Graphic Packaging Reports Third Quarter 2012 Earnings
- Q3 Net Sales increased 2.9% versus the prior year period.
- Q3 Adjusted Earnings per Share were $0.11 versus $0.09 in the prior year period.
- Q3 Adjusted EBITDA increased 12.4% to $170.8 million, versus $152.0 million in the prior year period.
- Q3 cash flow from operations was $145.8 million versus $81.3 million in the prior year period.
Oct. 25, 2012 - Graphic Packaging Holding Company, (the "Company") today reported Net Income for third quarter 2012 of $40.1 million, or $0.10 per share, based upon 398.2 million weighted average diluted shares. This compares to third quarter 2011 Net Loss of $(47.5) million, or $(0.12) per share, based upon 390.6 million weighted average shares.
Adjusted Net Income for the third quarter of 2012 was $42.8 million, or $0.11 per diluted share, when adjusted for $2.7 million of special charges (net of tax) related to integration costs of Graphic Flexible Packaging. This compares to third quarter 2011 Adjusted Net Income of $33.8 million, or $0.09 per diluted share.
"We posted a very solid quarter in a challenging operating environment." —David Scheible, CEO, Graphic Packaging.
"We posted a very solid quarter in a challenging operating environment," said CEO David Scheible.
"Sales to our core folding carton markets were up over 4 percent compared to last year despite continued softness in end-consumer demand. Recent wins in corrugated substitution, pasta and frozen foods helped offset the overall weak market conditions. We also drove higher margins through strong manufacturing performance at both our mills and converting plants as we produced more tons, and internally converted more of those tons than a year ago. In total, improved manufacturing performance, cost savings from supply chain optimization and continuous improvement initiatives added $16 million in benefit this quarter."
Net Sales increased 2.9% to $1,104.7 million during third quarter 2012, compared to third quarter 2011 Net Sales of $1,073.3 million. The $31.4 million increase primarily resulted from $35.9 million of favorable volume/mix. This was partially offset by $5.5 million of unfavorable exchange rates. Pricing was relatively flat during the quarter, contributing $1.0 million to the increase in sales.
On a segment basis, Paperboard Packaging sales, which comprised 84.1% of total third quarter Net Sales, increased 1.7% compared to the third quarter of 2011. Net sales in the Flexible Packaging segment increased 9.9% compared to the third quarter of 2011. The increase was primarily the result of the addition of Delta Natural Kraft, LLC and Mid-America Packaging, LLC on December 8, 2011.
EBITDA for third quarter 2012 was $166.4 million. Excluding $4.4 million of special charges primarily related to Graphic Flexible Packaging integration costs, Adjusted EBITDA was $170.8 million. This compares to third quarter 2011 EBITDA of $54.4 million and Adjusted EBITDA of $152.0 million.
When comparing against the prior year quarter, Adjusted EBITDA in the third quarter of 2012 was positively impacted by $15.6 million of improved operating performance and cost reduction initiatives, $2.8 million of cost deflation, $2.2 million of favorable volume/mix and $1.0 million of higher pricing. These benefits were partially offset by $2.8 million of unfavorable exchange rates/other.
Taking cash and cash equivalents into account, Total Net Debt at the end of the third quarter 2012 was $1,940.7 million. This represents a reduction of $153.3 million in Total Net Debt since December 31, 2011. At the end of the third quarter 2012, the Company had available domestic liquidity of $685.2 million, including the undrawn availability under its $1.0 billion revolving credit facility.
The Company generated $145.8 million of Net Cash Provided by Operating Activities in the third quarter of 2012, compared to $81.3 million in the third quarter of 2011. Net Interest Expense was $26.1 million in the third quarter of 2012, compared to $34.8 million in the third quarter of 2011. The decrease was due to both lower debt balances and lower effective interest rates. Capital expenditures for third quarter of 2012 were $47.5 million compared to $37.6 million in the third quarter of 2011. The increase was primarily the result of the timing of capital expenditures related to the Macon, GA biomass boiler project and the integration of Graphic Flexible Packaging.
Third quarter 2012 Income Tax Expense was $27.0 million, compared to a $5.6 million benefit in the third quarter of 2011. The change was primarily due to an increase in the Company's effective tax rate to a more normalized level as a result of the fourth quarter 2011 release of a tax valuation allowance. The valuation allowance release was based on the Company's assessment that it is more likely than not that the Company's U.S. federal and a substantial portion of its state deferred tax assets will be realized. The Company has approximately $1.0 billion of NOLs for U.S. federal income tax purposes, which may be used to offset future taxable income.
Graphic Packaging Holding Company (GPK), headquartered in Marietta, Georgia, is a leading provider of packaging solutions for a wide variety of products to food, beverage and other consumer products companies. The Company is one of the largest producers of folding cartons and holds a leading market position in coated-unbleached kraft, coated-recycled boxboard multi-wall bag and specialty packaging. The Company's customers include some of the most widely recognized companies in the world. Additional information about Graphic Packaging, its business and its products, is available on the Company's web site at www.graphicpkg.com.
SOURCE: Graphic Packaging Holding Company