ATLANTA, July 25, 2017 /PRNewswire/ --
Highlights
- Q2 Net Sales were $1,094.7
million versus $1,103.2
million in the prior year period.
- Q2 Net Tons Sold were 733.9 thousand tons versus 721.9 thousand
tons in the prior year period.
- Q2 Earnings per Diluted Share were $0.14 versus $0.24
in the prior year period.
- Q2 Adjusted Earnings per Diluted Share were $0.15 versus $0.19
in the prior year period.
- Q2 Net Income was $42.0 million
versus $77.8 million in the prior
year period.
- Q2 Adjusted EBITDA was $170.6
million versus $195.2 million
in the prior year period.
- Returned $42.8 million to
stockholders in Q2 through dividends and share repurchases.
Graphic Packaging Holding Company (NYSE: GPK), (the "Company"),
a leading provider of packaging solutions to food, beverage and
consumer product companies, today reported Net Income for second
quarter 2017 of $42.0 million, or
$0.14 per share, based on 311.1
million weighted average diluted shares. This compares to
second quarter 2016 Net Income of $77.8
million, or $0.24 per share,
based on 322.5 million weighted average diluted shares.
Second quarter 2017 Net Income was negatively impacted by
$4.4 million (net of a $1.7 million tax benefit) of business
combinations and other special charges. When adjusting for these
charges, Adjusted Net Income for the second quarter of 2017 was
$46.4 million, or $0.15 per diluted share. This compares to second
quarter 2016 Adjusted Net Income of $60.1
million or $0.19 per diluted
share.
"Our second quarter Adjusted EBITDA met our expectations at
$171 million compared to $195 million in the prior year period. Net Tons
Sold were up 1.7%, reflecting an acquisition and slightly positive
core volumes. We successfully completed our bi-annual maintenance
cold outage at the West Monroe,
Louisiana mill" said President and CEO Michael Doss. "The quarter was negatively
impacted by accelerating commodity input costs, primarily recycled
fiber, and the planned downtime costs."
"We are executing price increases to offset the unprecedented
recycled fiber input cost inflation and expect margins to improve
from our pricing actions during the second half of 2017 and in
2018. Our focus on meeting cash flow commitments, growing cash
flow, and returning more of it to stockholders over time has not
changed. We returned $43 million to
stockholders in the second quarter of 2017 through dividends and
share repurchases. We announced the Carton Craft acquisition in
mid-June, and completed the transaction on July 10, 2017. We remain committed to a balanced
capital allocation strategy, which includes reinvesting in our
business to drive strong cash returns on cash invested, strategic
acquisitions at compelling post-synergy multiples, and returning
cash to stockholders through dividends and share repurchases."
Operating Results
Net Sales
Net Sales decreased 0.8% to $1,094.7
million in the second quarter of 2017, compared to
$1,103.2 million in the prior year
period. When comparing against the prior year quarter, net
sales were positively impacted by $13.0
million of improved volume/mix related to an acquisition and
slightly positive core volumes. These benefits were more than
offset by $11.3 million of
unfavorable foreign exchange rates and $10.2
million of lower pricing.
Attached is supplemental data showing Net Tons Sold for the
first and second quarters of 2017 and each quarter of 2016.
EBITDA
EBITDA for the second quarter of 2017 was $164.5 million, or $23.6
million lower than the second quarter of 2016. After
adjusting both periods for expenses associated with business
combinations and other special charges, Adjusted EBITDA decreased
as expected to $170.6 million in the
second quarter of 2017 from $195.2
million in the second quarter of 2016. When comparing
against the prior year quarter, Adjusted EBITDA in the second
quarter of 2017 was positively impacted by $15.8 million of improved net operating
performance and $1.4 million of
favorable volume/mix. These benefits were more than offset by
$22.7 million of commodity input cost
inflation, $10.2 million of lower
pricing, $7.5 million of other
inflation (primarily labor and benefits), and $1.4 million of unfavorable foreign exchange
rates.
Other Results
Total Debt (Long-Term, Short-Term and Current Portion) decreased
$40.5 million during the second
quarter of 2017 to $2,227.4 million
compared to the first quarter of 2017. Total Net Debt (Total Debt,
net of Cash and Cash Equivalents) decreased $15.6 million during the second quarter of 2017
to $2,214.9 million compared to the
first quarter of 2017. At quarter end, the Company's Net
Leverage Ratio was 3.13 times Adjusted EBITDA compared to 2.76
times at the end of 2016.
At June 30, 2017, the Company had
available global liquidity of $1,167.9
million, including the undrawn availability under its global
revolving credit facilities.
Net Interest Expense was $22.5
million in the second quarter of 2017, up compared to the
$18.2 million in the second quarter
of 2016, reflecting higher average debt balances and interest
rates.
Capital expenditures for the second quarter of 2017 were
$68.4 million compared to
$83.0 million in the second quarter
of 2016.
Second quarter 2017 Income Tax Expense was $23.6 million compared to $10.1 million in the second quarter of 2016.
Please note that a tabular reconciliation of EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Total Net Debt
and Net Leverage Ratio is attached to this release.
Earnings Call
The Company will host a conference call at 10:00 am eastern time today (July 25, 2017) to discuss the results of second
quarter 2017. To access the conference call, please go to the
Investor Relations section of the Graphic Packaging website:
http://www.graphicpkg.com and click the audio webcast
link. For those calling from within North America, dial 800-392-9489 at least 10
minutes prior to the start of the conference call (Conference ID #
61299861). Supporting materials for our conference call have also
been posted to the Company's website. Replays of
the call will be available for one week following the completion of
the call and can be accessed by dialing 855-859-2056.
Forward Looking Statements
Any statements of the Company's expectations in this press
release constitute "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Such statements,
including but not limited to expected improvement in margins are
based on currently available information and are subject to various
risks and uncertainties that could cause actual results to differ
materially from the Company's present expectations. These
risks and uncertainties include, but are not limited to, inflation
of and volatility in raw material and energy costs, continuing
pressure for lower cost products, the Company's ability to
implement its business strategies, including productivity
initiatives and cost reduction plans, the Company's debt level,
currency movements and other risks of conducting business
internationally, the impact of regulatory and litigation matters,
including the continued availability of the Company's net operating
loss offset to taxable income. Undue reliance should not be
placed on such forward-looking statements, as such statements speak
only as of the date on which they are made and the Company
undertakes no obligation to update such statements, except as
required by law. Additional information regarding these and
other risks is contained in the Company's periodic filings with the
SEC.
About Graphic Packaging Holding
Company
Graphic Packaging Holding Company (NYSE: GPK), headquartered in
Atlanta, Georgia, is committed to
providing consumer packaging that makes a world of difference. The
Company is a leading provider of paper-based packaging solutions
for a wide variety of products to food, beverage and other consumer
product companies. The Company operates on a global basis, is one
of the largest producers of folding cartons in the United States, and holds leading market
positions in coated unbleached kraft paperboard and coated-recycled
paperboard. The Company's customers include many of the
world's most widely recognized companies and brands. Additional
information about Graphic Packaging, its business and its products
is available on the Company's web site at www.graphicpkg.com.
GRAPHIC PACKAGING
HOLDING COMPANY
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
In millions,
except per share amounts
|
2017
|
|
2016
|
2017
|
|
2016
|
Net Sales
|
$
|
1,094.7
|
|
|
$
|
1,103.2
|
|
$
|
2,156.2
|
|
|
$
|
2,137.2
|
|
Cost of
Sales
|
917.8
|
|
|
898.4
|
|
1,804.3
|
|
|
1,724.7
|
|
Selling, General and
Administrative
|
83.6
|
|
|
92.7
|
|
174.7
|
|
|
181.8
|
|
Other (Income)
Expense, Net
|
(0.4)
|
|
|
1.2
|
|
(0.6)
|
|
|
2.1
|
|
Business Combinations
and Other Special Charges
|
6.1
|
|
|
5.3
|
|
14.7
|
|
|
15.8
|
|
Income from
Operations
|
87.6
|
|
|
105.6
|
|
163.1
|
|
|
212.8
|
|
Interest Expense,
Net
|
(22.5)
|
|
|
(18.2)
|
|
(43.8)
|
|
|
(35.1)
|
|
Income before Income
Taxes and Equity Income of Unconsolidated Entity
|
65.1
|
|
|
87.4
|
|
119.3
|
|
|
177.7
|
|
Income Tax
Expense
|
(23.6)
|
|
|
(10.1)
|
|
(41.2)
|
|
|
(43.3)
|
|
Income before Equity
Income of Unconsolidated Entity
|
41.5
|
|
|
77.3
|
|
78.1
|
|
|
134.4
|
|
Equity Income of
Unconsolidated Entity
|
0.5
|
|
|
0.5
|
|
0.9
|
|
|
0.9
|
|
Net Income
|
$
|
42.0
|
|
|
$
|
77.8
|
|
$
|
79.0
|
|
|
$
|
135.3
|
|
|
|
|
|
|
|
|
Net Income Per Share
— Basic and Diluted
|
$
|
0.14
|
|
|
$
|
0.24
|
|
$
|
0.25
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares Outstanding - Basic
|
310.7
|
|
|
322.1
|
|
311.8
|
|
|
323.3
|
|
Weighted Average
Number of Shares Outstanding - Diluted
|
311.1
|
|
|
322.5
|
|
312.5
|
|
|
324.1
|
|
GRAPHIC PACKAGING
HOLDING COMPANY
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
In millions,
except share and per share amounts
|
June 30,
2017
|
|
December 31,
2016
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
12.5
|
|
|
$
|
59.1
|
|
Receivables,
Net
|
493.6
|
|
|
426.8
|
|
Inventories,
Net
|
600.2
|
|
|
582.9
|
|
Other Current
Assets
|
45.7
|
|
|
46.1
|
|
Total Current
Assets
|
1,152.0
|
|
|
1,114.9
|
|
Property, Plant and
Equipment, Net
|
1,813.5
|
|
|
1,751.9
|
|
Goodwill
|
1,266.4
|
|
|
1,260.3
|
|
Intangible Assets,
Net
|
423.7
|
|
|
445.3
|
|
Other
Assets
|
35.8
|
|
|
31.0
|
|
Total
Assets
|
$
|
4,691.4
|
|
|
$
|
4,603.4
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
Short-Term Debt and
Current Portion of Long-Term Debt
|
$
|
47.5
|
|
|
$
|
63.4
|
|
Accounts
Payable
|
465.3
|
|
|
466.5
|
|
Other Accrued
Liabilities
|
256.5
|
|
|
249.9
|
|
Total Current
Liabilities
|
769.3
|
|
|
779.8
|
|
Long-Term
Debt
|
2,165.7
|
|
|
2,088.5
|
|
Deferred Income Tax
Liabilities
|
400.7
|
|
|
408.0
|
|
Other Noncurrent
Liabilities
|
259.0
|
|
|
270.6
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Preferred Stock, par
value $.01 per share; 100,000,000 shares authorized; no shares
issued or
outstanding
|
—
|
|
|
—
|
|
Common Stock, par
value $.01 per share; 1,000,000,000 shares authorized; 310,108,823
and
313,533,785 shares issued and outstanding at June 30,
2017 and December 31, 2016,
respectively
|
3.1
|
|
|
3.1
|
|
Capital in Excess of
Par Value
|
1,677.0
|
|
|
1,709.0
|
|
Accumulated
Deficit
|
(229.5)
|
|
|
(268.0)
|
|
Accumulated Other
Comprehensive Loss
|
(353.9)
|
|
|
(387.6)
|
|
Total
Shareholders' Equity
|
1,096.7
|
|
|
1,056.5
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
4,691.4
|
|
|
$
|
4,603.4
|
|
GRAPHIC PACKAGING
HOLDING COMPANY
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Six Months
Ended
|
|
June
30,
|
In
millions
|
2017
|
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Net Income
|
$
|
79.0
|
|
|
$
|
135.3
|
|
Non-cash Items
Included in Net Income:
|
|
|
|
Depreciation and
Amortization
|
150.2
|
|
|
145.9
|
|
Deferred Income
Taxes
|
30.7
|
|
|
31.8
|
|
Amount of
Postretirement Expense Less Than Funding
|
(15.4)
|
|
|
(2.1)
|
|
Other, Net
|
(4.5)
|
|
|
24.2
|
|
Changes in Operating
Assets and Liabilities
|
(74.9)
|
|
|
(88.1)
|
|
Net Cash Provided by
Operating Activities
|
165.1
|
|
|
247.0
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Capital
Spending
|
(135.8)
|
|
|
(179.4)
|
|
Packaging Machinery
Spending
|
(8.7)
|
|
|
(6.6)
|
|
Acquisition of
Businesses, Net of Cash Acquired
|
—
|
|
|
(328.9)
|
|
Other, Net
|
(2.3)
|
|
|
(2.8)
|
|
Net Cash Used in
Investing Activities
|
(146.8)
|
|
|
(517.7)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Repurchase of Common
Stock
|
(59.6)
|
|
|
(79.7)
|
|
Payments on
Debt
|
(12.5)
|
|
|
(12.5)
|
|
Borrowings under
Revolving Credit Facilities
|
502.3
|
|
|
843.3
|
|
Payments on Revolving
Credit Facilities
|
(449.0)
|
|
|
(454.5)
|
|
Repurchase of Common
Stock related to Share-Based Payments
|
(10.0)
|
|
|
(10.4)
|
|
Dividends
Paid
|
(46.9)
|
|
|
(32.4)
|
|
Other, Net
|
9.1
|
|
|
(0.3)
|
|
Net Cash (Used In)
Provided by Financing Activities
|
(66.6)
|
|
|
253.5
|
|
Effect of Exchange
Rate Changes on Cash
|
1.7
|
|
|
1.0
|
|
Net Decrease in Cash
and Cash Equivalents
|
(46.6)
|
|
|
(16.2)
|
|
Cash and Cash
Equivalents at Beginning of Period
|
59.1
|
|
|
54.9
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$
|
12.5
|
|
|
$
|
38.7
|
|
Reconciliation of Non-GAAP Financial
Measures
The tables below set forth the calculation of the Company's
earnings before interest expense, income tax expense, equity income
of unconsolidated entities, depreciation and amortization,
including pension amortization ("EBITDA"), Adjusted EBITDA,
Adjusted EBITDA Margin, Adjusted Net Income, Net Leverage Ratio and
Total Net Debt. Adjusted EBITDA and Adjusted Net Income exclude
charges associated with: the Company's business combinations, and
other special charges. The Company's management believes that the
presentation of EBITDA, Adjusted EBITDA, Adjusted Net Income and
Net Leverage Ratio provides useful information to investors because
these measures are regularly used by management in assessing the
Company's performance. EBITDA, Adjusted EBITDA, Adjusted Net Income
and Net Leverage Ratio are financial measures not calculated in
accordance with generally accepted accounting principles in
the United States ("GAAP"), and
are not measures of net income, operating income, operating
performance or liquidity presented in accordance with GAAP.
EBITDA, Adjusted EBITDA, Adjusted Net Income and Net Leverage
Ratio should be considered in addition to results prepared in
accordance with GAAP, but should not be considered substitutes for
or superior to GAAP results. In addition, our EBITDA, Adjusted
EBITDA, Adjusted Net Income and Net Leverage Ratio may not be
comparable to Adjusted EBITDA or similarly titled measures utilized
by other companies since such other companies may not calculate
such measures in the same manner as we do.
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
In millions,
except per share amounts
|
2017
|
|
2016
|
2017
|
|
2016
|
Net Income
|
$
|
42.0
|
|
|
$
|
77.8
|
|
$
|
79.0
|
|
|
$
|
135.3
|
|
Add
(Subtract):
|
|
|
|
|
|
|
Income Tax
Expense
|
23.6
|
|
|
10.1
|
|
41.2
|
|
|
43.3
|
|
Equity Income of
Unconsolidated Entity
|
(0.5)
|
|
|
(0.5)
|
|
(0.9)
|
|
|
(0.9)
|
|
Interest Expense,
Net
|
22.5
|
|
|
18.2
|
|
43.8
|
|
|
35.1
|
|
Depreciation and
Amortization
|
76.9
|
|
|
82.5
|
|
153.7
|
|
|
158.2
|
|
EBITDA
|
164.5
|
|
|
188.1
|
|
316.8
|
|
|
371.0
|
|
Business Combinations
and Other Special Charges (a)
|
6.1
|
|
|
7.1
|
|
14.7
|
|
|
17.6
|
|
Adjusted
EBITDA
|
$
|
170.6
|
|
|
$
|
195.2
|
|
$
|
331.5
|
|
|
$
|
388.6
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin (Adjusted EBITDA/Net Sales)
|
15.6
|
%
|
|
17.7
|
%
|
15.4
|
%
|
|
18.2
|
%
|
|
|
|
|
|
|
|
Net Income
|
$
|
42.0
|
|
|
$
|
77.8
|
|
$
|
79.0
|
|
|
$
|
135.3
|
|
Business Combinations
and Other Special Charges
|
6.1
|
|
|
7.1
|
|
14.7
|
|
|
17.6
|
|
Tax Impact of
Business Combinations and Other Special Charges
|
(1.7)
|
|
|
(2.4)
|
|
(4.6)
|
|
|
(5.8)
|
|
One-time Discrete Tax
Item
|
—
|
|
|
(22.4)
|
|
—
|
|
|
(22.4)
|
|
Adjusted Net
Income
|
$
|
46.4
|
|
|
$
|
60.1
|
|
$
|
89.1
|
|
|
$
|
124.7
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per
Share - Basic
|
$
|
0.15
|
|
|
$
|
0.19
|
|
$
|
0.29
|
|
|
$
|
0.39
|
|
Adjusted Earnings Per
Share - Diluted
|
$
|
0.15
|
|
|
$
|
0.19
|
|
$
|
0.29
|
|
|
$
|
0.38
|
|
(a) For the three and six months ended June 30, 2016, $1.8
million is recorded in costs of sales for inventory
valuation adjustments related to business
combinations.
GRAPHIC PACKAGING
HOLDING COMPANY
Reconciliation of
Non-GAAP Financial Measures
(Continued)
|
|
|
Twelve Months
Ended
|
|
June
30,
|
|
June
30,
|
|
December
31,
|
In
millions
|
2017
|
|
2016
|
|
2016
|
Net Income
|
$
|
171.7
|
|
|
$
|
252.7
|
|
|
$
|
228.0
|
|
Add
(Subtract):
|
|
|
|
|
|
Income Tax
Expense
|
91.1
|
|
|
105.0
|
|
|
93.2
|
|
Equity Income of
Unconsolidated Entities
|
(1.8)
|
|
|
(1.5)
|
|
|
(1.8)
|
|
Interest Expense,
Net
|
85.3
|
|
|
68.2
|
|
|
76.6
|
|
Depreciation and
Amortization
|
322.9
|
|
|
308.4
|
|
|
327.4
|
|
EBITDA
|
669.2
|
|
|
732.8
|
|
|
723.4
|
|
Business Combinations
and Other Special Charges
|
37.5
|
|
|
31.7
|
|
|
40.4
|
|
Loss on Sale of
Assets, Net
|
—
|
|
|
1.9
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
706.7
|
|
|
$
|
766.4
|
|
|
$
|
763.8
|
|
|
|
|
|
|
|
|
June
30,
|
|
June
30,
|
|
December
31,
|
Calculation of Net
Debt:
|
2017
|
|
2016
|
|
2016
|
Short-Term Debt and
Current Portion of Long-Term Debt
|
$
|
47.5
|
|
|
$
|
61.8
|
|
|
$
|
63.4
|
|
Long-Term Debt
(a)
|
2,179.9
|
|
|
2,225.2
|
|
|
2,104.4
|
|
Less:
|
|
|
|
|
|
Cash and Cash
Equivalents
|
(12.5)
|
|
|
(38.7)
|
|
|
(59.1)
|
|
Total Net
Debt
|
$
|
2,214.9
|
|
|
$
|
2,248.3
|
|
|
$
|
2,108.7
|
|
|
|
|
|
|
|
Net Leverage Ratio
(Total Net Debt/Adjusted EBITDA)
|
3.13
|
|
|
2.93
|
|
|
2.76
|
|
(a) Excludes unamortized deferred debt issue
costs.
GRAPHIC PACKAGING
HOLDING COMPANY
Unaudited
Supplemental Data
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Tons Sold
(000's)
|
|
726.8
|
|
|
733.9
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Tons Sold
(000's)
|
|
687.0
|
|
|
721.9
|
|
|
721.6
|
|
|
706.8
|
|
View original
content:http://www.prnewswire.com/news-releases/graphic-packaging-holding-company-reports-second-quarter-2017-results-300493316.html
SOURCE Graphic Packaging Holding Company