Graphic Packaging Holding Company Reports Second Quarter 2021 Results: 5% Net Organic Sales Growth Driven by Strong Demand for Fiber-Based Consumer Packaging Solutions
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Q2 2021 Highlights
- Net Sales were $1,737 million versus $1,611 million in the prior year quarter.
- Net Organic Sales increased 5% in the quarter driven by demand for sustainability-supported, innovative consumer packaging solutions.
- Net Income was $38 million versus $52 million in the prior year quarter.
- Earnings per Diluted Share were $0.13 versus $0.19 in the prior year quarter.
- Adjusted Earnings per Diluted Share were $0.26 versus $0.26 in the prior year quarter.
- Adjusted EBITDA was $248 million versus $260 million in the prior year quarter; positively impacted by $15 million of volume/mix related to net organic sales growth and $36 million in favorable net performance, offset by $67 million of commodity input cost inflation.
- Executing $400 million in pricing actions to address commodity input cost inflation.
- Announced the acquisition of AR Packaging in Europe for approximately $1.45 billion in cash; on track to close by year end, creating premier, global provider of sustainable fiber-based consumer packaging solutions.
- Exchanged International Paper's remaining partnership units for shares; completion of transaction returns ownership of partnership interest back to 100%.
- Global liquidity was $1.9 billion at quarter end.
- Completed acquisition of Americraft Carton, Inc. on July 1st.
- Raised approximately $530 million in secured bank debt in July to support announced acquisitions.
Graphic Packaging Holding Company (NYSE: GPK), (the "Company"), a leading provider of sustainable fiber-based consumer packaging solutions to food, beverage, foodservice, and other consumer products companies, today reported Net Income for second quarter 2021 of $38 million, or $0.13 per share, based upon 295.8 million weighted average diluted shares. This compares to second quarter 2020 Net Income of $52 million, or $0.19 per share, based upon 280.5 million weighted average diluted shares.
The second quarters of 2021 and 2020 were negatively impacted by a net $38 million and a net $20 million of special charges, respectively. The charges are detailed in the Reconciliation of Non-GAAP Financial Measures table attached. When adjusting for charges, Adjusted Net Income for the second quarter of 2021 was $76 million, or $0.26 per diluted share. This compares to second quarter 2020 Adjusted Net Income of $72 million, or $0.26 per diluted share.
Michael Doss, the Company's President and CEO said, "Strong demand continued across our markets in the second quarter as consumer preferences are driving conversions to our fiber-based packaging solutions. Increased consumer mobility and consumption outside of the home resulted in higher sales in our Foodservice markets up 22% year over year, while Food, Beverage and Consumer markets continued to show healthy growth of 4%. Our teams worked tirelessly to meet customer demand, and we swiftly implemented pricing actions to offset rising commodity input costs which impacted our results in the quarter. We expect to generate significantly higher Adjusted EBITDA in the second half of 2021 driven by price-cost recovery from the successful execution of approximately $400 million of implemented and recognized pricing actions, and continued momentum from organic sales growth and strong productivity. As we address the near-term inflationary headwinds, we remain unwavering in our commitment to introduce new and innovative packaging solutions across global markets supportive of the move to a more circular economy."
Doss added, "Sustainable packaging is increasingly a factor for consumers when deciding what products to purchase. We are focused on providing the best packaging solutions for consumers through our innovative 'design for the environment' approach and extending our capabilities and geographic reach with strategic acquisitions. We recently closed the Americraft Carton acquisition, gaining seven well-capitalized converting facilities in North America, and I am pleased to welcome this outstanding group of talented employees to our Company. The regulatory approval processes for our announced acquisition of AR Packaging are underway and we anticipate closing that transaction by year end."
