Graphic Packaging Holding Company Reports Third Quarter 2024 Financial Results
Third Quarter 2024 Highlights
Return to positive packaging volume growth
Innovation Sales Growth of $54 million
Virtual Power Purchase Agreement advances commitment to reduce greenhouse gas emissions in Europe
Third Quarter 2024 Financial Results
Net Sales $2,216 million, versus $2,349 million in 2023
Net Income $165 million, versus $170 million in 2023
Adjusted EBITDA $433 million, versus $482 million in 2023
Adjusted EBITDA Margin 19.5%, versus 20.5% in 2023
Earnings per Diluted Share $0.55, versus $0.55 in 2023
Adjusted Earnings per Diluted Share $0.64, versus $0.74 in 2023
Net Leverage 3.1x, versus 3.0x in third quarter 2023
ATLANTA, Oct. 29, 2024 /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK) ("Graphic Packaging" or the "Company"), a global leader in sustainable consumer packaging, today reported third quarter 2024 results.
Net Income was $165 million, or $0.55 per share, based upon 302.6 million weighted average diluted shares. This compares to third quarter 2023 Net Income of $170 million, or $0.55 per share, based upon 309.2 million weighted average diluted shares. The third quarter of 2024 was impacted by a net charge from special items and amortization of purchased intangibles of $29 million and the third quarter of 2023 was impacted by a net charge from special items and amortization of purchased intangibles of $59 million. When adjusting for special items and amortization of purchased intangibles, Adjusted Net Income for the third quarter of 2024 was $194 million, or $0.64 per diluted share. This compares to third quarter 2023 Adjusted Net Income of $229 million, or $0.74 per diluted share.
Michael Doss, the Company's President and CEO said, "In the third quarter, we saw our packaging volumes turn positive, after Europe's return to growth in the second quarter. Third quarter also saw the launch of new paperboard cup and container innovations for major Foodservice customers and the first-ever round BoardioTM paperboard canister for a leading collagen-protein brand. Our innovations are delivering real value for our customers and for consumers.
Despite volume challenges brought on first by customer and retailer destocking and later by the pressure consumers are feeling from price inflation, we are delivering margin strength and consistency in line with the best global consumer packaging companies. That speaks to the value of the portfolio we have created, the success of our sustainable packaging innovations, and our team's commitment to outstanding execution. As volumes continue to improve and our Waco investment moves toward completion, cash generation will rise significantly, and we will deploy that cash to create substantial additional value for shareholders."
Operating Results
Net Sales
Net Sales decreased 6% or $133 million to $2,216 million in the third quarter of 2024, compared to $2,349 million in the prior year period. The decline was driven by a $109 million impact from the divestiture of the Augusta, GA bleached paperboard manufacturing facility and reduced open market sales participation, and a $35 million net decline in sales from packaging operations, where price declines were partially offset by volume growth. Other acquisitions and divestitures (excluding Augusta) had a $9 million favorable impact on sales in the quarter, while foreign exchange had a $2 million favorable impact.
EBITDA
EBITDA for the third quarter of 2024 was $417 million, $31 million lower than the third quarter of 2023. After adjusting both periods for business combinations and other special items, Adjusted EBITDA was $433 million in the third quarter of 2024 versus $482 million in the third quarter of 2023. The $49 million decline in Adjusted EBITDA was driven primarily by the divestiture of the Augusta, GA bleached paperboard manufacturing facility and related bleached paperboard price and volume declines of $34 million, and by previously disclosed weather and power issues of $25 million. Excluding those items, the impact of lower sales and modest inflation were offset by Net Performance. Other acquisitions and divestitures (excluding Augusta) had a $3 million favorable impact on EBITDA in the quarter, while foreign exchange had a $5 million favorable impact. Adjusted EBITDA Margin including the impact of the divestiture and reduced open market paperboard participation was 19.5% versus 20.5% in the prior year quarter.
Other Results and Commentary
Total Debt decreased $178 million to $5,430 million, and Net Debt decreased $158 million to $5,304 million, compared to the prior year third quarter. The Company's third quarter 2024 Net Leverage Ratio was 3.1x compared to 3.0x in the prior year quarter.
Capital expenditures in the quarter were $313 million, versus $207 million in the third quarter of 2023, primarily reflecting an acceleration in the timing of equipment purchases for the Waco, Texas recycled paperboard manufacturing facility.
The Company returned approximately $291 million to stockholders during the first nine months of 2024 through dividends and share repurchase activity. Regular dividends of approximately $30 million were paid in the third quarter.
2024 Annual Guidance and 2025 Commentary
The Company updated 2024 financial guidance:
Full-year Adjusted EBITDA: $1.68 billion to $1.73 billion
Adjusted Earnings per Diluted Share: $2.49 to $2.61
The Company is currently targeting 2025 financial results in line with the Vision 2030 base financial model:
Low single-digit Sales growth
Mid single-digit Adjusted EBITDA growth
High single-digit Adjusted EPS growth
Innovation Sales Growth, Net Performance, and Non-GAAP Reconciliations
We define Innovation Sales Growth as incremental sales of a product that delivers a significant change in materials used, package functionality, or design to a new or existing customer. We define Net Performance as the impact of cost and productivity initiatives, production efficiencies and/or disruptions, and other operating impacts. 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, 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 (October 29, 2024) to discuss the results of third 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 using the following dial-in numbers:
Toll-Free: 888-506-0062International: 973-528-0011Participant Access Code: 525323
Forward Looking Statements
Any statements of the Company's expectations in this press release, including but not limited to volume and cash generation increases, 2024 Adjusted EBITDA and Adjusted Earning per Diluted Share guidance, and 2025 commentary on sales, Adjusted EBITDA and Adjusted EPS growth, 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, 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 COMPANYCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
In millions, except per share amounts
2024
2023
2024
2023
Net Sales
$ 2,216
$ 2,349
$ 6,712
$ 7,179
Cost of Sales
1,714
1,799
5,203
5,563
Selling, General and Administrative
191
220
603
622
Other Expense, Net
17
15
49
48
Business Combinations, Exit Activities and Other Special Items, Net
16
28
(23)
62
Income from Operations
278
287
880
884
Nonoperating Pension and Postretirement Benefit Expense
(1)
(1)
(2)
(2)
Interest Expense, Net
(58)
(62)
(177)
(180)
Income before Income Taxes
219
224
701
702
Income Tax Expense
(55)
(54)
(182)
(175)
Income before Equity Income of Unconsolidated Entity
164
170
519
527
Equity Income of Unconsolidated Entity
1
—
1
—
Net Income
$ 165
$ 170
$ 520
$ 527
