Graphic Packaging Holding Company · NYSE:GPK
Graphic Packaging — Q4 2023 Earnings Presentation
78 slides from Graphic Packaging's earnings presentation, Feb 21, 2024
Slide 1: Investor Day
Investor Day February 21, 2024 © 2024 Graphic Packaging Holding Company
Slide 2: Agenda
Agenda Consumer Packaging Leadership 1 Presented by Mike Doss Americas and Innovation Growth 2 Presented by Maggie Bidlingmaier Dynamic European Environment 3 Fireside Chat with Jean-Francois Roche Sustainability Program 4 Presented by Michelle Fitzpatrick Growth and Return Outlook 2 5 Presented by
Slide 3: 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 company’s ability to meet its Vision 2030 goals, the proposed sale of the Augusta bleached pape
Slide 4: Consumer Packaging Leadership
Consumer Packaging Leadership 1 Presented by Mike Doss 4
Slide 5: Today's Results
Today’s Results $9.4B YoY $1.9B YoY Sales Adjusted EBITDA Value-based pricing offset modest 20% Adj EBITDA margin volume declines 2.8x YE $2.91 YoY Leverage Adjusted EPS Down from 3.2x Improved 25% year over year 5
Slide 6: Global Leader in Sustainable Consumer Packaging
Global Leader in Sustainable Consumer Packaging 36 locations 74 locations 6
Slide 7: Unmatched consumer packaging market depth and breadth
Unmatched consumer packaging market depth and breadth Portfolio moves with the consumer Market % of portfolio1 Food 39% Beverage 22% Foodservice 22% Household Products 13% Health Care & Beauty 4% 7 1. 2023 sales mix by market
Slide 8: Today's Speakers
• Today’s Speakers Mike Doss Maggie Bidlingmaier Jean-Francois Roche Michelle Fitzpatrick Steve Scherger President & Executive Vice President Senior Vice President, Vice President & Chief Executive Vice President Chief Executive Officer & President, Americas Sales International Sustainability Office
Slide 9: Vision 2025
Vision 2025 raphic Packaging HOLDING COMPANY. (Za w
Slide 10: Expansion of capabilities with diversified portfolio of consumer markets and products
Expansion of capabilities with diversified portfolio of consumer markets and products built over time 10% 4% 13% 10% 2017 2023 39% $4.4B 50% $9.4B 22% Sales Sales 30% 22% 10
Slide 11: Innovation
Global Leader in Sustainable Consumer Packaging Innovation • 2% annual sales growth from innovation • Every new product innovation more circular, more functional and more convenient than existing alternatives • Create a multi-generational portfolio of solutions leverageable across products and geogr
Slide 12: Culture
Global Leader in Sustainable Consumer Packaging Culture • Zero life injuries • 75 th percentile in employee engagement (Gallup Q12 ) • Women in leadership positions to 35%; US ethnic diversity to 40% • Enhance the communities in which we operate 12
Slide 13: Planet
Global Leader in Sustainable Consumer Packaging Planet • Achieve approved 2032 Science Based Targets for Scope 1, 2, and 3 greenhouse gas emissions reductions • 90% renewable fuel use in wood fiber paperboard manufacturing facilities • 50% purchased renewable electricity • 100% purchased forest prod
Slide 14: Results
Global Leader in Sustainable Consumer Packaging Results • Leverage unmatched global capabilities for customers and consumers • Deliver consistent and strong financial results across all economic conditions • Invest in team and innovation capabilities to be the global leader in sustainable consumer p
Slide 15: Innovation, Culture, Planet, Results
Global Leader in Sustainable Consumer Packaging Innovation Culture Build the leading Enable a safe, inclusive, sustainability-focused customer-focused culture consumer packaging innovation platform Planet Results Steadily and Consistently execute for measurably improve the customers, shareholders en
Slide 16: Americas and Innovation Growth
Americas and Innovation Growth 2 Presented by Maggie Bidlingmaier 16
Slide 17: Products in the hands of millions of consumers multiple times a day
Graphic Packaging’s products are in the hands of millions of consumers multiple times a day across a wide range of everyday occasions Food at Home Snacking Food away from Home Beverages Pet Care Oral Care Personal Care Home Care Beauty Health Care 17
Slide 18: Packaging serves multiple functions for consumers
Packaging serves multiple functions for consumers Hygiene and Durability food safety Shelf life Information Ease of use Branding 18
Slide 19: Consumers increasingly concerned about environmental impact of purchases
Consumers are increasingly concerned about the impact their purchasing decisions have on the environment 79% are looking for products in sustainable packaging1. of Gen Z shoppers are willing to pay more for 73% sustainable products2. agree that paperboard packaging is part of the 68% environmental s
Slide 20: Retailers and brand owners seek to address consumer expectations and regulations
Retailers and brand owners seek to address consumer expectations, comply with packaging regulations and achieve sustainability goals Retailers Brand Owners Legislators 20
Slide 21: Uniquely positioned with innovative consumer packaging solutions
Graphic Packaging is uniquely positioned and responding with innovative consumer packaging solutions Consumer Customer Environmentally centric focused responsible 21
Slide 22: Innovation capabilities centrally organized, regionally focused, globally connected
Our innovation capabilities are centrally organized, regionally focused, globally connected and competitively advantaged How We Win 8 innovation hubs 120 dedicated employees Deeper ~3,000 active patents Speed to Cross customer market fertilization relationships Unmatched Higher Tailored capabilities
Slide 23: From ideation to commercialization, innovation approach is cohesive
From ideation to commercialization, our innovation approach is cohesive and cross functional Market insights • Consumer trends • Customer and retailer understanding • Legislation tracking Commercialization • Technical resources Research and • 100+ packaging development manufacturing facilities • Des
Slide 24: Five global innovation platforms with $15 billion addressable market
Focused on five global innovation platforms with an addressable market of $15 billion $5.0B $4.0B $1.5B $2.5B $2.0B Trays & Bowls Cups & Containers Multi-Packs Paperboard Canisters Strength Packaging 24
Slide 25: Paperboard innovation enables expansion into multiple markets
Paperboard innovation enables expansion into multiple consumer packaging markets Oral Care Personal Care Beauty Health Care 25
Slide 26: Grocery, club store, eCommerce and quick-service restaurant landscape
Traditional grocery, club store, eCommerce and quick-service restaurant landscape Club Store and eCommerce Quick-Service Restaurant Traditional Grocery 26
Slide 27: Historical strength in center of the store
Historical strength in the center of the store in dry food and beverage Cereal Pasta Cookies & Crackers Beverage 27
Slide 28: Expanded into club stores, eCommerce and quick-service restaurants
We have expanded into club stores, eCommerce and quick-service restaurants Quick-Service Packages Heavy Weight Fully Enclosed Boxes Packages Cold & Hot Cups 28
Slide 29: Trays and Bowls expand reach to perimeter of the store
Trays and Bowls expand our reach to the perimeter of the store PaperSeal™ Cook PaperSeal™ Tray PaperSeal™ Skin ProducePack™ Punnet 29
Slide 30: Cups and Containers replace foam and plastic
Cups and Containers replace foam and plastic in quick-service restaurants and at retail Cold&Go™ Cups Food Cups Hold&Go™ Cups 30
Slide 31: Paperboard Canisters replace plastic, metal and composite packaging
Paperboard Canisters replace plastic, metal and other composite packaging Boardio™ Vitamins Boardio™ Snacks Boardio™ Confectionary Boardio™ Coffee 31
Slide 32: Multi-Packs extend strength beyond beverage into food
Multi-Packs extend our strength beyond beverage into food packaging KeelClip™ EnviroClip™ Clip Style for Cans Clip Style for PET 32
Slide 33: Strength Packaging brings high impact graphics to new markets
Strength Packaging brings high impact graphics to new markets and durability that withstands club store and eCommerce supply chains IntegraFlute™ Bag to Box 33
Slide 34: Pacesetter Rainier brings recycled paperboard packaging to new markets
Pacesetter Rainier™ brings recycled paperboard packaging to new markets Beauty Personal Care Health Care Oral Care 34
Slide 35: Our traditional stronghold was in the center of the store
Our traditional stronghold was in the center of the store 35
Slide 36: Innovation platforms extend reach across retail channels and markets
Our innovation platforms extend our reach across retail channels and markets 36
Slide 37: Trays & Bowls, Paperboard Canisters, Cups & Containers
Trays & Bowls Paperboard Canisters Cups & Containers i Key challenge to address Key challenge to address Key challenge to address “Microwaved food is convenient, but “Sustainable solution with easy “Commitment to reducing single-use how can it deliver on the crispiness of a dispensing and improved c
Slide 38: Customers recognize our leadership in innovation
Customers recognize our leadership in innovation “GPI is a leader. They have a good innovation arm. They’re also good about sharing their capabilities with us...we prefer to get in early and collaborate on the development.” National Quick Service Brand “They help us meet our sustainability targets.
Slide 39: Graphic Packaging is delivering results
Graphic Packaging is delivering results Large and Unmatched growing Creating and scale and addressable capturing value capabilities market 39
Slide 40: Dynamic European Environment
Dynamic European Environment 3 Fireside Chat with Jean-Francois Roche 40
Slide 41: European Consumer Packaging Market
European Consumer Packaging Market Fragmented Market1 $15B Historic GDP growth to be supplemented by 2-4% of 15% Paperboard additional growth from plastic 15% consumer substitution Other 48% packaging 8% 8% Paperboard expected to gain share in an overall flat packaging market 2% 4% European paperboa
Slide 42: AR Packaging transformed our international business
AR Packaging transformed our international business Before AR, Graphic Packaging was a food and beverage carton supplier Legacy Graphic Packaging Food Beverage 42
Slide 43: From supplier to 'Partner of Choice'
From supplier to ‘Partner of Choice’ Strong geographic footprint, broader market coverage and expanded capabilities Legacy Graphic Packaging Legacy AR Packaging Food Beverage Health Care Foodservice Household & Beauty Balanced Innovation Employer of Epicenter of customer mix leader choice change Eur
Slide 44: European Sustainability Regulatory Timelines
European Sustainability Regulatory Timelines SUPD Enforcement of bans 2027: (Single use National transposition of other measures Impact and marking plastics directive) assessment Revision by EU Council 2025-2040: PPWR Proposal from EC parliament vote Trialogue Delegated acts and (Packaging & packagi
Slide 45: Capturing plastic substitution opportunities driven by regulation
Our innovation capabilities position Graphic Packaging to capture plastic substitution opportunities driven by the regulatory environment Packaging and Packaging Headwinds Tailwinds Waste Regulations (PPWR) • Increased Extended Producer • Paperboard preferred where there are Responsibility fees for
Slide 46: Innovation platforms launched in Europe now global successes
Innovation platforms initiated, developed and launched in Europe which are now global successes KeelClipTM PaperSealTM BoardioTM CleanCloseTM 46
Slide 47: Sustainability Program
Sustainability Program 4 Presented by Michelle Fitzpatrick 47
Slide 48: Global sustainability trends create opportunities and challenges
Global sustainability trends create opportunities and challenges for consumer packaging companies Population Growth Resource Scarcity Climate Change Nature Impacts Graphic Packaging’s innovative consumer packaging provides solutions that address these trends 48
Slide 49: Better, Every Day - our sustainability promise
Better, Every Day - our sustainability promise At Graphic Packaging, we package life’s everyday moments for a renewable future. And we want every one of those moments to Fueling aFueling circularaeconomy recycling more materials, circular economy more and materials, avoiding by by recycling wasteand
Slide 50: 2030 sustainability commitments
We action Better, Every Day through our 2030 sustainability commitments UN SDG SUSTAINABILITY PILLAR ACTION AREA 2030 GOALS CONNECTION Better Packaging Driving • Every new product innovation more circular, more functional, Circularity and more convenient than existing alternatives • 75 th percentile
Slide 51: Better Future goals optimize circularity across the life-cycle
Better Future goals optimize circularity at each stage in the consumer packaging life-cycle Paperboard facility New and • More sustainable raw materials recycled paperboard Raw • Increased renewable materials energy use Recycled Recycle • Reduced manufacturing packaging paperboard emissions and wast
Slide 52: Becoming Better, Every Day
Becoming Better, Every Day 2023 Low Risk Rating (17.8) Leadership rating (A-) for climate and water in 2022 We Support Gold medal award in 2022 2023 assessment in progress 52
Slide 53: Better Future
Better i) hae =) + =) LL. HOLDING COMPANY. % Graphic Packaging 53
Slide 54: Climate Action
Climate Action 2030 Climate Action Goals • 50.4% reduction in Scope 1 & 2 GHG emissions by 2032 • 30% reduction in Scope 3 GHG emissions by 2032 We’re shaping a better future • 90% renewable fuel use in wood fiber paperboard manufacturing through everyday actions to facilities reduce our carbon foot
Slide 55: Scope 1 & 2 Decarbonization Pathway
Scope 1 & 2 Decarbonization Pathway Proposed renewable fuel projects at paperboard facilities combined with modeled grid greening are projected to achieve ~70%-75% of the 2032 target BAU Grid 2021 Growth1 Greening Emissions Renewable Fuel Projects -38% -50.4% 50% Purchased Renewable Electricity Ener
Slide 56: Scope 1 & 2 Emissions
Scope 1 & 2 Decarbonization Pathway Emissions reductions accelerate after the Waco investment Decarbonization Lever Impact1 3,000,000 K2 Waco Bark Project 2,500,000 Scope 1 & 2 Emissions (metric ton CO2e) 2021 Baseline Boiler Project 2,000,000 Boiler/Bark Capital Projects & Project Grid Greening Red
Slide 57: Scope 3 Decarbonization Pathway
Scope 3 Decarbonization Pathway Identified action areas projected to achieve ~70%-75% of our 2032 target Organic Grid Greening Tier 1 Supplier Growth Decarbonization 2021 Emissions Increase in End Product Recycling Increased Renewable -21% -30% Energy Use Transportation Initiatives Target Gap 2032 T
Slide 58: Award-winning innovations enable customers to achieve sustainability goals
Our award-winning innovations enable our customers to achieve their sustainability goals and give customers what they are asking for KeelClip™ enables brands to eliminate The Cold&Go™ double wall cold cup provides plastic rings and shrink film and increase an alternative to foam cups and is recyclab
Slide 59: Growth and Return Outlook
Growth and Return Outlook 5 Presented by Steve Scherger 59
Slide 60: Announced intent to sell Augusta bleached paperboard facility
Announced intent to sell Augusta bleached paperboard manufacturing facility to Clearwater Paper Corporation Financial Metrics Graphic Packaging Pro-forma Transaction Value $700M Sales $8.8B Adj. EBITDA $100M Adj. EBITDA $1.8B Capacity 600K tons Debt $4.7B Leverage 2.6x 60
Slide 61: Fourth Quarter and Full Year 2023 Wrap-Up
Fourth Quarter and Full Year 2023 Wrap-Up • Performed effectively through dynamic consumer packaging environment o Achieved Vision 2025 targeted Adjusted EBITDA margin goal early; grew Adjusted EPS 25% y/y o Modest and temporary impact to customers’ volumes due to well-chronicled inventory normaliza
Slide 62: Fourth Quarter and Full Year 2023 Financials
Fourth Quarter and Full Year 2023 Financials Change Change ($M excl EPS) Q4’23 Q4’22 FY’23 FY’22 y/y y/y Net Sales $2,249 $2,386 -6% $9,428 $9,440 0% Adj. EBITDA $457 $413 11% $1,876 $1,600 17% Adj. EBITDA Margin 20.3% 17.3% +300bps 19.9% 16.9% +300bps Adj. EPS $0.75 $0.59 27% $2.91 $2.33 25% Global
Slide 63: 2024 Guidance
2024 Guidance Adjusted EBITDA $1,750M - $1,950M FY’24 Guidance1 Adjusted EPS $2.50 - $3.00 Capital Spending $950M FY’24 Interest Expense $225M Supplemental Guidance1 Cash Taxes, Working Capital, Pension $300M Effective Tax Rate ~25% 63 1. Excludes potential impact of announced Augusta paperboard man
Slide 64: Results
Global Leader in Sustainable Consumer Packaging Results • Leverage unmatched global capabilities for customers and consumers • Deliver consistent and strong financial results across all economic conditions • Invest in team and innovation capabilities to be the global leader in sustainable consumer p
Slide 65: Sales Performance by Market
Sales Performance by Market 2022 FY 2023 FY Q1 Q2 Q3 Q4 2022 Q1 Q2 Q3 Q4 2023 Food Beverage Foodservice Household Health Care & Beauty Total = >5%, = 2 to 5%, = -2 to+2%, = -2 to -5%, = <-5% 65
Slide 66: Vision 2030 Base Financial Model
Vision 2030 Base Financial Model Vision 2030 Annual Sales Growth Low-Single Digits Annual ADJ EBITDA Growth Mid-Single Digits Annual ADJ EPS Growth High-Single Digits Normalized Capex (% of Sales) 5% Base financial model generates above cost of capital returns and significant cash flow, creating a r
Slide 67: $15 Billion Addressable Market Opportunity
$15 Billion Addressable Market Opportunity $5.0B $4.0B $1.5B $2.5B $2.0B Trays & Bowls Cups & Containers Multi-Packs Paperboard Canisters Strength Packaging 67
Slide 68: Vision 2030 Base Financial Model
Vision 2030 Base Financial Model Vision 2030 Annual Sales Growth Low-Single Digits Annual ADJ EBITDA Growth Mid-Single Digits Annual ADJ EPS Growth High-Single Digits Normalized Capex (% of Sales) 5% Base financial model generates above cost of capital returns and significant cash flow, creating a r
Slide 69: Capital allocation focused on consumer packaging leadership and return of capital
Capital allocation focused on strengthening consumer packaging leadership and return of capital OPPORTUNITY OPPORTUNITY IMPACT IMPACT INVEST in Team and Capabilities STRENGTHEN Consumer Packaging Leadership GROW the Dividend PRIORITIZE Return of Capital ACHIEVE Investment Grade ENHANCE Stakeholder A
Slide 70: Significant Cash Flow to Deploy for Value Creation
Significant Cash Flow to Deploy for Value Creation ~$5B+ Cash Flow (~$17/share) 2024-2030 Vision ~$2.5B Cash Flow (~$8/share) 2030 2024-2027 2029 2028 ~$1B Cash Flow 2027 ~$1B Cash Flow 2nd incremental 2026 $80M Waco Incremental EBITDA $80M Waco ~$900M to ~$1B 2025 EBITDA Cash Flow CapEx Cycle ~$800
Slide 71: Global Leader in Sustainable Consumer Packaging
Global Leader in Sustainable Consumer Packaging Strategic Pillars Progress Metrics Innovation – Build the leading • 2% annual sales growth from innovation sustainability-focused consumer packaging innovation platform • Zero life injuries • Women in leadership positions to 35% • US ethnic diversity t
Slide 72: Appendix
Appendix 72 © 2024 Graphic Packaging International, LLC.
Slide 73: Fourth Quarter and Full Year 2023 Financials
Fourth Quarter and Full Year 2023 Financials Change Change ($M excl EPS) Q4’23 Q4’22 FY’23 FY’22 y/y y/y Q4’23 Diversified Portfolio • Food, Beverage & Consumer Net Sales $2,249 $2,386 -6% $9,428 $9,440 0% sales -9% y/y • Foodservice sales +18% y/y Adj. EBITDA $457 $413 11% $1,876 $1,600 17% Dynamic
Slide 74: Q4 2023 Sales Performance
Q4 2023 Sales Performance ($M) (6%) Organic sales ($113) Open market sales ($119) Russia divestiture ($10) Bell acquisition $44 1 74 1. The impact of foreign exchange is measured as the increase or decrease in results for the current period by applying prior period foreign currency exchange rates to
Slide 75: Q4 2023 Adjusted EBITDA Performance
Q4 2023 Adjusted EBITDA Performance ($M) +11% Net productivity $135 Market downtime ($45) 1 75 1. The impact of foreign exchange is measured as the increase or decrease in results for the current period by applying prior period foreign currency exchange rates to present a constant currency compariso
Slide 76: Full Year 2023 Sales Performance
Full Year 2023 Sales Performance ($M) 0% Organic sales ($314) Open market sales ($314) Russia divestiture ($10) Tama acquisition $5 Bell acquisition $53 1 76 1. The impact of foreign exchange is measured as the increase or decrease in results for the current period by applying prior period foreign c
Slide 77: Full Year 2023 Adjusted EBITDA Performance
Full Year 2023 Adjusted EBITDA Performance ($M) +17% Net productivity $181 Market downtime ($106) 1 77 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 c
Slide 78: Planned projects will transition paperboard facilities to ~90% renewable fuel use
Planned projects will transition wood based paperboard facilities to ~90% renewable fuel use Renewable Fuel Renewable Fuel Projects From → To Project 1 Improve bark recovery and delivery to maximize bark usage in the 70% → 88% bark power boiler Project 2 Replace two existing recovery boilers and tur
Graphic Packaging Holding Company — Q4 2023 Earnings Presentation on 6ix