Quad Graphics, Inc

Good morning and welcome to Quartz's second quarter 2025 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 keys followed by 0. A flyer presentation accompanies today's webcast, and participants are invited to follow along, advancing the strides themselves. To access the webcast, follow the instructions posted in the early release. Alternatively, you can access a flyer presentation on the Investor section of Quartz's website under the Events and Presentations link. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star, then 1. To withdraw a question, please press star, then 2. Please note, this event is not recorded. I will now turn the conference call over to Katie Kershbock, Quartz Senior Manager of Invest Relations. Katie, please go ahead.

Thank you, operator, and good morning, everyone. With me today are Joel Quargauchi, Quartz Chairman, President, and Chief Executive Officer, and Tony Stanmick, Quartz Chief Financial Officer. Joel will lead today's call with a business update, and Tony will follow with a summary of Quartz's second quarter and -to-date 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 Harvard provisions, as outlined in our quarterly news release and in today's slide presentation on slide 2. Quartz financial results are prepared in accordance with generally accepted accounting principles. However, this presentation also contains non-debt financial measures, including adjusted EBITDA margin, adjusted diluted earnings per share, free cash flow, net debt, and debt leverage ratio. We have included in the slide presentation, recommendations of these non-debt financial measures to direct financial measures. Finally, a replay of the call will be available on the Investors 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. Second quarter results met our expectations as we continued to differentiate ourselves as a marketing experience company that simplifies the complexities of marketing for brands and marketers. Our distinctive offerings shown on slide 3 include a suite of integrated solutions for creative production and media, backed by intelligence and tech across all digital and physical channels. We continue to invest in our strategic growth areas, including innovative solutions and superior talent to stay ahead of industry trends and execute faster, better, and with more ability. Quartz's overall supply chain continues to have limited direct exposure to terms. Our largest import is the paper we bring in from Canada, as well as we manufacture books we manufacture in our facilities in Mexico. These products are compliant under the USMCA, and our expectation is that they will continue to be exempt from tariffs. During the second quarter, we did not see a significant pullback from clients due to tariffs or inflationary pressures. However, we continue to closely monitor for potential impacts on our clients, given the widespread uncertainty of when and how tariffs will ultimately be implemented. We are paying particular attention to our clients' supply chains for potential disruptions, as well as fluctuations in consumer demand that may affect their mission-critical marketing plans. Rising corporate rates also continue to challenge our clients, but a special 9-month USPS catalog discount, launching in October, offers some relief. This 10% discount aims to touch volume in the last 50 within the catalog vertical. We appreciate the USPS agreeing to this test, which follows a recent study from the Postal Regulatory Commission confirming that rising rates negatively impact mail volume, a long-held view within Quartz and other industries that rely on the USPS services to sustain essential communication and commerce. The PRC also has acknowledged for the first time that the current system is not meeting objectives, reinforcing the need for a sustainable approach. We are excited to welcome David Steiner as the recently appointed Postmaster General. He brings with him a compelling blend of operational expertise, financial discipline, and strategic vision, as well as an employee-friendly management approach at a critical time for the USPS. Quartz looks forward to continuing our way to see a strong collaboration with the USPS leadership to ensure print remains a valuable part of the marketing ecosystem. We continue to offer a two-pronged approach to help our clients mitigate the impact of postal rates, which remain the single largest marketing expense for mailers. The first prong is to provide innovative postal optimization solutions to maximize savings. Quartz offers a whole suite of postal solutions, including innovations like Household Fusion, in which we bundle multiple magazines from various publishers and catalogs from different brands and sections for the same household into a single package to reduce costs, and expanded co-mail capabilities that drive additional postal savings opportunities through economies of scale. The second prong of this strategy focuses on offsetting pricing increases to improved response rates for mailed marketing products. Much of our offering focuses on using our proprietary data stack to enhance audience targeting and responsiveness across channels, including in-home direct mail. I will discuss further in a moment. On slide four, we share how Quad is investing in the rapidly evolving technology of artificial intelligence to create internal cost savings and support revenue generation. We organize our approach to AI application into three categories. Process automation, which replicates and replaces repetitive human tasks. Cognitive insights, which uses machine learning and logarithms to produce predictive insights. And cognitive engagement, where genagrid AI can continuously analyze large pools of data to dynamically create new content and insights. Quad leverages AI across these categories to optimize each aspect of the marketing process. In MX Intelligence, we are focusing on using AI-powered insights from our data stack to predict behaviors and optimize messaging to reach the right audiences. In MX Creative, we are applying AI-driven automation to accelerate the production of high-quality customized content across channels, ensuring relevant connections at scale. In MX Production, we are streamlining workflows like scheduling and machine maintenance to reduce manual intervention and improve speed to market without compromising quality. And in MX Media, we are using AI to optimize campaign performance through continuously refining media execution across digital and physical channels, tracking real-time progress and making intelligence adjustments for maximum impact. Transition to slide five, marketers increasingly rely on audience intelligence to drive stronger campaign outcomes and quantifiable ROI. And our AI-powered, household-based data stack is helping meet that