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Yahoo
01-05-2025
- Business
- Yahoo
Graphic Packaging Holding's (NYSE:GPK) Q1 Earnings Results: Revenue In Line With Expectations But Stock Drops
Consumer packaging solutions provider Graphic Packaging Holding (NYSE:GPK) met Wall Street's revenue expectations in Q1 CY2025, but sales fell by 6.2% year on year to $2.12 billion. On the other hand, the company's full-year revenue guidance of $8.35 billion at the midpoint came in 3.7% below analysts' estimates. Its non-GAAP profit of $0.51 per share was 11.5% below analysts' consensus estimates. Is now the time to buy Graphic Packaging Holding? Find out in our full research report. Revenue: $2.12 billion vs analyst estimates of $2.13 billion (6.2% year-on-year decline, in line) Adjusted EPS: $0.51 vs analyst expectations of $0.58 (11.5% miss) Adjusted EBITDA: $365 million vs analyst estimates of $397.5 million (17.2% margin, 8.2% miss) The company dropped its revenue guidance for the full year to $8.35 billion at the midpoint from $8.8 billion, a 5.1% decrease Management lowered its full-year Adjusted EPS guidance to $2 at the midpoint, a 24.7% decrease EBITDA guidance for the full year is $1.5 billion at the midpoint, below analyst estimates of $1.68 billion Operating Margin: 10.4%, down from 12.3% in the same quarter last year Free Cash Flow was -$483 million compared to -$328 million in the same quarter last year Market Capitalization: $7.64 billion Michael Doss, the Company's President and CEO said, "First quarter results fell short of our expectations in a challenging economic and consumer environment. Consumers are redoubling their efforts to find value as food prices continue to rise. Meanwhile, promotional activity is driving mix and brand switching, rather than incremental foot traffic and volume gains. Against that backdrop, we saw a small volume decline in the Americas business, but continued improvement in our International business. Leveraging our growing cost and quality advantage and the strength of our innovation portfolio, we continue to gain market position as we partner with customers in a rapidly changing market. Founded in 1991, Graphic Packaging (NYSE:GPK) is a provider of paper-based packaging solutions for a wide range of products. A company's long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Graphic Packaging Holding grew its sales at a mediocre 6.7% compounded annual growth rate. This was below our standard for the industrials sector and is a poor baseline for our analysis. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Graphic Packaging Holding's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.1% annually. Graphic Packaging Holding isn't alone in its struggles as the Industrial Packaging industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time. This quarter, Graphic Packaging Holding reported a rather uninspiring 6.2% year-on-year revenue decline to $2.12 billion of revenue, in line with Wall Street's estimates. Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. Graphic Packaging Holding has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it's a show of well-managed operations if they're high when gross margins are low. Looking at the trend in its profitability, Graphic Packaging Holding's operating margin rose by 5.1 percentage points over the last five years, as its sales growth gave it operating leverage. Its expansion was impressive, especially when considering the cycle turned in the wrong direction and most of its Industrial Packaging peers observed plummeting revenue and margins. This quarter, Graphic Packaging Holding generated an operating profit margin of 10.4%, down 1.9 percentage points year on year. Since Graphic Packaging Holding's gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Graphic Packaging Holding's EPS grew at an astounding 19.1% compounded annual growth rate over the last five years, higher than its 6.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. Diving into the nuances of Graphic Packaging Holding's earnings can give us a better understanding of its performance. As we mentioned earlier, Graphic Packaging Holding's operating margin declined this quarter but expanded by 5.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For Graphic Packaging Holding, its two-year annual EPS declines of 5.4% mark a reversal from its (seemingly) healthy five-year trend. We hope Graphic Packaging Holding can return to earnings growth in the future. In Q1, Graphic Packaging Holding reported EPS at $0.51, down from $0.66 in the same quarter last year. This print missed analysts' estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Graphic Packaging Holding's full-year EPS of $2.34 to grow 5.5%. We struggled to find many positives in these results. EPS in the quarter missed by a wide margin on in-line revenue. Its full-year revenue and EPS guidance were both lowered. Overall, this quarter could have been better. The stock traded down 5% to $24.02 immediately following the results. Graphic Packaging Holding may have had a tough quarter, but does that actually create an opportunity to invest right now? If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
Associated Press
01-05-2025
- Business
- Associated Press
Graphic Packaging Holding Company Reports First Quarter 2025 Financial Results
Highlights ATLANTA, May 1, 2025 /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK) ('Graphic Packaging' or the 'Company'), a global leader in sustainable consumer packaging, today reported first quarter 2025 results. Net Income in first quarter 2025 was $127 million, or $0.42 per diluted share, versus $165 million, or $0.53 per diluted share in first quarter 2024. First quarter 2025 and 2024 Net Income was impacted by special items and amortization of purchased intangibles of $27 million and $38 million, respectively. Excluding special items and amortization of purchased intangibles, Adjusted Net Income for the first quarter of 2025 was $154 million, or $0.51 per diluted share, and $203 million, or $0.66 per diluted share in first quarter 2024. Michael Doss, the Company's President and CEO said, 'First quarter results fell short of our expectations in a challenging economic and consumer environment. Consumers are redoubling their efforts to find value as food prices continue to rise. Meanwhile, promotional activity is driving mix and brand switching, rather than incremental foot traffic and volume gains. Against that backdrop, we saw a small volume decline in the Americas business, but continued improvement in our International business. Leveraging our growing cost and quality advantage and the strength of our innovation portfolio, we continue to gain market position as we partner with customers in a rapidly changing market. We saw an uptick in input cost inflation during the quarter, and responded with a price increase intended to bring margins back to a more normal range. With our Waco, Texas recycled paperboard investment nearing completion, our capital spending needs decline substantially, and yesterday our Board of Directors approved a new $1.5 billion share repurchase authorization, taking the total available authorization to $1.865 billion. In February, we announced a ten percent increase in our quarterly dividend. We expect to return substantial cash to stockholders in the months and years ahead through a growing dividend and share repurchase.' Operating Results Net Sales First quarter 2025 Net Sales decreased 6% to $2,120 million, versus $2,259 million in the same quarter last year. The decline was driven by a $110 million impact from the divestiture of the Augusta, GA bleached paperboard manufacturing facility and reduced open market sales participation, and a $27 million unfavorable foreign exchange impact. Modest price pressure was offset by a modest volume increase. EBITDA First quarter 2025 EBITDA decreased 17% to $353 million. Excluding the impact of business combinations and other special items, Adjusted EBITDA was $365 million versus $443 million in the same quarter last year. The decline in Adjusted EBITDA was driven by a $25 million decline relating to the divestiture of the Augusta, GA bleached paperboard manufacturing facility and reduced open market sales participation; a $34 million decline in price, volume, and mix; higher costs which were partially offset by Net Performance, and a $6 million unfavorable foreign exchange impact. First quarter Adjusted EBITDA Margin was 17.2% in 2025, and 19.6% in 2024. Other Results Total Debt (Long-Term, Short-Term and Current Portion) increased $526 million during first quarter 2025 to $5,735 million, compared to fourth quarter 2024. Net Debt (Total Debt less Cash and Cash Equivalents) increased $554 million during first quarter 2025 to $5,606 million, compared to fourth quarter 2024. The Company's first quarter 2025 Net Leverage Ratio was 3.5x compared to 3.0x in the fourth quarter of 2024. Capital expenditures in first quarter 2025 were $313 million, versus $331 million in the same quarter last year. The Company returned approximately $30 million to stockholders during the first three months of 2025 through regular dividends. 2025 Annual Guidance and Commentary The Company currently expects full-year 2025 Net Sales, Adjusted EBITDA, and Adjusted EPS, including foreign exchange impact, of $8.2 billion to $8.5 billion, $1.4 billion to $1.6 billion, and $1.75 to $2.25, respectively. The reductions from prior guidance reflect an expectation of a 2% volume decline and $80 million of input cost inflation at the midpoint. The range of guidance has been widened to reflect higher macroeconomic and consumer spending uncertainty. Full-year 2025 capital spending is currently expected to be in the range of $700 million as the Company's Waco, Texas recycled paperboard investment moves toward completion later this year. Innovation Sales Growth, Net Performance, and Non-GAAP Reconciliations We define Innovation Sales Growth as incremental sales of a product that delivers a significant change in materials used, package functionality, or design to a new or existing customer. We define Net Performance as the impact of cost and productivity initiatives, production efficiencies and/or disruptions, and other operating impacts. A tabular reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, Net Debt and Net Leverage is attached to this release. Earnings Call The Company will host a conference call at 10:00 a.m. ET today (May 1, 2025) to discuss the results of first quarter 2025. The conference call will be webcast and can be accessed from the Investors website at Participants may also listen via telephone by using the following dial-in numbers: Toll-Free: 888-506-0062 International: 973-528-0011 Participant Access Code: 129770 Investors: [email protected] Media: [email protected] Forward Looking Statements Any statements of the Company's expectations in this press release, including but not limited to volume and cash generation increases, 2025 Adjusted EBITDA and Adjusted Earning per Diluted Share guidance, and 2025 commentary on net sales, Adjusted EBITDA and Adjusted EPS, as well as input cost inflation, constitute 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from the Company's present expectations. These risks and uncertainties include, but are not limited to, inflation of and volatility in raw material and energy costs, continuing pressure for lower cost products, the Company's ability to implement its business strategies, including productivity initiatives, cost reduction plans, as well as the Company's debt level, currency movements and other risks of conducting business internationally and the impact of regulatory and litigation matters, including the continued availability of the Company's U.S. federal income tax attributes to offset U.S. federal income taxes and the timing related to the Company's future U.S. federal income tax payments. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date on which they are made and the Company undertakes no obligation to update such statements, except as required by law. Additional information regarding these and other risks is contained in the Company's periodic filings with the SEC. About Graphic Packaging Holding Company Graphic Packaging Holding Company (NYSE: GPK), headquartered in Atlanta, Georgia, designs and produces consumer packaging made primarily from renewable or recycled materials. An industry leader in innovation, the Company is committed to reducing the environmental footprint of consumer packaging. Graphic Packaging operates a global network of design and manufacturing facilities serving the world's most widely recognized brands in food, beverage, foodservice, household, and other consumer products. Learn more at GRAPHIC PACKAGING HOLDING COMPANY Reconciliation of Non-GAAP Financial Measures The tables below set forth the calculation of the Company's earnings before interest expense, income tax expense, depreciation and amortization, including pension amortization ('EBITDA'), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, Net Leverage Ratio, and Total Net Debt. Adjusted EBITDA and Adjusted Net Income exclude charges associated with: the Company's business combinations, facility shutdowns, and other special items. The Company's management believes that the presentation of EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, and Net Leverage Ratio provides useful information to investors because these measures are regularly used by management in assessing the Company's performance. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, and Net Leverage Ratio are financial measures not calculated in accordance with generally accepted accounting principles in the United States ('GAAP'), and are not measures of net income, operating income, operating performance, or liquidity presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, and Net Leverage Ratio should be considered in addition to results prepared in accordance with GAAP, but should not be considered substitutes for or superior to GAAP results. In addition, our EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, and Net Leverage Ratio may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as we do. View original content to download multimedia: SOURCE Graphic Packaging Holding Company
Yahoo
01-05-2025
- Business
- Yahoo
Graphic Packaging Holding Company Announces New Share Repurchase Plan Authorization
ATLANTA, May 1, 2025 /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK) ("Graphic Packaging", or "the Company"), a global leader in sustainable consumer packaging, today announced that its Board of Directors has approved a new $1.5 billion share repurchase authorization. This authorization is in addition to the July 27, 2023 share repurchase authorization under which $365 million remains available, bringing the aggregate available authorization as of April 30, 2025 to $1.865 billion. The new authorization allows for the repurchase of shares from time to time through open market repurchases, privately negotiated transactions and Rule 10b5-1 plans in accordance with applicable securities laws. The timing of repurchases, if any, will depend on a range of factors including market conditions, the Company's financial condition, debt maturities, and cash flow. Graphic Packaging President and CEO Michael Doss said "With the last major investment of Vision 2025 moving toward completion, the Company's capital spending needs will decline significantly. While we will always prioritize reinvestment to maintain and build on our leadership position in sustainable consumer packaging, we expect to generate cash well in excess of our needs over the next several years." The Company's Board of Directors previously approved a ten percent increase in the quarterly dividend to $0.11 per share, paid on April 5, 2025 to common stockholders of record at the close of business on March 15, 2025. "We measure every potential investment against the alternative of repurchasing our stock, and expect to return a substantial amount of available cash to stockholders in the months and years ahead through a growing dividend and opportunistic share repurchase activity" Mr. Doss added. Investors: comms@ Forward Looking Statements Any statements of the Company's expectations in this press release, including, but not limited to the timing of the completion of the major investment in Waco, TX, future spending needs, and future cash generation, a growing dividend, and returning cash to stockholders, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from the Company's historical experience and its present expectations. These risks and uncertainties include, but are not limited to, inflation of and volatility in raw material and energy costs, changes in consumer buying habits and product preferences, competition with other paperboard manufacturers and product substitution, the Company's ability to implement its business strategies, including strategic acquisitions, productivity initiatives, cost reduction plans and integration activities, as well as the Company's debt level, currency movements and other risks of conducting business internationally, the impact of regulatory and litigation matters, including the continued availability of the Company's U.S. federal income tax attributes to offset U.S. federal income taxes and the timing related to the Company's future U.S. federal income tax payments. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date on which they are made and the Company undertakes no obligation to update such statements, except as may be required by law. Additional information regarding these and other risks is contained in the Company's periodic filings with the Securities and Exchange Commission. About Graphic Packaging Holding Company Graphic Packaging Holding Company (NYSE: GPK), headquartered in Atlanta, Georgia, designs and produces consumer packaging made primarily from renewable or recycled materials. An industry leader in innovation, the Company is committed to reducing the environmental footprint of consumer packaging. Graphic Packaging operates a global network of design and manufacturing facilities serving the world's most widely recognized brands in food, beverage, foodservice, household, and other consumer products. Learn more at View original content to download multimedia: SOURCE Graphic Packaging Holding Company Sign in to access your portfolio
