Graphic Packaging(GPK) - 2025 Q1 - Quarterly Report

Financial Performance - Net Sales for Q1 2025 decreased by $139 million or 6$2,120 million from $2,259 million in Q1 2024, primarily due to the Augusta divestiture and reduced paperboard volumes and pricing [122]. - Income from Operations for Q1 2025 decreased by$57 million or 21% to $221 million from$278 million in Q1 2024, attributed to the Augusta divestiture, pricing declines, and commodity inflation [123]. - The Americas Paperboard Packaging segment reported net sales of $1,476 million in Q1 2025, down from$1,531 million in Q1 2024 [132]. - The International Paperboard Packaging segment's net sales decreased slightly to $523 million in Q1 2025 from$525 million in Q1 2024 [132]. - Net sales for the three months ended March 31, 2025, were $1,636 million, with a net income of$106 million [144]. Cash Flow and Liquidity - Net Cash used in Operating Activities for Q1 2025 totaled $174 million compared to$3 million provided in Q1 2024, mainly due to lower income from operations and higher working capital needs [139]. - Net cash provided by financing activities for Q1 2025 was $439 million, up from$287 million in Q1 2024 [141]. - The Company expects its primary sources of liquidity to be cash flows from sales and operating activities, along with availability from revolving credit facilities [145]. - The Company expects ongoing cash requirements to be funded for at least the next twelve months through its current liquidity sources [145]. - The Company sold receivables of $262 million and$250 million under supply chain financing arrangements for Q1 2025 and Q1 2024, respectively [149]. Capital Expenditures and Investments - Capital spending for Q1 2025 was $313 million, driven by the construction of a new recycled paperboard manufacturing facility in Waco, Texas [140]. - The Company completed the sale of its Augusta, Georgia bleached paperboard manufacturing facility for a total consideration of$711 million on May 1, 2024 [120]. - The Company plans to close the Middletown, Ohio, recycled paperboard manufacturing facility by June 1, 2025 [120]. Debt and Financial Ratios - Interest Expense, Net decreased to $51 million in Q1 2025 from$59 million in Q1 2024, due to an increase in capitalized interest [124]. - The Company maintained a maximum Consolidated Total Leverage Ratio of 3.30 to 1.00 as of March 31, 2025, below the required limit of 4.25 to 1.00 [152]. - The Company was in compliance with a minimum Consolidated Interest Expense Ratio of 7.20 to 1.00, exceeding the required minimum of 3.00 to 1.00 [153]. Goodwill and Asset Valuation - Goodwill for the Europe reporting unit was $492 million as of March 31, 2025, with a fair value exceeding its carrying value by 24$44 million in Q1 2025, driven by sustainable consumer packaging solutions [122]. Interest Rate Management - The Company has no active interest rate swap agreements as of March 31, 2025, despite previous use to manage interest rate exposure [162].