Q2 2024 Financial Results: Stoneridge, Archrock, Meta, and Quad Report Mixed Performances

Stoneridge Reports Second Quarter 2024 Results - Stoneridge (NYSE:SRI)

Q2 Operating Performance Significantly Outperforms Previously Provided Expectations Driven by Strong Margin Expansion 2024 Second Quarter Results Sales of $237.1 millionGross profit of $53.7 million (22.7% of sales)Operating income of $3.4 million Adjusted operating income of $5.4 million (2.3% of sales)Adjusted EBITDA of $16.1 million (6.8% of sales)Earnings per share ("EPS") of $0.10Adjusted EPS of $0.17 2024 Full-Year Guidance Update Reducing full-year 2024 revenue midpoint guidance by $45 million to reflect updated FX rates (~$12 million impact), updated OEM production volumes (~$18 million impact) and potential volatility in non-OEM and customer demand-based products (~$15 million impact)Revenue guidance of $940 million - $970 million (midpoint of $955 million)Increasing gross margin midpoint guidance by 50 basis points to reflect continued material cost improvement and operational excellenceGross margin guidance of 22.75% - 23.0%Reducing adjusted operating margin and EBITDA margin expectations to reflect lower contribution from reduced revenue expectations, offset by improved gross margin performance and continued operating cost controlAdjusted operating margin guidance of ~2.75%Adjusted EBITDA guidance of $58 million - $64 million (adjusted EBITDA margin of 6.2% - 6.6%)Adjusted EPS guidance of $0.18 - $0.28 (midpoint of $0.23) NOVI, Mich., July 31, 2024 /PRNewswire/ -- Stoneridge, Inc. SRI today announced financial results for the second quarter ended June 30, 2024, with sales of $237.1 million and earnings per share of $0.10. Adjusted EPS was $0.17. For the second quarter of 2024, Stoneridge reported gross profit of $53.7 million (22.7% of sales), an increase of 250 basis points relative to the first quarter of 2024. Operating income of $3.4 million resulted in adjusted operating income of $5.4 million (2.3% of sales), an increase of 210 basis points relative to the first quarter of 2024. Adjusted EBITDA was $16.1 million (6.8% of sales), an increase of 410 basis points relative to the first quarter of 2024. Second quarter results were favorably impacted by non-operating foreign currency of approximately $2.3 million. The exhibits attached hereto provide reconciliation detail on normalizing adjustments of non-GAAP financial measures used in this press release. Jim Zizelman, president and chief executive officer, commented, "Our second quarter performance highlights our continued focus on improving the fundamentals of our business leading to significantly improved margins and significant outperformance relative to our prior expectations. This was primarily driven by continued material cost reductions, improved operational excellence, including reduced quality-related costs, and operating cost control as we continue to execute on the key initiatives we set at the beginning of the year. Our efforts to reduce material costs and control operating costs contributed to a 250 basis point improvement in gross margin and a 210 basis point improvement in adjusted operating margin over the first quarter. Including the benefit of non-operating FX income, adjusted EBITDA margin improved by 410 basis points over the first quarter to 6.8% of sales. We continue to improve the financial performance of the business while maintaining our robust approach to technology innovation and growth." Zizelman continued, "While we continue to drive operational performance improvement, we remain focused on flawless execution of the program launches that will drive strong growth going-forward. We are excited to announce that during the second quarter we began shipping our first MirrorEye OEM systems to Volvo for the launch of their FH Aero model in Europe. Similarly, our MirrorEye program with Peterbilt launched on Models 579 and 567 in North America in July. Both customers are focusing significant marketing efforts on MirrorEye as a differentiating product in the market. Initial customer feedback has been excellent. For example, Volvo recently announced one of their largest deals ever, in which they have received an order for 1,500 vehicles all of which will be equipped with MirrorEye to be delivered throughout 2024 and 2025. While we have experienced some volatility as new truck production and our programs ramp up, we expect volumes to continue to accelerate for the remainder of the year bringing take rates at least inline with our original expectations. We continue to expect MirrorEye to gain momentum in the second half of this year, as our first OEM program in Europe maintains its strong take rates and the two recently launched programs continue to ramp up in production." Zizelman concluded, "Our robust backlog continues to provide a strong foundation for our strategy focused on technologies and capabilities that will drive continued long-term growth. Last month, Volvo Bus announced they have selected Stoneridge to provide connected services and digital solutions using our artificial intelligence-based fuel advice system in a pilot program this year. This partnership is aligned with our ongoing focus on data services, software and AI to drive advanced system capabilities and expansion of our existing technology platforms and products to drive long-term profitable growth." Second Quarter in Review Electronics sales of $153.5 million decreased by 6.4% relative to adjusted sales of the second quarter of 2023. This decrease was primarily driven by lower sales in both the European and North American commercial vehicle end markets and the impact of retroactive pricing recognized in the second quarter of 2023 of approximately $3.3 million. This is partially offset by higher sales in the European off-highway vehicle end market. Second quarter adjusted operating margin of 7.6% improved by 230 basis points relative to the adjusted operating margin of the second quarter of 2023, primarily due to lower direct material costs as a percentage of sales, as well as lower D&D and SG&A costs. Control Devices sales of $80.9 million decreased by 13.1% relative to sales of the second quarter of 2023. This decrease was primarily due to lower sales in the North American passenger vehicle end market due to lower customer volumes and the expected wind-down of end-of-life programs as well as lower China automotive sales. Second quarter operating margin of 4.6% decreased by 130 basis points relative to the adjusted operating margin of the second quarter of 2023, primarily due to lower contribution from lower sales, partially offset by lower direct material costs as a percentage of sales and lower D&D costs. Stoneridge Brazil sales of $11.8 million decreased by $3.1 million relative to sales in the second quarter of 2023. This decrease was primarily due to lower sales in local OEM products, tracking devices and monitoring service fees. Second quarter operating performance of approximately break-even decreased by approximately $0.9 million relative to the second quarter of 2023, primarily due to lower contribution from lower sales volumes partially offset by lower direct material costs. Relative to the first quarter of 2024, Electronics adjusted sales of $153.5 million, decreased by $2.6 million, or 1.7%. This slight decrease was driven primarily by the unfavorable impact of foreign currency of approximately $2.2 million. Second quarter adjusted operating margin increased by 310 basis points relative to the first quarter of 2024, primarily due to material cost improvements, lower quality-related costs and lower engineering costs. Relative to the first quarter of 2024, Control Devices sales increased by 3.7%. This increase was primarily due to higher sales in the North American passenger vehicle end market as well as higher commercial vehicle sales in China. Second quarter adjusted operating margin increased by 180 basis points relative to the first quarter of 2024, primarily due to benefits recognized from completed negotiations related to price and volume, improved operational execution and lower SG&A and D&D costs as a result of operating cost control efforts. Relative to the first quarter of 2024, Stoneridge Brazil sales decreased by $0.4 million. This was primarily the result of the unfavorable foreign currency impact of approximately $0.6 million. Second quarter operating performance decreased by $0.2 million relative to the first quarter of 2024, primarily due to unfavorable foreign currency impact of approximately $0.2 million. Cash and Debt Balances As of June 30, 2024, Stoneridge had compliance net debt of $161.4 million resulting in a net debt to trailing twelve-month EBITDA compliance leverage ratio of 2.89x, an improvement of 0.24x compared to December 31, 2023. The Company continues to focus on both operating performance and working capital improvement to drive cash performance, particularly related to inventory reduction. During the first half of the year, inventory balances declined by $9.0 million. The Company expects to continue to reduce inventory balances throughout the year. The Company expects a net debt to EBITDA ratio for compliance purposes of approximately 2.5x by the end of 2024. 2024 Outlook The Company is updating its previously provided full-year 2024 guidance ranges including sales guidance of $940 million to $970 million, gross margin guidance of 22.75% to 23.0%, adjusted operating margin guidance of approximately 2.75%, adjusted earnings per share guidance of $0.18 to $0.28 and adjusted EBITDA guidance of $58 million to $64 million, or 6.2% to 6.6% of sales. Matt Horvath, chief financial officer, commented, "We are updating our full-year 2024 revenue guidance to reflect updated foreign currency rates, updated OEM production volumes and current expectations for non-OEM and customer demand-based products. This results in a midpoint of $955 million for the year. Due primarily to our year-to-date performance, expectation of continued reduction in material costs and a continued focus on operational excellence, we are increasing our full-year gross margin expectations by 50 basis points. We are expecting improved gross margin and operating cost control to significantly offset the decremental impact of reduced revenue. As a result, we are reducing our adjusted EBITDA margin midpoint guidance by 30 basis points, or $61 million of adjusted EBITDA. This results in a 130 basis point margin improvement and 27% growth in adjusted EBITDA over 2023. Finally, we are reducing our full-year adjusted EPS guidance to a midpoint of $0.23 to reflect the lower contribution from reduced sales partially offset by improved operating performance." Horvath, concluded, "By continuing to focus on improving the fundamentals of our business, we drove significant margin expansion across our business in the second quarter. Additionally, we continue to focus on inventory reduction to improve our cash position and reduce our leverage profile. We expect to continue those efforts in the second half of the year to help drive financial performance. Stoneridge remains well positioned to outpace our underlying end market growth and drive significant earnings expansion going forward." Conference Call on the Web A live Internet broadcast of Stoneridge's conference call regarding 2024 second quarter results can be accessed at 9:00 a.m. Eastern Time on Thursday, August 1, 2024, at www.stoneridge.com, which will also offer a webcast replay. About Stoneridge, Inc. Stoneridge, Inc., headquartered in Novi, Michigan, is a global designer and manufacturer of highly engineered electrical and electronic systems, components and modules for the automotive, commercial, off-highway and agricultural vehicle markets. Additional information about Stoneridge can be found at www.stoneridge.com. Forward-Looking Statements Statements in this press release contain "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and may include statements regarding the intent, belief or current expectations of the Company, with respect to, among other things, our (i) future product and facility expansion, (ii) acquisition strategy, (iii) investments and new product development, (iv) growth opportunities related to awarded business, and (v) operational expectations. Forward-looking statements may be identified by the words "will," "may," "should," "designed to," "believes," "plans," "projects," "intends," "expects," "estimates," "anticipates," "continue," and similar words and expressions. The forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other factors: the ability of our suppliers to supply us with parts and components at competitive prices on a timely basis, including the impact of potential tariffs and trade considerations on their operations and output;fluctuations in the cost and availability of key materials and components (including semiconductors, printed circuit boards, resin, aluminum, steel and copper) and our ability to offset cost increases through negotiated price increases with our customers or other cost reduction actions, as necessary;global economic trends, competition and geopolitical risks, including impacts from ongoing or potential global conflicts and any related sanctions and other measures, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and other countries;our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions;the reduced purchases, loss or bankruptcy of a major customer or supplier;the costs and timing of business realignment, facility closures or similar actions;a significant change in automotive, commercial, off-highway or agricultural vehicle production;competitive market conditions and resulting effects on sales and pricing;foreign currency fluctuations and our ability to manage those impacts;customer acceptance of new products;our ability to successfully launch/produce products for awarded business;adverse changes in laws, government regulations or market conditions affecting our products, our suppliers, or our customers' products;our ability to protect our intellectual property and successfully defend against assertions made against us;liabilities arising from warranty claims, product recall or field actions, product liability and legal proceedings to which we are or may become a party, or the impact of product recall or field actions on our customers;labor disruptions at our facilities, or at any of our significant customers or suppliers;business disruptions due to natural disasters or other disasters outside of our control;the amount of our indebtedness and the restrictive covenants contained in the agreements governing our indebtedness, including our revolving Credit Facility;capital availability or costs, including changes in interest rates;the failure to achieve the successful integration of any acquired company or business;risks related to a failure of our information technology systems and networks, and risks associated with current and emerging technology threats and damage from computer viruses, unauthorized access, cyber-attack and other similar disruptions; andthe items described in Part I, Item IA ("Risk Factors") in our Form 10-K filed with the SEC. The forward-looking statements contained herein represent our estimates only as of the date of this release and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements or otherwise. Use of Non-GAAP Financial Information This press release contains information about the Company's financial results that is not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures at the end of this press release. The provision of these non-GAAP financial measures for 2024 and 2023 is not intended to indicate that Stoneridge is explicitly or implicitly providing projections on those non-GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the Company at the date of this press release and the adjustments that management can reasonably predict. Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company's financial position and results of operations. In particular, management believes that adjusted sales, adjusted operating income and margin, adjusted income (loss) before tax, adjusted income tax expense (benefit), adjusted net income, adjusted EPS, EBITDA, adjusted EBITDA, adjusted net debt, adjusted debt and adjusted cash are useful measures in assessing the Company's financial performance by excluding certain items that are not indicative of the Company's core operating performance or that may obscure trends useful in evaluating the Company's continuing operating activities. Management also believes that these measures are useful to both management and investors in their analysis of the Company's results of operations and provide improved comparability between fiscal periods. Adjusted sales, adjusted operating income and margin, adjusted income (loss) before tax, adjusted income tax expense (benefit), adjusted net income, adjusted EPS, EBITDA, adjusted EBITDA, adjusted net debt, adjusted debt and adjusted cash should not be considered in isolation or as a substitute for sales, operating income, income (loss) before tax, income tax expense (benefit), net income, EPS, debt, cash and cash equivalents, cash provided by operating activities or other income statement or cash flow statement data prepared in accordance with GAAP. CONSOLIDATED BALANCE SHEETS (in thousands) June 30, 2024 December 31, 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 42,112 $ 40,841 Accounts receivable, less reserves of $620 and $1,058, respectively 168,215 166,545 Inventories, net 178,749 187,758 Prepaid expenses and other current assets 32,882 34,246 Total current assets 421,958 429,390 Long-term assets: Property, plant and equipment, net 103,061 110,126 Intangible assets, net 43,586 47,314 Goodwill 34,244 35,295 Operating lease right-of-use asset 8,722 10,795 Investments and other long-term assets, net 55,080 46,980 Total long-term assets 244,693 250,510 Total assets $ 666,651 $ 679,900 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of debt $ 2,064 $ 2,113 Accounts payable 108,085 111,925 Accrued expenses and other current liabilities 76,098 64,203 Total current liabilities 186,247 178,241 Long-term liabilities: Revolving credit facility 187,417 189,346 Deferred income taxes 6,276 7,224 Operating lease long-term liability 5,814 7,684 Other long-term liabilities 10,446 9,688 Total long-term liabilities 209,953 213,942 Shareholders' equity: Preferred Shares, without par value, 5,000 shares authorized, none issued -- -- Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,679 and 27,549 shares outstanding at June 30, 2024 and December 31, 2023, respectively, with no stated value -- -- Additional paid-in capital 224,599 227,340 Common Shares held in treasury, 1,287 and 1,417 shares at June 30, 2024 and December 31, 2023, respectively, at cost (39,066) (43,344) Retained earnings 193,169 196,509 Accumulated other comprehensive loss (108,251) (92,788) Total shareholders' equity 270,451 287,717 Total liabilities and shareholders' equity $ 666,651 $ 679,900 CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended June 30, Six months ended June 30, (in thousands, except per share data) 2024 2023 2024 2023 Net sales $ 237,059 $ 266,814 $ 476,216 $ 508,139 Costs and expenses: Cost of goods sold 183,319 206,326 374,119 404,849 Selling, general and administrative 31,876 33,491 62,299 63,354 Design and development 18,457 22,666 36,060 39,634 Operating income 3,407 4,331 3,738 302 Interest expense, net 3,801 3,120 7,435 5,866 Equity in loss of investee 52 329 329 500 Other (income) expense, net (2,296) 2,387 (260) 3,535 Income (loss) before income taxes 1,850 (1,505) (3,766) (9,599) (Benefit) provision for income taxes (936) 1,487 (426) 779 Net income (loss) $ 2,786 $ (2,992) $ (3,340) $ (10,378) Income (loss) per share: Basic $ 0.10 $ (0.11) $ (0.12) $ (0.38) Diluted $ 0.10 $ (0.11) $ (0.12) $ (0.38) Weighted-average shares outstanding: Basic 27,611 27,452 27,570 27,400 Diluted 27,853 27,452 27,570 27,400 CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, (in thousands) 2024 2023 OPERATING ACTIVITIES: Net loss $ (3,340) $ (10,378) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation 13,054 13,161 Amortization, including accretion and write-off of deferred financing costs 4,440 4,004 Deferred income taxes (7,004) (3,782) Loss of equity method investee 329 500 Loss (gain) on sale of fixed assets 258 (854) Share-based compensation expense 2,207 1,271 Excess tax deficiency related to share-based compensation expense 238 66 Changes in operating assets and liabilities: Accounts receivable, net (6,094) (28,100) Inventories, net 3,438 (23,142) Prepaid expenses and other assets (1,038) 3,313 Accounts payable (849) 27,069 Accrued expenses and other liabilities 12,123 12,184 Net cash provided by (used for) operating activities 17,762 (4,688) INVESTING ACTIVITIES: Capital expenditures, including intangibles (12,920) (18,025) Proceeds from sale of fixed assets 222 1,729 Investment in venture capital fund, net (260) -- Net cash used for investing activities (12,958) (16,296) FINANCING ACTIVITIES: Revolving credit facility borrowings 57,000 42,000 Revolving credit facility payments (58,000) (38,068) Proceeds from issuance of debt 17,677 16,402 Repayments of debt (17,690) (18,086) Repurchase of Common Shares to satisfy employee tax withholding (666) (1,325) Net cash (used for) provided by financing activities (1,679) 923 Effect of exchange rate changes on cash and cash equivalents (1,854) (32) Net change in cash and cash equivalents 1,271 (20,093) Cash and cash equivalents at beginning of period 40,841 54,798 Cash and cash equivalents at end of period $ 42,112 $ 34,705 Supplemental disclosure of cash flow information: Cash paid for interest, net $ 8,003 $ 5,622 Cash paid for income taxes, net $ 4,372 $ 5,927 Regulation G Non-GAAP Financial Measure Reconciliations Exhibit 1 - Reconciliation of Adjusted EPS Reconciliation of Q2 2024 Adjusted EPS (USD in millions, except EPS) Q2 2024 Q2 2024 EPS Net Income $ 2.8 $ 0.10 Add: After-Tax Business Realignment Costs 1.9 0.07 Adjusted Net Income $ 4.7 $ 0.17 Exhibit 2 - Reconciliation of Adjusted EBITDA (USD in millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Income (Loss) Before Tax $ (8.1) $ (1.5) $ 4.4 $ 3.2 $ (5.6) $ 1.9 Interest expense, net 2.7 3.1 3.3 3.8 3.6 3.8 Depreciation and amortization 8.3 8.4 8.5 8.4 8.6 8.5 EBITDA $ 3.0 $ 10.0 $ 16.2 $ 15.5 $ 6.6 $ 14.2 Add: Pre-Tax Business Realignment Costs 1.3 1.9 1.2 0.1 -- 1.9 Less: Pre-Tax Gain on Disposal of Fixed Assets (0.8) -- -- -- -- -- Add: Pre-Tax Environmental Remediation Costs 0.1 -- -- -- -- -- Add: Pre-Tax Brazilian Indirect Tax Credits, Net -- -- (0.5) -- -- -- Adjusted EBITDA $ 3.6 $ 11.9 $ 17.0 $ 15.6 $ 6.6 $ 16.1 Exhibit 3 - Reconciliation of Adjusted Operating Income (USD in millions) Q1 2024 Q2 2024 Operating Income $ 0.3 $ 3.4 Add: Pre-Tax Business Realignment Costs -- 1.9 Adjusted Operating Income $ 0.3 $ 5.4 Exhibit 4 - Segment Adjusted Operating Income Reconciliation of Control Devices Adjusted Operating Income (USD in millions) Q2 2023 Q1 2024 Q2 2024 Control Devices Operating Income $ 5.1 $ 2.2 $ 3.7 Add: Pre-Tax Business Realignment Costs 0.4 -- -- Control Devices Adjusted Operating Income $ 5.5 $ 2.2 $ 3.7 Reconciliation of Electronics Adjusted Operating Income (USD in millions) Q2 2023 Q1 2024 Q2 2024 Electronics Operating Income $ 7.4 $ 7.1 $ 9.8 Add: Pre-Tax Business Realignment Costs 1.3 -- 1.9 Electronics Adjusted Operating Income $ 8.8 $ 7.1 $ 11.7 Exhibit 5 - Reconciliation of Electronics Adjusted Sales (USD in millions) Q2 2023 Q1 2024 Q2 2024 Electronics Sales $ 168.3 $ 156.1 $ 153.5 Less: Sales from Spot Purchases Recoveries (4.4) -- -- Electronics Adjusted Sales $ 163.9 $ 156.1 $ 153.5 Exhibit 6 - Reconciliation of Adjusted Tax Rate Reconciliation of Q2 2024 Adjusted Tax Rate (USD in millions) Q2 2024 Tax Rate Income Before Tax $ 1.9 Add: Pre-Tax Business Realignment Costs 1.9 Adjusted Income Before Tax $ 3.8 Income Tax Benefit (0.9) (50.6) % Add: Tax Impact from Pre-Tax Adjustments - Adjusted Income Tax Benefit on Adjusted Income Before Tax $ (0.9) (24.3) % Exhibit 7 - Reconciliation of Compliance Leverage Ratio Reconciliation of Adjusted EBITDA for Compliance Calculation (USD in millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Income (Loss) Before Tax $ (8.1) $ (1.5) $ 4.4 3.2 (5.6) 1.9 Interest Expense, net 2.7 3.1 3.3 3.8 3.6 3.8 Depreciation and Amortization 8.3 8.4 8.5 8.4 8.6 8.5 EBITDA $ 3.0 $ 10.0 $ 16.2 $ 15.5 $ 6.6 $ 14.2 Compliance adjustments: Add: Non-Cash Impairment Charges and Write-offs or Write Downs -- -- -- -- 0.2 -- Add: Adjustments from Foreign Currency Impact 1.4 3.1 0.4 (0.7) 2.2 (2.4) Add: Extraordinary, Non-recurring or Unusual Items 0.2 -- 0.5 -- -- -- Add: Cash Restructuring Charges 1.4 0.5 0.1 0.3 1.6 0.5 Add: Charges for Transactions, Amendments, and Refinances -- -- -- 0.3 -- -- Add: Adjustment to Autotech Fund II Investment 0.2 0.3 0.1 (0.1) 0.3 0.1 Adjusted EBITDA (Compliance) $ 6.1 $ 13.9 $ 17.4 $ 15.3 $ 10.9 $ 12.3 Adjusted TTM EBITDA (Compliance) $ 52.7 $ 57.5 $ 55.9 Reconciliation of Adjusted Cash for Compliance Calculation (USD in millions) Q4 2023 Q1 2024 Q2 2024 Total Cash and Cash Equivalents $ 40.8 $ 48.4 $ 42.1 Less: 35% of Cash in Foreign Locations (12.8) (14.8) (12.5) Total Adjusted Cash (Compliance) $ 28.0 $ 33.6 $ 29.6 Reconciliation of Adjusted Debt for Compliance Calculation (USD in millions) Q4 2023 Q1 2024 Q2 2024 Total Debt $ 191.5 $ 196.5 $ 189.5 Outstanding Letters of Credit 1.6 1.6 1.6 Total Adjusted Debt (Compliance) $ 193.0 $ 198.1 $ 191.1 Adjusted Net Debt (Compliance) $ 165.0 $ 164.5 $ 161.4 Compliance Leverage Ratio (Net Debt / TTM EBITDA) 3.13x 2.86x 2.89x View original content to download multimedia:https://www.prnewswire.com/news-releases/stoneridge-reports-second-quarter-2024-results-302211592.html SOURCE Stoneridge, Inc. 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Archrock Reports Second Quarter 2024 Results - Archrock (NYSE:AROC)

HOUSTON, July 30, 2024 (GLOBE NEWSWIRE) -- Archrock, Inc. AROC ("Archrock") today reported results for the second quarter 2024. Second Quarter 2024 and Recent Highlights Revenue for the second quarter of 2024 was $270.5 million compared to $247.5 million in the second quarter of 2023.Net income for the second quarter of 2024 was $34.4 million compared to $24.7 million in the second quarter of 2023.Adjusted EBITDA (a non-GAAP measure defined below) for the second quarter of 2024 was $129.7 million compared to $112.8 million in the second quarter of 2023.Leverage ratio at the end of the second quarter of 2024 was 3.2x compared to 4.2x at the end of the second quarter of 2023.Declared a quarterly dividend of $0.165 per share of common stock for the second quarter of 2024, 6% higher compared to the second quarter of 2023, supported by dividend coverage of 2.6x.Announced acquisition of Total Operations and Production Services, LLC ("TOPS").Reaffirming Archrock 2024 Adjusted EBITDA guidance range of $510 million to $540 million, and 2024 total capital expenditures guidance range of $290 million to $300 million, excluding the impact of the acquisition of TOPS (the "Transaction"). Management Commentary and Outlook "Archrock's second quarter performance reflects the earnings power from our investment in high-quality assets, exceptional customer service, efficient execution and implementation of enabling technology," said Brad Childers, Archrock's President and Chief Executive Officer. "We grew our operating horsepower and our fleet remained fully utilized, with utilization exiting the quarter at a rate of 95 percent. In addition, we again achieved record-setting average revenue per horsepower and both of our segments delivered outstanding margin performance. "Market conditions for compression remain highly constructive, predominantly in oil plays with associated gas production like the Permian Basin. This strength and durability are being driven by the abundance of affordable U.S. natural gas that will support growth in its demand, use and production as well as the continued capital discipline being employed across the energy sector. We expect to see sustained compression booking demand well into the future as our customers plan for the call on natural gas production to support LNG export capacity growth and incremental electric generation demand from AI and data centers. "In addition to our strong operational performance and organic opportunity set, we are excited about the pending acquisition of TOPS. In this transaction, we are acquiring highly utilized and contracted horsepower that is expected to be immediately accretive to earnings and cash available for dividend, at an attractive price. We are expanding our business with existing and new customers, further enhancing our position in the Permian Basin and adding a talented management team and personnel with leading expertise in electric motor drive compression. The transaction also supports our ability to achieve our stated financial objectives, including growing our shareholder returns and maintaining a leverage ratio of between 3.0 to 3.5 times. We continue to expect the transaction will close in the second half of 2024," concluded Childers. Second Quarter 2024 Financial Results Archrock's second quarter 2024 net income of $34.4 million included a non-cash long-lived and other asset impairment of $4.4 million, as well as transaction-related expenses totaling $1.8 million. Archrock's second quarter 2023 net income of $24.7 million included a non-cash long-lived and other asset impairment of $2.9 million and a non-cash unrealized change in the fair value of our investment in an unconsolidated affiliate of $1.7 million. Adjusted EBITDA for the second quarter of 2024 and 2023 included $576,000 and $1.2 million, respectively, in net gains related to the sale of compression and other assets. Contract Operations For the second quarter of 2024, contract operations segment revenue totaled $225.5 million, an increase of 12% compared to $201.1 million in the second quarter of 2023. Adjusted gross margin was $146.2 million for the second quarter of 2024, up 17% from $125.1 million in the second quarter of 2023. Adjusted gross margin percentage was 65% for the second quarter of 2024, compared to 62% in the second quarter of 2023. At the end of the second quarter of 2024, total operating horsepower was 3.6 million and utilization was 95%, both consistent with the end of the second quarter of 2023. Aftermarket Services For the second quarter of 2024, aftermarket services segment revenue totaled $45.1 million, compared to $46.4 million in the second quarter of 2023. Adjusted gross margin of $9.9 million for the second quarter of 2024 compared to $11.1 million in the second quarter of 2023. Adjusted gross margin percentage was 22% for the second quarter of 2024, compared to 24% for the second quarter of 2023. Balance Sheet Long-term debt was $1.6 billion at June 30, 2024 and our available liquidity totaled $435 million. Our leverage ratio was 3.2x, compared to 4.2x as of June 30, 2023. Shareholder Returns Quarterly Dividend Our Board of Directors recently declared a quarterly dividend of $0.165 per share of common stock, or $0.66 per share on an annualized basis. Dividend coverage in the second quarter of 2024 was 2.6x. The second quarter 2024 dividend will be paid on August 13, 2024 to stockholders of record at the close of business on August 6, 2024. Share Repurchase Program The Board of Directors approved an extension of Archrock's share repurchase program upon expiry of the previous authorization on April 27, 2024, for an additional 24-month period. In connection with the extension, the Board of Directors replenished the amount of shares authorized for repurchase under the share repurchase program, resulting in available capacity of $50 million. During the quarter ended June 30, 2024, Archrock did not repurchase any common stock. Updated 2024 Annual Guidance (Excluding Impact of TOPS Transaction) Archrock is updating its standalone 2024 net income guidance range to between $139 million and $167 million, which includes transaction-related expenses related to the Transaction totaling between $1.8 million and $4 million; this range is an estimate of costs incurred to-date but excludes additional costs to be incurred after close. Archrock is updating its standalone 2024 selling, general, and administrative expense guidance range to between $125 million and $129 million, primarily to reflect an increase in performance-based short-term and long-term incentive compensation expense. Archrock continues to expect standalone 2024 Adjusted EBITDA between $510 million and $540 million. Archrock continues to expect $290 million to $300 million in standalone total capital expenditures during 2024, primarily consisting of approximately $190 million for growth capital expenditures and approximately $80 million to $85 million for maintenance capital expenditures. Summary Metrics (in thousands, except percentages, per share amounts and ratios) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Net income $34,425 $40,532 $24,653 Adjusted EBITDA $129,712 $131,024 $112,775 Contract operations revenue $225,468 $223,051 $201,120 Contract operations adjusted gross margin $146,190 $145,308 $125,087 Contract operations adjusted gross margin percentage 65% 65% 62% Aftermarket services revenue $45,058 $45,437 $46,423 Aftermarket services adjusted gross margin $9,900 $10,437 $11,080 Aftermarket services adjusted gross margin percentage 22% 23% 24% Selling, general, and administrative $31,163 $31,665 $28,649 Net cash provided by operating activities $70,651 $137,702 $30,542 Cash available for dividend $71,593 $82,026 $52,227 Cash available for dividend coverage 2.6x 3.2x 2.1x Adjusted free cash flow $(16,914) $51,779 $(62,738)Adjusted free cash flow after dividend $(42,733) $25,779 $(86,242) Total available horsepower (at period end) 3,806 3,780 3,770 Total operating horsepower (at period end) 3,601 3,593 3,578 Horsepower utilization spot (at period end) 95% 95% 95 Conference Call Details Archrock will host a conference call on Wednesday, July 31, 2024, to discuss second quarter 2024 financial results. The call will begin at 10:00 a.m. Eastern Time. To listen to the call via a live webcast, please visit Archrock's website at www.archrock.com. The call will also be available by dialing 1 (800) 715-9871 in the United States or 1 (646) 307-1963 for international calls. The access code is 4749623. A replay of the webcast will be available on Archrock's website for 90 days following the event. ***** Adjusted EBITDA, a non-GAAP measure, is defined as net income (loss) excluding interest expense, income taxes, depreciation and amortization, long-lived and other asset impairment, unrealized change in fair value of investment in unconsolidated affiliate, restructuring charges, transaction-related costs, non-cash stock-based compensation expense, amortization of capitalized implementation costs and other items. A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, and a reconciliation of our full year 2024 Adjusted EBITDA guidance to net income appear below. Adjusted gross margin, a non-GAAP measure, is defined as revenue less cost of sales, exclusive of depreciation and amortization. Adjusted gross margin percentage, a non-GAAP measure, is defined as adjusted gross margin divided by revenue. A reconciliation of adjusted gross margin to net income, the most directly comparable GAAP measure, and a reconciliation of adjusted gross margin percentage to gross margin, appear below. Cash available for dividend, a non-GAAP measure, is defined as net income (loss) excluding interest expense, income taxes, depreciation and amortization, long-lived and other asset impairment, unrealized change in fair value of investment in unconsolidated affiliate, restructuring charges, non-cash stock-based compensation expense, transaction-related expense, amortization of capitalized implementation costs and other items, less maintenance capital expenditures, other capital expenditures, cash taxes and cash interest expense. Reconciliations of cash available for dividend to net income and net cash provided by operating activities, the most directly comparable GAAP measures, and a reconciliation of our updated full year 2024 cash available for dividend guidance to net income appear below. Adjusted free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities plus net cash provided by (used in) investing activities. A reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable GAAP measure, appears below. Adjusted free cash flow after dividend, a non-GAAP measure, is defined as net cash provided by operating activities plus net cash provided by (used in) investing activities less dividends paid to stockholders. A reconciliation of adjusted free cash flow after dividend to net cash provided by operating activities, the most directly comparable GAAP measure, appears below. About Archrock Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is a premier provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how Archrock embodies its purpose, WE POWER A CLEANER AMERICA, visit www.archrock.com. Forward-Looking Statements All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Archrock, Inc. Forward-looking information includes, but is not limited to statements regarding: guidance or estimates related to Archrock's results of operations or of financial condition; fundamentals of Archrock's industry, including the attractiveness of returns and valuation, stability of cash flows, demand dynamics and overall outlook, and Archrock's ability to realize the benefits thereof; Archrock's expectations regarding future economic, geopolitical and market conditions and trends; Archrock's operational and financial strategies, including planned growth, coverage and leverage reduction strategies, Archrock's ability to successfully effect those strategies, and the expected results therefrom; Archrock's financial and operational outlook; demand and growth opportunities for Archrock's services; structural and process improvement initiatives, the expected timing thereof, Archrock's ability to successfully effect those initiatives and the expected results therefrom; the operational and financial synergies provided by Archrock's size; statements regarding Archrock's dividend policy; the anticipated completion of the Transaction and the timing thereof; the expected benefits of the Transaction, including its expected accretion and the expected impact on Archrock's leverage ratio; and plans and objectives of management for future operations. While Archrock believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. The factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: inability to consummate the Transaction; inability to achieve the expected benefits of the Transaction and difficulties in integrating TOPS; risks related to acquisitions, including the Transaction, that can reduce our ability to make distributions to our common stockholders; risks related to pandemics and other public health crises; an increase in inflation; ongoing international conflicts and tensions; risks related to our operations; competitive pressures; inability to make acquisitions on economically acceptable terms; uncertainty to pay dividends in the future; risks related to a substantial amount of debt and our debt agreements; inability to access the capital and credit markets or borrow on affordable terms to obtain additional capital; inability to fund purchases of additional compression equipment; vulnerability to interest rate increases; uncertainty relating to the phasing out of London Interbank Offered Rate; erosion of the financial condition of our customers; risks related to the loss of our most significant customers; uncertainty of the renewals for our contract operations service agreements; risks related to losing management or operational personnel; dependence on particular suppliers and vulnerability to product shortages and price increases; information technology and cybersecurity risks; tax-related risks; legal and regulatory risks, including climate-related and environmental, social and governance risks. These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Archrock's Annual Report on Form 10-K for the year ended December 31, 2023, Archrock's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 and those set forth from time to time in Archrock's filings with the Securities and Exchange Commission, which are available at www.archrock.com. Except as required by law, Archrock expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise. SOURCE: Archrock, Inc. For information, contact: Archrock, Inc.INVESTORS Megan Repine VP of Investor Relations 281-836-8360 [email protected] MEDIA Andrew Siegel / Jed Repko Joele Frank 212-355-4449 Archrock, Inc. Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Revenue: Contract operations $225,468 $223,051 $201,120 Aftermarket services 45,058 45,437 46,423 Total revenue 270,526 268,488 247,543 Cost of sales, exclusive of depreciation and amortization Contract operations 79,278 77,743 76,033 Aftermarket services 35,158 35,000 35,343 Total cost of sales, exclusive of depreciation and amortization 114,436 112,743 111,376 Selling, general and administrative 31,163 31,665 28,649 Depreciation and amortization 43,853 42,835 41,210 Long-lived and other asset impairment 4,401 2,568 2,892 Restructuring charges -- -- (85)Interest expense 27,859 27,334 28,630 Transaction-related costs 1,782 -- -- Gain on sale of assets, net (576) (2,381) (1,176)Other income, net 128 139 1,463 Income before income taxes 47,480 53,585 34,584 Provision for income taxes 13,055 13,053 9,931 Net income $34,425 $40,532 $24,653 Basic and diluted net income per common share (1) $0.22 $0.26 $0.16 Weighted average common shares outstanding: Basic 154,496 154,187 154,358 Diluted 154,785 154,501 154,412 (1)Basic and diluted net income per common share is computed using the two-class method to determine the net income per share for each class of common stock and participating security (restricted stock and stock-settled restricted stock units that have non-forfeitable rights to receive dividends or dividend equivalents) according to dividends declared and participation rights in undistributed earnings. Accordingly, we have excluded net income attributable to participating securities from our calculation of basic and diluted net income per common share. Archrock, Inc. Unaudited Supplemental Information (in thousands, except percentages, per share amounts and ratios) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Revenue: Contract operations $225,468 $223,051 $201,120 Aftermarket services 45,058 45,437 46,423 Total revenue $270,526 $268,488 $247,543 Adjusted gross margin: Contract operations $146,190 $145,308 $125,087 Aftermarket services 9,900 10,437 11,080 Total adjusted gross margin (1) $156,090 $155,745 $136,167 Adjusted gross margin percentage: Contract operations 65% 65% 62% Aftermarket services 22% 23% 24% Total adjusted gross margin percentage (1) 58% 58% 55% Selling, general and administrative $31,163 $31,665 $28,649 % of revenue 12% 12% 12% Adjusted EBITDA (1) $129,712 $131,024 $112,775 % of revenue 48% 49% 46% Capital expenditures $91,271 $99,755 $103,084 Proceeds from sale of property, plant and equipment and other assets (3,706) (13,844) (9,367)Net capital expenditures $87,565 $85,911 $93,717 Total available horsepower (at period end) (2) 3,806 3,780 3,770 Total operating horsepower (at period end) (3) 3,601 3,593 3,578 Average operating horsepower 3,607 3,606 3,549 Horsepower utilization: Spot (at period end) 95% 95% 95% Average 95% 96% 95% Dividend declared for the period per share $0.165 $0.165 $0.155 Dividend declared for the period to all stockholders $27,977 $25,978 $24,353 Cash available for dividend coverage (4) 2.6x 3.2x 2.1x Adjusted free cash flow (1) $(16,914) $51,779 $(62,738)Adjusted free cash flow after dividend (1) $(42,733) $25,779 $(86,242) (1)Management believes adjusted gross margin, Adjusted EBITDA, adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.(2)Defined as idle and operating horsepower and includes new compressor units completed by a third party manufacturer that have been delivered to us.(3)Defined as horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue.(4)Defined as cash available for dividend divided by dividends declared for the period. June 30, March 31, June 30, 2024 2024 2023Balance Sheet Long-term debt (1) $1,608,956 $1,566,566 $1,639,239Total equity 894,496 882,080 855,533 (1)Carrying values are shown net of unamortized premium and deferred financing costs. Archrock, Inc. Unaudited Supplemental Information Reconciliation of Net Income to Adjusted EBITDA and Adjusted Gross Margin (in thousands) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Net income $34,425 $40,532 $24,653 Depreciation and amortization 43,853 42,835 41,210 Long-lived and other asset impairment 4,401 2,568 2,892 Unrealized change in fair value of investment in unconsolidated affiliate -- -- 1,742 Restructuring charges -- -- (85)Interest expense 27,859 27,334 28,630 Transaction-related costs 1,782 -- -- Stock-based compensation expense 3,513 3,964 3,197 Amortization of capitalized implementation costs 824 738 605 Provision for income taxes 13,055 13,053 9,931 Adjusted EBITDA (1) 129,712 131,024 112,775 Selling, general and administrative 31,163 31,665 28,649 Stock-based compensation expense (3,513) (3,964) (3,197)Amortization of capitalized implementation costs (824) (738) (605)Unrealized change in fair value of investment in unconsolidated affiliate -- -- (1,742)Gain on sale of assets, net (576) (2,381) (1,176)Other income, net 128 139 1,463 Adjusted gross margin (1) $156,090 $155,745 $136,167 (1)Management believes Adjusted EBITDA and adjusted gross margin provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons. Archrock, Inc. Unaudited Supplemental Information Reconciliation of Total Revenue to Adjusted Gross Margin (in thousands) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Total revenues $270,526 $268,488 $247,543 Cost of sales, exclusive of depreciation and amortization (114,436) (112,743) (111,376) Depreciation and amortization (43,853) (42,835) (41,210) Gross margin 112,237 41% 112,910 42% 94,957 38%Depreciation and amortization 43,853 42,835 41,210 Adjusted gross margin (1) $156,090 58% $155,745 58% $136,167 55% (1)Management believes adjusted gross margin provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measures and performance measures for period-to-period comparisons. Archrock, Inc. Unaudited Supplemental Information Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend (in thousands) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Net income $34,425 $40,532 $24,653 Depreciation and amortization 43,853 42,835 41,210 Long-lived and other asset impairment 4,401 2,568 2,892 Unrealized change in fair value of investment in unconsolidated affiliate -- -- 1,742 Restructuring charges -- -- (85)Interest expense 27,859 27,334 28,630 Transaction-related costs 1,782 -- -- Stock-based compensation expense 3,513 3,964 3,197 Amortization of capitalized implementation costs 824 738 605 Provision for income taxes 13,055 13,053 9,931 Adjusted EBITDA (1) 129,712 131,024 112,775 Less: Maintenance capital expenditures (25,415) (19,525) (27,347)Less: Other capital expenditures (3,445) (2,920) (5,129)Less: Cash tax (payment) refund (2,028) 89 (1,120)Less: Cash interest expense (27,231) (26,642) (26,952)Cash available for dividend (2) $71,593 $82,026 $52,227 (1)Management believes Adjusted EBITDA provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measure and performance measure for period-to-period comparisons.(2)Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends. Archrock, Inc. Unaudited Supplemental Information Reconciliation of Net Cash Flows Provided by Operating Activities to Cash Available for Dividend (in thousands) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Net cash provided by operating activities $70,651 $137,702 $30,542 Inventory write-downs (318) (199) (143)Provision for (benefit from) credit losses (80) 75 (200)Gain on sale of assets, net 576 2,381 1,176 Current income tax provision 615 593 395 Cash tax (payment) refund (2,028) 89 (1,120)Amortization of operating lease ROU assets (880) (947) (826)Amortization of contract costs (5,957) (5,768) (5,160)Deferred revenue recognized in earnings 2,747 2,859 4,278 Cash restructuring charges -- -- 842 Transaction-related costs 1,782 -- -- Changes in assets and liabilities 33,345 (32,314) 54,919 Maintenance capital expenditures (25,415) (19,525) (27,347)Other capital expenditures (3,445) (2,920) (5,129)Cash available for dividend (1) $71,593 $82,026 $52,227 (1)Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends. Archrock, Inc. Unaudited Supplemental Information Reconciliation of Net Cash Flows Provided By Operating Activities to Adjusted Free Cash Flow and Adjusted Free Cash Flow After Dividend (in thousands) Three Months Ended June 30, March 31, June 30, 2024 2024 2023Net cash provided by operating activities $70,651 $137,702 $30,542 Net cash used in investing activities (87,565) (85,923) (93,280)Adjusted free cash flow (1) (16,914) 51,779 (62,738)Dividends paid to stockholders (25,819) (26,000) (23,504)Adjusted free cash flow after dividend (1) $(42,733) $25,779 $(86,242) (1)Management believes adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons. Archrock, Inc. Unaudited Supplemental Information Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend Guidance (in thousands) Annual Guidance Range 2024 Low HighNet income (1) $138,700 $166,500 Interest expense 111,000 111,000 Provision for income taxes 57,500 57,500 Depreciation and amortization 176,000 176,000 Stock-based compensation expense 14,000 14,000 Long-lived and other asset impairment 7,000 7,000 Transaction-related costs (2) 1,800 4,000 Amortization of capitalized implementation costs 4,000 4,000 Adjusted EBITDA (3) 510,000 540,000 Less: Maintenance capital expenditures (80,000) (85,000)Less: Other capital expenditures (20,000) (25,000)Less: Cash tax expense (2,000) (2,000)Less: Cash interest expense (108,000) (108,000)Cash available for dividend (4)(5) $300,000 $320,000 (1)2024 annual guidance for net income includes $7.0 million of long-lived and other asset impairment as of June 30, 2024, but does not include the impact of any such future costs, because due to its nature, it cannot be accurately forecasted. Long-lived and other asset impairment does not impact Adjusted EBITDA or cash available for dividend, however it is a reconciling item between these measures and net income. Long-lived and other asset impairment for the years 2023 and 2022 was $12.0 million and $21.4 million, respectively.(2)Reflects estimate of expenses incurred to date related to the Transaction and excludes additional costs to be incurred after close.(3)Management believes Adjusted EBITDA provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measure and performance measure for period-to-period comparisons.(4)Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends.(5)A forward-looking estimate of cash provided by operating activities is not provided because certain items necessary to estimate cash provided by operating activities, including changes in assets and liabilities, are not estimable at this time. Changes in assets and liabilities were $(28.0) million and $(24.5) million for the years 2023 and 2022, respectively. Market News and Data brought to you by Benzinga APIs

Meta Reports Second Quarter 2024 Results - Meta Platforms (NASDAQ:META)

MENLO PARK, Calif., July 31, 2024 /PRNewswire/ -- Meta Platforms, Inc. META today reported financial results for the quarter ended June 30, 2024. "We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year," said Mark Zuckerberg, Meta founder and CEO. "We've released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we're driving good growth across our apps." Second Quarter 2024 Financial Highlights Three Months Ended June 30, % Change In millions, except percentages and per share amounts 2024 2023 Revenue $ 39,071 $ 31,999 22 % Costs and expenses 24,224 22,607 7 % Income from operations $ 14,847 $ 9,392 58 % Operating margin 38 % 29 % Provision for income taxes $ 1,641 $ 1,505 9 % Effective tax rate 11 % 16 % Net income $ 13,465 $ 7,788 73 % Diluted earnings per share (EPS) $ 5.16 $ 2.98 73 % Second Quarter 2024 Operational and Other Financial Highlights Family daily active people (DAP) - DAP was 3.27 billion on average for June 2024, an increase of 7% year-over-year.Ad impressions - Ad impressions delivered across our Family of Apps increased by 10% year-over-year.Average price per ad - Average price per ad increased by 10% year-over-year.Revenue - Total revenue was $39.07 billion, an increase of 22% year-over-year. Revenue on a constant currency basis would have increased 23% year-over-year.Costs and expenses - Total costs and expenses were $24.22 billion, an increase of 7% year-over-year.Capital expenditures - Capital expenditures, including principal payments on finance leases, were $8.47 billion.Capital return program - Share repurchases were $6.32 billion of our Class A common stock and dividend payments were $1.27 billion.Cash, cash equivalents, and marketable securities - Cash, cash equivalents, and marketable securities were $58.08 billion as of June 30, 2024. Free cash flow was $10.90 billion.Headcount - Headcount was 70,799 as of June 30, 2024, a decrease of 1% year-over-year. CFO Outlook Commentary We expect third quarter 2024 total revenue to be in the range of $38.5-41 billion. Our guidance assumes foreign currency is a 2% headwind to year-over-year total revenue growth, based on current exchange rates. We expect full-year 2024 total expenses to be in the range of $96-99 billion, unchanged from our prior outlook. For Reality Labs, we continue to expect 2024 operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and investments to further scale our ecosystem. While we do not intend to provide any quantitative guidance for 2025 until the fourth quarter call, we expect infrastructure costs will be a significant driver of expense growth next year as we recognize depreciation and operating costs associated with our expanded infrastructure footprint. We anticipate our full-year 2024 capital expenditures will be in the range of $37-40 billion, updated from our prior range of $35-40 billion. While we continue to refine our plans for next year, we currently expect significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts. Absent any changes to our tax landscape, we expect our full-year 2024 tax rate to be in the mid-teens. In addition, we continue to monitor an active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the U.S. that could significantly impact our business and our financial results. Webcast and Conference Call Information Meta will host a conference call to discuss the results at 2:00 p.m. PT / 5:00 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at the Meta Investor Relations website at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Following the call, a replay will be available at the same website. Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website. Disclosure Information Meta uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page (facebook.com/zuck), Instagram account (instagram.com/zuck) and Threads profile (threads.net/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. About Meta Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram, and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology. Contacts Investors: Kenneth Dorell [email protected] / investor.fb.com Press: Ryan Moore [email protected] / about.fb.com/news/ Forward-Looking Statements This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of macroeconomic conditions on our business and financial results, including as a result of geopolitical events; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; changes to the content or application of third-party policies that impact our advertising practices; risks associated with new products and changes to existing products as well as other new business initiatives, including our artificial intelligence initiatives and metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy, legislative, and regulatory concerns or developments; risks associated with acquisitions; security breaches; our ability to manage our scale and geographically-dispersed operations; and market conditions or other factors affecting the payment of dividends. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed with the SEC on April 25, 2024, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. In addition, please note that the date of this press release is July 31, 2024, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. For a discussion of limitations in the measurement of certain of our community metrics, see the section entitled "Limitations of Key Metrics and Other Data" in our most recent quarterly or annual report filed with the SEC. Non-GAAP Financial Measures To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect, and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. Our non-GAAP financial measures are adjusted for the following items: Foreign exchange effect on revenue. We translated revenue for the three and six months ended June 30, 2024 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance. Purchases of property and equipment; Principal payments on finance leases. We subtract both purchases of property and equipment, net of proceeds and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures. For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release. META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenue $ 39,071 $ 31,999 $ 75,527 $ 60,645 Costs and expenses: Cost of revenue 7,308 5,945 13,948 12,054 Research and development 10,537 9,344 20,515 18,725 Marketing and sales 2,721 3,154 5,285 6,198 General and administrative (1) 3,658 4,164 7,114 7,049 Total costs and expenses 24,224 22,607 46,862 44,026 Income from operations 14,847 9,392 28,665 16,619 Interest and other income (expense), net 259 (99) 624 (19) Income before provision for income taxes 15,106 9,293 29,289 16,600 Provision for income taxes 1,641 1,505 3,455 3,102 Net income $ 13,465 $ 7,788 $ 25,834 $ 13,498 Earnings per share: Basic $ 5.31 $ 3.03 $ 10.17 $ 5.24 Diluted $ 5.16 $ 2.98 $ 9.86 $ 5.18 Weighted-average shares used to compute earnings per share: Basic 2,534 2,568 2,540 2,577 Diluted 2,610 2,612 2,619 2,604 (1) The second quarter 2024 general and administrative expenses include a charge for the recent settlement with the State of Texas. The settlement amount is fully accrued as of June 30, 2024. META PLATFORMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) June 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 32,045 $ 41,862 Marketable securities 26,035 23,541 Accounts receivable, net 14,505 16,169 Prepaid expenses and other current assets 3,846 3,793 Total current assets 76,431 85,365 Non-marketable equity securities 6,207 6,141 Property and equipment, net 102,959 96,587 Operating lease right-of-use assets 14,058 13,294 Goodwill 20,654 20,654 Other assets 9,929 7,582 Total assets $ 230,238 $ 229,623 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 3,173 $ 4,849 Operating lease liabilities, current 1,917 1,623 Accrued expenses and other current liabilities 21,914 25,488 Total current liabilities 27,004 31,960 Operating lease liabilities, non-current 17,685 17,226 Long-term debt 18,389 18,385 Long-term income taxes 7,897 7,514 Other liabilities 2,500 1,370 Total liabilities 73,475 76,455 Commitments and contingencies Stockholders' equity: Common stock and additional paid-in capital 78,270 73,253 Accumulated other comprehensive loss (2,695) (2,155) Retained earnings 81,188 82,070 Total stockholders' equity 156,763 153,168 Total liabilities and stockholders' equity $ 230,238 $ 229,623 META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cash flows from operating activities Net income $ 13,465 $ 7,788 $ 25,834 $ 13,498 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,637 2,623 7,011 5,147 Share-based compensation 4,616 4,060 8,178 7,111 Deferred income taxes (1,643) (1,137) (2,098) (1,757) Impairment charges for facilities consolidation, net 41 232 280 1,002 Other (6) 212 (71) 204 Changes in assets and liabilities: Accounts receivable (1,171) (1,424) 1,350 1,122 Prepaid expenses and other current assets (84) (54) 16 767 Other assets 54 37 (41) 67 Accounts payable 250 (51) (862) (1,155) Accrued expenses and other current liabilities (497) 5,174 (1,771) 5,268 Other liabilities 708 (151) 790 33 Net cash provided by operating activities 19,370 17,309 38,616 31,307 Cash flows from investing activities Purchases of property and equipment, net (8,173) (6,134) (14,573) (12,957) Purchases of marketable debt securities (3,289) (717) (10,176) (803) Sales and maturities of marketable debt securities 3,233 1,816 7,858 2,351 Acquisitions of businesses and intangible assets (57) (83) (129) (527) Other investing activities (12) (85) (12) (10) Net cash used in investing activities (8,298) (5,203) (17,032) (11,946) Cash flows from financing activities Taxes paid related to net share settlement of equity awards (3,208) (1,692) (6,370) (2,701) Repurchases of Class A common stock (6,299) (898) (21,307) (10,263) Dividend payments (1,266) -- (2,539) -- Proceeds from issuance of long-term debt, net -- 8,455 -- 8,455 Principal payments on finance leases (299) (220) (614) (484) Other financing activities (106) (353) (115) (231) Net cash provided by (used in) financing activities (11,178) 5,292 (30,945) (5,224) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (152) (14) (440) 71 Net increase (decrease) in cash, cash equivalents, and restricted cash (258) 17,384 (9,801) 14,208 Cash, cash equivalents, and restricted cash at beginning of the period 33,284 12,420 42,827 15,596 Cash, cash equivalents, and restricted cash at end of the period $ 33,026 $ 29,804 $ 33,026 $ 29,804 Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets Cash and cash equivalents $ 32,045 $ 28,785 $ 32,045 $ 28,785 Restricted cash, included in prepaid expenses and other current assets 100 165 100 165 Restricted cash, included in other assets 881 854 881 854 Total cash, cash equivalents, and restricted cash $ 33,026 $ 29,804 $ 33,026 $ 29,804 META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Supplemental cash flow data Cash paid for income taxes, net $ 5,929 $ 1,102 $ 6,559 $ 1,507 Cash paid for interest, net of amounts capitalized $ 124 $ -- $ 245 $ 182 Non-cash investing and financing activities: Property and equipment in accounts payable and accrued expenses and other current liabilities $ 3,229 $ 3,845 $ 3,229 $ 3,845 Acquisition of businesses and intangible assets in accrued expenses and other current liabilities and other liabilities $ 267 $ 217 $ 267 $ 217 Segment Results We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes our virtual, augmented, and mixed reality related consumer hardware, software, and content. The following table presents our segment information of revenue and income (loss) from operations: Segment Information (In millions) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenue: Advertising $ 38,329 $ 31,498 $ 73,965 $ 59,599 Other revenue 389 225 769 430 Family of Apps 38,718 31,723 74,734 60,029 Reality Labs 353 276 793 616 Total revenue $ 39,071 $ 31,999 $ 75,527 $ 60,645 Income (loss) from operations: Family of Apps $ 19,335 $ 13,131 $ 36,999 $ 24,351 Reality Labs (4,488) (3,739) (8,334) (7,732) Total income from operations $ 14,847 $ 9,392 $ 28,665 $ 16,619 Reconciliation of GAAP to Non-GAAP Results (In millions, except percentages) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 GAAP revenue $ 39,071 $ 31,999 $ 75,527 $ 60,645 Foreign exchange effect on 2024 revenue using 2023 rates 371 265 Revenue excluding foreign exchange effect $ 39,442 $ 75,792 GAAP revenue year-over-year change % 22 % 25 % Revenue excluding foreign exchange effect year-over-year change % 23 % 25 % GAAP advertising revenue $ 38,329 $ 31,498 $ 73,965 $ 59,599 Foreign exchange effect on 2024 advertising revenue using 2023 rates 367 261 Advertising revenue excluding foreign exchange effect $ 38,696 $ 74,226 GAAP advertising revenue year-over-year change % 22 % 24 % Advertising revenue excluding foreign exchange effect year-over-year change % 23 % 25 % Net cash provided by operating activities $ 19,370 $ 17,309 $ 38,616 $ 31,307 Purchases of property and equipment, net (8,173) (6,134) (14,573) (12,957) Principal payments on finance leases (299) (220) (614) (484) Free cash flow $ 10,898 $ 10,955 $ 23,429 $ 17,866 View original content to download multimedia:https://www.prnewswire.com/news-releases/meta-reports-second-quarter-2024-results-302211512.html SOURCE Meta Market News and Data brought to you by Benzinga APIs

Quad Reports Second Quarter and Year-to-Date 2024 Results - Quad/Graphics (NYSE:QUAD)

Company continues to drive its marketing experience strategy, launching multiple innovative service offerings SUSSEX, Wis., July 30, 2024 /PRNewswire/ -- Quad/Graphics, Inc. QUAD ("Quad" or the "Company"), a global marketing experience company, today reported results for the second quarter ended June 30, 2024. Recent Highlights Recognized Net Sales of $634 million in the second quarter of 2024 compared to $703 million in 2023 and realized a Net Loss of $3 million or $0.06 Diluted Loss Per Share for the second quarter of 2024.Achieved Non-GAAP Adjusted EBITDA of $52 million in the second quarter of 2024, increased from $50 million in the second quarter of 2023, and delivered $0.12 Adjusted Diluted Earnings Per Share for the second quarter of 2024.Increased Adjusted EBITDA Margin by 100 basis points to 8.2% in the second quarter of 2024 compared to the same period in 2023.Introduced Betty, a creative agency that delivers best-in-class strategy and creative, backed by Quad's global production resources for speed and scale.Launched 3D Commerce by Quad, the first commercially available automated and scalable 3D scanning solution in the North American market for creating photorealistic 3D assets.Expanded partnerships for In-Store Connect by Quad, the company's in-store retail media network.Generated $22 million of cash proceeds from sale of minority investment in Manipal Technologies, a leading print services and end-to-end business solutions provider headquartered in India.Declared quarterly dividend of $0.05 per share.Reaffirms full-year 2024 financial guidance. During the second quarter, Quad continued to focus on differentiating itself as a marketing experience company. Joel Quadracci, Chairman, President and CEO of Quad, said: "During the second quarter, we continued our focus on differentiating ourselves as a marketing experience company, including investments in innovative solutions and superior talent. We joined all of our creative business lines under a single agency called Betty, pairing the strategic creative services of an Agency of Record with our global production platform to offer highly scalable content at elevated speeds without sacrificing brand consistency or quality. We further enhanced our creative capabilities with the launch of 3D Commerce by Quad, the first commercially available automated and scalable 3D scanning solution in North America for creating photorealistic 3D assets for a range of applications, including product videos and virtual try-ons. Meanwhile, we advanced our In-Store Connect retail media network, or RMN, through a partnership with Swiftly, a prominent retail technology and media company whose industry-leading platform will help us bring the best elements of digital commerce into physical store environments. We continue to build sales momentum behind In-Store Connect. The Save Mart Companies, the largest private regional grocer on the West Coast, is in the process of activating our in-store RMN solution, and Homeland Stores, a large Oklahoma grocery chain, is scheduled to debut it in October. Additionally, we are in active conversations with more than a dozen other supermarket chains. "As always, we remain focused on enhancing Quad's financial strength and creating shareholder value and will continue to prioritize growth while further reducing debt in 2024." Added Tony Staniak, Chief Financial Officer: "During the second quarter, our Adjusted EBITDA margin increased by 100 basis points primarily due to higher manufacturing productivity and cost savings from completed restructuring actions that are ultimately expected to generate $60 million of savings in 2024. We generate cash from Free Cash Flow driven by our cost discipline as well as proceeds from asset sales, including $22 million in the second quarter of 2024 from the sale of our minority investment in Manipal Technologies. Net Sales declined in the second quarter reflecting pressure from ongoing external headwinds, including significant postal rate increases and the impact of elevated interest rates on financial services clients. Despite lower Net Sales, with our margin improvement and strong cash generation we are reaffirming our full-year guidance, including approximately 1.8x debt leverage, and we will continue to invest in accelerating our competitive position as a marketing experience company while returning capital to shareholders through our quarterly dividend. We also expect to be opportunistic in terms of our future share repurchases." Second Quarter 2024 Financial Results Net Sales were $634 million in the second quarter of 2024, a decrease of 10% compared to the same period in 2023 primarily due to lower print volumes, a higher mix of lower unit price gravure versus offset print in our magazine and catalog offerings from segment share wins, and lower paper and agency solutions sales, including the loss of a large grocery client.Net Loss was $3 million in the second quarter of 2024 compared to $6 million in the same period in 2023. The improvement is primarily due to benefits from increased manufacturing productivity, savings from cost reduction initiatives and a $4 million gain on the sale of the Company's minority investment in Manipal Technologies, partially offset by the impact from lower Net Sales.Adjusted EBITDA was $52 million in the second quarter of 2024 compared to $50 million in the same period in 2023, primarily due to the same reasons as the improvement in Net Loss.Adjusted Diluted Earnings Per Share was $0.12 in the second quarter of 2024 compared to $0.02 in the same period in 2023, primarily due to higher Adjusted Net Earnings and the beneficial impact from the Company repurchasing Class A shares totaling approximately 11% of its outstanding shares since the second quarter of 2022. Year-to-Date 2024 Financial Results Net Sales were $1.3 billion in the six months ended June 30, 2024, a decrease of 12% compared to the same period in 2023 primarily due to lower print volumes, a higher mix of lower unit price gravure versus offset print in our magazine and catalog offerings from segment share wins, and lower paper and agency solutions sales, including the loss of a large grocery client.Net Loss was $31 million, or $0.65 Diluted Loss Per Share, in the six months ended June 30, 2024, compared to Net Loss of $31 million, or $0.62 Diluted Loss Per Share, in the same period in 2023. The impact from lower Net Sales and higher restructuring and impairment charges from recent plant closures was offset by benefits from improved manufacturing productivity, lower depreciation and amortization, savings from cost reduction initiatives and a $4 million gain on the sale of the Company's minority investment in Manipal Technologies.Adjusted EBITDA was $102 million in the six months ended June 30, 2024, a decrease of $8 million compared to the same period in 2023. The decrease was due to lower Net Sales, partially offset by benefits from improved manufacturing productivity, savings from cost reduction initiatives and a $4 million gain on the sale of the Company's minority investment in Manipal Technologies.Adjusted Diluted Earnings Per Share was $0.22 in the six months ended June 30, 2024, compared to $0.17 in the same period in 2023.Net Cash Used in Operating Activities was $48 million in the six months ended June 30, 2024, compared to Net Cash Provided by Operating Activities of $0.3 million in the six months ended June 30, 2023. Free Cash Flow was negative $82 million in the six months ended June 30, 2024, compared to negative $45 million in the same period in 2023. During the six months ended June 30, 2023, the Company realized non-recurring cash flow benefits from reducing inventories enabled by an improved supply chain environment. As a reminder, the Company historically generates most of its Free Cash Flow in the fourth quarter of the year.Net Debt was $532 million at June 30, 2024, compared to $470 million at December 31, 2023, and $604 million at June 30, 2023. Compared to December 31, 2023, Net Debt increased primarily due to the negative $82 million of Free Cash Flow in the six months ended June 30, 2024, less the $22 million of proceeds from the sale of the Company's minority investment in Manipal Technologies. Quad continues to expect to reduce Net Debt to approximately $405 million, achieving a 1.8x Debt Leverage Ratio, at the end of this year. Dividend Quad's next quarterly dividend of $0.05 per share will be payable on September 6, 2024, to shareholders of record as of August 19, 2024. 2024 Guidance The Company's full-year 2024 financial guidance ranges are unchanged and are as follows: Financial Metric 2024 Guidance Annual Net Sales Change 5% to 9% decline Full-Year Adjusted EBITDA $205 million to $245 million Free Cash Flow $50 million to $70 million Capital Expenditures $60 million to $70 million Year-End Debt Leverage Ratio (1) Approximately 1.8x (1) Debt Leverage Ratio is calculated at the midpoint of the Adjusted EBITDA guidance. Conference Call and Webcast Information Quad will hold a conference call at 8:30 a.m. ET on Wednesday, July 31, to discuss second quarter and year-to-date 2024 financial results. The call will be hosted by Joel Quadracci, Quad Chairman, President and CEO, and Tony Staniak, Quad CFO. As part of the conference call, Quad will conduct a question-and-answer session. Participants can pre-register for the webcast by navigating to https://dpregister.com/sreg/10191016/fd1a26f188. Participants will be given a unique PIN to gain access to the call, bypassing the live operator. Participants may pre-register at any time, including up to and after the call start time. Alternatively, participants may dial in on the day of the call as follows: U.S. Toll-Free: 1-877-328-5508International Toll: 1-412-317-5424 An audio replay of the call will be posted on the Investors section of Quad's website shortly after the conference call ends. In addition, telephone playback will be available until August 31, 2024, accessible as follows: U.S. Toll-Free: 1-877-344-7529International Toll: 1-412-317-0088Replay Access Code: 1737252 About Quad Quad QUAD is a global marketing experience company that helps brands make direct consumer connections, from household to in-store to online. Supported by state-of-the-art technology and data-driven intelligence, Quad uses its suite of media, creative and production solutions to streamline the complexities of marketing and remove friction from wherever it occurs in the marketing journey. Quad tailors its uniquely flexible, scalable and connected solutions to clients' objectives, driving cost efficiencies, improving speed to market, strengthening marketing effectiveness, and delivering value on client investments. Quad employs approximately 13,000 people in 14 countries and serves approximately 2,700 clients including industry leading blue-chip companies that serve both businesses and consumers in multiple industry verticals, with a particular focus on commerce, including retail, consumer packaged goods, and direct-to-consumer; financial services; and health. Quad is ranked among the largest agency companies in the U.S. by Ad Age, buoyed by its full-service Rise media agency and Betty creative agency. Quad is also one the largest commercial printers in North America, according to Printing Impressions. For more information about Quad, including its commitment to ongoing innovation, culture and sustainable impact, visit quad.com. Forward-Looking Statements This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company's future results, financial condition, sales, earnings, free cash flow, margins, objectives, goals, strategies, beliefs, intentions, plans, estimates, prospects, projections and outlook of the Company and can generally be identified by the use of words or phrases such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "project," "believe," "continue" or the negatives of these terms, variations on them and other similar expressions. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those expressed in or implied by such forward-looking statements. Forward-looking statements are based largely on the Company's expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. The factors that could cause actual results to materially differ include, among others: the impact of decreasing demand for printing services and significant overcapacity in a highly competitive environment creates downward pricing pressures and potential under-utilization of assets; the impact of increased business complexity as a result of the Company's transformation to a marketing experience company, including adapting marketing offerings and business processes as required by new markets and technologies, such as artificial intelligence; the impact of changes in postal rates, service levels or regulations, including delivery delays; the impact of fluctuations in costs (including labor and labor-related costs, energy costs, freight rates and raw materials, including paper and the materials to manufacture ink) and the impact of fluctuations in the availability of raw materials, including paper, parts for equipment and the materials to manufacture ink; the impact macroeconomic conditions, including inflation, high interest rates and recessionary concerns, as well as cost and labor pressures, distribution challenges and the price and availability of paper, have had, and may continue to have, on the Company's business, financial condition, cash flows and results of operations (including future uncertain impacts); the inability of the Company to reduce costs and improve operating efficiency rapidly enough to meet market conditions; the impact of a data-breach of sensitive information, ransomware attack or other cyber incident on the Company; the fragility and decline in overall distribution channels; the failure to attract and retain qualified talent across the enterprise; the impact of digital media and similar technological changes, including digital substitution by consumers; the failure of clients to perform under contracts or to renew contracts with clients on favorable terms or at all; the impact of risks associated with the operations outside of the United States ("U.S."), including trade restrictions, currency fluctuations, the global economy, costs incurred or reputational damage suffered due to improper conduct of its employees, contractors or agents, and geopolitical events like war and terrorism; the failure to successfully identify, manage, complete and integrate acquisitions, investment opportunities or other significant transactions, as well as the successful identification and execution of strategic divestitures; the impact negative publicity could have on our business and brand reputation; significant capital expenditures and investments may be needed to sustain and grow the Company's platforms, processes, systems, client and product technology, marketing and talent, and to remain technologically and economically competitive; the impact of the various restrictive covenants in the Company's debt facilities on the Company's ability to operate its business, as well as the uncertain negative impacts macroeconomic conditions may have on the Company's ability to continue to be in compliance with these restrictive covenants; the impact of an other than temporary decline in operating results and enterprise value that could lead to non-cash impairment charges due to the impairment of property, plant and equipment and other intangible assets; the impact of regulatory matters and legislative developments or changes in laws, including changes in cybersecurity, privacy and environmental laws; the impact on the holders of Quad's class A common stock of a limited active market for such shares and the inability to independently elect directors or control decisions due to the voting power of the class B common stock; and the other risk factors identified in the Company's most recent Annual Report on Form 10-K, which may be amended or supplemented by subsequent Quarterly Reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. Except to the extent required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Financial Measures This press release contains financial measures not prepared in accordance with generally accepted accounting principles (referred to as non-GAAP), specifically Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. Adjusted EBITDA is defined as net earnings (loss) excluding interest expense, income tax expense (benefit), depreciation and amortization and restructuring, impairment and transaction-related charges. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales. Free Cash Flow is defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment. Debt Leverage Ratio is defined as total debt and finance lease obligations less cash and cash equivalents (Net Debt) divided by the last twelve months of Adjusted EBITDA. Adjusted Diluted Earnings Per Share is defined as earnings (loss) before income taxes excluding restructuring, impairment and transaction-related charges and adjusted for income tax expense at a normalized tax rate, divided by diluted weighted average number of common shares outstanding. The Company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, provide additional information for evaluating Quad's performance and are important measures by which Quad's management assesses the profitability and liquidity of its business. These non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net earnings (loss) as a measure of operating performance or to cash flows provided by (used in) operating activities as a measure of liquidity. These non-GAAP measures may be different than non-GAAP financial measures used by other companies. Reconciliation to the GAAP equivalent of these non-GAAP measures are contained in tabular form on the attached unaudited financial statements. Investor Relations Contact Don Pontes Executive Director of Investor Relations 916-532-7074 [email protected] Media Contact Claire Ho Director of Marketing Communications 414-566-2955 [email protected] QUAD/GRAPHICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended June 30, 2024 and 2023 (in millions, except per share data) (UNAUDITED) Three Months Ended June 30, 2024 2023 Net sales $ 634.2 $ 703.1 Cost of sales 493.9 569.8 Selling, general and administrative expenses 88.7 83.3 Depreciation and amortization 26.4 32.0 Restructuring, impairment and transaction-related charges 10.1 9.6 Total operating expenses 619.1 694.7 Operating income 15.1 8.4 Interest expense 17.2 17.0 Net pension income (0.2) (0.4) Loss before income taxes (1.9) (8.2) Income tax expense (benefit) 0.9 (2.1) Net loss $ (2.8) $ (6.1) Loss per share Basic and diluted $ (0.06) $ (0.12) Weighted average number of common shares outstanding Basic and diluted 47.7 49.3 QUAD/GRAPHICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 2024 and 2023 (in millions, except per share data) (UNAUDITED) Six Months Ended June 30, 2024 2023 Net sales $ 1,289.0 $ 1,469.6 Cost of sales 1,015.2 1,187.3 Selling, general and administrative expenses 171.8 172.5 Depreciation and amortization 55.0 65.7 Restructuring, impairment and transaction-related charges 42.6 35.6 Total operating expenses 1,284.6 1,461.1 Operating income 4.4 8.5 Interest expense 32.4 33.3 Net pension income (0.4) (0.8) Loss before income taxes (27.6) (24.0) Income tax expense 3.3 6.7 Net loss $ (30.9) $ (30.7) Loss per share Basic and diluted $ (0.65) $ (0.62) Weighted average number of common shares outstanding Basic and diluted 47.4 49.2 QUAD/GRAPHICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2024 and December 31, 2023 (in millions) (UNAUDITED) June 30, 2024 December 31, 2023 ASSETS Cash and cash equivalents $ 12.8 $ 52.9 Receivables, less allowances for credit losses 294.2 316.2 Inventories 174.5 178.8 Prepaid expenses and other current assets 37.2 39.8 Total current assets 518.7 587.7 Property, plant and equipment -- net 586.5 620.6 Operating lease right-of-use assets -- net 88.6 96.6 Goodwill 100.3 103.0 Other intangible assets -- net 14.0 21.8 Other long-term assets 59.8 80.0 Total assets $ 1,367.9 $ 1,509.7 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 333.2 $ 373.6 Other current liabilities 170.3 237.6 Short-term debt and current portion of long-term debt 82.1 151.7 Current portion of finance lease obligations 2.2 2.5 Current portion of operating lease obligations 24.0 25.4 Total current liabilities 611.8 790.8 Long-term debt 455.5 362.5 Finance lease obligations 5.4 6.0 Operating lease obligations 71.2 77.2 Deferred income taxes 5.1 5.1 Other long-term liabilities 139.8 148.6 Total liabilities 1,288.8 1,390.2 Shareholders' equity Preferred stock -- -- Common stock 1.4 1.4 Additional paid-in capital 839.6 842.7 Treasury stock, at cost (27.7) (33.1) Accumulated deficit (610.0) (573.9) Accumulated other comprehensive loss (124.2) (117.6) Total shareholders' equity 79.1 119.5 Total liabilities and shareholders' equity $ 1,367.9 $ 1,509.7 QUAD/GRAPHICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2024 and 2023 (in millions) (UNAUDITED) Six Months Ended June 30, 2024 2023 OPERATING ACTIVITIES Net loss $ (30.9) $ (30.7) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 55.0 65.7 Impairment charges 13.7 10.6 Amortization of debt issuance costs and original issue discount 0.8 1.0 Stock-based compensation 4.4 3.3 Gain on the sale of an investment (4.1) -- Gain on the sale or disposal of property, plant and equipment, net (1.4) (0.3) Deferred income taxes (0.1) 2.7 Changes in operating assets and liabilities (85.7) (52.0) Net cash provided by (used in) operating activities (48.3) 0.3 INVESTING ACTIVITIES Purchases of property, plant and equipment (33.5) (45.2) Cost investment in unconsolidated entities (0.2) (0.5) Proceeds from the sale of property, plant and equipment 4.8 7.5 Proceeds from the sale of an investment 22.2 -- Other investing activities 0.5 (4.5) Net cash used in investing activities (6.2) (42.7) FINANCING ACTIVITIES Proceeds from issuance of long-term debt 52.8 0.6 Payments of current and long-term debt (119.3) (24.2) Payments of finance lease obligations (1.6) (1.0) Borrowings on revolving credit facilities 776.0 771.4 Payments on revolving credit facilities (686.4) (711.4) Purchases of treasury stock -- (5.0) Equity awards redeemed to pay employees' tax obligations (2.1) (1.7) Payment of cash dividends (4.7) (0.1) Other financing activities (0.2) (0.3) Net cash provided by financing activities 14.5 28.3 Effect of exchange rates on cash and cash equivalents (0.1) 0.2 Net decrease in cash and cash equivalents (40.1) (13.9) Cash and cash equivalents at beginning of period 52.9 25.2 Cash and cash equivalents at end of period $ 12.8 $ 11.3 QUAD/GRAPHICS, INC. SEGMENT FINANCIAL INFORMATION For the Three and Six Months Ended June 30, 2024 and 2023 (in millions) (UNAUDITED) Net Sales Operating Income (Loss) Restructuring, Impairment and Transaction-Related Charges (1) Three months ended June 30, 2024 United States Print and Related Services $ 544.3 $ 25.4 $ 9.3 International 89.9 2.3 0.8 Total operating segments 634.2 27.7 10.1 Corporate -- (12.6) -- Total $ 634.2 $ 15.1 $ 10.1 Three months ended June 30, 2023 United States Print and Related Services $ 588.5 $ 11.8 $ 8.6 International 114.6 8.3 1.0 Total operating segments 703.1 20.1 9.6 Corporate -- (11.7) -- Total $ 703.1 $ 8.4 $ 9.6 Six months ended June 30, 2024 United States Print and Related Services $ 1,123.2 $ 24.1 $ 40.9 International 165.8 5.7 1.6 Total operating segments 1,289.0 29.8 42.5 Corporate -- (25.4) 0.1 Total $ 1,289.0 $ 4.4 $ 42.6 Six months ended June 30, 2023 United States Print and Related Services $ 1,246.1 $ 19.1 $ 31.1 International 223.5 16.0 3.6 Total operating segments 1,469.6 35.1 34.7 Corporate -- (26.6) 0.9 Total $ 1,469.6 $ 8.5 $ 35.6 ______________________________ (1) Restructuring, impairment and transaction-related charges are included within operating income (loss). QUAD/GRAPHICS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES EBITDA, EBITDA MARGIN, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN For the Three Months Ended June 30, 2024 and 2023 (in millions, except margin data) (UNAUDITED) Three Months Ended June 30, 2024 2023 Net loss $ (2.8) $ (6.1) Interest expense 17.2 17.0 Income tax expense (benefit) 0.9 (2.1) Depreciation and amortization 26.4 32.0 EBITDA (non-GAAP) $ 41.7 $ 40.8 EBITDA Margin (non-GAAP) 6.6 % 5.8 % Restructuring, impairment and transaction-related charges (1) 10.1 9.6 Adjusted EBITDA (non-GAAP) $ 51.8 $ 50.4 Adjusted EBITDA Margin (non-GAAP) 8.2 % 7.2 % ______________________________ (1) Operating results for the three months ended June 30, 2024 and 2023, were affected by the following restructuring, impairment and transaction-related charges: Three Months Ended June 30, 2024 2023 Employee termination charges (a) $ 3.2 $ 1.9 Impairment charges (b) 1.1 1.1 Transaction-related charges (c) 0.4 -- Integration costs (d) 0.1 0.5 Other restructuring charges (e) 5.3 6.1 Restructuring, impairment and transaction-related charges $ 10.1 $ 9.6 ______________________________ (a) Employee termination charges were related to workforce reductions through facility consolidations and separation programs. (b) Impairment charges were for certain property, plant and equipment no longer being utilized in production as a result of facility consolidations and other capacity reduction activities, as well as operating lease right-of-use assets. (c) Transaction-related charges consisted of professional service fees related to business acquisition and divestiture activities. (d) Integration costs were primarily costs related to the integration of acquired companies. (e) Other restructuring charges primarily include costs to maintain and exit closed facilities, as well as lease exit charges. In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, provide additional information for evaluating Quad's performance and are important measures by which Quad's management assesses the profitability and liquidity of its business. These non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net earnings (loss) as a measure of operating performance or to cash flows provided by (used in) operating activities as a measure of liquidity. These non-GAAP measures may be different than non-GAAP financial measures used by other companies. QUAD/GRAPHICS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES EBITDA, EBITDA MARGIN, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN For the Six Months Ended June 30, 2024 and 2023 (in millions, except margin data) (UNAUDITED) Six Months Ended June 30, 2024 2023 Net loss $ (30.9) $ (30.7) Interest expense 32.4 33.3 Income tax expense 3.3 6.7 Depreciation and amortization 55.0 65.7 EBITDA (non-GAAP) $ 59.8 $ 75.0 EBITDA Margin (non-GAAP) 4.6 % 5.1 % Restructuring, impairment and transaction-related charges (1) 42.6 35.6 Adjusted EBITDA (non-GAAP) $ 102.4 $ 110.6 Adjusted EBITDA Margin (non-GAAP) 7.9 % 7.5 % ______________________________ (1) Operating results for the six months ended June 30, 2024 and 2023, were affected by the following restructuring, impairment and transaction-related charges: Six Months Ended June 30, 2024 2023 Employee termination charges (a) $ 16.9 $ 15.0 Impairment charges (b) 13.7 10.6 Transaction-related charges (c) 0.9 0.6 Integration costs (d) 0.2 1.0 Other restructuring charges (e) 10.9 8.4 Restructuring, impairment and transaction-related charges $ 42.6 $ 35.6 ______________________________ (a) Employee termination charges were related to workforce reductions through facility consolidations and separation programs. (b) Impairment charges were for certain property, plant and equipment no longer being utilized in production as a result of facility consolidations and other capacity reduction activities, as well as operating lease right-of-use assets. (c) Transaction-related charges consisted of professional service fees related to business acquisition and divestiture activities. (d) Integration costs were primarily costs related to the integration of acquired companies. (e) Other restructuring charges primarily include costs to maintain and exit closed facilities, as well as lease exit charges. In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, provide additional information for evaluating Quad's performance and are important measures by which Quad's management assesses the profitability and liquidity of its business. These non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net earnings (loss) as a measure of operating performance or to cash flows provided by (used in) operating activities as a measure of liquidity. These non-GAAP measures may be different than non-GAAP financial measures used by other companies. QUAD/GRAPHICS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES FREE CASH FLOW For the Six Months Ended June 30, 2024 and 2023 (in millions) (UNAUDITED) Six Months Ended June 30, 2024 2023 Net cash provided by (used in) operating activities $ (48.3) $ 0.3 Less: purchases of property, plant and equipment 33.5 45.2 Free Cash Flow (non-GAAP) $ (81.8) $ (44.9) In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, provide additional information for evaluating Quad's performance and are important measures by which Quad's management assesses the profitability and liquidity of its business. These non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net earnings (loss) as a measure of operating performance or to cash flows provided by (used in) operating activities as a measure of liquidity. These non-GAAP measures may be different than non-GAAP financial measures used by other companies. QUAD/GRAPHICS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES NET DEBT AND DEBT LEVERAGE RATIO As of June 30, 2024 and December 31, 2023 (in millions, except ratio) (UNAUDITED) June 30, 2024 December 31, 2023 Total debt and finance lease obligations on the condensed consolidated balance sheets $ 545.2 $ 522.7 Less: Cash and cash equivalents 12.8 52.9 Net Debt (non-GAAP) $ 532.4 $ 469.8 Divided by: trailing twelve months Adjusted EBITDA (non-GAAP) (1) $ 225.5 $ 233.7 Debt Leverage Ratio (non-GAAP) 2.36 x 2.01 x ______________________________ (1) The calculation of Adjusted EBITDA for the trailing twelve months ended June 30, 2024, and December 31, 2023, was as follows: Add Subtract Trailing Twelve Months Ended Year Ended Six Months Ended December 31, 2023(a) (UNAUDITED) June 30, 2024 (UNAUDITED) June 30, 2023 (UNAUDITED) June 30, 2024 Net loss $ (55.4) $ (30.9) $ (30.7) $ (55.6) Interest expense 70.0 32.4 33.3 69.1 Income tax expense 12.8 3.3 6.7 9.4 Depreciation and amortization 128.8 55.0 65.7 118.1 EBITDA (non-GAAP) $ 156.2 $ 59.8 $ 75.0 $ 141.0 Restructuring, impairment and transaction-related charges 77.5 42.6 35.6 84.5 Adjusted EBITDA (non-GAAP) $ 233.7 $ 102.4 $ 110.6 $ 225.5 ______________________________ (a) Financial information for the year ended December 31, 2023, is included as reported in the Company's 2023 Annual Report on Form 10-K filed with the SEC on February 22, 2024. In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, provide additional information for evaluating Quad's performance and are important measures by which Quad's management assesses the profitability and liquidity of its business. These non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net earnings (loss) as a measure of operating performance or to cash flows provided by (used in) operating activities as a measure of liquidity. These non-GAAP measures may be different than non-GAAP financial measures used by other companies. QUAD/GRAPHICS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES ADJUSTED DILUTED EARNINGS PER SHARE For the Three Months Ended June 30, 2024 and 2023 (in millions, except per share data) (UNAUDITED) Three Months Ended June 30, 2024 2023 Loss before income taxes $ (1.9) $ (8.2) Restructuring, impairment and transaction-related charges 10.1 9.6 Adjusted net earnings, before income taxes (non-GAAP) 8.2 1.4 Income tax expense at 25% normalized tax rate 2.1 0.4 Adjusted net earnings (non-GAAP) $ 6.1 $ 1.0 Basic weighted average number of common shares outstanding 47.7 49.3 Plus: effect of dilutive equity incentive instruments (non-GAAP) 2.4 1.7 Diluted weighted average number of common shares outstanding (non-GAAP) 50.1 51.0 Adjusted diluted earnings per share (non-GAAP) (1) $ 0.12 $ 0.02 Diluted loss per share (GAAP) $ (0.06) $ (0.12) Restructuring, impairment and transaction-related charges per share 0.20 0.19 Income tax expense (benefit) from condensed consolidated statement of operations per share 0.02 (0.04) Income tax expense at 25% normalized tax rate per share (0.04) (0.01) Adjusted diluted earnings per share (non-GAAP) (1) $ 0.12 $ 0.02 ______________________________ (1) Adjusted diluted earnings per share excludes the following: (i) restructuring, impairment and transaction-related charges and (ii) discrete income tax items. In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, provide additional information for evaluating Quad's performance and are important measures by which Quad's management assesses the profitability and liquidity of its business. These non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net earnings (loss) as a measure of operating performance or to cash flows provided by (used in) operating activities as a measure of liquidity. These non-GAAP measures may be different than non-GAAP financial measures used by other companies. QUAD/GRAPHICS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES ADJUSTED DILUTED EARNINGS PER SHARE For the Six Months Ended June 30, 2024 and 2023 (in millions, except per share data) (UNAUDITED) Six Months Ended June 30, 2024 2023 Loss before income taxes $ (27.6) $ (24.0) Restructuring, impairment and transaction-related charges 42.6 35.6 Adjusted net earnings, before income taxes (non-GAAP) 15.0 11.6 Income tax expense at 25% normalized tax rate 3.8 2.9 Adjusted net earnings (non-GAAP) $ 11.2 $ 8.7 Basic weighted average number of common shares outstanding 47.4 49.2 Plus: effect of dilutive equity incentive instruments (non-GAAP) 2.5 1.9 Diluted weighted average number of common shares outstanding (non-GAAP) 49.9 51.1 Adjusted diluted earnings per share (non-GAAP) (1) $ 0.22 $ 0.17 Diluted loss per share (GAAP) $ (0.65) $ (0.62) Restructuring, impairment and transaction-related charges per share 0.85 0.70 Income tax expense from condensed consolidated statement of operations per share 0.07 0.13 Income tax expense at 25% normalized tax rate per share (0.08) (0.06) Effect of dilutive equity incentive instruments 0.03 0.02 Adjusted diluted earnings per share (non-GAAP) (1) $ 0.22 $ 0.17 ______________________________ (1) Adjusted diluted earnings per share excludes the following: (i) restructuring, impairment and transaction-related charges and (ii) discrete income tax items. In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), this earnings announcement also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Debt Leverage Ratio and Adjusted Diluted Earnings Per Share. The Company believes that these non-GAAP measures, when presented in conjunction with comparable GAAP measures, provide additional information for evaluating Quad's performance and are important measures by which Quad's management assesses the profitability and liquidity of its business. These non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net earnings (loss) as a measure of operating performance or to cash flows provided by (used in) operating activities as a measure of liquidity. These non-GAAP measures may be different than non-GAAP financial measures used by other companies. View original content to download multimedia:https://www.prnewswire.com/news-releases/quad-reports-second-quarter-and-year-to-date-2024-results-302210301.html SOURCE Quad Market News and Data brought to you by Benzinga APIs