Graphic Packaging reports positive results in first quarter

Graphic Packaging Holding Co., an Atlanta-based packaging producer, has reported it is on track to accomplish its long-term growth and profitability goals based on the results of its quarterly earnings report released April 26.

Net income for the first quarter of 2022 was $107 million, or 35 cents per share, based on 309.7 million weighted average diluted shares compared with its Q1 2021 net income of $54 million, or 19 cents per share, based on 277.2 million weighted average diluted shares.

“During the first quarter we achieved important milestones on the journey to realize our enhanced Vision 2025 goals,” President and CEO Michael Doss said during an earnings call. “While executing another solid quarter with 3 percent net organic sales growth, we continued to integrate our recently expanded European platform and began operating the new K2 CRB machine in Kalamazoo, Michigan.

“In addition, we successfully implemented pricing actions to offset an unprecedented inflationary environment. Importantly, the successful execution of our transformational CRB optimization project will drive benefits for the company, our employees and our customers for decades to comes as we produce the highest quality, lowest cost CRB in North America. Our business is expanding into new market segments and geographies and we are executing at a high level as a global team.”

Operating results

Net sales. Graphic Packaging’s net sales increased 36 percent to $2,245 million in Q1 2022 compared with $1,649 million in Q1 2021. The company says the $596 million increase was driven by $222 million of positive price and $385 million of improved volume/mix related to organic growth from conversions to fiber-based packaging solutions and acquisitions, partially offset by $11 million of unfavorable foreign exchange.

EBITDA. For the first quarter of 2022, Graphic Packaging’s earnings before interest, taxes and amortization (EBITDA) was $335 million—a $107 million increase from Q1 2021. The adjusted EBITDA was $350 million in Q1 2022 compared with $240 million in Q1 2021 after adjusting both periods for business combinations and other special charges. Adjusted EBITDA in Q1 2022 was positively impacted by $222 million in pricing, $68 million in volume/mix, $14 million in net productivity and $1 million of favorable foreign exchange when compared with Q1 2021. This was partially offset by $176 million of commodity input cost inflation and $19 million of other inflation.

Other results

Graphic Packaging’s total debt, including long-term, short-term and current portion, was $5,967 million compared with Q1 2021—a $136 million increase. Total net debt also increased by $197 million in Q1 2022 for a total of $5,856 million compared with 2021. The company returned $23 million in capital to stockholders in Q1 2022 in dividends.

The company says capital expenditures for the first quarter of 2022 were up to $223 million compared with $146 million in 2021 primarily due to the project-completion expenses with the K2 machine and CRB platform investment in Kalamazoo.

Doss said, “While we continue to strengthen our capabilities and expand innovative offerings for customers, we are also optimizing our global production network, driving efficiencies and best-in-class customer service. Progress toward our Vision 2025 will be on full display this year as many of the critical initiatives we have put in motion over the last three years positively impact our financial results.

He added, “We remain fully committed to achieving strong growth and profitability as reflected in our financial guidance for 2022, and are on track to accomplish the long-term goals established with our enhanced Vision 2025.”

Graphic Packaging’s “Vision 2025” sustainability goals aimed for 2025 include: Reduce greenhouse gas emissions by 15 percent, reduce water usage by 15 percent, reduce energy consumption by 15 percent, make its products 100 percent recyclable and reduce LDPE usage by 40 percent.