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

"We are pleased with our third quarter performance, which reflects our ongoing focus on driving sustainable cost reductions, productivity improvements and operational efficiencies across our platform," said Joel Quadracci, Chairman, President & CEO of Quad/Graphics. "Our solid earnings and cash flow in the quarter further strengthened our balance sheet and support our sustainable dividend policy. Because industry pressures continue to impact our top line, our team remains diligent and proactive in matching costs to revenue with the goal of being the low-cost producer while also listening to clients and innovating solutions to position the Company for long-term growth. Quad/Graphics holds a truly unique position in the industry, offering highly integrated, end-to-end print solutions as well as capabilities to improve both the efficiency and effectiveness of clients' media spend across print, digital, social, mobile and other channels. This customer-centric model gives us a distinct competitive advantage."

Net sales for the three months ended September 30, 2016, were $1.1 billion, a 7.0% decrease from the three months ended September 30, 2015. Organic sales decreased 4.6% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.0% impact), foreign exchange (-0.5% impact) and pass through paper sales (-2.9% impact). This decrease is consistent with annual guidance of down 4% to 7%. GAAP net earnings improved to $11 million during the three months ended September 30, 2016. The improvement in earnings year-over-year was due to better operating performance from ongoing improvements in manufacturing productivity and labor management, sustainable cost reductions, lower depreciation and amortization expense and lower restructuring and non-cash impairment charges. Third quarter Adjusted EBITDA increased $2 million to $122 million compared to $120 million in 2015, and Adjusted EBITDA margin improved to 11.5% compared to 10.5% last year. The increase in Adjusted EBITDA and Adjusted EBITDA margin primarily reflect enhanced operational efficiency and sustainable cost reductions.

Net sales for the nine months ended September 30, 2016, were $3.1 billion, a 4.6% decrease from the nine months ended September 30, 2015. Organic sales decreased 3.7% due to ongoing industry volume and pricing pressures, after excluding acquisitions (1.9% impact), foreign exchange (-0.7% impact) and pass through paper sales (-2.1% impact). GAAP net earnings improved to $7 million during the nine months ended September 30, 2016. Year-to-date Adjusted EBITDA increased $26 million to $340 million as compared to $314 million in 2015, and Adjusted EBITDA margin improved to 10.9% as compared to 9.6%. These year-to-date financial trends are consistent with the explanations provided for the third quarter.

GAAP net cash provided by operating activities was $260 million for the first nine months of 2016, an increase of $81 million, or 45%, over 2015. Correspondingly, Free Cash Flow was $202 million compared to $68 million in the first nine months of 2015, an increase of $134 million over 2015. Quad/Graphics generated three times more Free Cash Flow during the first nine months of 2016 than was generated through the same period of 2015. These improvements are due to the beneficial impacts from ongoing improvements in working capital levels, lower ongoing capital expenditures needs and increased earnings.

"Our operational efficiency and cost reduction programs have propelled us to stronger earnings and cash flow generation during the first nine months of 2016," said Dave Honan, Executive Vice President & Chief Financial Officer. "We've used the strong cash flow to reduce debt by $346 million, or 23%, since peak debt levels at September 30, 2015. The debt reduction, combined with increased earnings, resulted in a significant reduction of the debt leverage ratio from 3.07x at September 30, 2015, to 2.37x at September 30, 2016. Our 2.37x leverage is 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."

Quad/Graphics' next quarterly dividend of $0.30 per share will be payable on December 9, 2016, to shareholders of record as of November 28, 2016.

Quarterly Conference Call

Quad/Graphics (NYSE: QUAD) will hold a conference call at 10 a.m. ET / 9 a.m. CT on Wednesday, November 2, to discuss third quarter and year-to-date September 2016 results. The call will be hosted by Joel Quadracci, Quad/Graphics Chairman, President & Chief Executive Officer, and Dave Honan, Quad/Graphics Executive Vice President & Chief Financial Officer. The full earnings release and slide presentation will be concurrently available on the Investors section of Quad/Graphics' website at http://investors.qg.com.

Participants can pre-register for the webcast by navigating to http://dpregister.com/10092887. Participants will be given a unique PIN to gain immediate access to the call on November 2, bypassing the live operator. Participants may pre-register at any time, including up to and after the call start time.

Alternatively, participants without internet access may dial in on the day of the call as follows:

• U.S. Toll-Free: 1-877-328-5508
• International Toll: 1-412-317-5424

Telephone playback will be available shortly after the conference call ends, accessible as follows:

• U.S. Toll-Free: 1-877-344-7529
• International Toll: 1-412-317-0088
• Replay Access Code: 10092887

The playback will be available until December 2, 2016.