Quad Graphics, Inc · NYSE:QUAD
Quad Graphics — Investor Day (November 2024)
94 slides from Quad Graphics's investor day presentation, Nov 20, 2024
Slide 1: Investor Day November 20, 2024
ww Investor Day November 20, 2024 Lit Quad&
Slide 2: Don Pontes, Executive Director of Investor Relations
Don Pontes, Executive Director of Investor Relations Quad 2
Slide 3: Special Guest and presenters
Special Guest: Chairman, President & CEO Chief Marketing Officer Vice President Brand Marketing President of Media Founder and CEO, Flowcode President, Quad Agency Solutions & EVP & Chief Revenue EVP & Chief Operating Chief Financial Officer Executive Director EVP, Product & Market Strategy Officer
Slide 4: Agenda
8:30am Welcome and Opening Remarks Don Pontes, Executive Director of Investor Relations Company Overview Joel Quadracci, Chairman, President & CEO Quad’s Marketing Vision Josh Golden, Chief Marketing Officer & Heidi Waldusky, Vice President Brand Marketing MX: Intelligence & Media Joshua Lowcock, Pr
Slide 5: Forward-looking statements
This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company’s future results, financial condition,
Slide 6: Virtual attendees may submit questions to IR@quad.com
Virtual attendees may submit questions to IR@quad.com Quad 6
Slide 7: Joel Quadracci, Chairman, President & CEO
Joel Quadracci, Chairman, President & CEO Quad 7
Slide 8: A Marketing Experience Company
A Marketing Experience Company $ 1971 $3B 2,700+ 13,150 40+ Founded Net Sales Clients Across Employees Global Diverse Industries Worldwide Locations Quad 8
Slide 9: Client industries
FINANCE & DIRECT-TO- RETAIL GROCERY PUBLISHING CPG HEALTH INSURANCE CONSUMER Quad 9
Slide 10: Executive leadership team
President, Quad Agency Vice President & Chief Senior Vice President President of Betty Executive Vice President Chief Marketing Officer General Counsel, Solutions; EVP, Product Accounting Officer of Manufacturing a Quad agency & Chief Revenue Officer Joined Quad: 2021 Corporate Secretary & & Market
Slide 11: Print organic growth, consolidation and diversification
Print Organic Print Consolidation & Growth Diversification Quad Content Execution Creative at Scale Quad Data Data Systems Differentiation Print Media Online Media Placement Expansion Quad 11
Slide 12: Building on momentum as a marketing experience company
Building on our momentum as a marketing experience (MX) company, simplifying the marketing ecosystem for clients through process, integration and scale Leveraging our proprietary, household-based data stack and new AI-backed solutions to enable brands to create highly personalized content at scale a
Slide 13: Industry rankings and awards
World’s Largest Top Printing Companies Agency Companies in the U.S. and Canada PERFORMANCE CREATIVITY INNOVATION TOP 5 National Tulip Award Performance marketing agencies in the world Gold Winner for Sustainable Performance by for Art Direction 2019 “Best in Show” Top 40 Digital Marketing Strategist
Slide 14: Josh Golden, Chief Marketing Officer
Josh Golden, Chief Marketing Officer Quad 14
Slide 15: A Better Way: A Marketing Experience (MX) Company
A Better Way We use every tool at our disposal to make the marketer’s experience better A Marketing Experience (MX) Company We’ve always been marketer obsessed; our MX solution suites address critical marketing pain points Heidi Waldusky Vice President Brand Marketing Our Momentum We will continue t
Slide 16: Economic uncertainty, complexity, reaching consumers
Fragmentation Inflation and Data Privacy of Media and Rising Costs and Identity Point Solutions Economic Uncertainty Navigating Complexity Reaching Consumers Quad 16
Slide 17: Evolution from print to household to in-store to online
Online Household In-Store 1971 2010 2018 2023 and Forward Built a strong print Acquired to extend Diversified offering to Helping brands make direct platform that print offering and support client needs of consumer connections, from continues today improve efficiencies integrated and omnichannel hou
Slide 18: Household data and omnichannel solutions
Household Addressable Print & Postal Solutions Online In-Store Omnichannel Retail Display & Quad Data Media Solutions Packaging Solutions Reach of Adult Reach of US Continuously Re- US Population Households Validated Household Data Points Quad 18
Slide 19: MX suite of products and services
From offline to online, across Creative, Production and Media, fueled by Intelligence and Tech, Quad’s MX Suite of products and services is flexibly tailored for the unique needs of the marketer Brand Strategy & Design In-Store & Packaging Omnichannel Data & Analytics Content Creation & Print & Mana
Slide 20: First-to-market solutions
Brand Strategy & Design In-Store & Packaging Omnichannel Data & Analytics Content Creation & Print & Managed Marketing Client Testing & Measurement Studios Services Technology Unique Data Scaled AI Creative Postal Optimization Omnichannel Media Trigger Mail AI Optimization Modernizing & Audience Dir
Slide 21: Engagement, client and talent growth
Engagement Growth YTD Client Growth Talent Growth Chief Client Strategy Earned Media and Integration Officer Placements Havas, Deloitte, R/GA, Ogilvy Head of Client Experience Increase in Tier 1 Tyson Foods, Starcomm Earned Media President of Media UM Worldwide, MediaVest, News Corp New LinkedIn Fol
Slide 22: Joshua Lowcock, President of Media
Joshua Lowcock, President of Media Quad 22
Slide 23: Think about data like ink
Think About Data Like Ink - Core to Doing Business yy, ij N
Slide 24: Quad
John Doe Jane Doe John Jr Doe Jennifer Doe John Doe 123 Address City, State Zip Quad 24
Slide 25: Only one place you call home
Data & Privacy Regulations Only One Place You Call Home Identity is built from the place you call home Mobile Numbers Home Addresses Email Addresses Cookie Device- ID Deprecation Quad 25
Slide 26: Identity signals
Quad Device ID Mobile IDs Email Address IP Addresses Social Handles Firstname Lastname Address 26
Slide 27: Quad
Quad 27
Slide 28: Quad core dataset of 250M consumers
Quad’s core dataset features 250M consumers, 121 mapped to a resilient identifier ⎯ their physical M Ho home address coupled with additional data and us contextual insights that can be activated across eh any media channel: old s • Reaches real people • Targets individuals and households • Leverages
Slide 29: Consumer data attributes
Demographic Transactions Attitudinal Behavior • Age Shopping • Consumer Confidence Media • Income • Transactions • Buying Styles • Cable • Ethnicity • Card Data • Social Media • Internet • Education • Finance • Brands • Television • Adults in Household • Health • Merchants • Radio & Audio • Principa
Slide 30: Modern data stack
Quad has built a modern 1 Core Spine 2 Media Use 3 Personas 4 Transaction 5 Client 1PD data stack to avoid industry pitfalls: • Open architecture Predictive Propensity Contextual • Extensible data Transactional • Activation agnostic Retailer Category Product • Avoids unnecessary Attributes taxes and
Slide 31: Leading agency pitch consultant quote
“ ” — Leading Agency Pitch Consultant Quad 31
Slide 32: Partnership with Google for AI
As shared in September: • Partnership with Google to leverage AI smarter audience creation and development • Truly democratizes access to and unlocks the power of Quad’s data stack • Puts data analysis and insights in the hands of every employee across Quad, Betty, and Rise Quad 32
Slide 33: Data fueled, audience-led strategies
Data fueled, audience-led strategies for creative, media, and print: • Omnichannel audience view • Channel agnostic • Measurable impact and results With joint opportunities in creative and media more common, our unholding company approach to data is a key differentiator Quad 33
Slide 34: AI audience prompt example
Succulent COMMON • Scores HIGH for ease of care purchase HOUSELEEK “Please create optimized ads SEGMENT 1 • Responds to DIGITAL MEDIA The Common Houseleek for the top 4 customer Succulent has charming colors and exotic foliage. segments most likely to “Casual • Reacts to DURABILITY of the plant Gard
Slide 35: Omnichannel agency and proprietary data stack
Digital Agency Omnichannel Agency Platform Data Proprietary Data Stack Short-term Results Balancing Brand and Demand Spots and Dots Connections, Commerce, and Creators Cost per Action Scale without Sacrifice Quad 35
Slide 36: Marketplace clout, offline to online, optimization
Marketplace Offline to Optimization & Clout Online Transparency + Rise now has access to $3B in Secured key partnerships Partnered with an negotiating and buying leverage to provide turnkey email independent data across digital and traditional activation solutions for science firm to identify media
Slide 37: Not beholden to broken operating models
Client First Brand and Scale Transparency Media Investment Performance with Agility and Accountability We are not beholden to industry broken operating models Quad 37
Slide 38: Special Guest Tim Armstrong
Special Guest Tim Armstrong Josh Golden Founder and CEO, Chief Marketing Flowcode Officer Quad 38
Slide 39: Eric Ashworth
Eric Ashworth President, Quad Agency Solutions & EVP, Product & Market Strategy Quad 39
Slide 40: Eric Ashworth, President, Quad Agency Solutions
Eric Ashworth, President, Quad Agency Solutions & EVP, Product & Market Strategy Quad 40
Slide 41: Innovation process phases
INNOVATION INSIDE OUT OUTSIDE IN • The Offering PHASE 1 • Target Segment Concept & Ideas • Client Value Proposition • Quad Value Proposition • Competition • Market Sizing • Estimated Timeline PHASE 2 • Voice of Customer • Prototype Creation Business Case • SWOT Analysis • Legal and Compliance • Buil
Slide 42: Automated 3D scanning solution
The first commercially available automated 3D scanning solution in the North American market and an extension of Quad’s studio offering Creates photorealistic 3D assets for: • Virtual 2D photography • Product videos • Virtual try-on • Augmented and virtual reality experiences Quad 42
Slide 43: In-Store Connect by Quad
In-Store Connect by Quad
Slide 44: Omnichannel Retail Media Ad Spending
Omnichannel Retail Media Ad Spending US, 2024-2028, $ Billions $129.9 $104.5 $84.1 $67.8 $54.9 26.0% 23.7% 24.0% 24.2% 24.4% 2024 2025 2026 2027 2028 % Change Billions Source: EMARKETER Forecast, March 2024 Quad 44
Slide 45: Retail Media Ad Revenue Share, by Company
Retail Media Ad Revenue Share, by Company US, 2024, % of Retail Media Digital Ad Spending Others Instacart Target 8% 3% 2% Walmart 7% 77% Amazon Source: EMARKETER Forecast, March 2024 Quad 45
Slide 46: More than 80% of retail sales happen in physical stores
More Than 80% of Retail Sales Happen in Physical Stores Source: EMARKETER, “In-Store Retail Media 2024,” May 2024 Quad 46
Slide 47: Screens per store and weekly audience
m d b o n h e c a g kflij Number of Screens Per Store 14 Estimated Weekly Audience 15,000 Quad 47
Slide 48: Screens per store and weekly audience
a b c d e f g h i j k l m n o Number of Screens Per Store 14 Number of Screens Per Store 14 Estimated Weekly Audience 15,000 Estimated Weekly Audience 225,000 Quad 48
Slide 49: Screens per store and weekly audience
Number of Screens Per Store 14 Number of Screens Per Store 14 Estimated Weekly Audience 3,750,000 Estimated Weekly Audience 12,000,000 Quad 49
Slide 50: We Know Retail and Consumer Packaged Goods
We Know Retail and Consumer Packaged Goods % \ amazon s'¢ Costco tS bm tm — Walmart -,< ~ FRUITRLOOM. CONAGRA RedBull ey = WHOLE Foops Cub [W@) = keynolds® =sockey @ LOSkeh.. MARKET Consumer Products company ° 4 sa N \er Kroger Publix. ULTA G3 [Rubbermaid Pt “gjelmar ae ok... meijer mm Heckova!" Gol
Slide 51: Customer journey stage and traditional channels
Customer Journey Stage Traditional Channels Awareness Traditional Media Broad reach and frequency / Radio, OOH, Direct Mail, Digital, TV, Search National scale Consideration Educational & Informational Content while shoppers Media are researching Social, Website, Blog, Targeted Digital, Search Purch
Slide 52: Customer Journey Stage
Customer Journey Stage Awareness Front entrance Consideration Purchase Quad 52
Slide 53: Customer Journey Stage
Customer Journey Stage Awareness Consideration Perimeter and endcap displays Purchase Quad 53
Slide 54: Customer Journey Stage
Customer Journey Stage Awareness Consideration Purchase SKU specific Quad 54
Slide 55: Connecting In-Store to Online
Connecting In-Store to Online Buy 2 GET $1 OFF All Coupons @ 6161 Atlantic Blvd > llCoupons Sug Chobani BUY 2 $1.00 OFF 55
Slide 56: In-store service offerings
Network Design Procurement Install, Maintenance & Audit Project Management Electrical Content Strategy Reporting & Insights Creative Production Sales Strategy & Support Creative Scheduling Quad 56
Slide 57: Tamara Pattison, Chief Digital Officer quote
“ ” Tamara Pattison Chief Digital Officer Quad 57
Slide 58: In-Store proofs of concept and expansion
Q3 2024 Q4 2024 2025 and Beyond Proof of Concept #1 Proof of Concept #2 Expansion Strategies 1 National coverage to rival platforms 15 stores 2 Programmatic and client + side buying 15 stores 3rd Grocery Client 3 Test adjacent scaled retail verticals (C-stores, 15 stores Drug stores, etc.) Quad 58
Slide 59: Julie Currie, EVP & Chief Revenue Officer
Julie Currie, EVP & Chief Revenue Officer Quad 59
Slide 60: Humana health industry client story
Health Industry Challenges Intense competition • Complex consumer expectations • High compliance standards About the Client Humana is a leading American health insurance provider focused on delivering comprehensive health plans and services Key Offerings Target Customer Preferences Market Approach H
Slide 61: From manual campaign creation to automated process
MX: Intelligence MX: Creative MX: Production MX: Media MX: Tech • Audience Analytics • Premedia & • Direct Mail • Addressable • Order Management • Campaign Adaptive Design • Print & Postal Media System Development • Creative Templates Logistics • Direct Mail • Performance Data Automation From an off
Slide 62: Meijer grocery retail client story
Grocery Retail Industry Challenges Intense competition • Market penetration • Boosting purchase frequency • Convenience expectations About the Client Meijer is a leading regional retailer that operates more than 500 supercenters, neighborhood markets, and grocery stores throughout the Midwest Key Of
Slide 63: Meijer connections planning
MX: Intelligence MX: Creative MX: Production MX: Media MX: Tech • Customer Analytics • Content Management • Direct Mail • Media Planning • Connex • Campaign • Onsite Photo & Studio • Retail Inserts • Media • ContentX Measurement Management • Logistics Optimization • Media Mix • FavoriteChild Brand M
Slide 64: Client relationships and sales investment
• Strong and deep relationships with a diverse client base • Solutions to address marketing challenges • Configurable to meet the needs of multiple verticals • Investing in sales talent to grow existing client relationships and to acquire new clients Quad 64
Slide 65: Dave Honan, EVP & Chief Operating Officer
Dave Honan, EVP & Chief Operating Officer Quad 65
Slide 66: Efficient and flexible operating model
Providing a safe work Delivering high quality products Investing in automation and environment, retaining key talent and distribution that maximize reducing fixed costs to flex and increasing flexible labor customer marketing ROI efficiently with volume demand A highly efficient and flexible model t
Slide 67: Prioritizing safety over speed
Prioritizing Safety Optimizing Rotating Crews Across Continually Evaluating Over Speed Crew Schedules a Variety of Equipment Work Environment Quad 67
Slide 68: Effectively managing labor
• Effectively managing labor to lower overall Full-time Manufacturing Employees headcount, while driving more flexible labor hours to adjust quickly to demand -37% 7,500 fluctuations 6,000 ~4,700 • Maintaining safety, quality and customer service levels within targets despite more aggressive labor p
Slide 69: Marketing Experience Innovation Center
• Transformed 900,000 square- Marketing Experience Innovation Center foot, West Allis, Wisconsin magazine and catalog printing facility into an Innovation Center to support growing In-Store offering • Exited four leased facilities previously used for Quad In-Store operations • Room for future growth
Slide 70: Postal solutions: Co-Mail and Household Fusion
Our Solutions ✓ Co-Mail: Multiple client mail over Quad mailed over over lists for the same in-home window combined into a single mail stream of client cost pieces of mail of USPS Marketing ✓ Household Fusion: Multiple is postage(1) in 2023 representing: Mail and Periodical clients combined into a v
Slide 71: Capital expenditures and automation
Capital Expenditures ($ Millions) OPEX Perfect Pick HD $70.8 • Installed OPEX $60.3 ~$65.0 Perfect Pick HD, an 2.4% ~2.4% automated storage 1.9% and retrieval system • 65% headcount 2022 2023 2024E reduction % of Net Sales Capital Expenditures Manroland 4x8 Press • Installed three, new Manroland pre
Slide 72: United States manufacturing operations
• Recently sold 1 million square foot Saratoga Springs, New United States Manufacturing Operations York facility for $41 million • Continuing to make progress Wisconsin (7): on the sale of 4 recently closed Lomira, Hartford, Sussex, West Allis, facilities Pewaukee, Burlington, Franklin Saratoga Spri
Slide 73: Latin America and Europe operations
Latin America Europe • Strategic extension of • Agreed to sell the US operations for majority of our European traditional printing operations for México (2): Toluca, (Mexico) and packaging Xochimilco Santo Domingo, approximately $45M to (Dominican Republic) Dominican Republic Capmont by year end • A
Slide 74: Efficient and flexible operating model
Providing a safe work Delivering high quality products Investing in automation and environment, retaining key talent and distribution that maximize reducing fixed costs to flex and increasing flexible labor customer marketing ROI efficiently with volume demand A highly efficient and flexible model t
Slide 75: Tony Staniak, Chief Financial Officer
Tony Staniak, Chief Financial Officer Quad 75
Slide 76: 2024 original and updated guidance
Financial Metric Original 2024 Guidance Updated 2024 Guidance Annual Net Sales Change 5% to 9% decline Approximately 9% decline Full-Year Adjusted EBITDA(1) $205 to $245 million $215 to $235 million Free Cash Flow(1) $50 to $70 million $50 to $70 million Capital Expenditures $60 to $70 million Appro
Slide 77: Net sales mix estimate
Services Services 22% Integrated 32% Solutions Integrated Agency Logistics 42% Solutions Targeted Agency Logistics 47% Print Targeted Catalogs Print 13% Net Sales Direct Marketing Packaging Net Sales Catalogs Direct Marketing International In-Store Print Estimate Special Interest Estimate Packaging
Slide 78: Margins expected to improve with services growth
• Margins expected to improve with services Long-term Margin Profile(2) growth • Project Adjusted EBITDA Margin(1) to Adjusted EBITDA Adjusted EBITDA increase at least 100 basis points from Margin Margin today’s levels within a three-year timeframe 32% • Long-term goal is low double digit Adjusted I
Slide 79: Free cash flow and proceeds from asset sales
• Forecast continued strong cash generation Free Cash Flow and from Free Cash Flow(1) and asset sales Proceeds from Asset Sales ($ Millions) • Anticipate Free Cash Flow Conversion(2) over 35% within a three-year timeframe $253 • Will continue to generate cash from asset $198 sales on an event-basis;
Slide 80: Net debt expected to decline by over $700 million
• Net Debt(1) expected to decline by over $700 million from 2020 to 2024 Net Debt ($ Millions) • Announcing new, long-term targeted debt $1,034 leverage(1) range of 1.5x to 2.0x, lowered from 1.75x to 2.25x $873 -68% • May operate outside of this range at certain $624 times due to business seasonali
Slide 81: Strong banking relationships and debt ladder
• Extended $690 million Term Loan A and Debt Ladder ($ Millions) Revolving Credit Agreement through 2029 $299 • Next significant maturity is $193 million due $73 in October 2029 • Extension provides additional financial $193 flexibility to focus on growth offerings and $43 $40 $35 $37 $23 return cap
Slide 82: Capital allocation priorities
Growth Investments Increasing growth investments as a marketing experience company Debt Reduction Maintain low debt leverage and ensure long-term financial strength Shareholder Returns Increasing return of capital to shareholders through dividends and share buybacks Quad 82
Slide 83: 2024 guidance, three-year outlook and long-term goals
Financial Metric 2024 Updated Guidance Three Year Outlook Long-term Financial Goals Approximately Net Sales Net Sales Annual Net Sales Change 9% decline inflection point growth $215 to $235 million At least 100 basis point Low double digit Full-Year Adjusted EBITDA(1) ~8.4% Margin(2) margin improvem
Slide 84: Investment highlights
One-of-a-Kind Integrated • Featuring through-the-line marketing solutions deployed across offline and online channels Marketing Platform • Accessing additional revenue opportunity in advertising and marketing services industry Trusted by Leading • Serving 2,700 clients across growing verticals such
Slide 85: Print organic growth, consolidation and diversification
Print Organic Print Consolidation & Growth Diversification Quad Content Execution Creative at Scale Quad Data Data Systems Differentiation Print Media Online Media Placement Expansion Quad 85
Slide 86: Thank You
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Slide 87: Virtual attendees may submit questions to IR@quad.com
Virtual attendees may submit questions to IR@quad.com Quad 87
Slide 88: Appendix
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Slide 89: Non-GAAP financial measures
• In addition to financial measures prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), this presentation also contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow,
Slide 90: Year-to-Date Adjusted EBITDA reconciliation
Year-to-Date Nine Months Ended September 30, US $ Millions 2024 2023 Net loss $ (55.6) $ (33.4) Interest expense 49.4 51.0 Income tax expense 6.3 5.9 Depreciation and amortization 79.4 97.7 EBITDA (non-GAAP) $ 79.5 $ 121.2 EBITDA Margin (non-GAAP) 4.0% 5.6% Restructuring, impairment and transaction-
Slide 91: Full-Year Adjusted EBITDA reconciliation
Full-Year Year Ended December 31, US $ Millions 2023 2022 2021 Net earnings (loss) $ (55.4) $ 9.3 $ 37.8 Interest expense 70.0 48.4 59.6 Income tax expense 12.8 8.4 9.5 Depreciation and amortization 128.8 141.3 157.3 EBITDA (non-GAAP) $ 156.2 $ 207.4 $ 264.2 EBITDA Margin (non-GAAP) 5.3% 6.4% 8.9% R
Slide 92: Free Cash Flow reconciliation
Nine Months Ended September 30, US $ Millions 2024 2023 Net cash provided by (used in) operating activities $ (45.9) $ 41.1 Less: purchases of property, plant and equipment 45.7 59.5 Free Cash Flow (non-GAAP) $ (91.6) $ (18.4) Year Ended December 31, US $ Millions 2023 2022 2021 Net cash provided by
Slide 93: Net Debt and Debt Leverage Ratio reconciliation
US $ Millions September 30, 2024 December 31, 2023 Total debt and finance lease obligations on the balance sheets $ 502.8 $ 522.7 Less: Cash and cash equivalents 12.5 52.9 Net Debt (non-GAAP) $ 490.3 $ 469.8 Divided by: trailing twelve months Adjusted EBITDA (non-GAAP) (1) $ 227.1 $ 233.7 Debt Lever
Slide 94: Net Debt and Debt Leverage Ratio, 2021-2023
US $ Millions December 31, 2023 December 31, 2022 December 31, 2021 Total debt and finance lease obligations on the condensed consolidated balance sheets $ 522.7 $ 570.2 $ 803.7 Less: Cash and cash equivalents 52.9 25.2 179.9 Net Debt (non-GAAP) $ 469.8 $ 545.0 $ 623.8 Divided by: Adjusted EBITDA fo