Graphic Packaging International (GPK) raised its 2024 free cash flow outlook to $600 million–$700 million and outlined a path back to mid-teen EBITDA margins during a Sept. 10 presentation at the Jefferies Global Industrials Conference.
Chief Executive Officer Robbert Rietbroek, who joined the company roughly eight months prior, said the firm is targeting annual capital spending below $450 million—less than 5% of revenue—while guiding for LTM EBITDA around $1.14 billion on $8.6 billion in revenue, representing roughly a 13% margin.
"We are one of the leading fiber-based packaging companies in the world," Rietbroek said. "You may be interacting with us 10 times a day without knowing it—when you open your toothpaste box, your favorite cereal brand, or get your favorite value meal at a leading quick-service restaurant."
Pricing remains a central theme. Graphic Packaging identified $145 million in total pricing actions across its markets: about $60 million has been realized in 2024, with the remaining $85 million expected to carry through 2027. An additional $20-per-ton increase was recognized in bleached folding carton after the Q2 earnings call, delivering a $5 million tailwind heading into 2027. The company also noted $60-per-ton price increases in cup stock and bleached folding carton, and estimated roughly $200 million in yet-unrecognized pricing still available in the marketplace.
Structural cost savings are targeted at $85 million in 2024, approximately $100 million on an annualized basis, with about $15 million carrying over into 2027. Combined with pricing carryover and other operational dynamics, the company expects roughly $175 million in favorable 2027 carryover from 2026, alongside about $80 million in inflation-related carryover.
Inflation pressures will weigh on near-term results. Graphic Packaging expects Q3 2024 inflation to reduce results by $5 million–$10 million and full-year inflation pressure to total $10 million–$20 million. Commodity costs remain elevated: oil is trading near $100 a barrel, old corrugated container (OCC) prices have increased twice during the quarter, and diesel and energy costs continue to drive input-cost inflation. Energy is hedged for the remainder of the year, while resin costs lag behind diesel and OCC.
Volume guidance for 2024 sits between up 1% and down 1%, consistent with a flat-to-declining pattern observed over the past two to three years. The company is also moving some RISI index-based customer contracts from semi-annual to quarterly pricing adjustments, along with tighter terms on inventory holding, payment conditions, minimum order quantities, and lead times.
On the operational side, Graphic Packaging announced several footprint optimizations: the closure of its Lebanon, Tennessee facility; the sale of a plant in Croatia; and an ongoing process to close a U.K. facility. The company is also relaunching its uncoated recycled board (URB) product line, expected to add approximately 100,000 tons annually over the long term.
Canadian tariffs are affecting roughly 200,000 tons of paperboard imports, primarily folding boxboard and recycled grades.
The stock traded near its 52-week low of $8.79 at the time of the conference, down 52% over the past year and 35% year-to-date. The company maintains a 4.63% dividend yield, having paid dividends for 12 consecutive years.
Also joining the presentation were CFO Chuck, General Counsel Daniel Fishbein (formerly of Corpay), and CHRO Tatiana Berardinelli (formerly of Multi-Color Corporation). Moderator Phil Ng, Jefferies' paper and packaging analyst, led the discussion.
Graphic Packaging operates approximately 100 packaging-converting facilities across 26 countries and holds more than 3,000 patents.
