What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-22 · 173 added, 174 removed, 389 unchanged (47% of the section changed)

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• 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.

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.

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Business Overview

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.

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;

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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 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 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.

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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).

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).

Net sales growth.

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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.

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.

Overview of Trends Affecting Quad

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Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services.

In September 2024, the USPS held a pre-filing conference to further reduce service standards.

These changes required an advisory opinion from the PRC, which was issued in January 2025, urging the USPS to reconsider its plan.

However, the USPS is still expected to implement the changes in 2025, regardless of the advisory opinion issued.

In addition to the reduce service standards, the USPS has also issued reduced service performance targets for 2025.

Almost all letters and flats targets were reduced, some as much as 15% lower than 2024 targets (i.e.

First Class Letters three to five day on time performance target was reduced from 90% down to 80%).

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.

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.

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.

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.

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.

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 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.

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.

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.

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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.

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.

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Summary 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 year ended December 31, 2023, changed from the year ended December 31, 2022, as follows (dollars in millions, except per share data):

Operating Income Operating Margin Net Earnings (Loss) Diluted Earnings (Loss) Per Share

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):

Operating Income Operating Margin Net Loss Diluted Loss Per Share

For the year ended December 31, 2023 $ 25.7 0.9 % $ (55.4) $ (1.14)

Restructuring, impairment and transaction-related charges (1)

Restructuring, impairment and transaction-related charges, net (1)

(24.0) (1.2) % (18.0) (0.40)

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(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:

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;

(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:

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;

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;

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;

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;

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.

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;

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;

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.

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

(2) Other operating income elements increased $17.5 million ($13.1 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;

(1) a $26.3 million decrease in depreciation and amortization expense;

(2) impacts from improved manufacturing productivity;

and (5) savings from other cost reduction initiatives, partially offset by print volume decreases.

(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.

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.

(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.

(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 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.

(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.

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.

(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.

Year Ended December 31,

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(dollars in millions)

Earnings (loss) before income taxes $ (42.6) $ 17.7 $ (60.3)

Loss before income taxes $ (44.5) $ (42.6) $ (1.9)

Normalized tax rate 25.0 % 25.0 %

Income tax expense (benefit) at normalized tax rate (10.7) 4.4 (15.1)

Income tax benefit at normalized tax rate (11.1) (10.7) (0.4)

Income tax expense from the consolidated statements of operations 6.4 12.8 (6.4)

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Depreciation and amortization 102.5 3.8 % 128.8 4.4 % (26.3) (20.4) %

Restructuring, impairment and transaction-related charges 77.5 2.6 % 44.8 1.4 % 32.7 73.0 %

Restructuring, impairment and transaction-related charges, net 101.5 3.8 % 77.5 2.6 % 24.0 31.0 %

Total operating expenses 2,653.0 99.3 % 2,932.0 99.1 % (279.0) (9.5) %

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(1) a $142.1 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.

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.

(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.

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.

Cost of Sales

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(2) the impact from lower print volumes;

(3) the impact from the divestiture of the Company’s print operations in Argentina;

(3) impacts from improved manufacturing productivity;

and (5) savings from other cost reduction initiatives.

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.

and (4) other cost reduction initiatives.

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.

Selling, General and Administrative Expenses

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 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.

Depreciation and Amortization

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.

Restructuring, Impairment and Transaction-Related Charges

Restructuring, impairment and transaction-related charges increased $32.7 million, or 73.0%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the following:

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.

Restructuring, Impairment and Transaction-Related Charges, Net

Restructuring, impairment and transaction-related charges, net increased $24.0 million, or 31.0%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the following:

Year Ended December 31,

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74.9 25.2 49.7

Transaction-related charges 4.2 2.0 2.2

Transaction-related charges (income) (0.6) 4.2 (4.8)

Integration costs 0.4 1.0 (0.6)

Other restructuring charges

Other restructuring charges (income)

Vacant facility carrying costs and lease exit charges 14.2 16.6 (2.4)

Equipment and infrastructure removal costs 1.6 0.9 0.7

Gain on the sale of a facility (b)

(9.2) — (9.2)

Other restructuring activities (c)

Gains on the sale of facilities (b)

(20.5) (9.2) (11.3)

Other restructuring charges 12.0 32.6 (20.6)

Total restructuring, impairment and transaction-related charges $ 77.5 $ 44.8 $ 32.7

Other restructuring activities 1.0 3.7 (2.7)

Other restructuring charges (income) (3.7) 12.0 (15.7)

Total restructuring, impairment and transaction-related charges, net $ 101.5 $ 77.5 $ 24.0

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(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 (3) $3.6 million for right-of-use assets in 2023.

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

(c) Includes a $23.1 million loss on the sale of its Argentina print business and $1.8 million in charges from foreign currency losses as a result of the economy in Argentina being classified as highly inflationary during the year ended December 31, 2022.

The Company considered the economy in Argentina to be highly inflationary since June 30, 2018.

and (4) $3.1 million and $3.6 million, respectively, for operating lease right-of-use assets.

(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.

EBITDA and EBITDA Margin—Consolidated

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EBITDA and EBITDA margin (non-GAAP) $ 122.5 4.6 % $ 156.2 5.3 %

EBITDA decreased $51.2 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to $32.7 million of increased restructuring, impairment and transaction-related charges and the impact from lower print and logistics volumes, partially offset by the following:

(1) an increase in print product pricing;

(2) impacts from improved manufacturing productivity;

and (3) savings from other cost reduction initiatives.

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

EBITDA decreased $33.7 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to $24.0 million of increased restructuring, impairment and transaction-related charges, net and impacts from lower print volumes and marketing services sales, partially offset by impacts from improved manufacturing productivity and savings from other cost reduction initiatives.

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

Year Ended December 31,

(dollars in millions)

Net earnings (loss) (1)

$ (50.9) $ (55.4)

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

Restructuring, impairment and transaction-related charges of $77.5 million and $44.8 million for the years ended December 31, 2023 and 2022, respectively.

(1) Net loss included the following:

Restructuring, impairment and transaction-related charges, net of $101.5 million and $77.5 million for the years ended December 31, 2024 and 2023, respectively.

United States Print and Related Services

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Services 554.5 604.6 (50.1) (8.3) %

Operating income (including restructuring, impairment and transaction-related charges) 56.6 108.3 (51.7) (47.7) %

Operating income (including restructuring, impairment and transaction-related charges, net) 112.8 56.6 56.2 99.3 %

Operating margin 4.8 % 2.2 % N/A N/A

Restructuring, impairment and transaction-related charges $ 66.3 $ 12.1 $ 54.2 nm

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.

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.

Restructuring, impairment and transaction-related charges, net $ 42.8 $ 66.3 $ (23.5) (35.4) %

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.

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.

Operating Income

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;

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;

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and (4) savings from other cost reduction initiatives;

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.

Restructuring, Impairment and Transaction-Related Charges

Restructuring, impairment and transaction-related charges for the United States Print and Related Services segment increased $54.2 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the following:

partially offset by the impact from decreased print volumes and marketing services sales.

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.

Restructuring, Impairment and Transaction-Related Charges, Net

Restructuring, impairment and transaction-related charges, net for the United States Print and Related Services segment decreased $23.5 million, or 35.4%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the following:

Year Ended December 31,

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17.1 23.2 (6.1)

Other restructuring charges

Integration costs 0.4 — 0.4

Other restructuring charges (income)

Vacant facility carrying costs and lease exit charges 14.2 16.6 (2.4)

Equipment and infrastructure removal costs 1.6 0.9 0.7

Gain on the sale of a facility (b)

Gains on the sale of facilities (b)

(20.5) (9.2) (11.3)

Other restructuring activities 0.2 0.5 (0.3)

Other restructuring charges 8.8 6.9 1.9

Total restructuring, impairment and transaction-related charges $ 66.3 $ 12.1 $ 54.2

Other restructuring charges (income) (4.5) 8.8 (13.3)

Total restructuring, impairment and transaction-related charges, net $ 42.8 $ 66.3 $ (23.5)

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(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.

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

and (3) $3.1 million and $3.6 million, respectively, for operating lease right-of-use assets.

(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.

International

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Services 18.5 19.0 (0.5) (2.6) %

Operating income (loss) (including restructuring, impairment and transaction-related charges) 18.3 (4.5) 22.8 nm

Operating income (loss) (including restructuring, impairment and transaction-related charges, net) (45.7) 18.3 (64.0) nm

Operating margin (13.3) % 4.5 % N/A N/A

Restructuring, impairment and transaction-related charges $ 9.6 $ 30.7 $ (21.1) (68.7) %

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.

Service sales for the International segment decreased $1.6 million, or 7.8%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $2.8 million decrease in logistics sales, partially offset by a $1.2 million increase in marketing services sales.

Restructuring, impairment and transaction-related charges, net $ 61.9 $ 9.6 $ 52.3 nm

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.

Service sales for the International segment decreased $0.5 million, or 2.6%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $0.4 million decrease in logistics sales and a $0.1 million decrease in marketing services sales.

Operating Income (Loss)

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.

Restructuring, Impairment and Transaction-Related Charges

Restructuring, impairment and transaction-related charges for the International segment decreased $21.1 million, or 68.7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the following:

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.

Restructuring, Impairment and Transaction-Related Charges, Net

Restructuring, impairment and transaction-related charges, net for the International segment increased $52.3 million, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the following:

Year Ended December 31,

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Impairment charges (a)

57.8 2.0 55.8

Transaction-related charges 2.6 2.7 (0.1)

Integration costs — 1.0 (1.0)

Other restructuring charges (b)

3.4 25.6 (22.2)

Total restructuring, impairment and transaction-related charges $ 9.6 $ 30.7 $ (21.1)

Other restructuring charges 0.8 3.4 (2.6)

Total restructuring, impairment and transaction-related charges, net $ 61.9 $ 9.6 $ 52.3

______________________________

(a) Includes $2.0 million and $1.1 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 activities, during the years ended December 31, 2023 and 2022, respectively.

(b) Includes a $23.1 million loss on the sale of its Argentina print business and $1.8 million in charges from foreign currency losses as result of the economy in Argentina being classified as highly inflationary during the year ended December 31, 2022.

(a) Includes $57.8 million and $2.0 million of impairment charges during the years ended December 31, 2024 and 2023, respectively, which consisted of $57.6 million of impairment charges 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 during 2024, and $0.2 million and $2.0 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.

The following table summarizes unallocated operating expenses presented as Corporate:

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(dollars in millions)

Operating expenses (including restructuring, impairment and transaction-related charges) $ 49.2 $ 50.3 $ (1.1) (2.2) %

Restructuring, impairment and transaction-related charges 1.6 2.0 (0.4) (20.0) %

Operating expenses (including restructuring, impairment and transaction-related charges, net) $ 47.9 $ 49.2 $ (1.3) (2.6) %

Restructuring, impairment and transaction-related charges, net (3.2) 1.6 (4.8) nm

Operating Expenses

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.

Restructuring, Impairment and Transaction-Related Charges

Corporate restructuring, impairment and transaction-related charges decreased $0.4 million, or 20.0%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the following:

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.

Restructuring, Impairment and Transaction-Related Charges, Net

Corporate restructuring, impairment and transaction-related charges, net decreased $4.8 million, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the following:

Year Ended December 31,

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Employee termination charges $ — $ 0.3 $ (0.3)

Transaction-related charges 1.5 1.9 (0.4)

Transaction-related charges (income) (a)

(3.2) 1.5 (4.7)

Other restructuring charges (income) — (0.2) 0.2

Total restructuring, impairment and transaction-related charges $ 1.6 $ 2.0 $ (0.4)

Total restructuring, impairment and transaction-related charges, net $ (3.2) $ 1.6 $ (4.8)

______________________________

(a) Includes professional service fees related to business acquisitions and divestiture activities, as well as adjustments to estimated acquisition consideration in 2024.

Liquidity and Capital Resources

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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.

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.

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.

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.

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 for both the next 12 months and beyond.

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Net cash provided by operating activities was $112.9 million for the year ended December 31, 2024, compared to $147.6 million for the year ended December 31, 2023, resulting in a $34.7 million decrease in cash provided by operating activities.

The decrease was primarily due to a $92.6 million decrease in cash from earnings, offset by a $85.6 million increase in cash flows provided by changes in operating assets and liabilities.

Net Cash Used in Investing Activities

The decrease was primarily due to a $49.9 million decrease in cash flows provided by changes in operating assets and liabilities, partially offset by a $15.2 million increase in cash from earnings.

Net Cash Provided by (Used in) Investing Activities

Year Ended December 31, 2024, Compared to Year Ended December 31, 2023

Net cash used in investing activities was $46.4 million for the year ended December 31, 2023, compared to $60.5 million for the year ended December 31, 2022, resulting in a $14.1 million decrease in cash used in investing activities.

The decrease was primarily due to the following:

Net cash provided by investing activities was $12.7 million for the year ended December 31, 2024, compared to net cash used in investing activities of $46.4 million for the year ended December 31, 2023, resulting in a $59.1 million increase in cash provided by investing activities.

The increase was primarily due to the following:

(1) a $22.2 million increase in proceeds from the sale of an investment;

(2) a $17.4 million increase in proceeds from the sale of property, plant and equipment;

(2) a $2.6 million decrease in cost investment in unconsolidated entities;

and (3) a $1.1 million decrease in cash used in acquisition of businesses.

These decreases were partially offset by (1) a $10.5 million increase in purchases of property, plant and equipment;

(2) a $5.6 million increase in cash used in other investing activities;

and (3) a $0.6 million increase in loan to an unconsolidated entity.

(3) a $13.6 million decrease in purchases of property, plant and equipment;

(4) a $3.3 million decrease in cash used in other investing activities;

(5) a $1.5 million decrease in cash used in the acquisition of a business;

(6) a $0.6 million decrease in loan to an unconsolidated entity;

and (7) a $0.5 million decrease in cost investment in unconsolidated entities.

Net Cash Used in Financing Activities

Year Ended December 31, 2024, Compared to Year Ended December 31, 2023

Net cash used in financing activities was $73.6 million for the year ended December 31, 2023, compared to $248.7 million for the year ended December 31, 2022, resulting in a $175.1 million decrease in cash used in financing activities.

The decrease was primarily due to the following:

(1) a $175.6 million decrease in net payments of debt and lease obligations in 2023 compared to 2022;

(2) a $1.3 million decrease in payment of accrued dividends from vested equity awards;

and (3) a $0.8 million decrease in equity awards redeemed to pay employees’ tax obligations.

These decreases were partially offset by a $2.6 million increase in purchases of treasury stock.

Net cash used in financing activities was $149.1 million for the year ended December 31, 2024, compared to $73.6 million for the year ended December 31, 2023, resulting in a $75.5 million increase in cash used in financing activities.

The increase was primarily due to the following:

(1) a $74.4 million increase in net payments of debt and lease obligations in 2024 compared to 2023;

(2) a $9.3 million increase in payment of dividends;

(3) a $4.4 million increase in payments of debt issuance costs and financing fees;

and (4) a $0.4 million increase in equity awards redeemed to pay employees’ tax obligations.

These increases were partially offset by a $12.6 million decrease in purchases of treasury stock and a $0.4 million decrease in cash used for other financing activities.

Free Cash Flow

Free Cash Flow is defined as net cash provided by 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 Company’s management assesses Free Cash Flow as a measure to quantify cash available for (1) strengthening the balance sheet (debt and pension liability 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.

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Free Cash Flow (non-GAAP) $ 55.7 $ 76.8

Free Cash Flow decreased $17.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $10.5 million increase in capital expenditures and a $7.0 million decrease in net cash provided by operating activities.

Free Cash Flow decreased $21.1 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $34.7 million decrease in net cash provided by operating activities, partially offset by a $13.6 million decrease in capital expenditures.

See the “Net Cash Provided by Operating Activities” section above for further explanations of the change in operating cash flows.

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 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) and restructuring, impairment and transaction-related charges.

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 last twelve months of EBITDA (see the definition of EBITDA and the reconciliation of net loss to EBITDA in the “Results of Operations” section above) and restructuring, impairment and transaction-related charges, net.

The Company uses the Debt Leverage Ratio as a metric to assess liquidity and the flexibility of its balance sheet.

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The Debt Leverage Ratio calculated below differs from the Total Leverage Ratio, the Total Net Leverage Ratio and Senior Secured Leverage Ratio included in the Company’s debt covenant calculations (see “Covenants and Compliance” section below for further information on debt covenants).

The Total Leverage Ratio included in the Company’s debt covenants includes interest rate derivative liabilities, letters of credit and surety bonds as debt, and excludes non-cash stock-based compensation expense from EBITDA.

The Total Leverage Ratio included in the Company’s debt covenants includes interest rate derivative liabilities and letters of credit 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 surety bonds from debt and 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 netting domestic unrestricted cash with debt.

The Debt Leverage Ratio as of December 31, 2024 and 2023, was as follows:

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(dollars in millions)

Net earnings (loss) $ (55.4) $ 9.3

Net loss $ (50.9) $ (55.4)

Interest expense 64.5 70.0

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EBITDA (non-GAAP) $ 122.5 $ 156.2

Restructuring, impairment and transaction-related charges 77.5 44.8

Restructuring, impairment and transaction-related charges, net 101.5 77.5

Adjusted EBITDA (non-GAAP) $ 224.0 $ 233.7

The Debt Leverage Ratio, at December 31, 2023, decreased 0.15x to 2.01x compared to December 31, 2022, primarily due to a $75.2 million decrease in net debt, partially offset by an $18.5 million decrease in Adjusted EBITDA.

The Debt Leverage Ratio, at December 31, 2024, decreased 0.45x to 1.56x compared to December 31, 2023, primarily due to a $119.8 million decrease in Net Debt, partially offset by a $9.7 million decrease in Adjusted EBITDA.

The Debt Leverage Ratio, at December 31, 2024, is within management’s desired target Debt Leverage Ratio range of 1.50x to 2.00x;

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◦ $825.0 million Term Loan A ($360.8 million outstanding as of December 31, 2024);

• Master Note and Security Agreement ($2.5 million outstanding as of December 31, 2023).

Senior Secured Credit Facility

On April 28, 2014, the Company entered into its Senior Secured Credit Facility, which included a revolving credit facility, Term Loan A and Term Loan B (Term Loan B was retired in July 2019).

The Company completed the fifth amendment to the Senior Secured Credit Facility on November 2, 2021.

The Senior Secured Credit Facility was amended to (a) reduce the aggregate amount of the existing revolving credit facility from $500.0 million to $432.5 million, and extend the maturity of a portion of the revolving credit facility such that $90.0 million under the revolving credit facility is due on the existing maturity date of January 31, 2024 (the “Existing Maturity Date”) and $342.5 million under the revolving credit facility is due on November 2, 2026 (the “Extended Maturity Date”);

(b) extend the maturity of a portion of the existing term loan facility such that $91.5 million (of which a principal payment of $87.7 million was due upon maturity on January 31, 2024) of such term loan facility is due on the Existing Maturity Date and $483.9 million is due on the Extended Maturity Date;

(c) make certain adjustments to pricing, including an increase of 0.50% to the interest rate margin applicable to the loans maturing on the Extended Maturity Date;

(d) modify certain financial and operational covenants;

and (e) modify the interest rate provisions relating to the phase-out of London Interbank Offered Rate (“LIBOR”) as a reference rate.

The Company completed the sixth amendment to the Senior Secured Credit Facility on March 25, 2022, which expanded the number of currencies available for letters of credit.

The Company completed the seventh amendment to the Senior Secured Credit Facility on January 24, 2023, which transitioned the Company’s reference rate from LIBOR to SOFR effective February 1, 2023.

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The transition from LIBOR to SOFR did not have a material impact on the condensed consolidated financial statements.

The Company completed the eighth amendment to the Senior Secured Credit Facility on January 4, 2024, which added an additional $25.0 million principal value to the Term Loan A (under the Extended Maturity Date).

On January 31, 2024, the Company used liquidity available under its revolving credit facility and available cash on hand to fund the repayment on maturity of $87.7 million aggregate principal amount, outstanding at the time, of its Term Loan A.

The Company completed the ninth amendment to the Senior Secured Credit Facility (the “Ninth Amendment”) on October 18, 2024.

The Senior Secured Credit Facility was amended to:

(1) reduce the aggregate amount of the existing revolving credit facility from $342.5 million to $324.6 million, and extend the maturity of a portion of the revolving credit facility such that $17.7 million under the revolving credit facility will be due on the existing maturity date of November 2, 2026 (the “Existing Maturity Date”) and $306.9 million under the revolving credit facility with be due on October 18, 2029 (the “Extended Maturity Date);

(2) extend the maturity of a portion of the existing Term Loan A such that $8.7 million of such term loan facility will be due on the Existing Maturity Date and $193.2 million will be due on the Extended Maturity Date;

(3) make certain adjustments to pricing, including an increase of 0.50% to the interest rate margin applicable to the loans maturing on the Extended Maturity Date;

and (4) modify certain financial and operational covenants retroactive to September 30, 2024, including the Senior Secured Leverage Ratio (net indebtedness to consolidated EBITDA) shall not exceed 3.00 to 1.00 for any fiscal quarter ending on or after September 30, 2024, as well as the Total Leverage Ratio (consolidated total indebtedness to consolidated EBITDA) shall not exceed 3.50 to 1.00 for any fiscal quarter ending on or after September 30, 2024.

Borrowings under the revolving credit facility and Term Loan A made under the Senior Secured Credit Facility bear interest at 3.00% in excess of reserve adjusted SOFR, or 2.00% in excess of an alternate base rate with a SOFR floor of 0.75% for the extended tranche and bear interest at 2.50% in excess of reserve adjusted SOFR, or 1.50% in excess of an alternate base rate with a SOFR floor of 0.75% for the non-extending tranche.

At December 31, 2024, the Company had no ou tstanding borrowings on the revolving credit facility, and had $25.7 million of issue d letters of credit, leaving up t o $298.9 million available for future borrowings.

The amount available for future borrowings is reduced to $353.8 million under the Company’s most restrictive debt covenants.

This is the most restrictive liquidity measure currently applicable under the credit agreement.

The Senior Secured Credit Facility is secured by substantially all of the unencumbered assets of the Company.

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On September 1, 1995, and as last amended on November 24, 2014, the Company entered into its Master Note and Security Agreement.

As of December 31, 2023, the borrowings outstanding under the Master Note and Security Agreement were $2.5 million.

The senior notes under the Master Note and Security Agreement had a weighted average interest rate of 8.09% at December 31, 2023, which is fixed to maturity, with interest payable semiannually.

Principal payments commenced September 1997 and extend through 2026 in various tranches.

The notes are collateralized by certain United States press equipment under the terms of the Master Note and Security Agreement.

Senior Unsecured Notes

The Company issued $300.0 million aggregate principal amount of its unsecured 7.0% senior notes due May 1, 2022 (the “Senior Unsecured Notes”) on April 28, 2014.

During the first quarter of 2022, the Company repurchased $2.4 million of its outstanding Senior Unsecured Notes in the open market.

All repurchased Senior Unsecured Notes were canceled.

The Company used cash flows from operating activities and borrowings under its revolving credit facility to fund the repurchases.

These repurchases were completed primarily to reduce interest expense.

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, outstanding at the time, of its Senior Unsecured Notes.

On November 25, 2024, the Company used liquidity available under its revolving credit facility and available cash on hand to fund the repayment of the total outstanding aggregate principal balance of $1.5 million, thus terminating the Master Note and Security Agreement.

The notes were collateralized by certain United States press equipment under the terms of the Master Note and Security Agreement.

Covenants and Compliance

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• Total Leverage Ratio.

On a rolling twelve-month basis, the Total Leverage Ratio, defined as consolidated total indebtedness to consolidated EBITDA, shall not exce ed 3.75 to 1.00 (for the twelve months ended December 31, 2023, the Company’s Total Leverage Ratio was 2.18 t o 1.00).

• Liquidity, defined as unrestricted cash and permitted investments of the Company and its subsidiaries (subject to certain conditions) plus the aggregate amount of the unused revolving credit facility commitments, shall not be less than $181.6 million at any time during the period commencing December 15, 2023 and ending when all obligations owed under the Senio r Secured Credit Facility to lenders that are not extending lenders are paid in full.

On a rolling twelve-month basis, the Total Leverage Ratio, defined as consolidated total indebtedness to consolidated EBITDA, shall not exceed 3.50 to 1.00 (for the twelve months ended December 31, 2024, the Company’s Total Leverage Ratio was 1.68 to 1.00).

• If there is any amount outstanding on the Revolving Credit Facility or Term Loan A, or if any lender has any revolving credit exposure or Term Loan A credit exposure, the Company is required to maintain the following:

◦ Se nior Secured Leverage Ratio.

On a rolling four-quarter basis, the Senior Secured Leverage Ratio, defined as the ratio of consolidated senior secured net indebtedness to consolidated EBITDA, shall not exceed (a) 3.50 to 1.00 for any fiscal quarter ending prior to December 31, 2023, and (b) 3.25 to 1.00 for any fiscal quarter ending on or after December 31, 2023 (other than, in the case of this clause (b), any fiscal quarter ending September 30 of any year, each of which shall be subject to a maximum Senior Secured Leverage Ratio not to exceed 3.50 to 1.00) (for the twelve months ended December 31, 2023, the Company’s Senior Secured Leverage Ratio was 1.99 t o 1.00).

On a rolling four-quarter basis, the Senior Secured Leverage Ratio, defined as the ratio of consolidated senior secured net indebtedness to consolidated EBITDA, shall not exceed 3.00 to 1.00 for any fiscal quarter ending on or after September 30, 2024 (for the twelve months ended December 31, 2024, the Company’s Senior Secured Leverage Ratio was 1.57 to 1.00).

◦ Interest Coverage Ratio.

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If the Company’s Total Leverage Ratio is above 2.50 to 1.00 but below 2.75 to 1.00, the Company is prohibited from making greater than $100.0 million of dividend payments, capital stock repurchases and certain other payments, over the course of the agreement.

If the T otal Leverage Ratio is less than 2.50 to 1.00, there are no such restrictions.

As the Company’s Total Leverage Ratio as of December 31, 2023, was 2.18 t o 1.00, the limitations described above are not applicable at this time.

• If the Company’s Senior Secured Leverage Ratio is greater than 3.00 to 1.00 or the Company’s Total Net Leverage Ratio which, on a rolling twelve-month basis, is defined as consolidated net indebtedness to consolidated EBITDA, is greater than 3.50 to 1.00, the Company is prohibited from voluntarily prepaying any unsecured or subordinated indebtedness, with certain exceptions (including any mandatory prepayments on the Senior Unsecured Notes or any other unsecured or subordinated debt).

If the Total Leverage Ratio is less than 2.50 to 1.00, there are no such restrictions.

As the Company’s Total Leverage Ratio as of December 31, 2024, was 1.68 to 1.00, the limitations described above are not applicable at this time.

If the Senior Secured Leverage Ratio is less than 3.00 to 1.00 and the Total Net Leverage Ratio is less than 3.50 to 1.00, there are no such restrictions.

The limitations described above are currently not applicable, as the Company’s Senior Secured Leverage Ratio w as 1.99 to 1.00 and Total Net Leverage Ratio wa s 1.99 to 1.00, as of December 31, 2023 .

The limitations described above are currently not applicable, as the Company’s Senior Secured Leverage Ratio wa s 1.57 to 1.00 and Total Net Leverage Ratio wa s 1.57 to 1.00, as of December 31, 2024 .

Net Pension Obligations

The net underfunded pension and MEPPs obligations decreased by $7.8 million during the year ended December 31, 2024, from $63.4 million at December 31, 2023, to $55.6 million at December 31, 2024.

This decrease was primarily due to a $4.3 million decrease in MEPPs obligations, primarily due to payments totaling $6.2 million made to the MEPPS during the year ended December 31, 2023.

The underfunded defined benefit plan obligations increased by $3.1 million during the year ended December 31, 2023, due to an overall decrease of $9.7 million in pension plan assets from $36.6 million in benefits paid, offset by an actual gain on pension plan assets of $26.2 million or 10.67% during the year ended December 31, 2023, which was above the expected return on plan assets assumption of 6.75% and employer contributions of $0.7 million.

The decrease in plan assets was partially offset by a decrease in overall pension obligations of $6.6 million from $36.6 million in benefits paid, offset by a $17.6 million increase in interest cost due to a 35 basis point decrease in the pension discount rate from 5.46% at December 31, 2022, to 5.11% at December 31, 2023 and $12.4 million from an actuarial loss.

This decrease was primarily due to a $5.3 million decrease in the underfunded defined benefit plan obligations during the year ended December 31, 2024.

This $5.3 million decrease in the underfunded status was primarily due to a decrease in overall pension obligations of $30.1 million from $32.5 million in benefits paid and $14.0 million from an actuarial gain, offset by a $16.4 million increase in interest cost due to a 44 basis point increase in the pension discount rate from 5.11% at December 31, 2023, to 5.55% at December 31, 2024.

The decrease in pension obligations was partially offset by an overall decrease of $24.8 million in pension plan assets from $32.5 million in benefits paid, offset by an actual gain on pension plan assets of $5.6 million, or 2.99%, during the year ended December 31, 2024, which was below the expected long-term return on plan assets assumption of 6.30%, and employer contributions of $2.1 million.

There was a $2.5 million decrease in MEPPs obligations, primarily due to payments totaling $4.3 million made to the MEPPS during the year ended December 31, 2024.

The Company continues to focus on reducing pension obligations through cash contributions to the plans, lump-sum settlements and plan design changes.

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The program may be suspended or discontinued at any time.

The following repurchases occurred during the years ended December 31, 2023 and 2022:

December 31, 2023 December 31, 2022

There were no share repurchases during the year ended December 31, 2024.

The following repurchases occurred during the year ended December 31, 2023:

December 31, 2023

Shares of Class A common stock 2,852,501

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Total repurchases during the period (in millions) $ 12.6

$ 12.6 $ 10.0

______________________________

(1) Excluding commissions, total repurchases were $12.6 million and $9.9 million during the years ended December 31, 2023 and 2022.

As of December 31, 2024, there were $77.5 million of authorized repurchases remaining under the program.

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The Company’s most significant long-lived assets are property, plant and equipment, right-of-use assets and customer relationship intangible assets recorded in conjunction with an acquisition.

Assessing the impairment of long-lived assets requires the Company to make important estimates and assumptions, including, but not limited to, the expected future cash flows that the assets will generate, how the assets will be used based on the strategic direction of the Company, their remaining useful life and their residual value, if any.

Assessing the impairment of long-lived assets requires the Company to make important estimates and assumptions, including, but not limited to, the expected future cash flows that the assets

will generate, how the assets will be used based on the strategic direction of the Company, their remaining useful life and their residual value, if any.

Considerable judgment is also applied in incorporating the potential impact of the current economic climate on customer demand and selling prices, the cost of production and the limited activity on secondary markets for the assets and on the cost of capital.

8 unchanged sentences

The fair value less cost to sell of long-lived assets held for sale is assessed at each reporting period until it no longer meets this classification.

Based on the assessments completed during the years ended December 31, 2023, and 2022, the Company recognized property, plant and equipment and right-of-use assets impairment charges of $21.1 million and $2.2 million, respectively, primarily related to facility consolidations and other capacity reduction.

Based on the assessments completed during the years ended December 31, 2024, and 2023, the Company recognized property, plant and equipment and operating lease right-of-use assets impairment charges of $33.3 million and $21.1 million, respectively, primarily related to the reduction of the carrying value of the European operations to its estimated fair value due to the held for sale determination, facility consolidations and other capacity reduction.

There were no finite-lived intangible asset impairment charges recorded during the years ended December 31, 2024 and 2023.

10 unchanged sentences

New Accounting Pronouncements

As of December 31, 2023, there have been no new accounting pronouncements requiring disclosure within the consolidated financial statements of this Annual Report on Form 10-K.

See Note 23, “New Accounting Pronouncements,” to the consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis