Graphic Packaging Holding Company · NYSE:GPK
Graphic Packaging — Q2 2023 Earnings Presentation
21 slides from Graphic Packaging's earnings presentation, Aug 1, 2023
Slide 1: Second Quarter 2023 Financial Results
Second Quarter 2023 Financial Results August 1, 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: Second Quarter Business Update and Outlook
SECOND QUARTER BUSINESS UPDATE AND OUTLOOK • Actively managing supply to meet demand, addressing short-term customer and retailer inventory destocking; expect positive organic sales growth in Q4 • Investing to capitalize on consumer preference for renewable and recyclable fiber-based packaging; Kala
Slide 4: Second Quarter and First Half 2023 Financial Highlights
SECOND QUARTER AND FIRST HALF 2023 FINANCIAL HIGHLIGHTS ($M) ($M) SALES ADJ EBITDA ADJ EPS ($M) ($M) $2,392 $453 $0.66 Q2’23 Year/Year Year/Year Year/Year ($M) ($M) SALES ADJ EBITDA ADJ EPS $4,830 $937 $1.42 H1’23 Year/Year Year/Year Year/Year 4 Note: Adjusted figures represent Non-GAAP Financial Me
Slide 5: Delivering Packaging Solutions Preferred by Consumers
DELIVERING PACKAGING SOLUTIONS PREFERRED BY CONSUMERS Strategic initiatives driving category expansion, sustained organic growth opportunities and market share CONSUMERS DEMAND RECYCLED PACKAGING OPTIONS CONSUMERS DEMAND CONVENIENT, SUSTAINABLE OPTIONS SOLUTION: HIGHEST QUALITY PACESETTER RAINIERTM
Slide 6: Paperboard Platform Optimization Updates
PAPERBOARD PLATFORM OPTIMIZATION UPDATES Extending packaging leadership in North America; industry-leading cost base, superior paperboard quality offering CURRENT MILL NETWORK WACO CRB UPDATE • Project progressing and on track • Key mill management roles filled • 85% of equipment ordered • Finished
Slide 7: Bell Incorporated Acquisition Announced
BELL INCORPORATED ACQUISITION ANNOUNCED Strategically expanding packaging network, customers and categories served in North America; driving integration rates up FINANCIALS COMPANY AND CUSTOMER OVERVIEW Sales ~$200M Acquired EBITDA ~$30M Acquisition Cost $262.5M • Three well-capitalized packaging fa
Slide 8: Confidence in Continued Ability to Drive Net Organic Sales Growth
CONFIDENCE IN CONTINUED ABILITY TO DRIVE 100 T0 200 BASIS POINTS OF NET ORGANIC SALES GROWTH DRIVERS NEW PRODUCT DEVELOPMENT IN THE MARKET TODAY ✓ Consumer preference for plastic packaging alternatives ✓ Expanding market and category participation Multipacks Bakery & PaperSealTM Next Gen Cold&GoTM B
Slide 9: Second Quarter and Full Year 2023 Results
SECOND QUARTER AND FULL YEAR 2023 RESULTS ($M excl EPS) Q2’23 Q2’22 Change H1’23 H1’22 Change y/y y/y Diversified Portfolio Balancing Results Net Sales $2,392 $2,358 1% $4,830 $4,603 5% • Food, Beverage & Consumer sales flat y/y • Foodservice sales +10% y/y Adj. EBITDA $453 $396 14% $937 $746 26% Bu
Slide 10: Full Year 2023 Guidance Reiterated
FULL YEAR 2023 GUIDANCE REITERATED 2023 Guidance Sales ~$10B Adjusted EBITDA ($M) $1,800 - $2,000 Adjusted Cash Flow ($M) $600 - $800 Year-End Net Leverage <2.5x Adjusted EPS $2.70 - $3.10 10 Note: Excludes pending acquisition of Bell Incorporated
Slide 11: Balanced Approach to Capital Allocation Focused on Growth and Capital Return
BALANCED APPROACH TO CAPITAL ALLOCATION FOCUSED ON GROWTH AND CAPITAL RETURN Growth Return to shareholders Leverage Strategic Capital Share Dividend Reduction M&A Investments Repurchases Target net Bell Incorporated • Waco CRB Mill • New $500M $0.10 dividend leverage <2.5x at acquisition investment
Slide 12: Appendix
APPENDIX This information is confidential and proprietary to Graphic Packaging International. Any reproduction or distribution to any third party is prohibited ©2023 Graphic Packaging International.
Slide 13: Second Quarter 2023 Net Sales Performance
SECOND QUARTER 2023 NET SALES PERFORMANCE ($M) +1% Organic Sales ($87M) Open Market/Acq. ($67M) 1 1.The impact of Foreign Exchange is measured as the increase or decrease in sales for the current period by applying 13 prior period foreign currency exchange rates to present a constant currency compar
Slide 14: Second Quarter 2023 Adjusted EBITDA Performance
SECOND QUARTER 2023 ADJUSTED EBITDA PERFORMANCE ($M) +14% Net Productivity1 ($15M) Planned Maint. Downtime ($28M) 2 1. Includes impact of managing supply to meet demand, partially offset by Kalamazoo K2 returns 2. The impact of Foreign Exchange is measured as the increase or decrease in results for
Slide 15: 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
Slide 16: Recession Resistant Model
RECESSION RESISTANT MODEL Last Recession - What happened in 2009? 2023: Business Scale, Diversified Revenue & Customer Profile; Significantly Stronger • Core folding carton volume declined 3.6% y/y Financial Position With Material Cash Flow • Adj. EBITDA improved $81M y/y to $556 million or Generati
Slide 17: 2023 Full Year EBITDA and Cash Flow Support
2023 FULL YEAR EBITDA AND CASH FLOW SUPPORT EBITDA SUPPORT Organic Sales Growth (2%) - 0% Price-Commodity Input Cost Relationship $450M - $550M Price $500M - $600M, Commodity Input Cost ($0 - $100M) Net Performance ($50M) - $50M Kalamazoo returns offset by actively managing supply to meet demand Lab
Slide 18: 2023 Year-over-Year Price-Cost, Net Maintenance Outage and Other Guidance Support
2023 YEAR-OVER-YEAR PRICE - COST, NET MAINTENANCE OUTAGE AND OTHER GUIDANCE SUPPORT Price - Commodity Input Cost Relationship 2021 2022 2023 ($M) Actual Actual Guidance ($M) Q1A Q2A Q3E Q4E 2023 Pension Expense Price-Cost (excludes pension $6 $5 $8 $182 $192 $450 - $550 amortization) Relationship De
Slide 19: 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 20: Executing Growth Initiatives and Delivering on Our Vision
EXECUTING GROWTH INITIATIVES AND DELIVERING ON OUR VISION; POSITIONING BUSINESS IN 2026 AND BEYOND TO ACHIEVE SIGNIFICANT ANNUAL CASH FLOW AND MARGIN STABILITY IN A HIGHER, MORE NARROW EBITDA MARGIN RANGE 2019 2022 2023 Enhanced Actual Actual Guidance Vision 2025 Sales $6.2B $9.4B ~$10B $10B – $12B
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Graphic Packaging Holding Company — Q2 2023 Earnings Presentation on 6ix