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Graphic Packaging Holding (GPK) Q3 Earnings call transcript Oct 29, 2024

Daily EarningsWednesday, Oct 30, 2024 3:15 pm ET

1min read

GPK --

In a recent earnings call, Graphic Packaging Holding Company reported solid financial results for the third quarter of 2024. Despite the uneven market conditions that have impacted the company in the past two years, Graphic Packaging has managed to maintain consistent margins and deliver growth.

Strong Sales and Earnings

Graphic Packaging reported sales of $2.2 billion, with adjusted EBITDA at $433 million and adjusted EPS at $0.64. The company saw a modest volume growth of 1%, with price down 2% compared to the previous quarter. Despite weather and power disruptions, the company's adjusted EBITDA margin remained a strong 19.5%, highlighting the strength of its business model.

Strategic Investments and Innovation

The company's strategic investments in its manufacturing facilities, particularly the Waco, Texas recycled paperboard manufacturing facility, are on track for a fourth-quarter startup. This investment is expected to expand the company's long-term competitive advantage in both cost and quality, positioning it well for future growth.

Sustainability and Market Trends

Graphic Packaging's focus on sustainability is a key driver of its success. The company's recent virtual power purchase agreement with Zelestra to build two new solar power generating plants in Spain is part of its plan to reduce greenhouse gas emissions by 50.4% by 2032. This commitment to sustainability not only aligns with consumer trends but also sets the company apart from competitors.

Innovation and Customer Focus

The company's innovation engine is a significant contributor to its growth. In the third quarter, innovation sales were $54 million, and the company is on track to reach $200 million for the full year. This focus on innovation, coupled with a customer-centric approach, is helping Graphic Packaging to meet the evolving needs of its clients in a market that is increasingly shifting towards sustainable packaging solutions.

Outlook and Challenges

Looking ahead, Graphic Packaging expects volume growth in the second half of 2024 to be in the 1% to 2% range, with adjusted EBITDA projected to be in the $1.68 billion to $1.73 billion range and adjusted EPS in the $2.49 to $2.61 range. The company faces challenges, including weather and power disruptions and the impact of the divestiture of the Augusta, Georgia bleached paperboard manufacturing facility. However, its strong focus on innovation, customer service, and sustainability positions it well for future growth.

Conclusion

Graphic Packaging's solid financial performance, strategic investments, and commitment to sustainability and innovation position it well for the future. Despite the challenges of the current market conditions, the company's resilience and focus on meeting the needs of its customers are key drivers of its success. As it continues to navigate the evolving landscape of consumer packaging, Graphic Packaging remains a leader in the industry.

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