Core Insights - Graphic Packaging Holding Company reported a decrease in net sales and net income for the year 2025 compared to 2024, with net sales at $8.6 billion and net income at $444 million [1][3] - The company is focusing on operational excellence, customer service, cost structure improvement, and generating substantial free cash flow to strengthen its balance sheet and return capital to shareholders [4] Financial Performance - **Net Sales**: Fourth quarter 2025 net sales were $2,103 million, slightly up from $2,095 million in the same quarter of 2024. Full-year 2025 net sales decreased by 2% to $8,617 million from $8,807 million in 2024 [5][6] - **Net Income**: Fourth quarter net income was $71 million, or $0.24 per diluted share, down from $138 million, or $0.46 per diluted share in the same quarter of 2024. Full-year net income was $444 million, or $1.48 per diluted share, compared to $658 million, or $2.16 per diluted share in 2024 [2][3] - **EBITDA**: Fourth quarter EBITDA decreased by 19% to $305 million from $376 million in the same quarter of 2024. Full-year EBITDA decreased by 20% to $1,342 million from $1,677 million in 2024 [7][8] Operational Highlights - **Capital Expenditures**: Capital expenditures in the fourth quarter of 2025 were $127 million, down from $310 million in the same quarter of 2024. Full-year capital expenditures were $935 million, compared to $1,203 million in 2024 [10] - **Debt Levels**: Total debt for full-year 2025 was $5,592 million, an increase from $5,209 million in 2024. The net debt was $5,331 million, up from $5,052 million in 2024, resulting in a net leverage ratio of 3.8x compared to 3.0x in 2024 [9] Future Guidance - The company expects 2026 net sales to be between $8.4 billion and $8.6 billion, with adjusted EBITDA projected between $1.05 billion and $1.25 billion. The anticipated adjusted free cash flow for 2026 is between $700 million and $800 million [12][13]

Financial Data and Key Metrics Changes - In Q1 2025, Graphic Packaging reported sales of $2.1 billion, adjusted EBITDA of $365 million, and margins of 17.2%, with adjusted EPS at $0.51, all significantly below expectations due to weaker volumes and input cost inflation [5][27][28] - Adjusted EBITDA was impacted by a $34 million headwind from price, volume, and mix, while input cost inflation amounted to $21 million [29] Business Line Data and Key Metrics Changes - The Americas business experienced a volume decline of approximately 1%, while the non-integrated international business saw a volume increase of about 3% [27] - Innovation sales growth was reported at $44 million for the quarter, driven by new contributions in various product categories [11] Market Data and Key Metrics Changes - Volumes in the Americas were disappointing, down about 1%, while international markets showed slight growth but began to pull back due to economic uncertainty [8][9] - The food market represented approximately 38% of packaging sales, with mixed results across product categories, while beverage sales, accounting for about 25% of overall packaging sales, saw its first decline after two years of strong performance [14][16] Company Strategy and Development Direction - The company is transitioning from Vision 2025 to Vision 2030, focusing on reinvestment and returning capital to stockholders, with a new $1.5 billion share repurchase authorization approved by the Board [7][34] - The Waco recycled paperboard investment is on track for a fourth-quarter startup, with expectations of generating substantial excess cash over the next several years [5][8] Management Comments on Operating Environment and Future Outlook - Management noted that consumer confidence has significantly declined, impacting volumes across markets, and a 2% volume decline is now the base case for 2025 [22][32] - Input cost inflation is expected to continue, with price increases announced to help recover margins [29][30] Other Important Information - The company plans to maintain capital spending in the $700 million range for 2025, with expectations of generating innovation sales growth of at least 2% [33][34] - The company is committed to improving its environmental footprint and enhancing its competitive advantage through innovation [25] Q&A Session Summary Question: Trends in volume decline and affordability issues - Management acknowledged that affordability is a key factor affecting volumes, with customers experiencing volume declines of approximately 3% to 4% [45][46] Question: Guidance assumptions for price-cost dynamics - Management expects to see a positive price contribution late in 2025, with efforts to recover inflation through pricing actions [52][53] Question: Supply-demand balance and potential industry actions - Management indicated that they will take rolling market-related downtime to match supply with demand, and noted recent closures by competitors that could help balance the market [61][62] Question: Revised guidance and EBITDA margin expectations - Management clarified that the revised guidance reflects a temporary impact from inflation, with a path back to previous margin levels expected through pricing recovery and the Waco project [94][95]