Graphic Packaging Holding Company Reports Third Quarter 2022 Results

"Strong organic sales growth of 5% accelerated during the third quarter fueled by our innovation pipeline and demand for more sustainable, fiber-based packaging solutions." – Mike Doss, President and CEO, Graphic Packaging Holding Company.

Oct. 25, 2022 - Graphic Packaging Holding Company (NYSE: GPK) today reported Net Income for third quarter 2022 of $193 million, or $0.62 per share, based upon 310 million weighted average diluted shares. This compares to third quarter 2021 Net Income of $73 million, or $0.24 per share, based upon 309 million weighted average diluted shares.

The third quarters of 2022 and 2021 were impacted by a net negative $14 million and $44 million of special charges, respectively, including adjustments for amortization related to purchased intangible assets, and the third quarter of 2022 was impacted by a tax benefit of $9 million related to unrealized foreign exchange expense on intercompany loans. The charges are detailed in the Reconciliation of Non-GAAP Financial Measures table attached. When adjusting for charges, Adjusted Net Income for the third quarter of 2022 was $207 million, or $0.67 per diluted share. This compares to third quarter 2021 Adjusted Net Income of $117 million, or $0.38 per diluted share.

Michael Doss, the Company's President and CEO said, "Strong organic sales growth of 5% accelerated during the third quarter fueled by our innovation pipeline and demand for more sustainable, fiber-based packaging solutions. We are excited to be partnering with new and existing customers globally as they package more consumer goods in recyclable, fiber-based solutions. We are uniquely positioned to service increased demand for recycled content in paperboard packaging as our state-of-the-art coated recycled board machine in Kalamazoo, Michigan continues to ramp-up production. During the quarter, Foodservice sales improved 29% year over year, while Food, Beverage and Consumer sales grew 20% before acquisitions. Backlogs across all substrates remain strong at 8 plus weeks, reflecting a healthy demand environment."

Doss continued, "Strategic investments and operational execution by our teams have allowed us to continue to meet greater demand for fiber-based consumer packaging. Our low-cost production platform positions us to capture profitable growth and earn solid returns for stakeholders. We announced an increase to our dividend payout during the quarter and today are raising Adjusted EBITDA at the midpoint of our guidance to $1.6 billion. We remain focused on leading with innovation and service through an optimized global footprint while delivering on our multi-year growth and return goals to benefit all stakeholders."

Operating Results

Net Sales

Net Sales increased 38% to $2,451 million in the third quarter of 2022, compared to $1,782 million in the prior year period. The $669 million increase was driven by $334 million of pricing and $380 million of improved volume/mix, partially offset by $45 million of unfavorable foreign exchange.

EBITDA

EBITDA for the third quarter of 2022 was $432 million, compared to $246 million in the prior year period. After adjusting both periods for special charges, Adjusted EBITDA was $441 million in the third quarter of 2022 versus $284 million in the third quarter of 2021. When comparing against the prior year quarter, Adjusted EBITDA in the third quarter of 2022 was positively impacted by $334 million in favorable pricing and $61 million of volume/mix. Adjusted EBITDA was unfavorably impacted by $162 million of commodity input cost inflation, $28 million of labor, benefits and other inflation, $27 million of net performance and $21 million of foreign exchange.

Other Results

Total Debt (Long-Term, Short-Term and Current Portion) decreased $304 million during the third quarter of 2022 to $5,527 million compared to the second quarter of 2022. Total Net Debt (Total Debt, net of Cash and Cash Equivalents) decreased $278 million during the third quarter of 2022 to $5,445 million compared to the second quarter of 2022. The Company returned $23 million in capital to stockholders in the third quarter of 2022 in dividends and $15 million in share repurchases. The Company's third quarter 2022 Net Leverage Ratio was 3.70 times Adjusted EBITDA compared to 4.36 times at the end of second quarter 2022.

At September 30, 2022, the Company had available liquidity of $1,418 million, including the undrawn availability under its global revolving credit facilities.

Net Interest Expense was $53 million in the third quarter of 2022 as compared to $29 million reported in the third quarter of 2021. Capital expenditures for the third quarter of 2022 were $84 million, down compared to $242 million in the third quarter of 2021. Third quarter 2022 Income Tax Expense was $49 million, up compared to $20 million in the third quarter of 2021.

Graphic Packaging's complete third quarter 2022 earnngs report can be found on the company's website: www.graphicpkg.com.

Graphic Packaging Holding Company (NYSE: GPK), headquartered in Atlanta, Georgia, is committed to providing consumer packaging that makes a world of difference. The company is a leading provider of sustainable paper-based packaging solutions for a wide variety of products to food, beverage, foodservice, and other consumer products companies. The company operates on a global basis, is one of the largest producers of folding cartons and paper-based foodservice products in the United States, and holds leading market positions in coated recycled paperboard, coated unbleached kraft paperboard and solid bleached sulfate paperboard. To learn more, visit: www.graphicpkg.com.

SOURCE: Graphic Packaging Holding Company