QUAD/GRAPHICS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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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 months ended March 31, 2022 and 2021, 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, 2021, and notes thereto included in the Company's Annual Report on
Form 10-K, filed with the SEC on February 23, 2022.

Management's discussion and analysis of financial condition and results of
operations is provided as a supplement to the Company's condensed consolidated
financial statements and accompanying notes to help provide an understanding of
the Company's financial condition, the changes in the Company's financial
condition and the Company's results of operations. This discussion and analysis
is organized as follows:

• Caution Regarding Forward-Looking Statements.

•Overview. This section includes a general description of the Company's business
and segments, an overview of key performance metrics the Company's management
measures and utilizes to evaluate business performance, and an overview of
trends affecting the Company, including management's actions related to the
trends.

•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
March 31, 2022, to the three months ended March 31, 2021. The comparability of
the Company's results of operations between periods was impacted by the
divestiture of the Company's third-party logistics business on June 30, 2021.
The results of operations of the divestiture are included in the Company's
condensed consolidated results until the date of disposition. 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, financial measures that the Company uses
to assess the performance of its business that are not prepared in accordance
with GAAP.

•Liquidity and Capital Resources. This section provides an analysis of the
Company's capitalization, cash flows, a statement about off-balance sheet
arrangements 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.




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Cautionary Statement Regarding Forward-Looking Statements

To the extent any statements in this Quarterly Report on Form 10-Q contain
information that is not historical, these statements are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements relate to, among other
things, the objectives, goals, strategies, beliefs, intentions, plans,
estimates, prospects, projections and outlook of the Company, and can generally
be identified by the use of words such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "plan," "foresee," "believe" or "continue" or the
negatives of these terms, variations on them and other similar expressions. In
addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking
statements.

These forward-looking statements are not guarantees of future performance and
are subject to risks, uncertainties and other factors, some of which are beyond
the control of the Company. These risks, uncertainties and other factors could
cause actual results to differ materially from those expressed or implied by
those forward-looking statements. Among risks, uncertainties and other factors
that may impact Quad are those described in Part I, Item 1A, "Risk Factors," of
the Company's 2021 Annual Report on Form 10-K, filed with the SEC on
February 23, 2022, as such may be amended or supplemented in Part II, Item 1A,
"Risk Factors," of the Company's subsequently filed Quarterly Reports on
Form 10-Q (including this report), and the following:

•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 and the materials to manufacture ink;

•The impact of inflationary cost pressures and supply chain shortages;

•The impact of lower print demand and significant overcapacity in a highly competitive environment creates downward pricing pressures and potential underutilization of assets;

•The negative impacts the COVID-19 pandemic has had and will continue to have on
the Company's business, financial condition, cash flows, results of operations
and supply chain, including rising inflationary cost pressures on raw materials,
distribution and labor, and future uncertain impacts;

• Inability to attract and retain qualified talent across the business;

•The impact of increased business complexity resulting from the Company’s transformation into a marketing experience company;

•The impact of digital media and similar technological changes, including digital substitution by consumers;

•The Company’s inability to reduce costs and improve operational efficiency quickly enough to respond to market conditions;

•The impact of changes in postal rates, service levels or regulations, including
delivery delays due to ongoing COVID-19 impacts on daily operational staffing at
the United States Postal Service;

•The impact of a data breach of sensitive information, ransomware attack or other cyber incident on the Company;

•The impact that negative publicity could have on our business;

•The impact of changing future economic conditions;

• Customers’ inability to perform contracts or renew contracts with customers on favorable terms or at all;

•The fragility and decline of global distribution channels;

• Failure to successfully identify, manage, complete and integrate acquisitions, investment opportunities or other material transactions, as well as the successful identification and execution of strategic divestitures;

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Table of Contents •The impact of any other than temporary decline in operating results and business value that could result in non-cash impairment charges due to impairment of property, plant and equipment and other intangible assets;

• The impact of risks associated with operations outside of United States
(“United States”), including costs incurred or reputational damage suffered due to the improper conduct of its employees, contractors or agents, and geopolitical events such as war and terrorism;

•Significant investments may be needed to maintain the Company's platforms,
processes, systems, client and product technology and marketing and to remain
technologically and economically competitive;

• The impact of the various covenants in the Company’s credit facilities on the Company’s ability to operate its business, as well as the uncertain negative impacts that COVID-19 may have on the Company’s ability to continue to operate. comply with these covenants;

•The impact of regulatory issues and legislative developments or changes in laws, including changes in cybersecurity, privacy and environmental laws; and

•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.

Quad cautions that the foregoing list of risks, uncertainties and other factors
is not exhaustive, and you should carefully consider the other factors detailed
from time to time in Quad's filings with the SEC and other uncertainties and
potential events when reviewing the Company's forward-looking statements.

Because forward-looking statements are subject to assumptions and uncertainties,
actual results may differ materially from those expressed or implied by such
forward-looking statements. You are cautioned not to place undue reliance on
such statements, which speak only as of the date of this Quarterly Report on
Form 10-Q. Except to the extent required by the federal securities laws, Quad
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.



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Overview

Business Overview

Quad is a global marketing experience company that helps brands reimagine their
marketing to be more streamlined, impactful, flexible and frictionless. Quad's
strategic priorities are powered by three key competitive advantages that
include integrated marketing platform excellence, innovation, and culture and
social purpose. The Company's integrated marketing platform is powered by a set
of core specialties including business strategy, insights and analytics,
technology solutions, managed services, agency and studio solutions, media,
print, in-store and packaging. Serving over 4,600 clients, Quad has more than
15,000 people working in 14 countries around the world.

Quad’s overall business strategy and singular vision as a global marketing experience company is achieved through the execution of the following five cohesive strategic priorities:

Put yourself in the customers’ shoes

The Company encourages all employees, regardless of job title, to walk in the
shoes of clients by putting a priority on listening to clients' needs and
challenges, doing what they can to make it easy to work with Quad, and making
the client experience enjoyable and inclusive at every touchpoint. With a focus
on solving problems and removing friction wherever a client experiences it in
the marketing process, Quad seeks to become an invaluable strategic marketing
partner for its clients, helping them successfully navigate today's constantly
evolving media landscape through innovative data-driven solutions, produced and
deployed efficiently across multiple media channels. A key component of Quad's
client-facing strategy is to strengthen relationships at higher levels within a
client's organization so the Company can better understand, anticipate and
satisfy the organization's requirements, including their diversity, equity and
inclusion goals, and broader environmental, social and governance objectives.
The Company also believes its proactive thought leadership in the key issues
facing its clients, including data-driven marketing, mar-tech and postal reform,
will foster loyalty to the Quad brand.

Grow the business profitably

This strategic priority centers on Quad's ability to defend against significant
media disruption, deploy balanced use of capital, including disciplined and
compelling investments, and grow the business as a marketing experience company.
Key components of this priority are:

•Acquire new and expand existing account relationships by introducing clients to
the Company's complete through-the-line marketing offering - from strategy and
creative through production, execution and analytics - that helps them market
more efficiently and effectively. To this end, Quad is focused on ensuring it
has the right talent in the right positions to facilitate strategic marketing
conversations and tailored solutions based on a better understanding of their
needs.

•Expand in key vertical industries with growth opportunities, such as consumer
technology, consumer-packaged goods, financial services, insurance, healthcare
and direct-to-consumer, while continuing to capitalize on the Company's
established expertise in retail and publishing. Through existing and new
offerings, Quad delivers solutions dedicated to solving client marketing and
process challenges.

•Make disciplined and compelling investments that take many different forms. The
Company intends to continue to pursue growth investments that help expand and
strengthen its integrated marketing platform. In addition, the Company intends
to continue making long-term investments in its talent, such as hiring business
professionals with client-side marketing experience and consulting expertise to
enhance its position as a marketing experience company, as well as investments
to attract new employees and increase existing employee engagement, retention
and productivity.



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Bolster Platform Strength

The Company operates what it believes to be a superior and unparalleled
integrated marketing platform, which it has consciously built to remove friction
in the marketing process and speed the overall marketing journey through reduced
complexity, increased efficiencies and enhanced marketing spend effectiveness
across channels. Through this unique platform, the Company offers a complete
through-the-line marketing offering featuring agency, consulting and
implementation solutions encompassing marketing strategy, including consumer
insights and data analytics; creative solutions for producing quality content at
scale; and media deployment and optimization for all channels, including print,
broadcast, digital, in-store, out-of-home and packaging supported by 24/7 global
production, including industry-leading print manufacturing and mail-distribution
capabilities. Quad uses a disciplined return on capital framework to make
regular, strategic investments in this platform, resulting in what it believes
is the most integrated, automated, efficient, innovative and modern marketing
platform of its kind. The Company's long-standing, disciplined culture of
holistic Continuous Improvement and commitment to Lean Enterprise methodologies,
along with ongoing, strategic investments in talent, technology, products and
services to accelerate its position as a marketing experience company.

To strengthen its offering, the Company continually seeks to enhance its product
portfolio, especially in the direct marketing, in-store and packaging spaces,
with innovations that support clients' ability to stand out in a consumer's
mailbox or front doorstep, or on the store shelf. These innovations include
proprietary solutions unavailable anywhere else in the marketing, communications
or printing industries.

Additionally, Quad has chosen to strategically divest of those businesses that
cannot be easily leveraged as part of its greater integrated marketing platform,
such as the QuadExpress third-party logistics business Quad sold in 2021.
Through these types of optimization efforts, Quad maintains a superior,
unparalleled platform that delivers value to clients and, ultimately, their
customers.

Empower employees

Quad's strategic priority to empower employees throughout their career journey
builds on the key aspects of the Company's distinct corporate culture, which the
Company views as a competitive advantage. These aspects include the Company's
enduring values, which are centered on trust, innovation, growth, believing in
people and doing the right thing. The Company understands that its employees
perform better at work when they can simply be themselves - confident in their
abilities, comfortable sharing their ideas, opinions and beliefs, and able to
bring their truest and best selves to the workplace - all of which leads to a
more inclusive environment and better engagement, decision-making and business
outcomes. The Company embraces forward-thinking workplace practices, such as
flexible work models for the long-term future of work; implements innovative
talent acquisition strategies to meet its labor and business needs; and provides
training and reward programs to engage, develop and retain its employees.
Employees are encouraged to take advantage of the Company's continuous growth
environment, which not only teaches critical on-the-job and leadership skills,
but also helps them respond to rapid change, cultivate effective networks, and
create high-quality relationships necessary for personal, professional and
company growth. The Company believes its approach to continuous growth for each
employee is advantageously distinct from other employers. With the Company's
encouragement to do things differently, to be something greater and to create a
better way, employees are more fully engaged in their day-to-day activities,
producing better results for clients and advancing the Company's strategic
priorities. Additionally, the Company engages employees and fosters corporate
pride by supporting community activities, initiatives and organizations that
improve the quality of life near Quad's operations.

Improve financial strength and create shareholder value

Quad follows a disciplined approach to maintaining and enhancing financial
strength to create shareholder value, which is essential given ongoing media
disruption, including printing industry challenges. This strategy is centered on
the Company's ability to drive profitable growth, and maximize net earnings,
Free Cash Flow and operating margins; maintain consistent financial policies to
ensure a strong balance sheet, liquidity level and access to capital; and retain
the financial flexibility needed to strategically allocate and deploy capital as
circumstances change. The priorities for capital allocation and deployment are
balanced according to prevailing circumstances and what the Company thinks is
best for shareholder value creation at any particular point in time. Those
priorities currently include: deleveraging the Company's balance sheet through
debt and pension liability reductions; making compelling investments that drive
profitable organic growth and productivity in the Company's print manufacturing
and distribution operations, as well as expansion into higher-growth marketing
services; and paying dividends and stock buybacks over the long term.


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To provide ongoing improvement in manufacturing productivity and, ultimately,
maximize operating margins, the Company applies holistic Continuous Improvement
and Lean Enterprise methodologies to simplify and streamline processes. These
same methodologies are applied to its selling, general and administrative
functions to create a truly Lean Enterprise. The Company continually works to
lower its cost structure by consolidating its manufacturing operations into its
most efficient facilities, as well as realizing purchasing, mailing and
logistics efficiencies 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 and pension liability reduction.
The Company's disciplined financial approach also allows it to maintain
sufficient liquidity and to reduce refinancing risk, with the nearest
significant debt maturity of $91.5 million occurring in January 2024. The
Company had total liquidity of $535.0 million as of March 31, 2022, which
consisted of up to $396.7 million of unused capacity under its revolving credit
arrangement, net of $35.8 million of issued letters of credit, and cash and cash
equivalents of $138.3 million. On May 2, 2022, the Company used liquidity
available under its revolving credit facility and available cash on hand to fund
the repayment on maturity of all $209.1 million aggregate principal amount of
its Senior Unsecured Notes. In addition, the Company completed the amendment of
its $1 billion bank debt agreement during the fourth quarter of 2021, extending
the maturity to November 2026. Quad is proud of its strong and trusted banking
relationships, which provide the Company with increased financial flexibility to
continue to pay down debt and to make strategic investments to accelerate its
position as a marketing experience company.

segments

The Company's operating and reportable segments are aligned with how the chief
operating decision maker of the Company currently manages the business. The
Company's operating and reportable segments, including their product and service
offerings, and a "Corporate" category are summarized below.

•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 retail inserts, publications, catalogs,
special interest publications, journals, direct mail, directories, in-store
marketing and promotion, packaging, newspapers, custom print products, other
commercial and specialty printed products and global paper procurement, together
with marketing and other complementary services, including consumer insights,
audience targeting, personalization, media planning and placement, process
optimization, campaign planning and creation, pre-media production, videography,
photography, digital execution, print execution and logistics. This segment also
includes the manufacture of ink. The United States Print and Related Services
segment accounted for approximately 87% of the Company's consolidated net sales
during the three months ended March 31, 2022.

•The International segment consists of the Company's printing operations in
Europe and Latin America, including operations in England, France, Germany,
Poland, Argentina, Colombia, Mexico and Peru, as well as investments in printing
operations in India. 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% of
the Company's consolidated net sales during the three months ended March 31,
2022.

•Corporate consists of unallocated general and administrative activities and
associated expenses including, in part, executive, legal and finance, as well as
certain expenses and income from frozen employee retirement plans, such as
pension benefit plans.

Overview of key performance indicators

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
(used in) 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 (used in) operating activities
to Free Cash Flow, and the calculation of Debt Leverage Ratio in the "Liquidity
and Capital Resources" section below).



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Net sales growth. The Company uses period-over-period net sales growth as a key
performance metric. The Company's management assesses net sales growth based on
the ability to generate increased net sales through increased sales to existing
clients, sales to new clients, sales of new or expanded solutions to existing
and new clients and opportunities to expand sales through strategic investments,
including acquisitions.

EBITDA and EBITDA margin. The Company uses EBITDA and EBITDA margin as metrics
to assess operating performance. The Company's management assesses EBITDA and
EBITDA margin based on the ability to increase revenues while controlling
variable expense growth.

Net cash provided by (used in) operating activities. The Company uses net cash
provided by (used in) operating activities as a metric to assess liquidity. The
Company's management assesses net cash provided by (used in) operating
activities based on the ability to meet recurring cash obligations while
increasing available cash to fund debt service requirements, capital
expenditures, acquisitions and other investments in future growth, cash
restructuring requirements related to cost reduction activities, shareholder
dividends and share repurchases. Net cash provided by (used in) operating
activities can be significantly impacted by the timing of non-recurring or
infrequent receipts or expenditures.

Free Cash Flow. The Company uses Free Cash Flow as a metric to assess liquidity
and capital deployment. The Company's management assesses Free Cash Flow as a
measure to quantify cash available for strengthening the balance sheet (debt and
pension liability reduction), for strategic capital allocation and deployment
through investments in the business (acquisitions and strategic investments) and
for returning capital to the shareholders (dividends and share repurchases). The
Company's priorities for capital allocation and deployment will change as
circumstances dictate for the business, and Free Cash Flow can be significantly
impacted by the Company's restructuring activities and other unusual items.

Debt Leverage Ratio. The Company uses the Debt Leverage Ratio as a metric to
assess liquidity and the flexibility of its balance sheet. Consistent with other
liquidity metrics, the Company monitors the Debt Leverage Ratio as a measure to
determine the appropriate level of debt the Company believes is optimal to
operate its business, and accordingly, to quantify debt capacity available for
strengthening the balance sheet (debt and pension liability reduction), for
strategic capital allocation and deployment through investments in the business
(capital expenditures, acquisitions and strategic investments), and for
returning capital to the shareholders (dividends and share repurchases). The
priorities for capital allocation and deployment will change as circumstances
dictate for the business, and the Debt Leverage Ratio can be significantly
impacted by the amount and timing of large expenditures requiring debt
financing, as well as changes in profitability.

The Company remains disciplined with its debt leverage. The Company's
consolidated debt and finance lease obligations decreased by $2 million during
the three months ended March 31, 2022. Since the Company completed the World
Color Press acquisition in July 2010, the Company has reduced debt and finance
lease obligations by $937 million and has reduced the obligations for pension,
postretirement and MEPPs by $515 million, for a total obligation reduction since
July of 2010 of $1.4 billion.

The Company is subject to seasonality in its quarterly results as net sales and
operating income are typically higher in the third and fourth quarters of the
calendar year as compared to the first and second quarters. The fourth quarter
is typically the highest seasonal quarter for cash flows provided by operating
activities and Free Cash Flow due to the reduction of working capital
requirements that reach peak levels during the third quarter. Seasonality is
driven by increased retail inserts and catalogs primarily due to back-to-school
and holiday-related advertising and promotions. Due to the impacts from supply
chain disruptions in 2022, the Company expects to reach higher than typical
levels of working capital requirements during the first and second quarters. The
Company expects seasonality impacts to continue in future years.

Overview of trends affecting Quad

As consumer media consumption habits change, marketing services providers face
increased demand to offer end-to-end marketing services, from strategy and
creative through execution, across all channels, traditional and digital. As new
marketing and advertising channels emerge, marketing services providers must
expand their services beyond traditional channels, such as for television,
newspapers, print publications and radio, to digital channels, such as mobile,
internet search, internet display and video, to create effective multichannel
campaigns for their clients. This trend greatly influences Quad's ongoing
efforts to redefine the future of integrated marketing and create greater value
for its clients who are looking for less complexity, greater transparency and
accountability from their business partners.



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The Company leverages its data-driven print expertise as part of an integrated
marketing platform that helps its clients not only plan and produce marketing
programs, but also deploy, manage and measure them across all media channels.
Competition in the printing industry remains highly fragmented and intense, and
the Company believes that there are indicators of heightened competitive
pressures. The industry has excess manufacturing capacity created by continued
declines in industry volumes, compounded by the COVID-19 pandemic, which, in
turn, have created accelerated downward pricing pressures. The Company faces
competition due to the increased accessibility and quality of digital
alternatives to traditional delivery of printed documents through the online
distribution and hosting of media content, and the digital distribution of
documents and data. The Company faces competition from print management and
marketing consulting firms that look to streamline processes and reduce the
overall print spend of the Company's clients.

The Company believes that a disciplined approach for capital management and a
strong balance sheet are critical to be able to invest in profitable growth
opportunities and technological advances, thereby providing the highest return
for shareholders. Management balances the use of cash between deleveraging the
Company's balance sheet (through reduction in debt and pension obligations),
compelling investment opportunities (through capital expenditures, acquisitions
and strategic investments) and returns to shareholders (through dividends and
share repurchases).

The Company continues to make progress on integrating and streamlining all
aspects of its business, thereby lowering its cost structure by consolidating
its manufacturing platform into its most efficient facilities, as well as
realizing purchasing, mailing and logistics efficiencies by centralizing and
consolidating print manufacturing volumes and eliminating redundancies in its
administrative and corporate operations. The Company has continued to evolve its
manufacturing platform, equipping facilities to be product line agnostic, which
enables the Company to maximize equipment utilization. Quad believes that the
large plant size of certain of its key printing facilities allows the Company to
drive savings in certain product lines (such as publications and catalogs) due
to economies of scale and from investments in automation and technology. The
Company continues to focus on proactively aligning its cost structure to the
realities of the top-line pressures it faces in the printing industry through
Lean Manufacturing and sustainable continuous improvement programs.

The Company believes it will continue to drive productivity improvements and
sustainable cost reduction initiatives into the future through an engaged
workforce and ongoing adoption of the latest manufacturing automation and
technology. Through this strategy, the Company believes it can maintain the
strongest, most efficient print manufacturing platform to remain a high-quality,
low-cost producer.

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, gives the USPS considerable financial relief as well as significant cost
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 and other alternative media channels in
order to ensure that they stay within their expected postage budgets.

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 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. 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 also creates potential volume declines as rate predictability with
respect to cost is no longer known for mailers. The result may be reduced demand
for printed products as clients may move more aggressively into other delivery
methods, such as the many digital and mobile options now available to consumers.



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The Company has invested significantly in its mail preparation and distribution
capabilities to mitigate the impact of increases in postage costs, and to help
clients successfully navigate the ever-changing postal environment. Through its
data analytics, unique software to merge mail streams on a large scale, advanced
finishing capabilities and technology, and in-house transportation and logistics
operations, the Company manages the mail preparation and distribution of most of
its clients' products to maximize efficiency, to enable on-time and consistent
delivery and to partially reduce these costs; however, the net impact of
increasing postal costs may create a decrease in client demand for print and
mail products.

The Company's results of operations have been adversely impacted as a result of
the COVID-19 pandemic and the emergence of new variants. Through the Company's
Crisis Management Team, including executive and operations leadership, the
Company has been executing business continuity plans focused on protecting the
health and well-being of our employees, while also continuing to service
clients, and protect the long-term financial health of the Company as the
COVID-19 pandemic continues. With ongoing advancements against the COVID-19
pandemic, the effects on the Company have lessened from previous periods. The
Company is continuing to evaluate the impact and may implement additional cost
reduction measures as necessary. The ultimate impact of COVID-19 on the
Company's business, financial condition, cash flows, results of operations and
supply chain will depend on future developments, including the continuing
duration of the pandemic and the related length of its impact on the global
economy, all of which are still uncertain.

Additionally, the increasing cost and availability of raw materials, such as
paper, ink, supplies, distribution and labor, have been and are expected to
continue to adversely impact the Company's results of operation. The Company is
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 nationwide shortage of
available production personnel may put a strain on the Company's ability to
accept new work from client requests, including the Company's seasonally higher
third and fourth quarters. The ongoing labor shortage is also placing upward
price pressure on freight, as the number of available drivers have been reduced,
and may have an adverse effect on our operations. Due to the reduced number of
freight drivers available, the Company may not be able to meet rising customer
demand and could fail to meet our clients' expectations.

The Company has also experienced and anticipates it will continue to experience
certain distribution challenges, including, but not limited to, the above-noted
delivery delays at the USPS and recent volume restrictions at the United Parcel
Service, Federal Express and certain local couriers. As the labor shortages,
supply chain and distribution challenges continue to evolve, the Company is
unable to predict the duration of the shortages and challenges and the extent of
the impact on the Company's business, financial condition, cash flows and
results of operations. As a result of the rising inflationary cost pressures
within our raw materials, distribution and labor, the Company has and will
continue to pass along price increases to our clients. The Company expects
inflationary cost pressures and supply chain shortages to potentially continue
through fiscal year 2022. The Company is unable to predict the future impact of
the labor and supply chain shortages as well as cost inflation, and the
resulting impact on the Company's business, financial condition, cash flows and
results of operations.




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Results of Operations for the Three Months Ended March 31, 2022, Compared to the
Three Months Ended March 31, 2021

Summary of results

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 three months ended March 31, 2022, changed
from the three months ended March 31, 2021, as follows (dollars in millions,
except margin and per share data):
                                                 Operating                                              Net Earnings          Diluted Earnings
                                                   Income                Operating Margin                  (Loss)             (Loss) Per Share
For the three months ended March 31, 2021      $      21.0                               3.0  %       $        10.2          $          0.19

Restructuring, impairment and
transaction-related charges (1)                       (1.0)                             (0.1) %                (0.8)                   (0.01)
Other operating income elements (2)                  (14.6)                             (2.2) %               (10.8)                   (0.21)
Operating Income                                       5.4                               0.7  %                (1.4)                   (0.03)
Interest expense (3)                                      N/A                               N/A                 3.9                     0.07
Net pension income (4)                                    N/A                               N/A                (0.7)                   (0.01)

Income taxes (5)                                          N/A                               N/A                (2.7)                   (0.05)

Investments in unconsolidated entity, net of
tax (6)                                                   N/A                               N/A                (0.1)                       -
For the three months ended March 31, 2022      $       5.4                               0.7  %       $        (1.0)         $         (0.02)


______________________________

(1) Increase in restructuring, impairment and transaction charges
$1.0 million ($0.8 millionexcluding tax), at $3.6 million in the three months ended March 31, 2022and included the following:

aA $3.6 million reduction in termination benefits $4.7 million
in the three months ended March 31, 2021for $1.1 million in the three months ended March 31, 2022;

b.A $0.7 million decrease in impairment charges from $0.8 million during the
three months ended March 31, 2021, to $0.1 million during the three months ended
March 31, 2022;

c. Fees related to transactions of $0.2 million for the two three-month periods ended
March 31, 2022 and 2021; and

dA $5.3 million increase in various other restructuring charges
$3.1 million revenue in the three months ended March 31, 2021for
$2.2 million of expenses during the three months ended March 31, 2022.

The Company expects to incur additional restructuring costs in future reporting periods in connection with the elimination of excess manufacturing capacity and the appropriate alignment of its cost structure in conjunction with acquisitions and Company’s strategic investments, and other cost reduction programs.

(2)Other operating income elements decreased $14.6 million ($10.8 million, net
of tax impact) during the three months ended March 31, 2022, primarily due to
net cost increases from supply chain disruptions, cost inflation in materials
and freight and labor shortages. These cost increases were partially offset by
the following: (1) an $8.5 million increase in paper byproduct recoveries; (2) a
$5.4 million decrease in depreciation and amortization expense; and (3) savings
from other cost reduction initiatives.

(3)Interest expense decreased $5.2 million ($3.9 million, net of tax) during the
three months ended March 31, 2022, to $9.3 million. This change was due to a
$3.0 million decrease in interest expense related to the interest rate swaps and
lower average debt levels in the three months ended March 31, 2022, as compared
to the three months ended March 31, 2021.

(4)Net pension income decreased $0.9 million ($0.7 million, net of tax) during
the three months ended March 31, 2022, to $3.2 million. This was due to a
$0.6 million decrease from the expected long-term return on pension plan assets
and a $0.3 million increase from interest cost on pension plan liabilities.


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(5)The $2.7 million decrease in income tax benefit as calculated in the
following table is primarily due to a $2.8 million decrease in valuation
allowance reserves.
                                                         Three Months Ended March 31,
                                                           2022                 2021               $ Change
Earnings (loss) before income taxes and equity in
earnings of unconsolidated entity                    $       (0.7)          $     10.6          $     (11.3)
Normalized tax rate                                          25.0   %             25.0  %
Income tax expense (benefit) at normalized tax rate          (0.2)                 2.7                 (2.9)

Income tax expense from the condensed consolidated
statements of operations                                      0.3                  0.5                 (0.2)

Impact of income taxes                               $       (0.5)          $      2.2          $      (2.7)



(6)The decrease in investments in unconsolidated entity, net of tax, of
$0.1 million during the three months ended March 31, 2022, was due to a $0.1
million decrease in earnings at the Company's investment in Plural Industria
Grafica Ltda., the Company's Brazilian joint venture. In January 2022, the
Company sold its investment in Plural.

Operating results

The following table sets forth certain information from the Company's condensed
consolidated statements of operations on an absolute dollar basis and as a
relative percentage of total net sales for each noted period, together with the
relative percentage change in such information between the periods set forth
below:
                                                                    Three Months Ended March 31,
                                                             2022                                     2021
                                                                                 (dollars in millions)
                                                                         % of                                  % of                                    %
                                                  Amount                Sales              Amount             Sales             $ Change             Change
Net sales:
Products                                     $       580.9                 78.1  %       $ 526.0                 74.5  %       $   54.9                 10.4  %
Services                                             163.3                 21.9  %         179.8                 25.5  %          (16.5)                (9.2) %
Total net sales                                      744.2                100.0  %         705.8                100.0  %           38.4                  5.4  %
Cost of sales:
Products                                             503.1                 67.6  %         428.3                 60.7  %           74.8                 17.5  %
Services                                             116.5                 15.7  %         131.5                 18.6  %          (15.0)               (11.4) %
Total cost of sales                                  619.6                 83.3  %         559.8                 79.3  %           59.8                 10.7  %
Selling, general & administrative expenses            79.1                 10.6  %          80.5                 11.4  %           (1.4)               

(1.7)%

Depreciation and amortization                         36.5                  4.9  %          41.9                  5.9  %           (5.4)               (12.9) %
Restructuring, impairment and
transaction-related charges                            3.6                  0.5  %           2.6                  0.4  %            1.0                 38.5  %
Total operating expenses                             738.8                 99.3  %         684.8                 97.0  %           54.0                  7.9  %
Operating income                             $         5.4                  0.7  %       $  21.0                  3.0  %       $  (15.6)               (74.3) %



Net Sales

Product sales increased $54.9 million, or 10.4%, for the three months ended
March 31, 2022, compared to the three months ended March 31, 2021, primarily due
to a $47.5 million increase from pass-through paper sales and a $10.6 million
increase in sales in the Company's print product lines, primarily due to
increased print volume. These decreases were partially offset by $3.2 million in
unfavorable foreign exchange impacts.

Service sales, which primarily consist of logistics, distribution, marketing
services, imaging and medical services, decreased $16.5 million, or 9.2%, for
the three months ended March 31, 2022, compared to the three months ended
March 31, 2021, primarily due to a $28.1 million decrease in sales due to the
divestiture of the Company's third-party logistics business, partially offset by
a $6.6 million increase in logistics sales and a $5.0 million increase in
marketing services and medical services.



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Cost of Sales

Cost of product sales increased $74.8 million, or 17.5%, for the three months
ended March 31, 2022, compared to the three months ended March 31, 2021,
primarily due to the following: (1) a increase in pass-through paper costs; (2)
the impacts from rising costs of materials, labor and other costs of production;
and (3) higher print volumes.  These increases were partially offset by an $8.5
million increase in paper byproduct recoveries and other cost reduction
initiatives.

Cost of service sales decreased $15.0 million, or 11.4%, for the three months
ended March 31, 2022, compared to the three months ended March 31, 2021,
primarily due to the impact from the divestiture of the Company's third-party
logistics business, partially offset by increased freight costs.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased $1.4 million, or 1.7%,
for the three months ended March 31, 2022, compared to the three months ended
March 31, 2021, primarily due to a $2.0 million decrease from foreign
translations impacts. Selling, general and administrative expenses as a
percentage of net sales decreased to 10.6% for the three months ended March 31,
2022, compared to 11.4% for the three months ended March 31, 2021.

Depreciation and amortization

Depreciation and amortization decreased $5.4 million, or 12.9%, for the three
months ended March 31, 2022, compared to the three months ended March 31, 2021,
due to a $3.9 million decrease in depreciation expense, primarily from property,
plant and equipment becoming fully depreciated over the past year and a decrease
in purchases of property, plant and equipment, and a $1.5 million decrease in
amortization expense.

Restructuring, impairment and transaction-related costs

Increase in restructuring, impairment and transaction-related charges
$1.0 millionor 38.5%, for the three months ended March 31, 2022compared to the three months ended March 31, 2021mainly due to the following:

                                                                Three Months Ended
                                                                    March 31,
                                                                          2022                2021               $ Change
Employee termination charges                                          $      1.1          $      4.7          $      (3.6)
Impairment charges (a)                                                       0.1                 0.8                 (0.7)
Transaction-related charges                                                  0.2                 0.2                    -

Other restructuring charges (income)
Vacant facility carrying costs and lease exit charges                        1.0                 3.9                 (2.9)
Equipment and infrastructure removal costs                                     -                 0.8                 (0.8)
Gains on the sale of facilities (b)                                            -                (7.8)                 7.8
Other restructuring activities (c)                                           1.2                   -                  1.2
Other restructuring charges (income)                                         2.2                (3.1)                 5.3

Total restructuring, impairment and transaction costs

                                                               $     

3.6 $2.6 $1.0

______________________________

(a)Includes $0.1 million and $0.8 million of impairment charges for machinery
and equipment no longer being utilized in production as a result of facility
consolidations, as well as other capacity reduction and strategic divestiture
activities, during the three months ended March 31, 2022 and 2021, respectively.

(b) Includes a $7.6 million gain on the sale of Riverside, California
installation within the completed three months March 31, 2021.

(c)Includes $0.8 million in charges from foreign currency losses as a result of
the economy in Argentina being classified as highly inflationary during the
three months ended March 31, 2022. The Company has considered the economy in
Argentina to be highly inflationary since June 30, 2018.



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EBITDA and EBITDA Margin-Consolidated

EBITDA and EBITDA margin for the three months ended March 31, 2022compared to the three months ended March 31, 2021were the following:

                                                                           Three Months Ended March 31,
                                                             2022                                                 2021
                                            Amount                 % of Net Sales                Amount                % of Net Sales
                                                                               (dollars in millions)
EBITDA and EBITDA margin (non-GAAP)     $       45.1                             6.1  %       $     67.1                             9.5  %



EBITDA decreased $22.0 million for the three months ended March 31, 2022,
compared to the three months ended March 31, 2021, primarily due to net cost
increases from supply chain disruptions, cost inflation in materials and freight
and labor shortages and $1.0 million of increased restructuring, impairment and
transaction-related charges. These cost increases were partially offset by an
$8.5 million increase in paper byproduct recoveries and savings from other cost
reduction initiatives.

EBITDA is defined as net earnings (loss), excluding (1) interest expense,
(2) income tax expense and (3) depreciation and amortization. EBITDA margin
represents EBITDA as a percentage of net sales. EBITDA and EBITDA margin are
presented to provide additional information regarding Quad's performance. Both
are important measures by which Quad gauges the profitability and assesses the
performance of its business. EBITDA and EBITDA margin are non-GAAP financial
measures and should not be considered alternatives 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. Quad's calculation of EBITDA and
EBITDA margin may be different from the calculations used by other companies,
and therefore, comparability may be limited.

A reconciliation of EBITDA and net profit (loss) for the three months ended
March 31, 2022 and 2021, was as follows:

                                         Three Months Ended March 31,
                                               2022                     2021
                                             (dollars in millions)
Net earnings (loss) (1)          $          (1.0)                     $ 10.2
Interest expense                             9.3                        14.5
Income tax expense                           0.3                         0.5
Depreciation and amortization               36.5                        41.9
EBITDA (non-GAAP)                $          45.1                      $ 67.1

______________________________

(1) Net profit (loss) includes the following items:

a.Restructuring, impairment and transaction-related charges $3.6 million and
$2.6 million for the three months ended March 31, 2022 and 2021, respectively;

b. Net pension income of $3.2 million and $4.1 million for the three months ended
March 31, 2022 and 2021, respectively;

c.Equity in the results of the unconsolidated entity of $0.1 million for the three months ended March 31, 2021.




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United States Print and Related Services

The following table summarizes net sales, operating income, operating margin and
certain items impacting comparability within the United States Print and Related
Services segment:
                                                   Three Months Ended March 31,
                                                     2022                  2021
                                                                 (dollars in millions)
                                                    Amount                Amount              $ Change               % Change
Net sales:
Products                                       $       493.3           $    459.9          $      33.4                       7.3  %
Services                                               157.8                174.7                (16.9)                     (9.7) %
Operating income (including restructuring,
impairment and transaction-related charges)             11.8                 32.5                (20.7)                    (63.7) %
Operating margin                                         1.8   %              5.1  %                  N/A                       N/A
Restructuring, impairment and
transaction-related charges                    $         1.7           $      1.1          $       0.6                      54.5  %



Net Sales

Product sales for the United States Print and Related Services segment increased
$33.4 million, or 7.3%, for the three months ended March 31, 2022, compared to
the three months ended March 31, 2021, primarily due to a $34.0 million increase
from pass-through paper sales, partially offset by a $0.6 million decrease in
sales in the Company's print product lines, primarily due to decreased print
volume.

Service sales for the United States Print and Related Services segment decreased
$16.9 million, or 9.7%, for the three months ended March 31, 2022, compared to
the three months ended March 31, 2021, primarily due to a $28.1 million decrease
in sales due to the divestiture of the Company's third-party logistics business,
partially offset by a $6.4 million increase in logistics sales and a $4.8
million increase in marketing services and medical services.
Operating Income

Operating income for the United States Print and Related Services segment
decreased $20.7 million, or 63.7%, for the three months ended March 31, 2022,
compared to the three months ended March 31, 2021, primarily due to net cost
increases from supply chain disruptions, cost inflation in materials and freight
and labor shortages and a $0.6 million increase in restructuring, impairment and
transaction-related charges. These cost increases were partially offset by the
following: (1) a $8.5 million increase in paper byproduct recoveries; (2) a $4.7
million decrease in depreciation and amortization expense; and (3) savings from
other cost reduction initiatives.

Operating margin for the United States Print and Related Services segment
decreased to 1.8% for the three months ended March 31, 2022, compared to 5.1%
for the three months ended March 31, 2021, primarily due to the reasons provided
above.



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Restructuring, Impairment and Transaction-Related Charges

Restructuring, impairment and transaction-related charges for the United States
Print and Related Services segment increased $0.6 million for the three months
ended March 31, 2022, compared to the three months ended March 31, 2021,
primarily due to the following:
                                                                Three Months Ended
                                                                    March 31,
                                                                          2022                2021               $ Change
Employee termination charges                                          $      0.5          $      3.7          $      (3.2)
Impairment charges (a)                                                       0.1                 0.8                 (0.7)

Other restructuring charges (income) (b)                                     1.1                (3.4)                 4.5

Total restructuring, impairment and transaction costs

                                                               $     

1.7 $1.1 $0.6

______________________________

(a)Includes $0.1 million and $0.8 million of impairment charges for machinery
and equipment no longer being utilized in production as a result of facility
consolidations, as well as other capacity reduction and strategic divestiture
activities, during the three months ended March 31, 2022 and 2021, respectively.

(b) Includes a $7.6 million gain on the sale of Riverside, California
installation within the completed three months March 31, 2021.

International

The following table summarizes net sales, operating income, operating margin,
certain items impacting comparability and equity in earnings of unconsolidated
entity within the International segment:
                                                     Three Months Ended March 31,
                                                       2022                 2021
                                                                   (dollars in millions)
                                                      Amount               Amount              $ Change               % Change
Net sales:
Products                                         $       87.6           $     66.1          $      21.5                      32.5  %
Services                                                  5.5                  5.1                  0.4                       7.8  %
Operating income (including
restructuring, impairment and
transaction-related charges)                              3.7                  1.5                  2.2                     146.7  %
Operating margin                                          4.0   %              2.1  %                  N/A                       N/A
Restructuring, impairment and
transaction-related charges                      $        1.6           $      0.8          $       0.8                     100.0  %
Equity in earnings of unconsolidated entity                 -                 (0.1)                (0.1)                          nm



Net Sales

Product sales for the International segment increased $21.5 million, or 32.5%,
for the three months ended March 31, 2022, compared to the three months ended
March 31, 2021, due to a $13.5 million increase in pass-through paper sales and
a $11.2 million increase in print volume, primarily in Mexico and Europe,
partially offset by $3.2 million in unfavorable foreign exchange impacts,
primarily in Europe and Argentina.

Service sales for the International segment increased $0.4 million, or 7.8%, for
the three months ended March 31, 2022, compared to the three months ended
March 31, 2021, primarily due to an increase in logistics sales and marketing
services in Europe.



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Operating Income

Operating income for the International segment increased $2.2 million, or
146.7%, for the three months ended March 31, 2022, compared to the three months
ended March 31, 2021, primarily due to a $3.0 million increase in operating
income from increased print volume and cost saving initiatives, partially offset
by a $0.8 million increase in restructuring, impairment and transaction-related
charges.

Restructuring, impairment and transaction-related costs

Restructuring, impairment and transaction-related charges for the International
segment increased $0.8 million, or 100.0%, for the three months ended March 31,
2022, compared to the three months ended March 31, 2021, primarily due to the
following:
                                                                Three Months Ended
                                                                    March 31,
                                                                          2022                2021               $ Change
Employee termination charges                                          $      0.6          $      0.5          $       0.1

Other restructuring charges (a)                                              1.0                 0.3                  0.7

Total restructuring, impairment and transaction costs

                                                               $     

1.6 $0.8 $0.8

______________________________

(a) Includes $0.8 million and $0.3 million expenses related to exchange losses resulting from the economy Argentina being classified as highly inflationary in the three months ended March 31, 2022 and 2021, respectively. The Company has taken into account the economy of Argentina highly inflationary since June 30, 2018.

Equity in the result of the non-consolidated entity

Investments in entities where Quad has the ability to exert significant
influence, but not control, are accounted for using the equity method of
accounting. The Company held a 49% ownership interest in Plural Industria
Gráfica Ltda., a commercial printer based in São Paulo, Brazil until the
investment was sold in January 2022. The equity in earnings of unconsolidated
entity in the International segment was $0.1 million for the three months ended
March 31, 2021.

Unrestricted Subsidiaries

From March 31, 2022the Company does not have any unrestricted subsidiaries as defined in the senior unsecured note indenture.

Business

The following table summarizes unallocated operating expenses presented as
Corporate:
                                                         Three Months Ended March 31,
                                                           2022                   2021
                                                                       (dollars in millions)
                                                          Amount                 Amount              $ Change               % Change
Operating expenses (including
restructuring, impairment and transaction-related
charges)                                           $          10.1            $     13.0          $      (2.9)                    (22.3) %
Restructuring, impairment and transaction-related
charges                                                        0.3                   0.7                 (0.4)                    (57.1) %



Operating Expenses

Corporate operating expenses decreased $2.9 million, or 22.3%, for the three
months ended March 31, 2022, compared to the three months ended March 31, 2021,
primarily due to a $1.8 million decrease in employee-related costs and a $0.4
million decrease in restructuring, impairment and transaction-related charges.



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Restructuring, Impairment and Transaction-Related Charges

Corporate restructuring, impairment and transaction-related charges were $0.3
million and $0.7 million for the three months ended March 31, 2022 and 2021,
respectively.
                                                                Three Months Ended
                                                                    March 31,
                                                                          2022                2021               $ Change
Employee termination charges                                          $        -          $      0.5          $      (0.5)

Transaction-related charges                                                  0.2                 0.2                    -

Other restructuring charges                                                  0.1                   -                  0.1
Total restructuring, impairment and transaction-related
charges                                                               $      0.3          $      0.7          $      (0.4)


Cash and capital resources

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 $535.0 million as of March 31, 2022, which
consisted of up to $396.7 million of unused capacity under its revolving credit
arrangement, net of $35.8 million of issued letters of credit, and cash and cash
equivalents of $138.3 million. Total liquidity is reduced to $230.8 million
under the Company's most restrictive debt covenants, and consists of $138.3
million in cash and cash equivalents and $92.5 million available under its
revolving credit arrangement. There were no borrowings under the $432.5 million
revolving credit facility as of March 31, 2022.

The Company believes its expected future cash flows from operating activities
and its current liquidity and capital resources, are sufficient to fund ongoing
operating requirements and service debt and pension requirements.

Net cash provided by (used in) operating activities

Three months completed March 31, 2022compared to the three months ended March 31, 2021

Net cash used in operating activities increased $89.8 million, from
$72.9 million provided by operating activities for the three months ended
March 31, 2021, to $16.9 million used in operating activities for the three
months ended March 31, 2022. This increase was due to a $78.4 million increase
in cash flows used in changes in operating assets and liabilities, primarily due
to the payment of other current liabilities and the strategic decision to carry
higher inventory levels to serve clients, and a $11.4 million decrease in cash
from earnings.

Net cash used in investment activities

Three months completed March 31, 2022compared to the three months ended March 31, 2021

Net cash used in investing activities increased $12.7 million, from $6.0 million
for the three months ended March 31, 2021, to $18.7 million for the three months
ended March 31, 2022. The increase was primarily due to the following:
(1) a $10.9 million decrease in proceeds from the sale of property, plant, and
equipment; (2) a $2.2 million increase in purchases of property, plant and
equipment; and (3) a $1.6 million increase in cost investment in unconsolidated
entities. These increases were partially offset by a $2.0 million increase in
cash provided by other investing activities.

Net cash used in fundraising activities

Three months completed March 31, 2022compared to the three months ended March 31, 2021

Net cash used in financing activities decreased $35.3 million, from
$41.4 million for the three months ended March 31, 2021, to $6.1 million for the
three months ended March 31, 2022. The decrease was primarily due to
a $33.9 million decrease in net payments of debt and lease obligations and a
$2.8 million decrease in cash used in other financing activities. These
decreases were partially offset by a $1.4 million increase in equity awards
redeemed to pay employees' tax obligations.



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Free Cash Flow

Free cash flow is defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment.

The Company's management assesses Free Cash Flow as a measure to quantify cash
available for (1) strengthening the balance sheet (debt reduction),
(2) strategic capital allocation and deployment through investments in the
business (acquisitions and strategic investments) and (3) returning capital to
the shareholders (dividends and share repurchases). The priorities for capital
allocation and deployment will change as circumstances dictate for the business,
and Free Cash Flow can be significantly impacted by the Company's restructuring
activities and other unusual items.

Free Cash Flow is a non-GAAP financial measure and should not be considered an
alternative to cash flows provided by (used in) operating activities as a
measure of liquidity. Quad's calculation of Free Cash Flow may be different from
similar calculations used by other companies, and therefore, comparability may
be limited.

Free Cash Flow for the three months ended March 31, 2022compared to the three months ended March 31, 2021was the following:

Three months completed March, 31st,

                                                                           2022                      2021
                                                                            (dollars in millions)
Net cash provided by (used in) operating activities             $          (16.9)                $     72.9

Less: purchases of property, plant and equipment                           (19.1)                     (16.9)

Free Cash Flow (Non-GAAP)                                       $          (36.0)                $     56.0



Free Cash Flow decreased $92.0 million for the three months ended March 31,
2022, compared to the three months ended March 31, 2021, primarily due to a
$89.8 million increase in net cash used in operating activities and a
$2.2 million increase in capital expenditures. See the "Net Cash Provided by
(Used in) Operating Activities" section above for further explanations of the
change in operating cash flows and the "Net Cash Used in Investing Activities"
section above for further explanations of the changes in purchases of property,
plant and equipment.

Debt Leverage Ratio

The Debt Leverage Ratio is defined as total debt and finance lease obligations
less cash and cash equivalents (Net Debt) divided by the trailing twelve months
Adjusted EBITDA, comprised of the sum of the following: (1) the last twelve
months of EBITDA (see the definition of EBITDA and the reconciliation of net
earnings (loss) to EBITDA in the "Results of Operations" section above);
(2) restructuring, impairment and transaction-related charges; (3) gains from
sale and leaseback; (4) loss on debt extinguishment; (5) equity in earnings of
unconsolidated entity; and (6) Adjusted EBITDA for unconsolidated equity method
investments (calculated in a consistent manner with the calculation for Quad).

The Company uses the Debt Leverage Ratio as a metric to assess liquidity and the
flexibility of its balance sheet. Consistent with other liquidity metrics, the
Company monitors the Debt Leverage Ratio as a measure to determine the
appropriate level of debt the Company believes is optimal to operate its
business, and accordingly, to quantify debt capacity available for strengthening
the balance sheet through debt and pension liability reduction, for strategic
capital allocation and deployment through investments in the business, and for
returning capital to the shareholders. The priorities for capital allocation and
deployment will change as circumstances dictate for the business, and the Debt
Leverage Ratio can be significantly impacted by the amount and timing of large
expenditures requiring debt financing, as well as changes in profitability.

The debt-to-equity ratio is a non-GAAP measure and should not be considered an alternative to cash flow generated by (used in) operating activities as a measure of liquidity. Quad’s calculation of debt leverage ratio may differ from similar calculations used by other companies and therefore comparability may be limited.



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The Debt Leverage Ratio calculated below differs from the Total Leverage Ratio,
the Total Net Leverage Ratio and the Senior Secured Leverage Ratio included in
the Company's debt covenant calculations (see Note 9, "Debt," to the condensed
consolidated financial statements in Item 1, "Condensed Consolidated Financial
Statements (Unaudited)," of this Quarterly Report on Form 10-Q for further
information on debt covenants). The Total Leverage Ratio included in the
Company's debt covenants includes interest rate swap liabilities, letters of
credit and surety bonds as debt and excludes non-cash stock-based compensation
expense from EBITDA. The Total Net Leverage Ratio includes and excludes the same
adjustments as the Total Leverage Ratio, in addition to netting domestic
unrestricted cash with debt. Similarly, the Senior Secured Leverage Ratio
includes and excludes the same adjustments as the Total Leverage Ratio, in
addition to the exclusion of the outstanding balance of the Senior Unsecured
Notes and surety bonds from debt and netting domestic unrestricted cash with
debt.

The debt leverage ratio at March 31, 2022and December 31, 2021was the following:

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