A week after it changed its name to Quad from Quad/Graphics, the printing and marketing services company reported that 2018 sales increased 1.5% over 2017, to $4.2 billion. Net earnings, however, tumbled to $7.9 million, from $107.2 million in 2017.
The small sales gain, the company said, was due to acquisitions and pass-through price increases on paper, which offset a 3.8% decline in organic revenue. The profit decline was due in part to restructuring charges of $103.6 million in the year, compared to $60.4 million in the year prior, as well as $20 million in investments to continue to diversify the company’s operations and promote higher hourly wages in some markets. The company also said that, given paper supply pressures, it “intentionally increased paper inventories to ensure uninterrupted client service.”
Quad chairman, president, and CEO Joel Quadracci called 2018 a “pivotal year” for the company. “While maintaining our focus on preserving our high-quality, low-cost producer status, we made strategic investments to accelerate our transformation as a marketing solutions partner,” Quadracci said in a statement. Through a series of acquisitions that included the marketing and advertising company Ivie & Associates, Quad said that its integrated marketing services business accounted for 20% of its revenue last year.
“Our Quad 3.0 strategy creates more value for clients by expanding our offering beyond print and content production to include an integrated stack of higher margin marketing services, which, in turn, drives incremental revenue across our print product categories,” Quadracci said.
The biggest deal in Quad’s history, the purchase of its closest competitor in the printing market, LSC Communications, is expected to be completed by mid year, Quad said.