in the same quarter of 2023. The nine-month impairment charges also surged to $65.9 million from $15.8 million, primarily related to the company's European operations. Restructuring, impairment, and transaction-related charges increased to $39.3 million in Q3 2024 from $11.2 million in the same period last year.

In terms of liquidity, Quad/Graphics reported cash and cash equivalents of $12.5 million as of September 30, 2024, down from $52.9 million at the end of 2023. Total assets decreased to $1,388.8 million, while total liabilities fell to $1,337.9 million. The company’s accumulated deficit increased to $(637.2) million from $(573.9) million at the end of 2023.

Strategically, Quad/Graphics is in the process of selling the majority of its European operations to optimize its business portfolio for growth. The company has classified these operations as held for sale and expects net proceeds of approximately $32.0 million from the transaction, pending regulatory approvals. Additionally, the company has made efforts to streamline operations and reduce costs, including plant closures and headcount reductions.

Overall, Quad/Graphics is navigating a challenging market environment characterized by declining demand for printed products, increased competition, and rising operational costs, while also focusing on restructuring and strategic divestitures to enhance its financial position.