Graphic Packaging Company (GPK) Q4 2023 & Investor Day 2024 earnings summary

Executive summary

• FY23 net sales were $9.428B; adjusted EBITDA rose 17% to $1.876B, adjusted EPS increased 25% to $2.91, and net income rose 39% to $723M.

• Inventory normalization drove negative organic sales growth of 3.9%, while value-based pricing and productivity supported profitability; quarter-to-date volumes improved and organic growth was expected to return in 2024.

• Innovation products generated more than $200M in FY23 sales, supported by global scale and expansion into new markets.

Financial highlights

• FY23 net sales were $9.428B versus $9.440B in FY22; $580M unfavorable volume/mix was mostly offset by $556M pricing and $12M favorable FX.

• FY23 adjusted EBITDA was $1.876B versus $1.600B; adjusted EBITDA margin increased to 19.9% from 16.9%, achieving the 2025 margin target early.

• FY23 net income was $723M, or $2.34 diluted EPS; adjusted net income was $899M, or $2.91 per share, excluding special charges and purchased-intangible amortization.

• Q4 net sales fell 6% to $2.249B; $198M unfavorable volume/mix was partly offset by $40M pricing and $21M favorable FX.

• Q4 adjusted EBITDA was $457M versus $413M; adjusted EPS was $0.75 versus $0.59, and adjusted EBITDA margin rose to 20.3% from 17.3%.

Outlook and guidance

• FY24 adjusted EBITDA guidance is $1.750B–$1.950B and adjusted diluted EPS guidance is $2.50–$3.00; both exclude potential impact from the Augusta facility sale.

• FY24 supplemental guidance: capital spending $950M, interest expense $225M, cash taxes/working capital/pension $300M, and effective tax rate ~25%.

• Improved quarter-to-date volumes and a strong innovation pipeline supported expectations for positive organic sales growth in 2024.

• Vision 2030 base model targets annual sales growth in the low single digits, adjusted EBITDA growth in the mid single digits, adjusted EPS growth in the high single digits, and normalized capex of 5% of sales.