Graphic Packaging Reports 2Q 2019 Results

Graphic Packaging Holding Company 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.
 
Net sales increased 3% to $1,552.8 million in the second quarter of 2019, compared to $1,510.9 million in the prior year period. The $41.9 million increase was driven by $39.8 million of higher pricing and $16.3 million of improved volume/mix related to acquisitions. These benefits were partially offset by $14.2 million of unfavorable foreign exchange.
 
EBITDA for the second quarter of 2019 was $257.2 million, or $30 million higher than the second quarter of 2018. Total debt (long-term, short-term and current portion) decreased $118.1 million during the second quarter of 2019 to $3,070.6 million compared to the first quarter of 2019. The company’s second quarter 2019 pro forma net leverage ratio was 2.91 times adjusted EBITDA compared to 3.13 times at the end of the first quarter of 2019.
 
“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 Michael Doss, president and CEO. “Pricing improved by $40 million during the quarter reflecting the benefits of our pricing initiatives. 
 
“In addition, our commercial teams have been successful in customer negotiations to reduce our pricing lags to six months compared to  eight months previously,” Doss added. “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.”
 
Graphic Packaging Holding Company also announced 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, MI 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 12 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 Doss.