Despite seeing net sales growth of 11% last year, Sussex-based Quad/Graphics Inc. is projecting a less favorable net sales total for 2023.
Joel Quadracci, chairman, president and chief executive officer of Quad/Graphics, said the higher than anticipated net sales growth in 2022 reflected increased sales across all the company’s offerings. While Quad did increase its prices to help offset inflationary costs, the company’s print segment share saw gains from both new and existing customers, and its Agency Solutions segment also saw continued growth.
Quad’s Agency Solutions segment includes its marketing services operations (including data and analytics, technology solutions, media services, creative and content solutions, and managed services) and non-print channels like digital and social media.
Quad has made numerous acquisitions in the last several years, including Apple Tree Group, Periscope, Rise Interactive and Ivie & Associates – that have bolstered its creative and digital offerings and expanded the business beyond print services.
“Our strategy as a marketing experience, or MX, company is effective,” said Quadracci. “Increasingly, brands and marketers recognize the unique value that only Quad can provide through our integrated marketing platform. They are engaging us for holistic, multichannel, through-the-line solutions that remove friction and speed the marketing process, while improving results.”
The company’s net sales were $3.2 billion in 2022, up 11% year-over-year excluding the sale of QuadExpress. Quad/Graphics sold its QuadExpress third-party logistics business to Mullen Group Ltd. for $40 million in 2021. The company generated around $135 million in revenue in 2020.
Despite a strong performance in 2022, the company is expecting a 0% to 5% decline in net sales for 2023. Quadracci said continued economic uncertainty has caused some of Quad’s clients to take a more “conservative approach” to the start of the year. Several have reduced the amount they’re looking to spend on near-term print advertising. However, Quad will move forward with its growth strategy as a marketing experience company.
“As we look forward, in 2023 we anticipate continued growth in our Agency Solutions offerings; however, with economic uncertainty, we expect the decrease in net sales and adjusted EBITDA from lower print volumes will exceed the benefits from ongoing Agency growth,” said Tony Staniak, chief financial officer of Quad/Graphics.
The company also reduced net debt by $489 million, or 47%, over the past three years.
“By the end of 2023, we expect to have paid off $564 million of debt, which would be a 55% debt reduction, since January 1, 2020,” said Staniak. “This significant progress will enable us to continue to invest in our growth as a marketing experience company and seek opportunities to return capital to shareholders, while ensuring Quad’s continued financial strength.”