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4/27/2016
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"Sales were up 2.6% driven by both acquisitions and modest volume growth in our core legacy business." – Michael Doss, President and CEO, Graphic Packaging Holding Company.
April 26, 2016 - Graphic Packaging Holding Company (NYSE: GPK), (the "Company"), a leading provider of packaging solutions to food, beverage and consumer product companies, today reported Net Income for first quarter 2016 of $57.5 million, or $0.18 per share, based upon 324.2 million weighted average diluted shares. This compares to first quarter 2015 Net Income of $55.1 million, or $0.17 per share, based on 331.9 million weighted average diluted shares.
Including the tax impact, first quarter 2016 Net Income was negatively impacted by $7.1 million from business combinations and other special charges. When adjusting for these charges, Adjusted Net Income for the first quarter of 2016 was $64.6 million, or $0.20 per diluted share. This compares to first quarter 2015 Adjusted Net Income of $56.7 million or $0.17 per diluted share.
"We delivered a very solid first quarter," said President and CEO Michael Doss. "Sales were up 2.6% driven by both acquisitions and modest volume growth in our core legacy business. Adjusted EBITDA Margin increased 70 basis points to 18.7%. The increase was driven by $16.4 million of improved operating performance across the organization, as we remain firmly committed to our culture of continuous improvement and cost reduction."
"While we remain keenly focused on day to day execution, we had a busy quarter as we closed three strategic, tuck-under acquisitions and announced a fourth, which is expected to close in the second quarter. These transactions represent a continuation of our strategy to grow in key end-markets and geographies."
OPERATING RESULTS
Net Sales
Net Sales increased 2.6% to $1,034.0 million in the first quarter of 2016, compared to $1,008.2 million in the prior year period. The $25.8 million increase was driven by $42.5 million of improved volume/mix, related to acquisitions and a modest improvement in core volumes. The sales increase was partially offset by $8.7 million of unfavorable foreign exchange rates and $8.0 million of lower pricing.
EBITDA
EBITDA for first quarter 2016 was $182.9 million, or $3.8 million higher than the first quarter of 2015. After adjusting both periods for business combinations and other special charges, Adjusted EBITDA increased 6.7% to $193.4 million in the first quarter of 2016 from $181.3 million in the first quarter of 2015. When comparing against the prior year quarter, Adjusted EBITDA in the first quarter of 2016 was positively impacted by $16.4 million of improved net operating performance, $4.2 million of favorable volume/mix and $0.2 million in commodity deflation, net of pricing. These benefits were partially offset by $5.1 million of other inflation (primarily labor and benefits) and $3.6 million of unfavorable foreign exchange.
OTHER RESULTS
Total Net Debt increased $404.2 million during the first quarter of 2016 to $2,238.5 million. At quarter end, the Company's Net Leverage Ratio increased to 2.93 times Adjusted EBITDA from 2.44 times Adjusted EBITDA at the end of 2015. In addition to the first quarter seasonal growth in working capital, the increase in Net Debt and Net Leverage Ratio was driven by the funding of three acquisitions, share repurchases and the quarterly dividend payment.
At March 31, 2016, the Company had available global liquidity of $822.0 million, including the undrawn availability under its $1.25 billion U.S. revolving credit facility.
Net Interest Expense was $16.9 million in the first quarter of 2016, flat when compared to the $16.9 million reported in the first quarter of 2015.
Capital expenditures for the first quarter of 2016 were $99.0 million compared to $57.2 million in the first quarter of 2015. The increase is primarily the result of investments made in the Company's paperboard mills, including the previously announced installation of a new press section and headbox on one of the paper machines in West Monroe, LA.
First quarter 2016 Income Tax Expense was $33.2 million compared to $33.6 million in the first quarter of 2015. As of March 31, 2016, the Company had approximately $386 million of NOLs for U.S. federal income tax purposes, which may be used to offset future taxable income.
ACQUISITIONS
In the first quarter of 2016, the Company closed the acquisitions of G-Box, S.A. de C.V., Walter G. Anderson, Inc., and Metro Packaging & Imaging, Inc. In addition, the Company announced its intent to acquire Colorpak (ASX: CKL), which is expected to close in the second quarter of 2016.
Graphic Packaging International, Inc., a subsidiary of 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 board. To learn more about Graphic Packaging, please visit: www.graphicpkg.com.