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Graphic Packaging Holding Company Reports First Quarter 2025 Financial Results

1. Net income decreased to $127 million from $165 million year-over-year. 2. Sales declined 6% to $2,120 million, largely due to divestitures. 3. Closure of Middletown facility and new Texas investment planned for Q4 2025. 4. New share repurchase authorization of $1.5 billion boosts returning cash to shareholders. 5. Adjusted EBITDA fell 17% with a decrease in operating margins noted.

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$21.78505/02 01:25 PM EDTLatest Updated
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FAQ

Why Bearish?

The decline in both net sales and EBITDA indicates financial stress. For instance, the drop in sales might trigger investor uncertainty, reminiscent of past downturns following weak earnings releases.

How important is it?

Investor focus on the declines and outlook may enhance stock volatility amidst economic conditions.

Why Short Term?

Immediate financial results and guidance outlook suggest short-term performance challenges, likely impacting stock price. Recent case studies reveal companies often face short-term stock dips following earnings misses.

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IPGPKPPC
Highlights Packaging volumes -1% in Americas, +3% in International Innovation Sales Growth of $44 million Announced closure of Middletown, Ohio recycled paperboard manufacturing facility Waco, Texas recycled paperboard investment on track for Q4 2025 startup Announced new $1.5 billion share repurchase authorization , /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK) ("Graphic Packaging" or the "Company"), a global leader in sustainable consumer packaging, today reported first quarter 2025 results. Net Income in first quarter 2025 was $127 million, or $0.42 per diluted share, versus $165 million, or $0.53 per diluted share in first quarter 2024. First quarter 2025 and 2024 Net Income was impacted by special items and amortization of purchased intangibles of $27 million and $38 million, respectively. Excluding special items and amortization of purchased intangibles, Adjusted Net Income for the first quarter of 2025 was $154 million, or $0.51 per diluted share, and $203 million, or $0.66 per diluted share in first quarter 2024. Michael Doss, the Company's President and CEO said, "First quarter results fell short of our expectations in a challenging economic and consumer environment. Consumers are redoubling their efforts to find value as food prices continue to rise. Meanwhile, promotional activity is driving mix and brand switching, rather than incremental foot traffic and volume gains. Against that backdrop, we saw a small volume decline in the Americas business, but continued improvement in our International business. Leveraging our growing cost and quality advantage and the strength of our innovation portfolio, we continue to gain market position as we partner with customers in a rapidly changing market. We saw an uptick in input cost inflation during the quarter, and responded with a price increase intended to bring margins back to a more normal range. With our Waco, Texas recycled paperboard investment nearing completion, our capital spending needs decline substantially, and yesterday our Board of Directors approved a new $1.5 billion share repurchase authorization, taking the total available authorization to $1.865 billion. In February, we announced a ten percent increase in our quarterly dividend. We expect to return substantial cash to stockholders in the months and years ahead through a growing dividend and share repurchase." Operating Results Net Sales First quarter 2025 Net Sales decreased 6% to $2,120 million, versus $2,259 million in the same quarter last year. The decline was driven by a $110 million impact from the divestiture of the Augusta, GA bleached paperboard manufacturing facility and reduced open market sales participation, and a $27 million unfavorable foreign exchange impact. Modest price pressure was offset by a modest volume increase. EBITDA First quarter 2025 EBITDA decreased 17% to $353 million. Excluding the impact of business combinations and other special items, Adjusted EBITDA was $365 million versus $443 million in the same quarter last year. The decline in Adjusted EBITDA was driven by a $25 million decline relating to the divestiture of the Augusta, GA bleached paperboard manufacturing facility and reduced open market sales participation; a $34 million decline in price, volume, and mix; higher costs which were partially offset by Net Performance, and a $6 million unfavorable foreign exchange impact. First quarter Adjusted EBITDA Margin was 17.2% in 2025, and 19.6% in 2024. Other Results Total Debt (Long-Term, Short-Term and Current Portion) increased $526 million during first quarter 2025 to $5,735 million, compared to fourth quarter 2024. Net Debt (Total Debt less Cash and Cash Equivalents) increased $554 million during first quarter 2025 to $5,606 million, compared to fourth quarter 2024. The Company's first quarter 2025 Net Leverage Ratio was 3.5x compared to 3.0x in the fourth quarter of 2024. Capital expenditures in first quarter 2025 were $313 million, versus $331 million in the same quarter last year. The Company returned approximately $30 million to stockholders during the first three months of 2025 through regular dividends. 2025 Annual Guidance and Commentary The Company currently expects full-year 2025 Net Sales, Adjusted EBITDA, and Adjusted EPS, including foreign exchange impact, of $8.2 billion to $8.5 billion, $1.4 billion to $1.6 billion, and $1.75 to $2.25, respectively. The reductions from prior guidance reflect an expectation of a 2% volume decline and $80 million of input cost inflation at the midpoint. The range of guidance has been widened to reflect higher macroeconomic and consumer spending uncertainty. Full-year 2025 capital spending is currently expected to be in the range of $700 million as the Company's Waco, Texas recycled paperboard investment moves toward completion later this year. 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 (May 1, 2025) to discuss the results of first quarter 2025. 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: 129770 Investors: [email protected] Media: [email protected] Forward Looking Statements Any statements of the Company's expectations in this press release, including but not limited to volume and cash generation increases, 2025 Adjusted EBITDA and Adjusted Earning per Diluted Share guidance, and 2025 commentary on net sales, Adjusted EBITDA and Adjusted EPS, as well as input cost inflation, 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 COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, In millions, except per share amounts 2025 2024 Net Sales $                 2,120 $                 2,259 Cost of Sales 1,675 1,733 Selling, General and Administrative 196 215 Other Expense, Net 16 16 Business Combinations, Exit Activities and Other Special Items, Net 12 17 Income from Operations 221 278 Nonoperating Pension and Postretirement Benefit Expense — (1) Interest Expense, Net (51) (59) Income before Income Taxes 170 218 Income Tax Expense (43) (53) Net Income $                    127 $                    165 Net Income Per Share – Basic $                   0.42 $                   0.54 Net Income Per Share – Diluted $                   0.42 $                   0.53 Weighted Average Number of Shares Outstanding – Basic 302.2 307.8 Weighted Average Number of Shares Outstanding – Diluted 303.2 309.1 GRAPHIC PACKAGING HOLDING COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) In millions, except share and per share amounts March 31, 2025 December 31, 2024 ASSETS Current Assets: Cash and Cash Equivalents $                    129 $                    157 Receivables, Net 863 759 Inventories, Net 1,814 1,754 Assets Held for Sale 12 15 Other Current Assets 136 99 Total Current Assets 2,954 2,784 Property, Plant and Equipment, Net 5,385 5,258 Goodwill 2,023 1,993 Intangible Assets, Net 673 667 Other Assets 462 442 Total Assets $              11,497 $              11,144 LIABILITIES Current Liabilities: Short-Term Debt and Current Portion of Long-Term Debt $                      41 $                      39 Accounts Payable 910 1,116 Other Accrued Liabilities 619 748 Total Current Liabilities 1,570 1,903 Long-Term Debt 5,670 5,145 Deferred Income Tax Liabilities 624 613 Other Noncurrent Liabilities 475 470 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; 301,754,281      and 300,163,372 shares issued and outstanding at March 31, 2025 and December 31,      2024, respectively 3 3 Capital in Excess of Par Value 2,023 2,054 Retained Earnings 1,504 1,410 Accumulated Other Comprehensive Loss (373) (455) Total Graphic Packaging Holding Company Shareholders' Equity 3,157 3,012 Noncontrolling Interest 1 1 Total Equity 3,158 3,013 Total Liabilities and Shareholders' Equity $              11,497 $              11,144 GRAPHIC PACKAGING HOLDING COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, In millions 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $                    127 $                    165 Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 131 148 Amortization of Deferred Debt Issuance Costs 1 2 Deferred Income Taxes 9 (16) Amount of Postretirement Expense Less Than Funding — 1 Share-Based Compensation Expense, Net (4) 22 Other, Net 6 (10) Changes in Operating Assets and Liabilities (444) (309) Net Cash (Used in) Provided by Operating Activities (174) 3 CASH FLOWS FROM INVESTING ACTIVITIES: Capital Spending (309) (324) Packaging Machinery Spending (4) (7) Acquisition of Businesses (12) — Beneficial Interest on Sold Receivables 58 48 Beneficial Interest Obtained in Exchange for Proceeds (30) (28) Other, Net (1) — Net Cash Used in Investing Activities (298) (311) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on Debt (3) (10) Proceeds from Issuance of Debt — 250 Borrowings under Revolving Credit Facilities 1,203 1,106 Payments on Revolving Credit Facilities (700) (1,006) Repurchase of Common Stock related to Share-Based Payments (27) (22) Dividends Paid (30) (31) Other, Net (4) — Net Cash Provided by Financing Activities 439 287 Decrease in Cash and Cash Equivalents (33) (21) Effect of Exchange Rate Changes on Cash 5 (5) Net Decrease in Cash and Cash Equivalents (28) (26) Cash and Cash Equivalents at Beginning of Period 157 162 Cash and Cash Equivalents at End of Period $                    129 $                    136 GRAPHIC PACKAGING HOLDING COMPANYReconciliation 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 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 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 2025 2024 Net Income $                127 $                165 Add (Subtract): Income Tax Expense 43 53 Interest Expense, Net 51 59 Depreciation and Amortization 132 149 EBITDA 353 426 Charges Associated with Business Combinations, Exit Activities and Other Special Items, Net 12 17 Adjusted EBITDA $                365 $                443 Adjusted EBITDA Margin (Adjusted EBITDA/Net Sales) 17.2 % 19.6 % Net Income $                127 $                165 Charges Associated with Business Combinations, Exit Activities and Other Special Items, Net 12 17 Accelerated Depreciation Related to Exit Activities 4 12 Amortization Related to Purchased Intangible Assets 19 21 Tax Impact of Adjustments (8) (12) Adjusted Net Income $                154 $                203 Adjusted Earnings Per Share – Basic $               0.51 $               0.66 Adjusted Earnings Per Share – Diluted $               0.51 $               0.66 GRAPHIC PACKAGING HOLDING COMPANY Reconciliation of Non-GAAP Financial Measures (Continued) Twelve Months Ended In millions March 31, 2025 March 31, 2024 December 31, 2024 Net Income $                    620 $                    681 $                    658 Add (Subtract): Income Tax Expense 219 199 229 Equity Income of Unconsolidated Entity (1) (1) (1) Interest Expense, Net 222 240 230 Depreciation and Amortization 544 633 561 EBITDA $                 1,604 $                 1,752 $                 1,677 Charges Associated with Business Combinations, Exit Activities and      Other Special Items, Net — 83 5 Adjusted EBITDA $                 1,604 $                 1,835 $                 1,682 Calculation of Net Debt: March 31, 2025 March 31, 2024 December 31, 2024 Short-Term Debt and Current Portion of Long-Term Debt $                      41 $                    756 $                      39 Long-Term Debt (a) 5,694 4,952 5,170 Less: Cash and Cash Equivalents (129) (136) (157) Net Debt $                 5,606 $                 5,572 $                 5,052 Net Leverage Ratio (Net Debt/Adjusted EBITDA) 3.5 3.0 3.0 (a) Excludes unamortized deferred debt issue costs. Three Months Ended March 31, In millions 2025 2024 Net Cash (Used in) Provided by Operating Activities $                  (174) $                        3 Net Cash Receipts from Receivables Sold included in Investing Activities 28 20 Cash Payments Associated with Business Combinations, Exit Activities and Other Special      Items, Net 17 9 Adjusted Net Cash (Used in) Provided by Operating Activities $                  (129) $                      32 Capital Spending (313) (331) Adjusted Cash Flow $                  (442) $                  (299) SOURCE Graphic Packaging Holding Company WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

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