Core Insights - Quad/Graphics, Inc. reaffirmed its full-year 2025 financial guidance while reporting first-quarter results that met expectations [1][6][11] - The company continues to focus on strategic investments in innovative solutions and talent to navigate economic uncertainties [3][6] Recent Highlights - Quad reported net sales of $629 million in Q1 2025, a 4% decline from $655 million in Q1 2024, with a 2% decline on an organic basis excluding the divestiture of European operations [8][9] - Net earnings improved to $6 million or $0.11 diluted earnings per share in Q1 2025, compared to a net loss of $28 million or $0.60 diluted loss per share in Q1 2024 [8][9] - The company achieved non-GAAP adjusted EBITDA of $46 million in Q1 2025, down from $51 million in Q1 2024 [8][9] Financial Performance - The decline in net sales was attributed to lower paper, logistics, and agency solutions sales, including the loss of a significant grocery client [9] - The company repurchased 1.2 million shares year-to-date for $6.7 million, totaling 7.2 million shares repurchased since 2022, representing approximately 13% of outstanding shares as of March 31, 2022 [6][8] - Free cash flow was negative $100 million in Q1 2025, compared to negative $70 million in Q1 2024, primarily due to working capital timing [18][33] Strategic Initiatives - Quad's In-Store Connect retail media network is gaining traction, particularly among mid-market grocers, with two new grocery clients added [4][6] - The company is focused on optimizing print and marketing efficiencies, including expanding postage savings opportunities through the acquisition of Enru's co-mailing assets [6][8] 2025 Guidance - The full-year 2025 financial guidance remains unchanged, projecting an organic annual net sales change of a 2% to 6% decline, adjusted EBITDA of $180 million to $220 million, and free cash flow of $40 million to $60 million [11][12]

Group 1 - Quad/Graphics, Inc. will release its first quarter 2025 financial results on April 29, 2025, after market close [1] - A conference call to discuss the financial results will be held on April 30, 2025, at 8:30 a.m. ET, hosted by the Chairman, President, and CEO Joel Quadracci, along with CFO Tony Staniak [2] - Participants can pre-register for the conference call and will receive a unique PIN for access [3] Group 2 - Quad is a marketing experience company that provides a comprehensive range of marketing and print services, integrating creative, production, and media solutions across various channels [4] - The company employs over 12,000 people across 14 countries and serves approximately 2,500 clients, focusing on industries such as retail, consumer packaged goods, financial services, and health [5] - 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]

Group 1 - Quad/Graphics, Inc. announced the expansion of Tim Maleeny's role to include President of Quad Agency Solutions, succeeding Eric Ashworth who will leave the company on May 1, 2025 [1][2] - Maleeny will focus on evolving the integrated data, media, creative, and marketing services businesses, enhancing how clients utilize Quad's integrated offerings [2][3] - Joel Quadracci, Chairman, President, and CEO, emphasized Maleeny's industry experience and client-first focus as key to advancing the agency's growth strategy [3][4] Group 2 - Tim Maleeny joined Quad in November 2024 from Havas North America, where he held the position of President, Chief Strategy and Innovation Officer [4] - Quad is a marketing experience company that connects brands with consumers through its MX Solutions Suite, integrating creative, production, and media solutions across various channels [5][6] - The company employs over 12,000 people across 14 countries and serves approximately 2,500 clients, focusing on sectors such as retail, consumer packaged goods, financial services, and health [6]

Core Insights - Quad/Graphics Inc. is expanding into the $26.6 billion branded solutions market, enhancing its portfolio of integrated marketing solutions [1] - The new branded solutions group aims to provide a seamless and brand-aligned approach to promotional goods, relieving marketers of the complexities of managing branded goods programs [2][4] Company Overview - Quad is a marketing experience company that connects brands with consumers through a comprehensive range of marketing and print services, integrating creative, production, and media solutions [5] - The company employs over 12,000 people across 14 countries and serves approximately 2,500 clients, including leading companies in various industries such as retail, financial services, and health [6] Market Context - 77% of marketers report facing complexity within their marketing ecosystem, indicating a significant demand for streamlined branded solutions [4] - The branded solutions market is part of a broader trend where promotional goods are seen as extensions of a brand's story, emphasizing the importance of brand consistency and quality [4]

Core Viewpoint - Quad/Graphics, Inc. has completed the sale of its European operations for €41 million (approximately $42 million) to Capmont GmbH, which will aid in reducing debt and enhancing its marketing experience (MX) offerings [1][3][4] Group 1: Transaction Details - The sale includes all employees and facilities of Quad/Graphics Europe, including print and ink-manufacturing operations in Wyszków, Poland, and the Peppermint agency in Warsaw [2] - Excluded from the sale are Quad's shared services employees in Poland who support the integrated marketing platform in The Americas [2] Group 2: Strategic Focus - The divestiture aligns with the company's strategic focus on optimizing its business portfolio for growth as a marketing experience company, particularly in North America [4] - The proceeds from the sale will be utilized to reduce debt and invest in solutions that enhance the company's MX offerings [3][4] Group 3: Company Overview - Quad is a marketing experience company that connects brands with consumers through a comprehensive range of marketing and print services [5] - The company employs over 12,000 people across 14 countries and serves approximately 2,500 clients, focusing on various industry verticals including retail and financial services [6]

Core Insights - Quad/Graphics, Inc. has announced a strategic partnership with Adalytics to enhance digital media safety and transparency [1][2] - The collaboration aims to implement protocols that reduce ad delivery to non-human traffic and improve media investment evaluation [1][2] - This partnership positions Quad and its agency Rise as leaders in digital media protection and accountability [4][5] Company Overview - Quad is a marketing experience company that integrates creative, production, and media solutions across various channels [6] - The company employs over 12,000 people in 14 countries and serves approximately 2,500 clients, including major blue-chip companies [7][8] - Quad is recognized as one of the largest agency companies in the U.S. and a leading commercial printer in North America [8] Partnership Details - The partnership will incorporate Adalytics' tools for media-quality monitoring, brand-safety analysis, and supply-path optimization [4][5] - Quad and Rise will utilize advanced impression-level log-file analysis to provide clients with actionable insights and enhance media performance [2][5] - The collaboration represents a significant advancement in Quad's mission to set new standards for transparency and accountability in digital advertising [5] Industry Context - The partnership reflects a growing demand for data-driven advertising solutions that ensure media investments reach real audiences [4][5] - Adalytics specializes in advertising transparency and measurement, helping brands make informed media investment decisions [10] - The initiative aims to address reputational risks and optimize media performance in an evolving digital advertising landscape [5][10]

Revenue and Sales Performance - The United States Print and Related Services segment accounted for approximately 87% of the Company's consolidated net sales in 2024, down from 86% in 2023[222]. - The International segment represented about 13% of consolidated net sales in 2024, compared to 14% in 2023[223]. - The Company's total net sales decreased by $285.5 million, or 9.7%, from $2,957.7 million in 2023 to $2,672.2 million in 2024[251]. - Product sales declined by $234.9 million, or 10.1%, primarily due to a $142.1 million decrease in paper sales and a $91.4 million decrease in print product lines[252]. - Service sales decreased by $50.6 million, or 8.1%, mainly due to a $44.2 million decrease in marketing and medical services[253]. - Net sales in the United States Print and Related Services segment decreased by $224.8 million, or 9.0%, from $2,554.3 million in 2023 to $2,329.5 million in 2024[266][267]. - International segment net sales decreased by $60.2 million, or 15.7%, from $384.4 million in 2023 to $324.2 million in 2024, driven by lower paper sales and print volumes[273][274]. - Total net sales decreased to $2,672.2 million in 2024 from $2,957.7 million in 2023, a decline of approximately 9.6%[367]. Financial Performance and Income - The Company's operating income for 2024 was $19.2 million, down from $25.7 million in 2023, reflecting a decrease of 25.3%[251]. - EBITDA for the year ended December 31, 2024, was $122.5 million, a decrease of $33.7 million or 21.6% compared to $156.2 million in 2023, with an EBITDA margin of 4.6% down from 5.3%[261][263]. - Net loss for 2024 was $50.9 million, an improvement from a net loss of $55.4 million in 2023, with interest expense decreasing to $64.5 million from $70.0 million[264]. - Operating income for the United States Print and Related Services segment increased by $56.2 million, or 99.3%, to $112.8 million in 2024, primarily due to reduced restructuring charges and improved manufacturing productivity[269]. - Operating loss for the International segment was $45.7 million in 2024, a decrease of $64.0 million compared to an operating income of $18.3 million in 2023, largely due to increased restructuring charges[276]. - Total comprehensive loss increased to $(64.5) million in 2024 from $(44.7) million in 2023[370]. - Net loss improved to $(50.9) million in 2024 compared to $(55.4) million in 2023, representing a reduction of about 8.1%[370]. Debt and Liquidity - The Company's consolidated debt and finance lease obligations decreased by $143.5 million during the year ended December 31, 2024[232]. - The Company generated $112.9 million in cash provided by operating activities, contributing to the reduction in debt[232]. - Total liquidity as of December 31, 2024, was $328.1 million, consisting of $298.9 million in unused capacity under the revolving credit arrangement and $29.2 million in cash and cash equivalents[283]. - The Debt Leverage Ratio decreased from 2.01x as of December 31, 2023, to 1.56x as of December 31, 2024, due to a $119.8 million decrease in Net Debt[298]. - Total debt and finance lease obligations decreased from $522.7 million as of December 31, 2023, to $379.2 million as of December 31, 2024[296]. - The Company expects its future cash flows from operating activities to be sufficient to fund ongoing operating requirements and service debt for the next 12 months and beyond[284]. Cost Management and Expenses - The cost of product sales decreased by $248.3 million, or 12.5%, primarily due to lower paper costs and improved manufacturing productivity[254]. - Selling, general, and administrative expenses rose by $12.3 million, or 3.6%, increasing as a percentage of net sales from 11.6% in 2023 to 13.4% in 2024[256]. - Depreciation and amortization expenses decreased by $26.3 million, or 20.4%, due to plant closures and fully depreciated assets[257]. - Restructuring, impairment, and transaction-related charges increased by $24.0 million, or 31.0%, totaling $101.5 million in 2024[259]. - The Company expects to incur additional restructuring and integration costs in future periods to align its cost structure with acquisitions and strategic investments[248]. Cash Flow and Investments - Net cash provided by operating activities decreased by $34.7 million to $112.9 million for the year ended December 31, 2024, compared to $147.6 million in 2023[285]. - Net cash provided by investing activities increased by $59.1 million to $12.7 million for the year ended December 31, 2024, compared to a net cash used of $46.4 million in 2023[286]. - Net cash used in financing activities increased by $75.5 million to $149.1 million for the year ended December 31, 2024, compared to $73.6 million in 2023[287]. - Free Cash Flow decreased by $21.1 million to $55.7 million for the year ended December 31, 2024, compared to $76.8 million in 2023, primarily due to a decrease in operating cash flows[291]. Pension and Employee Obligations - The net underfunded pension obligations decreased by $7.8 million from $63.4 million at December 31, 2023, to $55.6 million at December 31, 2024, primarily due to a $5.3 million decrease in defined benefit plan obligations[309]. - The Company continues to focus on reducing pension obligations through cash contributions, lump-sum settlements, and plan design changes[310]. - The Company has established a withdrawal liability for Multiemployer Pension Plans (MEPPs) based on information from MEPP trustees, following its withdrawal from underfunded plans[416]. Risk Management and Market Conditions - The Company anticipates that industry challenges, including elevated interest rates and reduced demand for printed products, will continue to impact its operations through 2025[245]. - The USPS is expected to implement changes in service standards in 2025, which could impact demand for print services[240]. - The USPS has confirmed plans for twice a year price increases for 2026 and 2027, which may lead clients to reduce mail volumes[242]. - The Company has established a risk management strategy for energy costs, including natural gas hedges, but may not fully pass on increased energy prices to clients[342]. - An allowance for credit losses was established at $21.5 million as of December 31, 2024, reflecting the uncertainty in the global economy and client payment capabilities[337]. Shareholder Returns and Equity - Cash dividends declared were $0.20 per share, totaling $10.3 million for the year ended December 31, 2024[1]. - The Company has $77.5 million of authorized repurchases remaining under its share repurchase program as of December 31, 2024[312]. - The Company’s total equity decreased to $49.9 million by December 31, 2024, down from $172.9 million at the beginning of 2023[1]. - Stock-based compensation expenses increased to $7.3 million in 2024 from $5.6 million in 2023, reflecting higher employee compensation costs[1]. - The Company’s treasury stock purchases amounted to $12.6 million during the reporting period, indicating a strategy to manage share count[1].

Financial Data and Key Metrics Changes - Net sales for Q4 2024 were $708 million, a decline of 10.1% compared to Q4 2023. For the full year, net sales were $2.7 billion, a 9.7% decline compared to 2023 [43][44] - Adjusted EBITDA for Q4 2024 was $63 million, down from $66 million in Q4 2023, but the adjusted EBITDA margin increased from 8.3% to 8.8% [45] - Full year adjusted EBITDA was $224 million in 2024, compared to $234 million in 2023, with an adjusted EBITDA margin improvement from 7.9% to 8.4% [46] Business Line Data and Key Metrics Changes - Integrated solutions and targeted print accounted for 65% of total net sales in 2024, up from 54% in 2018, indicating a shift towards higher-margin offerings [10] - The company expects integrated solutions and targeted print to represent 78% of total net sales by 2028 [11] Market Data and Key Metrics Changes - The company anticipates continued growth in Latin America, particularly in Mexico, while facing a divestiture of European operations in early 2025 [12] - The company noted that postal rate increases and elevated interest rates adversely impacted print volumes in the first half of 2024 [44] Company Strategy and Development Direction - The company is focused on a revenue diversification strategy, aiming for net sales growth between 2027 and 2028, termed the "net sales inflection point" [12] - Investments in technology, including AI and data capabilities, are prioritized to enhance service offerings and drive future revenue growth [21][64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to net sales growth by 2027-2028, despite current challenges [12] - The company is closely monitoring postal rate increases and their impact on client demand, with ongoing efforts to mitigate risks associated with tariffs [60][89] Other Important Information - The company reduced net debt by $684 million from 2020 to 2024, achieving a 66% reduction [9][53] - A 50% increase in the quarterly dividend was announced, raising it to $0.075 per share [9][52] Q&A Session Summary Question: Update on growth investments for 2025 - The company plans to increase capital expenditures to approximately $70 million, focusing on technology and expanding offerings like In Store Connect [69] Question: Organic outlook for 2025 - The company expects a 4% to 6% decline in organic net sales for 2025, with anticipated growth in agency solutions and international print [57][73] Question: Revenue trends at the start of 2025 - The first quarter is expected to show a high single-digit decline, with improvements anticipated throughout the year [111] Question: Status of asset sales - The sale of the European operations is expected to close in early 2025, with additional asset sales planned for 2025 [114] Question: Impact of tariffs on revenue guidance - The company is prepared for potential tariffs, having bought forward Canadian paper to mitigate risks [90][120]

2 | Net Sales | Adjusted EBITDA(1) | | --- | --- | | Free Cash Flow(1) | Net Debt(1) Reduction since 1/1/20 | | Net Debt(1) as of 12/31/24 | Debt Leverage Ratio(1) | (1) See slide 21 for definitions of our non-GAAP measures, slide 23 for a reconciliation of Adjusted EBITDA, slide 24 for a reconciliation of Free Cash Flow and slide 25 for a reconciliation of Net Debt and Debt Leverage Ratio as non-GAAP measures Quad February 19, 2025 Chairman, President & Chief Executive Officer Chief Financial Officer This ...

Core Insights - Quad/Graphics, Inc. reported a reduction in net debt leverage to 1.6x and increased its quarterly dividend by 50% from $0.05 to $0.075 per share, reflecting strong financial performance and strategic progress in 2024 [1][3][11] - The company anticipates a decline in organic annual net sales of 2% to 6% for 2025, while projecting adjusted EBITDA between $180 million and $220 million [12][8] Financial Performance - For the full year 2024, Quad reported net sales of $2.7 billion, a decrease of 9.7% from $2.96 billion in 2023, primarily due to lower paper sales and print volumes [7][29] - The net loss for 2024 was $51 million, or $1.07 diluted loss per share, an improvement from a net loss of $55 million, or $1.14 diluted loss per share in 2023 [7][29] - Adjusted EBITDA for 2024 was $224 million, down from $234 million in 2023, with an adjusted EBITDA margin increase of 48 basis points to 8.4% [7][38] Cash Flow and Debt Management - The company generated $113 million in net cash from operating activities and $56 million in free cash flow for 2024, alongside $71 million from asset sales [7][8] - Net debt was reduced to $350 million at the end of 2024, a decrease of $684 million or 66% over the past five years [7][8] Strategic Initiatives - Quad is focusing on revenue diversification and enhancing its marketing experience (MX) capabilities, including the launch of At-Home Connect and In-Store Connect solutions [4][6] - The company plans to continue investing in its household-based data stack and AI optimization tools to drive new revenue streams [5][6] 2025 Guidance - The financial guidance for 2025 excludes the European operations to be divested, with expectations for adjusted EBITDA of $180 million to $220 million and a year-end debt leverage ratio of approximately 1.5x [12][8]