Second Quarter 2024 Highlights Delivered strong EBITDA and margin performance, in line with expectations Generated Innovation Sales Growth of $51 million Divested Augusta, Georgia bleached paperboard manufacturing facility Repurchased approximately 2.4% of Graphic Packaging Holding Company common shares outstanding Second Quarter 2024 Financial Results Net Sales $2,237 million, versus $2,392 million in 2023 Net Income $190 million, versus $150 million in 2023 Adjusted EBITDA $402 million, versus $453 million in 2023 Adjusted EBITDA Margin 18.0%, versus 18.9% in 2023 Earnings per Diluted Share $0.62 versus $0.49 in 2023 Adjusted Earnings per Diluted Share $0.60, versus $0.66 in 2023 Net Leverage 2.9x, versus 3.0x in second quarter 2023 ATLANTA, July 30, 2024 /PRNewswire/ -- Graphic Packaging Holding Company (NYSE: GPK), (the "Company"), a leader in sustainable consumer packaging, today reported second quarter 2024 results. Net Income was $190 million, or $0.62 per share, based upon 306.9 million weighted average diluted shares. This compares to second quarter 2023 Net Income of $150 million, or $0.49 per share, based upon 309.1 million weighted average diluted shares. The second quarter of 2024 was impacted by a net gain from special items of $22 million and the second quarter of 2023 was impacted by a net charge from special items of $37 million. When adjusting for special items and amortization of purchased intangibles, Adjusted Net Income for the second quarter of 2024 was $183 million, or $0.60 per diluted share. This compares to second quarter 2023 Adjusted Net Income of $203 million, or $0.66 per diluted share. Michael Doss, the Company's President and CEO said, "Second quarter played out largely as expected, with continued strength in Foodservice and Beverage results, and strong execution driving solid Adjusted EBITDA. Consumers are responding to higher prices by shifting their purchasing patterns, and our portfolio, designed to move with the consumer, is doing just that. Graphic Packaging's innovation leadership was on full display in the quarter with a big win for Paperseal™ Shape at one of the UK's largest food retailers. We are delivering the sustainable packaging solutions consumers prefer and are on track to reach $200 million in Innovation Sales Growth during 2024. "On May 1st, we divested the Augusta bleached paperboard manufacturing facility, eliminating most of our open market bleached paperboard sales and removing a significant source of earnings volatility. We used a portion of the proceeds to repurchase approximately 2.4% of our outstanding common shares and will continue to return substantial cash to stockholders through dividends and share repurchase over the next several years as sales and cash flow grow." Operating Results Net Sales Net Sales decreased 6% or $155 million to $2,237 million in the second quarter of 2024, compared to $2,392 million in the prior year period. The decline was driven by the divestiture of the Augusta, GA bleached paperboard manufacturing facility and reduced open market sales participation of $83 million and a net decline in sales from packaging operations of $73 million, primarily price and mix. Other acquisitions and divestitures (excluding Augusta) had a $16 million favorable impact on sales in the quarter, while foreign exchange had a $15 million unfavorable impact. EBITDA EBITDA for the second quarter of 2024 was $458 million, $24 million higher than the second quarter of 2023. After adjusting both periods for business combinations and other special items, Adjusted EBITDA was $402 million in the second quarter of 2024 versus $453 million in the second quarter of 2023. The $51 million decline in Adjusted EBITDA was driven primarily by the divestiture of the Augusta, GA bleached paperboard manufacturing facility, related bleached paperboard price and volume declines, and incremental planned maintenance expense (totaling $47 million), in line with expectations. Excluding those items, the negative impact of lower sales and modest cost inflation were offset by Net Performance. Other acquisitions and divestitures (excluding Augusta) had a $4 million favorable impact on EBITDA in the quarter, while foreign exchange had an $8 million unfavorable impact. Adjusted EBITDA Margin including the negative impact of maintenance, the divestiture, and reduced open market paperboard participation was 18.0% versus 18.9% in the prior year quarter. Other Results and Commentary Total Debt decreased $250 million to $5,285 million, and Net Debt decreased $250 million to $5,160 million, compared to the prior year second quarter. The Company's second quarter 2024 Net Leverage Ratio was 2.9x compared to 3.0x in the prior year quarter. During the quarter, the Company issued $500 million of 6.375% Senior Notes due 2032 and amended the approximately $2.8 billion Senior Secured Credit Facility to, along with other adjustments, extend the maturity from April 2026 to June 2029. Capital expenditures in the quarter were $249 million, versus $189 million in the second quarter of 2023, primarily reflecting an acceleration in the timing of equipment purchases for the Waco, Texas recycled paperboard manufacturing facility. The divestiture of the Company's Augusta, Georgia bleached paperboard manufacturing facility was completed on May 1, 2024. The Company returned approximately $261 million to stockholders during first half of 2024 through dividends and share repurchase activity. During the second quarter, the Company repurchased approximately 2.4%, or approximately 7.2 million shares of its common stock outstanding, for $200 million. Regular dividends of approximately $31 million and $30 million were paid in the first and second quarter, respectively. 2024 Annual Guidance The Company is reiterating 2024 financial guidance: Adjusted EBITDA: $1.73 billion to $1.83 billion Adjusted Earnings per Diluted Share: $2.65 to $2.85 Innovation Sales Growth, Net Performance, and Non-GAAP Reconciliations Innovation Sales Growth is defined as incremental sales of a product that delivers a significant change in materials used, package functionality, or design to a new or existing customer. Net Performance is defined as the impact of cost and productivity initiatives, production efficiencies and/or disruptions, and other operating impacts. A tabular reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow, Net Debt and Net Leverage is attached to this release. Earnings Call (New Dial-In Numbers) The Company will host a conference call at 10:00 a.m. ET today (July 30, 2024) to discuss the results of second quarter 2024. The conference call will be webcast and can be accessed from the Investors website at https://investors.graphicpkg.com. Participants may also listen via telephone by using the following dial-in numbers: Toll-Free: 888-506-0062International: 973-528-0011Participant Access Code: 477193 Forward Looking Statements Any statements of the Company's expectations in this press release, including but not limited to Innovation Sales Growth for 2024, sales and cash flow growth in the next few years, and 2024 Adjusted EBITDA and Adjusted Earning per Diluted Share guidance, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements 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, cost reduction plans, as well as the Company's debt level, currency movements and other risks of conducting business internationally and the impact of regulatory and litigation matters, including the continued availability of the Company's U.S. federal income tax attributes to offset U.S. federal income taxes and the timing related to the Company's future U.S. federal income tax payments. 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, except as required by law. 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, designs and produces consumer packaging made primarily from renewable or recycled materials. An industry leader in innovation, the Company is committed to reducing the environmental footprint of consumer packaging. Graphic Packaging operates a global network of design and manufacturing facilities serving the world's most widely recognized brands in food, beverage, foodservice, household, and other consumer products. Learn more at www.graphicpkg.com. GRAPHIC PACKAGING HOLDING COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Six Months Ended June 30, June 30, In millions, except per share amounts 2024 2023 2024 2023 Net Sales $       2,237 $       2,392 $      4,496 $      4,830 Cost of Sales 1,756 1,886 3,489 3,764 Selling, General and Administrative 197 205 412 402 Other Expense, Net 16 15 32 33 Business Combinations, Exit Activities and Other Special Items, Net (56) 19 (39) 34 Income from Operations 324 267 602 597 Nonoperating Pension and Postretirement Benefit Expense — — (1) (1) Interest Expense, Net (60) (60) (119) (118) Income before Income Taxes 264 207 482 478 Income Tax Expense (74) (57) (127) (121) Net Income $          190 $          150 $          355 $          357