Graphic Packaging Company (GPK) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $2.216 billion, down 6% year-over-year, mainly due to the Augusta facility divestiture and lower open market sales, while innovation sales reached $54 million and volume growth turned positive at 1%.

• Net income was $165 million, flat compared to Q3 2023, with adjusted EBITDA at $433 million (19.5% margin) and adjusted EPS at $0.64.

• Strategic investments in new facilities, including the Waco, Texas recycled paperboard plant and a new press in Poland, are progressing as planned.

• The Augusta, Georgia facility divestiture shifted the sales mix to 95% consumer packaging and resulted in a $75 million gain.

• Continued commitment to sustainability, highlighted by a virtual power purchase agreement in Europe to increase renewable electricity to 70%.

Financial highlights

• Q3 2024 net sales were $2.216 billion, adjusted EBITDA was $433 million (19.5% margin), and adjusted EPS was $0.64.

• Net income was $165 million, unchanged from Q3 2023; adjusted net income was $194 million, down from $229 million.

• Net leverage ratio was 3.1x, with an average cost of debt at 4.7%.

• Sales impact from Augusta divestiture and reduced open-market sales was $109 million; M&A and FX added $11 million.

• Weather and power disruptions reduced Q3 EBITDA by $25 million.

Outlook and guidance

• 2024 full-year adjusted EBITDA guidance is $1.68–$1.73 billion; adjusted EPS $2.49–$2.61; margin expected at 19–19.5%.

• 2025 outlook: low single-digit sales growth, mid single-digit adjusted EBITDA growth, high single-digit adjusted EPS growth, and ~$300 million capex reduction.

• Volume growth for H2 2024 (excluding Augusta) revised to 1–2% from 3–4%.

• Liquidity expected to be sufficient for ongoing requirements for at least the next twelve months.