Quad/Graphics Reports Volume Declines Continued

(PRESS RELEASE) SUSSEX, WI—Nov. 09, 2011—Quad/Graphics Inc.reported results for its third quarter ending Sept. 30, 2011.

Its third-quarter 2011 net sales were $1.186 billion vs. $1.209 billion for the same period in 2010. The results reflect moderate declines in volume primarily due to macroeconomic pressures, including continuing industry softness in the book market, and an aggressive pricing environment.

Adjusted EBITDA for the third quarter was $173.6 million, compared to $159.2 million in the same period in 2010. The increase in adjusted EBITDA was mostly attributable to Worldcolor transaction synergy savings and lower incentive compensation.

“The volume declines we began to see late in the second quarter accelerated during the third quarter, and included continued weakness in the book market,” said Joel Quadracci, chairman, president and CEO. “This, along with temporary productivity declines and ongoing competitive pricing pressures, resulted in adjusted EBITDA below what we had anticipated for the quarter. Given this environment, we remain focused on performing well for our customers, improving productivity and aggressively managing costs to produce results that drive shareholder value.”

John Fowler, executive vice president and chief financial officer, explained that the circumstances that led Aadjusted EBITDA to be lower than anticipated in the quarter are expected to continue through the remainder of the year. As a result, the company is revising its adjusted EBITDA outlook for 2011.

“Based on our third quarter results, as well as anticipated softer volume in the fourth quarter and continued productivity impacts, we believe full year adjusted EBITDA will be lower than what we anticipated,” Fowler said. “We now project a range of $610 million to $625 million for full year 2011 adjusted EBITDA. We continue to expect Recurring Free Cash Flow to be $260 million to $300 million.”

The company continues to make progress with the Worldcolor integration. “We remain confident in our ability to achieve more than $225 million in synergy savings on an annual run-rate basis within 24 months of the acquisition closing, and we achieved $32 million in incremental synergy savings during the third quarter 2011,” Quadracci said. “Last month we announced the next phase of facility closures in Richmond, VA, and Stillwater, OK, and will continue to identify additional cost-saving opportunities as we move forward with this very large and complex integration.”