This story was originally published on Packaging Dive. To receive daily news and insights, subscribe to our free daily Packaging Dive newsletter. Graphic Packaging International announced late Monday it will undertake a series of changes in the coming weeks, including bringing in a new CEO and conducting layoffs in 2026. Mike Doss, president and CEO for 10 years, will depart as of Dec. 31, and Robbert Rietbroek will take over on Jan. 1, according to a securities filing. Doss will also leave his position ...

Financial Data and Key Metrics Changes - The company reported Q3 EPS of $0.53 and net sales of $297.2 million, both exceeding consensus expectations [3][4] - Gross profit margin expanded by 160 basis points to 37.6%, driven by disciplined pricing and a shift towards higher-income customers [4][18] - Net income for Q3 was $14.6 million, down from $19.2 million year-over-year, primarily due to re-banner investments impacting EPS by $0.22 [19][20] Business Line Data and Key Metrics Changes - Athletics represented 51% of total sales in Q3, with low single-digit growth overall, while Shoe Station specifically saw double-digit growth [4][16] - Shoe Station's net sales grew by 5.3%, while Shoe Carnival's net sales declined by 5.2%, indicating a significant performance gap of 10.5 percentage points [5][19] - Non-athletic categories represented 43% of total sales in Q3, with a mid-single-digit comparable sales decline [4][17] Market Data and Key Metrics Changes - The company is strategically shifting away from lower-income households, which are under economic pressure, to focus on higher-income consumers with median household incomes of $60,000-$100,000 [6][9] - The company expects to reach a critical threshold of 51% of stores operating as Shoe Station by back-to-school 2026, which is anticipated to restore comparable sales growth [8][30] Company Strategy and Development Direction - The company announced a name change to Shoe Station Group, reflecting a strategic focus on building a stronger, more profitable company [3][14] - The plan includes converting underperforming locations to the Shoe Station format, with 101 store re-banners completed in fiscal 2025 [7][21] - The consolidation to one brand is expected to yield $20 million in annual cost savings and improved operational efficiencies by the end of fiscal 2027 [9][28] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of maintaining pricing discipline and not chasing unprofitable sales, especially in the lower-income segment [6][10] - The company anticipates modest gains beginning in 2027, with meaningful acceleration in 2028 as the transformation progresses [13][31] - Management expressed confidence in the long-term value creation potential of the one-banner strategy, emphasizing the shift in consumer preferences towards premium brands [14][30] Other Important Information - The company ended the quarter with over $107 million in cash equivalents and remains debt-free, providing financial flexibility for ongoing investments [20][30] - The company expects to free up $100 million in working capital through inventory reductions as it transitions to the Shoe Station model [10][26] Q&A Session Summary Question: What is the expected drag on earnings from re-bannering expenses next year? - Management indicated that re-banner expenses for the next year are expected to be between $25 million and $30 million, with costs front-loaded due to the conversion of approximately 70 stores [35][41] Question: How will the company handle inventory reductions and margin pressure? - Management acknowledged that there will be margin pressure from liquidating non-GoForward products, but emphasized the importance of not carrying over unsold inventory [58][69] Question: What is the timeline for reaching 80% of stores rebannered? - Management confirmed that the focus is on surpassing the critical 51% threshold by summer 2026, with plans to exceed 90% by the end of fiscal 2028 [71][72] Question: How much of the $20 million in savings is expected to flow to the bottom line? - Management stated that the full benefit of the $20 million savings is expected to manifest in 2028, as 2026 will be an investment year with ongoing re-banner costs [73][75]

Financial Data and Key Metrics Changes - The company is targeting a quarterly EPS run rate of $2, which is considered achievable with concrete plans in place [9][13] - Free cash flow generation is prioritized, with a guide of $700 to $800 million for the year, translating to approximately $7 per share [18][68] - The company reported a sequential negative impact of $25 million in Q3 due to inventory reduction efforts [17][22] Business Line Data and Key Metrics Changes - In the Engineered Materials segment, there has been a noted weakness in demand from China and Europe, while the Americas remained stable [6][7] - The Acetyl segment is expected to see flat performance compared to Q2, with no significant changes anticipated in the near term [98] Market Data and Key Metrics Changes - The company is experiencing the lowest demand levels in the Western Hemisphere for acetyl products in 20 years, with a 5% to 6% decline in volumes compared to the first half of the previous year [72][73] - The visibility of the order book has decreased significantly, with only two weeks of reliable orders in Engineered Materials [58] Company Strategy and Development Direction - The company is focusing on cost structure improvements and executing differentiated business models to achieve its EPS target [9][13] - There is an emphasis on diversifying the Engineered Materials business beyond automotive applications, exploring opportunities in drug delivery, performance footwear, and clean energy [94] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing demand and emphasized the importance of cash generation [18][37] - The company is prepared to pivot with demand changes and is actively working on controllable actions to improve profitability [13][39] Other Important Information - The company is undergoing a divestiture process, with the MicroMax project progressing well and expected to yield positive results in the second half of the year [102] - The company has extended its revolver to 2030, ensuring sufficient liquidity to address upcoming maturities [60][62] Q&A Session Summary Question: What end markets are seeing weakening demand? - Management noted a pullback in China automotive orders and some weakness in European demand, while the Americas remained stable [6][7] Question: How does the company plan to achieve the $2 EPS target? - The company has identified four controllable areas to improve cost structure and pricing, which will help reach the target, albeit potentially delayed [9][13] Question: Are tariffs affecting the tow business in China? - Management confirmed that the tow business in China is not impacted by tariffs as it operates through a joint venture [27] Question: What is the outlook for the acetic acid business in China? - Management indicated that the acetic acid business is currently breakeven and is pivoting towards downstream products for better margins [28] Question: How does the company view the current demand environment? - Management described the demand environment as uncertain, with customers reducing inventories, impacting sales [82][84] Question: What is the status of the MicroMax divestiture process? - The MicroMax process is progressing well, with management confident in achieving positive outcomes in the near future [102]

Financial Data and Key Metrics Changes - In Q4 2024, net sales were approximately $64.4 million, down from $66.7 million in Q4 2023 [2] - The net loss for Q4 2024 was $7.2 million compared to a net loss of $3.2 million in Q4 2023, which included an $8.2 million gain on the sale of assets [3] - For the fiscal year 2024, net sales were $265 million, down 4.1% from $276 million in 2023 [4] - The net loss from continuing operations for 2024 was $12.2 million or $0.83 per diluted share, compared to a net loss of $1.95 million or $0.13 per diluted share in 2023 [3] - Gross profit margin in 2024 was 24.7% of net sales, down from 26.7% in the prior year [5] Business Line Data and Key Metrics Changes - Selling and administrative expenses in 2024 were reduced by $4.3 million or 5.8% of net sales due to planned cost-cutting initiatives [5] - Facility consolidation expenses were $2.5 million lower than the prior year, including additional write-downs of idled assets [6] - The company reduced costs by over $35 million in 2023 and further reduced costs by over $10 million in 2024 [11] Market Data and Key Metrics Changes - Existing home sales have declined dramatically from over 6 million homes per year to under 4 million, impacting the industry significantly [9] - The actual square yards of carpet chips have decreased by 25% over the last three years [10] Company Strategy and Development Direction - The company has focused on cost reduction and restructuring to align capacity with current volume, reducing the number of associates by approximately 28% over the last three years [11] - Investment in extrusion equipment aims to provide lower-cost raw materials and ensure a consistent supply [12] - The company is expanding its product offerings, including hard surface products under the TrueCore brand and enhancing its high-end wood program [13][14] Management Comments on Operating Environment and Future Outlook - The management noted that the industry has been in a recession for several years, with existing home sales at the lowest point since 1995 [9] - The company anticipates further cost reductions exceeding $10 million in 2025 and continues to manage working capital effectively [11][17] - The impact of tariffs on imported products is uncertain, but the company is prepared to take appropriate actions as needed [16] Other Important Information - The company closed a new $75 million senior credit facility, enhancing its financial position [8] - The company has maintained low capital expenditures except for investments in extrusion equipment [11] Q&A Session Summary Question: What percent of hard surfaces is imported from China? - Very little is imported from China, with imports coming from Thailand, Cambodia, Vietnam, and some from Europe [19] Question: How quickly can the company pass along price increases due to tariffs? - It is unclear, but it is likely that price increases will be passed on quickly as tariffs become impactful [22] Question: What was the amount of the Q4 inventory write-down? - The overall reduction in inventory was $9.8 million, with additional reserves made for excess inventory [25][26] Question: How soon will the company achieve the $10 million cost reduction? - The company is very close to that level today, with most of the reductions planned months ago [27] Question: Is there potential benefit from tariffs for the soft side of the business? - It depends on where the tariffs end up, but imports are not a major factor for the domestic tufted carpet business [34] Question: Is the full amount of $12.2 million available to borrow under the new credit facility? - Yes, the $12.2 million includes the $6 million excess availability [35]