ATLANTA, April 23, 2019 /PRNewswire/ —
Highlights
- Q1 Net Sales were $1,505.9 million versus $1,477.4 million in the prior year period.
- Q1 Earnings per Diluted Share were $0.19 versus $0.10 in the prior year period.
- Q1 Adjusted Earnings per Diluted Share were $0.21 versus $0.19 in the prior year period.
- Q1 Net Income was $57.9 million versus $29.9 million in the prior year period.
- Q1 Adjusted EBITDA was $259.7 million versus $230.8 million in the prior year period.
- Returned $89 million to stakeholders in Q1 through $60 million of share repurchases, $23 million of dividends, and $6 million of distributions to the GPIP Partner.
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 2019 of $57.9 million, or $0.19 per share, based upon 298.2 million weighted average diluted shares. This compares to first quarter 2018 Net Income of $29.9 million, or $0.10 per share, based on 311.3 million weighted average diluted shares.
First quarter 2019 Net Income was negatively impacted by a net $3.8 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 first quarter of 2019 was $61.7 million, or $0.21 per diluted share. This compares to first quarter 2018 Adjusted Net Income of $58.1 million or $0.19 per diluted share.
“We are very pleased with our performance in the first quarter reflecting a 160 basis point improvement in our Adjusted EBITDA margin to 17.2%. First quarter Adjusted EBITDA of $260 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 $32 million during the quarter reflecting the benefits of pricing initiatives executed throughout 2018. Importantly, our pricing to commodity input cost relationship was a positive $16 million. The business operated well in the quarter generating $31 million in performance improvements driven by a continued emphasis on cost efficiencies, benefits from capital projects, and realization of synergies. We are starting to see benefits from the shift away from plastics into our innovative paperboard solutions and this was particularly evident in our strong European sales during the first quarter. We are generating improved profitability in 2019 driven by our pricing, new product development, and productivity initiatives.”
Operating Results
Net Sales
Net Sales increased 2% to $1,505.9 million in the first quarter of 2019, compared to $1,477.4 million in the prior year period. The $28.5 million increase was driven by $32.2 million of higher pricing and $16.7 million of improved volume/mix related to acquisitions. These benefits were partially offset by $20.4 million of unfavorable foreign exchange.
Attached is supplemental data highlighting Net Tons Sold for the first quarter of 2019 and for each quarter of 2018.
EBITDA
EBITDA for the first quarter of 2019 was $253.5 million, or $65.9 million higher than the first quarter of 2018. After adjusting both periods for business combinations and other special charges, Adjusted EBITDA increased 13% to $259.7 million in the first quarter of 2019 from $230.8 million in the first quarter of 2018. When comparing against the prior year quarter, Adjusted EBITDA in the first quarter of 2019 was positively impacted by $32.2 million of higher pricing and $31.4 million of improved net operating performance. These benefits were partially offset by $16.6 million of commodity input cost inflation (primarily wood), $10.6 million of other inflation (primarily labor and benefits), $4.4 million of unfavorable foreign exchange, and $3.1 million of unfavorable volume/mix.
Other Results
Total Debt (Long-Term, Short-Term and Current Portion) increased $221.0 million during the first quarter of 2019 to $3,188.7 million compared to the fourth quarter of 2018. Total Net Debt (Total Debt, net of Cash and Cash Equivalents) increased $229.2 million during the first quarter of 2019 to $3,126.4 million compared to the fourth quarter of 2018. The Company’s first quarter 2019 pro forma Net Leverage Ratio was 3.13 times Adjusted EBITDA compared to 2.98 times at the end of 2018.
At March 31, 2019, the Company had available liquidity of $1,043.7 million, including the undrawn availability under its global revolving credit facilities.
Net Interest Expense was $35.0 million in the first quarter of 2019, up compared to the $28.8 million reported in the first quarter of 2018, primarily reflecting higher average borrowing rates.
Capital expenditures for the first quarter of 2019 were $80.0 million compared to $92.1 million in the first quarter of 2018.
First quarter 2019 Income Tax Expense was $21.0 million, compared to a $5.1 million expense in the first quarter of 2018.
Please note that a tabular reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, Total Net Debt and pro forma Net Leverage Ratio may be found here.
Earnings Call
The Company will host a conference call at 10:00 am eastern time today (April 23, 2019) to discuss the results of first quarter 2019. 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 #9792436). Supporting materials for our conference call have also been posted to the 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, 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, cost reduction plans, and integration activities, as well as 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, foodservice, and other consumer products companies. The Company operates on a global basis, is one of the largest producers of folding cartons and paper-based foodservice products in the United States, and holds leading market positions in coated recycled paperboard, coated unbleached kraft paperboard and solid bleached sulfate 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.