Company Updates Full-Year 2016 Guidance Based on Improved Earnings and Cash Flow

• Recorded second quarter net sales of $1.0 billion and a GAAP net loss of $8 million which represents a $37 million, or 83% improvement in earnings from 2015.
• Increased second quarter Adjusted EBITDA of $98 million by $6 million, or 7%, over 2015.
• Increased year-to-date GAAP cash flow from operations by $96 million to $220 million, and increased Free Cash Flow by $139 million to $179 million.
• Reduced debt by $153 million, or 11% through six months of 2016, and Debt Leverage Ratio reduced to 2.43x as of June 30, 2016, within the Company's long-term targeted leverage range of 2.0x - 2.5x.
• Increases full-year 2016 guidance for Adjusted EBITDA to a range of $460 million to $500 million, and Free Cash Flow to a range of $230 million to $270 million.
• Declares quarterly dividend of $0.30 per share.

SUSSEX, Wis. - Quad/Graphics, Inc. (NYSE: QUAD) ("Quad/Graphics" or the "Company") today reported results for its second quarter ending June 30, 2016.

"We are very pleased with our second quarter 2016 results, which reflect our ongoing, focused efforts to improve manufacturing productivity and sustainably reduce costs," said Joel Quadracci, Quad/Graphics Chairman, President & Chief Executive Officer. "We surpassed our expectations for both earnings and cash flow, which further strengthens our balance sheet and supports our sustainable dividend policy. As always, we remain committed to being the industry's high-quality, low-cost producer while delivering an exceptional client experience."

Quadracci continued: "As we enter our 45^th year, Quad continues to transform as a company at this critical time in the printing industry. We are delivering innovative solutions that help our clients improve both the efficiency and effectiveness of their media spend across multiple channels. Last month, we made a minority investment in Rise Interactive, a digital marketing agency with whom we have a well-established relationship. Through this partnership, we help clients use robust data analytics to deliver and measure highly relevant campaigns at scale to consumers across traditional and digital channels. This addresses an important need for today's marketers and publishers who acknowledge the difficulty of coordinating content efficiently and effectively across channels, and are looking for an integrated solution from a trusted partner."

Net sales for the second quarter 2016 were $1.0 billion, a 3% decrease from second quarter 2015 due to ongoing industry volume and pricing pressures. Despite lower sales, the $8 million second quarter GAAP net loss represented a $37 million, or 83%, improvement in earnings versus 2015 due to better operating performance from ongoing improvements in manufacturing productivity and labor management, sustainable cost reductions and lower restructuring and non-cash impairment charges. Second quarter Adjusted EBITDA increased $6 million to $98 million compared to $92 million in 2015, and Adjusted EBITDA margin improved to 9.5% compared to 8.7% last year. The increase in Adjusted EBITDA and Adjusted EBITDA margins primarily reflect enhanced operational efficiency and sustainable cost reductions.

Net sales for the six months ended June 30, 2016 were $2.1 billion, a 3% decrease from the first six months of 2015. Year-to-date GAAP net loss was $4 million, a $76 million, or 95%, improvement versus an $80 million net loss in 2015. Year-to-date Adjusted EBITDA increased $23 million to $218 million as compared to $195 million in 2015, and Adjusted EBITDA margin improved to 10.5% as compared to 9.1%. These year-to-date financial trends are consistent with the explanations provided for the second quarter.

GAAP net cash provided by operating activities was $220 million for the first six months of 2016, an increase of $96 million, or 78%, over 2015. Correspondingly, Free Cash Flow was $179 million, an increase of $139 million over 2015, which was a 350% improvement. These improvements are due to the beneficial impacts from ongoing improvements in working capital levels, lower ongoing capital expenditures needs and increased earnings.

Outlook

The Company updated its full-year 2016 guidance for net sales, Adjusted EBITDA and Free Cash Flow as follows:

"The operational efficiency and cost reduction momentum established during the first half of the year is driving stronger earnings and cash flow results and, therefore, we are increasing our guidance for Adjusted EBITDA and Free Cash Flow each by $40 million at the midpoint of their respective ranges," said Dave Honan, Executive Vice President & Chief Financial Officer. "Our strong cash flow generation continues to be the foundation of our disciplined capital deployment strategy and has resulted in a $323 million, or a 21%, reduction in debt since peak debt levels at September 30, 2015. The debt reduction combined with increased earnings have resulted in a significant decrease in our debt leverage ratio to 2.43x, well within our stated long-term targeted leverage range of 2.0x to 2.5x. We are also committed to our annual dividend of $1.20 per share, which represents less than 25% of Free Cash Flow at the midpoint of our revised guidance range."

Quad/Graphics' next quarterly dividend of $0.30 per share will be payable on September 9, 2016, to shareholders of record as of August 29, 2016.