• Net Sales: $629 million, a decrease of 2% compared to Q1 2024, excluding the divestiture of European operations.
• Adjusted EBITDA: $46 million, down from $51 million in Q1 2024; margin declined from 7.7% to 7.2%.
• Adjusted Diluted Earnings Per Share: $0.20, up from $0.10 in Q1 2024.
• Free Cash Flow: Negative $100 million, compared to negative $70 million in Q1 2024.
• Net Debt Reduction: Decreased by $81 million from March 31, 2024, to March 31, 2025.
• Dividend Increase: 50% increase from 2024.
• Share Repurchases: 1.2 million shares repurchased for $6.7 million year-to-date in 2025.
• Debt Capital Structure: Blended interest rate of 7.1%; total available liquidity of $209 million.
• 2025 Guidance: Organic net sales decline of 2% to 6%; adjusted EBITDA between $180 million and $220 million; free cash flow between $40 million and $60 million.

• Warning! GuruFocus has detected 2 Warning Signs with QUAD.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Quad/Graphics Inc (NYSE:QUAD) is on track to achieve its 2025 guidance, demonstrating strong alignment with its strategic goals.
• The company is expanding its marketing experience (MX) offerings, including innovative solutions like Household Fusion and At-Home Connect, which are gaining traction.
• Quad/Graphics Inc (NYSE:QUAD) has made strategic acquisitions, such as the co-mail assets of Enru, enhancing its postal optimization solutions and increasing co-mail volumes.
• The company is leveraging AI and data analytics through partnerships with Google Cloud to enhance marketing effectiveness and personalization at scale.
• Quad/Graphics Inc (NYSE:QUAD) has successfully reduced its net debt by $81 million from March 2024 to March 2025, reflecting strong financial management.

Negative Points

• Net sales decreased by 2% in the first quarter of 2025 compared to the same period in 2024, primarily due to lower paper, logistics, and agency solutions sales.
• Adjusted EBITDA declined from $51 million in Q1 2024 to $46 million in Q1 2025, with a decrease in adjusted EBITDA margin from 7.7% to 7.2%.
• Free cash flow was negative $100 million in Q1 2025, a decline from negative $70 million in Q1 2024, due to timing of working capital and proactive inventory purchases.
• The company faces potential impacts from tariffs and recessionary pressures, which could affect client advertising and marketing spend.
• Quad/Graphics Inc (NYSE:QUAD) anticipates lower adjusted EBITDA in the second quarter of 2025 compared to the first quarter, reflecting seasonal impacts and ongoing economic uncertainties.

Q & A Highlights

Q: Have you seen any notable change in the demand outlook early in the second quarter, considering the disruptive headlines related to tariffs and the macro environment? A: J. Joel Quadracci, Chairman, President, and CEO: We haven't seen significant adjustments in marketing plans due to tariffs yet. Some clients have adjusted plans based on uncertainties, like product availability from Vietnam, but it's not a trend. We're monitoring the situation closely as clients await more clarity on tariffs and potential economic impacts.

Q: With the upcoming postal rate increase, do you see any changes in the Postal Service's approach to pricing and volume trade-offs? A: J. Joel Quadracci, Chairman, President, and CEO: The Postal Service is testing price elasticity for catalogs, acknowledging the sensitivity to cost changes. A new Postmaster General is expected soon, which might influence future pricing strategies. The upcoming rate increase is offset by a promotion for catalogs starting in October, which could create opportunities if economic conditions remain stable.

Q: What was the rationale behind acquiring Enru's co-mailing assets, given Quad's existing co-mailing solutions? A: J. Joel Quadracci, Chairman, President, and CEO: Enru brings a high-density co-mailing capability that complements our existing services, enhancing efficiency and discounts for clients. The acquisition also includes equipment upgrades, benefiting our platform and clients.

Q: Can you provide an update on the In-Store Connect initiative and its expansion? A: J. Joel Quadracci, Chairman, President, and CEO: We've expanded from 15 to over 45 stores, with 30 more coming from new clients. One new client is a large West Coast grocer focused on the Hispanic market, which is valuable to CPGs. Our goal is to increase store numbers and geographic reach, aiming for significant audience exposure.

Q: How is Quad leveraging AI, particularly in collaboration with Google, to enhance marketing performance? A: Anthony Staniak, CFO: We're rolling out Audience Builder 2.0, a tool that taps into our data stack, including transactional and passion score data. This tool, combined with AI language models, enhances audience targeting and marketing effectiveness. Early case studies show strong performance improvements in responsiveness.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.