Company Takes Actions to Augment Quad 3.0 Strategy and Provide Additional Financial Flexibility, Including the Divestiture of Its Kentucky Book Facility
Sussex, Wis. – Quad/Graphics, Inc. (“Quad” or the “Company”) today announced it continues to execute on its transformation strategy, while managing through the COVID-19 pandemic, by further aligning its business portfolio, strengthening its product and service offering, and improving its financial flexibility through a recent amendment to the Company’s existing credit agreement. Quad also continues to carry out business continuity plans in response to the COVID-19 pandemic, prioritizing the health and well-being of its employees, protecting its financial health, and providing extraordinary client service.
Quad completed the sale of its Versailles, Ky., book manufacturing plant, to CJK Group, Inc., which serves book, magazine, catalog, and journal publishers. This initiative was the first step in the previously announced strategic decision to divest the Company’s book business to optimize its product portfolio. Quad expects to use the proceeds from the sale to reduce debt.
The Company obtained an amendment to its existing April 28, 2014, senior secured credit facility that widens the leverage ratio by an estimated 0.75x to 1.0x turn through the third quarter of 2021. As a part of this agreement, Quad maintains the ability to complete certain acquisitions during the relief period and has agreed to reduce the revolver capacity, which was previously expanded to support a subsequently terminated acquisition, from $800 million to $500 million. The agreement’s maturity remains January 2024, and Quad’s next nearest debt maturity is the 7% senior unsecured notes due May 2022.
Quad recently strengthened its leadership team at its integrated marketing agency, Periscope, with the addition of new President, Cari Bucci-Hulings. Bucci-Hulings is an industry expert who has driven highly successful product development and business growth platforms, and most recently served as President of MARC USA, one of the largest independent agencies in the country.
The Company also continues to scale Accelerated Insights, its proprietary virtual testing platform, to help clients in multiple industry verticals predict which combination of format, offer, message and imagery will be most effective in print. The unparalleled testing methodology drives improved response at a fraction of the time and cost of traditional testing. Quad recently brought aboard senior-level data analytics and business insights talent to expand the solution beyond direct mail and catalogs to packaging and other retail uses.
Joel Quadracci, Chairman, President & CEO of Quad, said: “We continue to execute against our Quad 3.0 strategy by optimizing our product portfolio and ensuring we have the financial flexibility to navigate today’s fluid environment and emerge a stronger company post-pandemic. Today, we announce the divestiture of our book manufacturing facility in Versailles, Ky., to CJK Group. We are very happy to have found a great home for our talented team in Versailles while we continue to make progress on the potential sale of our remaining two East Coast book plants.”
Quadracci continued: “We are also pleased to have proactively completed an amendment to our existing credit agreement to further enhance our financial flexibility and ability to continue to invest in our strategic priorities. Given that the severity and duration of the COVID-19 pandemic on the global economy remains unknown, we believed it was prudent to take these proactive measures from both a risk-management and opportunistic perspective. We will continue to prioritize maximizing Free Cash Flow generation in order to reduce our overall debt levels as we progress through fiscal 2020, and have access to more than $500 million of estimated liquidity as of June 30, 2020.”
Quadracci concluded: “Our team remains highly proactive as we continue to pursue innovative new products, services and solutions for our clients, and invest in talent that will continue to deliver competitive advantages. We are thrilled to welcome Cari Bucci-Hulings, a results-oriented, growth-minded leader, as President of Periscope. Cari has deep experience in building strong service offerings, cultures and creative communities that serve the constantly evolving needs of today’s marketers. We look forward to her experience and energy, and the fresh perspective she will bring to Periscope as we continue to build an agile agency that is part of Quad’s integrated marketing platform that delivers brilliant strategy, world-class creative and effective solutions like Accelerated Insights for our clients.”