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]