Company Analysis - Quad
Quad's greatest value proposition that sets it apart from its competitors is that it is the only truly integrated marketing platform offering in the industry that provides varying combinations of marketing services all from a single platform. The major industries served by the company includes consumer packaged goods, e-tail, financial services, healthcare, insurance, publishing, retail, travel and hospitality.
A) VALUE PROPOSITION
- Quad company's greatest value proposition that sets it apart from its competitors is that it is the only truly integrated marketing platform offering in the industry. It provides the varying combinations of marketing services all from a single platform that helps its clients to greatly improve results and drive unbridled consumer experience.
- In addendum, Quad continued to focus on innovation and endeavors to constantly upgrade its integrated marketing solutions as one of its key value propositions. For example, the company has focused on the continued development and expansion of its BlueSoHo business, which offers multi-channel marketing services "with an emphasis on helping brands work smarter, produce faster and be more agile".
- This strategy has allowed Quad to capture new businesses as compared to its competitors from brand owners who understand the benefits of fully orchestrated cross-media programs.
- Quad provides data-based insights and analytics to its clients to target their consumers and carve out a multichannel strategy. The Company derives its value proposition in this area by providing accelerated insights to the clients that use a unique combination of demographics with cultural and emotional factors to motivate targeted consumers, as opposed to mere traditional testing insights provided by competitors and most industry players.
- The Company also drives its value proposition by leveraging next-generation technology in its product offerings. Quad's Accelerated Insights Simulator is a cloud-based application that gives secure access to testing results 24/7.
- In addition, the Company has applied robotic process automation to automatable tasks to streamline data processing and report generation.
B) CUSTOMER LANDSCAPE
- While Quad has not disclosed the names of its individual clients, the major industries that it serves include consumer packaged goods, e-tail, financial services, healthcare, insurance, publishing, retail, travel and hospitality.
- The company's clients include both national and regional corporations in North America, South America, Europe, and Asia.
- Quad comprises industry leading blue chip companies that operate in a wide range of industries and serve both businesses and consumers, including retailers, publishers, and direct marketers.
- In 2017, Quad served approximately 6,900 clients, and its 10 largest clients accounted for approximately 16% of consolidated sales, with none representing more than 5% individually.
C) CUSTOMER PERCEPTIONS
- Quad enjoys a high level of customer satisfaction with its dedicated customer relationship management department and has been able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
- There are no publicly available reviews/feedbacks from the clients either on the company's website, blogs or through case studies. However, Quad enjoys the highest A+ rating from 'Better Business Bureau' (BBB).
- BBB ratings represent how the business is likely to interact with its customers and hence the highest A+ rating for Quad corroborates that customers/clients have an extremely positive perception about the company with minimal level of complaints.
- The company's relationships with its largest clients average around 20 years in duration. This further accentuates the positive customer perception of Quad.
- The automation of the Quad's various activities has brought consistency of quality to the company's products and has enabled it to scale up and scale down based on the demand conditions in the market.
- The company leverages robotic process automation and Artificial Intelligence in its operations that have allowed it to focus on value-adding tasks, while the robotic process completes the transactional, repetitive functions.
- Quad has consistently invested in capital expenditure to fuel its innovation and has been successful at the execution of new projects and generated good returns on capital expenditure by building new revenue streams.
- Over the last five years, the company has invested an average of 2.7% of its annual net sales for capital expenditures which have enabled it to build the most advanced and efficient marketing platform in the industry.
- Quad has strong free cash flows (FCF) that provide resources in its hand to expand into new projects.
- The company generated $258M in FCF in 2017 as compared to $246M in 2016 and $215M in 2015, thus depicting a constant growth.
- Another key strength and differentiating factor of the company vis-a-vis its competitors is that it conducts a unique annual quantitative research survey called 'Customer Focus' that provides consumer insights on singular and integrated media usage and reveals the unique characteristics of special demographic, generational, gender and socioeconomic groups.
- The company leverages these insights using its proprietary segmentation tool, called Accelerated Insights, to create hyper-personalized online and offline campaigns that enhance its ROI and client experience.
- Quad's other key strengths are its strategic partnerships with companies who are considered a pioneer in digital marketing. This has allowed the Company to bolster its integrated marketing platform which is its key value proposition by optimizing offline spend and using robust analytics to deliver highly-relevant and consistent messages to its clients.
- The company's highly skilled workforce adds on to its strength. The company invests huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
- In addendum, the company's large and diverse client base and broad geographic coverage add on to its strengths.
- Quad has a successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated a number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
- Some of the recent successful integrations in 2018 include Periscope Agency, LSC Communications, Rise Interactive, and Ivie & Associates.
- Quad is currently not at par with industry standards in demand forecasting for its printing products and solutions and has high day sales inventory leading to higher rate of missed opportunities compared to its competitors.
- The Company ends up keeping higher inventory both in-house and in the channel that adds on to its cost and reduces its ROI.
- Quad has only recently started its investment in technology and needs to ramp it up considerably, given the scale of expansion and different geographies the company is planning to expand into. Currently, the investment in technologies is not at par with the vision of the company.
- Owing to competition, Quad's net sales have been on a declining trajectory over the past 3 years that signals overall weakness in the company's operations.
- The US net sales fell from $4,597 million in 2015 to $4,330 million in 2016 and $4,131 million in 2017 (5% YoY decline).
- In addition, the company's current asset ratio and liquid asset ratios are below industry average and suggest that it can use the cash more efficiently than what it is doing at present.
- Quad has been named as a defendant in various lawsuits in which claims have been asserted against the company. For example, the Company is currently in litigation with the GCIU (benefit plan) trustees to determine the amount and duration of the withdrawal payments for the GCIU.
- The company's litigation expenses have been increasing over the past few years; totaling $24.0 million, $11.8 million and $11.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. Such expenses mark the profitability and competitiveness of the company.