02.06.15
Graphic Packaging Holding Company reported net income for fourth quarter 2014 of $41.5 million, or $0.13 per share, based upon 331.0 million weighted average diluted shares. This compares to fourth quarter 2013 net income of $46.0 million, or $0.13 per share, based on 344.8 million weighted average diluted shares.
Including the tax impact, fourth quarter 2014 net income was negatively impacted by $28.6 million of special charges (the largest charges relating to the refinancing and retirement of the company’s 2018 Bonds and the amendment and extension of the company’s senior secured credit facility). When adjusting for these charges, adjusted net income for the fourth quarter of 2014 was $70.1 million, or $0.21 per diluted share. This compares to fourth quarter 2013 adjusted net income of $58.6 million or $0.17 per diluted share.
For the full year 2014, net income was $89.7 million, or $0.27 per diluted share, based on 330.5 million weighted average diluted shares. This compares to 2013 net income of $146.6 million or $0.42 per diluted share, based on 349.7 million weighted average diluted shares. Including the tax impact, full year 2014 net income was negatively impacted by $148.4 million of special charges (the largest charges relating to the loss on the sale of the company’s multi-wall bag and label businesses earlier in the year). When adjusting for these charges, 2014 adjusted net income was $238.1 million or $0.72 per diluted share, compared to full year 2013 adjusted net income of $181.4 million, or $0.52 per diluted share.
“We delivered record fourth quarter results in what continues to be a challenging operating environment,” said David Scheible, chairman, president and CEO. “Excluding the divested businesses, sales in our ongoing operations increased 5.6% and we continue to gain share in many of our markets. Adjusted EBITDA margin increased 250 basis points to a fourth quarter record of 17.2% and we generated over $130 million of net debt reduction in the fourth quarter, meeting our full year commitment to deliver $350 million of cash available for net debt reduction. These strong results are the outcome of our efforts over the last 18 months to exit lower margin businesses and to refocus our resources on our core paperboard packaging segment. At the same time, we continued to execute on our continuous improvement programs across the organization and achieved almost $60 million of margin enhancing performance improvements in 2014.
“Graphic Packaging’s financial performance and balance sheet have strengthened considerably over the past several years.,” Scheible continued. “We are now in a position to return cash to stockholders while still maintaining financial flexibility to execute our strategic plan, further strengthen our balance sheet and invest for future growth. I am happy to announce that Graphic Packaging’s Board of Directors has approved the initiation of a $0.05 per share quarterly dividend while also providing the flexibility to return additional cash to stockholders through a $250 million share repurchase program.
“Investing in high return projects and strategic acquisitions remains a core part of our growth strategy. The previously announced acquisition of the folding carton converting and paperboard mill assets of Cascades’ Norampac division closed earlier this week. We are extremely excited as these assets enable us to extend our customer reach in Canada. I am also happy to say that subsequent to year end, we acquired Rose City Printing and Packaging, Inc., which includes two state-of-the-art folding carton converting facilities located just outside Portland, Oregon. This acquisition increases our integrated west coast presence allowing us to better serve new and existing customers.”
The company’s recently approved capital allocation plan includes the initiation of a $0.05 per share quarterly dividend. The first cash dividend is payable April 5, 2015 to stockholders of record on March 15, 2015.
The capital allocation plan also includes a share repurchase program under which management may repurchase up to $250 million of shares from time to time through open market purchases, privately negotiated transactions and Rule 10b5-1 plans in accordance with applicable securities laws.
Net Ssales decreased 6.9% to $1,001.1 million in the fourth quarter 2014, compared to $1,074.9 million in the prior year period. Excluding $127.3 million of sales in the prior year period from divested businesses, net Ssales increased $53.5 million or 5.6%. The increase was driven by $49.3 million of improved volume/mix and $16.4 million of higher pricing. The sales increase was partially offset by $12.2 million of unfavorable exchange rates.
Full year 2014 net sales decreased 5.3% to $4,240.5 million compared to $4,478.1 million in 2013. Excluding $388.1 million of sales in 2013 from divested businesses, net sales increased $150.5 million or 3.7%. The increase was driven by $78.1 million of higher pricing and $75.2 million of improved volume/mix. The sales increase was partially offset by $2.8 million of unfavorable exchange rates.
EBITDA for fourth quarter 2014 was $145.5 million, or $5.5 million higher than the fourth quarter of 2013. When adjusting for special charges, Adjusted EBITDA increased 8.5% to $171.8 million in the fourth quarter of 2014 from $158.3 in the fourth quarter of 2013. When comparing against the prior year quarter, Adjusted EBITDA in the fourth quarter of 2014 was positively impacted by $16.4 million of higher pricing, $12.0 million of improved net operating performance and $1.7 million of favorable volume/mix. These benefits were partially offset by $6.3 million from divested businesses, $5.0 million in other costs, primarily for labor and benefits, $4.7 million of unfavorable exchange rates and $0.6 million of commodity inflation.
Full year 2014 EBITDA decreased 20.9% to $497.3 million from $628.7 million in 2013. When adjusting for special charges, adjusted EBITDA increased 6.1% to $710.8 million in 2014 from $670.2 million in 2013. When comparing against 2013, adjusted EBITDA in 2014 was positively impacted by $78.1 million of higher pricing, $57.5 million of improved net operating performance and $4.3 million of favorable volume/mix. These benefits were partially offset by $40.4 million of commodity inflation, $35.2 million other costs, primarily for labor and benefits, $18.5 million from divested businesses and $5.2 million of unfavorable exchange rates.
Total net debt at the end of 2014 was $1,892.7 million, or $308.7 million lower than at the end of 2013. After adjusting for net acquisition and divestiture activities and capital market activities, cash available for net debt reduction would have been in excess of $350 million.
Including the tax impact, fourth quarter 2014 net income was negatively impacted by $28.6 million of special charges (the largest charges relating to the refinancing and retirement of the company’s 2018 Bonds and the amendment and extension of the company’s senior secured credit facility). When adjusting for these charges, adjusted net income for the fourth quarter of 2014 was $70.1 million, or $0.21 per diluted share. This compares to fourth quarter 2013 adjusted net income of $58.6 million or $0.17 per diluted share.
For the full year 2014, net income was $89.7 million, or $0.27 per diluted share, based on 330.5 million weighted average diluted shares. This compares to 2013 net income of $146.6 million or $0.42 per diluted share, based on 349.7 million weighted average diluted shares. Including the tax impact, full year 2014 net income was negatively impacted by $148.4 million of special charges (the largest charges relating to the loss on the sale of the company’s multi-wall bag and label businesses earlier in the year). When adjusting for these charges, 2014 adjusted net income was $238.1 million or $0.72 per diluted share, compared to full year 2013 adjusted net income of $181.4 million, or $0.52 per diluted share.
“We delivered record fourth quarter results in what continues to be a challenging operating environment,” said David Scheible, chairman, president and CEO. “Excluding the divested businesses, sales in our ongoing operations increased 5.6% and we continue to gain share in many of our markets. Adjusted EBITDA margin increased 250 basis points to a fourth quarter record of 17.2% and we generated over $130 million of net debt reduction in the fourth quarter, meeting our full year commitment to deliver $350 million of cash available for net debt reduction. These strong results are the outcome of our efforts over the last 18 months to exit lower margin businesses and to refocus our resources on our core paperboard packaging segment. At the same time, we continued to execute on our continuous improvement programs across the organization and achieved almost $60 million of margin enhancing performance improvements in 2014.
“Graphic Packaging’s financial performance and balance sheet have strengthened considerably over the past several years.,” Scheible continued. “We are now in a position to return cash to stockholders while still maintaining financial flexibility to execute our strategic plan, further strengthen our balance sheet and invest for future growth. I am happy to announce that Graphic Packaging’s Board of Directors has approved the initiation of a $0.05 per share quarterly dividend while also providing the flexibility to return additional cash to stockholders through a $250 million share repurchase program.
“Investing in high return projects and strategic acquisitions remains a core part of our growth strategy. The previously announced acquisition of the folding carton converting and paperboard mill assets of Cascades’ Norampac division closed earlier this week. We are extremely excited as these assets enable us to extend our customer reach in Canada. I am also happy to say that subsequent to year end, we acquired Rose City Printing and Packaging, Inc., which includes two state-of-the-art folding carton converting facilities located just outside Portland, Oregon. This acquisition increases our integrated west coast presence allowing us to better serve new and existing customers.”
The company’s recently approved capital allocation plan includes the initiation of a $0.05 per share quarterly dividend. The first cash dividend is payable April 5, 2015 to stockholders of record on March 15, 2015.
The capital allocation plan also includes a share repurchase program under which management may repurchase up to $250 million of shares from time to time through open market purchases, privately negotiated transactions and Rule 10b5-1 plans in accordance with applicable securities laws.
Net Ssales decreased 6.9% to $1,001.1 million in the fourth quarter 2014, compared to $1,074.9 million in the prior year period. Excluding $127.3 million of sales in the prior year period from divested businesses, net Ssales increased $53.5 million or 5.6%. The increase was driven by $49.3 million of improved volume/mix and $16.4 million of higher pricing. The sales increase was partially offset by $12.2 million of unfavorable exchange rates.
Full year 2014 net sales decreased 5.3% to $4,240.5 million compared to $4,478.1 million in 2013. Excluding $388.1 million of sales in 2013 from divested businesses, net sales increased $150.5 million or 3.7%. The increase was driven by $78.1 million of higher pricing and $75.2 million of improved volume/mix. The sales increase was partially offset by $2.8 million of unfavorable exchange rates.
EBITDA for fourth quarter 2014 was $145.5 million, or $5.5 million higher than the fourth quarter of 2013. When adjusting for special charges, Adjusted EBITDA increased 8.5% to $171.8 million in the fourth quarter of 2014 from $158.3 in the fourth quarter of 2013. When comparing against the prior year quarter, Adjusted EBITDA in the fourth quarter of 2014 was positively impacted by $16.4 million of higher pricing, $12.0 million of improved net operating performance and $1.7 million of favorable volume/mix. These benefits were partially offset by $6.3 million from divested businesses, $5.0 million in other costs, primarily for labor and benefits, $4.7 million of unfavorable exchange rates and $0.6 million of commodity inflation.
Full year 2014 EBITDA decreased 20.9% to $497.3 million from $628.7 million in 2013. When adjusting for special charges, adjusted EBITDA increased 6.1% to $710.8 million in 2014 from $670.2 million in 2013. When comparing against 2013, adjusted EBITDA in 2014 was positively impacted by $78.1 million of higher pricing, $57.5 million of improved net operating performance and $4.3 million of favorable volume/mix. These benefits were partially offset by $40.4 million of commodity inflation, $35.2 million other costs, primarily for labor and benefits, $18.5 million from divested businesses and $5.2 million of unfavorable exchange rates.
Total net debt at the end of 2014 was $1,892.7 million, or $308.7 million lower than at the end of 2013. After adjusting for net acquisition and divestiture activities and capital market activities, cash available for net debt reduction would have been in excess of $350 million.