Quad Graphics, Inc

Good morning and welcome to QUAD's third quarter 2024 conference call. During today's call, all participants will be in listen-only mode. Should you need assistance at any time, please signal a conference specialist by pressing the star key followed by zero. A slide presentation accompanies today's webcast and participants are invited to follow along advancing the slides themselves. To access the webcast, follow the instructions posted in the earnings release. Alternatively, you can access the slide presentation on the Investors section of Quad's website under the Events and Presentations link. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1. To withdraw your question, please press star, then two. Please note this event is being recorded. I will now turn the conference over to Katie Krebsbach, Quad's Investor Relations Manager. Katie, please go ahead.

Thank you, Operator, and good morning, everyone. With me today are Joel Quadracchi, Quad's Chairman, President, and Chief Executive Officer, and Tony Staniak, Quad's Chief Financial Officer. Joel will lead today's call with a business update and Tony will follow with a summary of Quad's third quarter and year-to-date 2024 financial results, followed by Q&A. I would like to remind everyone that this call is being webcast and forward-looking statements are subject to safe harbor provisions as outlined in our quarterly news release and in today's slide presentation on slide two. Quad's financial results are prepared in accordance with generally accepted accounting principles However, this presentation also contains non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, free cash flow, net debt, and debt leverage ratio. We have included in the slide presentation reconciliations of these non-GAAP financial measures to GAAP financial measures. Finally, a replay of the call will be available on the investor section of Quad.com shortly after our call concludes today. I will now hand over the call to Joel.

Thank you, Katie, and good morning, everyone. Our third quarter results were in line with our expectations. Third quarter net sales declined versus prior year due to lower paper and agency solution sales. However, we achieved improvements in both adjusted EBITDA and adjusted EBITDA margin, with adjusted EBITDA margin increasing by 54 basis points to 8.7%. We also continue to be a strong cash generator, using these funds to pay down debt, strengthen our balance sheet, and return capital to shareholders through a quarterly dividend. Despite full-year 2024 net sales trending toward the higher end of decline in our guidance range, we are maintaining the midpoints of our guidance for adjusted EBITDA and free cash flow. We are also reducing anticipated year-end net debt leverage from approximately 1.8 times to 1.5 times pending the sale of the majority of our European operations by year-end. As announced last week, we entered into a definitive agreement with Capmont, a Germany-based private capital investment management firm, to sell our European print operations for an enterprise value of approximately $45 million, operations that represent just 5% of our total net sales. This proposed sale supports Quad's ongoing strategic focus to optimize our business portfolio for growth as a marketing experience or MX company. We will continue to maintain state-of-the-art print operations in locations that support our MX offering, including the Americas, with North America comprising our largest base of operations. The transaction is expected to close by the end of the year pending customary regulatory clearances and other closing conditions. As a company founded on creating a better way, we continue to use every tool at our disposal to improve the marketer's experience. Our solution suite shown on slide three helps brands enhance their marketing experience by removing friction wherever it appears across the marketing journey, from creative production and media to everywhere in between. Supported by state-of-the-art technology and data-driven intelligence, our solutions are scalable and flexible, operating together to provide clients with integrated service excellence. Our focus as an MX company includes accelerating our position in market value, leveraging ingenuity and innovation, relentlessly solving marketers' biggest challenges across industries, and building on our strong culture as an MX company. On slide four, we are excited to share the momentum behind In-Store Connect by Quad, our in-store retail media network solution that elevates the shopping experience by bringing the best elements of digital commerce into physical store environments. During the quarter, the SaveMark companies, the largest private regional grocer on the West Coast, activated our solution in 15 stores and an initial results are promising with participating brands, all registering a positive sales lift. Tamara Pattison, chief digital officer at the Save Mart companies echoed our enthusiasm for our solution saying, what was most compelling to us was the capabilities around targeting, around activation and around analytics that came with the solution. We are really excited by what we're seeing, not only from an in-store activation perspective, but from the excitement with the supplier community. As we rolled out the initial testing phase in 15 stores, we haven't been disappointed. We are excited for the future. In addition, the Save Mart companies, two other large regional grocery chains, including Oklahoma-based Homeland Stores, are in the process of testing our in-store connection solution and through which we expect to have activations at approximately 30 more stores by year end. Momentum is building not only with supermarket chains, but department stores, home improvement stores, and convenience stores too. Moving on to slide five, I'm proud to share how we're continuing to enhance our media intelligence solutions through the power of a proprietary also based data stack. Comprised of more than 3 billion data points that are revalidated weekly, our data stack represents more than 20,000 attributes from approximately 97% of the adult US population. We are leveraging this robust data set to power our audience targeting solutions and helps clients optimize customer acquisition efforts and creating engaging content for their existing customers. In September, we announced our next step in monetizing our data stack through an exciting partnership with Google Cloud. By leveraging Google Cloud's artificial intelligence optimization capabilities and large language models, we are creating new AI-driven solutions that tap into our data and seamlessly connect it with clients' creative and media. In addition to streamlining access to Quad's audience targeting capabilities, these combined solutions will provide highly personalized content at scale across multiple marketing channels via image generation, content creation, layout design, translation, and more. We plan to roll out our new AA-driven offerings in the coming months. Next, I'd like to spotlight two client examples that showcase the measurable benefits of our MX Solutions suite. Advancing to slide six, Nicholas Children's Hospital, a nationally ranked children's healthcare system in Miami, partnered with our RISE Media Agency to revise its marketing strategy. The focus of our work was to maintain reach while adhering to new guidelines for healthcare marketers related to heightened privacy regulations. With our help, the hospital implemented a refreshed campaign strategy that ensured compliance while increasing engagement. Our work included a complete creative refresh to its various ad formats, including increased usage of video content. A refined paid media strategy that enhanced ad relevancy and increased web traffic. And an updated SEO strategy that improved the hospital's metadata and identified and addressed content gaps. These integrated efforts led to a 93% higher click-through rate and a 375% higher engagement in paid social media ads year over year and 68% growth in website traffic. The client is extremely pleased with the results from our ongoing partnership, and we look forward to supporting continued growth for this client as its media agency of record. On slide seven, we show our work for Consolidated Communications, a billion-dollar broadband and business communications provider serving customers across more than 20 states. Through a multi-channel direct marketing campaign, we helped enhance customer acquisition efforts in new regions covered by Fidium Fiber, the client's rapidly expanding consumer broadband service. Specifically, we applied our proprietary household-based data stack and advanced analytics to identify and reach high potential audience targets, designed and optimized creative content for both online and offline channels, and designed a printed direct mail to drive online conversions with Flowcode technology. The campaign combined the power of digital and print by supplementing mail pieces with targeted social media and website ads, as well as remarketing web-based consumer leads with personalized mailings. The results of the campaign included high engagement and email open rates, reinforcing the value of well-conceived and connected multi-channel marketing campaigns. Before I turn the call over to Tony, I would like to take a moment to thank our employees during our seasonally busiest time of the year for the continued hard work and commitment to providing the highest levels of service for each of our clients I'm proud of our team and our future as an MX company. And with that, I will now turn the call over to Tony for the financial review.