Graphic Packaging Holding Company Reports Second Quarter 2019 Results; Announces Acquisition of Artistic Carton Company

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ATLANTA, July 23, 2019 --

Highlights

  • Q2 Net Sales were $1,552.8 million versus $1,510.9 million in the prior year period.
  • Q2 Earnings per Diluted Share were $0.22 versus $0.16 in the prior year period.
  • Q2 Adjusted Earnings per Diluted Share were $0.24 versus $0.18 in the prior year period.
  • Q2 Net Income was $63.8 million versus $49.4 million in the prior year period.
  • Q2 Adjusted EBITDA was $267.1 million versus $235.8 million in the prior year period.
  • Returned $47 million to stakeholders in Q2 through $18 million of share repurchases, $22 million of dividends, and $6 million of distributions to the GPIP Partner.
  • Reached agreement to acquire Artistic Carton Company, a diversified producer of folding cartons and coated recycled paperboard (CRB).

Graphic Packaging Holding Company (NYSE: GPK), (the "Company"), a leading provider of packaging solutions to food, beverage, foodservice, and other consumer products companies, today reported Net Income for second quarter 2019 of $63.8 million, or $0.22 per share, based upon 295.7 million weighted average diluted shares.  This compares to second quarter 2018 Net Income of $49.4 million, or $0.16 per share, based on 311.3 million weighted average diluted shares.

Second quarter 2019 Net Income was impacted by a net $5.8 million of special charges that are detailed in the Reconciliation of Non-GAAP Financial Measures table attached.  When adjusting for these charges, Adjusted Net Income for the second quarter of 2019 was $69.6 million, or $0.24 per diluted share. This compares to second quarter 2018 Adjusted Net Income of $54.5 million or $0.18 per diluted share.

"We reported strong results in the second quarter as our Adjusted EBITDA margin increased 160 basis points year-over-year to 17.2%. Second quarter Adjusted EBITDA of $267 million was ahead of our expectations driven by strong execution on pricing, performance, growth initiatives, and synergies" said President and CEO Michael Doss. "Pricing improved by $40 million during the quarter reflecting the benefits of our pricing initiatives. Importantly, our pricing to commodity input cost relationship was a positive $26 million in the quarter and $41 million in the first half of 2019. We are pleased to be increasing our 2019 Adjusted EBITDA guidance to reflect continued strong execution and a more favorable pricing to commodity input cost relationship. In addition, our commercial teams have been successful in customer negotiations to reduce our pricing lags to 6-months compared to 8-months previously. This reduction is an important milestone as it provides the opportunity to adjust pricing two times per year, on average, to better reflect market conditions. Overall, we operated well in the quarter generating $22 million in performance improvements driven by a continued emphasis on cost efficiencies, benefits from capital projects, and realization of synergies."

Acquisition of Artistic Carton Company

Graphic Packaging Holding Company also announced today that it has reached an agreement to acquire substantially all the assets of Artistic Carton Company through a subsidiary, subject to standard closing conditions. The business includes one coated recycled paperboard (CRB) mill located in White Pigeon, Michigan with annual production capacity of approximately 70,000 tons and two converting facilities located in Auburn, IN and Elgin, IL. The business generated $63 million in revenue during the twelve months ended June 30, 2019. The business is expected to generate approximately $10 million in annualized EBITDA including anticipated synergies over the next 12-18 months. The transaction is expected to close in the third quarter of 2019.

"We are pleased to announce the acquisition of Artistic Carton as it will provide compelling optimization and growth opportunities for our paperboard mill and converting platforms in North America" said President and CEO Michael Doss. "The acquisition will drive converting end-market diversification, enhance our converting platform, and we expect will allow us to deliver significant synergies driven by paperboard integration, mill and converting manufacturing optimization, and supply chain efficiencies."

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Source: Graphic Packaging

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