Graphic Packaging Reports 2Q 2016 Results

Graphic Packaging Holding Company reported net income for second quarter 2016 of $77.8 million, or $0.24 per share, based upon 322.5 million weighted average diluted shares. This compares to second quarter 2015 net income of $57.6 million, or $0.17 per share, based on 330.9 million weighted average diluted shares.
 
Second quarter 2016 net income was positively impacted by a discrete tax benefit of $22.4 million which was partially offset by $4.7 million (net of a $2.4 million tax benefit) of business combinations and other special charges. When adjusting for these charges, adjusted net income for the second quarter of 2016 was $60.1 million, or $0.19 per diluted share. This compares to second quarter 2015 adjusted net income of $61.3 million or $0.19 per diluted share.
 
“We delivered second quarter results that met our high expectations,” said president and CEO Michael Doss. “Net sales were up 4.4% driven primarily by acquisitions, while volumes in our core business remained stable. Adjusted EBITDA was $195.2 million, up slightly compared to the prior year period of $192.1 million, despite the expected $15 million negative impact from planned downtime taken to upgrade a paperboard machine at our West Monroe facility. We continue to execute on our operating performance programs across the organization and remain firmly committed to our culture of continuous improvement and cost reduction. We achieved $21.0 million in performance improvements in the quarter, and $37.5 million year-to-date.”
 
“While we remain keenly focused on day to day execution, we had a busy quarter as we successfully completed the paperboard machine upgrade at West Monroe, which supports sales from recent acquisitions and downstream converting efficiencies. We completed the Colorpak transaction and continued to integrate our recent acquisitions. The acquisitions also enabled us to announce the closures of our higher cost Menasha, WI and Piscataway, NJ converting operations, which will occur by year end. These actions are consistent with the key initiatives we are pursuing to drive continued EBITDA growth over the near and medium term.”
 
Net sales increased 4.4% to $1,103.2 million in the second quarter of 2016, compared to $1,057.1 million in the prior year period. The $46.1 million increase was driven by $60.9 million of improved volume/mix, primarily related to acquisitions. The net sales increase was partially offset by $8.2 million of unfavorable foreign exchange rates and $6.6 million of lower pricing.
 
EBITDA for second quarter of 2016 was $188.1 million, or $1.0 million higher than the second quarter of 2015. After adjusting both periods for business combinations and other special charges, adjusted EBITDA increased 1.6% to $195.2 million in the second quarter of 2016 from $192.1 million in the second quarter of 2015. When comparing against the prior year quarter, adjusted EBITDA in the second quarter of 2016 was positively impacted by $21.0 million of improved net operating performance and $4.1 million of favorable volume/mix.
 
Total debt (long-term, short-term and current portion) decreased $27.1 million during the second quarter of 2016 to $2,287.0 million.