Core Viewpoint - Graphic Packaging reported quarterly earnings of $0.42 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, but down from $0.60 per share a year ago, indicating a +5.00% earnings surprise [1] - The company posted revenues of $2.2 billion for the quarter, surpassing the Zacks Consensus Estimate by 1.17%, but down from $2.24 billion year-over-year [2] Financial Performance - Over the last four quarters, Graphic Packaging has only surpassed consensus EPS estimates once [2] - The company has experienced a decline of approximately 14.8% in share price since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] Future Outlook - The earnings outlook for Graphic Packaging is uncertain, with current consensus EPS estimates at $0.57 for the coming quarter and $1.97 for the current fiscal year, with revenues expected to be $2.15 billion and $8.5 billion respectively [7] - The Zacks Rank for Graphic Packaging is currently 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Industry Context - The Containers - Paper and Packaging industry is currently ranked in the top 38% of over 250 Zacks industries, suggesting that companies in the top 50% tend to outperform those in the bottom 50% by more than 2 to 1 [8] - Another company in the same industry, Karat Packing, is expected to report quarterly earnings of $0.61 per share, reflecting a year-over-year increase of +24.5% [9]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Graphic Packaging reported a Q2 2025 net income decline to $104 million and adjusted EPS of $0.42, despite volume growth, with the Waco investment nearing completion to enhance future shareholder returns Q2 2025 vs Q2 2024 Performance Summary (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $104 million | $190 million | | Diluted EPS | $0.34 | $0.62 | | Adjusted Net Income | $128 million | $183 million | | Adjusted Diluted EPS | $0.42 | $0.60 | - CEO Michael Doss stated that promotional activities drove modestly **better-than-expected volumes**, and the company is working closely with customers who may increase their focus on volume growth and market share protection[3](index=3&type=chunk) - The company's Waco, Texas recycled paperboard investment is nearing completion, which is expected to **sharply decrease capital spending in 2026**. This will enable **substantial cash returns** to stockholders through dividends and share repurchases, with a long-term goal of achieving an investment-grade rating[4](index=4&type=chunk) - Key operational highlights for the quarter include: - Waco, Texas recycled paperboard investment is on track for a **Q4 2025 startup** - Packaging volumes **increased by 1%** - Innovation Sales Growth reached **$61 million** - The company repurchased **$111 million** of its shares, reducing outstanding shares by **1.6%**[8](index=8&type=chunk) [Operating Results](index=1&type=section&id=Operating%20Results) Q2 2025 Net Sales decreased 1% to $2,204 million due to divestiture, while Adjusted EBITDA fell 16.4% to $336 million, impacted by lower prices and cost inflation - Net Sales decreased by **$33 million (1%)** year-over-year, driven by a **$40 million** negative impact from a facility divestiture, partially offset by a **$20 million** favorable foreign exchange impact[5](index=5&type=chunk) Q2 Adjusted EBITDA Performance Drivers (YoY Change, in millions) | Driver | Impact (in millions) | | :--- | :--- | | Price | $(23) | | Labor & Benefits Inflation | $(26) | | Input Cost Inflation | $(10) | | Divestiture & Open Market Sales | $(5) | | Net Performance (Inventory Reduction) | $(13) | | Foreign Exchange | $11 | Q2 EBITDA and Margin Comparison (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | EBITDA | $323 million | $458 million | | Adjusted EBITDA | $336 million | $402 million | | Adjusted EBITDA Margin | 15.3% | 18.0% | [Financial Position and Capital Allocation](index=1&type=section&id=Financial%20Position%20and%20Capital%20Allocation) Total debt increased to $5,859 million by Q2 2025, raising the Net Leverage Ratio to 3.7x, while $177 million was returned to stockholders through dividends and share repurchases Debt and Leverage Profile (in millions) | Metric | Q2 2025 | Q4 2024 | | :--- | :--- | :--- | | Total Debt | $5,859 million | $5,209 million | | Net Debt | $5,739 million | $5,052 million | | Net Leverage Ratio | 3.7x | 3.0x | - Capital expenditures in Q2 2025 were **$228 million**, a decrease from **$249 million** in Q2 2024[8](index=8&type=chunk) - In the first six months of 2025, the company returned **~$177 million** to stockholders, including **$111 million** in share repurchases in Q2 (**5.0 million shares**) and **$66 million** in dividends paid across Q1 and Q2[8](index=8&type=chunk)[9](index=9&type=chunk) [2025 Annual Guidance and Commentary](index=2&type=section&id=2025%20Annual%20Guidance%20and%20Commentary) Full-year 2025 guidance was updated, projecting Net Sales between $8.4 billion and $8.6 billion, Adjusted EBITDA from $1.45 billion to $1.55 billion, and Adjusted EPS from $1.90 to $2.20, with increased capital spending for Waco not impacting free cash flow Full-Year 2025 Guidance (in billions, except EPS) | Metric | Guidance Range | | :--- | :--- | | Net Sales | $8.4 billion - $8.6 billion | | Adjusted EBITDA | $1.45 billion - $1.55 billion | | Adjusted EPS | $1.90 - $2.20 | - The guidance update reflects actual first-half performance and a modest increase in second-half revenue expectations, though market uncertainty remains high[10](index=10&type=chunk) - Full-year 2025 capital spending is now expected to be approximately **$850 million**, an increase due to higher final costs at the Waco facility, with the 2025 free cash flow forecast remaining **unchanged** due to offsetting factors[11](index=11&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements reveal a year-over-year decline in Net Sales and Net Income, growth in total assets and liabilities, and lower net cash from operating activities for H1 2025 [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) For H1 2025, Net Sales decreased to $4,324 million from $4,496 million, with Net Income falling to $231 million, or $0.76 per diluted share Six Months Ended June 30, Performance (in millions, except EPS) | Metric (in millions, except EPS) | 2025 | 2024 | | :--- | :--- | :--- | | Net Sales | $4,324 | $4,496 | | Income from Operations | $414 | $602 | | Net Income | $231 | $355 | | Net Income Per Share – Diluted | $0.76 | $1.15 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Total Assets increased to $11,795 million, and Total Liabilities grew to $8,576 million, driven by property, plant, equipment, and debt Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $2,968 | $2,784 | | Property, Plant and Equipment, Net | $5,598 | $5,258 | | Total Assets | $11,795 | $11,144 | | Total Current Liabilities | $2,072 | $1,903 | | Long-Term Debt | $5,392 | $5,145 | | Total Equity | $3,219 | $3,013 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 saw Net Cash Provided by Operating Activities at $93 million, Net Cash Used in Investing Activities at $505 million, and Net Cash Provided by Financing Activities at $362 million Cash Flow Summary - Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $93 | $164 | | Net Cash (Used in) Provided by Investing Activities | $(505) | $175 | | Net Cash Provided by (Used in) Financing Activities | $362 | $(368) | | Net Decrease in Cash and Cash Equivalents | $(37) | $(37) | [Reconciliation of Non-GAAP Financial Measures](index=6&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP to non-GAAP measures, showing Q2 2025 Adjusted EBITDA of $336 million, Adjusted Net Income of $128 million, and a Net Leverage Ratio of 3.7x Q2 2025 Reconciliation of Net Income to Adjusted EBITDA (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $104 | $190 | | Income Tax Expense | $35 | $74 | | Interest Expense, Net | $53 | $60 | | Depreciation and Amortization | $131 | $134 | | **EBITDA** | **$323** | **$458** | | Special Items, Net | $13 | $(56) | | **Adjusted EBITDA** | **$336** | **$402** | Q2 2025 Reconciliation of Net Income to Adjusted Net Income (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $104 | $190 | | Special Items, Net | $13 | $(56) | | Amortization of Purchased Intangibles | $15 | $15 | | Other Adjustments & Tax Impact | $(4) | $34 | | **Adjusted Net Income** | **$128** | **$183** | Net Leverage Ratio Calculation as of June 30, 2025 (in millions) | Metric | Amount | | :--- | :--- | | Net Debt | $5,739 | | LTM Adjusted EBITDA | $1,538 | | **Net Leverage Ratio** | **3.7x** |

Core Insights - Graphic Packaging Holding Company reported a net income of $104 million, or $0.34 per diluted share, for the second quarter of 2025, a decrease from $190 million, or $0.62 per diluted share, in the same quarter of 2024 [2][25] - Adjusted net income for Q2 2025 was $128 million, or $0.42 per diluted share, compared to $183 million, or $0.60 per diluted share in Q2 2024 [2][26] - The company experienced a 1% decrease in net sales, totaling $2,204 million in Q2 2025, down from $2,237 million in Q2 2024 [5][17] Financial Performance - EBITDA for Q2 2025 decreased by 29% to $323 million, with adjusted EBITDA at $336 million compared to $402 million in Q2 2024 [6][26] - The adjusted EBITDA margin was 15.3% in Q2 2025, down from 18.0% in Q2 2024 [6][26] - Total debt increased to $5,859 million in Q2 2025 from $5,209 million in Q4 2024, resulting in a net leverage ratio of 3.7x compared to 3.0x in Q4 2024 [7][27] Capital Expenditures and Shareholder Returns - Capital expenditures in Q2 2025 were $228 million, a decrease from $249 million in the same quarter last year [8] - The company returned approximately $177 million to shareholders in the first half of 2025 through dividends and share repurchases, including $111 million in share repurchases during Q2 [9][14] - Full-year 2025 capital spending is expected to be around $850 million, reflecting higher costs at the Waco, Texas facility [11] Guidance and Market Outlook - The company expects full-year 2025 net sales between $8.4 billion and $8.6 billion, adjusted EBITDA between $1.45 billion and $1.55 billion, and adjusted EPS between $1.90 and $2.20 [10] - Market uncertainty remains higher than normal, impacting volume and revenue expectations [10]

Core Viewpoint - Graphic Packaging (GPK) is anticipated to report a year-over-year decline in earnings due to lower revenues for the quarter ended June 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected to be released on July 29, and if the key numbers exceed expectations, the stock may rise; conversely, a miss could lead to a decline [2]. - The consensus estimate for quarterly earnings is $0.41 per share, reflecting a year-over-year decrease of 31.7%, while revenues are projected at $2.18 billion, down 2.6% from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 2.56%, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Graphic Packaging aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the deviation of actual earnings from the consensus estimate, with positive readings being more reliable [9][10]. - Graphic Packaging currently holds a Zacks Rank of 5, making it challenging to predict an earnings beat [12]. Historical Performance - In the last reported quarter, Graphic Packaging was expected to earn $0.56 per share but only achieved $0.51, resulting in a surprise of -8.93% [13]. - Over the past four quarters, the company has only surpassed consensus EPS estimates once [14]. Conclusion - While the potential for an earnings beat exists, Graphic Packaging does not appear to be a strong candidate for such an outcome, and investors should consider additional factors before making investment decisions [17].

Core Insights - Graphic Packaging Holding Company has released its 2024 Impact Report, showcasing progress towards its Better by 2030 sustainability commitments [1][3] - The company's Vision 2030 strategy emphasizes innovation and sustainability to meet the growing demand for packaging solutions [3] Sustainability Goals - The Better by 2030 initiative includes climate action goals aimed at achieving net-zero greenhouse gas emissions by 2050, in line with the Paris Agreement [3][4] - Specific targets include reducing GHG emissions across operations and increasing the use of renewable fuel and electricity [3][4] Achievements and Metrics - Approximately 1 billion plastic packages have been replaced with paperboard packaging [6] - 97% of packaging products sold are characterized as recyclable [6] - Over 130 new patent applications have been filed [6] - Employee engagement survey participation reached over 20,000, with an 87% response rate [6] - 98% of global sites have implemented the Health Safety and Environment Excellence System [6] - 89% of purchased forest products are sustainably sourced [6] - Approximately 1 million metric tons of generated waste materials have been recycled [6] Renewable Energy Initiatives - The company plans to switch to 50% or more renewable electricity across all operations [4] - A virtual power purchase agreement (VPPA) is expected to cover 70% of electricity use in the EMEA region [6]

Company Overview - Graphic Packaging's 2024 net sales were $8.8 billion[5] - The company's 2024 adjusted EBITDA was $1.7 billion[5] - International sales accounted for 30% of the company's total sales in 2024, while U S sales made up the remaining 70%[5] Strategic Initiatives and Investments - The company expects $160 million in incremental EBITDA from the Waco recycled paperboard manufacturing facility in 2025[23] - The company's Kalamazoo K2 recycled paperboard machine is expected to generate $130 million in incremental EBITDA[23] - The company's innovation platforms target an addressable market opportunity of $15 billion[26] Sustainability Goals - The company aims for a 504% reduction in Scope 1 & 2 GHG emissions by 2032[38] - The company targets 90% renewable fuel use in wood fiber paperboard facilities[38] - The company is aiming for 2% annual sales growth from innovation[50] Financial Outlook - The company's 2025 net sales are guided to be between $82 billion and $85 billion[55] - The company's 2025 adjusted EBITDA is guided to be between $14 billion and $16 billion[55] - The company's capital spending for 2025 is expected to be approximately $700 million[57]

Financial Results Announcement - Graphic Packaging Holding Company will announce its second quarter 2025 financial results before the market opens on July 29, 2025 [1] - The conference call to discuss the results is scheduled for 10:00 a.m. ET on the same day [1] Conference Call Details - The conference call will be available via webcast on the Graphic Packaging investor website [2] - Participants can also join by telephone using the toll-free number 888-506-0062 or the international number 973-528-0011, with a participant access code of 582640 [2] - Telephone participants are advised to call in at least 10 minutes prior to the start of the call [2] - The webcast will be archived for replay starting at approximately 1:00 p.m. ET on July 29 [2] Future Financial Results - Graphic Packaging has tentatively scheduled the release of its third quarter 2025 financial results for November 4, 2025 [3] Company Overview - Graphic Packaging is a leader in sustainable consumer packaging, focusing on designs made primarily from renewable or recycled materials [4] - The company operates a global network of design and manufacturing facilities, serving well-known brands across various sectors including food, beverage, and household products [4]

Financial Data and Key Metrics Changes - The company reported an expectation for EBITDA in the range of $330 million to $340 million for the quarter, indicating a positive outlook on inventory reductions and production alignment with demand [20] - Overall volume is exceeding expectations slightly, with a more stable performance compared to the previously anticipated decline of 2% [18] Business Line Data and Key Metrics Changes - The company has approximately 40% of its business in food packaging and about 25% in beverage packaging, with a noted shift towards sustainable packaging solutions [8][9] - The health and beauty segment, which constitutes about 4% of the company, is experiencing uneven performance, with better results in health products compared to beauty products [45] Market Data and Key Metrics Changes - The coated recycled paperboard market in North America is about 2.7 million tons, with recent closures of 390,000 tons of capacity, representing 14% of the market [15][16] - Backlogs for coated recycled paperboard and unbleached paperboard are at their highest levels in over two years, indicating a favorable supply-demand dynamic [53] Company Strategy and Development Direction - The company is focused on becoming a leading consumer packaging company, with a goal of achieving low single-digit organic growth and mid-single-digit EBITDA growth through innovation [12] - The Vision 2030 strategy aims to enhance cash flow generation and leverage new facilities, such as the Waco facility, to improve operational efficiency and profitability [13][58] Management's Comments on Operating Environment and Future Outlook - Management noted that promotional activity has been low across the consumer packaged goods (CPG) sector, impacting volume growth expectations [38] - The company remains optimistic about the long-term growth potential in the beverage and foodservice segments, despite current challenges in the core food market [44][40] Other Important Information - The company has announced a $1.5 billion share repurchase authorization, indicating a strong commitment to returning value to shareholders [60] - The Waco facility is expected to contribute $160 million in EBITDA improvement over two years, with $80 million anticipated in each of the following years [58] Q&A Session Summary Question: Can you clarify the capacity ramp-up for the Waco facility? - The Waco facility will take 12 to 18 months to ramp up to its full capacity of 550,000 tons, with closures of 490,000 tons from other facilities expected to balance the supply-demand dynamic [25][26] Question: How is the competitive positioning of Graphic Packaging relative to its peers? - The company believes it has a cost and quality advantage in the coated recycled paperboard market, positioning itself for long-term growth despite competitors closing facilities [30][31] Question: What are the implications of current consumer behavior on promotional activities? - Management observed that many CPGs are maintaining pricing stability and have opted for lower promotional activity, which has led to modest volume declines [38][39]

Core Viewpoint - Graphic Packaging Holding Company, a leader in sustainable consumer packaging, will present at the Wells Fargo Industrials and Materials Conference on June 11, 2025 [1]. Company Overview - Graphic Packaging Holding Company is headquartered in Atlanta, Georgia, and specializes in designing and producing consumer packaging primarily from renewable or recycled materials [2]. - The company is recognized for its innovation and commitment to reducing the environmental footprint of consumer packaging [2]. - Graphic Packaging operates a global network of design and manufacturing facilities, serving well-known brands in various sectors including food, beverage, foodservice, household, and other consumer products [2].

Company Leadership - Alessandro Maselli has been appointed as the new president and CEO of Graphic Packaging, bringing extensive leadership experience from his previous roles at Catalent and other companies [1][2] - His career at Catalent spanned fourteen years, where he held various positions including director of operations and senior vice president of global operations before becoming CEO in 2022 [1] Strategic Vision - Graphic Packaging's Chairman Philip Martens emphasized that Maselli's commercial and operational expertise aligns with the company's Vision 2030 innovation and execution priorities [2] - Michael Doss, the current president and CEO, highlighted that Maselli's experience in global pharmaceutical and healthcare markets will be crucial for expanding Graphic Packaging's position in these sectors [2] Company Overview - Graphic Packaging specializes in designing and producing consumer packaging primarily from renewable or recycled materials, aiming to reduce the environmental footprint of consumer packaging [2] - The company operates a global network of design and manufacturing facilities, serving well-known brands across various sectors including food, beverage, and household products [2]