Quad/Graphics Q2 FY26 earnings call QUAD

Quad continues to make strategic investments in growth areas such as agency solutions and targeted print categories, including packaging, to support its revenue diversification strategy. A key example is the expansion of the packaging business into Salt Lake City, which will enhance national footprint, reduce lead times, and improve logistics efficiency for clients in the Western U.S. This facility is expected to be operational in Q4 2026 and will serve both existing and new clients.

Quad's MX offering provides integrated solutions across creative, production, and media, leveraging intelligence and technology to simplify workflows and improve marketing effectiveness. A significant expansion of this model is the partnership with Wakefern Food Corp, where Quad now provides paid media strategy, content creation, and in-store retail media services, building on a long-standing print relationship. This demonstrates the ability to deepen existing account relationships into broader, higher-value marketing partnerships.

The In-Store Connect footprint is expanding rapidly, with new deployments including 30 ShopRite locations for Wakefern, a doubling of stores for Vallarta, and an initial 25 stores for a new West Coast grocer. These additions will significantly increase the network's reach, particularly in key markets like California and the Northeast. The goal is to create a powerful flywheel effect, attracting more consumer brands with broader reach and subsequently drawing in new retail partners.

Quad's integrated agency model has demonstrated measurable business results, as highlighted by the Jelmar CLR brands campaign, which achieved a 106% increase in Instagram reach and video completion rates exceeding 50%. This success, recognized by an Effie Award, underscores the value of combining creative, media, data, and analytics. Quad also received independent industry recognition, being named to Ad Age's Agency Report and MM+M Agency 100, enhancing market visibility and supporting pipeline growth.

The company is actively managing macroeconomic challenges^🌐, including pressures on petrochemical-based supply chains, volatility in energy markets (diesel), and elevated logistics costs due to geopolitical instability. Quad is diversifying suppliers, optimizing inventory, and implementing targeted price actions. Additionally, the significant USPS postage increase (up to 10%) is being mitigated through postal optimization models and innovative mail solutions designed to improve response rates and cost savings for clients.

Quad is embedding AI across its agency operations (e.g., Betty for asset creation, Rise Connex for media analysis and optimization) and manufacturing processes. This integration aims to improve efficiency, reduce manual tasks, accelerate speed to market, optimize production schedules, anticipate maintenance needs, and ultimately drive better business outcomes and cost efficiencies for both Quad and its clients.

Quad is winding down its Peruvian operations, including selling a 200,000+ sq ft building in Lima and other assets, which is expected to generate proceeds of $25 million to $30 million in revenue and small adjusted EBITDA. These proceeds are anticipated to substantially offset a $17 million accrual for an adverse income tax and VAT litigation ruling related to its Mexican subsidiary from a 2011 audit assessment.