Workflow
Quad/Graphics(QUAD)
icon
Search documents
Quad/Graphics(QUAD) - 2025 Q2 - Quarterly Report
2025-07-30 19:17
[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section presents Quad/Graphics, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the interim period [ITEM 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Quad/Graphics, Inc.'s unaudited condensed consolidated financial statements, including statements of operations, comprehensive income (loss), balance sheets, cash flows, and shareholders' equity, along with detailed notes [Condensed Consolidated Statements of Operations (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) This statement provides a detailed breakdown of the company's revenues, costs, and net earnings or losses over specific interim periods Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $571.9 | $634.2 | $1,201.3 | $1,289.0 | | Cost of sales | $448.1 | $493.9 | $948.1 | $1,015.2 | | Operating income | $13.7 | $15.1 | $33.3 | $4.4 | | Net earnings (loss) | $(0.1) | $(2.8) | $5.7 | $(30.9) | | Basic EPS | $0.00 | $(0.06) | $0.12 | $(0.65) | | Diluted EPS | $0.00 | $(0.06) | $0.11 | $(0.65) | [Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) This statement details the components of comprehensive income or loss, including net earnings and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net earnings (loss) | $(0.1) | $(2.8) | $5.7 | $(30.9) | | Other comprehensive income (loss), net of tax | $5.4 | $(7.3) | $46.2 | $(6.6) | | Comprehensive income (loss) | $5.3 | $(10.1) | $51.9 | $(37.5) | - Translation adjustments significantly impacted other comprehensive income (loss), moving from a loss of **$7.1 million** in Q2 2024 to a gain of **$5.9 million** in Q2 2025, and from a loss of **$7.5 million** in H1 2024 to a gain of **$46.8 million** in H1 2025[13](index=13&type=chunk) [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This statement presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Total current assets | $492.8 | $534.3 | | Total assets | $1,240.8 | $1,299.0 | | Total current liabilities | $534.3 | $698.7 | | Long-term debt | $420.5 | $349.1 | | Total liabilities | $1,153.8 | $1,249.1 | | Total shareholders' equity | $87.0 | $49.9 | - Total assets decreased by **$58.2 million** from December 31, 2024, to June 30, 2025, while total shareholders' equity increased by **$37.1 million**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over interim periods Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | | Net cash used in operating activities | $(41.6) | $(48.3) | | Net cash used in investing activities | $(38.2) | $(6.2) | | Net cash provided by financing activities | $55.4 | $14.5 | | Net decrease in cash and cash equivalents | $(22.5) | $(40.1) | | Cash and cash equivalents at end of period | $6.7 | $12.8 | - Net cash provided by financing activities increased significantly from **$14.5 million** in H1 2024 to **$55.4 million** in H1 2025, primarily due to increased net borrowings on revolving credit facilities[19](index=19&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Unaudited)) This statement outlines changes in the company's shareholders' equity, including net earnings, dividends, and other comprehensive income Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Key Changes (Six Months Ended June 30, 2025) | Item | Change (in millions) | | :--- | :--- | | Net earnings | $5.8 | | Foreign currency translation adjustments | $40.9 | | Cash dividends declared | $(3.8) | | Purchases of treasury stock | $(3.3) | | Equity awards redeemed to pay employees' tax obligations | $(3.6) | | Balance at June 30, 2025 | $87.0 | - Shareholders' equity increased from **$49.9 million** at December 31, 2024, to **$87.0 million** at June 30, 2025, largely driven by foreign currency translation adjustments and net earnings[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide additional information and explanations for the figures presented in the condensed consolidated financial statements [Note 1. Basis of Presentation](index=8&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the accounting policies and principles used in preparing the interim financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules for interim financial information and should be read with the latest annual 10-K[22](index=22&type=chunk) - The Company's results are subject to seasonality, with higher net sales and operating income in the second half of the calendar year, particularly the fourth quarter, driven by back-to-school and holiday advertising[23](index=23&type=chunk) [Note 2. Revenue Recognition](index=9&type=section&id=Note%202.%20Revenue%20Recognition) This note details the company's policies for recognizing revenue from various product and service offerings Disaggregated Revenue by Segment and Offering (Three Months Ended June 30, 2025 vs 2024) | Category | June 30, 2025 (in millions) | June 30, 2024 (in millions) | | :--- | :--- | :--- | | **Total Products** | | | | United States Print and Related Services | $400.6 | $411.9 | | International | $47.4 | $85.7 | | **Total Services** | | | | United States Print and Related Services | $123.9 | $132.4 | | International | $0.0 | $4.2 | | **Total Net Sales** | $571.9 | $634.2 | Disaggregated Revenue by Segment and Offering (Six Months Ended June 30, 2025 vs 2024) | Category | June 30, 2025 (in millions) | June 30, 2024 (in millions) | | :--- | :--- | :--- | | **Total Products** | | | | United States Print and Related Services | $822.7 | $847.8 | | International | $120.1 | $157.0 | | **Total Services** | | | | United States Print and Related Services | $255.6 | $275.4 | | International | $2.9 | $8.8 | | **Total Net Sales** | $1,201.3 | $1,289.0 | - Product offerings include print operations (retail inserts, catalogs, direct mail, packaging) and global paper procurement[29](index=29&type=chunk) - Service offerings include logistics, marketing services (data & analytics, technology, media, creative), and medical services[30](index=30&type=chunk) [Note 3. Restructuring, Impairment and Transaction-Related Charges, Net](index=11&type=section&id=Note%203.%20Restructuring,%20Impairment%20and%20Transaction-Related%20Charges,%20Net) This note provides details on charges related to restructuring activities, asset impairments, and transaction costs Restructuring, Impairment and Transaction-Related Charges, Net (in millions) | Charge Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Employee termination charges | $5.8 | $3.2 | $6.5 | $16.9 | | Impairment charges | $4.2 | $1.1 | $4.5 | $13.7 | | Transaction-related charges | $0.4 | $0.4 | $3.0 | $0.9 | | Integration costs | $0.2 | $0.1 | $0.2 | $0.2 | | Other restructuring charges (income) | $(1.4) | $5.3 | $1.6 | $10.9 | | **Total** | **$9.2** | **$10.1** | **$15.8** | **$42.6** | - Total restructuring, impairment, and transaction-related charges decreased by **$0.9 million** for the three months and **$26.8 million** for the six months ended June 30, 2025, compared to the prior year, primarily due to lower employee termination and impairment charges[32](index=32&type=chunk) - Impairment charges in H1 2025 included **$3.0 million** for software licensing from a terminated project and **$1.5 million** for property, plant, and equipment due to facility consolidations[35](index=35&type=chunk) [Note 4. Strategic Acquisition and Divestiture](index=13&type=section&id=Note%204.%20Strategic%20Acquisition%20and%20Divestiture) This note outlines the financial impacts of recent strategic acquisitions and divestitures on the company's operations - On April 1, 2025, Quad/Graphics acquired the co-mailing assets of Enru for an estimated **$27.0 million**, including **$16.3 million** cash, an **$8.8 million** earn-out, and a **$1.9 million** deferred payment, strengthening the Company's co-mail platform[40](index=40&type=chunk) - On February 28, 2025, the Company sold its European operations for **$24.1 million**, consisting of a **$19.5 million** note receivable and **$4.6 million** cash[41](index=41&type=chunk) - A pre-tax loss of **$0.5 million** from the sale of European operations was recorded[42](index=42&type=chunk) [Note 5. Receivables](index=14&type=section&id=Note%205.%20Receivables) This note details the company's accounts receivable, including provisions for credit losses and related policies - The Company evaluates client creditworthiness and records specific and general provisions for credit losses[44](index=44&type=chunk) - Credit loss expense was **$0.7 million** for Q2 2025 and **$2.1 million** for H1 2025, an increase from **$0.4 million** and **$0.5 million** in the prior year periods, respectively[45](index=45&type=chunk)[46](index=46&type=chunk) Allowance for Credit Losses (in millions) | Metric | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Balance | $21.5 | $21.0 | | Provisions | N/A | $2.1 | | Write-offs | N/A | $(2.7) | | Translation and other | N/A | $0.1 | [Note 6. Inventories](index=14&type=section&id=Note%206.%20Inventories) This note provides a breakdown of inventory components and changes over the reporting period Inventories (in millions) | Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials and manufacturing supplies | $93.7 | $87.5 | | Work in process | $22.6 | $27.8 | | Finished goods | $37.1 | $47.1 | | **Total** | **$153.4** | **$162.4** | - Total inventories decreased by **$9.0 million** from December 31, 2024, to June 30, 2025, primarily due to reductions in work in process and finished goods[48](index=48&type=chunk) [Note 7. Commitments and Contingencies](index=15&type=section&id=Note%207.%20Commitments%20and%20Contingencies) This note discloses the company's various commitments and potential liabilities arising from legal proceedings and environmental obligations - The Company is involved in various lawsuits in the normal course of business, but management does not expect them to have a material impact on the consolidated financial statements[49](index=49&type=chunk) - Environmental remediation obligations are reserved when probable and estimable, and the Company believes it is in material compliance with environmental laws[50](index=50&type=chunk) [Note 8. Debt](index=15&type=section&id=Note%208.%20Debt) This note details the company's debt structure, including credit facilities, maturities, and financial covenants - The Company completed the ninth amendment to its Senior Secured Credit Facility on October 18, 2024, reducing the revolving credit facility to **$324.6 million** and extending maturities for portions of both the revolving credit facility and Term Loan A[52](index=52&type=chunk) - The Ninth Amendment also increased the interest rate margin by **0.50%** for extended maturity loans and modified financial covenants, setting the Senior Secured Leverage Ratio limit at **3.00 to 1.00** and Total Leverage Ratio limit at **3.50 to 1.00**[52](index=52&type=chunk) [Note 9. Income Taxes](index=15&type=section&id=Note%209.%20Income%20Taxes) This note explains the company's income tax provisions, effective tax rates, and unrecognized tax benefits - The estimated annual effective income tax rate for H1 2025 differs from the statutory rate primarily due to net decreases in valuation allowance reserves[53](index=53&type=chunk) - The liability for unrecognized tax benefits increased by **$0.8 million** to **$9.7 million** as of June 30, 2025, with a **$1.8 million** decrease anticipated within the next twelve months due to audit resolutions or statute expirations[56](index=56&type=chunk) - The recently passed 'One Big Beautiful Bill Act' (OBBB Act) is not expected to materially impact financial statements in the period enacted due to valuation allowance reserves, but is anticipated to result in a favorable reduction in U.S. cash tax payments for the next few years[57](index=57&type=chunk) [Note 10. Financial Instruments and Fair Value Measurements](index=16&type=section&id=Note%2010.%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) This note describes the company's use of financial instruments, including derivatives, and their fair value measurements - The Company uses an active interest rate swap (**$50.0 million** notional, **4.67%** fixed rate, maturing March 31, 2027) and two interest rate collar contracts (**$75.0 million** each, maturing October 2025 and October 2026) to hedge variable rate debt, classified as Level 2 fair value measurements[59](index=59&type=chunk)[61](index=61&type=chunk)[65](index=65&type=chunk) - As of June 30, 2025, there were three open foreign currency exchange contracts designated as cash flow hedges with a total notional value of **$26.2 million**, resulting in a **$0.7 million** loss in other comprehensive income for the three and six months ended June 30, 2025[67](index=67&type=chunk) - The fair value of the Company's total debt was approximately **$0.5 billion** at June 30, 2025, and **$0.4 billion** at December 31, 2024, measured using Level 2 inputs[69](index=69&type=chunk) [Note 11. Employee Retirement Plans](index=20&type=section&id=Note%2011.%20Employee%20Retirement%20Plans) This note provides information on the company's pension and other post-retirement benefit plans, including related expenses and liabilities Net Pension (Expense) Income (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Interest cost | $(3.8) | $(4.1) | $(7.6) | $(8.2) | | Expected return on plan assets | $3.7 | $4.5 | $7.4 | $9.0 | | Net periodic pension (expense) income | $(0.1) | $0.4 | $(0.2) | $0.8 | | Amortization of actuarial loss | $(0.2) | $(0.2) | $(0.5) | $(0.4) | | **Net pension (expense) income** | **$(0.3)** | **$0.2** | **$(0.7)** | **$0.4** | - Net pension expense increased to **$0.3 million** for Q2 2025 and **$0.7 million** for H1 2025, compared to income in the prior year periods, primarily due to a decrease in the expected return on plan assets[73](index=73&type=chunk) - The Company has reserved **$20.4 million** for the GCIU multiemployer pension plan withdrawal liability as of June 30, 2025, with payments scheduled until April 2032[75](index=75&type=chunk) [Note 12. Earnings (Loss) Per Share](index=20&type=section&id=Note%2012.%20Earnings%20(Loss)%20Per%20Share) This note details the calculation of basic and diluted earnings per share, including the impact of dilutive securities Earnings (Loss) Per Share (EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net earnings (loss) (in millions) | $(0.1) | $(2.8) | $5.7 | $(30.9) | | Basic EPS | $0.00 | $(0.06) | $0.12 | $(0.65) | | Diluted EPS | $0.00 | $(0.06) | $0.11 | $(0.65) | | Basic weighted average shares (in millions) | 47.6 | 47.7 | 47.8 | 47.4 | | Diluted weighted average shares (in millions) | 47.6 | 47.7 | 50.1 | 47.4 | - Dilutive equity incentive instruments were excluded from diluted EPS calculations for periods with net losses (Q2 2025, Q2 2024, H1 2024) as they would be anti-dilutive[77](index=77&type=chunk) [Note 13. Equity Incentive Programs](index=21&type=section&id=Note%2013.%20Equity%20Incentive%20Programs) This note describes the company's equity-based compensation plans and the associated compensation expense Total Equity Incentive Compensation Expense (in millions) | Program Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Restricted Stock and RSU awards | $1.2 | $1.5 | $2.8 | $3.3 | | Deferred Stock Units (DSU) awards | $1.0 | $1.1 | $1.0 | $1.1 | | **Total** | **$2.2** | **$2.6** | **$3.8** | **$4.4** | - Total equity incentive compensation expense decreased for both the three and six months ended June 30, 2025, compared to the prior year[79](index=79&type=chunk) - Future compensation expense related to equity incentive programs is estimated at **$9.6 million** as of June 30, 2025[79](index=79&type=chunk) [Note 14. Shareholders' Equity](index=22&type=section&id=Note%2014.%20Shareholders'%20Equity) This note provides a breakdown of the company's common stock, treasury stock, share repurchases, and dividend declarations Common Stock Shares (in millions) | Class | Authorized Shares | Outstanding (June 30, 2025) | Treasury (June 30, 2025) | Total Issued Shares (June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | | Class A | 105.0 | 37.7 | 4.8 | 42.5 | | Class B | 80.0 | 13.3 | — | 13.3 | | Class C | 20.0 | — | 0.5 | 0.5 | - The Company repurchased **832,439 Class A common shares** for **$4.3 million** in Q2 2025 and **1,396,655 shares** for **$7.6 million** in H1 2025[85](index=85&type=chunk) - **$70.0 million** remains authorized under the share repurchase program[85](index=85&type=chunk) - Quarterly dividends of **$0.075 per share** were declared for Q1 and Q2 2025, following the reinstatement of dividends in February 2024[87](index=87&type=chunk)[88](index=88&type=chunk) [Note 15. Accumulated Other Comprehensive Loss](index=24&type=section&id=Note%2015.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components and changes in accumulated other comprehensive loss, including translation adjustments and derivative impacts Changes in Accumulated Other Comprehensive Loss (in millions) - Six Months Ended June 30, 2025 | Component | Balance at Dec 31, 2024 | Net Other Comprehensive Income (Loss) | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | | Translation Adjustments | $(91.0) | $46.8 | $(44.2) | | Interest Rate Derivatives Adjustments | $(2.0) | $(1.1) | $(3.1) | | Pension Benefit Plan Adjustments | $(38.2) | $0.5 | $(37.7) | | **Total** | **$(131.2)** | **$46.2** | **$(85.0)** | - Accumulated other comprehensive loss improved significantly from **$(131.2) million** at December 31, 2024, to **$(85.0) million** at June 30, 2025, primarily driven by positive foreign currency translation adjustments[89](index=89&type=chunk) [Note 16. Segment Information](index=26&type=section&id=Note%2016.%20Segment%20Information) This note provides financial data for the company's reportable operating segments, including net sales and operating income - The Company adopted ASU 2023-07 'Segment Reporting' during the three and six months ended June 30, 2025[91](index=91&type=chunk) - The Company operates in two reportable segments: United States Print and Related Services, and International, plus a Corporate category[91](index=91&type=chunk) - The United States Print and Related Services segment accounted for approximately **92%** and **90%** of consolidated net sales for the three and six months ended June 30, 2025, respectively[120](index=120&type=chunk) Segment Operating Income (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | United States Print and Related Services | $22.8 | $25.4 | $54.5 | $24.1 | | International | $3.9 | $2.3 | $4.5 | $5.7 | | Corporate | $(13.0) | $(12.6) | $(25.7) | $(25.4) | | **Total Operating Income** | **$13.7** | **$15.1** | **$33.3** | **$4.4** | [Note 17. New Accounting Pronouncements](index=29&type=section&id=Note%2017.%20New%20Accounting%20Pronouncements) This note discusses recently issued accounting standards and their potential impact on the company's financial statements - The Company is evaluating the impact of ASU 2023-09 'Income Taxes' (effective for fiscal years beginning after December 15, 2024) and ASU 2024-03 'Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures' (effective for fiscal years beginning after December 15, 2026) on its consolidated financial statements[99](index=99&type=chunk)[100](index=100&type=chunk) [Note 18. Subsequent Events](index=29&type=section&id=Note%2018.%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On July 21, 2025, the Company declared a quarterly dividend of **$0.075 per share**, payable on September 5, 2025[101](index=101&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Quad/Graphics, Inc.'s financial condition and operational results for the three and six months ended June 30, 2025, compared to the prior year [Cautionary Statement Regarding Forward-Looking Statements](index=31&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This statement warns readers about the inherent risks and uncertainties associated with forward-looking information in the report - The report contains forward-looking statements subject to risks and uncertainties, including increased business complexity from transformation to a marketing experience company, decreasing demand for printing services, rising operating costs, changes in postal rates, macroeconomic conditions, and cyber incidents[104](index=104&type=chunk)[105](index=105&type=chunk) - Other risks include the inability to reduce costs, fragility of distribution channels, failure to attract talent, impact of digital media, client contract performance, risks of international operations, negative publicity, and challenges in integrating acquisitions or executing divestitures[105](index=105&type=chunk)[108](index=108&type=chunk) [Overview](index=33&type=section&id=Overview) This section provides a high-level summary of the company's business model, strategic objectives, and key operational trends [Business Overview](index=33&type=section&id=Business%20Overview) This section describes Quad's transformation into a marketing experience company and its integrated service offerings - Quad is a marketing experience (MX) company offering integrated creative, production, and media solutions across online and offline channels, serving approximately **2,100 clients** in commerce, financial services, and health[109](index=109&type=chunk)[110](index=110&type=chunk) - The MX Solutions Suite includes Intelligence (audience analytics, segmentation, testing), Creative (brand strategy, content creation, premedia), Production (print operations, managed services, vertical integration), Media (data-led planning, placement, analytics), and Tech (client-facing platforms like ContentX, Publishing Solutions, At-Home Connect, In-Store Connect)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Financial Objectives](index=34&type=section&id=Financial%20Objectives) This section outlines the company's goals for profitable growth, cash flow, operating margins, and capital allocation strategies - Quad aims for profitable growth, maximized net earnings, Free Cash Flow, and operating margins, while maintaining a strong balance sheet and financial flexibility for capital allocation[118](index=118&type=chunk) - Current capital allocation priorities include increasing growth investments as an MX company, maintaining low debt leverage, and increasing return of capital to shareholders through dividends and share buybacks[118](index=118&type=chunk) - Total liquidity as of June 30, 2025, was **$217.6 million**, comprising **$210.9 million** unused revolving credit capacity and **$6.7 million** cash and cash equivalents[119](index=119&type=chunk) [Segments](index=35&type=section&id=Segments) This section defines the company's reportable segments: United States Print and Related Services, International, and Corporate - The United States Print and Related Services segment includes U.S. printing operations, marketing, and complementary services, accounting for **92%** of consolidated net sales in Q2 2025[120](index=120&type=chunk) - The International segment includes printing operations in Latin America and Europe (until sold on February 28, 2025), providing similar products and services, and accounted for **8%** of consolidated net sales in Q2 2025[120](index=120&type=chunk) - Corporate consists of unallocated general and administrative activities and expenses, including executive, legal, finance, and frozen employee retirement plans[120](index=120&type=chunk) [Key Performance Metrics Overview](index=36&type=section&id=Key%20Performance%20Metrics%20Overview) This section identifies the primary metrics used to evaluate the company's operational performance, financial health, and liquidity - Key performance metrics include net sales growth, EBITDA, EBITDA margin, net cash provided by (used in) operating activities, Free Cash Flow, and Debt Leverage Ratio, used to assess operating performance, financial condition, and liquidity[121](index=121&type=chunk) - Consolidated debt and finance lease obligations increased by **$75.7 million** in H1 2025, primarily due to cash used in operating activities, capital expenditures, acquisitions, treasury stock purchases, and dividends, partially offset by a reduction in cash and cash equivalents[127](index=127&type=chunk) [Overview of Trends Affecting Quad](index=37&type=section&id=Overview%20of%20Trends%20Affecting%20Quad) This section discusses industry trends, competitive landscape, and cost pressures influencing the company's business environment - The Company faces increased demand for end-to-end marketing services and multichannel campaigns due to changing consumer media consumption habits and heightened competition in the commercial printing industry[128](index=128&type=chunk)[129](index=129&type=chunk) - Challenges include rising postage and paper costs, increased use of online marketing, and excess manufacturing capacity, leading to ongoing cost reduction initiatives, facility consolidations, and investments in automation[129](index=129&type=chunk)[131](index=131&type=chunk) - USPS service standard reductions and twice-yearly postage increases (exceeding CPI) are expected to continue, potentially reducing mail volumes despite a new Marketing Mail Catalog promotion offering a **10% discount**[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk) [Results of Operations for the Three Months Ended June 30, 2025, Compared to the Three Months Ended June 30, 2024](index=39&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030,%202025,%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030,%202024) This section analyzes the company's financial performance for the second quarter of 2025 compared to the same period in the prior year [Summary Results](index=39&type=section&id=Summary%20Results) This section provides a high-level comparison of key financial outcomes for the three-month period Summary Results (Three Months Ended June 30, 2025 vs 2024) | Metric | June 30, 2024 (in millions) | Change (in millions) | June 30, 2025 (in millions) | | :--- | :--- | :--- | :--- | | Operating Income | $15.1 | $(1.4) | $13.7 | | Operating Margin | 2.4% | 0.0% | 2.4% | | Net Loss | $(2.8) | $2.7 | $(0.1) | | Diluted Loss Per Share | $(0.06) | $0.06 | $0.00 | - Operating income decreased by **$1.4 million**, while net loss improved by **$2.7 million**, resulting in diluted EPS moving from **$(0.06)** to **$0.00**[139](index=139&type=chunk) - This was influenced by decreased restructuring charges and lower interest expense, partially offset by lower sales and increased innovation investments[141](index=141&type=chunk) [Operating Results (Consolidated)](index=40&type=section&id=Operating%20Results) This section details the consolidated revenue, cost of sales, and operating expenses for the three-month period Consolidated Operating Results (Three Months Ended June 30, 2025 vs 2024) | Metric | 2025 (in millions) | % of Sales (2025) | 2024 (in millions) | % of Sales (2024) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total net sales | $571.9 | 100.0% | $634.2 | 100.0% | $(62.3) | (9.8)% | | Total cost of sales | $448.1 | 78.4% | $493.9 | 77.8% | $(45.8) | (9.3)% | | Selling, general & administrative expenses | $80.2 | 14.0% | $88.7 | 14.0% | $(8.5) | (9.6)% | | Depreciation and amortization | $20.7 | 3.6% | $26.4 | 4.2% | $(5.7) | (21.6)% | | Restructuring, impairment and transaction-related charges, net | $9.2 | 1.6% | $10.1 | 1.6% | $(0.9) | (8.9)% | | Operating income | $13.7 | 2.4% | $15.1 | 2.4% | $(1.4) | (9.3)% | - Total net sales decreased by **$62.3 million (9.8%)**, driven by a **$49.6 million (10.0%)** decrease in product sales (including **$35.8 million** in paper sales, partly due to European operations divestiture) and a **$12.7 million (9.3%)** decrease in service sales[144](index=144&type=chunk)[145](index=145&type=chunk) - EBITDA decreased by **$7.6 million** to **$34.1 million (6.0% margin)** in Q2 2025, from **$41.7 million (6.6% margin)** in Q2 2024, primarily due to lower sales and increased innovation investments, partially offset by improved manufacturing productivity and reduced restructuring charges[153](index=153&type=chunk) [United States Print and Related Services Segment](index=43&type=section&id=United%20States%20Print%20and%20Related%20Services) This section analyzes the performance of the domestic print and related services segment for the three-month period US Print and Related Services Segment Performance (Three Months Ended June 30, 2025 vs 2024) | Metric | 2025 (in millions) | 2024 (in millions) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product sales | $400.6 | $411.9 | $(11.3) | (2.7)% | | Service sales | $123.9 | $132.4 | $(8.5) | (6.4)% | | Operating income | $22.8 | $25.4 | $(2.6) | (10.2)% | | Operating margin | 4.3% | 4.7% | N/A | N/A | | Restructuring, impairment and transaction-related charges, net | $8.6 | $9.3 | $(0.7) | (7.5)% | - Operating income decreased by **$2.6 million (10.2%)**, primarily due to decreased logistics and marketing services sales and increased innovation investments, partially offset by lower depreciation and amortization, and reduced restructuring charges[158](index=158&type=chunk) [International Segment](index=44&type=section&id=International) This section reviews the financial results of the international segment, including impacts from divestitures and foreign exchange International Segment Performance (Three Months Ended June 30, 2025 vs 2024) | Metric | 2025 (in millions) | 2024 (in millions) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product sales | $47.4 | $85.7 | $(38.3) | (44.7)% | | Service sales | $0.0 | $4.2 | $(4.2) | nm | | Operating income | $3.9 | $2.3 | $1.6 | 69.6% | | Operating margin | 8.2% | 2.6% | N/A | N/A | | Restructuring, impairment and transaction-related charges, net | $0.2 | $0.8 | $(0.6) | (75.0)% | - Product sales decreased by **$38.3 million (44.7%)**, largely due to the sale of European operations (**$17.9 million** in print volume, **$15.1 million** in paper sales) and unfavorable foreign exchange impacts[163](index=163&type=chunk) - Operating income increased by **$1.6 million (69.6%)**, driven by increased print product volume in Mexico and a decrease in restructuring, impairment, and transaction-related charges[166](index=166&type=chunk) [Corporate Segment](index=45&type=section&id=Corporate) This section details the unallocated general and administrative expenses and other corporate-level activities - Corporate operating expenses increased by **$0.4 million (3.2%)** to **$13.0 million**, primarily due to a **$0.4 million** increase in restructuring, impairment, and transaction-related charges, net[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) [Results of Operations for the Six Months Ended June 30, 2025, Compared to the Six Months Ended June 30, 2024](index=46&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030,%202025,%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030,%202024) This section analyzes the company's financial performance for the first half of 2025 compared to the same period in the prior year [Summary Results](index=46&type=section&id=Summary%20Results) This section provides a high-level comparison of key financial outcomes for the six-month period Summary Results (Six Months Ended June 30, 2025 vs 2024) | Metric | June 30, 2024 (in millions) | Change (in millions) | June 30, 2025 (in millions) | | :--- | :--- | :--- | :--- | | Operating Income | $4.4 | $28.9 | $33.3 | | Operating Margin | 0.3% | 2.5% | 2.8% | | Net Earnings (Loss) | $(30.9) | $36.6 | $5.7 | | Diluted Earnings (Loss) Per Share | $(0.65) | $0.76 | $0.11 | - Operating income increased significantly by **$28.9 million**, and net earnings improved from a loss of **$30.9 million** to a gain of **$5.7 million**, leading to a diluted EPS increase of **$0.76**[171](index=171&type=chunk) - This was primarily due to a **$26.8 million** decrease in restructuring charges and a **$6.8 million** decrease in interest expense[173](index=173&type=chunk) [Operating Results (Consolidated)](index=47&type=section&id=Operating%20Results) This section details the consolidated revenue, cost of sales, and operating expenses for the six-month period Consolidated Operating Results (Six Months Ended June 30, 2025 vs 2024) | Metric | 2025 (in millions) | % of Sales (2025) | 2024 (in millions) | % of Sales (2024) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total net sales | $1,201.3 | 100.0% | $1,289.0 | 100.0% | $(87.7) | (6.8)% | | Total cost of sales | $948.1 | 78.9% | $1,015.2 | 78.8% | $(67.1) | (6.6)% | | Selling, general & administrative expenses | $163.7 | 13.6% | $171.8 | 13.3% | $(8.1) | (4.7)% | | Depreciation and amortization | $40.4 | 3.4% | $55.0 | 4.3% | $(14.6) | (26.5)% | | Restructuring, impairment and transaction-related charges, net | $15.8 | 1.3% | $42.6 | 3.3% | $(26.8) | (62.9)% | | Operating income | $33.3 | 2.8% | $4.4 | 0.3% | $28.9 | nm | - Total net sales decreased by **$87.7 million (6.8%)**, with product sales down **$62.0 million (6.2%)** and service sales down **$25.7 million (9.0%)**, largely due to European operations divestiture and unfavorable foreign exchange impacts[176](index=176&type=chunk)[177](index=177&type=chunk) - EBITDA increased by **$13.2 million** to **$73.0 million (6.1% margin)** in H1 2025, from **$59.8 million (4.6% margin)** in H1 2024, driven by decreased restructuring charges, improved manufacturing productivity, and cost reduction initiatives, despite lower net sales[185](index=185&type=chunk) [United States Print and Related Services Segment](index=50&type=section&id=United%20States%20Print%20and%20Related%20Services) This section analyzes the performance of the domestic print and related services segment for the six-month period US Print and Related Services Segment Performance (Six Months Ended June 30, 2025 vs 2024) | Metric | 2025 (in millions) | 2024 (in millions) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product sales | $822.7 | $847.8 | $(25.1) | (3.0)% | | Service sales | $255.6 | $275.4 | $(19.8) | (7.2)% | | Operating income | $54.5 | $24.1 | $30.4 | nm | | Operating margin | 5.1% | 2.1% | N/A | N/A | | Restructuring, impairment and transaction-related charges, net | $12.1 | $40.9 | $(28.8) | (70.4)% | - Operating income increased by **$30.4 million**, primarily due to a **$28.8 million** decrease in restructuring charges, a **$10.7 million** decrease in depreciation and amortization, and improved manufacturing productivity[191](index=191&type=chunk) [International Segment](index=51&type=section&id=International) This section reviews the financial results of the international segment, including impacts from divestitures and foreign exchange International Segment Performance (Six Months Ended June 30, 2025 vs 2024) | Metric | 2025 (in millions) | 2024 (in millions) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product sales | $120.1 | $157.0 | $(36.9) | (23.5)% | | Service sales | $2.9 | $8.8 | $(5.9) | (67.0)% | | Operating income | $4.5 | $5.7 | $(1.2) | (21.1)% | | Operating margin | 3.7% | 3.4% | N/A | N/A | | Restructuring, impairment and transaction-related charges, net | $3.0 | $1.6 | $1.4 | 87.5% | - Product sales decreased by **$36.9 million (23.5%)** and service sales by **$5.9 million (67.0%)**, largely due to the sale of European operations and unfavorable foreign exchange impacts[195](index=195&type=chunk)[196](index=196&type=chunk) - Operating income decreased by **$1.2 million (21.1%)**, primarily due to a **$1.4 million** increase in restructuring, impairment, and transaction-related charges, net[198](index=198&type=chunk) [Corporate Segment](index=52&type=section&id=Corporate) This section details the unallocated general and administrative expenses and other corporate-level activities - Corporate operating expenses increased by **$0.3 million (1.2%)** to **$25.7 million**, primarily due to a **$0.6 million** increase in restructuring, impairment, and transaction-related charges, net, partially offset by lower employee-related costs[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, debt, and ability to meet its financial obligations and fund operations - Total liquidity as of June 30, 2025, was **$217.6 million**, consisting of **$210.9 million** unused revolving credit capacity and **$6.7 million** cash and cash equivalents[204](index=204&type=chunk) - The Company believes its liquidity is sufficient for ongoing operating and debt requirements[205](index=205&type=chunk) - Net cash used in operating activities decreased by **$6.7 million** to **$41.6 million** in H1 2025, due to a **$14.4 million** increase in cash from earnings, partially offset by a **$7.7 million** increase in cash used in changes in operating assets and liabilities[206](index=206&type=chunk) - Net cash used in investing activities increased by **$32.0 million** to **$38.2 million** in H1 2025, primarily due to a **$22.2 million** decrease in proceeds from investment sales and a **$16.3 million** increase from business acquisition[207](index=207&type=chunk) - Net cash provided by financing activities increased by **$40.9 million** to **$55.4 million** in H1 2025, mainly due to a **$52.5 million** increase in net debt borrowings, partially offset by increased treasury stock purchases and dividends[208](index=208&type=chunk) Free Cash Flow (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(41.6) | $(48.3) | | Less: purchases of property, plant and equipment | $24.3 | $33.5 | | **Free Cash Flow (non-GAAP)** | **$(65.9)** | **$(81.8)** | - Free Cash Flow improved by **$15.9 million** to **$(65.9) million** in H1 2025, due to a **$9.2 million** decrease in capital expenditures and a **$6.7 million** decrease in net cash used in operating activities[212](index=212&type=chunk) Debt Leverage Ratio (non-GAAP) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Debt (in millions) | $448.2 | $350.0 | | Adjusted EBITDA (trailing twelve months, in millions) | $210.4 | $224.0 | | **Debt Leverage Ratio** | **2.13 x** | **1.56 x** | - The Debt Leverage Ratio increased to **2.13x** at June 30, 2025, from **1.56x** at December 31, 2024, exceeding management's target range of **1.50x to 2.00x**[218](index=218&type=chunk) - This was primarily due to a **$98.2 million** increase in Net Debt and a **$13.6 million** reduction in trailing twelve months Adjusted EBITDA[218](index=218&type=chunk) - The Company was in compliance with all financial covenants as of June 30, 2025, including Total Leverage Ratio (**2.10x** vs. **3.50x** limit), Senior Secured Leverage Ratio (**2.09x** vs. **3.00x** limit), and Interest Coverage Ratio (**4.59x** vs. **3.00x** minimum)[220](index=220&type=chunk)[222](index=222&type=chunk) Share Repurchases (Class A Common Stock) | Period | Shares Purchased | Weighted Average Price Per Share | Total Repurchases (in millions) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | 832,439 | $5.11 | $4.3 | | Six Months Ended June 30, 2025 | 1,396,655 | $5.41 | $7.6 | | Remaining Authorized Repurchases (June 30, 2025) | N/A | N/A | $70.0 | [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Quad/Graphics, Inc.'s exposure to various market risks, including interest rate, foreign currency, credit, and commodity risks, and the strategies employed to manage them [Interest Rate Risk](index=57&type=section&id=Interest%20Rate%20Risk) This section describes the company's exposure to fluctuations in interest rates and its hedging strategies - The Company is exposed to interest rate risk on **$243.3 million** of variable rate debt (weighted average **7.1%**) and price risk on **$211.6 million** of fixed rate debt and finance leases (weighted average **7.3%**) as of June 30, 2025[229](index=229&type=chunk) - Interest rate swaps and collars are used to reduce cash flow variability from variable rate debt, effectively fixing **$200.0 million** of variable rate debt[229](index=229&type=chunk) - A hypothetical **10%** increase in market interest rates would change the fair value of floating rate debt by approximately **$1.8 million** and fixed rate debt by approximately **$0.2 million**[229](index=229&type=chunk) [Foreign Currency Risk and Translation Exposure](index=58&type=section&id=Foreign%20Currency%20Risk%20and%20Translation%20Exposure) This section details the company's exposure to foreign exchange rate fluctuations and its mitigation strategies - Foreign currency exposure is limited in most countries as operating revenues and expenses are primarily in local currencies[230](index=230&type=chunk) - Foreign exchange forward contracts are used to hedge currency risk where revenues and expenses are not in local currency[230](index=230&type=chunk) - As of June 30, 2025, foreign subsidiaries had **$86.7 million** in net current assets subject to foreign currency translation risk[231](index=231&type=chunk) - A hypothetical **10%** adverse change in exchange rates would result in an approximate **$8.7 million** decrease in net current assets[231](index=231&type=chunk) [Credit Risk](index=58&type=section&id=Credit%20Risk) This section outlines the company's management of credit risk associated with its client base and receivables - Credit risk is managed through client underwriting, continuous monitoring, and specific/general provisions for credit losses[234](index=234&type=chunk) - The allowance for credit losses was **$21.0 million** at June 30, 2025[234](index=234&type=chunk) - The Company has a diverse client base with no significant concentration; its largest client accounted for less than **5%** of net sales in Q2 and H1 2025[235](index=235&type=chunk) [Commodity Risk](index=59&type=section&id=Commodity%20Risk) This section addresses the company's exposure to price volatility in raw materials and energy, and its mitigation efforts - Primary raw materials (paper, ink, energy) are subject to price fluctuations[236](index=236&type=chunk) - The Company mitigates paper price risk through client-supplied paper, purchasing efficiencies, and price adjustment clauses in contracts[237](index=237&type=chunk) - The Company produces most of its ink, controlling quality and cost, and uses natural gas hedges to mitigate energy price risk[238](index=238&type=chunk) - In logistics, fuel price increases are largely passed on to clients[239](index=239&type=chunk) - A hypothetical **10%** change in paper and other raw material prices is not expected to have a significant direct impact on consolidated annual results, but could influence future client demand[240](index=240&type=chunk) [ITEM 4. Controls and Procedures](index=59&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of Quad/Graphics, Inc.'s disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter ended June 30, 2025 [Disclosure Controls and Procedures](index=59&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's controls designed to ensure timely and accurate financial disclosures - Management, with the CEO and CFO's participation, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[241](index=241&type=chunk) [Changes in Internal Control Over Financial Reporting](index=59&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes to the company's internal control over financial reporting during the quarter - There were no changes in the Company's internal control over financial reporting during the fiscal quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[242](index=242&type=chunk) [PART II — OTHER INFORMATION](index=60&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section includes additional disclosures not covered in the financial information, such as risk factors and equity security sales [ITEM 1A. Risk Factors](index=60&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to previously disclosed risk factors in the 2024 Annual Report on Form 10-K[244](index=244&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the Company's repurchases of its Class A common stock during the quarter ended June 30, 2025, under its authorized share repurchase program Issuer Purchases of Equity Securities (Class A Common Stock) - Quarter Ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | | April 1, 2025 to April 30, 2025 | 664,389 | $5.08 | 664,389 | $70,828,558 | | May 1, 2025 to May 31, 2025 | 163,047 | $5.21 | 163,047 | $69,978,704 | | June 1, 2025 to June 30, 2025 | 5,003 | $5.24 | 5,003 | $69,952,492 | | **Total** | **832,439** | N/A | **832,439** | N/A | - As of June 30, 2025, **$70.0 million** of authorized repurchases remained under the **$100.0 million** share repurchase program approved on July 30, 2018[246](index=246&type=chunk) [ITEM 5. Other Information](index=60&type=section&id=ITEM%205.%20Other%20Information) This section confirms that no director or Section 16 officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or Section 16 officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the quarter ended June 30, 2025[247](index=247&type=chunk) [ITEM 6. Exhibits](index=61&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of this Quarterly Report on Form 10-Q, including amended bylaws, deferred stock unit award agreements, certifications, and financial statements in iXBRL format - Exhibits include Amended Bylaws, Form of Deferred Stock Unit Award Agreement, CEO and CFO certifications (Rule 13a-14(a) or 15d-14(a) and 18 U.S.C. Section 1350), and financial statements in iXBRL format[249](index=249&type=chunk)[250](index=250&type=chunk) [Signatures](index=62&type=section&id=Signatures) This section contains the required signatures for the Quarterly Report on Form 10-Q, affirming its submission by authorized officers of Quad/Graphics, Inc - The report is signed by J. Joel Quadracci, Chairman, President and Chief Executive Officer, and Anthony C. Staniak, Chief Financial Officer, on July 30, 2025[252](index=252&type=chunk)[253](index=253&type=chunk)
Quad/Graphics(QUAD) - 2025 Q2 - Earnings Call Transcript
2025-07-30 13:30
Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $572 million, a decrease of 4% compared to Q2 2024, excluding a 6% impact from the divestiture of European operations [27] - Adjusted EBITDA was $43 million in Q2 2025, down from $52 million in Q2 2024, with the adjusted EBITDA margin declining from 8.2% to 7.6% [28] - Year-to-date adjusted diluted earnings per share increased to 34¢ in 2025 from 22¢ in 2024, attributed to higher earnings and share repurchases [29] Business Line Data and Key Metrics Changes - Revenue from targeted print offerings increased by 2%, driven by direct marketing, packaging, and in-store solutions, while large-scale print offerings decreased by 2% due to organic declines in magazines and retail inserts [27] - The company reported a 7% increase in sales for direct mail and packaging, and a 13% increase for in-store solutions [56] Market Data and Key Metrics Changes - The company noted that rising postal rates continue to challenge clients, but a new USPS catalog discount launching in October aims to alleviate some pressure [7] - The postal rate commission acknowledged that pricing increases have negatively impacted volume, leading to discussions about potential caps on future rate increases [43][44] Company Strategy and Development Direction - The company is investing in artificial intelligence to enhance marketing processes, focusing on process automation, cognitive insights, and cognitive engagement [10] - The launch of Audience Builder 2.0 aims to democratize access to the company's data stack, allowing for faster audience creation and improved client targeting [15][46] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting that while there are concerns about tariffs, there has not been a significant pullback from clients [69] - The company reaffirmed its 2025 guidance, expecting net sales to decline by 2% to 6% compared to 2024, with a projected adjusted EBITDA range of $180 million to $220 million [34] Other Important Information - The company completed the sale of its Sacramento facility for approximately $5 million and made progress on the acquisition of Onur, a co-mailing and logistics provider [31][73] - The company plans to maintain a balanced capital allocation strategy, including returning capital to shareholders through dividends and share repurchases [32] Q&A Session Summary Question: What is the outlook on postal rates and the USPS? - Management expressed optimism about the new postmaster general and the potential for a 10% discount for catalogers, which could help mitigate volume declines due to rising rates [41][42] Question: Can you elaborate on the Audience Builder 2.0 tool? - The tool automates audience creation from the data stack, allowing users to generate audience lists using simple prompts, enhancing client targeting capabilities [46][48] Question: What are the trends in sales and the impact of the grocery client loss? - The grocery client represented about 3% of revenue, and while there was a decline in sales, the company expects increasing volumes in the upcoming quarters [65][66] Question: How is the company managing asset sales and net debt? - The company is actively selling facilities and has included estimates of potential sales in its net debt guidance, which is projected to decrease by $50 million [75][76]
Quad/Graphics(QUAD) - 2025 Q2 - Earnings Call Presentation
2025-07-30 12:30
Financial Performance & Guidance - Net sales for the second quarter of 2025 were $571.9 million, compared to $634.2 million in the second quarter of 2024[33] - Adjusted EBITDA for the second quarter of 2025 was $43.3 million, with an Adjusted EBITDA Margin of 7.6%[33, 51] - The company anticipates a 2% to 6% decline in adjusted annual net sales for 2025, excluding the divested European operations[41, 44] - Full-year Adjusted EBITDA is projected to be between $180 million and $220 million for 2025[41] - Free cash flow is expected to be between $40 million and $60 million for the full year 2025[41] Debt & Leverage - Net debt as of June 30, 2025, was $448.2 million[54] - The debt leverage ratio as of June 30, 2025, was 2.13x[54] - The company aims for a long-term targeted debt leverage range of 1.5x to 2.0x[43] Strategic Initiatives & Market Trends - Quad's proprietary core dataset features 250 million consumers, mapped to their physical home address[9] - A survey indicates that 71% of consumers feel a deeper connection and loyalty to brands experienced in physical stores[21] - 71% of consumers find print catalogs and magazines more authentic than digital campaigns[21]
Quad/Graphics (QUAD) Q2 Earnings and Revenues Beat Estimates
ZACKS· 2025-07-29 22:46
Core Insights - Quad/Graphics reported quarterly earnings of $0.14 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, and showing an increase from $0.12 per share a year ago, resulting in an earnings surprise of +16.67% [1] - The company achieved revenues of $571.9 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.56%, although this represents a decline from $634.2 million in the same quarter last year [2] - The stock has underperformed, losing approximately 15.6% since the beginning of the year, while the S&P 500 has gained 8.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $596 million, and for the current fiscal year, it is $0.89 on revenues of $2.43 billion [7] - The estimate revisions trend for Quad/Graphics was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Commercial Printing industry, to which Quad/Graphics belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting that companies in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]
Quad/Graphics(QUAD) - 2025 Q2 - Quarterly Results
2025-07-29 21:02
Exhibit 99.1 FOR IMMEDIATE RELEASE Quad Reports Second Quarter and Year-to-Date 2025 Results Reaffirms Full-Year 2025 Financial Guidance Continues Investing in Strategic Growth Areas — Data and Audience Intelligence, AI- Enabled Tools and Systems, and In-Store Retail Media Network SUSSEX, WI, July 29, 2025 — Quad/Graphics, Inc. (NYSE: QUAD) ("Quad" or the "Company"), a marketing experience company that solves complex marketing challenges for its clients, today reported results for the second quarter ended J ...
Quad Reports Second Quarter and Year-to-Date 2025 Results
Prnewswire· 2025-07-29 20:30
Core Insights - Quad/Graphics, Inc. reaffirmed its full-year 2025 financial guidance while continuing to invest in strategic growth areas such as data and audience intelligence, AI-enabled tools, and in-store retail media networks [1][3][11] Recent Highlights - The second quarter results met expectations, with ongoing investments aimed at differentiating the company as a marketing experience provider [3][4] - Quad launched Audience Builder 2.0, an AI-powered tool enhancing audience targeting capabilities [4][7] - A new partnership was established with Vallarta Supermarkets, expanding the In-Store Connect retail media network [5][7] Financial Performance - Net Sales for Q2 2025 were $572 million, a 10% decline from $634 million in Q2 2024, with a 4% decline when excluding the impact of the European operations divestiture [7][8] - The company reported a net loss of $0.1 million in Q2 2025, an improvement from a net loss of $3 million in Q2 2024 [8][15] - Adjusted EBITDA for Q2 2025 was $43 million, down from $52 million in Q2 2024 [8][15] Year-to-Date Financial Results - For the six months ended June 30, 2025, net sales were $1.2 billion, a 7% decrease compared to the same period in 2024 [15] - Net earnings for the first half of 2025 were $6 million, compared to a net loss of $31 million in the same period in 2024 [15][29] - Free Cash Flow improved to negative $66 million in the first half of 2025, compared to negative $82 million in the same period in 2024 [15][40] Guidance for 2025 - The company maintains its guidance for 2025, projecting a 2% to 6% decline in adjusted annual net sales, adjusted EBITDA between $180 million to $220 million, and free cash flow of $40 million to $60 million [11][15]
Quad declares quarterly dividend of $0.075 per share
Prnewswire· 2025-07-22 12:30
Company Overview - Quad/Graphics, Inc. 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 [2][3] - The company employs approximately 11,000 people across 11 countries and serves around 2,100 clients, including leading blue-chip companies in multiple industries such as retail, consumer packaged goods, financial services, and health [3] Recent Developments - The Board of Directors of Quad declared a quarterly dividend of $0.075 per share, payable on September 5, 2025, to shareholders of record as of August 18, 2025 [1] Industry Position - Quad is ranked among the largest agency companies in the U.S. by Ad Age, supported by its full-service media agency, Rise, and creative agency, Betty [3] - The company is also recognized as one of the largest commercial printers in North America according to Printing Impressions [3]
VALLARTA SUPERMARKETS JOINS QUAD'S IN-STORE CONNECT NETWORK
Prnewswire· 2025-07-15 16:00
Core Insights - Quad/Graphics Inc. is expanding its In-Store Connect retail media network into Vallarta Supermarkets, enhancing shopper engagement and providing new opportunities for consumer packaged goods (CPG) brands [1][2] Company Overview - Quad is a marketing experience company that integrates creative, production, and media solutions across online and offline channels, serving approximately 2,100 clients and employing around 11,000 people in 11 countries [5][6] Partnership Details - The partnership will introduce digital signage in 15 Vallarta stores, focusing on high-traffic areas to promote CPG brands, local products, and special promotions, with messaging available in both English and Spanish [2][3] - Vallarta Supermarkets aims to enhance customer experience and loyalty through innovative tools like In-Store Connect, which allows for effective communication of unique products and savings [3][4] Market Impact - The collaboration is expected to deepen shopper loyalty and create immersive shopping experiences, as 88% of consumers find it easy to remember engaging physical store experiences [4]
Quad to Host Call to Discuss Second Quarter and Year-to-Date 2025 Results
Prnewswire· 2025-07-09 12:30
Core Viewpoint - Quad/Graphics, Inc. will release its second quarter and year-to-date 2025 financial results on July 29, 2025, followed by a conference call on July 30, 2025, to discuss the results [1][2]. 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 [4]. - The company employs approximately 11,000 people across 11 countries and serves around 2,100 clients, including leading blue-chip companies in sectors such as retail, consumer packaged goods, financial services, and health [5]. Conference Call Details - The conference call will be hosted by Joel Quadracci (Chairman, President, and CEO) and Tony Staniak (CFO) [2]. - Participants can pre-register for the webcast or dial in on the day of the call, with an audio replay available shortly after the call ends [3]. Additional Information - Quad is recognized as one of the largest agency companies in the U.S. and one of the largest commercial printers in North America [5]. - The company emphasizes its commitment to responsible operations, intentional innovation, and a values-driven culture [6].
Quad scores no. 21 in Ad Age Agency Ranking
Prnewswire· 2025-06-24 13:00
Core Insights - Quad/Graphics, Inc. has been ranked 21st in Ad Age's list of the largest agency companies, marking its sixth consecutive year on the list [1][4]. Company Overview - Quad is a marketing experience company that provides solutions to complex marketing challenges, integrating creative, production, and media services across various channels [5]. - The company employs approximately 11,000 people across 11 countries and serves around 2,100 clients, including major blue-chip companies in sectors such as retail, consumer packaged goods, financial services, and health [6]. Industry Context - The marketing industry is characterized by increasing complexity, with clients facing pressure to drive growth while balancing collaboration with senior talent and comprehensive service offerings [2]. - Ad Age, a leading media brand in marketing, produces an annual report analyzing industry data to rank top advertising and marketing agencies, which includes notable companies like WPP and Publicis alongside Quad [3]. Strategic Approach - Quad emphasizes a culture of collaboration and innovation, utilizing its creative agency, Betty, and media agency, Rise, to enhance marketing effectiveness and foster direct connections between brands and consumers [4][6]. - The company aims to simplify marketing processes by removing friction and tailoring solutions to meet client objectives, thereby driving cost efficiencies and improving speed-to-market [5].