"Challenging" third-quarter financial performance means $100M cost reduction for Quad/Graphics

SUSSEX -- Sussex-based Quad/Graphics is reacting to slumping sales -- and the company is about to undergo a $100 million cost reduction.

We're told that cost reduction will include closures, but there's no word which plants could be affected.

Quad/Graphics officials on Tuesday, November 3rd reported results for its third quarter ending September 30, 2015.

Quad/Graphics' director of corporate communications provided the following information to FOX6 News:

"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 lowerthan-expected Adjusted EBITDA, due primarily to sustainable reductions in working capital."

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.

Quad/Graphics (NYSE: QUAD) will hold a conference call at 10 a.m. ET on Wednesday, November 4, to discuss
third quarter and year-to-date 2015 results.