Quad Graphics Q2 Earnings Call Highlights

Quad Graphics NYSE: QUAD reported second-quarter results that were in line with its expectations, with net sales rising 1% year over year to $578 million and adjusted EBITDA declining modestly to $42 million from $43 million a year earlier. Chairman and Chief Executive Officer Joel Quadracci said the company remains on track to meet its full-year 2026 guidance and is continuing to invest in targeted print categories, packaging, agency services and in-store retail media as part of its transformation into a marketing experience company. During the quarter, net sales increased compared to the second quarter of 2025, representing progress toward our 2028 projected full-year revenue growth. He also cited strong second-quarter free cash flow and a balance sheet that enabled the company to return $13 million to shareholders during the first half, including $10 million in dividends and $3 million in share repurchases. Chief Financial Officer and Treasurer Tony Staniak said second-quarter sales growth was driven primarily by higher paper sales through Quad Supplied Paper and higher logistics revenue. Direct mail and in-store print operations also posted growth during the quarter, according to Staniak. For the first six months of 2026, net sales totaled $1.2 billion. Sales declined 2% from the prior-year period when excluding the effect of the February 2025 divestiture of Quad’s European operations. The year-to-date decline reflected lower large-scale print volumes and agency solution sales, partly offset by paper sales. Revenue mix improved in some of the company’s targeted categories. Targeted print offerings, including direct mail, packaging and install, represented a 2% larger share of total sales in the first half than a year earlier. Logistics increased by 1% as a percentage of sales, supported by fuel surcharges, volumes and expanded list services through co-mail operations. Those gains were offset by an expected 2% organic decline in large-scale print product lines, including magazines and retail inserts, as well as a 1% decline in agency solutions. Staniak said agency sales continued to be affected by spending pullbacks from certain existing clients and the company’s evolution from project-based work toward omnichannel agency-of-record relationships. Adjusted EBITDA margin was 7.3% in the second quarter, down from 7.6% a year earlier, largely because paper, ink and fuel-related revenue carries lower margins. Staniak said fuel and ink surcharges had a low-double-digit-million-dollar impact during the first half, helping preserve EBITDA dollars but not providing incremental profitability. Adjusted diluted earnings per share rose to $0.24 from $0.14 in the prior-year quarter. The increase reflected higher net earnings, lower interest expense from debt reduction, and lower depreciation and amortization, Staniak said. Quad is opening a 100,000-square-foot packaging facility in Salt Lake City that is expected to begin operations in the fourth quarter. The facility will complement packaging operations in Franklin, Wisconsin, and Spartanburg, South Carolina, while giving the company a Western U.S. presence. Quadracci said the site is intended to reduce lead times and improve logistics for customers, while positioning Quad near consumer packaged goods companies and co-manufacturers in the region. The company expects the facility to ramp with existing customer work and new opportunities. Staniak said the project requires less than $10 million of capital expenditures, is included in the company’s 2026 capital spending guidance, and could contribute low-double-digit millions of revenue in 2027.