Graphic Packaging Holding Company Reports First Quarter 2018 Results

Highlights
Q1 Net Sales were $1,476.0 million versus $1,061.5 million in the prior year period.
Q1 Earnings per Diluted Share were $0.10 versus $0.12 in the prior year period.
Q1 Adjusted Earnings per Diluted Share were $0.19 versus $0.14 in the prior year period.
Q1 Net Income was $29.9 million versus $37.0 million in the prior year period.
Q1 Adjusted EBITDA was $230.8 million versus $160.9 million in the prior year period.
Completed the combination with International Paper Company’s North America Consumer Packaging business (“SBS mill and foodservice converting assets”) on January 1, 2018.

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 first quarter 2018 of $29.9 million, or $0.10 per share, based upon 311.3 million weighted average diluted shares.  This compares to first quarter 2017 Net Income of $37.0 million, or $0.12 per share, based on 314.1 million weighted average diluted shares.

First quarter 2018 Net Income was negatively impacted by a net $28.2 million of special charges that are detailed in the Reconciliation of Non-GAAP Financial Measures table.  When adjusting for these charges, Adjusted Net Income for the first quarter of 2018 was $58.1 million, or $0.19 per diluted share. This compares to first quarter 2017 Adjusted Net Income of $42.7 million or $0.14 per diluted share.

“We are very pleased with our performance in the first quarter following the new combination with the SBS mill and foodservice converting assets and are encouraged by the positive volume and productivity momentum in the business during the second quarter. First quarter Adjusted EBITDA of $231 million was in line with our expectations and results from the SBS mill and foodservice converting assets were solid,” said President and CEO Michael Doss. “The business operated well in the quarter generating $17 million in performance improvements. Pricing improved by $6 million during the quarter reflecting the benefits of pricing initiatives executed in 2017. Importantly, we successfully implemented open market paperboard price increases across our coated recycled, coated unbleached kraft, and solid bleached sulfate paperboard grades in the first quarter 2018, which we expect will positively impact results in the second half of 2018 and in 2019. We remain focused on offsetting our commodity input cost inflation with pricing initiatives, consistent with our long term track record.”

Operating Results

Net Sales
Net Sales increased 39% to $1,476.0 million in the first quarter of 2018, compared to $1,061.5 million in the prior year period.  The $414.5 million increase was driven by $359.5 million of revenue from the SBS mill and foodservice converting assets, $25.5 million of improved volume/mix related primarily to acquisitions, $24.0 million of favorable foreign exchange, and $5.5 million of higher pricing.

Attached is supplemental data highlighting Net Tons Sold for the first quarter of 2018 and for each quarter of 2017.

EBITDA
EBITDA for the first quarter of 2018 was $187.6 million, or $35.3 million higher than the first quarter of 2017.  After adjusting both periods for business combinations and other special charges, Adjusted EBITDA increased 43% to $230.8 million in the first quarter of 2018 from $160.9 million in the first quarter of 2017.  When comparing against the prior year quarter, Adjusted EBITDA in the first quarter of 2018 was positively impacted by $59.2 million of Adjusted EBITDA from the SBS mill and foodservice converting assets, $16.7 million of improved net operating performance, $5.5 million of higher pricing, $5.5 million of favorable exchange rates, and $0.8 million of favorable volume/mix. These benefits were partially offset by $15.0 million of commodity input cost inflation (primarily freight) and $2.8 million of other inflation (primarily labor and benefits).
more detail at:  https://investors.graphicpkg.com/investor-relations/press-releases/press-release-details/2018/Graphic-Packaging-Holding-Company-Reports-First-Quarter-2018-Results/default.aspx

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