QuadGraphics Inc

Previous wording

•Liquidity and Capital Resources. This section provides an analysis of the Company’s capitalization, cash flows and a discussion and table of outstanding debt and commitments. Forward-looking statements important to understanding the Company’s financial condition are included in this section. This section also provides a discussion of Free Cash Flow and Debt Leverage Ratio, non-GAAP financial measures that the Company uses to assess liquidity and capital allocation and deployment.

Current wording

•Liquidity and Capital Resources. This section provides an analysis of the Company’s capitalization, cash flows and a discussion of outstanding debt and commitments. Forward-looking statements important to understanding the Company’s financial condition are included in this section. This section also provides a discussion of Free Cash Flow and Debt Leverage Ratio, non-GAAP financial measures that the Company uses to assess liquidity and capital allocation and deployment.

Previous wording

Quad is a global marketing experience (MX) company that helps brands make direct consumer connections, from household to in-store to online. The Company is focused on providing a better marketing experience for its clients, so they can focus on delivering the best customer experience to theirs. Quad does this with a suite of marketing solutions that is flexible, scalable and connected. Supported by state-of-the-art technology and data-driven intelligence, these solutions are designed to streamline the complexities of marketing and remove friction from wherever it occurs in the marketing journey. Quad tailors its solutions to its clients’ objectives, driving cost efficiencies, improving speed to market, strengthening marketing effectiveness, and delivering value on their investments. The Company supports a diverse base of clients, including industry-leading blue-chip companies that serve both businesses and consumers across multiple industry verticals, with a particular focus on commerce, including retail, consumer packaged goods and direct-to-consumer; financial services; and health.

Current wording

Quad is a marketing experience (MX) company that simplifies the complexities of marketing, removing friction from wherever it occurs along the marketing journey. Its results-driven approach enables stronger marketing operations that lead to real, repeatable success for clients. The Company does this through its MX Solutions Suite, which is flexible, scalable and connected. Quad tailors its solutions to each client’s objectives, driving cost efficiencies, improving speed to market, strengthening marketing effectiveness and delivering value on investments. The Company supports a diverse base of clients, including industry-leading blue-chip companies that serve both businesses and consumers across multiple industry verticals, with a particular focus on commerce, including retail, consumer packaged goods and direct-to-consumer; financial services; and health.

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 years ended December 31, 2023 and 2022, respectively.

Current wording

The United States Print and Related Services segment is predominantly comprised of the Company’s United States printing operations, managed as one integrated platform, and marketing and other complementary services. The printing operations include 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 the manufacture of ink. Marketing and other complementary services include 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 medical services. The United States Print and Related Services segment accounted for approximately 87% and 86% of the Company’s consolidated net sales during the years ended December 31, 2024 and 2023, 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 years ended December 31, 2023 and 2022, 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 13% and 14% of the Company’s consolidated net sales during the years ended December 31, 2024 and 2023, respectively.

Previous wording

The Company’s management believes the ability to generate net sales growth, profit increases and positive cash flow, while maintaining the appropriate level of debt, are key indicators of the successful execution of the Company’s business strategy and will increase shareholder value. The Company uses period-over-period net sales growth, EBITDA, EBITDA margin, net cash provided by operating activities, Free Cash Flow and Debt Leverage Ratio as metrics to measure operating performance, financial condition and liquidity. EBITDA, EBITDA margin, Free Cash Flow and Debt Leverage Ratio are non-GAAP financial measures (see the definitions of EBITDA, EBITDA margin and the reconciliation of net earnings (loss) to EBITDA in the “Results of Operations” section below, and see the definitions of Free Cash Flow and Debt Leverage Ratio, the reconciliation of net cash provided by operating activities to Free Cash Flow, and the calculation of Debt Leverage Ratio in the “Liquidity and Capital Resources” section below).

Current wording

The Company’s management believes the ability to generate net sales growth, profit increases and positive cash flow, while maintaining the appropriate level of debt, are key indicators of the successful execution of the Company’s business strategy and will increase shareholder value. The Company uses period-over-period net sales growth, EBITDA, EBITDA margin, net cash provided by operating activities, Free Cash Flow and Debt Leverage Ratio as metrics to measure operating performance, financial condition and liquidity. EBITDA, EBITDA margin, Free Cash Flow and Debt Leverage Ratio are non-GAAP financial measures (see the definitions of EBITDA, EBITDA margin and the reconciliation of net loss to EBITDA in the “Results of Operations” section below, and see the definitions of Free Cash Flow and Debt Leverage Ratio, the reconciliation of net cash provided by operating activities to Free Cash Flow, and the calculation of Debt Leverage Ratio in the “Liquidity and Capital Resources” section below).

Previous wording

The Company remains disciplined with its debt leverage. The Company’s consolidated debt and finance lease obligations decreased by $47.5 million during the year ended December 31, 2023, primarily due to the use of cash and cash equivalents, cash provided by operating activities and proceeds from the sale of property, plant and equipment.

Current wording

The Company remains disciplined with its debt leverage. The Company’s consolidated debt and finance lease obligations decreased by $143.5 million during the year ended December 31, 2024, primarily due to the following: (1) $112.9 million in cash provided by operating activities; (2) $49.1 million in proceeds from the sale of property, plant and equipment; (3) $23.7 million reduction in cash and cash equivalents; and (4) $22.2 million in proceeds from the sale of an investment, partially offset by $57.2 million in purchases of property, plant and equipment and the $9.4 million payment in cash dividends.

Previous wording

Integrated distribution with the 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 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. Additional price increases 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

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 to continue into the future. As a result of these financial difficulties, the USPS has continued to adjust its postal rates and service levels. The USPS did not implement a Market Dominant product price increase for January 2025. However, the available rate authority will roll forward to July 2025. The USPS has confirmed it intends to continue with twice a year price increases for 2026 and 2027. With postage increases that continue to exceed the 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 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 may result 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. The uncertainty as to how much of the authority the USPS will use on any specific rate increase also creates 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. 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 continues to face several other industry challenges that have been, and are expected to continue to, adversely impact the Company’s results of operation. The Company continues to operate in a high interest rate environment, which is expected to continue through 2024. Additionally, the price and availability of paper has been, and may continue to be, adversely affected by paper mills’ permanent or temporary closures, and mills’ access to raw materials, conversion to produce other types of paper, and ability to transport paper produced. Postal rate increases, along with the previously described industry challenges, have led to reduced demand for printed products and has caused clients to move more aggressively into other delivery methods, such as the many digital and mobile options now available to consumers. This reduced volume has driven the Company to institute several cost saving measures through its restructuring program, including plant closures and headcount reductions. Through these cost saving measures and proceeds from asset sales, the Company has been able to maintain focus on its transformation into an MX company, with flexibility to invest into the growing business, as well as continuing to be advantageous in its efforts to return capital to shareholders and reduce debt. The Company is also dependent on its production personnel to print the Company’s products in a cost-effective and efficient manner that allows the Company to obtain new clients and to drive sales from existing clients. The Company is unable to predict the full future impact these challenges will have on its business, financial condition, cash flows and results of operations, but expects them to continue into 2024.

Current wording

The Company continues to face several other industry challenges that have been, and are expected to continue to, adversely impact the Company’s results of operation. The Company continues to operate in an elevated interest rate environment, which is expected to continue through 2025. Additionally, the price and availability of paper has been, and may continue to be, adversely affected by paper mills’ permanent or temporary closures; paper mills’ access to raw materials, conversion to produce other types of paper, and ability to transport paper produced; and tariffs and trade restrictions. Postal rate increases, along with the previously described industry challenges, have led to reduced demand for printed products and has caused clients to move more aggressively into other delivery methods, such as the many digital and mobile options now available to consumers. This reduced volume has driven the Company to institute several cost saving measures through its restructuring program, including plant closures and headcount reductions. Through these cost saving measures and proceeds from asset sales, the Company has been able to maintain focus on its transformation into an MX company, with flexibility to invest into the growing business, as well as continuing to be advantageous in its efforts to return capital to shareholders and reduce debt. The Company is also dependent on its production personnel to print the Company’s products in a cost-effective and efficient manner that allows the Company to obtain new clients and to drive sales from existing clients. The Company is unable to predict the full future impact these challenges will have on its business, financial condition, cash flows and results of operations, but expects them to continue into 2025.

Previous wording

The Company’s operating income, operating margin, net earnings (loss) (computed using a 25% normalized tax rate for all items subject to tax) and diluted earnings (loss) per share for the year ended December 31, 2023, changed from the year ended December 31, 2022, as follows (dollars in millions, except per share data):

Current 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 year ended December 31, 2024, changed from the year ended December 31, 2023, as follows (dollars in millions, except per share data):

Previous wording

(1)Restructuring, impairment and transaction-related charges increased $32.7 million ($24.5 million, net of tax), to $77.5 million during the year ended December 31, 2023, and included the following:

Current wording

(1)Restructuring, impairment and transaction-related charges, net increased $24.0 million ($18.0 million, net of tax), to $101.5 million during the year ended December 31, 2024, and included the following:

Previous wording

a. A $27.8 million increase in employee termination charges from $7.3 million during the year ended December 31, 2022, to $35.1 million during the year ended December 31, 2023;

Current wording

a. A $4.6 million decrease in employee termination charges from $35.1 million during the year ended December 31, 2023, to $30.5 million during the year ended December 31, 2024;

Previous wording

b. A $23.0 million increase in impairment charges from $2.2 million during the year ended December 31, 2022, to $25.2 million during the year ended December 31, 2023;

Current wording

b. A $49.7 million increase in impairment charges from $25.2 million during the year ended December 31, 2023, to $74.9 million during the year ended December 31, 2024;

Previous wording

c. A $2.2 million increase in transaction-related charges from $2.0 million during the year ended December 31, 2022, to $4.2 million during the year ended December 31, 2023;

Current wording

c. A $4.8 million decrease in transaction-related charges from $4.2 million of expense during the year ended December 31, 2023, to $0.6 million of income during the year ended December 31, 2024;

Previous wording

d. A $0.3 million increase in integration-related charges from $0.7 million during the year ended December 31, 2022, to $1.0 million during the year ended December 31, 2023; and

Current wording

d. A $0.6 million decrease in integration-related charges from $1.0 million during the year ended December 31, 2023, to $0.4 million during the year ended December 31, 2024; and

Previous wording

e. A $20.6 million decrease in various other restructuring charges from $32.6 million during the year ended December 31, 2022, to $12.0 million during the year ended December 31, 2023.

Current wording

e. A $15.7 million decrease in various other restructuring charges from $12.0 million of expense during the year ended December 31, 2023, to $3.7 million of income during the year ended December 31, 2024.

Previous wording

(2)Other operating income elements increased $4.9 million ($3.7 million, net of tax) primarily due to the following: (1) the impact from print product pricing; (2) a $14.1 million decrease in selling, general and administrative expenses; (3) a $12.5 million decrease in depreciation and amortization expense; (4) impacts from improved manufacturing productivity; and (5) savings from other cost reduction initiatives, partially offset by print volume decreases.

Current wording

(2)Other operating income elements increased $17.5 million ($13.1 million, net of tax) primarily due to the following: (1) a $26.3 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 $12.3 million increase in selling, general and administrative expenses.

Previous wording

(3)Interest expense increased $21.6 million ($16.2 million, net of tax) during the year ended December 31, 2023, to $70.0 million. This change was due to higher weighted average interest rates on borrowings and a $6.1 million increase in interest expense related to the interest rate swaps, partially offset by lower average debt levels during the year ended December 31, 2023, as compared to the year ended December 31, 2022.

Current wording

(3)Interest expense decreased $5.5 million ($4.1 million, net of tax) during the year ended December 31, 2024, to $64.5 million. This change was due to lower average debt levels and a $1.7 million decrease in interest expense related to the interest rate swap, partially offset by a higher weighted average interest rate on borrowings during the year ended December 31, 2024, as compared to the year ended December 31, 2023.

Previous wording

(4)Net pension income decreased $10.9 million ($8.2 million, net of tax) during the year ended December 31, 2023, to $1.7 million. This was due to the following: (1) a $7.9 million increase from interest cost on pension plan liabilities; (2) a $2.4 million decrease from the expected long-term return on pension plan assets; and (3) amortization of actuarial loss of $0.6 million in 2023 that did not occur in 2022.

Current wording

(4)Net pension income decreased $0.9 million ($0.7 million, net of tax) during the year ended December 31, 2024, to $0.8 million. This was due to a $1.7 million decrease from the expected long-term return on pension plan assets and a $0.4 million increase in the amortization of actuarial loss, partially offset by a $1.2 million decrease from interest cost on pension plan liabilities.

Previous wording

(5)The $19.5 million increase in income tax expense as calculated in the following table is primarily due to the following: (1) a $10.7 million increase in the Company’s liability for audit assessments and unrecognized tax benefits; (2) a $5.1 million increase from the loss on the sale of its Argentina print business in 2022; and (3) a $1.3 million increase from valuation allowance reserves.

Current wording

(5)The $6.0 million decrease in income tax expense as calculated in the following table is primarily due to the following: (1) a $16.3 million decrease in the Company’s liability for audit assessments and unrecognized tax benefits; (2) a $5.1 million decrease from adjustments to deferred tax assets; (3) a $1.7 million decrease from differences in foreign statutory income tax rates; and (4) a $1.7 million decrease from the impact of foreign branches. These decreases were partially offset by a $9.8 million increase from from valuation allowance reserve and an $8.7 million increase from non-deductible impairments charges related to the European operations.

Previous wording

Product sales decreased $194.2 million, or 7.7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the following: (1) a $117.3 million decrease from paper sales; (2) a $65.4 million decrease in sales in the Company’s print product lines, mainly due to decreased print volumes; and (3) a $26.4 million decrease in net sales (which includes $8.3 million in paper sales) due to the divestiture of the Company’s print operations in Argentina, partially offset by $14.9 million in favorable foreign exchange impacts.

Current wording

Product sales decreased $234.9 million, or 10.1%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the following: (1) a $142.1 million decrease from paper sales; (2) a $91.4 million decrease in sales in the Company’s print product lines, mainly due to decreased print volumes and a higher mix of lower unit price gravure versus offset print in our magazine and catalog print offerings; and (3) $1.4 million in unfavorable foreign exchange impacts.

Previous wording

Service sales, which primarily consist of logistics, distribution, marketing services, imaging and medical services, decreased $65.1 million, or 9.5%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $59.2 million decrease in logistics sales from lower print volumes and a $5.9 million decrease in marketing services and medical services.

Current wording

Service sales, which primarily consist of logistics, distribution, marketing services, imaging and medical services, decreased $50.6 million, or 8.1%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $44.2 million decrease in marketing services and medical services and a $6.4 million decrease in logistics sales from lower print volumes.

Previous wording

Cost of product sales decreased $171.5 million, or 8.0%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the following: (1) a decrease in paper costs; (2) the impact from lower print volumes; (3) the impact from the divestiture of the Company’s print operations in Argentina; (4) impacts from improved manufacturing productivity; and (5) savings from other cost reduction initiatives.

Current wording

Cost of product sales decreased $248.3 million, or 12.5%, for the year ended December 31, 2024, compared to the year ended December 31, 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.

Previous wording

Cost of service sales decreased $66.1 million, or 14.3%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to decreased freight volumes and other cost reduction initiatives.

Current wording

Cost of service sales decreased $40.7 million, or 10.3%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the impact from lower marketing services and decreased freight volumes.

Previous wording

Selling, general and administrative expenses decreased $14.1 million, or 3.9%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the following: (1) a $6.6 million decrease in employee-related expenses; (2) $6.5 million in favorable foreign exchange impacts; and (3) $2.2 million in lower professional fees. Selling, general and administrative expenses as a percentage of net sales increased from 11.1% for the year ended December 31, 2022, to 11.6% for the year ended December 31, 2023.

Current wording

Selling, general and administrative expenses increased $12.3 million, or 3.6%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $10.8 million increase from unfavorable foreign exchange impacts and a $4.4 million increase in employee-related expenses, 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 from 11.6% for the year ended December 31, 2023, to 13.4% for the year ended December 31, 2024.

Previous wording

Depreciation and amortization decreased $12.5 million, or 8.8%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, due to a $9.5 million decrease in depreciation expense, primarily from property, plant and equipment becoming fully depreciated over the past year, a decrease in purchases of property, plant and equipment and a $3.0 million decrease in amortization expense.

Current wording

Depreciation and amortization decreased $26.3 million, or 20.4%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, due to a $15.9 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 $10.4 million decrease in amortization expense, primarily from intangible assets becoming fully amortized over the past year.

Previous wording

(a)Includes $25.2 million and $2.2 million of impairment charges during the years ended December 31, 2023 and 2022, respectively, which consisted of the following: (1) $17.5 million and $2.2 million, respectively, for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction activities; (2) $4.1 million for software licensing and related implementation costs from a terminated project in 2023; and (3) $3.6 million for right-of-use assets in 2023.

Current wording

(a)Includes $74.9 million and $25.2 million of impairment charges during the years ended December 31, 2024 and 2023, respectively, which consisted of the following: (1) $57.6 million of impairment to reduce the carrying value of the European operations to its estimated fair value, including $41.6 million for foreign currency translation adjustments and $16.0 million for property, plant and equipment in 2024; (2) $14.2 million and $17.5 million, respectively, for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction activities; (3) $4.1 million for software licensing and related implementation costs from a terminated project in 2023; and (4) $3.1 million and $3.6 million, respectively, for operating lease right-of-use assets.

Previous wording

(b)Includes a $9.2 million gain on the sale of the Merced, California facility during the year ended December 31, 2023.

Current wording

(b)Includes a $20.5 million gain on the sale of the Saratoga Springs, New York facility during the year ended December 31, 2024 and a $9.2 million gain on the sale of the Merced, California facility during the year ended December 31, 2023.

Previous wording

A reconciliation of EBITDA to net earnings (loss) for the years ended December 31, 2023 and 2022, was as follows:

Current wording

A reconciliation of EBITDA to net loss for the years ended December 31, 2024 and 2023, was as follows:

Previous wording

(1)Net earnings (loss) included the following:

Current wording

(1)Net loss included the following:

Previous wording

Product sales for the United States Print and Related Services segment decreased $176.9 million, or 8.3%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to an $89.3 million decrease from paper sales and an $87.6 million decrease in sales in the Company’s print product lines, primarily due to decreased volumes.

Current wording

Product sales for the United States Print and Related Services segment decreased $174.7 million, or 9.0%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $100.2 million decrease from paper sales and a $74.5 million decrease in sales in the Company’s print product lines, mainly due to decreased print volumes and a higher mix of lower unit price gravure versus offset print in our magazine and catalog print offerings.

Previous wording

Service sales for the United States Print and Related Services segment decreased $63.5 million, or 9.5%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $56.4 million decrease in logistics sales from lower print volumes and a $7.1 million decrease in marketing services and medical services.

Current wording

Service sales for the United States Print and Related Services segment decreased $50.1 million, or 8.3%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $44.1 million decrease in marketing services and medical services and a $6.0 million decrease in logistics sales from lower print volumes.

Previous wording

Operating income for the United States Print and Related Services segment decreased $51.7 million, or 47.7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $54.2 million increase in restructuring, impairment and transaction-related charges and the impact from decreased print volumes, partially offset by the following: (1) the impact from an increase in print product pricing; (2) a $11.0 million decrease in depreciation and amortization expense; (3) impacts from improved manufacturing productivity; and (4) savings from other cost reduction initiatives.

Current wording

Operating income for the United States Print and Related Services segment increased $56.2 million, or 99.3%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the following: (1) a $23.5 million decrease in restructuring, impairment and transaction-related charges, net; (2) a $23.2 million decrease in depreciation and amortization expense; (3) impacts from improved manufacturing productivity; and (4) savings from other cost reduction initiatives; partially offset by the impact from decreased print volumes and marketing services sales.

Previous wording

The operating margin for the United States Print and Related Services segment decreased to 2.2% for the year ended December 31, 2023, from 3.9% for the year ended December 31, 2022, primarily due to the reasons provided above.

Current wording

The operating margin for the United States Print and Related Services segment increased to 4.8% for the year ended December 31, 2024, from 2.2% for the year ended December 31, 2023, primarily due to the reasons provided above.

Previous wording

(a)Includes $23.2 million and $1.1 million of impairment charges during the years ended December 31, 2023 and 2022, respectively, which consisted of the following: (1) $15.5 million and $1.1 million, respectively, for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction; (2) $4.1 million for software licensing and related implementation costs from a terminated project in 2023; and (3) $3.6 million for right-of-use assets in 2023.

Current wording

(a)Includes $17.1 million and $23.2 million of impairment charges during the years ended December 31, 2024 and 2023, respectively, which consisted of the following: (1) $14.0 million and $15.5 million, respectively, for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction; (2) $4.1 million for software licensing and related implementation costs from a terminated project in 2023; and (3) $3.1 million and $3.6 million, respectively, for operating lease right-of-use assets.

Previous wording

(b)Includes a $9.2 million gain on the sale of the Merced, California facility during the year ended December 31, 2023.

Current wording

(b)Includes a $20.5 million gain on the sale of the Saratoga Springs, New York facility during the year ended December 31, 2024, and a $9.2 million gain on the sale of the Merced, California facility during the year ended December 31, 2023.

Previous wording

Product sales for the International segment decreased $17.3 million, or 4.3%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $28.0 million decrease in paper sales and a $26.4 million decrease in net sales (which includes $8.3 million of paper sales) due to the divestiture of the Company’s print operations in Argentina, partially offset by a $22.2 million increase in print pricing and volume, primarily in Mexico, Peru and Colombia, and $14.9 million in favorable foreign exchange impacts, primarily in Mexico.

Current wording

Product sales for the International segment decreased $60.2 million, or 15.7%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the following: (1) a $41.9 million decrease in paper sales; (2) a $16.9 million decrease in print volume, primarily in Europe and Mexico; and (3) $1.4 million in unfavorable foreign exchange impacts, primarily in Mexico.

Previous wording

Operating income (loss) for the International segment increased $22.8 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $21.1 million decrease in restructuring, impairment and transaction-related charges and a $1.3 million decrease in depreciation and amortization.

Current wording

Operating income (loss) for the International segment decreased $64.0 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $52.3 million increase in restructuring, impairment and transaction-related charges, net and a $14.7 million decrease in operating income from decreased print product volume, primarily in Mexico, Peru and Europe, partially offset by a $3.0 million decrease in depreciation and amortization.

Previous wording

Corporate operating expenses decreased $1.1 million, or 2.2%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to lower employee-related costs and a $0.4 million decrease in restructuring, impairment and transaction-related charges.

Current wording

Corporate operating expenses decreased $1.3 million, or 2.6%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $4.8 million decrease in restructuring, impairment and transaction-related charges, net, partially offset by a $4.8 million increase in employee-related costs.

Previous wording

The Company utilizes cash flows from operating activities and borrowings under its credit facilities to satisfy its liquidity and capital requirements. The Company had total liquidity of $454.3 million as of December 31, 2023, which consisted of up to $401.4 million of unused capacity under its revolving credit arrangement, which was net of $31.1 million of issued letters of credit, and cash and cash equivalents of $52.9 million. Total liquidity is reduced to $406.7 million under the Company’s most restrictive debt covenants, and consists of $353.8 million available under its revolving credit arrangement and $52.9 million in cash and cash equivalents. There were no borrowings under the $432.5 million revolving credit facility as of December 31, 2023. Due to a portion of the revolving credit facility maturing on January 31, 2024, the total capacity under the revolving credit facility was reduced to $342.5 million as of this date.

Current wording

The Company utilizes cash flows from operating activities and borrowings under its credit facilities to satisfy its liquidity and capital requirements. The Company had total liquidity of $328.1 million as of December 31, 2024, which consisted of up to $298.9 million of unused capacity under its revolving credit arrangement, which was net of $25.7 million of issued letters of credit, and cash and cash equivalents of $29.2 million. This is the most restrictive liquidity measure currently applicable under the credit agreement. There were no borrowings under the $324.6 million revolving credit facility as of December 31, 2024.