re: QUAD! Great turn around!

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reported fourth-quarter net income of $7.5 million, after reporting a loss in the same period a year earlier.

- Exceeded revised 2019 guidance for net sales, Adjusted EBITDA and Free Cash Flow.

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And this is a prime example that upon (not iPod ) further inspection, it’s really hard to determine exactly what exactly their income and cash flow figures mean and how they come to their calculations.

For example, normally the reported EPS is close to or exactly the same as EPS reported on the income statements, using Generally Accepted Accounting Principles (GAAP; typically net income/# of shares outstanding).

In the case of QUAD, in Q3 their net income was approximately -126,500,000 with approximately 50,100,000 shares outstanding. So their EPS was -$2.52; however, their non-GAAP adjustments resulted in a reported EPS of $0.10.

I understand that some sectors use different financial calculations and metrics that are common across the sector that deviate a bit from GAAP, and subtle adjustments from company to company happen as well, but I have a hard time getting a loss of $2.52 to a profit of $0.10 without it coming off as deceiving.

Here is an explanation of their adjusted EPS figure:

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Adjusted Diluted Earnings (Loss) Per Share is defined as earnings (loss) from continuing operations before income taxes and equity in (earnings) loss of unconsolidated entity excluding restructuring, impairment and transaction-related charges, employee stock ownership plan contributions, loss (gain) on debt extinguishment, and adjusted for income tax expense at a normalized tax rate, divided by diluted weighted average number of common shares outstanding.

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Here is their adjusted EBIDTA explanation

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Adjusted EBITDA is defined as net earnings (loss) attributable to Quad common shareholders excluding interest expense, income tax expense (benefit), depreciation and amortization, restructuring, impairment and transaction-related charges, (loss) earnings from discontinued operations, net of tax, net pension income, employee stock ownership plan contributions, loss (gain) on debt extinguishment, equity in (earnings) loss of unconsolidated entity, the Adjusted EBITDA for unconsolidated equity method investments (calculated in a consistent manner with the calculation for Quad) and net earnings

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Here is their free cash flow explanation

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Free Cash Flow is defined as net cash provided by operating activities less purchases of property, plant and equipment, plus LSC-related payments primarily related to incremental interest payments associated with the 2019 amended debt refinancing and transaction-related costs.

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And here is their debt leverage explanation

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Debt Leverage Ratio is defined as total debt and finance lease obligations divided by the last twelve months of Adjusted EBITDA.

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Only its free cash flow seems to be consistent with the typical calculation of FCF. And after looking deeper. that was true for 2018, but their adjustments resulted in a $61 million increase from the traditional FCF calculations.

And when using these adjusted measures, their 2020 finance is for lower adjusted EBIDTA ($285 to $315 million compared to $335 million in 2019) and similar, if not a little bit higher FCF ($100 to $130 million compared to $106 million in 2019). Both represent considerable deceases from 2018 ($428 million adjusted EBIDTA; $164 million FCF) even at the very top end of their projections.