Quad/Graphics, Inc.(NYSE:QUAD) stock surged over 21.9% on Feb 21st, 2018 (As of 12:00PM EST; Source: Google finance) post their solid fourth quarter of 2017 update. The Net sales reached $1.2 billion for the fourth quarter of 2017 and $4.1 billion for full-year 2017 which is a 47% rise in net earnings to $55 million in the quarter and a 139% rise to $107 million for the year.
Organic sales fell 2.8% on the back of ongoing industry volume and pricing pressures, after excluding pass-through paper sales (-0.3% impact) and favorable foreign exchange (0.3% impact). The diluted earnings per share for the fourth quarter of 2017 rose to $1.06 against $0.73 in 2016 hurt by lower income tax expense related to tax reform.
The group delivered a Non-GAAP Adjusted EBITDA and Margin of $125 million and 10.7%, respectively, for the fourth quarter 2017 and $459 million and 11.1%, respectively, for full-year 2017. They generated a cash flow from operations of $344 million and enhanced Free Cash Flow to $258 million for full-year 2017. The group also cut debt by $166 million, or 15%, during 2017 and enhanced Debt Leverage Ratio to 1.99x, net of excess cash.
The group also announced an acquisition of Ivie & Associates which is a leading marketing services provider. The group has strategically invested in their business to accelerate their Quad 3.0 transformation. This combined with $150 million in incremental revenue from the Ivie acquisition, help offset ongoing print industry volume and pricing pressures and support their outlook for flat 2018 net sales at the midpoint of their guidance. The business combination created a powerful marketing solution that addresses clients’ boosting the need for a better process efficiency and marketing spend effectiveness. The combined offering, drove both companies’ talent, expertise and technology, offering client’s unmatched scale for onsite marketing services, integrated execution, and expanded subject matter expertise in digital, media and creative.
Their 2018 Adjusted EBITDA guidance reflects $10 million of additional investment in SG&A expense for hiring marketing services talent to further support their Quad 3.0 transformation primarily offsetting by a further Adjusted EBITDA from the Ivie Acquisition.