Core Viewpoint - Graphic Packaging Holding Company has provided an update on its operating conditions for the third quarter and its full-year 2024 outlook, indicating a reduction in expected financial performance due to recent operational disruptions [1][2]. Group 1: Operational Challenges - Severe weather in July led to reduced production at two paperboard manufacturing facilities [2]. - An electrical substation damage in August at a third facility caused additional production disruptions and restart costs [2]. - Collectively, these events are expected to reduce Adjusted EBITDA by approximately $20 million to $25 million in the third quarter [2]. Group 2: Financial Outlook - The company now anticipates that its full-year 2024 results will fall below the midpoint of the previously announced Adjusted EBITDA guidance range of $1,730 million to $1,830 million [2]. - The Adjusted EPS guidance range has also been adjusted downward from $2.65 to $2.85 [2]. Group 3: Recovery and Service Levels - All affected facilities have resumed normal operations, and customer service levels were not impacted by the disruptions [3]. Group 4: Company Overview - Graphic Packaging is a leader in sustainable consumer packaging, focusing on designs made primarily from renewable or recycled materials [8]. - The company operates a global network of design and manufacturing facilities, serving well-known brands across various sectors including food and beverage [8].

ATLANTA, Aug. 22, 2024 /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK), a leading consumer packaging company, announced today that Mark W. Connelly, Senior Vice President, Investor Strategy and Development, will present at the Stifel London Industrials Summit on Wednesday, September 4th at 7:00am ET. The discussion will be in the form of a fireside chat and will be available live and in replay via webcast and can be accessed from the Investors section of the Graphic Packaging website at https: ...

Company advances sustainability and aspires to Net Zero Greenhouse Gas emissions by 2050 ATLANTA, Aug. 14, 2024 /PRNewswire/ -- Graphic Packaging International, LLC, a global leader in sustainable consumer packaging, today announced its aspiration to achieve Net Zero Greenhouse Gas emissions by 2050 in conjunction with the release of its 2023 Environmental, Social and Governance report. The ESG report outlines the company's Better, Every Day sustainability strategy and plans for achieving its new Better by ...

Core Viewpoint - Graphic Packaging Holding (GPK) is a leader in sustainable consumer packaging, showing strong growth until FY23, with a need to adapt to EU regulations to maintain its market position [2][10]. Business Overview - GPK is a major player in consumer packaging, focusing on cartons, containers, and paperboard-based foodservice packaging in the U.S. and Europe, with three reportable segments: Paperboard Manufacturing, Paperboard Packaging, and Europe Packaging [3]. - Sales distribution is diverse, with 61% from Food & Beverages, 22% from Foodservice, 13% from Household, and 4% from Health & Beauty [3][4]. Historical Financial Analysis - GPK experienced consistent top-line growth until FY23, with net sales increasing from $7.15 billion in FY22 to $9.44 billion, but a slight decline of -0.13% in FY23 [5]. - Profitability margins have expanded, with adjusted EBITDA margin rising from 16.90% to 19.90%, and adjusted net income margin improving from 7.6% to 9.5% [5][6]. - FY23 EBITDA was $1.795 billion, up by $326 million from FY22, driven by pricing and favorable net performance [5]. Second Quarter Earnings Analysis - In 2Q24, net sales decreased by ~6% year-over-year to $2.23 billion, and adjusted EBITDA fell by ~11% to $402 million [6]. - The decline was attributed to the sale of the Augusta facility and lower paperboard volume and prices, but GPK continues to return value to shareholders through dividends and share buybacks [6]. Regulatory Environment - The EU's Packaging and Packaging Waste Regulation (PPWR) aims to reduce plastic packaging waste and requires compliance from packaging producers, which may increase costs [7]. - Stricter regulations could boost demand for paperboard packaging, as GPK's innovations like PaperSeal™ Shape significantly reduce plastic content [7]. Augusta Divestiture - GPK sold the Augusta bleached paperboard facility, resulting in a $155 million decrease in reported sales and a $51 million drop in adjusted EBITDA [8]. - Proceeds from the sale were used to reduce debt and repurchase shares, with a focus on sustainable packaging solutions [8]. Relative Valuation Model - GPK's forward revenue growth rate is -0.80%, slightly below the peer median of -0.65%, but its profitability margins exceed peers, with a net income margin of 7.93% and EBITDA margin of 19.54% [9]. - GPK's forward non-GAAP P/E ratio is 10.82x, lower than the peer median of 14.35x, indicating a conservative valuation approach [9]. Market Outlook - Revenue estimates for GPK are $9.04 billion in 2024 and $9.21 billion in 2025, with EPS estimates of $2.72 and $2.94 respectively [9]. - A conservative target share price of $31.81 is projected for 2025 based on the estimated EPS and P/E ratio [9].

Gam1983/iStock via Getty Images Introduction I previously covered Graphic Packaging Holding Company (NYSE:NYSE:GPK) back in February 2024. At the time, my investment thesis was based around the fact that the company was on track for accretive growth capital spend, margin expansion and significant creation of shareholder value driven largely by rising earnings. Over the years, capital allocation at Graphic Packaging has been focused on cost reduction and rationalization of the upstream mill system as well as ...

PART I — FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's Q2 and H1 2024 financial statements reflect decreased Net Sales, a Q2 Net Income increase to $190 million, and a slight decline in total assets to $10.8 billion, with reduced operating cash flow [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2024 Net Sales decreased to $2.24 billion, but Income from Operations and Net Income increased, while H1 Net Sales fell to $4.50 billion with flat Net Income Condensed Consolidated Statements of Operations (In millions, except per share) | Indicator | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $2,237 | $2,392 | $4,496 | $4,830 | | **Income from Operations** | $324 | $267 | $602 | $597 | | **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 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets decreased to $10.83 billion, driven by reductions in Goodwill and Intangible Assets, while total equity slightly increased Condensed Consolidated Balance Sheets (In millions) | Balance Sheet Item | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $2,840 | $2,845 | | **Total Assets** | $10,828 | $11,175 | | **Total Current Liabilities** | $1,963 | $2,589 | | **Total Liabilities** | $8,015 | $8,393 | | **Total Equity** | $2,813 | $2,782 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2024 saw operating cash flow decrease to $164 million, investing activities provide $175 million due to divestiture proceeds, and financing activities use $368 million Condensed Consolidated Statements of Cash Flows (In millions) | Cash Flow Activity | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $164 | $291 | | **Net Cash Provided By (Used In) Investing Activities** | $175 | $(437) | | **Net Cash (Used In) Provided By Financing Activities** | $(368) | $131 | | **Net Decrease in Cash and Cash Equivalents** | $(37) | $(25) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, recent business activities, and financial positions, including the $711 million Augusta divestiture, facility closures, debt activities, and share repurchases - The company completed the sale of its Augusta, Georgia bleached paperboard manufacturing facility on May 1, 2024, for a total consideration of **$711 million**, resulting in a **$75 million** gain on sale[132](index=132&type=chunk) - In Q2 2024, the company decided to close additional packaging facilities by year-end, consolidating production, in addition to 2023 closures[127](index=127&type=chunk)[292](index=292&type=chunk) - The company issued **$500 million** of 6.375% senior unsecured notes due 2032 and redeemed its 0.821% Senior Notes due 2024 using new credit facilities and cash[50](index=50&type=chunk)[78](index=78&type=chunk) - The company repurchased **7.24 million shares** for **$200 million** in H1 2024, completing the 2019 program, with **$365 million** remaining under the 2023 program[269](index=269&type=chunk)[289](index=289&type=chunk) [Management's Discussion and Analysis (MD&A)](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes Q2 Net Sales decrease to divestitures and lower volumes, while Q2 Operating Income rose 21% due to a $75 million divestiture gain, maintaining strong liquidity [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2024 Net Sales decreased by $155 million (6%) due to divestitures and lower volumes, while Operating Income increased by $57 million (21%) primarily from the Augusta sale gain Net Sales Change and Key Drivers | Period | Net Sales Change (YoY) | Key Drivers | | :--- | :--- | :--- | | **Q2 2024** | -$155M (-6%) | Augusta divestiture, lower volumes/pricing, Russia divestiture, partially offset by Bell acquisition | | **H1 2024** | -$334M (-7%) | Lower open market paperboard volumes/pricing, Russia divestiture, lower packaging volumes, partially offset by Bell acquisition | - The primary driver for the increase in Income from Operations in both Q2 and H1 2024 was the **$75 million** gain from the Augusta divestiture[160](index=160&type=chunk)[164](index=164&type=chunk) [Segment Reporting](index=29&type=section&id=Segment%20Reporting) Q2 2024 saw slight Net Sales decreases in Americas Paperboard Packaging, declines in Europe Paperboard Packaging, and a significant drop in Paperboard Manufacturing sales due to divestitures and lower volumes Segment Net Sales (In millions) | Segment | Q2 2024 Net Sales | Q2 2023 Net Sales | H1 2024 Net Sales | H1 2023 Net Sales | | :--- | :--- | :--- | :--- | :--- | | **Americas Paperboard Packaging** | $1,551 | $1,571 | $3,082 | $3,115 | | **Europe Paperboard Packaging** | $474 | $523 | $944 | $1,055 | | **Paperboard Manufacturing** | $174 | $252 | $397 | $568 | - The Paperboard Manufacturing segment's Income from Operations increased significantly to **$68 million** in Q2 2024 from a **$33 million loss** in Q2 2023, primarily due to the Augusta divestiture gain[123](index=123&type=chunk)[222](index=222&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=31&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations and credit, despite H1 2024 operating cash flow decreasing to $164 million, while investing activities provided $175 million from the Augusta divestiture - Net cash provided by operating activities decreased by **$127 million** in H1 2024 compared to H1 2023, mainly due to lower cash generated from operations[201](index=201&type=chunk) - The company completed the sale of the Augusta facility for **$711 million** in cash, significantly impacting investing cash flows[227](index=227&type=chunk) - The company was in compliance with its debt covenants as of June 30, 2024, with a Consolidated Total Leverage Ratio of **2.70 to 1.00** (covenant limit < 4.25) and an Interest Expense Ratio of **7.50 to 1.00** (covenant limit > 3.00)[210](index=210&type=chunk)[235](index=235&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) The company faces interest rate risk, with approximately 30% of its total debt subject to floating rates as of June 30, 2024, and no active interest rate swaps - As of June 30, 2024, approximately **30%** of the Company's total debt was subject to floating interest rates[161](index=161&type=chunk) - The company had no outstanding interest rate swaps as of June 30, 2024, compared to **$750 million** notional value at year-end 2023 that matured in April 2024[109](index=109&type=chunk)[215](index=215&type=chunk) [Controls and Procedures](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2024[216](index=216&type=chunk) - No material changes occurred during the quarter that affected the Company's internal control over financial reporting[242](index=242&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course lawsuits, but does not anticipate a material adverse effect on its financial position, results, or cash flows - The company does not expect lawsuits arising from the ordinary course of business to have a material adverse effect on its financial results[253](index=253&type=chunk) [Risk Factors](index=36&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to the company's risk factors were reported compared to the previously disclosed 2023 Annual Report on Form 10-K - No material changes to risk factors were reported compared to the 2023 Annual Report on Form 10-K[254](index=254&type=chunk) [Issuer Purchases of Equity Securities](index=36&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) In Q2 2024, the company repurchased over 7.2 million shares, completing its 2019 program and continuing purchases under the 2023 program Issuer Purchases of Equity Securities | Period (2024) | Total Shares Purchased | Average Price Paid ($) | | :--- | :--- | :--- | | April 1 - 30 | — | — | | May 1 - 31 | 3,991,952 | $27.68 | | June 1 - 30 | 3,251,782 | $27.52 | - The company completed its 2019 share repurchase program in Q2 2024 by repurchasing **2,329,140 shares** under it[244](index=244&type=chunk)

Company Performance - Graphic Packaging reported quarterly earnings of $0.60 per share, exceeding the Zacks Consensus Estimate of $0.56 per share, but down from $0.66 per share a year ago, representing an earnings surprise of 7.14% [1] - The company posted revenues of $2.24 billion for the quarter ended June 2024, missing the Zacks Consensus Estimate by 2.33% and down from $2.39 billion year-over-year [2] - Over the last four quarters, Graphic Packaging has surpassed consensus EPS estimates four times but has not beaten consensus revenue estimates [2] Stock Outlook - Graphic Packaging shares have increased approximately 13.6% since the beginning of the year, compared to the S&P 500's gain of 14.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.75 on revenues of $2.39 billion, and for the current fiscal year, it is $2.69 on revenues of $9.22 billion [7] - The estimate revisions trend for Graphic Packaging is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Containers - Paper and Packaging industry is currently in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Second Quarter 2024 Financial Results ATLANTA, July 30, 2024 /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK), (the "Company"), a leader in sustainable consumer packaging, today reported second quarter 2024 results. Michael Doss, the Company's President and CEO said, "Second quarter played out largely as expected, with continued strength in Foodservice and Beverage results, and strong execution driving solid Adjusted EBITDA. Consumers are responding to higher prices by shifting their purchasing ...

Group 1 - Graphic Packaging Holding Company is focused on designing and producing consumer packaging primarily from renewable or recycled materials, aiming to reduce the environmental footprint of consumer packaging [1][3] - The company operates a global network of design and manufacturing facilities that serve well-known brands in various sectors including food, beverage, and household products [1] - The appointment of Andy Callahan to the board is expected to enhance the company's growth trajectory, leveraging his extensive experience in driving growth for major consumer brands [1][3] Group 2 - Michael P. Doss, President and CEO of Graphic Packaging, emphasized the company's unmatched portfolio of sustainable packaging solutions and the importance of innovation in meeting consumer preferences [3] - Andy Callahan has a strong background in the food industry, having served in leadership roles at Hostess Brands, Tyson Foods, Hillshire Brands, and Sara Lee Corporation, which adds valuable expertise to the board [4]

ATLANTA, June 4, 2024 /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK), (the "Company"), will announce second quarter 2024 financial results before the market opens on Tuesday, July 30th, with a call to discuss results at 10:00 a.m. ET. The conference call will be webcast and can be accessed from the investors section of the Graphic Packaging website at https://investors.graphicpkg.com/. Participants may also listen via telephone by using the following dial-in number: +1 215-268-9905. Telephone ...