Shares of Quad/Graphics (QUAD -3.66%) plummeted on Wednesday following a disastrous third-quarter report. Revenue missed analyst estimates by a wide margin, full-year guidance was slashed, the dividend was cut in half, and the company announced plans to divest its book business. The small-cap stock was down 52.4% at 12 p.m. EDT.
Quad/Graphics reported third-quarter revenue of $943.6 million, down 3.1% year over year and $66.4 million below the average analyst estimate. Organic sales were down 4.3%, excluding acquisitions. The weak sales were driven by ongoing print industry volume and pricing pressures. Quad/Graphics posted a net loss from continuing operations of $0.94 per share, compared to a profit of $0.57 per share in the prior-year period.
Along with its results, Quad/Graphics announced a 50% reduction in its quarterly dividend. The new $0.15-per-share dividend will be paid on Dec. 6. The purpose of the dividend cut was to provide financial flexibility and to maintain a strong balance sheet in the long term.
The company also expanded its cost-reduction program to target $50 million in annual savings, and it announced plans to divest its book business. The book business generates annual sales of $200 million.
To reflect the discontinued operations of the book business and weakening market prices, Quad/Graphics cut its outlook for the full year. The company now expects revenue of $3.9 billion, down from a previous range of $4.05 billion to $4.25 billion. Free cash flow is expected between $80 million and $100 million, down from a previous range of $145 million to $185 million.
With a deluge of bad news in the third-quarter report, the market unsurprisingly decimated Quad/Graphics stock.