Quad/Graphics, Inc.

Previous wording

The following discussion of the financial condition and results of operations of Quad should be read together with (1) the condensed consolidated financial statements for the three months ended March 31, 2025 and 2024, including the notes thereto, included in Item 1, “Condensed Consolidated Financial Statements (Unaudited),” of this Quarterly Report on Form 10-Q; and (2) the audited consolidated annual financial statements as of and for the year ended December 31, 2024, and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 21, 2025.

Current wording

The following discussion of the financial condition and results of operations of Quad should be read together with (1) the condensed consolidated financial statements for the three and six months ended June 30, 2025 and 2024, including the notes thereto, included in Item 1, “Condensed Consolidated Financial Statements (Unaudited),” of this Quarterly Report on Form 10-Q; and (2) the audited consolidated annual financial statements as of and for the year ended December 31, 2024, and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 21, 2025.

Previous wording

•Results of Operations. This section contains an analysis of the Company’s results of operations by comparing the results for the three months ended March 31, 2025, to the three months ended March 31, 2024. The comparability of the Company’s results of operations between periods was impacted by the divestiture of the Company's European operations, which were sold on February 28, 2025. The results of operations of the divested operations are included in the Company’s condensed consolidated results until the date of disposition. Forward-looking statements providing a general description of recent and projected industry and Company developments that are important to understanding the Company’s results of operations are included in this section. This section also provides a discussion of EBITDA and EBITDA margin, financial measures that the Company uses to assess the performance of its business that are not prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Current wording

•Results of Operations. This section contains an analysis of the Company’s results of operations by comparing the results for (1) the three months ended June 30, 2025, to the three months ended June 30, 2024; and (2) the six months ended June 30, 2025, to the six months ended June 30, 2024. The comparability of the Company’s results of operations between periods was impacted by the divestiture of the Company's European operations, which were sold on February 28, 2025, and the acquisition of the Enru co-mail assets, which were acquired on April 1, 2025. The results of operations of the divested operations are included in the Company’s condensed consolidated results until the date of disposition and the results of operations of the acquired operations are included in the Company’s condensed consolidated results from the date of acquisition. Forward-looking statements providing a general description of recent and projected industry and Company developments that are important to understanding the Company’s results of operations are included in this section. This section also provides a discussion of EBITDA and EBITDA margin, financial measures that the Company uses to assess the performance of its business that are not prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Previous wording

•The failure to successfully identify, manage, complete and integrate acquisitions, investment opportunities or other significant transactions, as well as the successful identification and execution of strategic divestitures;

Current wording

•The failure to successfully identify, manage, complete, integrate and/or achieve the intended benefits of acquisitions, investment opportunities or other significant transactions, as well as the successful identification and execution of strategic divestitures;

Previous wording

Quad applies holistic continuous improvement and lean enterprise methodologies to further streamline its processes and maximize operating margins. These same methodologies are applied to its selling, general and administrative functions. The Company continually works to lower its cost structure by consolidating manufacturing operations into its most efficient facilities, as well as realizing purchasing, mailing and logistics synergies by centralizing and consolidating print manufacturing volumes, and eliminating redundancies in its administrative and corporate operations. Quad believes that its focused efforts to be a high-quality, low-cost producer generates increased Free Cash Flow and allows the Company to maintain a strong balance sheet through debt reduction. The Company’s disciplined financial approach and strong, trusted banking relationships allows it to maintain sufficient liquidity and to reduce refinancing risk, such as with Quad’s successful 2024 refinancing of its Term Loan A and Revolving Credit Agreement. The Company had total liquidity of $209.2 million as of March 31, 2025, which consisted of up to $201.1 million of unused capacity under its revolving credit agreement, which was net of $25.6 million of issued letters of credit, and cash and cash equivalents of $8.1 million. This is the most restrictive liquidity measure currently applicable under the credit agreement.

Current wording

Quad applies holistic continuous improvement and lean enterprise methodologies to further streamline its processes and maximize operating margins. These same methodologies are applied to its selling, general and administrative functions. The Company continually works to lower its cost structure by consolidating manufacturing operations into its most efficient facilities, as well as realizing purchasing, mailing and logistics synergies by centralizing and consolidating print manufacturing volumes, and eliminating redundancies in its administrative and corporate operations. Quad believes that its focused efforts to be a high-quality, low-cost producer generates increased Free Cash Flow and allows the Company to maintain a strong balance sheet through debt reduction. The Company’s disciplined financial approach and strong, trusted banking relationships allows it to maintain sufficient liquidity and to reduce refinancing risk, such as with Quad’s successful 2024 refinancing of its Term Loan A and revolving credit agreement. The Company had total liquidity of $217.6 million as of June 30, 2025, which consisted of up to $210.9 million of unused capacity under its revolving credit agreement, which was net of $25.6 million of issued letters of credit, and cash and cash equivalents of $6.7 million. Total liquidity is reduced to $202.1 million under the Company’s most restrictive debt covenants.

Previous wording

•The United States Print and Related Services segment is predominantly comprised of the Company’s United States printing operations, managed as one integrated platform, and marketing and other complementary services. The printing operations include print execution and logistics for retail inserts, catalogs, long-run publications, special interest publications, journals, direct mail, directories, in-store marketing and promotion, packaging, custom print products, as well as other commercial and specialty printed products, along with global paper procurement and the manufacture of ink. Marketing and other complementary services include data intelligence and analytics, technology solutions, media planning, placement and optimization, creative strategy and content creation, as well as execution in non-print channels (e.g., digital and broadcast). This segment also includes medical services. The United States Print and Related Services segment accounted for approximately 88% of the Company’s consolidated net sales during the three months ended March 31, 2025.

Current wording

•The United States Print and Related Services segment is predominantly comprised of the Company’s United States printing operations, managed as one integrated platform, and marketing and other complementary services. The printing operations include print execution and logistics for retail inserts, catalogs, long-run publications, special interest publications, journals, direct mail, directories, in-store marketing and promotion, packaging, custom print products, as well as other commercial and specialty printed products, along with global paper procurement and the manufacture of ink. Marketing and other complementary services include data intelligence and analytics, technology solutions, media planning, placement and optimization, creative strategy and content creation, as well as execution in non-print channels (e.g., digital and broadcast). This segment also includes medical services. The United States Print and Related Services segment accounted for approximately 92% and 90% of the Company’s consolidated net sales during the three and six months ended June 30, 2025, respectively.

Previous wording

•The International segment consists of the Company’s printing operations in Latin America, including operations in Colombia, Mexico and Peru, as well as operations in Europe, including operations in England, France, Germany and Poland, until the European operations were sold on February 28, 2025. This segment provides printed products and marketing and other complementary services consistent with the United States Print and Related Services segment. The International segment accounted for approximately 12% of the Company’s consolidated net sales during the three months ended March 31, 2025.

Current wording

•The International segment consists of the Company’s printing operations in Latin America, including operations in Colombia, Mexico and Peru, as well as operations in Europe, including operations in England, France, Germany and Poland, until the European operations were sold on February 28, 2025. This segment provides printed products and marketing and other complementary services consistent with the United States Print and Related Services segment. The International segment accounted for approximately 8% and 10% of the Company’s consolidated net sales during the three and six months ended June 30, 2025, respectively.

Previous wording

The Company’s management believes the ability to generate net sales growth, profit increases and positive cash flow, while maintaining the appropriate level of debt, are key indicators of the successful execution of the Company’s business strategy and will increase shareholder value. The Company uses period-over-period net sales growth, EBITDA, EBITDA margin, net cash provided by (used in) operating activities, Free Cash Flow and Debt Leverage Ratio as metrics to measure operating performance, financial condition and liquidity. EBITDA, EBITDA margin, Free Cash Flow and Debt Leverage Ratio are non-GAAP financial measures (see the definitions of EBITDA, EBITDA margin and the reconciliation of net loss to EBITDA in the “Results of Operations” section below, and see the definitions of Free Cash Flow and Debt Leverage Ratio, the reconciliation of net cash provided by (used in) operating activities to Free Cash Flow, and the calculation of Debt Leverage Ratio in the “Liquidity and Capital Resources” section below).

Current wording

The Company’s management believes the ability to generate net sales growth, profit increases and positive cash flow, while maintaining the appropriate level of debt, are key indicators of the successful execution of the Company’s business strategy and will increase shareholder value. The Company uses period-over-period net sales growth, EBITDA, EBITDA margin, net cash provided by (used in) operating activities, Free Cash Flow and Debt Leverage Ratio as metrics to measure operating performance, financial condition and liquidity. EBITDA, EBITDA margin, Free Cash Flow and Debt Leverage Ratio are non-GAAP financial measures (see the definitions of EBITDA and EBITDA margin and the reconciliation of net earnings (loss) to EBITDA in the “Results of Operations” section below, and see the definitions of Free Cash Flow and Debt Leverage Ratio, the reconciliation of net cash used in operating activities to Free Cash Flow, and the calculation of Debt Leverage Ratio in the “Liquidity and Capital Resources” section below).

Previous wording

The Company remains disciplined with its debt leverage. The Company’s consolidated debt and finance lease obligations increased by $91.8 million during the three months ended March 31, 2025, primarily due to the following: (1) $89.0 million in cash used in operating activities from seasonality; (2) $11.3 million in purchases of property, plant and equipment; (3) $6.9 million in purchases of equity awards redeemed to pay employees’ tax obligations and treasury stock; and (4) the $3.5 million payment in cash dividends, partially offset by a $21.1 million reduction in cash and cash equivalents.

Current wording

The Company remains disciplined with its debt leverage. The Company’s consolidated debt and finance lease obligations increased by $75.7 million during the six months ended June 30, 2025, primarily due to the following: (1) $41.6 million in cash used in operating activities from seasonality; (2) $24.3 million in purchases of property, plant and equipment; (3) $16.3 million in cash paid for an acquisition; (4) $11.2 million in purchases of treasury stock and equity awards redeemed to pay employees’ tax obligations; and (5) $7.4 million in cash dividends, partially offset by a $22.5 million reduction in cash and cash equivalents.

Previous wording

Integrated distribution with the United States Postal Service (“USPS”) is an important component of the Company’s business. Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services. In September 2024, the USPS held a pre-filing conference to further reduce service standards. These changes required an advisory opinion from the Postal Regulatory Commission (“PRC”), which was issued in January 2025, urging the USPS to reconsider its plan. However, the USPS is still expected to implement the changes in 2025, regardless of the advisory opinion issued. In addition to the reduced service standards, the USPS has also issued reduced service performance targets for 2025. Almost all letters and flats targets were reduced, some as much as 15% lower than 2024 targets (i.e. First Class Letters three to five day on time performance target was reduced from 90% down to 80%).

Current wording

Integrated distribution with the United States Postal Service (“USPS”) is an important component of the Company’s business. Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services. In September 2024, the USPS held a pre-filing conference to further reduce service standards. These changes required an advisory opinion from the Postal Regulatory Commission (“PRC”), which was issued in January 2025, urging the USPS to reconsider its plan. Disregarding the advisory opinion, the USPS implemented the first phase of changes as of April 1, 2025, and the second phase took effect July 1, 2025. In addition to the reduced service standards, the USPS has also issued reduced service performance targets for 2025. Almost all letters and flats targets were reduced, some as much as 15% lower than 2024 targets (i.e. First Class Letters three to five day on time performance target was reduced from 90% down to 80%).

Previous wording

The USPS continues to experience financial problems. The passing of the Postal Service Reform Act of 2022, signed in April 2022, gave the USPS considerable financial relief as well as significant other relief over the next ten years. While the legislative postal reform helps considerably, without decreased operational cost structures, increased efficiencies or increased volumes and revenues, these losses are expected to continue into the future. As a result of these financial difficulties, the USPS has continued to adjust its postal rates and service levels. The USPS did not implement a Market Dominant product price increase for January 2025. However, the available rate authority will roll forward to July 2025. The USPS has confirmed it intends to continue with twice a year price increases for 2026 and 2027. With postage increases that continue to exceed the Consumer Price Index (“CPI”), clients will continue to reduce mail volumes and explore the use of alternative methods for delivering a larger portion of their products, such as continued diversion to the internet, digital and mobile channels and other alternative media channels, in order to ensure that they stay within their expected postage budgets.

Current wording

The USPS continues to experience financial problems. The passing of the Postal Service Reform Act of 2022, signed in April 2022, gave the USPS considerable financial relief as well as significant other relief over the next ten years. While the legislative postal reform helps considerably, without decreased operational cost structures, increased efficiencies or increased volumes and revenues, these losses are expected to continue into the future. As a result of these financial difficulties, the USPS has continued to adjust its postal rates and service levels. The USPS did not implement a Market Dominant product price increase for January 2025. However, the available rate authority was rolled forward to July 2025, where approximately 8% postage increases were implemented and far exceeded Consumer Price Index (“CPI”). The USPS has confirmed it intends to continue with twice a year price increases for 2026 and 2027. The USPS launched a new Marketing Mail Catalog promotion, which will offer a 10% discount on postage for any mail pieces that meet the USPS definition of a catalog. The discount will go into effect on October 1, 2025 and continue until June 30, 2026. An increase to catalog volume and revenue is expected from the promotion. However, with postage increases that continue to exceed the CPI, combined with lower service standards, we expect that clients will continue to reduce mail volumes and explore the use of alternative methods for delivering a larger portion of their products, such as continued diversion to the internet, digital and mobile channels and other alternative media channels, in order to ensure that they stay within their expected postage budgets.

Previous wording

Federal statute requires the PRC to conduct reviews of the overall rate-making structure for the USPS to ensure funding stability. As a result of those reviews, the PRC authorized a five year rate-making structure that provides the USPS with additional pricing flexibility over the CPI cap, which has resulted in a substantially altered rate structure for mailers. The revised rate authority that is effective as a result of the rules issued by the PRC includes a higher overall rate cap on the USPS’ ability to increase rates from year to year. The USPS has used these additional rate authorities to implement twice a year increases. This will continue to lead to price spikes for mailers and may also reduce the incentive for the USPS to continue to take out costs and instead continue to rely on postage to cover the costs of an outdated postal service that does not reflect the industry’s ability or willingness to pay. Given the significant amount of concern that has been expressed by the mailing industry, in April 2024, the PRC opened a proceeding to start the next rate system review, which is still underway. The Company believes the continued use of all available rate authority by the USPS will continue to increase the potential volume declines as rate predictability with respect to cost is no longer known for mailers.

Current wording

Federal statute requires the PRC to conduct reviews of the overall rate-making structure for the USPS to ensure funding stability. As a result of those reviews, the PRC authorized a five year rate-making structure that provides the USPS with additional pricing flexibility over the CPI cap, which has resulted in a substantially altered rate structure for mailers. The revised rate authority that is effective as a result of the rules issued by the PRC includes a higher overall rate cap on the USPS’ ability to increase rates from year to year. The USPS has used these additional rate authorities to implement twice a year increases. This will continue to lead to price spikes for mailers and may also reduce the incentive for the USPS to continue to take out costs and instead continue to rely on postage to cover the costs of an outdated postal service that does not reflect the industry’s ability or willingness to pay. In response to industry concerns, in April 2024, the PRC opened a proceeding to start the next rate system review, which includes a phased approach of proposing changes to improve rate predictability, such as only allowing price changes once a year and aligning workshare discounts. However, the Company believes the continued use of all available rate authority by the USPS that far exceeds CPI will continue to increase the potential volume declines.

Previous wording

The Company has invested significantly in its mail preparation and distribution capabilities to mitigate the impact of increases in postage costs, and to help clients successfully navigate the ever-changing postal environment. Through its data analytics, unique software to merge mail streams on a large scale, advanced finishing capabilities and technology, and in-house transportation and logistics operations, the Company manages the mail preparation and distribution of most of its clients’ products to maximize efficiency, to enable on-time and consistent delivery and to partially reduce these costs.

Current wording

The Company has invested significantly in its mail preparation, optimization and distribution capabilities to mitigate the impact of increases in postage costs, and to help clients successfully navigate the ever-changing postal environment. Through its data analytics, unique software to merge mail streams on a large scale, advanced finishing capabilities and technology, and in-house transportation and logistics operations, the Company manages the mail preparation, optimization and distribution of most of its clients’ products to maximize efficiency, to enable on-time and consistent delivery and to partially reduce postage costs. It is important as part of the ongoing PRC review, the USPS maintain the current work-share discounts as the Company believes this mail optimization capability is valuable to its clients.

Previous wording

The Company continues to face several other industry challenges that have been, and are expected to continue to, adversely impact the Company’s results of operation. The Company is closely monitoring the potential impacts of tariffs and recessionary pressures on its clients businesses that could impact their marketing spend, including print volumes. The Company continues to operate in an elevated interest rate environment, which is expected to continue through 2025. Additionally, the price and availability of paper has been, and may continue to be, adversely affected by paper mills’ permanent or temporary closures; paper mills’ access to raw materials, conversion to produce other types of paper, and ability to transport paper produced; and tariffs and trade restrictions. Postal rate increases, along with the previously described industry challenges, have led to reduced demand for printed products and has caused clients to move more aggressively into other delivery methods, such as the many digital and mobile options now available to consumers. These challenges have, as needed, driven the Company to institute several cost saving measures through its restructuring program, including plant closures and headcount reductions. Through these cost saving measures and proceeds from asset sales, the Company has been able to maintain focus on its transformation into an MX company, with flexibility to invest into the growing business, as well as continuing to be advantageous in its efforts to return capital to shareholders and reduce debt. The Company is also dependent on its production personnel to print the Company’s products in a cost-effective and efficient manner that allows the Company to obtain new clients and to drive sales from existing clients. The Company is unable to predict the full future impact these challenges will have on its business, financial condition, cash flows and results of operations, but expects them to continue through 2025.

Current wording

The Company continues to face several other industry challenges that have, and are expected to continue to, adversely impact the Company’s results of operation. The Company is closely monitoring the potential impacts of tariffs and recessionary pressures on its clients’ businesses that could impact their marketing spend, including print volumes. The Company continues to operate in an elevated interest rate environment, which is expected to continue through 2025. Additionally, the price and availability of paper has been, and may continue to be, adversely affected by paper mills’ permanent or temporary closures; paper mills’ access to raw materials, conversion to produce other types of paper, and ability to transport paper produced; and tariffs and trade restrictions. Postal rate increases, along with the previously described industry challenges, have led to reduced demand for printed products and has caused clients to move more aggressively into other delivery methods, such as the many digital and mobile options now available to consumers. These challenges have, as needed, driven the Company to institute several cost saving measures through its restructuring program, including plant closures and headcount reductions. Through these cost saving measures and proceeds from asset sales, the Company has been able to maintain focus on its transformation into an MX company, with flexibility to invest into the growing business, as well as continuing to be advantageous in its efforts to return capital to shareholders and reduce debt. The Company is also dependent on its production personnel to print the Company’s products in a cost-effective and efficient manner that allows the Company to obtain new clients and to drive sales from existing clients. The Company is unable to predict the full future impact these challenges will have on its business, financial condition, cash flows and results of operations, but expects them to continue through 2025.

Previous wording

The Company’s operating income (loss), operating margin, net earnings (loss) (computed using a 25% normalized tax rate for all items subject to tax) and diluted earnings (loss) per share for the three months ended March 31, 2025, changed from the three months ended March 31, 2024, as follows (dollars in millions, except margin and per share data):

Current wording

The Company’s operating income, operating margin, net loss (computed using a 25% normalized tax rate for all items subject to tax) and diluted loss per share for the three months ended June 30, 2025, changed from the three months ended June 30, 2024, as follows (dollars in millions, except margin and per share data):

Previous wording

(1)Restructuring, impairment and transaction-related charges, net decreased $25.9 million ($19.4 million, net of tax), to $6.6 million during the three months ended March 31, 2025, and included the following:

Current wording

(1)Restructuring, impairment and transaction-related charges, net decreased $0.9 million ($0.6 million, net of tax), to $9.2 million during the three months ended June 30, 2025, and included the following:

Previous wording

a. A $13.0 million decrease in employee termination charges from $13.7 million during the three months ended March 31, 2024, to $0.7 million during the three months ended March 31, 2025;

Current wording

a. A $2.6 million increase in employee termination charges from $3.2 million during the three months ended June 30, 2024, to $5.8 million during the three months ended June 30, 2025;

Previous wording

d. A $0.1 million decrease in integration costs from $0.1 million during the three months ended March 31, 2024, to zero during the three months ended March 31, 2025;

Current wording

d. A $0.1 million increase in integration costs from $0.1 million during the three months ended June 30, 2024, to $0.2 million during the three months ended June 30, 2025; and

Previous wording

e. A $2.6 million decrease in various other restructuring charges from $5.6 million during the three months ended March 31, 2024, to $3.0 million during the three months ended March 31, 2025.

Current wording

e. A $6.7 million decrease in various other restructuring charges from $5.3 million of expense during the three months ended June 30, 2024, to $1.4 million of income during the three months ended June 30, 2025.

Previous wording

Service sales, which primarily consist of logistics, distribution, marketing services, imaging and medical services, decreased $13.0 million, or 8.8%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to a $7.6 million decrease in logistics sales, of which $1.8 million is from the impact of the sale of the European operations, and a $5.4 million decrease in marketing services and medical services.

Current wording

Service sales, which primarily consist of logistics, distribution, marketing services, imaging and medical services, decreased $12.7 million, or 9.3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to a $9.0 million decrease in logistics sales, of which $3.5 million is a result of the sale of the European operations, and a $3.7 million decrease in marketing services and medical services.

Previous wording

Cost of product sales decreased $12.1 million, or 2.8%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following: (1) a decrease in paper costs; (2) impacts from improved manufacturing productivity; and (3) other cost reduction initiatives.

Current wording

Cost of product sales decreased $39.5 million, or 9.7%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to the following: (1) a decrease in paper costs due to the decrease in paper sales; (2) impacts from improved manufacturing productivity; and (3) other cost reduction initiatives.

Previous wording

Cost of service sales decreased $9.2 million, or 9.7%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the impact from decreased freight volumes and lower marketing services.

Current wording

Cost of service sales decreased $6.3 million, or 7.3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to the impact from decreased freight volumes and lower marketing services.

Previous wording

A reconciliation of EBITDA to net earnings (loss) for the three months ended March 31, 2025 and 2024, was as follows:

Current wording

A reconciliation of EBITDA to net loss for the three months ended June 30, 2025 and 2024, was as follows:

Previous wording

The following table summarizes net sales, operating income (loss), operating margin and certain items impacting comparability within the United States Print and Related Services segment:

Current wording

The following table summarizes net sales, operating income, operating margin and certain items impacting comparability within the United States Print and Related Services segment:

Previous wording

Service sales for the United States Print and Related Services segment decreased $11.3 million, or 7.9%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to a $5.9 million decrease in logistics sales from lower print volumes and a $5.4 million decrease in marketing services and medical services.

Current wording

Product sales for the United States Print and Related Services segment decreased $11.3 million, or 2.7%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to an $18.7 million decrease in paper sales, partially offset by a $7.4 million increase in sales in the Company’s print product lines.

Previous wording

Corporate restructuring, impairment and transaction-related charges, net increased $0.2 million, or 200.0%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following:

Current wording

Corporate restructuring, impairment and transaction-related charges, net increased $0.4 million, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to the following:

Previous wording

b. A $12.3 million decrease in impairment charges from $12.6 million during the three months ended March 31, 2024, to $0.3 million during the three months ended March 31, 2025;

Current wording

b. A $9.2 million decrease in impairment charges from $13.7 million during the six months ended June 30, 2024, to $4.5 million during the six months ended June 30, 2025;

Previous wording

c. A $2.1 million increase in transaction-related charges from $0.5 million during the three months ended March 31, 2024, to $2.6 million during the three months ended March 31, 2025;

Current wording

c. A $2.1 million increase in transaction-related charges from $0.9 million during the six months ended June 30, 2024, to $3.0 million during the six months ended June 30, 2025;

Previous wording

(2)Other operating income elements increased $4.4 million ($3.3 million, net of tax impact) during the three months ended March 31, 2025, primarily due to the following: (1) a $8.9 million decrease in depreciation and amortization expense; (2) impacts from improved manufacturing productivity; and (3) savings from other cost reduction initiatives, partially offset by the impact from lower net sales and increased investments in innovative offerings to drive future revenue growth.

Current wording

(2)Other operating income elements increased $2.1 million ($1.6 million, net of tax impact) during the six months ended June 30, 2025, primarily due to the following: (1) a $14.6 million decrease in depreciation and amortization expense; (2) impacts from improved manufacturing productivity; and (3) savings from other cost reduction initiatives, partially offset by the impact from lower net sales and increased investments in innovative offerings to drive future revenue growth.

Previous wording

(3)Interest expense decreased $2.8 million ($2.1 million, net of tax) during the three months ended March 31, 2025, to $12.4 million. This was primarily due to lower average debt levels and a $0.5 million decrease in interest expense related to the interest rate swap and lower weighted average interest rates on borrowings in the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

Current wording

(3)Interest expense decreased $6.8 million ($5.1 million, net of tax) during the six months ended June 30, 2025, to $25.6 million. This was primarily due to the following: (1) lower average debt levels; (2) lower weighted average interest rates on borrowings; and (3) a $0.5 million decrease in interest expense related to the interest rate swap in the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

Previous wording

(4)Net pension expense increased $0.6 million ($0.4 million, net of tax) during the three months ended March 31, 2025, to $0.4 million. This was due to a $0.8 million decrease from the expected long-term return on pension plan assets and a $0.1 million increase in the amortization of actuarial loss, partially offset by a $0.3 million decrease from interest cost on pension plan liabilities.

Current wording

(4)Net pension expense increased $1.1 million ($0.8 million, net of tax) during the six months ended June 30, 2025, from $0.4 million of income to $0.7 million of expense. This was due to a $1.6 million decrease from the expected long-term return on pension plan assets and a $0.1 million increase in the amortization of actuarial loss, partially offset by a $0.6 million decrease from interest cost on pension plan liabilities.

Previous wording

(5)The $9.5 million decrease in income tax expense as calculated in the following table is primarily due to the following: (1) a $7.9 million decrease from valuation allowance reserves; (2) a $1.1 million decrease from the impact of non-deductible expenses; and (3) a $0.4 million decrease in the Company’s liability for audit assessments and unrecognized tax benefits.

Current wording

(5)The $10.7 million decrease in income tax expense as calculated in the following table is primarily due to the following: (1) a $9.2 million decrease from valuation allowance reserves; (2) a $1.2 million decrease from the impact of non-deductible expenses; and (3) a $0.3 million decrease in the Company’s liability for audit assessments and unrecognized tax benefits.

Previous wording

Selling, general and administrative expenses increased $0.4 million, or 0.5%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following: (1) a $1.3 million increase in credit loss expense; (2) a $0.9 million increase from a gain on the sale of property, plant and equipment in 2024 that did not reoccur in 2025; (3) a $0.7 million increase in employee-related costs; and (4) a $0.7 million increase in professional fees, partially offset by a $2.9 million increase in favorable foreign exchange impacts. Selling, general and administrative expenses as a percentage of net sales increased to 13.3% for the three months ended March 31, 2025, compared to 12.7% for the three months ended March 31, 2024.

Current wording

Selling, general and administrative expenses decreased $8.1 million, or 4.7%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the following: (1) a $7.0 million increase in favorable foreign exchange impacts; (2) $4.3 million in lower employee-related costs; and (3) savings from other cost reduction initiatives, partially offset by a $4.1 million gain on the sale of an investment in 2024 that did not reoccur in 2025. Selling, general and administrative expenses as a percentage of net sales increased to 13.6% for the six months ended June 30, 2025, compared to 13.3% for the six months ended June 30, 2024.

Previous wording

Depreciation and amortization decreased $8.9 million, or 31.1%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to a $4.7 million decrease in amortization expense, primarily from intangible assets becoming fully amortized over the past year, and a $4.2 million decrease in depreciation expense, primarily due to impacts from plant closures and from property, plant and equipment becoming fully depreciated over the past year.

Current wording

Depreciation and amortization decreased $14.6 million, or 26.5%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, due to a $7.5 million decrease in amortization expense, primarily from intangible assets becoming fully amortized over the past year, and a $7.1 million decrease in depreciation expense, primarily due to impacts from plant closures and from property, plant and equipment becoming fully depreciated over the past year.

Previous wording

(c)Includes a $0.5 million loss on the sale of the European operations during the three months ended March 31, 2025.

Current wording

(d)Includes a $0.5 million loss on the sale of the European operations during the six months ended June 30, 2025.

Previous wording

EBITDA increased $20.8 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following: (1) $25.9 million of decreased restructuring, impairment and transaction-related charges, net; (2) impacts from improved manufacturing productivity; and (3) savings from other cost reduction initiatives, partially offset by the impact of lower net sales and increased investments in innovative offerings to drive future revenue growth.

Current wording

EBITDA increased $13.2 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the following: (1) $26.8 million of decreased restructuring, impairment and transaction-related charges, net; (2) impacts from improved manufacturing productivity; and (3) savings from other cost reduction initiatives, partially offset by the impact of lower net sales and increased investments in innovative offerings to drive future revenue growth.

Previous wording

Operating income (loss) for the United States Print and Related Services segment increased $33.0 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following: (1) a $28.1 million decrease in restructuring, impairment and transaction-related charges, net; (2) a $6.9 million decrease in depreciation and amortization expense; (3) impacts from improved manufacturing productivity; and (4) savings from other cost reduction initiatives; partially offset by the impact from decreased print volumes, decreased marketing services sales and increased investments in innovative offerings to drive future revenue growth.

Current wording

Operating income for the United States Print and Related Services segment increased $30.4 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the following: (1) a $28.8 million decrease in restructuring, impairment and transaction-related charges, net; (2) a $10.7 million decrease in depreciation and amortization expense; (3) impacts from improved manufacturing productivity; and (4) savings from other cost reduction initiatives; partially offset by the impact from decreased marketing services sales and increased investments in innovative offerings to drive future revenue growth.

Previous wording

The operating margin for the United States Print and Related Services segment increased to 5.7% for the three months ended March 31, 2025, compared to negative 0.2% for the three months ended March 31, 2024, primarily due to the reasons provided above.

Current wording

The operating margin for the United States Print and Related Services segment increased to 5.1% for the six months ended June 30, 2025, compared to 2.1% for the six months ended June 30, 2024, primarily due to the reasons provided above.

Previous wording

Service sales for the International segment decreased $1.7 million, or 37.0%, for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024, primarily due to a $1.7 million decrease in logistics sales from the impact of the sale of the European operations.

Current wording

Service sales for the International segment decreased $5.9 million, or 67.0%, for the six months ended June 30, 2025, when compared to the six months ended June 30, 2024, primarily due to a $5.2 million decrease in logistics sales and $0.7 million decrease in marketing service sales, both as a result of the sale of the European operations.

Previous wording

(a)Includes professional service fees related to business acquisition and divestiture activities, including charges related to the sale of the European operations.

Current wording

(a)Includes professional service fees related to business acquisition and divestiture activities, including charges related to the sale of the European operations during the six months ended June 30, 2025.

Previous wording

(b)Includes a $0.5 million loss on the sale of the European operations during the three months ended March 31, 2025.

Current wording

(b)Includes a $0.5 million loss on the sale of the European operations during the six months ended June 30, 2025.