Quad/Graphics, Inc. Q4 FY2024 earnings call

• Joel highlighted the strategic and financial progress in 2024, including a 48 basis point increase in adjusted EBITDA margin to 8.4%, $56 million free cash flow, and a 50% dividend increase. - Progress on revenue diversification with integrated solutions and targeted print growing as a percentage of net sales. - Investment in data stack with 250 million consumers represented, 3 billion data points revalidated weekly, and partnership with Google Cloud for AI optimization. - Operational highlights include work with Titleist on packaging redesign, RISE Media agency winning Gallo account, and updates on At Home Connect and In Store Connect solutions.

In 2024, net sales were $2.7 billion, a 9.7% decline from 2023. Fourth quarter 2024 net sales were $708 million, down 10.1% year-over-year. Adjusted EBITDA in 2024 was $224 million, down from $234 million in 2023, but the adjusted EBITDA margin improved to 8.4% from 7.9% in 2023. Integrated solutions and targeted print increased from 54% of net sales in 2018 to 65% in 2024, with a goal to reach 78% of total net sales by 2028.

• Organic net sales expected to decline 2%-6% in 2025 excluding $153 million from European divestiture. - Full year 2025 adjusted EBITDA expected $180M-$220M, midpoint $200M, a $24M decline from 2024. - First quarter 2025 net sales impacted by loss of large grocery client annualizing in March 2025. - Intend to reduce net debt leverage to approximately 1.5x by end of 2025.

• Postal rate impacts affecting print volumes and client spending. - Potential tariffs on Canadian paper impacting paper supply and client costs. - Interest rate uncertainty managed via interest rate collars, but still a risk. - Impact of post office changes and potential rate hikes on business operations.

Q: Asks about shifting capital allocation priorities and growth investments in 2025 A: Tony and Joel discuss increased capex in technology (AI) and In Store Connect, and investments in labor and offerings to drive future growth Q: Inquires about organic outlook for 2025 and demand environment A: Tony and Joel mention improved sequential growth expected in agency solutions, targeted prints, and international print (Mexico), offsetting declines in large-scale prints; also discuss impact of postal rates and post office changes Q: Asks about monetization of At Home Connect and impact of tariffs A: Joel explains At Home Connect is part of omnichannel approach driving revenue from direct mail and other offerings; discusses tariff exposure in Canada and steps taken to mitigate short-term impact Q: Seeks clarity on revenue trend at start of 2025 and asset sales A: Tony states first quarter 2025 to be lighter with high single-digit decline, improving later; discusses asset sales including European divestiture expected in early 2025 and other building sales in process Q: Asks about postmaster general impact and tariff policy A: Joel talks about postmaster general changes and their potential impact on postal rates, and current stance on tariff expectations for midyear