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 net income rising to $190 million and EPS at $0.62; 95% of sales now come from sustainable packaging.

• Adjusted EBITDA was $402 million, down $51 million year-over-year, with margins remaining strong despite flat volumes and price/mix headwinds.

• Innovation sales growth reached $51 million in Q2, on track for $200 million in 2024.

• Completed Augusta facility divestiture for $711 million, with proceeds used for debt reduction and share repurchases; Bell acquisition fully integrated, achieving $10 million in synergies.

• Productivity and automation investments, along with network optimization and facility closures, are driving cost savings and improved performance.

Financial highlights

• Adjusted EBITDA margin was 18.0% in Q2 2024, down from 18.9% year-over-year; net leverage improved to 2.9x, expected to fall to 2.7x by year-end.

• Net income rose to $190 million from $150 million year-over-year; adjusted EPS was $0.60, down from $0.66.

• $230 million was returned to shareholders in Q2 via dividends and share repurchases, including $200 million from Augusta sale proceeds; 2.4% of shares repurchased.

• Capital spending for 2024 is projected at $1 billion, up from $950 million, mainly for the Waco project; $580 million spent in the first half.

• Share count at quarter-end was approximately 300 million (301.2 million fully diluted).

Outlook and guidance

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

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

• CapEx to decrease by at least $200 million in 2025 as Waco project nears completion.

• Sufficient liquidity expected to fund ongoing requirements, including capital expenditures, debt service, share repurchases, and dividends.

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