Graphic Packaging Holding Company Reports Fourth Quarter and Full Year 2023 Results
2023 Highlights
-
Net Sales were$9,428 million , flat versus the prior year. - Net Income was
$723 million , an increase of 39% versus the prior year. - Adjusted EBITDA was
$1,876 million , an increase of 17% versus the prior year. - Earnings per Diluted Share were
$2.34 , an increase of 38% versus the prior year. - Adjusted Earnings per Diluted Share were
$2.91 , an increase of 25% versus the prior year. - Year-end net leverage was 2.8x versus 3.2x at prior year end.
Net Income for fourth quarter 2023 was
The fourth quarters of 2023 and 2022 were impacted by a net
For the full year 2023, Net Income was
Full year 2023 and 2022 were impacted by a net
"Our innovation pipeline has never been stronger, and we expect to partner with both existing and new customers to bring more sustainable packaging solutions to the market in 2024 and beyond. We look forward to sharing details of our growth outlook and transformation to the global leader in sustainable consumer packaging at our investor meeting tomorrow,
Operating Results
EBITDA
EBITDA for the fourth quarter of 2023 was
EBITDA for the full year 2023 was
Other Results
Total Debt (Long-Term, Short-Term and Current Portion) decreased
At
Net Interest Expense was
Capital expenditures for the fourth quarter of 2023 were
Fourth quarter 2023 Income Tax Expense was
Full Year 2024 Guidance
The Company's fiscal 2024 guidance, excluding the potential impact of announced Augusta paperboard manufacturing facility sale, is as follows:
- Adjusted EBITDA is expected to be
$1.750 billion to$1.950 billion . - Adjusted Earnings per Diluted Share is expected to be
$2.50 to$3.00 .
Non-GAAP Reconciliation
Please note that a tabular reconciliation of Net Organic Sales Growth, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS (Excluding Amortization of Purchased Intangibles), Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow and Total Net Debt is attached to this release.
Earnings and Investor Meeting Webcast
The Company will host a video webcast tomorrow beginning at
Forward Looking Statements
Any statements of the Company's expectations in this press release 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 |
Twelve Months Ended |
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|
|
|
||||
In millions, except per share amounts |
2023 |
|
2022 |
2023 |
|
2022 |
|
$ 2,249 |
|
$ 2,386 |
$ 9,428 |
|
$ 9,440 |
Cost of Sales |
1,748 |
|
1,895 |
7,311 |
|
7,610 |
Selling, General and Administrative |
183 |
|
205 |
805 |
|
774 |
Other Expense, Net |
16 |
|
13 |
64 |
|
19 |
Business Combinations, Exit Activities and Other Special Charges, Net |
12 |
|
5 |
74 |
|
131 |
Income from Operations |
290 |
|
268 |
1,174 |
|
906 |
Nonoperating Pension and Postretirement Benefit (Expense) Income |
(1) |
|
2 |
(3) |
|
7 |
Interest Expense, Net |
(59) |
|
(54) |
(239) |
|
(197) |
Income before Income Taxes and Equity Income of Unconsolidated Entity |
230 |
|
216 |
932 |
|
716 |
Income Tax Expense |
(35) |
|
(60) |
(210) |
|
(194) |
Income before Equity Income of Unconsolidated Entity |
195 |
|
156 |
722 |
|
522 |
Equity Income of Unconsolidated Entity |
1 |
|
— |
1 |
|
— |
Net Income |
$ 196 |
|
$ 156 |
$ 723 |
|
$ 522 |
|
|
|
|
|
|
|
Net Income Per Share — Basic |
$ 0.64 |
|
$ 0.51 |
$ 2.35 |
|
$ 1.69 |
Net Income Per Share — Diluted |
$ 0.64 |
|
$ 0.50 |
$ 2.34 |
|
$ 1.69 |
|
|
|
|
|
|
|
Weighted Average Number of Shares Outstanding - Basic |
307.6 |
|
308.5 |
308.2 |
|
308.8 |
Weighted Average Number of Shares Outstanding - Diluted |
308.5 |
|
309.4 |
309.1 |
|
309.5 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
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|
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In millions, except share and per share amounts |
|
|
|
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and Cash Equivalents |
$ 162 |
|
$ 150 |
Receivables, Net |
835 |
|
879 |
Inventories, Net |
1,754 |
|
1,606 |
Other Current Assets |
94 |
|
71 |
Total Current Assets |
2,845 |
|
2,706 |
Property, Plant and Equipment, Net |
4,992 |
|
4,579 |
|
2,103 |
|
1,979 |
Intangible Assets, Net |
820 |
|
717 |
Other Assets |
415 |
|
347 |
Total Assets |
$ 11,175 |
|
$ 10,328 |
|
|
|
|
LIABILITIES |
|
|
|
Current Liabilities: |
|
|
|
Short-Term Debt and Current Portion of Long-Term Debt |
$ 764 |
|
$ 53 |
Accounts Payable |
1,094 |
|
1,123 |
Other Accrued Liabilities |
731 |
|
757 |
Total Current Liabilities |
2,589 |
|
1,933 |
Long-Term Debt |
4,609 |
|
5,200 |
Deferred Income Tax Liabilities |
731 |
|
668 |
Other Noncurrent Liabilities |
464 |
|
377 |
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
Preferred Stock, par value |
— |
|
— |
Common Stock, par value |
3 |
|
3 |
Capital in Excess of Par Value |
2,062 |
|
2,054 |
Retained Earnings |
1,029 |
|
469 |
Accumulated Other Comprehensive Loss |
(313) |
|
(377) |
Total Graphic Packaging Holding Company Shareholders' Equity |
2,781 |
|
2,149 |
Noncontrolling Interest |
1 |
|
1 |
Total Equity |
2,782 |
|
2,150 |
Total Liabilities and Shareholders' Equity |
$ 11,175 |
|
$ 10,328 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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|
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|
Twelve Months Ended |
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|
|
||
In millions |
2023 |
|
2022 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net Income |
$ 723 |
|
$ 522 |
Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: |
|
|
|
Depreciation and Amortization |
619 |
|
553 |
Amortization of Deferred Debt Issuance Costs |
6 |
|
9 |
Deferred Income Taxes |
22 |
|
131 |
Amount of Postretirement Expense Less Than Funding |
(5) |
|
(18) |
Asset Impairment Charges |
29 |
|
96 |
Other, Net |
58 |
|
15 |
Changes in Operating Assets and Liabilities, Net of Acquisitions |
(308) |
|
(218) |
Net Cash Provided by Operating Activities |
1,144 |
|
1,090 |
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Capital Spending |
(781) |
|
(522) |
Packaging Machinery Spending |
(23) |
|
(27) |
Acquisition of Businesses, Net of Cash Acquired |
(361) |
|
— |
Beneficial Interest on Sold Receivables |
184 |
|
125 |
Beneficial Interest Obtained in Exchange for Proceeds |
(45) |
|
(6) |
Other, Net |
1 |
|
(5) |
|
(1,025) |
|
(435) |
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Repurchase of Common Stock |
(54) |
|
(28) |
Payments on Debt |
(26) |
|
(14) |
Retirement of Long-Term Debt |
— |
|
(250) |
Borrowings under Revolving Credit Facilities |
4,449 |
|
3,929 |
Payments on Revolving Credit Facilities |
(4,314) |
|
(4,195) |
Repurchase of Common Stock related to Share-Based Payments |
(22) |
|
(18) |
Dividends Paid |
(123) |
|
(92) |
Other, Net |
(16) |
|
2 |
|
(106) |
|
(666) |
Increase (Decrease) in cash and cash equivalents, including cash classified within assets held for sale |
13 |
|
(11) |
Less Cash reclassified to Assets Held for Sale |
— |
|
5 |
Effect of Exchange Rate Changes on Cash |
(1) |
|
(6) |
Net Increase (Decrease) in Cash and Cash Equivalents |
12 |
|
(22) |
Cash and Cash Equivalents at Beginning of Year |
150 |
|
172 |
Cash and Cash Equivalents at End of Year |
$ 162 |
|
$ 150 |
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, Total Net Debt and Net Organic Sales Growth. 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, Net Leverage Ratio and Net Organic Sales Growth 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, Net Leverage Ratio, and Net Organic Sales Growth 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, Net Leverage Ratio and Net Organic Sales Growth 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, Net Leverage Ratio and Net Organic Sales Growth 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 |
|
Twelve Months Ended |
||||
|
|
|
|
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In millions, except per share amounts |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net Income |
$ 196 |
|
$ 156 |
|
$ 723 |
|
$ 522 |
Add (Subtract): |
|
|
|
|
|
|
|
Income Tax Expense |
35 |
|
60 |
|
210 |
|
194 |
Equity Income of Unconsolidated Entity |
(1) |
|
— |
|
(1) |
|
— |
Interest Expense, Net |
59 |
|
54 |
|
239 |
|
197 |
Depreciation and Amortization |
155 |
|
138 |
|
624 |
|
556 |
EBITDA |
444 |
|
408 |
|
1,795 |
|
1,469 |
Charges Associated with Business Combinations, Exit Activities and Other |
13 |
|
5 |
|
81 |
|
131 |
Adjusted EBITDA |
$ 457 |
|
$ 413 |
|
$ 1,876 |
|
$ 1,600 |
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin (Adjusted EBITDA/ |
20.3 % |
|
17.3 % |
|
19.9 % |
|
16.9 % |
|
|
|
|
|
|
|
|
Net Income |
$ 196 |
|
$ 156 |
|
$ 723 |
|
$ 522 |
Charges Associated with Business Combinations, Exit Activities and Other |
13 |
|
5 |
|
81 |
|
131 |
Accelerated Depreciation Related to Exit Activities |
3 |
|
— |
|
56 |
|
7 |
Tax Impact of Business Combinations, Exit Activities and Other Special |
— |
|
5 |
|
(28) |
|
(4) |
Amortization Related to Purchased Intangible Assets, Net of Tax |
18 |
|
15 |
|
67 |
|
66 |
Adjusted Net Income (b) |
$ 230 |
|
$ 181 |
|
$ 899 |
|
$ 722 |
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share - Basic (b) |
$ 0.75 |
|
$ 0.59 |
|
$ 2.92 |
|
$ 2.34 |
Adjusted Earnings Per Share - Diluted (b) |
$ 0.75 |
|
$ 0.59 |
|
$ 2.91 |
|
$ 2.33 |
|
|
(a) |
For the three and twelve months ended |
(b) |
Excludes amortization related to purchased intangibles. |
Reconciliation of Non-GAAP Financial Measures (Continued) |
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|
Twelve Months Ended |
||||
|
|
|
|
|
December 31, |
In millions |
2023 |
|
2022 |
|
2021 |
Net Income |
$ 723 |
|
$ 522 |
|
$ 204 |
Add (Subtract): |
|
|
|
|
|
Net Income Attributable to Noncontrolling Interest |
— |
|
— |
|
12 |
Income Tax Expense |
210 |
|
194 |
|
74 |
Equity Income of Unconsolidated Entity |
(1) |
|
— |
|
(1) |
Interest Expense, Net |
239 |
|
197 |
|
123 |
Depreciation and Amortization |
624 |
|
556 |
|
494 |
EBITDA |
1,795 |
|
1,469 |
|
906 |
Charges Associated with Business Combinations, Exit Activities and |
81 |
|
131 |
|
150 |
Adjusted EBITDA |
1,876 |
|
1,600 |
|
1,056 |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
Calculation of Net Debt: |
2023 |
|
2022 |
|
2021 |
Short-Term Debt and Current Portion of Long-Term Debt |
$ 764 |
|
$ 53 |
|
$ 279 |
Long-Term Debt(a) |
4,632 |
|
5,230 |
|
5,552 |
Less: |
|
|
|
|
|
Cash and Cash Equivalents |
(162) |
|
(150) |
|
(172) |
Total Net Debt |
$ 5,234 |
|
$ 5,133 |
|
$ 5,659 |
|
|
|
|
|
|
Net Leverage Ratio (Total Net Debt/Adjusted EBITDA) |
2.79 |
|
3.21 |
|
5.36 |
|
|
(a) |
Excludes unamortized deferred debt issue costs. |
|
Twelve Months Ended |
||
|
|
||
In millions |
2023 |
|
2022 |
Net Cash Provided by Operating Activities |
$ 1,144 |
|
$ 1,090 |
Net Cash Receipts from Receivables Sold included in Investing Activities |
139 |
|
119 |
Cash Payments Associated with Business Combinations, Exit Activities and Other Special Charges, Net |
14 |
|
40 |
Adjusted Net Cash Provided by Operating Activities |
$ 1,297 |
|
$ 1,249 |
Capital Spending |
(804) |
|
(549) |
Adjusted Cash Flow |
$ 493 |
|
$ 700 |
Unaudited Supplemental Data
|
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|
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Calculation of Net Organic Sales Growth: |
Three Months Ended |
Twelve Months Ended |
||||
|
|
|
||||
In millions |
2023 |
|
2022 |
2023 |
|
2022 |
|
$ 2,249 |
|
$ 2,386 |
$ 9,428 |
|
$ 9,440 |
Open Market Paperboard Sales (Paperboard Mills Segment) |
(218) |
|
(357) |
(1,022) |
|
(1,290) |
Impact of Purchased Sales from Acquisitions (a) |
(44) |
|
— |
(53) |
|
— |
Impact of Divestitures |
— |
|
(10) |
— |
|
(10) |
Impact of Pricing (b) |
(60) |
|
— |
(514) |
|
— |
Impact of Foreign Exchange (c) |
(21) |
|
— |
(13) |
|
— |
Net Organic Sales |
$ 1,906 |
|
$ 2,019 |
$ 7,826 |
|
$ 8,140 |
Net Organic Sales Growth |
(5.6) % |
|
|
(3.9) % |
|
|
|
|
(a) |
Purchased Sales from Acquisitions represents the prior year sales from acquired companies adjusted for current year currency impact. |
(b) |
Represents pricing from converting sales, including price recovery from acquisitions. |
(c ) |
Impact of Foreign Exchange is measured as the increase or decrease in sales for the current period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods. |
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