Graphic Packaging Company (GPK) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $2.237 billion, down 6% year-over-year, mainly due to the Augusta divestiture, with Adjusted EBITDA of $402 million and Adjusted EPS of $0.60; net income rose to $190 million from $150 million, and EPS increased to $0.62 from $0.49.

• 95% of sales now come from sustainable consumer packaging after the Augusta facility sale; innovation sales growth reached $51 million in Q2 and is on track for $200 million in 2024.

• Strong operational execution and productivity initiatives offset headwinds from price, mix, and inflation.

• Completed the Augusta facility divestiture for $711 million, with proceeds used for debt reduction and share repurchases; continued network optimization and Bell acquisition integration.

• Foodservice and Beverage segments remained strong, while Food improved and Health & Beauty and Household were mixed.

Financial highlights

• Adjusted EBITDA declined by $51 million year-over-year, with margin at 18.0% versus 18.9%; net leverage improved to 2.9x from 3.0x.

• Net income increased to $190 million from $150 million; adjusted net income was $183 million versus $203 million.

• Returned $230 million to shareholders in Q2 via dividends and share repurchases, buying back 7.2 million shares at an average price of $27.61.

• Capital expenditures increased, mainly for the Waco facility, with $249 million spent in Q2 and $580 million in the first half.

• Cash and cash equivalents at June 30, 2024 were $125 million.

Outlook and guidance

• Full-year 2024 Adjusted EBITDA guidance is $1.73-$1.83 billion, with margins in the 19%-20% range and Adjusted EPS of $2.65-$2.85.

• Expect 3%-4% volume/mix growth in the second half of 2024, with full-year volume/mix modestly positive excluding Augusta.

• CapEx for 2024 raised to $1 billion, with a $200 million reduction expected in 2025; year-end net leverage expected at 2.7x.

• Sufficient liquidity from operations and credit facilities to fund ongoing requirements.

• Anticipate low single-digit sales growth in 2025, driven by innovation and execution.