Graphic Packaging Reports Strong 4Q, Full Year 2015 Results

Graphic Packaging Holding Company reported Net Income for fourth quarter 2015 of $57.2 million, or $0.17 per share, based upon 329.6 million weighted average diluted shares. This compares to fourth quarter 2014 Net Income of $41.5 million, or $0.13 per share, based on 331.0 million weighted average diluted shares.

Adjusted Net Income for the fourth quarter of 2015 was $63.0 million, or $0.19 per diluted share. This compares to fourth quarter 2014 Adjusted Net Income of $70.1 million or $0.21 per diluted share. The decline versus the prior year was driven by non-recurring tax benefits in Q4 2014.

For the full year 2015, Net Income was $230.1 million, or $0.70 per share, based on 330.7 million weighted average diluted shares. This compares to 2014 Net Income of $89.7 million, or $0.27 per share, based on 330.5 million weighted average diluted shares. The 2015 Adjusted Net Income was $247.0 million, or $0.75 per diluted share, compared to full year 2014 Adjusted Net Income of $238.1 million, or $0.72 per diluted share.

Net Sales increased 2.4% to $1,024.9 million in the fourth quarter of 2015, compared to $1,001.1 million in the prior year period. The $23.8 million increase was driven by $50.4 million of improved volume/mix, related to acquisitions. The sales increase was partially offset by $21.2 million of unfavorable foreign exchange rates and $5.4 million of lower pricing.

Full year 2015 Net Sales decreased 1.9% to $4,160.2 million compared to $4,240.5 million in 2014. The decrease was driven by $221.6 million of lower sales due to business divestitures, $109.0 million from unfavorable foreign exchange rates and $15.6 million of lower pricing. The sales decrease was partially offset by $265.9 million of improved volume/mix, related to acquisitions.

“We delivered a very strong quarter in the face of difficult markets and foreign exchange headwinds,” said Michael Doss, president and CEO. “Sales increased 2.4% and we continue to gain share in many of our markets. Strong performance drove Adjusted EBITDA Margin higher by 40 basis points to 17.6%. We continued to execute on our operating improvement programs across the organization, achieving $74 million of performance improvements in 2015

“We’ve been very busy since the end of the third quarter with the announcement of four strategic tuck-under acquisitions,” Doss added. “Investing in high return projects and strategic acquisitions remains a core part of our profitable growth strategy. Two of the acquisitions, Virginia-based Carded Graphics and Minnesota-based Walter G. Anderson, bring state-of-the-art assets and enhance our leadership position in key North American food, beverage and consumer product markets.

“I am also excited about our international expansions in Mexico and Australia/New Zealand.,” Doss noted. “The G-Box acquisition, completed in early January, adds two strategically located folding carton plants which strengthen our footprint in the growing Mexican food and beverage markets. While Graphic Packaging has been operating successfully in Australia for over two decades, the acquisition of market-leader Colorpak, and its three folding carton manufacturing facilities, allows us to expand in the Australia and New Zealand food, beverage and consumer product markets.”

EBITDA for fourth quarter 2015 was $172.7 million, or $27.2 million higher than the fourth quarter of 2014. After adjusting both periods for special charges, Adjusted EBITDA increased 5.2% to $180.7 million in the fourth quarter of 2015 from $171.8 million in the fourth quarter of 2014. When comparing against the prior year quarter, Adjusted EBITDA in the fourth quarter of 2015 was positively impacted by $13.8 million of improved net operating performance, $5.0 million in commodity deflation, net of pricing and $2.5 million of favorable volume/mix. These benefits were partially offset by $7.7 million of unfavorable foreign exchange rates and $4.7 million of other inflation (primarily labor and benefits).

Full year 2015 EBITDA increased 46.4% to $728.0 million from $497.3 million in 2014. After adjusting both periods for special charges, Adjusted EBITDA increased 5.7% to $751.2 million in 2015 from $710.8 million in 2014. When comparing against 2014, Adjusted EBITDA in 2015 was positively impacted by $73.7 million of improved net operating performance, $28.9 million of favorable volume/mix and $3.6 million of commodity deflation, net of pricing. These benefits were partially offset by $28.2 million of unfavorable foreign exchange rates, $28.2 million of other inflation (primarily labor and benefits) and $9.4 million from divested businesses.

Total Net Debt declined $78.4 million during the fourth quarter of 2015 to $1,834.3 million. The company’s year-end 2015 Net Leverage Ratio declined to 2.44 times Adjusted EBITDA from 2.66 times Adjusted EBITDA at the end of 2014. At Dec. 31, 2015, the Company had available domestic liquidity of $1,080.1 million, including the undrawn availability under its $1.25 billion U.S. revolving credit facility.