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Item 1. Business

2021-02-24 compared with 2020-02-19 · 339 added, 213 removed, 146 unchanged (79% of the section changed)

Quad is a worldwide marketing solutions partner dedicated to creating a better way for its clients through a data-driven, integrated marketing platform that helps reduce complexity, increase efficiency and enhance marketing spend effectiveness.

Quad provides its clients with unmatched scale for on-site services and expanded subject expertise in marketing strategy, creative solutions, media deployment (which includes a strong foundation in print) and marketing management services.

With a client-centric approach, that drives its expanded offering, combined with leading-edge technology and single-source simplicity, the Company believes it has the resources and knowledge to help a wide variety of clients in multiple vertical industries, including retail, financial/insurance, healthcare, consumer packaged goods, publishing and direct-to-consumer.

As a worldwide marketing solutions partner, Quad leverages its 50-year heritage of platform excellence, innovation, strong culture and social purpose to create a better way for its clients, employees and communities.

The Company’s integrated marketing platform helps brands and marketers reduce complexity, increase efficiency and enhance marketing spend effectiveness.

Quad provides its clients with unmatched scale for on-site services and expanded subject expertise in marketing strategy, creative solutions, media deployment and marketing management services.

With a client-centric approach that drives the Company to continuously evolve its offering, combined with leading-edge technology and single-source simplicity, the Company has the resources and knowledge to help a wide variety of clients in multiple vertical industries, including retail, publishing, consumer technology, consumer packaged goods, financial services, insurance, healthcare and direct-to-consumer.

Quad was founded in Pewaukee, Wisconsin, as a Wisconsin corporation, in 1971 by the late Harry V.

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Amended and Restated Voting Trust Agreement (“Quad Voting Trust”), has voting control of approximately 71%, which the Company believes provides it with continued stability and flexibility as Quad works to achieve its long-term strategic vision.

As of December 31, 2019 , the Company had approximately 19,600 full-time equivalent employees in North America, South America, Europe and Asia, and served a diverse base of approximately 5,600 clients.

As of December 31, 2020, the Company had approximately 15,800 full-time equivalent employees in North America (including Mexico and the Dominican Republic), South America, Europe and Asia, and served a diverse base of approximately 4,500 clients.

Quad locations span 14 countries, including 49 manufacturing and distribution facilities and more than 80 client-based on-site locations, with additional investments in printing operations in Brazil and India.

During Quad’s first 40 years, the Company grew rapidly through greenfield growth, built a premier manufacturing and distribution platform equipped with the latest technology, established its reputation as one of the printing industry’s foremost innovators and created a Company culture based on strong values that remains in place today.

Beginning in 2010, Quad began its transformative journey, which has expanded its offerings to create enhanced value for its clients.

Quad saw an opportunity to participate in industry consolidation in response to economic and industry pressures following the great recession of 2008 and 2009, which severely impacted print volumes and accelerated the impact of media disruption.

Through a series of disciplined consolidating acquisitions that included World Color Press, Inc.

(“ World Color Press ”), Vertis Holdings Inc.

and Brown Printing Company, the Company added experienced talent and was able to enhance and expand its product and service offerings, while removing inefficient and underutilized capacity, reducing costs and transitioning work to more efficient facilities.

This period of consolidation created the advanced, highly automated and efficient manufacturing and distribution platform the Company has today.

The Company believes it will continue to drive productivity improvements into the future through an engaged workforce and ongoing adoption of the latest manufacturing automation and technology.

Through this strategy, the Company believes it can maintain the strongest, most efficient print manufacturing platform and remain the high-quality, low-cost producer.

This strategy also allows Quad to generate the earnings and cash flow necessary to support future value-creating opportunities.

More recently, significant media disruption created the opportunity for Quad to create greater value for its clients by extending its offering beyond print and content execution to include an integrated stack of marketing services.

Today, the Company leverages its data-driven print expertise as part of an integrated marketing platform that helps its clients not only plan and produce marketing programs, but also deploy, manage and measure them across all traditional and digital channels.

In February 2019, the Company evolved its brand from Quad/Graphics to Quad to reflect the role it now plays with clients as a marketing solutions partner.

During Quad’s first 40 years, the Company grew rapidly through greenfield growth, built a premier manufacturing and distribution platform equipped with the latest technology, established its reputation as one of the printing industry’s foremost innovators and created a strong Company culture based on enduring values and commitment to social purpose that remains in place today.

Beginning in 2010, Quad strategically expanded its offerings to create enhanced value for its clients.

Quad saw an opportunity to participate in industry consolidation in response to economic and industry pressures following the great recession of 2008 and 2009 that severely impacted print volumes and accelerated the impact of media disruption.

Through a series of disciplined consolidating acquisitions that included World Color Press, Inc., Vertis Holdings Inc.

and Brown Printing Company, the Company added experienced talent and enhanced and expanded its print-based product and service offerings, while removing inefficient and underutilized capacity by transitioning work to more efficient facilities, and reducing costs.

This period of consolidation created a disciplined cost reduction philosophy and advanced, highly automated and efficient manufacturing and distribution capabilities the Company operates today.

Beginning in 2014, Quad began focusing on strategic investments in marketing services, talent and technology to accelerate its transformation as a marketing solutions partner.

During this transformation period, known as Quad 3.0, Quad made several growth acquisitions including Ivie & Associates, LLC (“Ivie”), a premier marketing services provider specializing in customized marketing and business process outsourcing with unmatched scale for on-site marketing services;

Periscope, Inc.

(“Periscope”), one of the nation’s top five independent creative agencies by annual revenue, offering world-class capabilities in strategy, including media buying and analytics, creative and account management, and packaging design and premedia services;

and the acquisition of a controlling interest in Rise Interactive Media & Analytics, LLC (“Rise”), a leading digital marketing agency specializing in media, analytics and customer experience in digital channels.

In addition, the Company hired business professionals with client-side marketing experience and consulting expertise to strategically expand its integrated marketing offering, enter new market verticals, and change product-centric conversations with clients to a solutions based approach centered on uncomplicating marketing for our clients.

To reflect its transformation to a marketing solutions partner with a strong foundation in print, the Company evolved its brand from Quad/Graphics to Quad in 2019.

Today, Quad provides brands and marketers with a more efficient and effective way to go to market and reach consumers.

Through its integrated marketing platform, the Company creates greater value for clients by helping them reduce the complexities of working with multiple agency partners and vendors;

reduce process inefficiencies through workflow re-engineering, content production and process optimization;

and improve marketing spend effectiveness through demand-driving ideas and integrated solutions that help clients target audiences, plan and measure marketing, strategize, create and activate big ideas, produce content at scale, and connect with consumers through multiple channels.

Quad also creates societal value through a strong commitment to corporate social responsibility, prioritizing people and the planet along with profits (i.e., the triple bottom line).

This dedication to operating with meaningful purpose aligns with Quad’s long-standing commitment to create a better way – a hallmark of the Company’s culture.

While the Company experienced a significant reduction in client demand in 2020 due to the COVID-19 pandemic, it took aggressive actions to realign its cost structure and continued to drive productivity improvements while maintaining the health and well-being of employees;

providing high-quality, on-time delivery for clients;

and ensuring the long-term financial health and stability of the Company.

During the pandemic, Quad has been able to continue growing print segment share because of its dependable performance, operational and financial stability, and ongoing investment in its platform.

It also has continued to expand its marketing solutions with new and existing accounts, providing clients with the simplicity, efficiency and effectiveness of one integrated approach for content creation, production and media placement.

In addition, the Company provided essential pandemic-related communications support through its In-Store Marketing and Direct Mail groups, such as signage for social distancing and mask wearing at retail locations.

Despite the challenges from the pandemic, and ongoing industry and economic disruption, Quad believes it will be able to maintain its leading competitive position through its consistent business strategy and integrated marketing platform, providing stability and innovative solutions for clients into the future.

More information regarding Quad is available on the Company’s website at QUAD.com .

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Industry and Competition

According to a November 2019 Dun & Bradstreet First Research report, the U.S.

According to a January 2021 Dun & Bradstreet First Research report, the U.S.

advertising services industry is forecast to grow at an annual compounded rate of 6% between 2020 and 2024, as compared to the printing industry which is in secular decline.

This opportunity supports Quad’s transformation as a marketing solutions partner.

The secular decline of the printing industry has accelerated due to the COVID-19 pandemic and the further migration of advertising dollars from print to digital channels.

These industry dynamics support Quad’s transformation as a marketing solutions partner.

The advertising and marketing services industry is highly fragmented.

According to the November 2019 Dun & Bradstreet First Research report, the top 50 companies in the U.S.

According to the January 2021 Dun & Bradstreet First Research report, the top 50 companies in the U.S.

advertising and marketing services industry generate approximately 40% of industry revenue.

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The commercial print industry is also highly fragmented.

According to the August 2019 Printing in the U.S.

According to the October 2020 Printing in the U.S.

IBISWorld industry report, the United States commercial printing industry, in the aggregate, generates an estimated $70 billion in annual revenue, employs over 370,000 people and is comprised of approximately 44,000 companies .

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In addition to being highly fragmented, competition in the printing industry remains intense, and the Company believes that there are indicators of heightened competitive pressures.

The industry has excess manufacturing capacity created by continued declines in industry volumes which, in turn, have created accelerated downward pricing pressures.

The industry has excess manufacturing capacity created by continued declines in industry volumes, compounded by the COVID-19 pandemic, which, in turn, have created accelerated downward pricing pressures.

The Company faces competition due to the increased accessibility and quality of digital alternatives to traditional delivery of printed documents through the online distribution and hosting of media content, and the digital distribution of documents and data.

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This, combined with increases in postage expenses and the increased use of digital marketing and communication channels, has led to excess manufacturing capacity in the print industry.

This excess capacity has allowed certain larger printers, like Quad, with economies of scale, strong balance sheets and access to capital markets, the ability to invest in automation and more efficient equipment, take advantage of consolidating acquisition opportunities to remove excess, inefficient and/or underutilized capacity, and reduce overall costs.

This excess capacity has allowed certain larger competitors, like Quad, with economies of scale, strong balance sheets and access to capital markets, the ability to invest in automation and more efficient equipment, take advantage of consolidating acquisition opportunities to remove excess, inefficient and/or underutilized capacity, and reduce overall costs.

Competition in both the advertising and marketing services and print industries is affected by real gross domestic product growth, as economic activity and advertising spending are key drivers of consumer demand.

In times of economic prosperity, advertisers may increase spending to build brand awareness and to drive sales.

Conversely, in times of global economic uncertainty and budget pressures, advertisers may reduce spending or shift their spending to other forms of media.

Conversely, in times of global economic uncertainty and budget pressures, advertisers may reduce spending or shift their spending to other forms of media, as demonstrated during the COVID-19 pandemic.

For print specifically, magazine publishers that face diminished advertising pages reduce total page counts and frequency;

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access to a highly skilled workforce;

availability of labor due to the COVID-19 pandemic;

availability to schedule work on appropriate equipment;

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The fourth quarter is typically the highest seasonal quarter for cash flows from operating activities and Free Cash Flow due to the reduction of working capital requirements that reach peak levels during the third quarter.

Seasonality is driven by increased magazine advertising page counts, retail inserts, catalogs and books primarily due to back-to-school and holiday-related advertising and promotions.

Seasonality is driven by increased magazine advertising page counts, retail inserts and catalogs primarily due to back-to-school and holiday-related advertising and promotions.

The Company expects this seasonality impact to continue in future years.

Quad believes employee pride, combined with a relentless quest to create a better way, builds the opportunity to invent the future as a preferred marketing solutions partner, helping its clients win every day.

To accomplish this vision, Quad remains focused on its consistent strategic priorities as follows:

Due to the continued uncertainty surrounding the COVID-19 pandemic, the Company anticipates this seasonality may be further impacted in future periods, as the Company is heavily dependent on consumer demand.

Strategic Priorities

Quad’s overarching business strategy and singular vision as a marketing solutions partner is achieved through the execution of the following five consistent strategic priorities:

Walk in the Shoes of Clients

The Company encourages all employees, regardless of job title, to walk in the shoes of clients by putting a priority on listening to clients’ needs and challenges, doing what they can to make it easy to work with Quad, and making the client experience enjoyable at every touchpoint.

As part of its transformation, the Company has focused on evolving client print-production conversations to conversations encompassing consultative, enterprise-wide solutions that solve marketing and process challenges, and create more value for clients.

To accomplish this, a key component of Quad’s client-facing strategy is to strengthen relationships at higher levels within a client’s organization so the Company can better understand, anticipate and satisfy the organization’s needs.

Quad seeks to become an invaluable strategic marketing partner for its clients, helping them successfully navigate today’s constantly evolving media landscape through innovative data-driven solutions, produced and deployed across multiple media channels.

The Company also believes its proactive thought leadership in the key issues facing its clients, including data-driven marketing and postal reform, will foster loyalty to the Quad brand.

With a focus on solving problems and uncomplicating the marketing process, Quad seeks to become an invaluable strategic marketing partner for its clients, helping them successfully navigate today’s constantly evolving media landscape through innovative data-driven solutions, produced and deployed efficiently across multiple media channels.

A key component of Quad’s client-facing strategy is to strengthen relationships at higher levels within a client’s organization so the Company can better understand, anticipate and satisfy the organization’s requirements, including their diversity, equity and inclusion goals, and broader corporate social responsibility goals.

The Company also believes its proactive thought leadership in the key issues facing its clients, including data-driven marketing, sustainability and postal reform, will foster loyalty to the Quad brand.

Grow the Business Profitably

This strategy centers on Quad’s ability to grow its business at a time when significant media disruption and print industry headwinds continue.

Key components of this strategy are as follows:

Transformation as a marketing solutions partner, with an integrated marketing platform that the Company believes creates more value than the traditional agency approach that operates in silos and is focused on profit by individual media channel.

The Company calls this transformation Quad 3.0.

Quad’s unique integrated marketing platform removes the complexity Quad’s clients face when working with multiple agency partners and vendors, eliminating multiple handoffs that compromise both the strategy of programs as well as the speed at which they are executed.

In addition, the Company believes its platform increases client efficiencies through workflow re-engineering, content production and process optimization;

and improves their clients’ overall marketing spend effectiveness across all channels through data-driven consumer insights, media planning, and creative and campaign strategy.

Organic growth, in which the Company leverages knowledge from existing client relationships in key growth vertical industries to develop complementary products and services that help brand owners market more efficiently and effectively across media channels.

Quad is also focused on ensuring it has the right talent in the right positions to facilitate strategic marketing conversations with its clients that lead to a better understanding of their needs, developing tailored solutions and growing market share.

Disciplined investments, that take many different forms.

For example, the Company intends to continue to pursue acquisitions that help accelerate Quad 3.0 as well as value-driven industry consolidating acquisitions that meet its disciplined acquisition criteria.

In addition, the Company intends to continue making the long-term investments in its talent, such as hiring marketing talent, that will accelerate its transformation as a marketing solutions partner, as well as investments to increase productivity, such as through increased hourly production employees’ wages.

This strategic priority centers on Quad’s ability to defend against significant media disruption and ongoing print industry headwinds and grow the business as a marketing solutions partner.

Key components of this priority are:

• Expand existing account relationships by introducing clients to the Company’s ever-expanding offering that helps them market more efficiently and effectively across media channels.

To this end, Quad is focused on ensuring it has the right talent in the right positions to facilitate strategic marketing conversations with its clients that lead to a better understanding of their needs, developing tailored solutions and growing market share.

• Expand in key vertical industries with growth opportunities, such as consumer technology, consumer-packaged goods, financial services, insurance, healthcare and direct-to-consumer, while continuing to capitalize on the Company’s established expertise in retail and publishing.

Through existing and new offerings, Quad delivers solutions dedicated to solving client marketing and process challenges.

• Grow print segment share by providing dependable, on-time performance and ongoing investments in its platform that improve manufacturing and distribution cost efficiencies, product features and effectiveness.

At a time of significant industry and economic disruption, Quad is a stable and reliable partner to its clients.

• Make disciplined investments that take many different forms.

The Company intends to continue to pursue acquisitions that help expand and strengthen its integrated marketing platform as well as value-driven industry consolidating acquisitions that meet its disciplined acquisition criteria.

In addition, the Company intends to continue making long-term investments in its talent, such as hiring business professionals with client-side marketing experience and consulting expertise who will bolster its position as a marketing solutions partner, as well as investments to increase employee engagement, retention and productivity.

Strengthen the Core

Quad uses a disciplined return on capital framework and historically has made significant investments in its print manufacturing platform and data management capabilities that have resulted in what it believes is the most integrated, automated, efficient, innovative and modern manufacturing platform and distribution network in the printing industry.

The Company’s continued focus to strengthen its core manufacturing platform through investments that streamline, automate and improve efficiencies and throughput, while reducing labor costs, promotes sustainable cash flow and continued value creation.

Further, Quad’s disciplined culture of holistic Continuous Improvement and commitment to Lean Manufacturing methodologies is a high priority throughout the Company and supports its goal of strengthening the production and distribution functions for core product lines so that Quad can remain the printing industry’s high-quality, low-cost producer.

Quad also strengthens its core print offering through continually enhancing its product portfolio, especially in the direct marketing and packaging space, with innovations that support clients’ ability to stand out in the mailbox or on the store shelf.

The Company operates what it believes to be a superior and unparalleled integrated marketing platform, which it has consciously built to reduce complexity, enhance efficiencies and improve marketing spend effectiveness across channels.

Through this unique platform, the Company offers marketing strategy, including consumer insights and data analytics;

creative solutions for producing quality content at scale;

media optimization for all channels, including print, broadcast and digital;

and 24/7 global production, supported by industry-leading print manufacturing capabilities.

Quad uses a disciplined return on capital framework to make regular, strategic investments in this platform, resulting in what it believes is the most integrated, automated, efficient, innovative and modern marketing platform of its kind.

The Company’s long-standing, disciplined culture of holistic Continuous Improvement and commitment to Lean Enterprise methodologies, along with ongoing investments in employee development and retention, further supports its goal of strengthening its platform so that Quad can remain a high-quality, low-cost producer.

To strengthen its core offering, the Company continually seeks to enhance its product portfolio, especially in the direct marketing and packaging space, with innovations that support clients’ ability to stand out in the mailbox or on the store shelf.

These innovations include proprietary solutions unavailable anywhere else in the marketing, communications or printing industries.

Additionally, Quad has chosen to strategically divest of those businesses that cannot be easily leveraged as part of its greater integrated marketing platform, such as books.

Through these types of optimization efforts, Quad strengthens its core by remaining focused on where it can provide the most value to clients by uncomplicating marketing to deliver more.

Empower Employees

Quad’s strategy to empower employees throughout their career journey builds on key aspects of the Company’s distinct corporate culture, which the Company uses to fuel Quad 3.0.

These aspects include strong and lasting Company values and an organization-wide entrepreneurial spirit and opportunity-seeking mentality.

Employees are encouraged to take pride and ownership in their work, take advantage of continuous learning programs to advance in their careers and improve leadership skills, share knowledge by mentoring others and innovate solutions to drive performance.

With the encouragement to do things differently, to be something greater and to create a better way, the Company believes its employees are more fully engaged in producing better results for clients and advancing the Company’s strategic goals, while supporting community activities, initiatives and organizations that impact the quality of life near Quad’s facilities and where employees work on site at client locations.

As Quad continues to expand its integrated marketing platform, the Company believes this creates possibilities for each employee that are advantageously distinct from other employers.

Quad’s strategic priority to empower employees throughout their career journey builds on the key aspects of the Company’s distinct corporate culture, which the Company views as a competitive advantage.

These aspects include the Company’s enduring values, which are centered on trust, innovation, growth and believing in people.

The Company understands that its employees perform better at work when they can simply be themselves – confident in their abilities and comfortable sharing their ideas, opinions and beliefs – all of which leads to a more inclusive environment and better engagement, decision-making and business outcomes.

The Company implements talent strategies to meet its labor and business transformation needs, and training and reward programs to engage, develop and retain its employees.

Employees are encouraged to take advantage of the Company’s continuous growth environment, which not only teaches critical on-the-job and leadership skills, but also helps them respond to rapid change, cultivate effective networks, and create high-quality relationships necessary for personal, professional and company growth.

The Company believes its approach to continuous growth for each employee is advantageously distinct from other employers.

With the Company’s encouragement to do things differently, to be something greater and to create a better way, employees are more fully engaged in their day-to-day activities, producing better results for clients and advancing the Company’s strategic priorities.

Additionally, the Company engages employees and fosters corporate pride by supporting community activities, initiatives and organizations that impact the quality of life near Quad’s operations.

Enhance Financial Strength and Create Shareholder Value

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The priorities for capital allocation and deployment are adjusted based on prevailing circumstances and what the Company thinks is best for shareholder value creation at any particular point in time.

Those priorities currently include the following:

(1) deleveraging the Company’s balance sheet through debt and pension liability reductions;

(2) making compelling investments that drive profitable organic growth and productivity in the Company’s print manufacturing and distribution operations, as well as expansion into higher-growth marketing services that help accelerate Quad 3.0, and pursuing value-driven industry consolidation;

and (3) returning capital to shareholders through dividends and share repurchases.

To provide ongoing improvement in manufacturing productivity, the Company applies holistic Continuous Improvement and Lean Manufacturing methodologies to simplify and streamline processes and to ultimately maximize operating margins.

Those priorities currently include deleveraging the Company’s balance sheet through debt and pension liability reductions, and making compelling investments that drive profitable organic growth and productivity in the Company’s print manufacturing and distribution operations, as well as expansion into higher-growth marketing services, and pursuing value-driven industry consolidation.

The Company’s Board of Directors proactively suspended the Company’s quarterly dividends beginning in the second quarter of 2020, and the Company is currently prohibited from making dividend payments through September 30, 2021.

However, the Company remains committed to paying a dividend over the long term and will seek to resume a dividend following the stabilization of its operating environment.

To provide ongoing improvement in manufacturing productivity, the Company applies holistic Continuous Improvement and Lean Enterprise methodologies to simplify and streamline processes and to ultimately maximize operating margins.

These same methodologies are applied to its selling, general and administrative functions to create a truly lean enterprise.

The Company has been working diligently to lower its cost structure by consolidating its manufacturing platform into its most efficient facilities, as well as realizing purchasing, mailing and logistics efficiencies by centralizing and consolidating print manufacturing volumes and eliminating redundancies in its administrative and corporate operations.

The Company has been working diligently to lower its cost structure by consolidating its manufacturing operations into its most efficient facilities, as well as realizing purchasing, mailing and logistics efficiencies by centralizing and consolidating print manufacturing volumes, and eliminating redundancies in its administrative and corporate operations.

Quad believes that its focused efforts to be the high-quality, low-cost producer generates increased Free Cash Flow and allows the Company to maintain a strong balance sheet through debt and pension liability reduction.

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Competitive Advantages

Quad’s strategic priorities are powered by three key competitive advantages that the Company believes distinguishes itself from its competitors:

a commitment to ongoing innovation, a commitment to platform excellence, and a commitment to its people and lasting culture.

Quad’s strategic priorities are powered by three key competitive advantages that the Company believes distinguish it from its competitors:

a commitment to platform excellence, a commitment to ongoing innovation, and a commitment to its culture and social purpose.

Commitment to Platform Excellence

Quad provides a better way to solve clients’ marketing and process challenges through a data-driven integrated marketing platform that enables clients to strategically plan, produce, deploy, manage and measure their content across multiple media channels – rapidly, at scale and without handoffs that comprise quality, consistency and timeliness.

Through this platform, Quad gives brands and marketers a more efficient and effective way to go to market and reach consumers using its unmatched scale in client on-site services and expanded subject matter expertise in:

• Marketing Strategy , including customer insights and analytics, campaign planning and media services, to understand and connect with a target audience;

• Creative Solutions , including campaign development, photo and video production, adaptive design and cross-media production to produce quality content quickly and at scale;

• Media Deployment , including print, broadcast, all forms of digital, in-store and packaging, to reach multi-channel consumers while maximizing budgets;

• Marketing Management Services , including dedicated marketing services teams, sourcing and procurement, and print and paper management, to alleviate operational complexities to focus on other critical aspects of business.

Quad’s 24/7, “always-on” global platform capitalizes on creative talent and production resources in North America, South America, Europe and Asia to provide clients with around-the-clock service and/or service in a desired geography.

Quad’s dedicated on-site and near-site teams, including a network of photo studios, serve as the gateway to its integrated marketing platform.

Quad employees serve as a natural extension of a client’s internal marketing department, fulfilling traditional agency executional roles while also providing production efficiencies at scale for content creation, creative production and marketing execution.

The Company believes this model increases process efficiencies and enables clients to focus on what they do best:

sell more products, services and content.

Quad now has more than 450 professionals embedded at more than 80 on-site locations covering grocery, sporting goods, mass merchandisers and publishers.

Over its 50-year heritage, the Company has led the industry in its printing and distribution capabilities – the most capital intensive part of Quad’s integrated marketing platform, but also a key point of differentiation with traditional creative agencies and agency holding companies.

These investments in equipment, automation and leading-edge technology have been key to enhancing print product features, including personalization, while maximizing labor productivity, increasing throughput and reducing labor costs.

For example, through ongoing investments in digital press technology, the Company provides marketers and publishers a full range of options to produce and deliver more relevant content faster, in smaller print-run quantities, and more cost-effectively versus conventional web offset press technology.

Recent investments in digital press technology also have enabled Quad to enter markets in which it previously was not as competitive.

These ongoing investments, along with innovative front-end toolsets and data workflows, and industry-best, back-end logistics and postal optimization, have enabled Quad to better serve the needs of today’s leading marketers.

Quad carries over this commitment to print media to other forms of media, including all forms of digital, broadcast, in-store and out-of-home.

Another key aspect of the Company’s manufacturing capabilities is the operation of very large facilities (greater than one million square feet) that produce multiple different product lines under one roof to maximize utilization of equipment and labor resources, while also driving savings in certain product lines (such as publications and catalogs) due to economies of scale.

The Company has continued to strengthen its manufacturing operations by:

• Removing excess and/or under-utilized capacity, and by consolidating work into facilities where it can achieve the greatest manufacturing and distribution efficiencies.

Over the past 10 years, the Company has closed 50 manufacturing plants to reduce under-utilized production capacity.

• Reconfiguring and re-equipping manufacturing facilities for growth segments, such as packaging and in-store marketing.

For example, in 2019, Quad transformed its Leominster, Massachusetts book plant into a packaging facility to take advantage of key vertical industries in the region in which packaging plays a key role in establishing a product’s visual brand and influencing point of purchase decisions.

Postal rates are a significant component of many clients’ cost structures, and Quad believes that postal costs influence the number of pieces that its clients print and mail.

Therefore, the Company has invested significantly in its mailing and distribution platform to mitigate increasing postage costs, and to help clients successfully navigate the ever-changing postal environment.

One of Quad’s postal optimization programs is co-mailing, which involves the sorting and bundling of multiple printed products to be mailed to consumers, in order to facilitate better integration with the United States Postal Service (“USPS”).

In return, the USPS offers significant work-sharing discounts for this sorting, bundling and drop-shipping.

Quad’s co-mail program is the largest in the print industry (based on information published or otherwise made available from competitors).

Due to the continuously increasing costs of utilizing the USPS and to help control costs for its clients, Quad continues to expand its alternate delivery service for clients that altogether bypasses the USPS to deliver products to consumers’ doorsteps.

Commitment to Ongoing Innovation

At the forefront of innovation for more than 48 years, Quad believes its commitment to ongoing innovation drives its purpose to create a better way.

To accomplish this, Quad takes a disciplined approach to expanding its existing offerings, developing new offerings and delivering solutions dedicated to solving client marketing and process challenges.

Quad’s platform, in and of itself, is innovative, representing a non-siloed approach to marketing solutions that includes execution through digital and traditional print channels as well as vertically integrated print and non-print capabilities - an important point of differentiation from traditional printers and large agency holding companies.

Quad prides itself on strategically investing in and developing the talent (i.e., expertise), tools, technology and businesses that either fortify or fill gaps in its existing offerings to increase revenue or reduce costs as follows:

To drive innovation in key strategic marketing functions, Quad continues to hire business professionals with client-side marketing experience to help advance conversations with clients to be more consultative and solutions-based.

Quad has created an enterprise sales team that is focused on understanding client pain points, especially through expanded relationships with higher-level executives, including Chief Executive Officers and Chief Marketing Officers, to sell solutions that incorporate a broad range of products and services.

Another way the Company drives innovation is through acquisitions that quickly scale service offerings within its integrated marketing platform, provided they meet Quad’s disciplined acquisition criteria.

For example, on February 21, 2018, the Company acquired Ivie & Associates, LLC (“ Ivie ”), a premier marketing services provider specializing in customized marketing and business process outsourcing, to provide clients with unmatched scale for on-site marketing services, integrated execution, and expanded subject matter expertise in digital, media and creative.

On January 3, 2019, the Company acquired Periscope, Inc.

(“ Periscope ”), one of the nation’s top five independent creative agencies by annual revenue, offering world-class capabilities in strategy, including media buying and analytics, creative and account management, as well as packaging design and premedia services.

The acquisition supports and accelerates Quad’s transformation strategy, creating a highly efficient global platform for creating marketing campaigns and programs—from strategy and creative through execution—across all media channels.

Quad also fosters innovation by partnering with companies whose expertise helps fill a specific gap or amplify an existing offering.

For example, to strengthen its integrated marketing platform, Quad established a partnership with Rise Interactive Media & Analytics, LLC (“ Rise ”), a digital marketing agency specializing in media, analytics and customer experience, and owns a controlling interest.

The partnership brings together Quad’s expertise in optimizing a client’s marketing spend in traditional channels with Rise’s expertise in digital channels.

The Company believes this creates more integrated, multichannel campaigns and, ultimately, advances data-driven marketing through the delivery of highly relevant, consistent messages, at scale, to consumers.

The Company uses a variety of approaches to drive innovation in marketing solutions, including dedicated Product Development & Innovation (“PDI”) and Client Technology (“CT”) teams, both of which are focused on understanding and alleviating client pain points.

The PDI team aggregates ideas for enhancing Quad’s marketing solutions portfolio according to a disciplined process that includes assessing client interest and need, development time and resources, and revenue-generating potential.

Ideas selected for development are tested and refined with the help of clients before launching to the marketplace.

The CT team is focused on helping clients connect strategy, data and analytics consistently and intelligently across all media channels.

Given the myriad of marketing technology (aka MarTech) solutions available in the marketplace today, the CT team consults with clients to both optimize and configure industry-leading platforms, and develop solutions to address market voids.

In this way, the CT team acts as the

consultant, architect and back-end executor all in one.

The team’s solutions enable clients to better understand and connect with their customers and create assets smarter and faster, among other benefits.

The Company is proud to have more than 50,000 individual users of its CT solutions at hundreds of clients.

As part of its marketing solutions thought leadership, Quad conducts annual quantitative research called Customer Focus ® ™.

This extensive survey, conducted by a third party, provides consumer insights on singular and integrated media usage.

The survey reveals the unique characteristics of special demographic, generational, gender and socio-economic groups and how they consume advertising and marketing messaging, and their attitudes and engagement preferences in several industry segments.

According to survey data, print remains a strong driver across generations.

This active response to print has influenced magazine publishers to increase usage of custom product covers to enhance reader engagement and retailers who primarily use digital channels, such as online-only retailers, to incorporate print into their marketing strategy.

Further, Quad can combine the insights from Customer Focus ® ™ and use its proprietary segmentation tool, called Accelerated Insights®, to leverage client data and create a virtual testing platform through which its clients are able to rapidly test direct mail creative and formats without a physical mailing, saving significant time and money.

The ability to generate content that is relevant to the consumer is one way the Company believes it can help its clients influence consumer behavior, lift response and enhance return on investment.

Manufacturing and Distribution

The Company also remains committed to ongoing innovation throughout its print manufacturing and distribution processes to better serve its clients and remain the industry’s high-quality, low-cost producer.

Over the last five years, Quad has invested an average of 2.5% of its annual net sales for capital expenditures in its core print manufacturing and distribution platform.

This investment has resulted in what the Company believes is the most advanced and efficient print manufacturing and distribution platform in the industry and has allowed the Company to reduce the amount invested in recent years without impacting its leading technological excellence.

To improve internal processes, enhance client service levels and further drive efficiencies, the Company has consistently focused on the rapid adoption of technological innovations.

In its early years, the Company integrated its imaging, manufacturing and distribution networks into a single platform using a networked information technology infrastructure.

This platform, connected via Quad’s own Smartools ® proprietary enterprise resource planning system, provides seamless, real-time information flow across sales and estimating, production planning, scheduling, manufacturing, warehousing, logistics, invoicing, reporting and customer service.

The Company has extended its spirit of innovation through Continuous Improvement and Lean Manufacturing methodologies, and business process management tools that further simplify and improve existing internal workflows.

This includes pricing, job specifications and client acceptance to streamlining and automating the handoffs between departments throughout the entire order workflow through invoicing.

At the forefront of innovation for 50 years, Quad believes its commitment to ongoing innovation drives its purpose to create a better way, which benefits all stakeholders.

Quad innovates in marketing solutions and other vertically integrated capabilities as follows:

Marketing Solutions

When it comes to marketing solutions, Quad takes a disciplined approach to (1) expand its existing offerings;

(2) develop new offerings;

and (3) deliver solutions that solve clients’ marketing and process challenges in the areas of Marketing Strategy, Creative Solutions, Media Deployment and Marketing Management.

The Company has hired talent with client-side marketing experience and consulting expertise to help advance conversations with clients to be more solutions-based versus product-focused.

Quad’s Enterprise Sales team is focused on understanding client pain points, and aims to expand relationships with higher-level executives responsible for corporate strategy, including Chief Executive Officers and Chief Marketing Officers, to create and implement solutions that incorporate a broad range of Quad’s products and services.

Through these relationships, the Company is able to gain insights into additional client marketing needs, and then uses a disciplined process to develop and commercialize those solutions to expand and deepen Quad’s relationships.

These solutions include media products, and innovative solutions for cost-effective mailing and distribution, as well as online and cloud-based solutions for effectively integrating multichannel campaigns.

Marketing Strategy:

The Company has made recent investments in its data and analytics, campaign planning and media services for improved marketing execution to increase response rates and improve return on investment.

The Company’s data-driven customer insights and analytics services not only help clients determine their target audience based on behavior and demographics, but also the best content to serve up to that audience.

Customer insights and analytics services include market segmentation and list optimization as well as advanced testing capabilities, including a proprietary online testing platform that allows clients to rapidly test print creative and formats, and identify precisely what combination of format, offer, messaging and imagery will be most successful.

The Company also conducts annual quantitative research that reveals the unique characteristics of special demographic, generational, gender and socio-economic groups and how they consume advertising and marketing messaging, as well as their attitudes and engagement preferences in several industry segments.

The Company has innovated media buying by providing media services for all channels in-house, creating a single point of accountability for streamlined execution and helping clients speed up the media cycle with more opportunities to iterate, adjust and optimize spend across channels.

Creative Solutions:

Quad creates world-class campaigns that attract attention and activate audiences, and then implement those campaigns using processes that save money and time to get in market faster.

Technology plays a key role in Quad’s Creative Solutions which include content workflow solutions that simplify and optimize the creative process, from concept through production;

content production services that enable clients to generate high-volume, high-quality content with a noncompetitive, complementary partner;

creative services that seamlessly connect strategy, concept and design;

and mar-tech solutions centered on solving client challenges in the areas of marketing operations, content accessibility, content production (including but not limited to copywriting, videography and photography), content workflows, asset management, content deployment and data optimization.

Clients credit the Company’s creative solutions for providing a more integrated, channel agnostic, content-first approach.

Media Deployment:

Unlike traditional creative agencies and agency holding companies, Quad has the ability to deploy content across all channels using its own in-house print, broadcast, digital, in-home and packaging capabilities.

To improve internal processes, enhance client service levels and drive efficiencies in media deployment, the Company has consistently focused on the rapid adoption of technological innovations, complemented by a long-standing commitment to Continuous Improvement and Lean Enterprise methodologies, and business process management tools that further simplify and improve existing internal workflows, and reduce costs.

For example, Quad’s own Smartools ® proprietary enterprise resource planning system provides seamless, real-time information flow across print sales and estimating, production planning, scheduling, manufacturing, warehousing, logistics, invoicing, reporting and customer

Quad also has applied robotic process automation to streamline data processing and report generation.

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Where appropriate, Quad also leverages artificial intelligence in areas such as labor management, scheduling and predictive machine maintenance.

While print’s traditional role in media engagement is changing, Quad continues to believe it is an important and strategic channel for brand owners and marketers and, therefore, continues to make investments in its print manufacturing and distribution capabilities averaging 2% of its annual net sales for capital expenditures over the past five years.

These investments, which include automated guided vehicles, robotic palletizers and efficient digital and wide-web offset presses, have resulted in what the Company believes is the most advanced and efficient print manufacturing and distribution capabilities in the industry and have allowed the Company to reduce the amount invested in recent years without impacting its leading technological excellence.

These investments also have enabled it to remain the print industry’s high-quality, low-cost producer.

Marketing Management:

Quad leverages its deep expertise and expansive network to help clients manage their operations the way it runs its own – with diligence toward efficiency and cost-savings.

Through this innovative approach, Quad alleviates operational complexities for clients by offering its network of in-house experts and capabilities for marketing and production outsourcing;

sourcing and procurement of goods and services;

and print and paper management.

As a result, clients can focus on other critical aspects of business while leveraging Quad’s expertise and purchasing power.

Vertically Integrated Capabilities

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Through ongoing innovation in prepress/premedia services, paper procurement and ink manufacturing (through Quad’s Chemical Research\Technology subsidiary), the Company maintains a competitive advantage in delivering lower costs and enhanced customer service for its clients while providing the Company with substantial control over critical links in the overall print supply chain to help control the quality, cost and availability of key inputs in the printing process.

The Company created a health and wellness subsidiary, QuadMed, LLC (“ QuadMed ”), in 1990 to address its own employees’ needs for quality, cost-effective healthcare.

Today, QuadMed also provides employer-sponsored healthcare solutions on a national level to employers of all sizes, including private and public sector companies.

These solutions include, but are not limited to, on-site and near-site healthcare clinics, occupational health services, telemedicine, and health and wellness programs.

Commitment to Platform Excellence

Platform excellence pertains to Quad’s Manufacturing, Mailing and Distribution, and Marketing platforms, all of which are integrated to provide a single, cohesive platform.

Manufacturing Platform

Quad continues to invest in equipment and leading-edge technology to ensure its manufacturing platform remains the strongest and most sustainable in the printing industry and that it continues to support a vast range of traditional and digital print solutions, finishing techniques and distribution capabilities to create value for its clients.

At the same time, the Company has continued to strengthen its platform by removing excess and/or under-utilized capacity, and by consolidating work into facilities where it can achieve the greatest manufacturing and distribution efficiencies.

Over the past nine years, the Company has closed 45 manufacturing plants to reduce under-utilized production capacity.

This commitment to consolidating work into fewer facilities to maximize capacity is one key way Quad maintains platform excellence and remains the industry’s high-quality, low-cost producer.

The Company has continuously invested in its print manufacturing platform through state-of-the-art equipment and automation that reduces labor costs, maximizes labor productivity and increases throughput.

Within the last five years, these investments have included multiple wide-web offset presses and digital presses;

more than 50 automated guided vehicles or computer-controlled robotic forklifts;

and more than 60 automated palletizers, which automatically configure bundles of finished magazines and catalogs on pallets at the end of a binding line.

The Company’s investment in its manufacturing platform has consistently been based on evaluating the economic useful life of the underlying equipment rather than focusing on the potential mechanical life of the equipment.

This discipline is critical in an industry in which technological change can create obsolescence well before the end of the mechanical life of equipment.

To remain the industry’s high-quality, low-cost producer, Quad makes a concerted effort to treat all costs as variable and maintains a stringent focus on achieving productivity improvements and sustainable cost reductions through a variety of holistic Continuous Improvement and Lean Enterprise programs in both manufacturing and administrative areas.

Another key aspect of the Company’s modern manufacturing platform is the operation of very large facilities (greater than one million square feet) that produce multiple different product lines under one roof to maximize utilization of equipment and labor resources.

In addition, the Company believes these very large facilities drive savings in certain product lines (such as publications and catalogs) due to economies of scale and from ongoing investments in automation and technology.

These facilities are part of an “always-on” global production platform that capitalizes on the talent and production resources in North America, South America, Europe and Asia to provide clients with around-the-clock service or in a desired geography.

The Company continues to transform its manufacturing platform through ongoing investments in digital press technology to give marketers and publishers a full range of options to produce and deliver more relevant direct mail, packaging and other commercial products faster and more cost-effectively versus conventional web offset press technology.

For example, in the Company’s high-end folding carton packaging business, recent investments in digital press technology have enabled Quad to cost-competitively accommodate shorter runs with quicker turns, and enter markets in which it previously was not as competitive, such as private label packaging.

In the Company’s direct mail business, ongoing investments in digital press technology (along with innovative front-end toolsets and data workflows, and industry-best, back-end logistics and postal optimization) have enabled Quad to better serve the needs of today’s leading marketers through advanced personalization and targeting capabilities.

Using Quad’s technology-enabled direct mail platform, clients are able to reach the right recipients with a relevant message at the right time which, in turn, helps them increase consumer response rates, maximize their return on print spending and reduce overall costs.

Built over many years, Quad’s data-driven, one-to-one direct marketing platform includes in-house capabilities to analyze mailing list data, demographic data, consumer transaction data and other consumer-specific data to help its clients create targeted and personalized printed materials.

Mailing and Distribution Platform

Quad is also able to leverage the volume of products running through its printing plants for further client distribution savings by coordinating and consolidating shipments, and then by routing them directly to thousands of local newspapers, United States Postal Service (“ USPS ”) processing facilities or other distribution facilities.

In addition, each major United States metropolitan area is within one day’s drive of at least one of the Company’s strategically located facilities, providing its clients the flexibility to print closest to their end consumers.

Postal rates are a significant component of many clients’ cost structures, and Quad believes that postal costs influence the number of pieces that its clients print and mail.

The Company performs an analysis of mail list data as part of its logistics services, which allows it to reduce client freight costs for shipments to newsstands and postal centers, while providing a high level of dependability and rapid response times that are crucial to the delivery of time-sensitive materials.

Further, the Company manages mail distribution of most of its clients’ products to maximize efficiency and reduce these costs.

In return, the USPS offers significant work-sharing discounts for this sorting, bundling and drop-shipping.

Quad’s co-mail program is the largest in the print industry (based on information published or otherwise made available from competitors).

In 2019 , Quad co-mailed approximately 3.7 billion publications, catalogs and direct marketing pieces.

Marketing Platform

The Company’s commitment to platform excellence extends to integrated marketing solutions, which are provided at Quad facilities as well as at client on-site or near-site locations.

For clients who engage the Company’s on-site marketing solutions model, Quad employees serve as a natural extension of a client’s internal marketing department and fulfill traditional agency executional roles while also providing production efficiencies at scale for content creation, creative production and marketing execution.

The Company believes this model increases process efficiencies and enables clients to focus on what they do best:

sell more products, services and content.

Quad now has more than 500 professionals embedded at more than 75 on-site locations, including retail and publishing.

Commitment to People and Lasting Culture

Quad believes that its employees do not just make a difference—they are the difference.

The Company believes this is a key competitive advantage that is not easily replicated by its competitors given its long-standing culture.

Quad believes that its distinct corporate culture, which evolved from a core set of values conceived by the late founder Harry V.

Quadracci, drives thoughtful decision-making, especially with regard to its disciplined approach to managing operations, creating solutions that redefine print in a multichannel media marketplace, and better positioning the Company to prevail in the dynamic and competitive printing industry.

The Company fosters an entrepreneurial environment by inspiring and empowering employees to own projects and enact solutions that advance the Company’s goals.

Employees in the United States also may have a beneficial ownership interest in Quad through Company stock held in the Quad/Graphics, Inc.

Employee Stock Ownership Plan (“ ESOP ”), enhancing their sense of ownership.

The Company believes this sense of employee engagement and distinct corporate culture drives its disciplined approach to all aspects of its business.

The Company demonstrates its commitment to employee engagement in a variety of ways, including the following:

Offering employees a competitive compensation and benefits package;

Providing employees with a safe work environment with robust safety training and accountability programs;

Offering continuous learning and career advancement opportunities, such as through registered mechanical and electrical apprenticeship programs, youth apprenticeship programs, the Company’s own Accelerated Career Training program for production employees, digital media training, business resource groups and leadership development training;

Offering business resource groups—including The Circle for women launched in 2016, and the Frontline for military veterans launched in 2019, with additional groups expected to be launched in future years—to promote diversity and inclusion and provide the Company with feedback on ways to enhance the employee experience through the development and improvement of current policies that help Quad remain their employer of choice;

Promoting employee health and wellness through a variety of personal improvement programs and facilities, including the Company’s own full-service QuadMed primary care clinics;

The Company created a health and wellness subsidiary, QuadMed, LLC (“QuadMed”) in 1990 to address its own employees’ needs for quality, cost-effective health care.

Today, QuadMed provides worksite health care solutions nationally for approximately 60 employers of all sizes and across all industries, including private and public sector employers.

These solutions include onsite, near-site and virtual health delivery of comprehensive primary and preventive care, condition management, wellness programs and coaching, physical therapy, behavioral health, pharmacy services, occupational health and more.

Commitment to Culture and Social Purpose

Quad believes its ability to create value is not limited to generating economic value, but also social and environmental value, and that corporate social responsibility is good business.

This dedication to operating with meaningful purpose aligns with its commitment to creating a better way – a hallmark of the Company’s culture.

In fact, Quad believes that its distinct corporate culture, which evolved from a core set of values conceived by the Company’s late founder Harry V.

Quadracci, drives thoughtful decision-making, especially with regard to its disciplined approach to managing operations, innovating solutions for clients, and better positioning the Company to prevail in a dynamic marketplace.

Quad uses the triple bottom line – people, planet, profit – as the measure for social well-being, environmental impact, and economic value.

In this Annual Report on Form 10-K, the Company discusses People under “Human Capital Management” below;

Planet under “Environmental Stewardship” below;

and Profit under “Corporate Governance” below.

Human Capital Management

The Company continually invests in and supports its employees.

Its people-focused, values-driven culture is a key competitive advantage that the Company believes distinguishes itself from its competitors.

Attracting, Developing and Retaining Highly Qualified Talent

Quad relies on highly qualified, skilled and knowledgeable talent to advance its strategic priorities and maintain its competitive advantage.

Accordingly, the Company heavily invests in efforts to attract, develop and retain employees, and in tools, technologies, processes and education to increase engagement, productivity and efficiency.

As of December 31, 2020, the Company had approximately 15,800 full-time equivalent (“FTE”) employees in the following geographies:

Geographic Region Number of FTE Employees

North America (Includes Mexico, Central America and the Caribbean) 13,400

Europe, Middle East and Africa 1,600

South America 700

The ways in which Quad attracts, develops and retains highly qualified talent include, among others, the following:

• Providing and maintaining a world-class culture and environment for health and safety.

The Company strives for zero workplace injuries and illnesses through its Safety Accountability for All Employees (SAFE) policy which states that no department is considered properly managed – regardless of proficiency in other managerial areas – unless it maintains an acceptable level of safety performance.

All employees, from entry-level through senior management, are held accountable for adhering to the Company’s safety policies.

In 2020, the Company also implemented a Safe at Work program in response to the COVID-19 pandemic, which prioritizes the health and safety of employees through a variety of initiatives (for additional information on this program, see “COVID-19 ” below).

• Implementing a new wage structure over the past few years for hourly manufacturing employees in its most competitive labor markets.

• Offering career development through a variety of programs, including:

◦ Accelerated Career Training , which provides a fast-track for career advancement in manufacturing positions.

◦ People Leading People , a leadership development program focused on best-in-class manager behaviors that drive employee development and retention.

◦ Corporate Training Program, an 18-month to 36-month on-the-job training and leadership development program in which employees learn Quad’s business from the ground up.

◦ Ongoing skills training, including industrial, mechanical and youth apprenticeship programs.

• Acting on employee feedback garnered through regular surveys and open forums at department and company-wide meetings.

Offering an employee referral program and investing in technology and improved processes to facilitate an easy hiring and on-boarding process;

This includes engagement surveys – both large-scale and targeted by location or department.

• Fostering pride through employee recognition programs;

employee and family events;

long-standing focus on corporate social responsibility, including community outreach activities and support, and environmental sustainability efforts, such as effective management of resources and reducing waste;

and adhering to a published code of ethics.

Quad is led by an experienced management team with a proven track record in the printing industry that is committed to preserving the Company’s values-based culture.

The senior management team includes entrepreneurially minded leaders with a long tenure at Quad mixed with strategic new hires or leaders from recent acquisitions, further supplemented by managers and employees committed to advancing print and marketing solutions in coordination with the ever-evolving multichannel media landscape.

The Company believes the experience and stability of senior management, paired with next-generation talent, will contribute to its long-term success as it continues its path forward as a marketing solutions partner with a strong foundation in print.

Quad also enjoys a competitive advantage in consistent, stable leadership that is focused on making decisions in the best long-term interest of the Company.

It is able to do this because of the Quadracci family voting control, which enables the Company to manage its strategy and disciplined financial policy by being able to make decisions today that could benefit the Company years from now and avoid the pitfalls of short-term decision making that could potentially jeopardize the stability and longevity of the Company.

long-standing focus on corporate social responsibility, including community outreach activities and environmental sustainability efforts;

and adhering to a published code of conduct.

Compensation and Benefits

The Company invests in its workforce by offering market competitive compensation, regularly conducting total compensation benchmarking as part of its basic operations, as well as offering a comprehensive benefits package as part of its Total Rewards program.

Features of this program include:

• Comprehensive medical, dental and vision coverage to employees, including access to 24/7 telemedicine.

• On-site or near-site primary and specialty healthcare care, pharmacy, dental and vision clinics, physical therapy services, and fitness centers at several large-scale employee locations, owned and operated by the Company’s health and wellness subsidiary, QuadMed.

• 401(k) retirement savings program with annual discretionary Company match as well as retirement planning and financial wellness resources and webinars.

• Paid vacation time and holidays.

• Short and long-term disability insurance.

• On-site daycare and summer camps for some of the Company’s largest employee locations.

• Promoting the importance of total employee well-being through the Company’s new wellness platform, QLife, that provides extensive information and resources for addressing employees’ total health, including physical, emotional, financial and social well-being.

Diversity, Equity and Inclusion

At a time of heightened awareness about social justice issues, Quad has enhanced its diversity, equity and inclusion (“DEI”) strategy and program to:

(1) ensure it achieves a workforce that reflects the communities where employees live and work, as well as the clients who trust Quad with their business;

(2) ensure that procedures, processes and distribution of resources create equal opportunities and fair and just outcomes;

and (3) create a safe and open environment where all Quad employees can bring their truest and best selves to work every day, consistent with the Company’s long-standing values.

The Company demonstrates its commitment to diversity, equity and inclusion in a variety of ways, including the following:

• Supporting employee-led Business Resource Groups (BRGs), which are formed and managed by employees who share common interests and concerns, to encourage, support and help each other, and provide the Company with feedback on ways to enhance the employee experience.

The Company’s BRGs currently include:

The Circle for women launched in 2016;

the Frontline for military veterans launched in 2019;

PRIDE for the LGBTQIA+ community and allies launched in 2020;

and U.N.I.T.E.

for black employees and allies launched in 2020.

• Expanding partnerships with community organizations that support underserved communities, such as Running Rebels in Milwaukee where Quad provides career-oriented manufacturing jobs, training and transportation to individuals seeking to better their employment situation.

• Partnering with diversity, equity and inclusion experts to advance a more comprehensive and sustainable strategy that includes tailored learning and development programs for employees.

In 2020, the Company:

◦ Fielded a company-wide survey to better understand employee attitudes and perceptions toward diversity, equity and inclusion.

◦ Held educational town halls covering DEI topics.

◦ Conducted extensive discovery with employees to surface the areas of greatest need for DEI programmatic and education efforts, including an assessment of culture competencies, stakeholder interviews and focus groups.

• Creating I am.

, an internal platform to celebrate diverse voices while also affirming that employee voices are stronger when they come together.

Here, employees can listen to employees from across the company as well as external thought leaders as they discuss DEI-related topics.

• Supporting the education and advancement of diverse talent in the creative industry through talent development programs, such as paid agency internships, and scholarships at institutions committed to diversifying the talent pipeline.

• Advancing supplier diversity by developing mutually beneficial relationships with diverse suppliers.

Quad’s goal is to achieve a supplier base that reflects the diversity of the communities in which it does business.

Community Relations

The Company continuously seeks to build relationships and involvement with its communities through volunteerism, outreach, philanthropy and charitable giving.

Through its efforts, the Company has made a meaningful difference through support of food pantries, emergency relief, literacy programs, technical schools and more.

The Company’s annual Quad Charity Golf Outing for employees and vendors raises money for organizations that improve education or access to resources, including Homes for our Troops, Children’s Hospital of Wisconsin Burn Center and Herma Heart Institute, and Stars and Stripes Honor Flight.

Communication

The Company believes that timely, transparent communication with all employees is an important engagement tool, and uses a variety of channels to inform and educate employees about business operations and matters of personal importance (e.g., benefits).

These channels include InsideQuad , the employee intranet;

executive blogs and vlogs;

executive town halls;

department meetings;

opt-in text messaging;

in-plant electronic and print signage;

and in-home mailings.

Quad’s CEO hosts quarterly town halls for all employees, accessible online and also posts video and written messages.

Throughout the COVID-19 pandemic, Quad has prioritized protecting employees’ health and well-being while also protecting the financial health and long-term viability of the Company.

Beginning with the earliest stages of the pandemic, Quad:

• Activated a cross-disciplinary Crisis Management Team to address business continuity, including maintaining employee health and wellness, while continuing to serve clients.

• Followed guidance from the Centers for Disease Control and Prevention, local health authorities, and federal and state governments, along with best practices and recommendations from its health and wellness subsidiary, QuadMed.

• Developed a Safe at Work program providing for the health and safety of employees while we continue to meet the needs of clients.

This program includes processes and procedures for good hygiene, social distancing, mask wearing and daily disinfecting to prevent the spread of COVID-19.

Also, as part of this program, any employee who is able to perform their duties remotely has been equipped to work from home to promote social distancing.

• Created a Rapid Response Team to assess each potential COVID-19 case, perform contact tracing, determine the need for self-quarantining, and support and track employees through their return to work at the appropriate time.

In 2020, Quad has assessed, responded and tracked situations involving more than 4,300 employees.

• Implemented a communication strategy that includes frequent communications and ongoing education – including in-home mailings and opt-in text messaging – around how to stay healthy both inside and outside of work.

Environmental Stewardship

Quad strives to be the leader in the printing industry in adopting new technologies and processes to minimize the Company’s impact on the environment.

The Company believes it has long been known for its environmental stewardship.

Quad’s proactive approach to incorporate holistic practices has also positively impacted operating costs through the reduction of waste, energy use, and emissions, as well as through the implementation of water conservation solutions.

The Company has also undertaken steps to reduce greenhouse gas emissions from its manufacturing processes and to improve fuel efficiency and reduce emissions in its fleet of Company-owned tractor trailers.

Quad believes that doing what is good for the environment is good for business, and seeks to operate in an environmentally responsible manner by challenging itself to find new and better ways to conduct business that better serves the environment and reflect the values of its clients and their customers.

This approach, which the Company calls enlightened environmentalism, focuses on conserving resources, minimizing waste, and recycling and reusing materials and equipment.

Examples of Quad’s enlightened environmentalism include a blend of programs, processes and technologies, including:

• Partnering with federal, state and local regulatory agencies;

educational institutions;

industry trade groups;

and nonprofit organizations to share information, best-management practices, development of new tools and metrics, and innovative technology that lead to reduction or elimination of environmental impacts.

• Benchmarking environmental performance to evaluate the effectiveness of current environmental management programs and to identify program areas that need improvement or need to be developed.

• Maintaining three responsible forestry certifications:

Forest Stewardship Council® (FSC®), Sustainable Forest Initiative (SFI®) , and Program for the Endorsement of Forest Certification (PEFC) .

• Becoming a founding member of Forests in Focus , a sustainability verification tool that identifies family-owned forests as a source for sustainable wood fiber, the raw material used to make paper and packaging.

• Being a member of the Green Master’s Program, a recognition and assessment program for Wisconsin businesses interested in improving and being recognized for their sustainability initiatives.

• Formulating its own brand of Envirotech™ inks that contain a high percentage of renewable resource (i.e., vegetable) content.

• Developing a co-mailing program that helps consolidate loads of mail and, thereby, reduce greenhouse gas emissions impact by putting fewer trucks on the road.

• Equipping the Company’s web offset presses with dryers that can collect volatile organic compounds and use them as a supplementary fuel source to natural gas.

• Being active participants in the State of Wisconsin’s Focus on Energy program, an energy-savings program promoted by local utilities to encourage energy efficiencies and renewable use.

• Becoming ISO 50001 Certified Ready through the U.S.

Department of Energy in our West Allis facility, a recognition that the Company would be considered “Ready” to achieve full ISO 500001 recognition if they opted to do so in the future.

• Helping clients meet their sustainability goals through sourcing sustainable materials.

• Putting the Company’s 375-acre “Camp Quad” recreational center into conservancy through non-profit Tall Pines, ensuring the land will be preserved for future generations.

• Continually educating clients, employees and communities on environmental sustainability matters.

These include, providing access to internal experts for consultations, hosting symposiums and other educational events at which the clients, suppliers and employees learn about the latest challenges and trends in sustainability;

and community education initiatives with non-profits dedicated to preserving our forests and ecosystems.

In the last six years, Quad has educated 75 client companies on sustainability issues at its annual Sustainability Symposium featuring internal and external subject matter experts.

As the owner, lessee or operator of various real properties and facilities, Quad is subject to various federal, state and local environmental laws and regulations, including those relating to air emissions;

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Compliance with existing or new environmental laws and regulations may require the Company to make future expenditures.

Corporate Governance

Thoughtful corporate governance has been a part of Quad since its founding and is informed by the Company’s values of Grow, Believe in People, Have Fun, Make Money, Trust in Trust, Do the Right Thing, Do Things for the Rose (i.e., excellence) and Urgently Innovate.

Key aspects of Quad’s approach to managing the Company include:

• Maintaining consistent, stable leadership that is focused on making decisions in the best long-term interest of the Company.

It is able to do this because of the Quadracci family voting control, which enables the Company to manage its strategy and disciplined financial policy by being able to avoid the pitfalls of short-term decision making that could potentially jeopardize the stability and longevity of the Company.

• Retaining an experienced management team with a proven track record that is committed to preserving the Company’s values-based culture.

The Company believes the experience and stability of senior management, paired with next-generation talent, will contribute to its long-term success.

• Sustaining a disciplined approach to managing operations and commitment to innovating solutions to drive growth for clients and the Company.

• Maintaining a high standard for corporate compliance and ethical business practices to keep the business healthy and protect the Company and its stakeholders from risk.

The Company’s values, especially Do the Right Thing , serve as the foundation for Quad’s ethical approach to decision-making and business practices.

The Company’s Employee Code of Conduct appears on the employee intranet and corporate website, and explicitly states that Quad is committed to a workplace where every employee, regardless of job title or position, is responsible for doing the right thing.

Employees are required to complete annual compliance training on acceptable use policy, anti-harassment, code of conduct, C-TPAT, HIPAA, information security and physical security.

• Creating a Supplier Code of Conduct that ensures the Company sources materials from responsible suppliers that have business integrity, ethical labor practices and environmental management policies.

This Code also includes anti-corruption and anti-bribery policies.

Quad enjoys long-standing relationships with a diverse base of clients, which includes both national and regional corporations in North America, South America, Europe and Asia.

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The Company generally buys these raw materials based upon market prices that are established with the vendor as part of the procurement process.

Approximately half of the paper used by the Company is supplied directly by its clients.

Approximately half of the paper used in the printing process is supplied directly by the Company’s clients.

For those clients that do not directly supply their own paper, the Company makes use of its purchasing efficiencies to supply paper by negotiating with leading paper vendors, uses a wide variety of paper grades, weights and sizes, and does not rely on any one vendor.

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In its logistic operations, however, the Company is able to pass a substantial portion of any increase in fuel prices directly to its clients.

As of December 31, 2019 , Quad had approximately 19,600 full-time equivalent employees in North America, South America, Europe and Asia.

Within the United States, there were approximately 15,900 full-time equivalent employees, of which approximately 400 were covered by a collective bargaining agreement.

Outside of the United States, there were approximately 3,700 full-time equivalent employees, of which approximately 1,200 were either governed by an industry-wide agreement, by a collective bargaining agreement or through a works council or similar arrangement.

Quad believes that its employee relations are good and that the Company maintains an employee-centric culture.

Business Acquisitions and Strategic Investments

The Company completed the acquisition of Periscope on January 3, 2019 , for a net preliminary purchase price of $121 million , excluding acquired cash.

On June 15, 2020, the Company purchased units of equity in Rise from a previous holder in the form of a $16 million note payable paid in full on October 1, 2020, and $1 million cash paid on June 15, 2020.

In addition, on June 15, 2020, Rise purchased and retired units of equity from previous holders of Rise for $5 million in cash.

These transactions increased the Company’s ownership interest from 57% to 99%.

The Company began consolidating the results of Rise in the Company’s consolidated financial statements when its equity ownership increased to 57% on March 14, 2018.

Rise is a leading digital marketing agency specializing in media, analytics and customer experience in digital channels.

The Company completed the acquisition of Periscope on January 3, 2019, for a net purchase price of $121 million, excluding acquired cash.

Periscope is a creative agency headquartered in Minneapolis, Minnesota and provides a comprehensive offering, including media buying and analytics, creative and account management.

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The following table sets forth the names, ages (as of January 31, 2021) and positions of Quad’s executive officers.

Joel Quadracci

Chairman, President and Chief Executive Officer

Executive Vice President of Product and Market Strategy, and President of Quad Agency Solutions

Executive Vice President of Sales and Marketing

Executive Vice President and Chief Operating Officer

Executive Vice President and Chief Financial Officer

Executive Vice President of Administration and General Counsel

Executive Vice President, President of Logistics and Treasurer

Vice President and Chief Information Officer

Executive Director and Chief Accounting Officer

Quadracci has served as the Chairman, President and Chief Executive Officer of Quad since January 2010.

Since March, 2018, Mr.

Quadracci also serves on the Board of Directors of Rise Interactive Media & Analytics, LLC .

He previously served as President and Chief Executive Officer from July 2006 to January 2010, President from January 2005 to July 2006 and has served as a director of Quad since 2003.

Quadracci joined Quad in 1991 and, prior to becoming President and Chief Executive Officer, served in various capacities, including Sales Manager, Regional Sales Strategy Director, Vice President of Print Sales, Senior Vice President of Sales & Administration, and President and Chief Operating Officer.

Quadracci is the brother of Kathryn Quadracci Flores, a director of Quad, and the brother-in-law of Christopher B.

Name Age Position

Joel Quadracci 52 Chairman, President and Chief Executive Officer

Ashworth 55 Executive Vice President of Product and Market Strategy, and President of Quad Agency Solutions

Currie 58 Executive Vice President and Chief Revenue Officer

Frankowski 60 Executive Vice President and Chief Operating Officer

Honan 52 Executive Vice President and Chief Financial Officer

Kent 49 Executive Vice President of Administration and General Counsel

Vanderboom 46 Executive Vice President, President of Logistics and Treasurer

Jaeger 56 Vice President and Chief Information Officer

Bauer 56 Executive Director and Chief Accounting Officer

Quadracci has been a director of Quad since 2003, its President since January 2005, its President and Chief Executive Officer since July 2006 and its Chairman, President and Chief Executive Officer since January 2010.

Quadracci joined Quad in 1991 and, prior to becoming President and Chief Executive Officer, served in various capacities, including Sales Manager, Regional Sales Strategy Director, Vice President of Print Sales, Senior Vice President of Sales and Administration, and President and Chief Operating Officer.

Quadracci has served as the President of the board of trustees of the Milwaukee Art Museum since December 2018.

He serves on the board of directors for Plexus Corp., Pixability, Inc., Road America, Inc., Children’s Hospital of Wisconsin, the National Association of Manufacturers, and the Metropolitan Milwaukee Association of Commerce.

He also serves on the advisory council of the Smithsonian National Postal Museum and is a member of the Greater Milwaukee Committee.

Quadracci received a Bachelor of Arts in Philosophy from Skidmore College in 1991.

Quadracci is the brother of Kathryn Quadracci Flores, M.D., a director of Quad, and the brother-in-law of Christopher B.

Harned, a director of Quad.

Ashworth has served as Executive Vice President of Product and Market Strategy, and President of Quad Agency Solutions since April 2016.

Since March, 2018, Mr.

Ashworth also serves on the Board of Directors of Rise Interactive and Analytics, LLC.

He previously served as President of BlueSoHo and Media Solutions from August 2015 to April 2016.

Quad believes that Mr.

Quadracci’s experience in the printing industry and in leadership positions within Quad qualify him for service as a director of Quad.

Ashworth has served as Executive Vice President of Product and Market Strategy since joining Quad in 2015, and President of Quad Agency Solutions since April 2016.

Ashworth also serves on the board of directors of Ash+Ames, and is a board member of the Chicago Children’s Choir.

Prior to joining Quad, Mr.

Ashworth was President of SGK, Inc.

(formerly Schawk, Inc.) from July 2012 to July 2015, Chief Growth and Strategy Officer of SGK from September 2009 to July 2012 and Global Chief Growth Officer of Anthem Worldwide (a division of SGK) from November 2003 to September 2009.

(formerly Schawk, Inc.) from July 2012 to July 2015, Chief Growth and Strategy Officer of SGK from September 2009 to July 2012, and Global Chief Growth Officer of Anthem Worldwide (a division of SGK) from November 2003 to 2010.

Prior thereto, Mr.

Ashworth was co-founder and President of BlueMint Associates from June 2002 through November 2003, after serving in various marketing related roles since 1992 at Levi Strauss & Co., the Clorox Corporation and Colgate-Palmolive.

Badura has served as Executive Vice President of Sales and Marketing since June 2015.

She previously served as Vice President of Omnichannel Sales Strategy from February 2014 to June 2015, as Regional Vice President of Sales-Midwest for Marketing Solutions from January 2012 to February 2014, as Vice President of Sales - East Coast for Magazines and Catalogs from April 2007 to December 2011, as Vice President of Sales - West Coast from January 2004 to March 2007 and in various other capacities since she joined Quad in 1986.

Ashworth was Co-founder and President of BlueMint Associates from June 2002 through November 2003, after serving in various marketing roles at Fitch San Francisco, Addis Interaction, Levi Strauss & Co., Clorox, Colgate-Palmolive and National Semiconductor.

Currie has served as Executive Vice President and Chief Revenue Officer since November 2020.

She previously served as Executive Consultant of FCM, LLC from 2019 to 2020.

Prior thereto, Ms.

Currie served as Senior VP of Global Retail Product Leadership from 2016 to 2019, as Senior VP, Global Loyalty Commercial Director from 2012 to 2016, as Senior VP, Global Business Services North America from 2008 to 2012, as VP, National Accounts Group Client Director from 2003 to 2007, and as VP, Group Client Director from 2001 to 2003 of The Nielsen Company.

Currie also serves on the board of Boys & Girls Club of Lake County.

Frankowski has served as Executive Vice President and Chief Operating Officer since March 2014.

He previously served as Executive Vice President of Manufacturing Operations and President of Europe from July 2010 to March 2014.

He previously served as Executive Vice President of Manufacturing Operations and President of Quad Europe from July 2010 to March 2014.

Prior thereto, Mr.

Frankowski was Senior Vice President of Manufacturing from 2004 to July 2010, President of Quad Europe, Quad Polish subsidiary, from 2008 to July 2010, and he served in various other capacities since he joined Quad in 1979.

Frankowski was Senior Vice President of Manufacturing from 2004 to July 2010, President of Quad Europe from 2008 to July 2010, and served in various other capacities since he joined Quad in 1979.

Frankowski also serves on the Quad/Graphics Europe Management Board and the board of Memjet Ink.

Honan has served as Executive Vice President and Chief Financial Officer since January 2015.

He previously served as Vice President and Chief Financial Officer from March 2014 to January 2015, Vice President and Chief Accounting Officer from July 2010 to March 2014, Vice President and Corporate Controller from December 2009 to July 2010 and as Quad’s Corporate Controller from when he joined Quad in May 2009 until December 2009.

He previously served as Vice President and Chief Financial Officer from March 2014 to January 2015, Vice President and Chief Accounting Officer from July 2010 to March 2014, Vice President and Corporate Controller from December 2009 to July 2010 and Quad’s Corporate Controller from when he joined Quad in May 2009 until December 2009.

Currently, he serves on the Advisory board of FM Global.

Prior to joining Quad, Mr.

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She previously served as Vice President and General Counsel from December 2013 to June 2015, and as Quad’s Assistant General Counsel from when she joined Quad in August 2010 until December 2013.

Kent joined the board of Mayville Engineering Company, (MEC:

NYSE), a manufacturer of tooling, production fabrication, coating, assembly and aftermarket components, in December 2020 and serves on the board of Building Brave, a non-profit virtual community for professional women.

Prior to joining Quad, Ms.

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Kent served as an Assistant United States Attorney for the Eastern District of Wisconsin and practiced law at Foley & Lardner LLP, a Milwaukee-based law firm.

Vanderboom has served as Executive Vice President since 2018.

Since March 2018, Mr.

Vanderboom has also served on the Board of Directors of Rise Interactive Media & Analytics, LLC .

He has also served as Treasurer and President of Logistics since March 2014.

He previously served as Quad’s Vice President & Treasurer from 2008 to March 2014 and as its Treasurer from 2007 to 2008.

Prior to becoming Quad’s Treasurer, Mr.

Vanderboom served as Director of Treasury, Risk & Planning from 2006 until 2007, as Controller of Quad’s Distribution and Facilities departments from 2004 until 2006, and in various other capacities since he joined Quad in 1993.

Vanderboom has served as Executive Vice President since 2018, and Treasurer and President of Logistics since March 2014.

Vanderboom was put in charge of leading Quad’s EBITDA initiatives in October of 2019.

Since joining Quad in 1993, he has served in various leadership capacities, including controller of Quad’s Distribution and Facilities departments from 2004 until 2006;

director of Treasury, Risk & Planning, beginning in 2007, and Vice President, beginning in 2008.

Jaeger has served as Vice President and Chief Information Officer since November 2015.

He previously served as Executive Vice President, President of Direct Marketing and Chief Information Officer from November 2014 to November 2015, as Executive Vice President, President of Direct Marketing and Media Solutions and Chief Information Officer from March 2014 to November 2014, as Corporate Vice President of Information and Technology for Quad since 2013, Vice President of Information Systems and Infrastructure from 2007 to 2012 and as President of Quad/Direct since August 2007.

He previously served as Executive Vice President, President of Direct Marketing and Chief Information Officer from November 2014 to November 2015;

as Executive Vice President, President of Direct Marketing and Media Solutions and Chief Information Officer from March 2014 to November 2014;

as Corporate Vice President of Information and Technology since 2013;

as Vice President of Information Systems and Infrastructure from 2007 to 2012;

and as President of Quad/Direct from August 2007 until 2013.

Prior thereto, Mr.

Jaeger had been Quad’s Vice President of Information Systems from 1998 to 2006 and had worked in various other capacities since he joined Quad in 1994.

Jaeger served as Quad’s Vice President of Information Systems from 1998 to 2006 and worked in various other capacities since he joined Quad in 1994.

Prior to joining Quad, Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business