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]

July 30, 2025 Proprietary & Confidential Chairman, President & Chief Executive Officer Chief Financial Officer This communication contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company's future results, financial condition, sales, earnings, free cash flow, margins, objectives, goals, strategies, beliefs, intentions, plans, ...

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]

Financial Data and Key Metrics Changes - In Q1 2025, net sales were $629 million, a decrease of 2% compared to Q1 2024, excluding the divestiture of European operations [23] - Adjusted EBITDA was $46 million in Q1 2025, down from $51 million in Q1 2024, with the adjusted EBITDA margin declining from 7.7% to 7.2% [24] - Adjusted diluted earnings per share doubled to $0.20 in Q1 2025 from $0.10 in Q1 2024, primarily due to higher net earnings and lower interest expense [26] - Free cash flow was negative $100 million in Q1 2025, compared to negative $70 million in Q1 2024, mainly due to timing of working capital [26] Business Line Data and Key Metrics Changes - Organic net sales decline was primarily due to lower paper, logistics, and agency solution sales, including the loss of a large grocery client [23] - Revenue as a percentage of total sales increased by 3% in Latin America and 2% in targeted print offerings, offset by a 4% decrease in large scale print offerings [23] Market Data and Key Metrics Changes - The company is closely monitoring the impacts of tariffs and recessionary pressures on clients' businesses, with tariffs affecting less than 11% of procurement spend [6][7] - The U.S. Postal Service announced a 10% increase in postage costs expected to take effect on July 13, which may impact many mailing clients [8] Company Strategy and Development Direction - The company is focused on becoming a marketing experience (MX) company, integrating creative production and media across digital and physical channels [5] - Strategic investments are being made in innovative solutions and talent while managing economic uncertainties [5] - The acquisition of Enru's co-mail assets aims to enhance postal optimization solutions and increase co-mail volumes [10] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are signs of dislocation in the market due to tariffs, there hasn't been a significant pullback in client demand [41] - The company expects organic net sales to decline by 2% to 6% in 2025, with adjusted EBITDA anticipated to be between $180 million and $220 million [31] - Management is optimistic about the potential for new client acquisitions and the effectiveness of integrated marketing solutions [47] Other Important Information - The company completed the sale of its European operations for approximately $42 million [28] - The company has increased its dividend by 50% from 2024 and has repurchased 1.2 million shares of Class A common stock year-to-date in 2025 [29] Q&A Session Summary Question: How has the external environment impacted demand outlook? - Management indicated that while there are some adjustments in marketing plans due to tariffs, overall demand has not significantly changed [41][42] Question: What are the implications of the upcoming postal rate increase? - Management noted that clients have built the 10% increase into their plans, and there is potential for promotional opportunities to offset this increase [46] Question: Can you elaborate on the acquisition of Enru's co-mail assets? - The acquisition brings additional capabilities in high-density mailing and equipment upgrades, enhancing the company's offerings [50][51] Question: What is the current status of in-store connect clients? - The company has expanded its in-store connect presence to over 45 stores, with plans for further growth [52] Question: How does the company utilize AI in its marketing strategies? - The company is rolling out Audience Builder 2.0, which leverages AI to enhance data accessibility and improve marketing performance [68][70]