QuadGraphics Inc

Previous wording

The following discussion of the financial condition and results of operations of Quad should be read together with (1) the condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023, including the notes thereto, included in Item 1, “Condensed Consolidated Financial Statements (Unaudited),” of this Quarterly Report on Form 10-Q; and (2) the audited consolidated annual financial statements as of and for the year ended December 31, 2023, and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 22, 2024.

Current wording

The following discussion of the financial condition and results of operations of Quad should be read together with (1) the condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023, including the notes thereto, included in Item 1, “Condensed Consolidated Financial Statements (Unaudited),” of this Quarterly Report on Form 10-Q; and (2) the audited consolidated annual financial statements as of and for the year ended December 31, 2023, and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 22, 2024.

Previous wording

•Results of Operations. This section contains an analysis of the Company’s results of operations by comparing the results for (1) the three months ended June 30, 2024, to the three months ended June 30, 2023; and (2) the six months ended June 30, 2024, to the six months ended June 30, 2023. Forward-looking statements providing a general description of recent and projected industry and Company developments that are important to understanding the Company’s results of operations are included in this section. This section also provides a discussion of EBITDA and EBITDA margin, non-GAAP financial measures that the Company uses to assess the performance of its business that are not prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Current wording

•Results of Operations. This section contains an analysis of the Company’s results of operations by comparing the results for (1) the three months ended September 30, 2024, to the three months ended September 30, 2023; and (2) the nine months ended September 30, 2024, to the nine months ended September 30, 2023. Forward-looking statements providing a general description of recent and projected industry and Company developments that are important to understanding the Company’s results of operations are included in this section. This section also provides a discussion of EBITDA and EBITDA margin, non-GAAP financial measures that the Company uses to assess the performance of its business that are not prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Previous wording

To provide ongoing improvement in productivity and, ultimately, maximize operating margins, the Company applies holistic continuous improvement and lean enterprise methodologies to further streamline its processes and maximize operating margins. These same methodologies are applied to its selling, general and administrative functions. The Company continually works to lower its cost structure by consolidating manufacturing operations into its most efficient facilities, as well as realizing purchasing, mailing and logistics synergies by centralizing and consolidating print manufacturing volumes, and eliminating redundancies in its administrative and corporate operations. Quad believes that its focused efforts to be the high-quality, low-cost producer generates increased Free Cash Flow and allows the Company to maintain a strong balance sheet through debt reduction. The Company’s disciplined financial approach also allows it to maintain sufficient liquidity and to reduce refinancing risk. The Company had total liquidity of $241.6 million as of June 30, 2024, which consisted of up to $228.8 million of unused capacity under its revolving credit agreement, which was net of $28.5 million of issued letters of credit, and cash and cash equivalents of $12.8 million. Total liquidity is reduced to $222.3 million under the Company’s most restrictive debt covenants. Quad is proud of its strong and trusted banking relationships, which provide the Company with increased financial flexibility to make strategic investments to accelerate its growth and drive profitability as an MX company.

Current wording

To provide ongoing improvement in productivity and, ultimately, maximize operating margins, the Company applies holistic continuous improvement and lean enterprise methodologies to further streamline its processes and maximize operating margins. These same methodologies are applied to its selling, general and administrative functions. The Company continually works to lower its cost structure by consolidating manufacturing operations into its most efficient facilities, as well as realizing purchasing, mailing and logistics synergies by centralizing and consolidating print manufacturing volumes, and eliminating redundancies in its administrative and corporate operations. Quad believes that its focused efforts to be the high-quality, low-cost producer generates increased Free Cash Flow and allows the Company to maintain a strong balance sheet through debt reduction. The Company’s disciplined financial approach also allows it to maintain sufficient liquidity and to reduce refinancing risk. The Company had total liquidity of $255.4 million as of September 30, 2024, which consisted of up to $242.9 million of unused capacity under its revolving credit agreement, which was net of $26.3 million of issued letters of credit, and cash and cash equivalents of $12.5 million. Total liquidity is reduced to $196.1 million under the Company’s most restrictive debt covenants, as defined in the ninth amendment to its Senior Secured Credit Facility, effective October 18, 2024, that contained modifications to certain financial and operational covenants retroactive to September 30, 2024. Quad is proud of its strong and trusted banking relationships, which provide the Company with increased financial flexibility to make strategic investments to accelerate its growth and drive profitability as an MX company.

Previous wording

•The United States Print and Related Services segment is predominantly comprised of the Company’s United States printing operations and is managed as one integrated platform. This includes print execution and logistics for retail inserts, catalogs, long-run publications, special interest publications, journals, direct mail, directories, in-store marketing and promotion, packaging, newspapers, custom print products, as well as other commercial and specialty printed products, along with global paper procurement, and marketing and other complementary services, such as data intelligence and analytics, technology solutions, media planning, placement and optimization, creative strategy and content creation, as well as execution in non-print channels (e.g., digital and broadcast). This segment also includes the manufacture of ink. The United States Print and Related Services segment accounted for approximately 86% and 87% of the Company’s consolidated net sales during the three and six months ended June 30, 2024, respectively.

Current wording

•The United States Print and Related Services segment is predominantly comprised of the Company’s United States printing operations and is managed as one integrated platform. This includes print execution and logistics for retail inserts, catalogs, long-run publications, special interest publications, journals, direct mail, directories, in-store marketing and promotion, packaging, newspapers, custom print products, as well as other commercial and specialty printed products, along with global paper procurement, and marketing and other complementary services, such as data intelligence and analytics, technology solutions, media planning, placement and optimization, creative strategy and content creation, as well as execution in non-print channels (e.g., digital and broadcast). This segment also includes the manufacture of ink. The United States Print and Related Services segment accounted for approximately 86% and 87% of the Company’s consolidated net sales during the three and nine months ended September 30, 2024, respectively.

Previous wording

•The International segment consists of the Company’s printing operations in Europe and Latin America, including operations in England, France, Germany, Poland, Colombia, Mexico and Peru. This segment provides printed products and marketing and other complementary services consistent with the United States Print and Related Services segment. The International segment accounted for approximately 14% and 13% of the Company’s consolidated net sales during the three and six months ended June 30, 2024, respectively.

Current wording

•The International segment consists of the Company’s printing operations in Europe and Latin America, including operations in England, France, Germany, Poland, Colombia, Mexico and Peru. This segment provides printed products and marketing and other complementary services consistent with the United States Print and Related Services segment. The International segment accounted for approximately 14% and 13% of the Company’s consolidated net sales during the three and nine months ended September 30, 2024, respectively.

Previous wording

The Company remains disciplined with its debt leverage. The Company’s consolidated debt and finance lease obligations increased by $22.5 million during the six months ended June 30, 2024, primarily due to $48.3 million in cash used in operating activities and $33.5 million in purchases of property, plant and equipment, partially offset by $52.8 million in proceeds from the issuance of long-term debt.

Current wording

The Company remains disciplined with its debt leverage. The Company’s consolidated debt and finance lease obligations decreased by $19.9 million during the nine months ended September 30, 2024, primarily due to the following: (1) $46.5 million in proceeds from the sale of property, plant and equipment; (2) a $40.4 million reduction in cash and cash equivalents; (3) $22.2 million in proceeds from the sale of an investment; and (4) $14.9 million of debt and finance lease obligations reclassified as held for sale due to the Company’s plan to sell the majority of its European operations, partially offset by the following: (1) $45.9 million in cash used in operating activities; (2) $45.7 million in purchases of property, plant and equipment; and (3) the $7.0 million payment in cash dividends.

Previous wording

Integrated distribution with the United States Postal Service (“USPS”) is an important component of the Company’s business. Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services. The USPS continues to experience financial problems. The passing of the Postal Service Reform Act of 2022, signed in April 2022, gave the USPS considerable financial relief as well as significant other relief over the next ten years. While the legislative postal reform helps considerably, without decreased operational cost structures, increased efficiencies or increased volumes and revenues, these losses will potentially continue into the future. As a result of these financial difficulties, the USPS has continued to adjust its postal rates and service levels. Price increases, especially those above the consumer price index, such as the approved 7.8% average increase across several USPS mailing products implemented during July 2024 (whereas the consumer price index was only 1.6% of the overall increase), may result in clients reducing mail volumes and exploring the use of alternative methods for delivering a larger portion of their products, such as continued diversion to the internet, digital and mobile channels and other alternative media channels, in order to ensure that they stay within their expected postage budgets.

Current wording

Integrated distribution with the United States Postal Service (“USPS”) is an important component of the Company’s business. Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services. The USPS continues to experience financial problems. The passing of the Postal Service Reform Act of 2022, signed in April 2022, gave the USPS considerable financial relief as well as significant other relief over the next ten years. While the legislative postal reform helps considerably, without decreased operational cost structures, increased efficiencies or increased volumes and revenues, these losses are expected continue into the future. As a result of these financial difficulties, the USPS has continued to adjust its postal rates and service levels. In September 2024, the USPS held a pre-filing conference to further reduce service standards. These changes will require an advisory opinion from the Postal Regulatory Commission (“PRC”) and the changes would not take effect until sometime in 2025. The USPS has also recently announced that it will not propose a price increase for January 2025. However, the available rate authority will roll forward to July 2025, and it is possible that additional postage price increases may be proposed. With postage increases that continue to exceed the Consumer Price Index (“CPI”), clients will continue to reduce mail volumes and explore the use of alternative methods for delivering a larger portion of their products, such as continued diversion to the internet, digital and mobile channels and other alternative media channels, in order to ensure that they stay within their expected postage budgets.

Previous wording

Federal statute requires the Postal Regulatory Commission (“PRC”) to conduct reviews of the overall rate-making structure for the USPS to ensure funding stability. As a result of those reviews, the PRC authorized a five year rate-making structure that provides the USPS with additional pricing flexibility over the Consumer Price Index cap, which has resulted in a substantially altered rate structure for mailers. The revised rate authority that is effective as a result of the rules issued by the PRC includes a higher overall rate cap on the USPS’ ability to increase rates from year to year. The USPS has used these additional rate authorities to implement twice a year increases and are expected to continue to do so in the future. This has led to price spikes for mailers and may also reduce the incentive for the USPS to continue to take out costs and instead continue to rely on postage to cover the costs of an outdated postal service that does not reflect the industry’s ability or willingness to pay. Given the significant amount of concern that has been expressed by the mailing industry, in April 2024, the PRC opened a proceeding to start the next rate system review. The Company believes the continued use of all available rate authority by the USPS will continue to increase the potential volume declines as rate predictability with respect to cost is no longer known for mailers.

Current wording

Federal statute requires the PRC to conduct reviews of the overall rate-making structure for the USPS to ensure funding stability. As a result of those reviews, the PRC authorized a five year rate-making structure that provides the USPS with additional pricing flexibility over the CPI cap, which has resulted in a substantially altered rate structure for mailers. The revised rate authority that is effective as a result of the rules issued by the PRC includes a higher overall rate cap on the USPS’ ability to increase rates from year to year. The USPS has used these additional rate authorities to implement twice a year increases. As noted, the USPS has announced they will forgo a price increase for January 2025, but they have also stated that they plan to continue twice a year price increases into the future. This will continue to lead to price spikes for mailers and may also reduce the incentive for the USPS to continue to take out costs and instead continue to rely on postage to cover the costs of an outdated postal service that does not reflect the industry’s ability or willingness to pay. Given the significant amount of concern that has been expressed by the mailing industry, in April 2024, the PRC opened a proceeding to start the next rate system review, which is still underway. The Company believes the continued use of all available rate authority by the USPS will continue to increase the potential volume declines as rate predictability with respect to cost is no longer known for mailers.

Previous wording

The Company’s operating income, operating margin, net loss (computed using a 25% normalized tax rate for all items subject to tax) and diluted loss per share for the three months ended June 30, 2024, changed from the three months ended June 30, 2023, as follows (dollars in millions, except margin and per share data):

Current wording

The Company’s operating income (loss), operating margin, net loss (computed using a 25% normalized tax rate for all items subject to tax) and diluted loss per share for the three months ended September 30, 2024, changed from the three months ended September 30, 2023, as follows (dollars in millions, except margin and per share data):

Previous wording

(1)Restructuring, impairment and transaction-related charges increased $0.5 million ($0.4 million, net of tax), to $10.1 million during the three months ended June 30, 2024, and included the following:

Current wording

(1)Restructuring, impairment and transaction-related charges, net increased $28.1 million ($21.1 million, net of tax), to $39.3 million during the three months ended September 30, 2024, and included the following:

Previous wording

a. A $1.3 million increase in employee termination charges from $1.9 million during the three months ended June 30, 2023, to $3.2 million during the three months ended June 30, 2024;

Current wording

a. A $0.6 million increase in employee termination charges from $1.6 million during the three months ended September 30, 2023, to $2.2 million during the three months ended September 30, 2024;

Previous wording

c. A $0.4 million increase in transaction-related charges from zero during the three months ended June 30, 2023, to $0.4 million during the three months ended June 30, 2024;

Current wording

c. A $0.4 million increase in transaction-related charges from $0.5 million during the three months ended September 30, 2023, to $0.9 million during the three months ended September 30, 2024;

Previous wording

d. A $0.4 million decrease in integration costs from $0.5 million during the three months ended June 30, 2023, to $0.1 million during the three months ended June 30, 2024;

Current wording

d. A $0.1 million increase in integration costs from zero during the three months ended September 30, 2023, to $0.1 million during the three months ended September 30, 2024;

Previous wording

e. A $0.8 million decrease in various other restructuring charges from $6.1 million during the three months ended June 30, 2023, to $5.3 million during the three months ended June 30, 2024.

Current wording

e. A $20.0 million decrease in various other restructuring charges from $3.9 million of expense during the three months ended September 30, 2023, to $16.1 million of income during the three months ended September 30, 2024.

Previous wording

(2)Other operating income elements increased $7.2 million ($5.4 million, net of tax) primarily due to the following: (1) impacts from improved manufacturing productivity; (2) a $5.6 million decrease in depreciation and amortization expense; and (3) savings from other cost reduction initiatives; partially offset by the impact from the decrease in print product volume and a $5.4 million increase in selling, general and administrative expenses.

Current wording

(2)Other operating income elements increased $9.5 million ($7.1 million, net of tax) primarily due to the following: (1) impacts from improved manufacturing productivity; (2) a $7.6 million decrease in depreciation and amortization expense; and (3) savings from other cost reduction initiatives, partially offset by the impact from a $5.9 million increase in selling, general and administrative expenses.

Previous wording

(3)Interest expense increased $0.2 million ($0.1 million, net of tax) during the three months ended June 30, 2024, to $17.2 million. This change was due to a higher weighted average interest rate on borrowings and a $0.1 million increase in interest expense related to the interest rate swaps, partially offset by lower average debt levels in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Current wording

(3)Interest expense decreased $0.7 million ($0.5 million, net of tax) during the three months ended September 30, 2024, to $17.0 million. This change was due to lower average debt levels and a $0.6 million decrease in interest expense related to the interest rate swaps, partially offset by a higher weighted average interest rate on borrowings in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Previous wording

(4)Net pension income decreased $0.2 million ($0.2 million, net of tax) during the three months ended June 30, 2024, to $0.2 million. This was due to a $0.5 million decrease from the expected long-term return on pension plan assets, partially offset by a $0.3 million decrease from interest cost on pension plan liabilities during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Current wording

(4)Net pension income decreased $0.3 million ($0.2 million, net of tax) during the three months ended September 30, 2024, to $0.2 million. This was due to a $0.4 million decrease from the expected long-term return on pension plan assets and a $0.2 million increase in the amortization of actuarial loss, partially offset by a $0.3 million decrease from interest cost on pension plan liabilities during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Previous wording

Service sales, which primarily consist of logistics, distribution, marketing services, imaging and medical services, decreased $6.6 million, or 4.6%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to a $7.5 million decrease in marketing services and medical services, partially offset by a $0.9 million increase in logistics sales.

Current wording

Service sales, which primarily consist of logistics, distribution, marketing services, imaging and medical services, decreased $8.2 million, or 5.4%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a $7.2 million decrease in marketing services and medical services and a $1.0 million decrease in logistics sales.

Previous wording

Cost of product sales decreased $158.1 million, or 15.9%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to the following: (1) a decrease in paper costs; (2) the impact from lower print volumes; (3) impacts from improved manufacturing productivity; and (4) other cost reduction initiatives.

Current wording

Cost of product sales decreased $25.7 million, or 5.5%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the following: (1) a decrease in paper costs; (2) impacts from improved manufacturing productivity; and (3) other cost reduction initiatives.

Previous wording

Cost of service sales decreased $7.4 million, or 7.9%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the impact from lower marketing services.

Current wording

Cost of service sales decreased $7.5 million, or 7.8%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the impact from lower marketing services.

Previous wording

Selling, general and administrative expenses increased $5.4 million, or 6.5%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the following: (1) a $5.8 million increase from unfavorable foreign exchange impacts; (2) $1.7 million in retention credits and unclaimed property recoveries that occurred in 2023, that did not reoccur in 2024; and (3) a $1.0 million increase in employee-related costs; partially offset by a $4.1 million gain on the sale of an investment in 2024. Selling, general and administrative expenses as a percentage of net sales increased to 14.0% for the three months ended June 30, 2024, compared to 11.8% for the three months ended June 30, 2023.

Current wording

Selling, general and administrative expenses increased $5.9 million, or 7.2%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the following: (1) $1.7 million in favorable contractual and property terminations that occurred in 2023 that did not reoccur in 2024; (2) a $1.5 million increase from unfavorable foreign exchange impacts; (3) a $0.7 million increase in selling-related costs; (4) a $0.6 million increase in professional fees; and (5) a $0.4 million increase in employee-related costs. Selling, general and administrative expenses as a percentage of net sales increased to 13.1% for the three months ended September 30, 2024, compared to 11.8% for the three months ended September 30, 2023.

Previous wording

Depreciation and amortization decreased $5.6 million, or 17.5%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, due to a $2.9 million decrease in depreciation expense, primarily due to impacts from plant closures and from property, plant and equipment becoming fully depreciated over the past year, and a $2.7 million decrease in amortization expense.

Current wording

Depreciation and amortization decreased $7.6 million, or 23.8%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due to a $4.5 million decrease in depreciation expense, primarily due to impacts from plant closures and from property, plant and equipment becoming fully depreciated over the past year, and a $3.1 million decrease in amortization expense.

Previous wording

EBITDA increased $0.9 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to impacts from improved manufacturing productivity and savings from other cost reduction initiatives, partially offset by impacts from lower print volumes and $0.5 million of increased restructuring, impairment and transaction-related charges.

Current wording

EBITDA decreased $26.5 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to $28.1 million of increased restructuring, impairment and transaction-related charges, net, and the impact from lower marketing services sales, partially offset by impacts from improved manufacturing productivity and savings from other cost reduction initiatives.

Previous wording

Operating margin for the United States Print and Related Services segment increased to 4.7% for the three months ended June 30, 2024, from 2.0% for the three months ended June 30, 2023, primarily due to the reasons provided above.

Current wording

Operating margin for the United States Print and Related Services segment increased to 8.8% for the three months ended September 30, 2024, from 3.1% for the three months ended September 30, 2023, primarily due to the reasons provided above.

Previous wording

The following table summarizes net sales, operating income, operating margin, certain items impacting comparability within the International segment:

Current wording

The following table summarizes net sales, operating income (loss), operating margin, certain items impacting comparability within the International segment:

Previous wording

Product sales for the International segment decreased $24.9 million, or 22.5%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to a $13.5 million decrease in paper sales and a $12.1 million decrease in print product volume and pricing, mainly in Europe and Mexico, partially offset by $0.7 million in favorable foreign exchange impacts, primarily in Colombia and Mexico.

Current wording

Product sales for the International segment increased $3.5 million, or 4.0%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a $4.5 million increase in print product volume and pricing, mainly in Mexico and a $0.7 million increase in paper sales, partially offset by $1.7 million in unfavorable foreign exchange impacts, primarily in Colombia and Mexico.

Previous wording

Operating income for the International segment decreased $6.0 million, or 72.3%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to a $6.2 million decrease in operating income from decreased print product volume, mainly in Mexico, Peru and Colombia, partially offset by a $0.2 million decrease in restructuring, impairment and transaction-related charges.

Current wording

Operating income (loss) for the International segment decreased $50.7 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a $51.3 million increase in restructuring, impairment and transaction-related charges, net, partially offset by a $0.6 million increase in operating income from increased print product volume, mainly in Mexico.

Previous wording

(a)Includes $0.1 million of impairment charges for certain property, plant and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction activities, during the three months ended June 30, 2024. There were no impairment charges during the three months ended June 30, 2023.

Current wording

(a)Includes $50.9 million of impairment charges to reduce the carrying value of the majority of the European operations to fair value, including $38.3 million for foreign currency translation adjustments and $12.6 million for property, plant and equipment, and $0.1 million for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction activities, during the three months ended September 30, 2024. There were no impairment charges during the three months ended September 30, 2023.

Previous wording

Corporate operating expenses increased $0.9 million, or 7.7%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to a $0.7 million increase in employee-related costs.

Current wording

Corporate operating expenses increased $0.2 million, or 2.1%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a $0.2 million increase in restructuring, impairment and transaction-related charges, net.

Previous wording

Results of Operations for the Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Current wording

Results of Operations for the Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023

Previous wording

The Company’s operating income, operating margin, net loss (computed using a 25% normalized tax rate for all items subject to tax) and diluted loss per share for the six months ended June 30, 2024, changed from the six months ended June 30, 2023, as follows (dollars in millions, except margin and per share data):

Current wording

The Company’s operating income (loss), operating margin, net loss (computed using a 25% normalized tax rate for all items subject to tax) and diluted loss per share for the nine months ended September 30, 2024, changed from the nine months ended September 30, 2023, as follows (dollars in millions, except margin and per share data):

Previous wording

(1)Restructuring, impairment and transaction-related charges increased $7.0 million ($5.3 million, net of tax), to $42.6 million during the six months ended June 30, 2024, and included the following:

Current wording

(1)Restructuring, impairment and transaction-related charges, net increased $35.1 million ($26.3 million, net of tax), to $81.9 million during the nine months ended September 30, 2024, and included the following:

Previous wording

a. A $1.9 million increase in employee termination charges from $15.0 million during the six months ended June 30, 2023, to $16.9 million during the six months ended June 30, 2024;

Current wording

a. A $2.5 million increase in employee termination charges from $16.6 million during the nine months ended September 30, 2023, to $19.1 million during the nine months ended September 30, 2024;

Previous wording

b. A $3.1 million increase in impairment charges from $10.6 million during the six months ended June 30, 2023, to $13.7 million during the six months ended June 30, 2024;

Current wording

b. A $50.1 million increase in impairment charges from $15.8 million during the nine months ended September 30, 2023, to $65.9 million during the nine months ended September 30, 2024;

Previous wording

c. A $0.3 million increase in transaction-related charges from $0.6 million during the six months ended June 30, 2023, to $0.9 million during the six months ended June 30, 2024;

Current wording

c. A $0.7 million increase in transaction-related charges from $1.1 million during the nine months ended September 30, 2023, to $1.8 million during the nine months ended September 30, 2024;

Previous wording

d. A $0.8 million decrease in integration costs from $1.0 million during the six months ended June 30, 2023, to $0.2 million during the six months ended June 30, 2024;

Current wording

d. A $0.7 million decrease in integration costs from $1.0 million during the nine months ended September 30, 2023, to $0.3 million during the nine months ended September 30, 2024;

Previous wording

e. A $2.5 million increase in various other restructuring charges from $8.4 million during the six months ended June 30, 2023, to $10.9 million during the six months ended June 30, 2024.

Current wording

e. A $17.5 million decrease in various other restructuring charges from $12.3 million of expense during the nine months ended September 30, 2023, to $5.2 million of income during the nine months ended September 30, 2024.

Previous wording

(2)Other operating income elements increased $2.9 million ($2.2 million, net of tax impact) during the six months ended June 30, 2024, primarily due to the following: (1) a $10.7 million decrease in depreciation and amortization expense; (2) impacts from improved manufacturing productivity; (3) savings from other cost reduction initiatives; and (4) a $0.7 million decrease in selling, general and administrative expenses; partially offset by print volume decreases.

Current wording

(2)Other operating income elements increased $12.4 million ($9.3 million, net of tax impact) during the nine months ended September 30, 2024, primarily due to the following: (1) a $18.3 million decrease in depreciation and amortization expense; (2) impacts from improved manufacturing productivity; and (3) savings from other cost reduction initiatives, partially offset by print volume decreases and a $5.2 million increase in selling, general and administrative expenses.

Previous wording

(3)Interest expense decreased $0.9 million ($0.7 million, net of tax) during the six months ended June 30, 2024, to $32.4 million. This was primarily due to lower average debt levels and a $0.4 million decrease in interest expense related to the interest rate swap, partially offset by higher weighted average interest rates on borrowings in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Current wording

(3)Interest expense decreased $1.6 million ($1.2 million, net of tax) during the nine months ended September 30, 2024, to $49.4 million. This was primarily due to lower average debt levels and a $1.0 million decrease in interest expense related to the interest rate swap, partially offset by higher weighted average interest rates on borrowings in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Previous wording

(4)Net pension income decreased $0.4 million ($0.3 million, net of tax) during the six months ended June 30, 2024, to $0.4 million. This was due to a $1.0 million decrease from the expected long-term return on pension plan assets, partially offset by a $0.6 million decrease from interest cost on pension plan liabilities.

Current wording

(4)Net pension income decreased $0.7 million ($0.6 million, net of tax) during the nine months ended September 30, 2024, to $0.6 million. This was due to a $1.4 million decrease from the expected long-term return on pension plan assets and a $0.2 million increase in the amortization of actuarial loss, partially offset by a $0.9 million decrease from interest cost on pension plan liabilities.