Quad/Graphics (QUAD) risk factors, FY2024 10-K

Risks Relating to Quad’s Business, Operations and Industry

1. 01The Company may be adversely affected by increases in its operating costs, including the cost and availability of raw materials (such as paper, ink components and other materials), inventory, parts for equipment, labor, fuel and other energy costs and freight rates
2. 02The price of raw materials used by the Company has fluctuated over time and has caused fluctuations in the Company’s net sales and cost of sales. This volatility may continue and the Company may experience increases in the costs of its raw materials in the future as prices are expected to remain beyond its control
3. 03The Company may not be able to fully pass on to clients the impact of higher electric and natural gas energy prices on its manufacturing costs, and increases in energy prices result in higher manufacturing costs for certain of its operations
4. 04Postal costs are a significant component of the cost structures of many of the Company’s clients and potential clients. Postal rate changes and USPS regulations that result in higher overall costs can influence the volume that these clients will be willing to print and ultimately send through the USPS
5. 05Macroeconomic conditions could have a material adverse impact on the Company’s business, financial conditions, cash flows and results of operations
6. 06The Company operates in a highly competitive environment
7. 07The Company may not be able to reduce costs and improve its operating efficiency rapidly enough to meet market conditions
8. 08The fragility of and decline in overall distribution channels may adversely impact clients’ access to cost effective distribution of their advertising materials, and therefore may adversely impact the Company’s business
9. 09Failure to attract and retain qualified talent across the enterprise could materially adversely affect the Company’s business, competitive position, financial condition and results of operations
10. 10The Company’s future success also depends on its continuing ability to identify, hire, develop, and retain its executive management team, including its Chief Executive Officer, and other personnel for all areas of the organization
11. 11Net sales from the Company’s wholly-owned subsidiaries outside of the United States accounted for approximately 13% and 14% of its consolidated net sales for the years ended December 31, 2024 and 2023, respectively
12. 12Negative publicity could have an adverse impact on the Company’s business and brand reputation
13. 13If the Company fails to identify, manage, complete and integrate acquisitions, investment opportunities or other significant transactions, as well as identify and execute strategic divestitures, it may adversely affect the Company’s future results and ability to implement its business strategy

Financial Risks

1. 14The Company’s debt facilities include various covenants imposing restrictions that may affect the Company’s ability to operate its business
2. 15As of December 31, 2024, 44% of the Company’s borrowings were subject to variable interest rates. As a result, the Company is exposed to market risks associated with fluctuations in interest rates, and increases in interest rates could adversely affect the Company
3. 16The Company’s revenue, operating income and cash flows are subject to cyclical and seasonal variations
4. 17An other than temporary decline in operating results and enterprise value could lead to non-cash impairment charges due to the impairment of property, plant and equipment, goodwill and other intangible assets
5. 18The Company has liabilities with respect to defined benefit pension plans that could cause the Company to incur additional costs
6. 19The Company may not be able to utilize deferred tax assets to offset future taxable income

Legal and Regulatory Risks

1. 20Unfavorable outcomes in legal proceedings could result in substantial costs and may harm the Company’s financial condition
2. 21The Company may incur costs or suffer reputational damage due to improper conduct of its employees, contractors or agents under anti-corruption or other laws governing business practices, including the United States Foreign Corrupt Practices Act
3. 22Changes in the legal and regulatory environment or reporting requirements could limit the Company’s business activities, increase its operating costs, reduce demand for its products or result in litigation
4. 23If QuadMed, a wholly-owned subsidiary of the Company, fails to comply with applicable healthcare laws and regulations, the Company could face substantial penalties, and its business, reputation, operations, prospects and financial condition of the Company’s subsidiary could be adversely affected

Risks Relating to Quad’s Common Stock

1. 24The Company is a controlled company within the meaning of the rules of the New York Stock Exchange (“NYSE”) and, as a result, it relies on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies
2. 25Currently, there is a limited active market for Quad’s class A common stock and, as a result, shareholders may be unable to sell their class A common stock without losing a significant portion of their investment