Tuesday, October 29, 2019

Quad/Graphics Exiting the Book Business

UPDATE: Quad's stock price lost more than half its value at the opening bell on October 30 and was still down 53% nearly three hours later.
 
The second largest printer of books in the United States announced late today that it plans to exit the business.

Quad, AKA Quad/Graphics, stated in a news release that it "plans to divest book business that generates annual sales of $200 million as part of ongoing portfolio optimization."

The announcement comes barely three months after Quad called off a merger with rival megaprinter LSC Communications, the nation's largest book printer. The U.S. Justice Department objected to the proposed merger because LSC and Quad are "the only two significant providers of magazine, catalog, and book printing services."

In the same news release, the big printing company announced a 50% reduction of its dividend, to 15 cents per share, as well as $50 million in cost cuts and a $126 million 3rd Quarter loss.

"We have made the strategic decision to divest our book business, which follows our recent sale of our non-core industrial wood crating business, Transpak," Joel Quadracci, Quad's CEO, said in the news release.

No details were offered about when the book business will be sold or to whom. Quad will have its quarterly-earnings conference call with investors tomorrow morning.

"Our Quad 3.0 transformation strategy is working as evidenced by $125 million of expected organic incremental sales growth in 2019, which helps offset over three percentage points of annual print sales decline," Quadracci said.

The Quad 3.0 strategy seeks to turn Quad from being primarily a printer into a multimedia provider of a broad array of marketing services. Book publishers may not fit the 3.0 strategy because, unlike retailers and magazine publishers, they are likely to have little use for Quad's non-printing offerings.

2 comments:

Anonymous said...

Do you foresee a day in our future where Quad owns zero printing presses and outsources their printing needs to LSC, RRD, and others? The challenge will be to gain enough "profitable" 3.0 dollars to counter the losses by continuing to print under their current scale.

Unknown said...

I work at the Fairfield plant as a jacket operator it's not a great job but it's pays my bills hopefully another company comes along and buys it I would still like to work there for a while