Sussex-based Quad/Graphics Inc. Tuesday reported a third quarter net loss of $552.2 million, or $11.50 lost per share, compared with net income of $24.4 million, or 50 cents per share, in the third quarter of 2014.
As a result of the loss, Quad/Graphics also announced it will begin a $100 million cost reduction program next year, which will include plant closures as well as streamlining its organizational structure, reducing costs, and increasing its focus on productivity. Company leaders will provide more details of the plan in an earnings call tomorrow at 9 a.m.
The commercial printer recorded a $772.1 million operating loss, compared with operating income of $53.6 million in the same period a year ago.
Quad’s quarterly revenue totaled $1.2 billion, flat from the third quarter of 2014.
During the third quarter, Quad recorded a one-time non-cash goodwill impairment charge of $775 million in the quarter related to its 2010 acquisition of World Color Press, triggered by a decline in the company’s stock price.
“We will continue to find ways to reduce our cost structure while generating the strong free cash flow that is the foundation of our historically strong balance sheet,” said Dave Honan, executive vice president and chief financial officer at Quad/Graphics. “Our continued strong free cash flow enables us to deploy capital in ways that generate value for our company and our shareholders, including returning cash to our shareholders through our quarterly dividend.”
Restructuring, impairment and transaction-related charges totaled $35.6 million in the quarter, up from $14.1 million in the year ago quarter. These included $9 million in employee termination charges related to layoffs and facility consolidations and $15.8 million in impairment charges related to property, plant and equipment no longer being utilized for production as a result of facility consolidations.
Quad attributed the loss to a “greater-than-expected pullback in volumes” in the printing industry, along with accelerated pricing pressures and higher manufacturing costs due to lower productivity.
“We have a longstanding commitment to being the industry’s low-cost producer and these actions are a continuation of that commitment,” said Joel Quadracci, chairman, president and chief executive officer. “Quad/Graphics is focused on realizing improved efficiencies and cost savings while contributing to an overall better client experience.
“As always, we remain committed to our strategic goals to transform Quad/Graphics, including strengthening the core print categories that generate a significant amount of free cash flow to support growth opportunities. Recently, we acquired Specialty Finishing, an Omaha-based packaging manufacturer with a loyal blue-chip customer base that has enjoyed eight straight years of consecutive sales growth. This acquisition, along with the April 2015 acquisition of Copac, have increased the scale and geographic footprint of our QuadPackaging division, enabling us to more effectively compete for large-volume or multi-location clients across the United States, in addition to Europe, South America, Central America and Asia, where we also have packaging capabilities.”
