Quad Graphics, Inc

Good morning and welcome to Quad's second quarter 2026 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, and then 2. Please note this event is being recorded. I will now like to turn the conference over to Julie Fraundorf, Quad's Executive Director of Corporate Development and Investor Relations. Julie, please go ahead.

Thank you, Operator, and good morning, everyone. With me today are Joel Quadracci, Quad's Chairman and Chief Executive Officer, and Tony Staniak, Quad's Chief Financial Officer and Treasurer. Joel will lead today's call with a business update, and Tony will follow with a summary of Quad's second 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've 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, Julie, and good morning, everyone. I'll begin with key highlights as shown on slide three. Quad's second quarter results were in line with our expectations and we remain on track to achieve our full year 2026 guidance. During the quarter, net sales increased compared to the second quarter of 2025, representing progress toward our 2028 projected full year revenue growth. We also generated strong free cash flow in the second quarter. Our strong balance sheet continues to provide financial flexibility, enabling us to return $13 million to shareholders in the first half of 2026, including 10 million in regular cash dividends and 3 million in share repurchases. We continue to make strategic investments in growth areas across agency solutions and targeted print categories that support our revenue diversification strategy. One example is the expansion of our packaging business into Salt Lake City, which we have highlighted on slide four. Our packaging business continues to scale, delivering year-over-year growth in 2025 and expected growth for full year 2026. To build on that momentum, we're rounding out our national packaging footprint with a new facility in the western U.S. Joining existing operations in Franklin, Wisconsin and Spartanburg, South Carolina, the Salt Lake City facility enhances our ability to serve clients across the country and pursue additional packaging opportunities with both existing and new clients. For our clients, the expansion will help reduce lead times, improve logistics efficiency, and support packaging programs across multiple regions while maintaining the quality, consistency, and partnership our clients expect from us. The 100,000 square foot facility is expected to be operational in the fourth quarter of this year. Its location provides direct access to major transportation routes and key markets across the western United States. Additionally, Salt Lake City is an established hub for high-growth consumer packaged goods companies and is dear co-manufacturers that work with producers like Quad to print, fill, and package goods on behalf of CPG brands. As we grow our national presence, we continue to invest in our global packaging operations, which serve clients through our facility in Santo Domingo, Dominican Republic, alongside strategic packaging partnerships in Central America and across Asia. Transitioning to slide five, Quad's MX offering features a suite of integrated solutions across creative production and media that are supported by cutting edge intelligence and technology. Our unified marketing platform helps clients simplify complex workflows and improve their marketing effectiveness across physical and digital channels. As more clients adopt Quad's creative media and marketing solutions, we continue to deepen existing account relationships with longtime partners. A recent example is Wakefirm Food Corp, which is highlighted on slide six. We have significantly expanded our work with Wakefirm, the nation's largest retailer-owned grocery cooperative. As Wakefirm pursues a more banner-driven marketing strategy, it selected Quad for our ability to deliver integrated solutions at scale. Building on our longstanding work supporting Wakefirm's print retail circulars, we now provide paid media strategy, content creation, and in-store retail media services. These solutions are designed to strengthen each of Wake Fern's eight supermarket banners while preserving the local identity of their 400 member owned stores. A key component of this expansion is Rise, which now serves as Wake Fern's media agency of record. Powered by our proprietary data capabilities, Rise leads the client's media strategy planning and buying, and is enabling more precise shopper targeting, localized media execution, and improved media effectiveness. Wakefirm will also deploy in-store connect by quad in 30 ShopRite locations later this year. ShopRite is Wakefirm's flagship banner with 298 locations across the Northeast, making it the largest retailer to date to adopt our in-store retail media solution. This deployment is significant as it expands opportunities for consumer packaged goods to scale their campaigns right at the point of purchase. Examples like Wakefur demonstrate how we can expand existing print relationships into broader, higher value marketing partnerships. These engagements typically increase share of wallet, diversify revenue streams, and create opportunities for more recurring client relationships. We continue to expand our in-store retail media network with regional grocers as shown on slide 7. I am pleased to share that we will be increasing our in-store connect footprint with Vallarta, a fast-growing grocery chain in California known for providing high-quality, authentic Latin American ingredients to its customers. Following successful CPG adoption across the client's initial test stores, Vallarta has decided to more than double its in-store count. Once we complete the rollout later this year, the majority of Viarda stores will leverage our in-store media network. Additionally, we just signed a leading grocer on the West Coast that plans to deploy in-store connect across an initial 25 stores. This partnership will further extend our reach in California, one of the nation's largest grocery markets, alongside our existing partnerships with Viarda and the Save Mart companies. Combined with the 30 new Wake Fern stores, this represents meaningful progress in scaling our in-store retail media offering. By adding new retailers and stores to the network, we increase the offering's value to consumer brands seeking broader reach. Growing advertising interest in turn attracts new retail partners, creating a powerful flywheel that supports continued expansion of and revenue generated from our retail media network. Moving to slide eight. We spotlight our work for Gelmar and its CLR brands as an example of how our integrated agency model is helping heritage brands drive measurable business results by connecting with a new generation of consumers. Since 2023, Rise and Betty have served as Gelmar's media and creative agencies of record, working together to reposition the appeal of CLL brands. Rather than focusing solely on product performance, our strategy is centered on building stronger emotional connections through culturally relevant creative and more effective media activation. Most recently, the agencies collaborated on So Clean, So Hot, a campaign that combined creative storytelling, influencer partnerships, and cross-channel media activation to drive brand awareness, engagement, and sales. Betty developed a creative platform and messaging while Rise activated the campaign across influencer marketing, addressable TV, paid social and programmatic media. Following the campaign's launch, CLR brands experienced notable sales growth along with significant gains in consumer engagement, including a 106% increase in Instagram reach, strong TikTok audience growth, a video completion rate succeeding 50%. Through continuous optimization of audiences, Channel Mix, and Creative Assets, we improved the efficiency of the client's media throughout the campaign, significantly decreasing its cost per thousand impressions across quarters. These outcomes earned Betty and Rise an Effie Award, one of the advertising industry's most respected awards for marketing effectiveness. This success demonstrates the value of Quad's integrated approach. By combining creative media, data, and analytics connected with execution, were helping clients deliver strong business outcomes while expanding opportunities for long-term agency growth. Turning to slide nine, Quad also received notable industry recognitions during the second quarter, providing independent acknowledgement of our integrated marketing model. Quad was named at agencies agency report for the seventh consecutive year, placing us among the world's largest agency companies. We were also included in MMM's Agency 100 for the third straight year, reflecting our expertise and continued momentum in healthcare marketing. Additionally, RISE was recognized as one of 35 notable providers in Forrester's report, the Media Management Services Landscape Q2 2026. We believe this kind of independent recognition is an acknowledgement of the agency's full-service omnichannel offering including strengths across audience development and insights, media activation, and measurement. This increases awareness of our capabilities among prospective clients at a time when many brands are evaluating agency partners. As a result, it helps strengthen visibility in the marketplace and supports continued growth of our media and agency pipeline. While we remain focused on accelerating our transformation as a marketing experience company, we continue to navigate a dynamic macro Thank you very much. and elevated logistics costs in some markets. As a result, we continue to experience cost pressures in certain areas of our business, most notably Inc. We're actively managing these challenges by diversifying our supplier base, optimizing inventory planning and implementing targeted price actions where appropriate. In addition to supply chain volatility, postage remains a significant macroeconomic challenge for many of our clients as it represents the single largest marketing expense for mailers. On July 12, the United States Postal Service implemented its most recent increase, which we estimate will result in an average postage increase of up to 10% for many of our mailing clients. While the USPS continues to rely on price increases as one of its primary levers to address its financial challenges, Postmaster General David Steiner is pursuing solutions to address what he calls a broken USPS business model. Among other changes, the Postmaster General is advocating for the return of the public service reimbursement that once compensated USPS for its universal service obligations. Quad supports the PMG's proposal in its entirety, as we believe it will provide the USPS with the necessary financial flexibility to pursue growth through avenues beyond price increases. As always, Quad's Postal Affairs team remains actively engaged with policymakers in Washington, as well as the Postal Service, working on behalf of our clients and the broader mailing ecosystem. In addition to our postal affairs work, we continue to help mitigate ongoing rate increases by deploying the same two-pronged approach we've done for decades, which focuses on maximizing postal cost savings while improving response rates. Our layered postal optimization model combines various co-mail sortation and bundling solutions to generate substantial client savings. Meanwhile, audience identification services and innovative mail solutions like At Home Connect, our self-service direct mail automation platform, are designed to improve the efficiency and effectiveness of the mail client's spend. By generating stronger mail response rates, clients are often able to more than offset increased mailing costs. On slide 11, we show how Quad is embedding AI across our agency operations, manufacturing processes and workflows to create lasting cost efficiencies while improving client outcomes. We view AI as an integral part of each business use infrastructure that we deploy to improve efficiency, reduce manual processes, accelerate speed to market and drive better business outcomes for both Quad and our clients. At Betty, the agency supports clients by using a blend of AI technology and traditional studio capabilities, creating scalable high quality assets at fast speeds and low costs. For example, the team can use AI to create realistic models, apply actual product images to those models and generate set imagery. At Rise, the agency has embedded AI into K'nex, and many more. Connect analyzes campaign performance in real time across any online and offline physical media investment and provides a suite of custom AI agents to help support media analysis and optimization. That reduces manual work while allowing our media experts to spend more time strategically advising clients. In manufacturing, we're applying AI and automation to optimize Production schedules anticipate maintenance needs before equipment failures occur and reduce manual intervention, helping improve throughput and reduce downtime. Before I turn the call over to Toni, I would like to thank our employees for the continued dedication and hard work. Earlier this month, we celebrated Quad's 55th anniversary. Each employee has played a role in building the business we are today, and their continued commitment to urgent innovation and obsessive collaboration are the key to achieving Quad's long-term goals. With that, I'll turn the call over to Till.