Graphic Packaging Holding Company · NYSE:GPK
Graphic Packaging — Q3 2023 Earnings Presentation
20 slides from Graphic Packaging's earnings presentation, Oct 31, 2023
Slide 1: Third Quarter 2023 Financial Results
Third Quarter 2023 Financial Results October 31, 2023 Michael P. Doss President and Chief Executive Officer Stephen R. Scherger EVP and Chief Financial Officer
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS • Any statements of the Company’s expectations in these slides, including, but not limited to, statements regarding the new CRB mill in Waco, Texas and expected facility closures, value creation, capacity, capital e
Slide 3: Our Purpose
3 OUR PURPOSE We package life’s everyday moments for a renewable future.
Slide 4: Third Quarter Business Update and Outlook
THIRD QUARTER BUSINESS UPDATE AND OUTLOOK • Operating effectively through dynamic consumer environment o Modest impact to packaging volumes; anticipate return to targeted net organic sales growth in 2024 o Actively managing supply to meet demand; reduced paperboard production 150,000 tons during Q3
Slide 5: Delivering Innovative Packaging Solutions Preferred by Consumers
DELIVERING INNOVATIVE PACKAGING SOLUTIONS PREFERRED BY CONSUMERS PLASTIC AND FOAM REPLACEMENT INITIATIVES DRIVING CATEGORY EXPANSION • Fiber-based double-wall Nissin Cup Noodles retail hot cup to be launched in Q1’24 • Marks expansion into microwaveable retail cup applications as an alternative to f
Slide 6: Continued Progress of Multi-Year CRB System Transformation
CONTINUED PROGRESS OF MULTI-YEAR CRB SYSTEM TRANSFORMATION DISCIPLINED BUILD OUT OF LOWEST-COST, HIGHEST QUALITY PRODUCTION 2019 CRB SYSTEM (+ TAMA) 2023 CRB SYSTEM Kalamazoo East Angus Kalamazoo East Angus 480kT Battle Creek 100kT 910kT 100kT K1: 360kT 210kT K1: 360kT K3: 120kT K2: 550kT Tama 80kT
Slide 7: Better, Every Day – Progressing Our Sustainability Vision
BETTER, EVERY DAY – PROGRESSING OUR SUSTAINABILITY VISION 2022 ESG REPORT HIGHLIGHTS Planet ✓ Achieved climate intensity goals 3 years early ✓ Diverted 1.1M metric tons of waste from landfill, 85% was recovered paper waste that was recycled People ✓ 30% ethnic diversity among U.S. employees – 2.3x p
Slide 8: Near-Term Greenhouse Gas Reduction Targets Approved by SBTi
BETTER, EVERY DAY – PROGRESSING OUR SUSTAINABILITY VISION NEAR-TERM GREENHOUSE GAS REDUCTION TARGETS APPROVED BY SBTi Graphic Packaging commits to reduce: • Absolute scope 1 and 2 GHG emissions 50.4% by 2032 from a 2021 base year1 • Absolute scope 3 GHG emissions from purchased goods and services, f
Slide 9: Third Quarter and First Nine Months 2023 Results
THIRD QUARTER AND FIRST NINE MONTHS 2023 RESULTS Change Change Diversified Portfolio Balancing Results ($M excl EPS) Q3’23 Q3’22 YTD’23 YTD’22 y/y y/y • Food, Beverage & Consumer sales -6% y/y Net Sales $2,349 $2,451 -4% $7,179 $7,054 2% • Foodservice sales +8% y/y Adj. EBITDA $482 $441 9% $1,419 $1
Slide 10: Full Year 2022 Actuals and 2023 Guidance
FULL YEAR 2022 ACTUALS AND 2023 GUIDANCE 2022 Actual 2023 Guidance Sales $9.4B $9.5B - $9.6B Adjusted EBITDA $1.6B $1.875B - $1.925B Adjusted Cash Flow $700M $600M - $700M Year-End Net Leverage 3.2x 2.6x - 2.7x Adjusted EPS $2.33 $2.85 - $3.00 10
Slide 11: Balanced Approach to Capital Allocation Focused on Growth & Capital Return
BALANCED APPROACH TO CAPITAL ALLOCATION FOCUSED ON GROWTH & CAPITAL RETURN Growth Return to shareholders Leverage Strategic Capital Share Dividend Reduction M&A Investments Repurchases Target year-end Bell Incorporated • Waco CRB Mill • $582M total $0.10 dividend ‘23 net leverage of acquisition comp
Slide 12: Appendix
Appendix
Slide 13: Third Quarter 2023 Net Sales Performance
THIRD QUARTER 2023 NET SALES PERFORMANCE ($M) (4%) Organic sales ($129) Open market sales ($103) Bell acquisition $9 1 13 1. The impact of Foreign Exchange is measured as the increase or decrease in results for the current period by applying prior period foreign currency exchange rates to present a
Slide 14: Third Quarter 2023 Adjusted EBITDA Performance
THIRD QUARTER 2023 ADJUSTED EBITDA PERFORMANCE ($M) +9% Net productivity $72 Market downtime ($53) 1 14 1. The impact of Foreign Exchange is measured as the increase or decrease in results for the current period by applying prior period foreign currency exchange rates to present a constant currency
Slide 15: 2023 Full Year EBITDA and Cash Flow Support
2023 FULL YEAR EBITDA AND CASH FLOW SUPPORT EBITDA SUPPORT Organic Sales Growth (3% - 1%) Q4’23 (2%) – 2% Price-Commodity Input Cost Relationship ~$550M Net Performance ($25M) - $25M Kalamazoo returns offset by actively managing supply to meet demand Labor, Benefits, Other Inflation, FX ($170M - $15
Slide 16: 2023 Year-Over-Year Price-Cost, Net Maintenance Outage and Other Guidance Support
2023 YEAR-OVER-YEAR PRICE - COST, NET MAINTENANCE OUTAGE AND OTHER GUIDANCE SUPPORT Price - Commodity Input Cost Relationship 2021 2022 2023 ($M) Actual Actual Guidance ($M) Q1A Q2A Q3A Q4E 2023E Pension Expense (excludes pension $6 $5 $8 Price-Cost amortization) $182 $192 $124 ~$50 ~$550 Relationsh
Slide 17: Supplemental Information
SUPPLEMENTAL INFORMATION Commodity Annual Consumption 2022 Sales By Currency Categories Units Currency % of Sales Wood (Million tons) 10 USD 71 Recycled Fiber (Million tons) 1.4 EUR 10 Natural Gas (MMBTU) 26 GPB 5 CAD 2 Caustic Soda (000, tons) 79 MXN 2 Starch (Million lbs.) 143 PLN 2 TiO2 (Million
Slide 18: Scale and Operational Execution: Track Record of Growth
SCALE AND OPERATIONAL EXECUTION: TRACK RECORD OF GROWTH ($M) $1,900 Adjusted EBITDA $1,600 $1,070 $1,056 $1,030 $971 $712 2 2017 2018 2019 2020 2021 2022 2023E 18
Slide 19: Running a Different Race – Compelling Investment Case
RUNNING A DIFFERENT RACE – COMPELLING INVESTMENT CASE LEADING integrated global fiber-based consumer packaging company ADVANCED innovation capabilities, diversified market segments, and sustainable packaging offerings provide runway for organic growth COMPETITIVELY advantaged with lowest-cost operat
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