The Business Services group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Quad/Graphics (QUAD) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? A quick glance at the company's year-to-date performance in comparison to the rest of the Business Services sector should help us answer this question.Quad/Graphics is one of 238 individual stocks in the Busi ...

Core Viewpoint - Quad/Graphics, Inc. will participate in the 38th Annual ROTH Conference, showcasing its marketing experience solutions and engaging with investors [1] Group 1: Company Overview - Quad is a marketing experience company that addresses complex marketing challenges for clients through its MX Solutions Suite, which integrates creative, production, and media solutions across various channels [1] - The company employs approximately 10,000 people across 10 countries and serves around 2,100 clients, including leading blue-chip companies in sectors such as retail, consumer packaged goods, financial services, and health [1] - Quad is recognized as one of the largest agency companies in the U.S. and one of the largest commercial printers in North America [1] Group 2: Conference Participation - Dave Honan, President and COO, and Tony Staniak, CFO and Treasurer, will represent Quad at the ROTH Conference from March 22–24, 2026 [1] - The company will host one-on-one and small group meetings with investors during the conference, providing opportunities for direct engagement [1]

Core Viewpoint - Quad/Graphics (QUAD) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, thus affecting stock prices [4]. Company-Specific Insights - For Quad/Graphics, the rising earnings estimates and the Zacks rating upgrade suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5][10]. - The Zacks Consensus Estimate for Quad/Graphics indicates expected earnings of $1.18 per share for the fiscal year ending December 2026, with a 1.7% increase in estimates over the past three months [8]. Zacks Rating System - The Zacks Rank stock-rating system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of Quad/Graphics to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Financial Performance - The Company reported a consolidated net sales growth of approximately 5% for the year ended December 31, 2025, compared to the previous year, driven by increased sales to existing clients and new client acquisitions [224]. - EBITDA for the year ended December 31, 2025, was $150 million, representing an EBITDA margin of 15%, an increase from 14% in 2024 [225]. - The Company's total net sales for the year ended December 31, 2025, were $2,419.9 million, a decrease of $252.3 million or 9.4% compared to $2,672.2 million in 2024 [248]. - The Company's operating income for 2025 was $97.0 million, with an operating margin of 4.0%, compared to an operating income of $19.2 million and an operating margin of 0.7% in 2024 [244]. - Free Cash Flow for the year ended December 31, 2025, was reported at $90 million, allowing the Company to invest in strategic growth opportunities and return capital to shareholders [227]. Sales and Revenue Trends - Product sales decreased by $207.9 million, or 9.9%, primarily due to a $120.5 million decrease in paper sales and an $83.9 million decrease in print product volumes [249]. - Service sales decreased by $44.4 million, or 7.7%, primarily due to a $37.9 million decrease in logistics sales [250]. - Net sales in the United States Print and Related Services segment decreased by $115.1 million, or 4.9% for products and 5.2% for services, primarily due to lower print product volumes [263][264]. - International segment net sales decreased by $121.6 million, or 37.5%, primarily due to a $62.5 million decrease in paper sales and the sale of European operations [268]. Cost Management and Expenses - Selling, general, and administrative expenses decreased by $30.9 million, or 8.7%, for the year ended December 31, 2025 [253]. - The Company has implemented cost-saving measures, including plant closures and headcount reductions, to address industry challenges and maintain focus on transformation [243]. - Corporate operating expenses decreased by $5.3 million, or 11.1%, in 2025, primarily due to a $4.0 million increase in income from restructuring and a $1.9 million decrease in employee-related costs [276]. Debt and Liquidity - The Net Debt Leverage Ratio improved to 2.5x as of December 31, 2025, down from 2.8x in 2024, indicating a stronger balance sheet [228]. - Total liquidity as of December 31, 2025, was $379.0 million, consisting of $315.7 million of unused capacity under the revolving credit arrangement and $63.3 million in cash and cash equivalents [278]. - The Company had no borrowings under the $339.6 million revolving credit facility as of December 31, 2025 [278]. - The Company's Total Leverage Ratio was 1.84 to 1.00 for the twelve months ended December 31, 2025, well below the maximum limit of 3.50 to 1.00 [305]. Operational Changes and Strategic Initiatives - The Company divested its European operations on February 28, 2025, which accounted for approximately 8% of consolidated net sales in 2024, impacting year-over-year comparability [220]. - The Company acquired the Enru co-mail assets on April 1, 2025, which are expected to enhance its service offerings and operational capabilities [216]. - The Company continues to focus on integrating and streamlining its operations, resulting in a reduction of consolidated debt and finance lease obligations by $8 million during 2025 [229]. - The Company is adapting to changes in consumer media consumption habits by expanding its capabilities to offer integrated, end-to-end marketing services [231]. Future Outlook and Challenges - The Company expects to incur additional restructuring and integration costs in future periods to align its cost structure with acquisitions and strategic investments [245]. - The Company anticipates continued challenges from tariffs, recessionary pressures, and postal rate increases affecting its operations through 2026 [242]. - The Company is operating in an elevated interest rate environment, which is expected to persist through 2026, impacting its financial condition [242]. Pension and Settlement Charges - The Company recognized a non-cash settlement charge of $12.8 million related to the annuitization of $98.1 million in projected benefit obligations during 2025 [307]. - The net underfunded pension obligations decreased by $13.7 million from $55.6 million at December 31, 2024, to $41.9 million at December 31, 2025 [308]. - The Company continues to focus on reducing pension obligations through cash contributions, lump-sum settlements, and plan design changes [309]. Impairment and Asset Management - The Company recognized impairment charges of $7.5 million for property, plant, and equipment and operating lease right-of-use assets in 2025, and $33.3 million in 2024, primarily due to the reduction of the carrying value of European operations [323]. - The Company performs impairment evaluations of long-lived assets whenever business conditions indicate potential impairment, requiring significant estimates and assumptions regarding future cash flows and asset utilization [321].

Financial Data and Key Metrics Changes - In Q4 2025, net sales were $631 million, a decrease of 5.7% compared to Q4 2024, excluding the divestiture of European operations [24] - For the full year 2025, net sales were $2.4 billion, a 4.8% decline compared to 2024, also excluding the European divestiture [24] - Adjusted EBITDA for Q4 2025 was $55 million, down from $63 million in Q4 2024, while full-year adjusted EBITDA was $196 million, compared to $224 million in 2024 [26] - Adjusted diluted earnings per share for Q4 2025 was $0.36, consistent with Q4 2024, while full-year adjusted diluted earnings per share increased by 19% to $1.01 [26] Business Line Data and Key Metrics Changes - Targeted print categories, including direct mail and packaging, experienced net sales growth, while traditional print product lines like magazines and catalogs saw declines [4][25] - The QuadMed employer-sponsored healthcare business also showed revenue increases, offsetting declines in logistics and agency sales [25] Market Data and Key Metrics Changes - The company reported a significant increase in co-mail volumes by over 50%, enhancing carrier route density levels and achieving postal savings [57] - The postal service is expected to implement a mid-year rate increase of 6%-8%, which could impact marketing spend [80] Company Strategy and Development Direction - The company is focused on revenue diversification and has made targeted investments in artificial intelligence to drive efficiency and effectiveness in marketing solutions [4][19] - Quad aims to return to net sales growth by 2028, with a strategic emphasis on integrated marketing solutions and targeted print offerings [4][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, noting increased confidence among clients and a potential for reinvestment [75] - The company is closely monitoring inflationary pressures and postal rate increases, which could affect marketing spend [40] Other Important Information - The company increased its quarterly dividend by 33% to $0.10 per share, reflecting a commitment to shareholder returns [5][31] - A significant transition in the manufacturing network was announced, with the closure of a plant in Thomaston, Georgia, expected to be completed by early March [22] Q&A Session Summary Question: Insights on direct mail performance and future trends - Management clarified the distinction between direct mail as a product and the direct marketing agency, emphasizing the importance of personalized, data-driven approaches to enhance response rates [47][48] Question: Impact of postal rate increases on catalogs - Management noted that while catalogs have been responsive, the significant increases in postal rates have led to further declines in catalog usage, particularly in prospecting mailings [56] Question: Updates on In-Store Connect and future deployments - Management indicated that there has been an acceleration in conversations and opportunities regarding In-Store Connect, with plans for further rollouts [60] Question: Factors influencing 2026 sales and Adjusted EBITDA guidance - Management highlighted that postal impacts and the momentum in targeted print categories will influence the sales trend, with expectations for improved margins as the revenue mix evolves [66][67] Question: Capital allocation strategy moving forward - Management confirmed a balanced approach to capital allocation, focusing on shareholder returns, potential tuck-in acquisitions, and growth investments [68][69]

Financial Data and Key Metrics Changes - In Q4 2025, net sales were $631 million, a decrease of 5.7% compared to Q4 2024, excluding the divestiture of European operations [24] - For the full year 2025, net sales were $2.4 billion, a 4.8% decline compared to 2024, excluding the European divestiture [24] - Adjusted EBITDA for Q4 2025 was $55 million, down from $63 million in Q4 2024, while full-year adjusted EBITDA was $196 million, compared to $224 million in 2024 [26] - Adjusted diluted earnings per share for Q4 2025 was $0.36, consistent with Q4 2024, while full-year adjusted diluted earnings per share was $1.01, an increase of 19% from 2024 [26][27] - Free cash flow was $51 million in 2025, down from $56 million in 2024 [28] Business Line Data and Key Metrics Changes - Targeted print categories, including direct mail, packaging, and in-store marketing, experienced net sales growth, while traditional print product lines like magazines and catalogs saw declines [4][25] - The QuadMed employer-sponsored healthcare business also showed revenue increases, offsetting declines in logistics and agency sales [25] Market Data and Key Metrics Changes - The company reported a significant increase in co-mail volumes by over 50%, enhancing carrier route density levels and achieving postal savings [57] - The postal service's rate increases have impacted catalog marketing, leading to further declines in that area, although the company has managed to offset some of the damage through its postal optimization efforts [56] Company Strategy and Development Direction - The company is focused on revenue diversification and has made targeted investments in artificial intelligence to drive cost efficiency and revenue generation [18][19] - Quad is expanding its integrated marketing platform and has opened new offices to support growth in creative and media capabilities [10][16] - The company aims to return to net sales growth by 2028, with a strategic focus on higher-margin targeted print offerings [4][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to navigate the current operating environment, citing increased confidence among clients and a focus on personalized marketing strategies [75][76] - The company anticipates a continued decline in net sales for 2026, but expects improvements in sales trends as it moves towards its 2028 growth targets [35][41] Other Important Information - The company increased its quarterly dividend by 33% to $0.10 per share, reflecting its commitment to long-term shareholder value [5][31] - The company has reduced net debt by $42 million in 2025 and by $726 million since 2020, achieving a net debt leverage ratio of 1.57x [32] Q&A Session Summary Question: Can you provide insights on direct mail growth trends and expectations for 2026? - Management clarified the difference between direct mail as a product and the direct marketing agency, emphasizing the importance of personalized marketing to drive higher response rates [47][48] Question: Have you seen any impact from the delayed postal rate increase on catalogs? - Management noted that while there has been no growth in catalogs, they have managed to offset some declines through increased co-mail volumes and postal optimization [56][57] Question: What is the status of In-Store Connect and its rollout? - Management indicated that there has been an acceleration in conversations and opportunities related to In-Store Connect, with capital reserved for growth in this area [60][62] Question: What factors are influencing the guidance ranges for 2026? - Management highlighted the impact of postal rates and the momentum in targeted print categories as key factors influencing the guidance [66][67] Question: How will capital allocation be balanced moving forward? - Management stated that capital allocation will continue to be balanced, with a focus on growth investments, share repurchases, and maintaining low debt leverage [69][70]

Financial Data and Key Metrics Changes - In Q4 2025, net sales were $631 million, a decrease of 5.7% compared to Q4 2024, excluding the divestiture of European operations [22] - For the full year 2025, net sales were $2.4 billion, a 4.8% decline compared to 2024, also excluding the European divestiture [22] - Adjusted EBITDA for Q4 2025 was $55 million, down from $63 million in Q4 2024, while full-year adjusted EBITDA was $196 million, compared to $224 million in 2024 [23][24] - Adjusted diluted earnings per share for Q4 2025 was $0.36, consistent with Q4 2024, while full-year adjusted diluted earnings per share increased by 19% to $1.01 [24] - Free cash flow was $51 million in 2025, down from $56 million in 2024, primarily due to a decrease in net cash from operating activities [26] Business Line Data and Key Metrics Changes - Targeted print categories, including direct mail, packaging, and in-store marketing, experienced net sales growth, while traditional print product lines like magazines and catalogs saw declines [4][22] - The direct mail segment outperformed expectations in 2025, driven by higher volumes and operational efficiencies [4][45] - The QuadMed employer-sponsored healthcare business also saw an increase in revenue mix as a percentage of total net sales [22] Market Data and Key Metrics Changes - The company noted a significant impact from postal rate increases, which have affected the catalog segment, leading to further declines in volume [52][54] - The new Postmaster General's approach aims for growth rather than just revenue through price increases, which could positively influence the catalog market in the future [53] Company Strategy and Development Direction - The company is focused on revenue diversification and has made targeted investments in artificial intelligence to enhance marketing efficiency and effectiveness [5][18] - Quad is expanding its integrated marketing platform, which combines creative, production, and media solutions across physical and digital channels, creating a competitive advantage [5][6] - The company anticipates a return to net sales growth by 2028, with a focus on improving adjusted EBITDA margins and free cash flow conversion [4][40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to navigate the current operating environment, emphasizing the importance of maintaining a disciplined approach to cost management [38] - The company expects to see improved sales trends in 2026, with a focus on targeted print categories and continued investment in growth initiatives [33][34] - Management acknowledged potential challenges from tariffs and inflation but remains committed to adapting to changing market conditions [38] Other Important Information - The company increased its quarterly dividend by 33% to $0.10 per share, reflecting a commitment to shareholder returns [5][29] - Quad's net debt leverage ratio was 1.57x as of December 31, 2025, with a goal to maintain a low leverage ratio while pursuing growth investments [28][30] Q&A Session Summary Question: Can you provide insights on the growth trends in direct mail and its momentum into 2026? - Management clarified the difference between direct mail as a product and the direct marketing agency's role, emphasizing the importance of data-driven personalization to enhance response rates [45][46] Question: Have you seen any impact from the delayed postal rate increase on catalogs or other channels? - Management noted that while there has been no growth in catalogs, they have managed to offset some declines through increased co-mail volumes and postal savings [54][55] Question: What is the current status of In-Store Connect and its rollout? - Management indicated that there has been an acceleration in conversations and opportunities related to In-Store Connect, with capital reserved for growth in this area [57][59] Question: What factors are influencing the guidance ranges for sales and Adjusted EBITDA in 2026? - Management highlighted the impact of postal rates and the momentum in targeted print categories as key factors influencing the guidance ranges [63][64] Question: How will capital allocation be balanced moving forward? - Management stated that capital allocation will continue to be balanced, with a focus on growth investments, share repurchases, and maintaining low debt leverage [66][68]

February 18, 2026 The factors that could cause actual results to materially differ include, among others: the impact of increased business complexity as a result of the Company's transformation to a marketing experience company, including adapting marketing offerings and business processes as required by new markets; the impact of decreasing demand for printing services and significant overcapacity in a highly competitive environment creating downward pricing pressures and potential under-utilization of ass ...

Financial Performance - Net Sales for 2025 were $2.4 billion, a 9.4% decline from $2.7 billion in 2024, with a 4.8% decline when excluding the divestiture of European operations[3] - Net Earnings improved to $27 million or $0.54 Diluted Earnings Per Share in 2025, compared to a Net Loss of $51 million or $1.07 Diluted Loss Per Share in 2024[3] - Adjusted EBITDA for 2025 was $196 million, down from $224 million in 2024, primarily due to lower Net Sales and increased investments in innovative offerings[3] - Net earnings for the year ended December 31, 2025, were $27.0 million, a significant improvement from a loss of $50.9 million in 2024[40] - Adjusted diluted earnings per share for the year ended December 31, 2025, increased to $1.01 from $0.85 in 2024, while diluted earnings per share (GAAP) improved to $0.54 from a loss of $1.07[51] Cash Flow and Debt Management - Free Cash Flow was $51 million in 2025, compared to $56 million in 2024, driven by a $17 million decrease in Net Cash Provided by Operating Activities[11] - Net Debt was reduced by $42 million to $308 million in 2025, achieving a Net Debt Leverage Ratio of 1.57x[3] - Cash and cash equivalents increased to $63.3 million in 2025, up from $29.2 million in 2024, enhancing liquidity[29] - Payments of current and long-term debt decreased to $28.6 million in 2025 from $183.7 million in 2024, a reduction of about 84.4%[32] - The company reported a net cash used in financing activities of $36.1 million in 2025, down from $149.1 million in 2024, indicating a decrease of approximately 75.8%[32] Operational Efficiency - Operating income increased to $37.3 million in Q4 2025, compared to $19.7 million in Q4 2024, reflecting improved operational efficiency[25] - The company completed the integration of Enru's co-mailing capabilities, enhancing operational efficiency and client value[3] - Selling, general and administrative expenses decreased to $325.9 million in 2025 from $356.8 million in 2024, reflecting cost control measures[28] Future Outlook - For 2026, the company anticipates a Net Sales decline of 1% to 5%, with Adjusted EBITDA guidance between $175 million and $215 million[10] - The company plans to remain opportunistic regarding future share repurchases following strong cash generation in 2025[6] - The company aims to shift revenue mix towards higher-value offerings, including Targeted Print and integrated marketing services[5] Market and Segment Performance - Net sales for Q4 2025 were $630.6 million, a decrease of 11% from $708.4 million in Q4 2024[25] - The United States Print and Related Services segment generated net sales of $2,214.4 million in 2025, down from $2,329.5 million in 2024, a decrease of about 4.9%[34] Impairments and Charges - The company incurred impairment charges of $7.5 million in 2025, a significant reduction from $74.9 million in 2024[32] - Restructuring, impairment, and transaction-related charges for 2025 totaled $21.8 million, significantly lower than $101.5 million in 2024[51] - Employee termination charges in 2025 were $26.1 million, down from $30.5 million in 2024, reflecting workforce reductions[40] - The company incurred a settlement charge of $12.8 million related to the defined benefit pension plan annuitization in 2025[49] Non-GAAP Measures - Adjusted EBITDA for the three months ended December 31, 2025, was $54.8 million, compared to $62.6 million in the same period of 2024, indicating a decline of approximately 12.5%[38] - The company continues to assess its performance using non-GAAP measures, which are believed to provide additional insights into profitability and liquidity[40]

Core Insights - Quad/Graphics, Inc. reported its fourth quarter and full-year 2025 results, highlighting significant operational progress and solid financial outcomes despite a planned decline in sales [1][2] Financial Performance - For the full year 2025, Quad achieved Net Sales of $2.4 billion, a decrease of 9.4% compared to 2024, or a 4.8% decline when excluding the impact of the divestiture of European operations [1][2] - Adjusted Diluted Earnings Per Share increased by 19% to $1.01 in 2025, compared to $0.85 in 2024 [1][2] - Net Earnings improved to $27 million, or $0.54 Diluted Earnings Per Share, in 2025, compared to a Net Loss of $51 million, or $1.07 Diluted Loss Per Share, in 2024 [1][2] - Adjusted EBITDA for 2025 was reported at $196 million, down from $224 million in 2024, primarily due to lower Net Sales and increased investments in innovative offerings [1][2] Cash Flow and Debt Management - The company generated $96 million of Net Cash provided by Operating Activities and $51 million of Free Cash Flow in 2025 [1][2] - Net Debt was reduced by $42 million during 2025 to $308 million, achieving a Net Debt Leverage of 1.57x at year-end [1][2] - The company returned $22 million to shareholders in 2025 through $14 million in cash dividends and $8 million in share repurchases [1][2] Dividend and Future Guidance - Quad announced a 33% increase in its quarterly dividend to $0.10 per share, payable on March 13, 2026 [1][2] - The company provided 2026 financial guidance, anticipating a further improvement in Net Sales decline to approximately 3% at the midpoint of the guidance range [1][2] Operational Highlights - Quad completed the integration of Enru's co-mail volume and high-density co-mailing capabilities, enhancing mail pool sizes and improving sortation levels [1][2] - The company continued to secure integrated creative and media work with notable brands, indicating a shift towards higher-value offerings [1][2]