First Quarter 2024 Highlights
- Vision 2030 introduced at Investor Day in February
- Agreement to sell Augusta,
Georgia paperboard manufacturing facility to Clearwater
Paper
- Sales growth from innovation of $37
million, in line with expectations
First Quarter 2024 Financial Results versus First Quarter
2023
- Net Sales $2,259 million, versus
$2,438 million in 2023
- Net Income $165 million, versus
$207 million in 2023
- Adjusted EBITDA $443 million,
versus $484 million in 2023
- Adjusted EBITDA Margin 19.6%, versus 19.9% in 2023
- Earnings per Diluted Share $0.53,
versus $0.67 in 2023
- Adjusted Earnings per Diluted Share $0.66, versus $0.77
in 2023
- Net leverage 3.0x, versus 3.1x in 2023
ATLANTA, April 30,
2024 /PRNewswire/ -- Graphic Packaging Holding
Company (NYSE: GPK), (the "Company"), a leader in sustainable
consumer packaging, today reported first quarter 2024 results.
Net Income was $165 million, or
$0.53 per share, based upon 309.1
million weighted average diluted shares. This compares to first
quarter 2023 Net Income of $207
million, or $0.67 per share,
based upon 309.7 million weighted average diluted shares. The first
quarters of 2024 and 2023 were impacted by a net $22 million and $14
million of special charges, respectively. When adjusting for
special charges and amortization of purchased intangibles, Adjusted
Net Income for the first quarter of 2024 was $203 million, or $0.66 per diluted share. This compares to first
quarter 2023 Adjusted Net Income of $237
million, or $0.77 per diluted
share.
Michael Doss, the Company's
President and CEO said, "During the first quarter, our diverse
consumer packaging portfolio performed broadly as expected. Sales
improved sequentially compared to the fourth quarter of 2023, and
we generated a solid 19.6% Adjusted EBITDA margin while choosing to
significantly reduce bleached paperboard production to match supply
with demand. We expect volumes to improve further in the second
quarter, and, excluding the impact of the Augusta bleached paperboard sale, expect to
generate positive sales growth in 2024, as we partner with
customers to deliver the more circular, more functional, and more
convenient packaging that consumers prefer.
"We unveiled Vision 2030 in February, setting ambitious new
goals that reflect our transformation to a global consumer
packaging leader. The addressable market opportunity we see across
five global innovation platforms increased to $15 billion and we remain on track to achieve 2%
sales growth from innovation in 2024. We are investing in our
exceptional team and advancing plans to achieve the emissions
reduction goals approved by the Science Based Targets Initiative.
Construction at the Waco, Texas
recycled paperboard manufacturing facility is on schedule and
hitting all milestones. Capital spending will peak in 2024. We
expect cash flow to increase in 2025 and in subsequent years, and
our opportunities for value-creating capital deployment are clear
and compelling" continued Mr. Doss.
Operating Results
Net Sales
Net Sales
decreased 7% to $2,259 million in the
first quarter of 2024, compared to $2,438
million in the prior year period. The decline was driven by
lower open market sales of paperboard (~4%), fewer shipping days
(~2%), input cost pass through in Europe (~1%), and lower days-adjusted sales
(~1%). Net acquisitions and divestitures had a $15 million favorable impact on sales in the
quarter, while foreign exchange had a $3
million favorable impact. Sales growth in Foodservice and
Beverage markets was offset by weakness in Food and Household
markets.
EBITDA
EBITDA for the first quarter of 2024 was
$426 million, $43 million less than the first quarter of
2023. After adjusting both periods for business combinations
and other special charges, Adjusted EBITDA was $443 million in the first quarter of 2024 versus
$484 million in the first quarter of
2023. The $41 million decline was
driven by lower production and open market sales of paperboard.
Adjusted EBITDA Margin was 19.6%, versus 19.9% in the year ago
quarter.
Other Results and Commentary
Total Debt increased
$160 million to $5,708 million, and total debt, net of cash and
cash equivalents increased $137
million to $5,572 million,
compared to the prior year first quarter. The Company's first
quarter 2024 Net Leverage Ratio was 3.0x compared to 3.1x in the
prior year quarter.
Capital expenditures in the quarter were $331 million, versus $196
million in the first quarter of 2023 reflecting an
acceleration in project spend for the Waco, Texas recycled paperboard manufacturing
facility.
The Company returned $31 million
to stockholders through dividends in the first quarter. There were
no share repurchases during the quarter.
The sale of the Company's Augusta,
Georgia bleached paperboard manufacturing facility to
Clearwater Paper is expected to close May 1,
2024, with net proceeds of approximately $550 million.
2024 Annual Guidance
The Company updated 2024
financial guidance to reflect the expected contribution from the
Augusta, Georgia bleached
paperboard manufacturing facility and related bleached paperboard
sales through the end of April. The midpoint of the guidance range
has not changed except to reflect four months of Augusta contribution rather than twelve.
- Adjusted EBITDA: $1.73 billion to
$1.83 billion
- Adjusted Earnings per Diluted Share: $2.65 to $2.85
Innovation Sales Growth and Non-GAAP
Reconciliations
Innovation Sales Growth is defined as
incremental sales of a product that delivers a significant change
in materials used, package functionality, or design to a new or
existing customer. A tabular reconciliation of EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS,
Adjusted Net Cash Provided by Operating Activities, Adjusted Cash
Flow, Total Net Debt and Net Leverage is attached to this
release.
Earnings Call
The Company will host a
conference call at 10:00 a.m. ET
today (April 30, 2024) to discuss the
results of first quarter 2024. The conference call will be webcast
and can be accessed from the Investors website at
https://investors.graphicpkg.com. Participants may also
listen via telephone by referencing conference ID 507644 and
dialing:
- +1-833-470-1428 from the United
States,
- +1-833-950-0062 from Canada,
and
- +1-929-526-1599 from outside the
United States and Canada.
Forward Looking Statements
Any statements of the
Company's expectations in this press release, including but not
limited to capital spending trends, updated 2024 Adjusted EBITDA,
and Adjusted Earning per Diluted Share guidance, constitute
"forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Such statements are based on
currently available information and are subject to various risks
and uncertainties that could cause actual results to differ
materially from the Company's present expectations. These risks and
uncertainties include, but are not limited to, inflation of and
volatility in raw material and energy costs, continuing pressure
for lower cost products, the Company's ability to implement its
business strategies, including productivity initiatives, cost
reduction plans, and integration activities, as well as the
Company's debt level, currency movements and other risks of
conducting business internationally and the impact of regulatory
and litigation matters, including the continued availability of the
Company's U.S. federal income tax attributes to offset U.S. federal
income taxes and the timing related to the Company's future U.S.
federal income tax payments. Undue reliance should not be placed on
such forward-looking statements, as such statements speak only as
of the date on which they are made and the Company undertakes no
obligation to update such statements, except as required by law.
Additional information regarding these and other risks is contained
in the Company's periodic filings with the SEC.
About Graphic Packaging Holding Company
Graphic
Packaging Holding Company (NYSE: GPK), headquartered in
Atlanta, Georgia, designs and
produces consumer packaging made primarily from renewable or
recycled materials. An industry leader in innovation, the Company
is committed to reducing the environmental footprint of consumer
packaging. Graphic Packaging operates a global network of design
and manufacturing facilities serving the world's most widely
recognized brands in food, beverage, foodservice, household, and
other consumer products. Learn more at www.graphicpkg.com.
GRAPHIC PACKAGING
HOLDING COMPANY
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three Months Ended
|
|
March 31,
|
In millions, except per share
amounts
|
2024
|
|
2023
|
Net Sales
|
$ 2,259
|
|
$ 2,438
|
Cost of
Sales
|
1,733
|
|
1,878
|
Selling, General and
Administrative
|
215
|
|
197
|
Other Expense,
Net
|
16
|
|
18
|
Business Combinations,
Exit Activities and Other Special Charges, Net
|
17
|
|
15
|
Income from
Operations
|
278
|
|
330
|
Nonoperating Pension
and Postretirement Benefit Expense
|
(1)
|
|
(1)
|
Interest Expense,
Net
|
(59)
|
|
(58)
|
Income before Income
Taxes
|
218
|
|
271
|
Income Tax
Expense
|
(53)
|
|
(64)
|
Net Income
|
$
165
|
|
$
207
|
|
|
|
|
Net Income Per Share
— Basic
|
$
0.54
|
|
$
0.67
|
Net Income Per Share
— Diluted
|
$
0.53
|
|
$
0.67
|
|
|
|
|
Weighted Average Number
of Shares Outstanding - Basic
|
307.8
|
|
308.6
|
Weighted Average Number
of Shares Outstanding - Diluted
|
309.1
|
|
309.7
|
GRAPHIC PACKAGING
HOLDING COMPANY
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
In millions, except share and per share
amounts
|
March 31,
2024
|
December 31,
2023
|
ASSETS
|
|
|
Current
Assets:
|
|
|
Cash and Cash
Equivalents
|
$
136
|
$
162
|
Receivables,
Net
|
878
|
835
|
Inventories,
Net
|
1,702
|
1,754
|
Assets Held for
Sale
|
90
|
—
|
Other Current
Assets
|
117
|
94
|
Total Current
Assets
|
2,923
|
2,845
|
Property, Plant and
Equipment, Net
|
4,685
|
4,992
|
Goodwill
|
2,010
|
2,103
|
Intangible Assets,
Net
|
746
|
820
|
Assets Held for
Sale
|
557
|
—
|
Other Assets
|
428
|
415
|
Total Assets
|
$
11,349
|
$
11,175
|
|
|
|
LIABILITIES
|
|
|
Current
Liabilities:
|
|
|
Short-Term Debt and
Current Portion of Long-Term Debt
|
$
756
|
$
764
|
Accounts
Payable
|
940
|
1,094
|
Liabilities Held for
Sale
|
10
|
—
|
Other Accrued
Liabilities
|
660
|
731
|
Total Current
Liabilities
|
2,366
|
2,589
|
Long-Term
Debt
|
4,930
|
4,609
|
Deferred Income Tax
Liabilities
|
714
|
731
|
Liabilities Held for
Sale
|
20
|
—
|
Other Noncurrent
Liabilities
|
461
|
464
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
Preferred Stock, par
value $0.01 per share; 100,000,000 shares authorized; no shares
issued or outstanding
|
—
|
—
|
Common Stock, par value
$0.01 per share; 1,000,000,000 shares authorized; 307,293,066 and
306,058,815
shares issued and outstanding at March 31, 2024 and
December 31, 2023, respectively
|
3
|
3
|
Capital in Excess of
Par Value
|
2,062
|
2,062
|
Retained
Earnings
|
1,163
|
1,029
|
Accumulated Other
Comprehensive Loss
|
(371)
|
(313)
|
Total Graphic Packaging Holding Company Shareholders'
Equity
|
2,857
|
2,781
|
Noncontrolling
Interest
|
1
|
1
|
Total Equity
|
2,858
|
2,782
|
Total Liabilities and Shareholders'
Equity
|
$
11,349
|
$
11,175
|
GRAPHIC PACKAGING
HOLDING COMPANY
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Three Months Ended
|
|
March 31,
|
In millions
|
2024
|
2023
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
Net Income
|
$ 165
|
$ 207
|
Adjustments to
Reconcile Net Income to Net Cash (Used In) Provided by Operating
Activities:
|
|
|
Depreciation and
Amortization
|
148
|
139
|
Deferred Income
Taxes
|
(16)
|
30
|
Amount of
Postretirement Expense Less Than Funding
|
1
|
1
|
Asset Impairment
Charges
|
—
|
4
|
Other, Net
|
14
|
16
|
Changes in Operating
Assets and Liabilities
|
(309)
|
(337)
|
Net Cash Provided by
Operating Activities
|
3
|
60
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
Capital
Spending
|
(324)
|
(189)
|
Packaging Machinery
Spending
|
(7)
|
(7)
|
Acquisition of
Businesses, Net of Cash Acquired
|
—
|
(100)
|
Beneficial Interest on
Sold Receivables
|
48
|
30
|
Beneficial Interest
Obtained in Exchange for Proceeds
|
(28)
|
(6)
|
Other, Net
|
—
|
(1)
|
Net Cash Used in
Investing Activities
|
(311)
|
(273)
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
Repurchase of Common
Stock
|
—
|
(28)
|
Payments on
Debt
|
(10)
|
(5)
|
Proceeds from Issuance
of Debt
|
250
|
—
|
Borrowings under
Revolving Credit Facilities
|
1,106
|
1,832
|
Payments on Revolving
Credit Facilities
|
(1,006)
|
(1,569)
|
Repurchase of Common
Stock related to Share-Based Payments
|
(22)
|
(20)
|
Dividends
Paid
|
(31)
|
(31)
|
Other, Net
|
—
|
(2)
|
Net Cash Provided by
Financing Activities
|
287
|
177
|
Increase (Decrease) in
Cash and Cash Equivalents, including Cash classified within Assets
Held for Sale
|
(21)
|
(36)
|
Less Cash reclassified
to Assets Held for Sale
|
—
|
2
|
Effect of Exchange Rate
Changes on Cash
|
(5)
|
1
|
Net Decrease in Cash
and Cash Equivalents
|
(26)
|
(37)
|
Cash and Cash
Equivalents at Beginning of Period
|
162
|
150
|
Cash and Cash
Equivalents at End of Period
|
$ 136
|
$ 113
|
GRAPHIC PACKAGING HOLDING
COMPANY
Reconciliation of Non-GAAP Financial
Measures
The tables below set forth the calculation of the
Company's earnings before interest expense, income tax expense,
depreciation and amortization, including pension amortization
("EBITDA"), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided by
Operating Activities, Adjusted Cash Flow, Net Leverage Ratio, and
Total Net Debt. Adjusted EBITDA and Adjusted Net Income exclude
charges associated with: the Company's business combinations,
facility shutdowns, and other special charges. The Company's
management believes that the presentation of EBITDA, Adjusted
EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, Adjusted
Net Cash Provided by Operating Activities, Adjusted Cash Flow, and
Net Leverage Ratio provides useful information to investors because
these measures are regularly used by management in assessing the
Company's performance. EBITDA, Adjusted EBITDA, Adjusted Net
Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided by
Operating Activities, Adjusted Cash Flow, and Net Leverage Ratio
are financial measures not calculated in accordance with generally
accepted accounting principles in the
United States ("GAAP"), and are not measures of net income,
operating income, operating performance, or liquidity presented in
accordance with GAAP.
EBITDA, Adjusted EBITDA, Adjusted Net Income,
Adjusted Earnings Per Share, Adjusted Net Cash Provided by
Operating Activities, Adjusted Cash Flow, and Net Leverage Ratio
should be considered in addition to results prepared in accordance
with GAAP, but should not be considered substitutes for or superior
to GAAP results. In addition, our EBITDA, Adjusted EBITDA, Adjusted
Net Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided
by Operating Activities, Adjusted Cash Flow, and Net Leverage Ratio
may not be comparable to Adjusted EBITDA or similarly titled
measures utilized by other companies since such other companies may
not calculate such measures in the same manner as we do.
|
Three Months Ended
|
|
March 31,
|
In millions, except per share
amounts
|
2024
|
2023
|
Net Income
|
$
165
|
$
207
|
Add
(Subtract):
|
|
|
Income Tax
Expense
|
53
|
64
|
Interest Expense,
Net
|
59
|
58
|
Depreciation and
Amortization
|
149
|
140
|
EBITDA
|
426
|
469
|
Charges Associated with
Business Combinations, Exit Activities and Other Special Charges,
Net
|
17
|
15
|
Adjusted
EBITDA
|
$
443
|
$
484
|
|
|
|
Adjusted EBITDA Margin
(Adjusted EBITDA/Net Sales)
|
19.6 %
|
19.9 %
|
|
|
|
Net Income
|
$
165
|
$
207
|
Charges Associated with
Business Combinations, Exit Activities and Other Special Charges,
Net
|
17
|
15
|
Accelerated
Depreciation Related to Exit Activities
|
12
|
2
|
Tax Impact of Business
Combinations, Exit Activities and Other Special Charges, Net,
Accelerated Depreciation and Other Tax Items
|
(7)
|
(3)
|
Amortization Related to
Purchased Intangibles Assets, Net of Tax
|
16
|
16
|
Adjusted Net Income
(a)
|
$
203
|
$
237
|
|
|
|
Adjusted Earnings Per
Share - Basic (a)
|
0.66
|
0.77
|
Adjusted Earnings Per
Share - Diluted (a)
|
0.66
|
0.77
|
|
|
(a)
|
Excludes amortization
related to purchased intangibles.
|
GRAPHIC PACKAGING
HOLDING COMPANY
Reconciliation of
Non-GAAP Financial Measures
(Continued)
|
|
|
Twelve Months Ended
|
|
March 31,
|
|
March 31,
|
|
December 31,
|
In millions
|
2024
|
|
2023
|
|
2023
|
Net Income
|
$
681
|
|
$
622
|
|
$
723
|
Add
(Subtract):
|
|
|
|
|
|
Income Tax
Expense
|
199
|
|
212
|
|
210
|
Equity Income of
Unconsolidated Entity
|
(1)
|
|
—
|
|
(1)
|
Interest Expense,
Net
|
240
|
|
213
|
|
239
|
Depreciation and
Amortization
|
633
|
|
556
|
|
624
|
EBITDA
|
$
1,752
|
|
$
1,603
|
|
$
1,795
|
Charges Associated with
Business Combinations, Exit Activities and Other Special Charges,
Net
|
83
|
|
131
|
|
81
|
Adjusted
EBITDA
|
$
1,835
|
|
$
1,734
|
|
$
1,876
|
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
December 31,
|
Calculation of Net
Debt:
|
2024
|
|
2023
|
|
2023
|
Short-Term Debt and
Current Portion of Long-Term Debt
|
$
756
|
|
$
57
|
|
$
764
|
Long-Term Debt
(a)
|
4,952
|
|
5,491
|
|
4,632
|
Less:
|
|
|
|
|
|
Cash and Cash
Equivalents
|
(136)
|
|
(113)
|
|
(162)
|
Total Net
Debt
|
$
5,572
|
|
$
5,435
|
|
$
5,234
|
|
|
|
|
|
|
Net Leverage Ratio
(Total Net Debt/Adjusted EBITDA)
|
3.04
|
|
3.13
|
|
2.79
|
|
|
(a)
|
Excludes unamortized
deferred debt issue costs.
|
|
Three Months Ended
|
|
March 31,
|
In millions
|
2024
|
|
2023
|
Net Cash Provided by
Operating Activities
|
$
3
|
|
$
60
|
Net Cash Receipts from
Receivables Sold included in Investing Activities
|
20
|
|
24
|
Cash Payments
Associated with Business Combinations, Exit Activities and Other
Special Charges, Net
|
9
|
|
1
|
Adjusted Net Cash
Provided by Operating Activities
|
$
32
|
|
$
85
|
Capital
Spending
|
(331)
|
|
(196)
|
Adjusted Cash
Flow
|
$
(299)
|
|
$
(111)
|
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SOURCE Graphic Packaging Holding Company