Graphic Packaging Holding Company Reports Second Quarter 2024 Financial Results
Second Quarter 2024 Highlights
- Delivered strong EBITDA and margin performance, in line with expectations
- Generated Innovation Sales Growth of
$51 million - Divested
Augusta, Georgia bleached paperboard manufacturing facility - Repurchased approximately 2.4% of
Graphic Packaging Holding Company common shares outstanding
Second Quarter 2024 Financial Results
-
Net Sales $2,237 million , versus$2,392 million in 2023 - Net Income
$190 million , versus$150 million in 2023 - Adjusted EBITDA
$402 million , versus$453 million in 2023 - Adjusted EBITDA Margin 18.0%, versus 18.9% in 2023
- Earnings per Diluted Share
$0.62 versus$0.49 in 2023 - Adjusted Earnings per Diluted Share
$0.60 , versus$0.66 in 2023 - Net Leverage 2.9x, versus 3.0x in second quarter 2023
Net Income was
"On
Operating Results
EBITDA
EBITDA for the second quarter of 2024 was
Other Results and Commentary
Total Debt decreased
Capital expenditures in the quarter were
The divestiture of the Company's
The Company returned approximately
2024 Annual Guidance
The Company is reiterating 2024 financial guidance:
- Adjusted EBITDA:
$1.73 billion to$1.83 billion - Adjusted Earnings per Diluted Share:
$2.65 to$2.85
Innovation Sales Growth, Net Performance, 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. Net Performance is defined 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 (New Dial-In Numbers)
The Company will host a conference call at
Toll-Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 477193
Forward Looking Statements
Any statements of the Company's expectations in this press release, including but not limited to Innovation Sales Growth for 2024, sales and cash flow growth in the next few years, and 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, 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 |
Six Months Ended |
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|
|
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In millions, except per share amounts |
2024 |
|
2023 |
2024 |
|
2023 |
|
$ 2,237 |
|
$ 2,392 |
$ 4,496 |
|
$ 4,830 |
Cost of Sales |
1,756 |
|
1,886 |
3,489 |
|
3,764 |
Selling, General and Administrative |
197 |
|
205 |
412 |
|
402 |
Other Expense, Net |
16 |
|
15 |
32 |
|
33 |
Business Combinations, Exit Activities and Other Special Items, Net |
(56) |
|
19 |
(39) |
|
34 |
Income from Operations |
324 |
|
267 |
602 |
|
597 |
Nonoperating Pension and Postretirement Benefit Expense |
— |
|
— |
(1) |
|
(1) |
Interest Expense, Net |
(60) |
|
(60) |
(119) |
|
(118) |
Income before Income Taxes |
264 |
|
207 |
482 |
|
478 |
Income Tax Expense |
(74) |
|
(57) |
(127) |
|
(121) |
Net Income |
$ 190 |
|
$ 150 |
$ 355 |
|
$ 357 |
|
|
|
|
|
|
|
Net Income Per Share - Basic |
$ 0.62 |
|
$ 0.49 |
$ 1.16 |
|
$ 1.16 |
Net Income Per Share - Diluted |
$ 0.62 |
|
$ 0.49 |
$ 1.15 |
|
$ 1.15 |
|
|
|
|
|
|
|
Weighted Average Number of Shares Outstanding - Basic |
305.7 |
|
308.2 |
306.7 |
|
308.4 |
Weighted Average Number of Shares Outstanding - Diluted |
306.9 |
|
309.1 |
307.9 |
|
309.4 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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In millions, except share and per share amounts |
|
|
ASSETS |
|
|
Current Assets: |
|
|
Cash and Cash Equivalents |
$ 125 |
$ 162 |
Receivables, Net |
875 |
835 |
Inventories, Net |
1,699 |
1,754 |
Assets Held for Sale |
11 |
— |
Other Current Assets |
130 |
94 |
Total Current Assets |
2,840 |
2,845 |
Property, Plant and Equipment, Net |
4,826 |
4,992 |
|
2,014 |
2,103 |
Intangible Assets, Net |
722 |
820 |
Other Assets |
426 |
415 |
Total Assets |
$ 10,828 |
$ 11,175 |
|
|
|
LIABILITIES |
|
|
Current Liabilities: |
|
|
Short-Term Debt and Current Portion of Long-Term Debt |
$ 327 |
$ 764 |
Accounts Payable |
973 |
1,094 |
Other Accrued Liabilities |
663 |
731 |
Total Current Liabilities |
1,963 |
2,589 |
Long-Term Debt |
4,930 |
4,609 |
Deferred Income Tax Liabilities |
666 |
731 |
Other Noncurrent Liabilities |
456 |
464 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Preferred Stock, par value |
— |
— |
Common Stock, par value |
3 |
3 |
Capital in Excess of Par Value |
2,031 |
2,062 |
Retained Earnings |
1,167 |
1,029 |
Accumulated Other Comprehensive Loss |
(389) |
(313) |
Total Graphic Packaging Holding Company Shareholders' Equity |
2,812 |
2,781 |
Noncontrolling Interest |
1 |
1 |
Total Equity |
2,813 |
2,782 |
Total Liabilities and Shareholders' Equity |
$ 10,828 |
$ 11,175 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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|
Six Months Ended |
|
|
|
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In millions |
2024 |
2023 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
Net Income |
$ 355 |
$ 357 |
Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: |
|
|
Depreciation and Amortization |
281 |
304 |
Deferred Income Taxes |
(70) |
38 |
Gain on Disposal of Business |
(75) |
— |
Asset Impairment Charges |
— |
7 |
Other, Net |
30 |
35 |
Changes in Operating Assets and Liabilities |
(357) |
(450) |
Net Cash Provided by Operating Activities |
164 |
291 |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
Capital Spending |
(564) |
(372) |
Packaging Machinery Spending |
(16) |
(13) |
Acquisition of Businesses, Net of Cash Acquired |
— |
(100) |
Proceeds from the Sale of Business |
711 |
— |
Beneficial Interest on Sold Receivables |
96 |
60 |
Beneficial Interest Obtained in Exchange for Proceeds |
(50) |
(9) |
Other, Net |
(2) |
(3) |
Net Cash Provided By (Used In) Investing Activities |
175 |
(437) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
Repurchase of Common Stock |
(200) |
(29) |
Proceeds from Issuance of Debt |
756 |
— |
Retirement of Long-Term Debt |
(400) |
— |
Payments on Debt |
(19) |
(10) |
Borrowings under Revolving Credit Facilities |
2,479 |
2,636 |
Payments on Revolving Credit Facilities |
(2,892) |
(2,379) |
Repurchase of Common Stock related to Share-Based Payments |
(23) |
(20) |
Debt Issuance Costs |
(14) |
— |
Dividends Paid |
(61) |
(61) |
Other, Net |
6 |
(6) |
|
(368) |
131 |
Decrease in Cash and Cash Equivalents, including Cash classified within Assets Held for Sale |
(29) |
(15) |
Less Cash reclassified to Assets Held for Sale |
— |
7 |
Effect of Exchange Rate Changes on Cash |
(8) |
(3) |
|
(37) |
(25) |
Cash and Cash Equivalents at Beginning of Period |
162 |
150 |
Cash and Cash Equivalents at End of Period |
$ 125 |
$ 125 |
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 gains or charges associated with: the Company's business combinations, facility shutdowns, and other special items. 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 |
|
Six Months Ended |
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|
|
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In millions, except per share amounts |
2024 |
2023 |
|
2024 |
2023 |
Net Income |
$ 190 |
$ 150 |
|
$ 355 |
$ 357 |
Add (Subtract): |
|
|
|
|
|
Income Tax Expense |
74 |
57 |
|
127 |
121 |
Interest Expense, Net |
60 |
60 |
|
119 |
118 |
Depreciation and Amortization |
134 |
167 |
|
283 |
307 |
EBITDA |
458 |
434 |
|
884 |
903 |
(Gains) Charges Associated with Business Combinations, Exit Activities and |
(56) |
19 |
|
(39) |
34 |
Adjusted EBITDA |
$ 402 |
$ 453 |
|
$ 845 |
$ 937 |
|
|
|
|
|
|
Adjusted EBITDA Margin (Adjusted EBITDA/ |
18.0 % |
18.9 % |
|
18.8 % |
19.4 % |
|
|
|
|
|
|
Net Income |
$ 190 |
$ 150 |
|
$ 355 |
$ 357 |
(Gains) Charges Associated with Business Combinations, Exit Activities and |
(56) |
19 |
|
(39) |
34 |
Accelerated Depreciation Related to Exit Activities |
3 |
30 |
|
15 |
32 |
Tax Impact of Business Combinations, Exit Activities and Other Special |
31 |
(12) |
|
24 |
(15) |
Amortization Related to Purchased Intangibles Assets, Net of Tax |
15 |
16 |
|
31 |
32 |
Adjusted Net Income (a) |
$ 183 |
$ 203 |
|
$ 386 |
$ 440 |
|
|
|
|
|
|
Adjusted Earnings Per Share - Basic (a) |
$ 0.60 |
$ 0.66 |
|
$ 1.26 |
$ 1.43 |
Adjusted Earnings Per Share - Diluted (a) |
$ 0.60 |
$ 0.66 |
|
$ 1.25 |
$ 1.42 |
(a) Excludes amortization related to purchased intangibles. |
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|
|
Reconciliation of Non-GAAP Financial Measures (Continued) |
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Twelve Months Ended |
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|
|
|
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In millions |
2024 |
|
2023 |
|
2023 |
Net Income |
$ 721 |
|
$ 706 |
|
$ 723 |
Add (Subtract): |
|
|
|
|
|
Income Tax Expense |
216 |
|
230 |
|
210 |
Equity Income of Unconsolidated Entity |
(1) |
|
— |
|
(1) |
Interest Expense, Net |
240 |
|
225 |
|
239 |
Depreciation and Amortization |
600 |
|
582 |
|
624 |
EBITDA |
$ 1,776 |
|
$ 1,743 |
|
$ 1,795 |
Charges Associated with Business Combinations, Exit Activities and |
8 |
|
48 |
|
81 |
Adjusted EBITDA |
$ 1,784 |
|
$ 1,791 |
|
$ 1,876 |
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Net Debt: |
2024 |
|
2023 |
|
2023 |
Short-Term Debt and Current Portion of Long-Term Debt |
$ 327 |
|
$ 463 |
|
$ 764 |
Long-Term Debt (a) |
4,958 |
|
5,072 |
|
4,632 |
Less: |
|
|
|
|
|
Cash and Cash Equivalents |
(125) |
|
(125) |
|
(162) |
Net Debt |
$ 5,160 |
|
$ 5,410 |
|
$ 5,234 |
|
|
|
|
|
|
Net Leverage Ratio (Net Debt/Adjusted EBITDA) |
2.9 |
|
3.0 |
|
2.8 |
(a) Excludes unamortized deferred debt issue costs. |
|
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|
|
|
|
Six Months Ended |
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In millions |
2024 |
|
2023 |
Net Cash Provided by Operating Activities |
$ 164 |
|
$ 291 |
Net Cash Receipts from Receivables Sold included in Investing Activities |
46 |
|
51 |
Cash Payments Associated with Business Combinations, Exit Activities and Other Special Items, |
39 |
|
9 |
Adjusted Net Cash Provided by Operating Activities |
$ 249 |
|
$ 351 |
Capital Spending |
(580) |
|
(385) |
Adjusted Cash Flow |
$ (331) |
|
$ (34) |
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