Quad/Graphics tops 2016 Ticker See TICKER, Page 2D
Sussex company boosts earnings, reduces debt
After emerging from the Great Recession as a consolidator of the fragmented printing industry, Quad/Graphics Inc. is starting to see the payoff from all that addition and subtraction.
The Sussex company, long known as a printer but now also more involved in digital advertising and marketing, is increasing earnings, generating cash flow, reducing debt and investing in its facilities, all while paying a dividend. Wall Street seems to have noticed. Quad/Graphics’ stock price almost tripled in 2016, to $26.88 per share from $9.30, putting it atop the Morningstar Wisconsin Ticker for the year. The Ticker tracks percentage changes in the stock price of the state’s publicly traded companies.
“We got through the very heavy lifting period of many years of integrating and consolidating a massive industry, and now we’re seeing the results,” Joel Quadracci, chief executive, said in an interview.
Taking a long view of the industry, Quad starting acquiring other printers about six years ago, but pared 36 plants along the way. As it brought in other companies, annual revenue went from $1.8 billion to about $4.6 billion, and its workforce grew to more than 20,000 from about 8,600.
While Quad now is one of the world’s largest printing companies, it also is evolving with the digital and marketing needs of today’s customers, Quadracci said. Customers are asking for help in deciding the balance between online and Quadracci print marketing.
“We are a printer. However, what our customers are asking us — and how they’re asking to participate — is feeling more like an agency as well,” Quadracci said.
Milwaukee investment professional John Collopy, who tracks Wisconsin stocks, said Quad has diversified.
“Printing, per se, isn’t a high-growth industry, so they’re broadening their wings,” said Collopy, director of research for Carl M. Hennig Inc.
In 2016, only eight of the 59 Wisconsin companies included in the Ticker didn’t see a price increase. For the year, the stock price of S&P 500 Index was up about 9.5%.
Locally based investment pros say how the stock market performs in 2017 may be influenced, at least in part, by the actions of the Trump administration.
“At the moment, it feels like walking a tightrope while being blindfolded as a lot depends on whether the Trump administration can make good on its corporate tax cut promises,” said Brian Jacobsen, chief portfolio strategist for Wells Fargo Funds Management in Menomonee Falls. “Consumer and business sentiment improved in the wake of the election, but it’s based on hopes of quick reforms. I think we’ll get some of those reforms, and we could see the S&P 500 trade between 2,100 and 2,650 during 2017. That’s a wide range, and the upside represents quite a bit of upside.”
Jacobsen said corporate earnings are likely to improve.
“And when you get an improvement in the earnings outlook, investors typically pay up for earnings,” he said.
Bob Landaas, president of Landaas & Co. in Milwaukee, also said it appears corporate earnings should be up in 2017, with projections of around 11% to 13%.
“Overall, we’re pretty upbeat for the year,” Landaas said. “Earnings in-
Las Vegas — Want to join — or rejoin — the vinyl movement? A wave of new turntables was on display at the Consumer Electronics Show earlier this month, all part of the resurgent interest in long-playing records.
Various spins on the record player — starting from under $100 to more than $15,000 — could be found at the four-day technology trade show, which ended Sunday. The growing number of models reflects consumers’ burgeoning affection for the seven decade-old format, which Nielsen says has seen sales rise for 10 straight years.
Nostalgia for the format is what is driving some to give vinyl LPs another spin. But young music lovers, too, who grew up in the CD era are embracing records, too.
“It’s the warmth and even the noise, crackle, pop and hiss that have been filtered out of all the digital and streaming music. And it’s that opening up a beautiful album of art to look at and read while you are listening and having to be actively involved with flipping the album over,” said Josh Poulsen, director of product development, House of Marley, which is bringing its first turntable, the Stir It Up ($199), to market in the United States in the next two months.
The turntable, which has a base made with sustainable bamboo and has other materials made from recycled material, can be connected directly to a Bluetooth speaker via audio cable or connected to a stereo system. It also has a USB output so that albums can be converted into digital files, too.
Elsewhere, the Crosley Radio booth had dozens of turntable models — everything from an $89.95 Cruiser Deluxe portable player to a $12,000 jukebox that plays vinyl singles.
Audio Technica USA’s lineup includes the $279 AT-LP3 fully automatic belt-drive turntable coming this spring. The electronics company has expanded its lineup beyond models aimed at disc jockeys. “Kids have discovered these big CDs up in the attic that belong to Mom and Dad,” said the company’s director of educational services Steve Savanyu.
High-end turntables never went away, but some new ones are on the way to capitalize on the recent vinyl resurgence among well-heeled music aficionados. Technics, a favorite brand of DJs for years, displayed a new Grand Class audiophile turntable, expected to sell for about $2,000.
And even higher-end brand Mark Levinson by Harman introduced its first turntable, the No. 515, made with renowned turntable maker VPI Industries. With a 20-pound platter and a 3-D-printed tonearm, the turntable is priced starting at $10,000 and is due this summer.
With more vinyl being released and new record players on the way, the movement could wax on.
“We continue to see the trend of vinyl expanding,” House of Marley’s Poulsen said. “Talking to some of our retail partners, the volumes and number of turntables they were selling during the holiday season was unreal.”