GRAPHIC PACKAGING HOLDING COMPANY ATLANTA, July 23, 2015 /PRNewswire/ --
Second Quarter Highlights
-- Q2 Adjusted Earnings per Diluted Share were $0.19 compared to $0.20 in
the prior year period.
-- Q2 Adjusted EBITDA was $192.1 million compared to $190.8 million in the
prior year period.
-- Q2 Adjusted EBITDA margin increased 110 basis points to 18.2% from 17.1%
in the prior year period.
Graphic Packaging Holding Company (NYSE: GPK), (the "Company"), a leading provider of paper-based packaging solutions to food, beverage and other consumer products companies, today reported Net Income for second quarter 2015 of $57.6 million, or $0.17 per share, based upon 330.9 million weighted average diluted shares. This compares to the second quarter 2014 Net Loss of $(40.0) million, or $(0.12) per share, based on 328.7 million weighted average diluted shares.
Including the tax impact, second quarter 2015 Net Income was negatively impacted by $3.7 million of Charges Associated with Business Combinations and Other Special Charges. When adjusting for these charges, Adjusted Net Income for the second quarter of 2015 was $61.3 million, or $0.19 per diluted share. This compares to second quarter 2014 Adjusted Net Income of $66.0 million or $0.20 per diluted share.
"We delivered on our expectations despite continued soft demand in key end-markets," said Chairman and CEO David Scheible. "Although market volumes remain challenging, we continue to post strong results as Adjusted EBITDA margin was up 110 basis points over last year to 18.2%. The increase was driven by our ongoing asset optimization strategies, acquisition integration and strong operating performance. Our global supply chain has been extremely efficient as we produced and sold more net tons through our integrated system versus second quarter last year. Our strong performance has generated over $40 million in productivity benefits through the first six months of the year."
Net Sales
Net Sales decreased 5.3% to $1,057.1 million in the second quarter of 2015, compared to $1,116.7 million in the prior year period. Excluding $107.7 million of sales in the prior year period from divested businesses, Adjusted Net Sales increased $48.1 million or 4.8%. The increase was driven by $82.7 million of improved volume/mix, primarily related to acquisitions. The sales increase was partially offset by $34.6 million of unfavorable foreign exchange rates and modestly lower pricing.
Attached is supplemental data showing Net Tons Sold, Net Sales and Income (Loss) from Operations for the first and second quarters of 2015 and each quarter of 2014.
EBITDA
EBITDA for second quarter 2015 was $187.1 million, or $167.4 million higher than the second quarter of 2014. When adjusting both periods for Charges Associated with Business Combinations and Other Special Charges, and the prior year period for Loss on Sale of Assets, Adjusted EBITDA increased 0.7% to $192.1 million in the second quarter of 2015 from $190.8 million in the second quarter of 2014. When comparing against the prior year quarter, Adjusted EBITDA in the second quarter of 2015 was positively impacted by $12.7 million of improved net operating performance and $9.2 million of favorable volume/mix. These benefits were partially offset by $8.6 million in higher costs (primarily for labor and benefits), $5.4 million of unfavorable foreign exchange rates, $4.3 million of EBITDA from divested businesses and $2.3 million of lower price, net of commodity deflation.
Other Results
Total Net Debt declined $64.9 million during the second quarter 2015 to $1,997.6 million. The Company's June 30, 2015 Net Leverage Ratio dropped to 2.71 times Adjusted EBITDA from 3.17 times Adjusted EBITDA at the end of the second quarter of 2014. At June 30, 2015, the Company had available domestic liquidity of $960.6 million, including the undrawn availability under its $1.25 billion domestic revolving credit facility.
Net Interest Expense was $17.8 million in second quarter 2015, compared to $21.2 million in second quarter 2014. The decrease was due to both lower debt balances and lower overall interest rates.
Capital expenditures for second quarter 2015 were $66.3 million, compared to $49.6 million in the second quarter of 2014. The increase is primarily the result of additional investments being made in the Company's mills, including the previously announced Cogen installation at the West Monroe, LA mill.
Second quarter 2015 Income Tax Expense was $35.1 million compared to a benefit of $(33.2) million in the second quarter of 2014. The prior year benefit was primarily driven by the pre-tax loss generated from the sale of the Company's multi-wall bag business. As of June 30, 2015, the Company had approximately $551 million of NOLs for U.S. federal income tax purposes, which may be used to offset future taxable income.
Please note that a tabular reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Sales, Total Net Debt and Net Leverage Ratio is attached to this release.
Earnings Call
The Company will host a conference call at 10:00 am eastern time today (July 23, 2015) to discuss the results of second quarter 2015. To access the conference call, listeners calling from within North America should dial 800-392-9489 at least 10 minutes prior to the start of the conference call (Conference ID #77911604). Listeners may also access the audio webcast, along with a slide presentation, in the Investors section of the Graphic Packaging website: http://www.graphicpkg.com. Replays of the call can be accessed for one week by dialing 855-859-2056.
Forward Looking Statements
Any statements of the Company's expectations in this press release constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements, including but not limited to, assessments regarding the use of the Company's NOLs are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from the Company's present expectations. These risks and uncertainties include, but are not limited to, inflation of and volatility in raw material and energy costs, continuing pressure for lower cost products, the Company's ability to implement its business strategies, including productivity initiatives and cost reduction plans, the Company's debt level, currency movements and other risks of conducting business internationally, the impact of regulatory and litigation matters, including the continued availability of the Company's net operating loss offset to taxable income. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date on which they are made and the Company undertakes no obligation to update such statements. Additional information regarding these and other risks is contained in the Company's periodic filings with the SEC.
About Graphic Packaging Holding Company
Graphic Packaging Holding Company (NYSE:GPK), headquartered in Atlanta, Georgia, is a leading provider of packaging solutions for a wide variety of products to food, beverage and other consumer products companies. The Company is one of the largest producers of folding cartons and holds a leading market position in coated-unbleached kraft and coated-recycled boxboard. The Company's customers include some of the most widely recognized companies in the world. Additional information about Graphic Packaging, its business and its products, is available at www.graphicpkg.com.
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
In millions, except per share amounts 2015 2014 2015 2014
------------------------------------- ---- ---- ---- ----
Net Sales $1,057.1 $1,116.7 $2,065.3 $2,189.4
Cost of Sales 859.1 903.6 1,677.7 1,789.3
Selling, General and Administrative 88.7 94.5 174.1 195.4
Other (Income) Expense, Net (4.8) 0.4 (8.1) (1.0)
Restructuring and Other Special Charges 3.9 171.1 6.1 178.9
--------------------------------------- --- ----- --- -----
Income (Loss) from Operations 110.2 (52.9) 215.5 26.8
Interest Expense, Net (17.8) (21.2) (34.7) (41.6)
--------------------- ----- ----- ----- -----
Income (Loss) before Income Taxes and Equity Income of Unconsolidated 92.4 (74.1) 180.8 (14.8)
Entities
Income Tax (Expense) Benefit (35.1) 33.2 (68.7) 8.4
---------------------------- ----- ---- ----- ---
Income (Loss) before Equity Income of Unconsolidated Entities 57.3 (40.9) 112.1 (6.4)
Equity Income of Unconsolidated Entities 0.3 0.6 0.6 0.9
---------------------------------------- --- --- --- ---
Net Income (Loss) 57.6 (40.3) 112.7 (5.5)
Net Loss Attributable to Noncontrolling Interests - 0.3 - 0.7
--- --- --- ---
Net Income (Loss) Attributable to Graphic Packaging Holding Company $57.6 $(40.0) $112.7 $(4.8)
------------------------------------------------------------------- ----- ------ ------ -----
Net Income (Loss) Per Share Attributable to Graphic Packaging Holding $0.17 $(0.12) $0.34 $(0.01)
Company - Basic and Diluted
Weighted Average Number of Shares Outstanding - Basic 330.2 328.7 329.9 328.2
Weighted Average Number of Shares Outstanding - Diluted 330.9 328.7 330.9 328.2
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In
millions,
except
share and
per share
amounts June 30, December 31,
2015 2014
--- ---- ----
ASSETS
Current Assets:
Cash and
Cash
Equivalents $46.8 $81.6
Receivables,
Net 484.7 408.3
Inventories,
Net 569.3 521.8
Deferred
Income
Tax
Assets 179.3 177.2
Other
Current
Assets 39.7 32.0
Total
Current
Assets 1,319.8 1,220.9
Property,
Plant and
Equipment,
Net 1,560.9 1,546.8
Goodwill 1,162.9 1,118.1
Intangible
Assets,
Net 396.3 385.6
Other
Assets 72.5 59.9
------- ---- ----
Total
Assets $4,512.4 $4,331.3
======= ======== ========
LIABILITIES
Current Liabilities:
Short-
Term
Debt and
Current
Portion
of Long-
Term
Debt $34.7 $32.2
Accounts
Payable 410.7 424.9
Other
Accrued
Liabilities 226.1 219.6
------------ ----- -----
Total
Current
Liabilities 671.5 676.7
Long-
Term
Debt 2,009.7 1,942.1
Deferred
Income
Tax
Liabilities 400.4 309.3
Other
Noncurrent
Liabilities 341.6 390.9
SHAREHOLDERS' EQUITY
Preferred
Stock,
par value
$.01 per
share;
100,000,000
shares - -
authorized; no shares
issued or outstanding
Common
Stock,
par
value
$.01 per
share;
1,000,000,000
shares 3.3 3.3
authorized; 328,692,879
and 327,044,500 shares
issued and
outstanding at June 30,
2015 and December 31,
2014, respectively
Capital
in
Excess
of Par
Value 1,783.9 1,796.5
Accumulated
Deficit (378.1) (452.9)
Accumulated
Other
Comprehensive
Loss (319.9) (334.6)
------------- ------ ------
Total
Shareholders'
Equity 1,089.2 1,012.3
-------------- ------- -------
Total
Liabilities
and
Shareholders'
Equity $4,512.4 $4,331.3
============== ======== ========
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
--------
In millions 2015 2014
----------- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income
(Loss) $112.7 $(5.5)
Non-cash Items Included in Net
Income:
Depreciation and
Amortization 139.3 136.4
Deferred Income
Taxes 61.7 (13.6)
Amount of
Postretirement
Expense Less
Than Funding (13.6) (9.2)
Loss on the Sale
of Assets 0.7 170.4
Other, Net 15.3 29.3
Changes in
Operating
Assets and
Liabilities (138.8) (154.2)
------------ ------ ------
Net Cash
Provided by
Operating
Activities 177.3 153.6
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital Spending (127.0) (108.9)
Proceeds from
Government
Grant - 26.9
Acquisition of
Businesses, Net
of Cash
Acquired (113.6) (173.8)
Proceeds
Received from
the Sale of
Assets, Net of
Selling Costs - 167.4
Other, Net 4.7 (1.6)
---------- --- ----
Net Cash Used in
Investing
Activities (235.9) (90.0)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repurchase of
Common Stock (8.0) -
Payments on Debt (12.5) (30.8)
Borrowings under
Revolving
Credit
Facilities 596.4 794.2
Payments on
Revolving
Credit
Facilities (511.3) (699.1)
Repurchase of
Common Stock
related to
Share-Based
Payments (21.1) (15.8)
Dividends Paid (16.4) -
Other, Net (0.4) (8.4)
---------- ---- ----
Net Cash
Provided by
Financing
Activities 26.7 40.1
Effect of
Exchange Rate
Changes on Cash (2.9) 1.1
---------------- ---- ---
Net (Decrease)
Increase in
Cash and Cash
Equivalents (34.8) 104.8
Cash and Cash
Equivalents at
Beginning of
Period 81.6 52.2
--------------- ---- ----
CASH AND CASH
EQUIVALENTS AT
END OF PERIOD $46.8 $157.0
=============== ===== ======
Reconciliation of Non-GAAP Financial Measures
The tables below set forth the calculation of the Company's earnings before interest expense, income tax expense, equity income of unconsolidated entities, depreciation and amortization ("EBITDA"), Adjusted EBITDA, Adjusted Net Income, Net Leverage Ratio and Total Net Debt. Adjusted EBITDA and Adjusted Net Income exclude charges associated with: the Company's business combinations, sale or shutdown of assets, other special charges and the modification or extinguishment of debt. The Company's management believes that the presentation of EBITDA, Adjusted EBITDA, Adjusted Net Income and Net Leverage Ratio provides useful information to investors because these measures are regularly used by management in assessing the Company's performance. EBITDA, Adjusted EBITDA, Adjusted Net Income and Net Leverage Ratio are financial measures not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), and are not measures of net income, operating income, operating performance or liquidity presented in accordance with GAAP.
EBITDA, Adjusted EBITDA, Adjusted Net Income and Net Leverage Ratio should be considered in addition to results prepared in accordance with GAAP, but should not be considered substitutes for or superior to GAAP results. In addition, our EBITDA, Adjusted EBITDA, Adjusted Net Income and Net Leverage Ratio may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as we do.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
In millions, except per share amounts 2015 2014 2015 2014
------------------------------------- ---- ---- ---- ----
Net Income Attributable to Graphic Packaging Holding Company $57.6 $(40.0) $112.7 $(4.8)
(Subtract) Add:
Net Loss Attributable to Noncontrolling Interests - (0.3) - (0.7)
Income Tax Expense (Benefit) 35.1 (33.2) 68.7 (8.4)
Equity Income of Unconsolidated Entities (0.3) (0.6) (0.6) (0.9)
Interest Expense, Net 17.8 21.2 34.7 41.6
Depreciation and Amortization 76.9 72.6 150.7 142.7
----------------------------- ---- ---- ----- -----
EBITDA 187.1 19.7 366.2 169.5
Loss on Sale of Assets - 164.5 - 170.4
Charges Associated with Business Combinations and Other Special Charges 5.0 6.6 7.2 8.5
----------------------------------------------------------------------- --- --- --- ---
Adjusted EBITDA $192.1 $190.8 $373.4 $348.4
=============== ====== ====== ====== ======
Net Income Attributable to Graphic Packaging Holding Company $57.6 $(40.0) $112.7 $(4.8)
Loss on Sale of Assets - 164.5 - 170.4
Charges Associated with Business Combinations and Other Special Charges 5.0 6.6 7.2 8.5
Tax Impact of Non-recurring Items (1.3) (65.1) (1.9) (63.6)
----
Adjusted Net Income $61.3 $66.0 $118.0 $110.5
=================== ===== ===== ====== ======
Adjusted Earnings Per Share - Basic $0.19 $0.20 $0.36 $0.34
Adjusted Earnings Per Share - Diluted $0.19 $0.20 $0.36 $0.33
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
In millions 2015 2014 2015 2014
----------- ---- ---- ---- ----
Net Sales $1,057.1 $1,009.0 $2,065.3 $1,967.8
Net Sales related to divestitures - 107.7 - 221.6
Adjusted Net Sales $1,057.1 $1,116.7 $2,065.3 $2,189.4
================== ======== ======== ======== ========
Adjusted EBITDA Margin (Adjusted EBITDA/Net Sales) 18.2% 17.1% 18.1% 15.9%
GRAPHIC PACKAGING HOLDING COMPANY
Reconciliation of Non-GAAP Financial Measures
(Continued)
Twelve Months Ended
June 30, June 30, December 31,
-------- -------- ------------
In millions 2015 2014 2014
----------- ---- ---- ----
Net Income Attributable
to Graphic Packaging
Holding Company $207.2 $85.7 $89.7
(Subtract) Add:
Net Loss Attributable to
Noncontrolling
Interests - (0.2) (0.7)
Income Tax Expense 122.5 23.9 45.4
Equity Income of
Unconsolidated Entities (1.4) (1.7) (1.7)
Interest Expense, Net 73.8 86.6 80.7
Depreciation and
Amortization 291.9 304.0 283.9
---------------- ----- ----- -----
EBITDA 694.0 498.3 497.3
Loss on Sale of Assets,
Net 9.7 152.5 180.1
Charges Associated with
Business Combinations
and Other Special
Charges 17.7 29.9 19.0
Loss on Modification or
Extinguishment of Debt 14.4 1.2 14.4
----------------------- ---- --- ----
Adjusted EBITDA $735.8 $681.9 $710.8
=============== ====== ====== ======
June 30, June 30, December 31,
Calculation of Net Debt: 2015 2014 2014
------------------------ ---- ---- ----
Short-Term Debt and
Current Portion of
Long-Term Debt $34.7 $73.0 $32.2
Long-Term Debt 2,009.7 2,245.3 1,942.1
Less:
Cash and Cash
Equivalents (46.8) (157.0) (81.6)
------------- ----- ------ -----
Total Net Debt $1,997.6 $2,161.3 $1,892.7
============== ======== ======== ========
Net Leverage Ratio (
Total Net Debt/
Adjusted EBITDA) 2.71 3.17 2.66
GRAPHIC PACKAGING HOLDING COMPANY
Unaudited Supplemental Data
Three Months Ended
------------------
March 31, June 30, September 30, December 31,
--------- -------- ------------- ------------
2015
Net Tons Sold (000's)
Paperboard Packaging 681.1 730.8
Net Sales ($ Millions):
Paperboard Packaging $1,008.2 $1,057.1
Income from Operations ($ Millions):
Paperboard Packaging $105.3 $110.2
2014
Net Tons Sold (000's)
Paperboard Packaging 624.2 654.4 679.4 666.1
Flexible Packaging ** ** ** **
Net Sales ($ Millions):
Paperboard Packaging $964.7 $1,009.0 $1,050.0 $1,001.1
Flexible Packaging 108.0 107.7 - -
------------------ ----- ----- --- ---
Total $1,072.7 $1,116.7 $1,050.0 $1,001.1
===== ======== ======== ======== ========
Income (Loss) from Operations ($ Millions):
Paperboard Packaging $87.0 $119.3 $112.3 $95.3
Flexible Packaging (7.3) (172.2) - (6.6)
Total $79.7 $(52.9) $112.3 $88.7
===== ===== ====== ====== =====
** Not meaningful
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SOURCE Graphic Packaging Holding Company
