Graphic Packaging(GPK) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents the unaudited condensed consolidated financial statements and detailed notes explaining the company's financial activities Condensed Consolidated Statements of Operations Net sales and net income decreased for the three and six months ended June 30, 2025, compared to the same periods in 2024 Condensed Consolidated Statements of Operations | In millions, except per share amounts | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net Sales | $2,204 | $2,237 | $4,324 | $4,496 | | Income from Operations | $193 | $324 | $414 | $602 | | Net Income | $104 | $190 | $231 | $355 | | Net Income Per Share - Basic | $0.35 | $0.62 | $0.77 | $1.16 | | Net Income Per Share - Diluted | $0.34 | $0.62 | $0.76 | $1.15 | Condensed Consolidated Statements of Comprehensive Income Total comprehensive income increased for both the three and six months ended June 30, 2025, driven by positive currency adjustments Condensed Consolidated Statements of Comprehensive Income | In millions | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net Income | $104 | $190 | $231 | $355 | | Total Other Comprehensive Income (Loss), Net of Tax | $104 | $(18) | $186 | $(76) | | Total Comprehensive Income | $208 | $172 | $417 | $279 | - For the three months ended June 30, 2025, there was a positive currency translation adjustment of $111 million, compared to a negative $25 million in 2024; for the six months, the adjustment was positive $188 million, versus negative $82 million in 2024[15] Condensed Consolidated Balance Sheets Total assets and equity increased as of June 30, 2025, driven by growth in fixed assets and a significant rise in short-term debt Condensed Consolidated Balance Sheets | In millions | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total Current Assets | $2,968 | $2,784 | | Property, Plant and Equipment, Net | $5,598 | $5,258 | | Total Assets | $11,795 | $11,144 | | Total Current Liabilities | $2,072 | $1,903 | | Long-Term Debt | $5,392 | $5,145 | | Total Equity | $3,219 | $3,013 | - Short-Term Debt and Current Portion of Long-Term Debt increased significantly from $39 million at December 31, 2024, to $443 million at June 30, 2025[18] Condensed Consolidated Statements of Shareholders' Equity Shareholders' equity increased due to net income and other comprehensive income, despite share repurchases and dividend declarations Condensed Consolidated Statements of Shareholders' Equity | In millions, except share amounts | Balances at December 31, 2024 | Balances at June 30, 2025 | | :-------------------------------- | :---------------------------- | :------------------------ | | Total Equity | $3,013 | $3,219 | | Net Income (Q1 2025) | $127 | - | | Net Income (Q2 2025) | - | $104 | | Dividends Declared (Q1 2025) | $(33) | - | | Dividends Declared (Q2 2025) | - | $(33) | | Repurchase of Common Stock (Q2 2025) | - | $(112) | - The company repurchased 4,982,296 shares of common stock for $112 million during the second quarter of 2025[19] Condensed Consolidated Statements of Cash Flows Operating cash flow decreased while investing activities became a net use of cash due to capital spending and lack of a major divestiture Condensed Consolidated Statements of Cash Flows | In millions | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $93 | $164 | | Net Cash (Used in) Provided by Investing Activities | $(505) | $175 | | Net Cash Provided by (Used in) Financing Activities | $362 | $(368) | | Capital Spending | $(541) | $(580) | | Proceeds from the Sale of Business and Properties | $12 | $711 | - Capital spending remained high at $541 million in 2025, primarily for the new Waco, Texas facility, compared to $580 million in 2024[21] - Financing activities in 2025 included $99 million from Green Bonds issuance and $110 million in common stock repurchases, while 2024 included $756 million from debt issuance and $200 million in repurchases[21] NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed disclosures for the financial statements, covering accounting policies, debt, equity, and other key areas NOTE 1 — GENERAL INFORMATION The company is a leading producer of sustainable consumer packaging, with details on its accounting, repurchase programs, and special items - The Company is a leading global producer of consumer goods packaging made from renewable or recycled materials, serving diverse end markets[23][24] Revenue from contracts with customers | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Revenue from contracts with customers | $2,193 | $2,228 | $4,303 | $4,479 | - On April 30, 2025, the Board authorized a new $1.5 billion share repurchase program, bringing total availability to $1.754 billion as of June 30, 2025[36] Share Repurchases (2023 program) | Share Repurchases (2023 program) | Amount Repurchased (millions) | Number of Shares Repurchased | | :------------------------------- | :---------------------------- | :--------------------------- | | Six Months Ended June 30, 2025 | $111 | 4,982,296 | | Six Months Ended June 30, 2024 | $200 | 7,243,734 | - The Company declared two quarterly dividends of $0.11 per share of common stock during the first six months of 2025[37] Business Combinations, Exit Activities and Other Special Items, Net | Business Combinations, Exit Activities and Other Special Items, Net (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Exit Activities | $13 | $13 | $27 | $22 | | (Gains)/Charges Associated with Divestitures | — | $(74) | $1 | $(72) | | Other Special Items | — | $5 | $(3) | $10 | | Total | $13 | $(56) | $25 | $(39) | - The Augusta Divestiture in Q2 2024 resulted in a $74 million gain, impacting the 'Gains/Charges Associated with Divestitures' line[42] - The Company closed its Middletown, Ohio, recycled paperboard manufacturing facility in May 2025 to consolidate production[44] NOTE 2 — INVENTORIES, NET Net inventories increased slightly from December 31, 2024, to June 30, 2025, with growth in finished goods and supplies Inventories, Net | In millions | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Finished Goods | $574 | $552 | | Work in Progress| $216 | $209 | | Raw Materials | $714 | $724 | | Supplies | $301 | $269 | | Total | $1,805 | $1,754 | NOTE 3 — DEBT Short-term debt increased significantly due to reclassification, while total long-term debt grew from new Green Bonds issuance Short-Term Debt | In millions | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Short-Term Borrowings | $19 | $18 | | Current Portion of Long-Term Debt | $417 | $14 | | Total Short-Term Debt and Current Portion | $443 | $39 | Long-Term Debt | In millions | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Total Long-Term Debt Including Current Portion | $5,840 | $5,191 | | Total Long-Term Debt (excluding current portion and unamortized costs) | $5,392 | $5,145 | - On May 29, 2025, the Company issued $100 million in tax-exempt Green Bonds with a 5.0% annual interest rate to fund its new Waco facility[55] Revolving Credit Facilities | Revolving Credit Facilities (in millions) | Total Commitments | Total Outstanding | Total Available | | :---------------------------------------- | :---------------- | :---------------- | :-------------- | | Senior Secured Domestic Revolving Credit Facility | $1,900 | $1,027 | $871 | | Senior Secured International Revolving Credit Facility | $211 | $71 | $140 | | Other International Facilities | $51 | $22 | $29 | | Total | $2,162 | $1,120 | $1,040 | - As of June 30, 2025, the Company was in compliance with all debt covenants[58] NOTE 4 — STOCK INCENTIVE PLANS The company operates under the 2024 Omnibus Incentive Compensation Plan, with recent changes accelerating expense recognition - As of June 30, 2025, 9.7 million shares remained available for grant under the 2024 Plan[59] Stock Awards Granted (Six Months Ended June 30, 2025) | Stock Awards Granted (Six Months Ended June 30, 2025) | Number of Units | Weighted Average Grant Date Fair Value Per Share | | :---------------------------------------------------- | :-------------- | :----------------------------------------------- | | RSUs - Employees and Non-Employee Directors | 1,479,667 | $26.59 | | RSAs - Board of Directors | 35,075 | $22.81 | - During the first six months of 2025, $1 million was credited to compensation expense due to performance adjustments, and $3 million was credited to special items due to vesting provision changes[63] NOTE 5 — PENSIONS AND OTHER POSTRETIREMENT BENEFITS Net periodic pension cost decreased in 2025, with expected full-year contributions of $10 million to $15 million to pension plans Net Periodic Pension Cost | Net Periodic Pension Cost (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Pension Benefits | $2 | $3 | $4 | $6 | | Postretirement Benefits | $0 | $(1) | $0 | $(1) | - The Company contributed $3 million to its pension plans and $1 million to its postretirement health care plans during the first six months of 2025[70][71] - Expected full-year 2025 contributions are $10 million to $15 million for pension plans and approximately $2 million for postretirement health care plans[70][71] NOTE 6 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT The company uses derivative instruments to manage interest rate, commodity, and foreign currency risks, primarily as cash flow hedges Interest Rate Swap Positions (as of June 30, 2025) | Interest Rate Swap Positions (as of June 30, 2025) | Notional Amount (in millions) | Weighted Average Interest Rate | | :------------------------------------------------- | :---------------------------- | :----------------------------- | | 05/01/2025 - 05/01/2027 | $500 | 3.50% | - The Company has hedged approximately 55% of its expected natural gas usage for the remainder of 2025 and 20% for 2026[79] - As of June 30, 2025, forward exchange contracts had notional amounts totaling $61 million, expiring through the remainder of 2025[82] - Net notional amounts for derivatives not designated as hedges totaled $160 million at June 30, 2025, up from $116 million at December 31, 2024[84] Fair Value of Long-Term Debt | Fair Value of Long-Term Debt (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Fair Value | $5,603 | $4,894 | | Carrying Amount | $5,696 | $5,046 | NOTE 7 — INCOME TAXES Income tax expense for the first six months of 2025 was $78 million, with the effective tax rate influenced by discrete adjustments Income Taxes | In millions | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | | Income before Income Taxes | $309 | $482 | | Income Tax Expense | $78 | $127 | - The effective tax rate for the first six months of 2025 included a $2 million tax benefit from excess tax benefits on vested restricted stock units[91] - H.R. 1, 'The One Big Beautiful Bill Act,' signed on July 4, 2025, is expected to decrease the Company's 2025 U.S. federal income tax liability to zero[93] NOTE 8 — ENVIRONMENTAL AND LEGAL MATTERS The company is subject to various legal and environmental matters, none of which are expected to be materially adverse - The Company believes that accrued amounts for environmental loss contingencies and reasonably possible losses are not material to its financial position or results[97] - The Company does not believe that the disposition of current lawsuits will have a material adverse effect on its financial position or results[98] NOTE 9 — SEGMENT INFORMATION In Q1 2025, the company realigned its financial reporting into Americas and International Paperboard Packaging segments - The Company realigned its financial reporting structure into two reportable segments: Americas Paperboard Packaging and International Paperboard Packaging, effective Q1 2025[99] Net Sales by Segment | Net Sales (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Americas Paperboard Packaging | $1,511 | $1,551 | $2,987 | $3,082 | | International Paperboard Packaging | $560 | $531 | $1,083 | $1,056 | | Corporate and Other | $133 | $155 | $254 | $358 | | Total | $2,204 | $2,237 | $4,324 | $4,496 | Income (Loss) from Operations by Segment | Income (Loss) from Operations (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Americas Paperboard Packaging | $187 | $229 | $415 | $510 | | International Paperboard Packaging | $29 | $35 | $69 | $69 | | Corporate and Other | $(23) | $60 | $(70) | $23 | | Total | $193 | $324 | $414 | $602 | NOTE 10 — EARNINGS PER SHARE Earnings per share decreased for the three and six months ended June 30, 2025, reflecting lower net income Earnings Per Share | In millions, except per share data | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net Income | $104 | $190 | $231 | $355 | | Earnings Per Share – Basic | $0.35 | $0.62 | $0.77 | $1.16 | | Earnings Per Share – Diluted | $0.34 | $0.62 | $0.76 | $1.15 | - Weighted average basic shares outstanding decreased from 305.7 million to 301.2 million for the three months ended June 30, 2025, and from 306.7 million to 301.7 million for the six-month period[110] NOTE 11 — CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated Other Comprehensive Loss improved significantly due to a positive currency translation adjustment of $188 million Changes in Accumulated Other Comprehensive Loss | In millions, net of tax | Balance at December 31, 2024 | Net Current-period Other Comprehensive (Loss) Income | Balance at June 30, 2025 | | :---------------------- | :--------------------------- | :--------------------------------------------------- | :----------------------- | | Derivative Instruments | $6 | $(2) | $4 | | Pension and Postretirement Benefit Plans | $(107) | $0 | $(107) | | Currency Translation Adjustments | $(354) | $188 | $(166) | | Total | $(455) | $186 | $(269) | - The Company expects to reclassify $1 million of pre-tax loss from Accumulated Other Comprehensive Loss to earnings in the next twelve months[113] NOTE 12 — EXIT ACTIVITIES The company incurred $35 million in exit costs during the first six months of 2025 related to its network optimization strategy Exit Costs | Exit Costs (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | | Asset Write-Offs and Start-Up Costs | $21 | $15 | | Severance Costs and Other | $6 | $7 | | Accelerated Depreciation | $8 | $15 | | Total | $35 | $37 | - The Company expects to incur total charges of $21 million to $25 million for post-employment benefits and $19 million to $20 million for asset-related costs through 2026 for facility closures[118] - Total start-up charges for the new Waco facility are expected to be $65 million to $75 million through 2026, with $31 million incurred to date[120] NOTE 13 — DIVESTITURES The 2024 sale of the Augusta facility resulted in a $75 million gain, while the 2023 sale of Russian operations led to a valuation allowance - The Augusta Divestiture on May 1, 2024, generated $711 million in consideration and a $75 million gain on sale[121] - The sale of Russian operations in November 2023 resulted in a $52 million valuation allowance against the Vendor Loan receivable[123] NOTE 14 — SUBSEQUENT EVENTS Recently enacted legislation is expected to reduce the company's 2025 U.S. federal income tax liability to zero - H.R. 1, 'The One Big Beautiful Bill Act,' signed on July 4, 2025, is expected to decrease the Company's 2025 U.S. federal income tax liability to zero[125] - The Act extends or modifies 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation[125] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management provides its perspective on the company's financial performance, condition, and future outlook INTRODUCTION This introduction sets the context for the MD&A, linking it to the consolidated financial statements OVERVIEW OF BUSINESS The company is a global leader in sustainable consumer packaging with a strategy focused on innovation and operational efficiency - Graphic Packaging is a leading global producer of consumer goods packaging made from renewable or recycled materials for diverse markets[128][129] - The Company's strategy focuses on developing innovative sustainable packaging, expanding market share, and reducing costs through operational improvements[132] - Many multi-year supply contracts include cost pass-through terms to reduce exposure to raw material and energy volatility[131] Recent Developments and Economic Conditions Recently enacted legislation, H.R. 1, is expected to reduce the company's 2025 U.S. federal income tax liability to zero - H.R. 1, 'The One Big Beautiful Bill Act,' signed on July 4, 2025, extends or modifies 100% bonus depreciation and other key tax provisions[133] - The Company expects the Act to decrease its 2025 U.S. federal income tax liability to zero, but not materially impact the annual effective tax rate[133] Acquisitions and Dispositions This section directs readers to relevant financial statement notes for detailed information on acquisitions and dispositions RESULTS OF OPERATIONS Net Sales and Income from Operations declined for both the three and six-month periods, driven by the Augusta divestiture and market pressures Results of Operations | In millions | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net Sales | $2,204 | $2,237 | $4,324 | $4,496 | | Income from Operations | $193 | $324 | $414 | $602 | | Net Income | $104 | $190 | $231 | $355 | SECOND QUARTER 2025 COMPARED WITH SECOND QUARTER 2024 Net Sales decreased 1% and Income from Operations decreased 40%, impacted by the prior-year Augusta divestiture gain and lower pricing Net Sales Variances (Q2 2025 vs Q2 2024) | Net Sales Variances (in millions) | 2024 Net Sales | Price/Volume/Mix | M&A | Foreign Exchange | 2025 Net Sales | Decrease | Percent Change | | :-------------------------------- | :------------- | :--------------- | :----- | :--------------- | :------------- | :------- | :------------- | | Consolidated | $2,237 | $(40) | $(13) | $20 | $2,204 | $(33) | (1)% | - Innovation sales growth contributed $61 million, driven by sustainable consumer packaging solutions[136] - Income from Operations decreased by $131 million (40%) due to the Augusta divestiture (including a $75 million gain in 2024) and lower pricing[137] - Interest Expense, Net decreased from $60 million to $53 million, primarily due to increased capitalized interest from the Waco project[138] FIRST SIX MONTHS OF 2025 COMPARED WITH FIRST SIX MONTHS OF 2024 Net Sales decreased 4% and Income from Operations decreased 31%, mainly due to the Augusta divestiture and reduced paperboard pricing Net Sales Variances (H1 2025 vs H1 2024) | Net Sales Variances (in millions) | 2024 Net Sales | Price/Volume/Mix | M&A | Foreign Exchange | 2025 Net Sales | Decrease | Percent Change | | :-------------------------------- | :------------- | :--------------- | :------ | :--------------- | :------------- | :------- | :------------- | | Consolidated | $4,496 | $(23) | $(142) | $(7) | $4,324 | $(172) | (4)% | - Innovation sales growth contributed $105 million, driven by conversions to sustainable consumer packaging solutions[142] - Income from Operations decreased by $188 million (31%) due to the Augusta divestiture (including a $75 million gain in 2024) and lower pricing[143] - Interest Expense, Net decreased from $119 million to $104 million, primarily due to increased capitalized interest from the Waco project[144] Segment Reporting The company's financial reporting was realigned in Q1 2025 into Americas and International Paperboard Packaging segments - The Company realigned its financial reporting structure in Q1 2025 into two reportable segments: Americas Paperboard Packaging and International Paperboard Packaging[147] Net Sales by Segment | Net Sales (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Americas Paperboard Packaging | $1,511 | $1,551 | $2,987 | $3,082 | | International Paperboard Packaging | $560 | $531 | $1,083 | $1,056 | | Corporate/Other/Eliminations | $133 | $155 | $254 | $358 | | Total | $2,204 | $2,237 | $4,324 | $4,496 | Income (Loss) from Operations by Segment | Income (Loss) from Operations (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Americas Paperboard Packaging | $187 | $229 | $415 | $510 | | International Paperboard Packaging | $29 | $35 | $69 | $69 | | Corporate and Other | $(23) | $60 | $(70) | $23 | | Total | $193 | $324 | $414 | $602 | 2025 COMPARED WITH 2024 This section details segment performance, highlighting factors impacting Net Sales and Income from Operations for each segment Second Quarter 2025 Compared to Second Quarter 2024 Americas segment sales and income declined on lower pricing, while International sales grew but income fell due to inflation - Americas Paperboard Packaging Net Sales decreased due to lower pricing and unfavorable foreign currency, partially offset by innovation sales growth[154] - Americas Paperboard Packaging Income from Operations decreased due to lower pricing, higher commodity costs, and actions to reduce inventories[155] - International Paperboard Packaging Net Sales increased due to higher packaging volumes, innovation sales growth, and favorable foreign currency[156] - International Paperboard Packaging Income from Operations decreased due to lower pricing and higher inflation, partially offset by higher volumes[157] First Six Months of 2025 Compared to First Six Months of 2024 Americas segment sales and income declined on pricing and inflation, while International sales grew with flat operating income - Americas Paperboard Packaging Net Sales decreased due to lower pricing and unfavorable foreign currency, partially offset by innovation sales growth[158] - Americas Paperboard Packaging Income from Operations decreased due to lower pricing and higher inflation, offset by net performance improvements[159] - International Paperboard Packaging Net Sales increased due to innovation sales growth, higher volumes, and favorable foreign currency[160] - International Paperboard Packaging Income from Operations was flat, as lower pricing and inflation were offset by higher volumes and cost savings[161] FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Liquidity is supported by operating cash flows and credit facilities, with high capital spending for the Waco facility impacting cash use Cash Flows | Cash Flows (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $93 | $164 | | Net Cash (Used in) Provided by Investing Activities | $(505) | $175 | | Net Cash Provided by (Used in) Financing Activities | $362 | $(368) | - Capital spending was $541 million in the first six months of 2025, primarily for the new Waco, Texas recycled paperboard manufacturing facility[165] - In 2024, investing activities included $711 million from the sale of the Augusta Paperboard Manufacturing Facility[165] - Financing activities in 2025 included a $100 million tax-exempt green bond transaction, with net proceeds of $99 million used for the Waco facility[166] - The Company was in compliance with its maximum Consolidated Total Leverage Ratio (3.55 to 1.00) and minimum Consolidated Interest Expense Ratio (7.03 to 1.00) as of June 30, 2025[178][179] CRITICAL ACCOUNTING POLICIES The annual goodwill impairment test as of October 1, 2024, confirmed no impairment, with sufficient headroom in all reporting units - The Company's annual goodwill impairment tests as of October 1, 2024, concluded that goodwill was not impaired[184] - The Europe reporting unit's fair value exceeded its carrying value by 24%, while other reporting units exceeded by more than 69%[184] NEW ACCOUNTING STANDARDS This section refers to Note 1 for a discussion of recent accounting pronouncements, with no new significant standards adopted ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The company is exposed to interest rate risk on its debt and uses interest rate swaps to manage this exposure - The Company uses interest rate swap agreements to manage interest rate risks on its variable rate debt[187] - As of June 30, 2025, the Company had active interest rate swap agreements with a combined notional amount of $500 million, expiring on May 1, 2027[187] ITEM 4. CONTROLS AND PROCEDURES Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - The Company's disclosure controls and procedures were effective as of June 30, 2025[188] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[189] PART II — OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Current lawsuits are not expected to have a material adverse effect on the company's financial position or operations - The Company does not believe that the disposition of current lawsuits will have a material adverse effect on its consolidated financial position or results[191] ITEM 1A. RISK FACTORS No material changes have occurred to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to risk factors since the 2024 Annual Report on Form 10-K[192] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The company repurchased 4,982,296 shares during the second quarter of 2025 under its authorized repurchase programs - The Company has $1.5 billion authorized under the 2025 share repurchase program and $500 million under the 2023 program[193] Share Repurchases (Q2 2025) | Period (2025) | Total Number of Shares Purchased | Average Price Paid for Shares | | :---------------------- | :------------------------------- | :---------------------------- | | April 1, through April 30, | — | $— | | May 1, through May 31, | 2,555,937 | $22.73 | | June 1, through June 30, | 2,426,359 | $21.76 | | Total | 4,982,296 | $22.26 | ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the Company ITEM 5. OTHER INFORMATION No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the second quarter of 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during Q2 2025[196] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including required certifications and XBRL-related documents SIGNATURES The report is duly signed by the company's Chief Financial Officer and Chief Accounting Officer as of July 29, 2025