Summary of QUAD Q1 2026 Earnings Call

1Key Financial Results and Metrics:

Net Sales: $581 million, down 4.3% year-over-year (YoY) when excluding the divestiture of European operations.

Adjusted EBITDA: $45 million, slightly down from $46 million YoY; adjusted EBITDA margin increased from 7.2% to 7.7%.

Adjusted Diluted Earnings Per Share: $0.25, up 25% from $0.20 YoY.

Free Cash Flow: Negative $107 million, compared to negative $100 million YoY, attributed to higher inventories and increased capital expenditures.

Share Repurchases: $1 million in Q1, with a total of 7.6 million shares repurchased since 2022.

Dividend: Increased by 33% to $0.10 per share.

2Strategic Updates and Business Highlights:

Continued investment in marketing solutions, particularly in audience strategy services leveraging Quad's proprietary data stack.

Strong momentum in integrated solutions across creative, production, and media, particularly in targeted print offerings like direct mail and packaging.

Implementation of a temporary surcharge on ink due to rising costs from oil and gas price increases.

Development of innovative solutions such as the At-Home Direct platform, enhancing direct mail efficiency and effectiveness.

3Forward Guidance and Outlook:

2026 Guidance: Net sales expected to decline by 1% to 5% compared to 2025, with adjusted EBITDA projected between $175 million and $215 million.

Anticipation of a seasonal pattern with the second quarter expected to be the lowest for net sales, followed by increases in the third and fourth quarters.

Free cash flow projected to be between $40 million and $60 million, with capital expenditures expected to be $55 million to $65 million.

Long-term outlook remains positive, targeting an inflection point of net sales growth by 2028.

4Bad News, Challenges, or Points of Concern:

Declining Metrics: Notable declines in agency solutions sales, down 18% YoY, attributed to a shift from project-based work to agency of record engagements.

Supply Chain Pressures: Ongoing cost pressures from inflation, geopolitical tensions, and postal rate increases impacting client marketing budgets.

Delayed Payment: A $6 million note receivable from the divestiture of European operations remains unpaid, increasing net debt unexpectedly.

Macro Economic Challenges: Persistent inflation and geopolitical tensions could dampen demand and affect marketing spend decisions.

5Notable Q&A Insights:

Impact of Macro Pressures: Joel Quadracci noted that while there are pressures from rising costs, clients are not significantly adjusting their marketing plans for the remainder of the year.

Agency Solutions Outlook: There is optimism about growth in agency solutions, despite recent declines, as the transition to a full-service agency model continues.

Postal Service Dynamics: There is cautious optimism regarding potential changes in postal rate hikes under new leadership, with ongoing advocacy for a more sustainable postal system.

Client Engagement: Clients are increasingly adopting optimization programs to mitigate rising postage costs, indicating a proactive response to macroeconomic challenges. Overall, while QUAD faces several challenges, particularly in agency solutions and macroeconomic pressures, the company remains committed to strategic growth and innovation, with a positive long-term outlook.