QUAD — Quad/Graphics, Inc.

Summary of Quad's Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Net Sales: $631 million, down 5.7% year-over-year (YoY), excluding the divestiture of European operations.
• Full Year 2025 Net Sales: $2.4 billion, a 4.8% decline YoY, primarily due to lower paper and print volumes, and the loss of a major grocery client.
• Adjusted EBITDA: $55 million in Q4 2025, down from $63 million in Q4 2024; full year adjusted EBITDA was $196 million, down from $224 million in 2024.
• Adjusted Diluted EPS: $0.36 in Q4 2025 (flat YoY) and $1.01 for the full year, a 19% increase from 2024.
• Free Cash Flow: $51 million in 2025, slightly down from $56 million in 2024.
• Net Debt: Reduced by $42 million in 2025, with a leverage ratio of 1.57x at year-end.

2. Strategic Updates and Business Highlights

• Quad achieved its full-year financial guidance despite a planned reduction in sales.
• The company made significant progress in diversifying revenue streams, particularly in direct mail, packaging, and in-store marketing.
• Quad's integrated marketing platform, MX solution suite, continues to enhance client marketing efficiency through data-driven strategies.
• The company formalized its direct marketing agency, which combines various services to improve direct mail effectiveness.
• New office openings in Austin and Mexico City aim to strengthen creative and media capabilities.
• Quad's agencies, Betty and Rise, are gaining traction with notable clients, including Gorilla Glue and Heartland Dental.

3. Forward Guidance and Outlook

• 2026 Guidance: Expected net sales decline of 1% to 5%, with a midpoint decline of 3%, indicating sequential improvement from previous years.
• Adjusted EBITDA for 2026: Projected between $175 million and $215 million, with a margin increase to 8.4%.
• Free Cash Flow for 2026: Expected in the range of $40 million to $60 million, with capital expenditures projected to increase to $55 million to $65 million.
• The company aims for net sales growth by 2028, with a long-term target of a 3% CAGR in non-large-scale print offerings.

4. Bad News, Challenges, or Points of Concern

• The decline in net sales reflects ongoing challenges in the print industry, particularly in traditional segments like magazines and catalogs.
• The company faces headwinds from postal rate increases, which could impact direct mail volumes and client marketing spend.
• Competitive pressures from digital marketing solutions and performance marketing platforms may challenge Quad's market position.
• The closure of the Thomaston, Georgia plant by early March 2026 signifies restructuring efforts but also potential job losses and community impact.

5. Notable Q&A Insights

• Direct mail showed strong performance in 2025, with expectations for continued momentum in 2026, driven by personalized marketing strategies.
• The delayed postal rate increase has not yet resulted in an uptick in catalog usage, with ongoing declines noted.
• Quad's in-store media initiatives are gaining traction, though execution may take longer due to organizational complexities within retail clients.
• Management remains optimistic about maintaining client marketing budgets, despite broader industry pullbacks, particularly in retail inserts.
• The company is closely monitoring inflationary pressures and potential tariff impacts on its operations and client spending.

Overall, Quad's Q4 2025 earnings call highlighted a mix of strategic advancements and ongoing challenges, with a cautious but optimistic outlook for the coming year.