Quad narrows 2025 sales and EBITDA guidance while advancing AI-enabled marketing and retail media growth

Earnings Call Insights: Quad/Graphics, Inc. (QUAD) Q3 2025

MANAGEMENT VIEW

* CEO J. Joel Quadracci stated that "our results met our expectations," highlighting continued investments in AI-powered tools and systems, data and audience intelligence services, and the In-Store Connect retail media network. These steps are designed to strengthen Quad's position as a marketing experience company and support the company's revenue diversification strategy, aiming to return to net sales growth in 2028. Quadracci announced, "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."
* Quadracci emphasized Quad's supply chain resilience, noting, "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, he acknowledged rising costs in print-related materials and communicated a January 1 price increase to clients to offset those costs.
* The CEO also highlighted industry relief as "the USPS announced that it would not issue a January price increase for market dominant mail," affecting key product categories like magazines, catalogs, and direct mail.
* The In-Store Connect retail media network showed strong campaign performance, with cited sales lifts for major CPG brands: "Nestle USA deployed a campaign for DiGiorno frozen pizza and experienced a 23 percentage point sales lift in test stores versus control stores. PepsiCo... experienced a sales lift of 25 percentage points."
* CFO Anthony Staniak reported, "Net sales were $588 million in the third quarter of 2025, a decrease of 7% compared to the third quarter of 2024 when excluding the 6% impact of the February 28, 2025, divestiture of our European operations." Staniak added, "Adjusted EBITDA was $53 million in the third quarter of 2025 as compared to $59 million in the third quarter of 2024, and adjusted EBITDA margin improved from 8.7% to 8.9%."
* Staniak also highlighted, "Adjusted diluted earnings per share was $0.31 in the third quarter of 2025, increased 19% from $0.26 in the third quarter of 2024."

OUTLOOK

* The company narrowed its 2025 guidance: "For net sales, we are narrowing the range and reaffirming the midpoint of our guidance. We now expect net sales to decline 3% to 5% or 4% at the midpoint compared to previous guidance of a 2% to 6% decline when excluding 2025 net sales of $23 million and 2024 net sales of $153 million from our divested European operations."
* Full year 2025 adjusted EBITDA is now expected to be between $190 million and $200 million compared to previous guidance of $180 million to $220 million.
* Free cash flow is expected to be at the higher end of the original guidance range at $50 million to $60 million, compared to previous guidance of $40 million to $60 million.
* Capital expenditures are now expected to be between $50 million and $55 million, down from previous guidance of $65 million to $75 million.
* Staniak noted, "net debt leverage ratio is expected to slightly increase from approximately 1.5x to approximately 1.6x by the end of 2025."

FINANCIAL RESULTS

* Net sales for the quarter were $588 million. Adjusted EBITDA for the quarter was $53 million, and adjusted EBITDA margin improved to 8.9%.
* Adjusted diluted earnings per share rose to $0.31. Free cash flow improved by $5 million to negative $87 million for the first nine months of 2025.
* The company returned $19 million to shareholders year-to-date, comprising $11 million in dividends and $8 million in share repurchases.
* Quad sold two buildings in Effingham, Illinois for $6.5 million and expects additional proceeds from other facility sales.
* At quarter-end, Quad reported total available liquidity of $166 million.

Q&A

* Kevin Steinke, Barrington Research: Asked about trends in targeted print categories. Quadracci responded, "direct mail is up year-to-date by like over 6%; packaging over 9% year-to-date; in-store, plus 11% year-to-date."
* Steinke followed up on the USPS's decision not to raise rates for key categories. Quadracci said, "that increase would be somewhere in the, I don't know, 5%, 6% range. And they've foregone that, which is great news."
* Steinke requested detail on the narrowed guidance. Quadracci and Staniak indicated variability is mainly in direct mail volumes, with Staniak adding, "we reaffirmed the midpoint at 4%. Year-to-date without Poland, we're basically at 4%."
* Steinke also inquired about In-Store Connect deployment. Quadracci described a shift from client investigation to adoption, citing patent-pending digital signage and strong pipeline momentum.
* Barton Crockett, Rosenblatt Securities: Sought clarity on the impact of the USPS rate change on client spending. Staniak noted it's "a little early for us to tell what the impact will be for 2026."
* Crockett asked about the holiday season and tariffs. Quadracci said, "it doesn't feel like the grinch is stealing Christmas."
* Crockett requested guidance on property sale values. Staniak confirmed the historical rule of thumb for property sales still applies for remaining properties.

SENTIMENT ANALYSIS

* Analysts' tone was neutral, focusing on guidance, category growth, and effects of postal rates and tariffs. Inquiries sought clarification and detail rather than expressing skepticism or concern.
* Management maintained a confident and constructive approach during prepared remarks and Q&A, using phrases such as "we are optimistic" and "we believe this represents strong value."
* Compared to the previous quarter, management's tone was slightly more focused on operational execution but equally confident. Analysts' sentiment remained steady with a neutral, information-seeking tone.

QUARTER-OVER-QUARTER COMPARISON

* The company narrowed its 2025 guidance for both net sales and adjusted EBITDA, as opposed to reaffirming the broad range the prior quarter.
* Management continues to focus on targeted print, AI-driven solutions, and retail media, but this quarter saw new AI integrations and specific CPG campaign results highlighted.
* Previous quarter analyst questions centered on postal trends, AI initiatives, and growth evidence; this quarter, they focused on guidance range, postal impacts, and In-Store Connect momentum.
* The tone of both management and analysts remained consistent, with a slightly more positive outlook on the benefits of USPS pricing decisions.

RISKS AND CONCERNS

* Management flagged ongoing macroeconomic pressures: "inflation, employment rates, tariffs and high postage costs, which may negatively impact our clients' mission-critical marketing plans."
* Tariff-related cost increases are being passed to clients through price adjustments.
* Postage rates remain a critical expense and risk, though recent USPS decisions provided some relief.
* The company is monitoring demand variability in direct mail and potential impacts of asset sale proceeds on leverage.

FINAL TAKEAWAY

Quad management highlighted targeted investments in AI and retail media as core drivers for future growth, while narrowing 2025 guidance ranges for net sales, adjusted EBITDA, and capital expenditures. The company underscored continued resilience in its operational model, robust liquidity, and a focus on shareholder returns, with optimism around the evolving postal environment and accelerating adoption of its In-Store Connect solutions among both retailers and consumer product brands.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/quad/earnings/transcripts]

MORE ON QUAD/GRAPHICS

* Quad/Graphics, Inc. (QUAD) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4834958-quad-graphics-inc-quad-q3-2025-earnings-call-transcript]
* Quad/Graphics, Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4834782-quad-graphics-inc-2025-q3-results-earnings-call-presentation]
* Quad/Graphics: Turning Print's Decline Into Data-Driven Growth [https://seekingalpha.com/article/4813451-quadgraphics-turning-prints-decline-into-data-driven-growth]
* Quad/Graphics Non-GAAP EPS of $0.31 beats by $0.04, revenue of $588M misses by $17.45M [https://seekingalpha.com/news/4509789-quad-graphics-non-gaap-eps-of-0_31-beats-by-0_04-revenue-of-588m-misses-by-17_45m]
* Quad/Graphics Q3 2025 Earnings Preview [https://seekingalpha.com/news/4508690-quad-graphics-q3-2025-earnings-preview]