Quad/Graphics, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 Net Sales were $587 million, consistent with $588 million in the third quarter of 2025.
• Year-to-date 2026 Net Sales were $1.7 billion, a 2% decrease compared to the same period in 2025; excluding the 1% impact of the European operations divestiture, sales declined 1%.
• Third quarter 2026 Net Earnings were $6 million ($0.11 Diluted EPS), compared to $10 million ($0.21 Diluted EPS) in 2025.
• Year-to-date 2026 Net Earnings were $15 million ($0.31 Diluted EPS), compared to $16 million ($0.32 Diluted EPS) in 2025.
• Third quarter 2026 Adjusted EBITDA was $51 million, compared to $53 million in 2025.
• Year-to-date 2026 Adjusted EBITDA was $138 million, compared to $141 million in 2025.
• Third quarter 2026 Adjusted Diluted EPS was $0.35, a 13% increase from $0.31 in 2025.
• Year-to-date 2026 Adjusted Diluted EPS was $0.84, a 29% increase from $0.65 in 2025.
• Net Cash Used in Operating Activities for the nine months ended September 30, 2026, was $62 million, compared to $50 million in 2025.
• Free Cash Flow for the nine months ended September 30, 2026, was negative $100 million, compared to negative $87 million in 2025.
• Net Debt was $422 million at September 30, 2026, compared to $308 million at December 31, 2025, and $465 million at September 30, 2025.
• Net Debt Leverage Ratio guidance remains at approximately 1.5x at year-end 2026.

Guidance and Future Outlook:

• Updated full-year 2026 Adjusted Annual Net Sales Change guidance midpoint improved from a 4% decline to a 2% decline (range narrowed from 1% to 5% decline to 1% to 3% decline).
• Full-year 2026 Adjusted EBITDA guidance narrowed to $185 million to $195 million (original range: $175 million to $215 million).
• Full-year 2026 Free Cash Flow guidance narrowed to $45 million to $55 million (original range: $40 million to $60 million).
• Full-year 2026 Capital Expenditures guidance set at approximately $55 million (original range: $55 million to $65 million).
• Management targets an inflection to Net Sales growth in 2028.
• Management expects to remain opportunistic regarding future share repurchases.

Business Segments and Product Lines:

• United States Print and Related Services segment reported $540.0 million in Net Sales and $35.1 million in Operating Income for the third quarter of 2026.
• International segment reported $46.7 million in Net Sales and $2.0 million in Operating Income for the third quarter of 2026.
• Announced "Direct," a newly branded full-service direct marketing agency providing integrated audience intelligence, pre-market creative validation, production, and measurement solutions.
• In-Store Connect signed its first national retailer, launching screens across 30 Florida stores in winter 2026.
• Clients Wakefern and Chedraui USA's Smart & Final expanded relationships with Quad beyond print to include In-Store Connect and Rise media services.
• Third quarter Net Sales mix included higher logistics sales offset by lower large-scale print volumes and lower agency solutions sales.
• Year-to-date Net Sales mix included higher logistics and paper sales offset by lower large-scale print volumes and lower agency solutions sales.

Market and Competitive Landscape:

• The company operates in a highly competitive environment with significant overcapacity in printing services creating downward pricing pressures.
• Quad is ranked among the largest agency companies in the U.S. by Ad Age and one of the largest commercial printers in North America according to Printing Impressions.
• The company serves approximately 2,100 clients across commerce, financial services, and health verticals.

Risks and Challenges:

• Secular declines in large-scale print volumes continue to impact the business.
• Macroeconomic uncertainties, including elevated interest rates, postal rate increases, tariffs, and trade restrictions, may impact business and financial condition.
• Rising operating costs for raw materials (paper, ink), labor, fuel, and freight rates pose challenges if unable to be passed to clients.
• Risks include data breaches, cyber incidents, and the inability to adapt marketing offerings to rapid technological changes, including AI.
• Potential impairment charges related to property, plant, and equipment, goodwill, and intangible assets due to operating result declines.
• Restrictive covenants in debt facilities may limit operational flexibility.

Management Commentary and Tone:

• CEO Joel Quadracci stated clients are increasingly engaging multiple Quad solutions, deepening relationships and increasing share of client marketing spend.
• CFO Tony Staniak noted sales momentum with new and existing clients supports the improved guidance range and progress toward 2028 growth inflection.
• Management emphasized a disciplined approach to cost management, treating costs as variable, optimizing capacity utilization, and maintaining strong labor management.
• Initiatives in automation and AI-enabled tools are driving productivity and strengthening margins.
• Management is closely monitoring macroeconomic uncertainties and maintaining a balanced capital allocation strategy.

Other Key Points:

• Provided $23 million of returns to shareholders year-to-date, comprising $15 million in cash dividends and $8 million in share repurchases.
• Repurchased 1.0 million shares of Class A common stock in 2026, bringing total repurchases to 8.4 million shares since 2022 (approximately 15% of March 31, 2022, outstanding shares).
• Declared a quarterly dividend of $0.10 per share payable December 4, 2026, to shareholders of record as of November 17, 2026.
• Net Debt increased $43 million (9%) when removing seasonality, driven by negative Free Cash Flow and shareholder returns, partially offset by proceeds from the sale of property, plant, and equipment in Peru.
• Third quarter 2026 Net Earnings were impacted by increased restructuring, impairment, and transaction-related charges of $19.2 million, compared to $7.3 million in 2025.
• Year-to-date 2026 Net Earnings were impacted by increased restructuring, impairment, and transaction-related charges of $37.3 million, compared to $23.1 million in 2025.
• Transaction-related charges in 2026 included a $10.8 million credit loss expense related to a note receivable.
• Other restructuring charges in 2026 were net of a $13.6 million gain on the sale of Lima, Peru property, plant, and equipment.