Editor's note: In a conference call with investors, Joel Quadracci, CEO of Quad/Graphics announced the company would close plants in Augusta, Georgia and East Greenville, Pennsylvania. The Augusta plant employs approximately 250 employees and specializes in printing retail advertisements and catalogs. The East Greenville plant employs approximately 400 people and prints publications and catalogs.

Highlights:

• Generated third quarter net sales of $1.2 billion and Adjusted EBITDA of $117 million.
• Achieved Free Cash Flow of $68 million year-to-date, representing a $106 million increase over prior year.
• Lowers full-year 2015 guidance for net sales to a range of $4.6 billion to $4.7 billion; Adjusted EBITDA to a range of $430 million to $450 million; and Free Cash Flow to a range of $165 million to $180 million.
• Announces $100 million cost reduction program.
• Completed the strategic acquisition of Specialty Finishing, a full-service paperboard folding carton manufacturer, to support transformative growth opportunities in high-end packaging.
• Declared a quarterly dividend of $0.30 per share.

SUSSEX, Wis. - Quad/Graphics, Inc. (NYSE: QUAD) ("Quad/Graphics" or the "Company") today reported results for its third quarter ending September 30, 2015. For full financial results, including reconciliations of non-GAAP financial measures, please see the accompanying information.

“Our third quarter financial performance was challenging and below our expectations due to a greater-than-expected pullback in industry volumes and pricing pressures that accelerated in the quarter, as well as lower productivity levels in our manufacturing platform,” said Joel Quadracci, Chairman, President & CEO of Quad/Graphics. “We are taking swift and decisive action to address the volume and pricing pressures, and are announcing a $100 million cost reduction program to bring our cost structure in line with revenues. This program includes reducing excess manufacturing capacity through plant closures, intensifying our focus on productivity, reducing SG&A costs and implementing a new streamlined organizational structure. We have a long-standing commitment to being the industry’s low-cost producer and these actions are a continuation of that commitment. Quad/Graphics is focused on realizing improved efficiencies and cost-savings while contributing to an overall better client experience.”

Quadracci continued: “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.”

Net sales for the third quarter 2015 were $1.2 billion, representing a 6.5% decrease from the third quarter of 2014. Third quarter Adjusted EBITDA was $117 million compared to $151 million for the same period in 2014, and Adjusted EBITDA margin was 10.1% compared to 12.2% in 2014. The Adjusted EBITDA variance primarily reflects an acceleration of ongoing industry pressures and lower productivity.

For the first nine months of 2015, net sales were $3.3 billion, representing a 2.8% decrease from the first nine months of 2014. Year-to-date Adjusted EBITDA was $308 million as compared to $360 million for the same period in 2014, and Adjusted EBITDA margin was 9.2% as compared to 10.5% in 2014. Free Cash Flow was $68 million for the first nine months of 2015, an increase of $106 million over the prior year due to sustainable improvements in the cash conversion process primarily reducing ongoing working capital needs.

Net loss during the third quarter of 2015 was $552 million and in the nine months ended September 30, 2015, was $633 million, and includes a $775 million non-cash goodwill impairment charge ($533 million net of tax).

“Based on the recent pullback in industry volumes and pricing pressures that accelerated in the quarter, as well as lower manufacturing productivity, we are reducing our financial outlook for full-year 2015,” said Dave Honan, Quad/Graphics Executive Vice President and Chief Financial Officer. “However, we believe Quad/Graphics will achieve a 12% increase year-over-year in Free Cash Flow at the midpoint of our updated guidance, despite lower-than-expected Adjusted EBITDA, due primarily to sustainable reductions in working capital.”

2015 guidance is as follows:

Honan concluded: “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. 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.”

Quad/Graphics' next quarterly dividend of $0.30 per share will be payable on December 18, 2015, to shareholders of record as of December 7, 2015.