Graphic Packaging Holding Company Reports First Quarter 2024 Financial Results
First Quarter 2024 Highlights
- Vision 2030 introduced at Investor Day in February
- Agreement to sell
Augusta, Georgia paperboard manufacturing facility toClearwater 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
Net Income was
"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
Operating Results
EBITDA
EBITDA for the first quarter of 2024 was
Other Results and Commentary
Total Debt increased
Capital expenditures in the quarter were
The Company returned
The sale of the Company's
2024 Annual Guidance
The Company updated 2024 financial guidance to reflect the expected contribution from the
- 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
- +1-833-470-1428 from
the United States , - +1-833-950-0062 from
Canada , and - +1-929-526-1599 from outside
the United States andCanada .
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
About
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
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|
Three Months Ended |
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|
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In millions, except per share amounts |
2024 |
|
2023 |
|
$ 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 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
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In millions, except share and per share amounts |
|
|
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 |
|
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 |
— |
— |
Common Stock, par value |
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 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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Three Months Ended |
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In millions |
2024 |
2023 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
Net Income |
$ 165 |
$ 207 |
Adjustments to Reconcile Net Income to |
|
|
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) |
|
(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 |
|
(26) |
(37) |
Cash and Cash Equivalents at Beginning of Period |
162 |
150 |
Cash and Cash Equivalents at End of Period |
$ 136 |
$ 113 |
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
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 |
|
|
|
|
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/ |
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. |
Reconciliation of Non-GAAP Financial Measures (Continued) |
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Twelve Months Ended |
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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 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
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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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