Quad Graphics, Inc

Good morning, and welcome to Quad's third 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 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, please press star, then 1. To withdraw your question, please press star, then 2. Please note this event is being recorded. I will now turn the conference over to Katie Krebsbach, Quad Senior Manager of Investor Relations. Katie, please go ahead.

Thank you, Operator, and good morning, everyone. With me today are Joel Quadracci, 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 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 net 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 results met our expectations, and on slide three, we outlined key highlights from our third quarter and year-to-date performance. We continue making targeted investments in AI powered tools and systems, data and audience intelligence services, and our in-store connect retail media network. These investments combined with our creative marketing services and premier print platform fortified Quad's differentiated strengths as a marketing experience company that simplifies the complexities of marketing for brands and marketers. They also advance our revenue diversification strategy, which aims to return Quad to net sales growth in 2028. Quad's continued strong balance sheet and our disciplined approach to managing the business have enabled us to return $19 million of capital to shareholders year to date. Additionally, we are updating our full year 2025 guidance by narrowing our ranges for sales, adjusted EBITDA, and cash flow, which Tony will walk through later. Quad's MX offering, shown on slide four, includes a suite of integrated solutions for creative, production, and media, backed by intelligence and tech across all digital and physical channels. As we invest in our growing solution set, we also continue to monitor macroeconomic pressures, such as inflation, employment rates, tariffs, and high postage costs, which may negatively impact our clients' mission-critical marketing plans. Quad's overall supply chain continues to have limited direct exposure to tariffs. Our largest imports, the paper we bring in from Canada, and the books we manufacture for U.S. clients in our Mexico facilities are compliant under the USMCA and remain exempt from tariffs. However, tariffs have increased the cost of certain print-related materials, such as ink pigments and plates. As a result, we have notified our clients that Quad will pass along these costs through a January 1st price increase consistent with the rest of the industry. During the third quarter, we did not see a significant pullback from clients due to tariffs. However, we are closely monitoring client actions given ongoing uncertainty around the macro environment. With postage being Mailer's single largest marketing expense, high postage rates continue to significantly impact our industry. However, marketers received positive news in September when the USPS announced that it would not issue a January price increase for market dominant mail which includes magazines, catalogs, and direct mail. This announcement comes at an important time for marketers as they formalize their 2026 media plans. During the quarter, Quad leaders and I met with the USPS to have an open discussion about mailers' concerns. We presented data on a variety of topics, including how twice annual rate increases and inconsistent delivery service negatively affect our industry. We also discussed work sharing, whereby private sector mailers like Quad perform tasks that the USPS would otherwise handle in exchange for discounted rates. The USPS has recently affirmed that this type of public-private partnership is critical to the postal landscape and as it reduces operational costs for the government and lowers posted costs for mailers. I appreciate the USPS's renewed engagement with the mailing industry under the new Postmaster General and look forward to continued collaboration to keep print a vital part of the marketing mix. We continue to deploy a strategic two-pronged approach to help clients mitigate the impacts of high postal rates. Our approach focuses on maximizing savings while increasing marketing effectiveness. To maximize savings, we provide clients with innovative postal optimization solutions. Earlier this year, we expanded our co-mailing capabilities by acquiring the co-mail assets of OnRoute to support high-density pre-sort levels, which generates additional savings through economies of scale. We also offer innovative bundling services like Household Fusion, which combines different mail pieces destined for a single household into one package for a discounted rate. To drive marketing effectiveness, we create smarter audience segments and deploy personalized content. This ultimately yields a higher response rate and greater return on investment, which offsets the cost of postage. Transitioning to slide five, audience data is the lifeblood of today's marketing ecosystem. Quad is uniquely positioned to provide audience intelligence through our proprietary data stack, which is anchored in physical household-centric data. Our stack represents 92% of U.S. households and includes more than 20,000 addressable demographic, transactional, attitudinal, and behavioral characteristics, as well as hundreds of proprietary interests or what we call passions. Addressable data enables precisely targeted marketing efforts that drive measurable results. Using our data stack, we create a single knowable audience that can be built and bought across multiple media partners, supporting physical and digital channels. This unified buying experience helps clients understand who they are targeting and where. breaking down the walled gardens put in place by other media platforms, and thereby removing unintentional audience duplication. The biggest hurdle to scaling the application of our data stack has been the time and specialized knowledge required to interpret the relevant data for each particular use case. During last quarter's earnings call, I shared the launch of Quad's Audience Builder, a proprietary platform that enables employees to easily access our data stack and create complex high propensity audiences. I'm pleased to share that Quad has successfully integrated a generative AI chat feature into the platform, which provides an even faster and more effective way for our media strategists, analysts, and planners to uncover consumer insights and design high performing audiences. This new feature uses Cortex AI functionality from Snowflake, a leading cloud data platform, to interpret prompts, analyze stored audience attributes, and enrich results with external demographic data. Aaron Foxworthy, Global Head of Marketing and Advertising at Snowflake said, our collaboration with Quad is a testament to the power of AI to transform how marketers interact with their data. We're making it possible for brands to unlock sophisticated insights and act at them with speed and precision. Turning to slide six, while the consumer journey today is more complicated and convoluted than ever, In-store shopping remains an important and engaging channel for our consumers. Recent research presented by Quad and conducted by the Harris Poll, one of the longest running surveys in the U.S., finds that 76% of Americans believe physical retail experiences help them connect more deeply with people and brands. And 86% of Gen Z and millennials report that touching and feeling products are essential to their purchase decisions. In the coming days, Quad will release results from the Harris-Bowles follow-up survey that shows a significant consumer preference for in-person shopping during the holiday due to its ability to spur brand discovery and human connection. These findings underscore how tactile brand experiences remain essential to driving sales and strengthening brand loyalty, especially as new technologies like AI disrupt traditional marketing methods. On slide seven, we highlight how Favorite Child, The brand strategy and design practice within Quad's creative agency is helping retailers like Aldi turn their private label packaging into powerful brand amplifier. With more than 2,500 US locations, Aldi is widely recognized as the nation's fastest growing grocery chain. Although 90% of its 3,000 plus products are private label, many shoppers don't realize these items are exclusive to Aldi. The retailer hired Favor Child to address this lack of brand visibility, leading Aldi's largest packaging refresh to date. To start, Favor Child created Aldi's first ever namesake brand, which puts its name on every product for recognizability and will replace many of the grocer's 90 previous brand names. The new Aldi packaging brand relies on a strategic design system comprised of flexible layouts, cohesive colors, and bold fonts to balance brand consistency with eye-catching variety that pops on shelf. In addition, Favorite Child is working alongside other creative agencies to refresh some of the grocery's most popular private label brands like Clancy's, Simply Nature, and Southern Grove. The rejuvenated packaging will include the tag and all the original to strengthen the product's connections to the retailer's overall brand. Certain Aldi branded products are already on shelves and rollout will continue to scale throughout 2026. Moving to slide eight, we spotlight how InStore Connect, our retail media network for brick and mortar stores, supports retailers and CPG brands by leveraging digital technology within the physical store environment. During the quarter, we introduced advancement to our solution, including three new digital signage form factors, all of which are designed to grab shopper attention and increased brand visibility. We continue to receive positive results from CPG campaigns, demonstrating the effectiveness of our in-store retail media network. Earlier this year, we conducted a test and control study with multiple clients, including Procter & Gamble, PepsiCo, and Nestle USA. The study tracked year-over-year brand sales lift across a four-week period with the Save Mart companies. The results showed significantly higher sales lift in locations deploying our solution versus those without it. Nestle USA deployed a campaign for DiGiorno frozen pizza and experienced a 23 percentage point sales lift in test stores versus control stores. PepsiCo used our retail media network to drive awareness of its new six pack Rockstar energy drink and experienced a sales list of 25 percentage points. In high velocity retail categories, achieving significant sales lift can be difficult, particularly for mature brands like Procter & Gamble. Using In-Store Connect to promote laundry products such as Tide, Downy, and Bounce, P&G realized a sales lift of 8 percentage points. With these strong results and growing pipeline of CPGs, we are optimistic about In-Store Connect's future growth. When clients integrate their marketing efforts, they improve business outcomes, accelerate their speed to market, and realize cost efficiencies. While traditional holding companies focus their efforts on individual agency capabilities, cobbling together businesses that operate in silos, Quad has structured our services to work harmoniously together, producing results greater than the sum of their parts. Throughout 2025, Quad has seen particularly strong momentum in our integrated approach to direct mail. On slide nine, we share an example of this through our work with one of the nation's largest auto insurers. Quad partnered with the client to relaunch its direct mail channel through a scalable data-backed strategy. Our end-to-end service model has helped the client modernize its direct marketing efforts with significantly condensing its number of partners compared to past programs. Quad's support includes strategic guidance on the client's quarterly and annual DM plans, audience targeting for customer acquisition campaigns, DM creative design backed by Quad's proprietary accelerated marketing insights, pre-market testing to connect the best content, creative, and format, print execution through our state-of-the-art manufacturing platform, postal optimization services and guidance to maximize USPS discounts, and comprehensive analytics to fuel growth through test and learn tactics. The iterative nature of this approach conducted all under one roof has enabled the client to evolve its strategy over time based on consumer response rates. With this strategy, we have helped the client successfully relaunch its direct mail channel, mailing more than 30 million pieces through the first three quarters of 2025. Before I turn the call over to Tony, I would like to recognize our employees and thank them for their continued hard work during our traditionally busiest season of the year. Whether it's on the manufacturing floor, in agency services, or anywhere in between, your hard work and commitment to innovation is helping solve client problems, drive diversified business, and advance our long-term strategic goals. With that, I'll turn the call over to Joel.