Quad Turns to Annual Profits and Increases Profits Amid Continued Sales Pressure
The marketing know-how company has reported a return to net profit for fiscal 2025 despite continued revenue declines in its printing divisions. Management announced a 33% increase in quarterly profit and issued 2026 guidance that expects sales to decline as part of a long-term strategy to achieve growth in 2028..
Quad/Graphics, Inc. (NYSE: QUAD) reported a return to net profit for the fiscal year ended December 31, 2025, from a net loss in the prior year despite a 9.4% decline in net sales for the year. The company met its financial guidance for the full year 2025 and announced a 33% increase in its quarterly dividend to $0.10 per share. Financial results for the year were reflected in improved net profit and diluted adjusted earnings per share, supported by lower productivity and operating costs, which offset the impact of lower volumes in the printing and transportation segments.
Enhanced Shareholder Returns and Debt Reduction
The main drivers of the year-end report were a significant increase in shareholder returns and the introduction of guidance for 2026 with a multi-year capital return plan. The quarterly dividend increase to $0.10 per share is payable on March 13, 2026. Additionally, the company concluded to de-risk its pension obligations by paying approximately one-third of its single-employer pension plan, which involved the distribution of $94 million from plan assets. Quad also reported $42 million in debt reduction through 2025, ending the year with a total debt ratio of 1.57 times.
Net Income Rises Despite Low Sales
For the full year 2025, Quad reported net sales of $2.42 billion, down from $2.67 billion in 2024. When adjusting for the breakdown of European operations, the decline in net sales was 4.8%. Net income for 2025 amounted to $27 million, or $0.54 per diluted share, compared to a net loss of $51 million, or $1.07 per diluted share, in 2024. Adjusted EBITDA for the year was $196 million, down from $224 million last year, primarily due to increased investment growth due to lower sales growth. Net sales for the fourth quarter fell 11% to $631 million, while adjusted earnings per share for the quarter remained flat year over year at $0.36. Full-year free cash flow was $51 million, down slightly from $56 million in 2024.
Financial Guidance for 2026 and a Strategic Shift Towards Higher Value Offerings
Management presented 2026 guidance predicting a decline in adjusted annual net sales of 1% to 5% and adjusted EBITDA between $175 million and $215 million. The company’s stated strategy involves shifting its revenue mix to higher value offerings, particularly Target Print, which includes direct mail, packaging, and in-store marketing and integrated marketing services. Operational priorities for the coming year include the expansion of automation and AI-enabled tools to drive costs. The company maintains a long-term financial goal of reaching the point of net sales growth by 2028, targeting a return to growth and a 100 basis point increase in adjusted EBITDA margin.
Coping with Digital Transformation and Overcapacity in the Print Industry
Quad’s performance reflects broader challenges in the commercial printing sector, including the digital revolution and declining demand for traditional printing services. The company noted that macroeconomic factors, such as higher interest rates and rising postage costs, continue to impact client rates and operating costs. To reduce these pressures, the company focuses on postal optimization through the integration of high-density mailing capabilities to provide customers with postage savings. The industry environment is still highly competitive, with oversupply contributing to lower prices.
