By the numbers: Q1 2024
Net sales: $2.26B
Down 7.3% year over year
Net income: $165M
Down 20.3% year over year
- Q1 recap: Executives on Graphic Packaging International’s Tuesday earnings call pointed to some signs of recovery in 2024 as volumes step up following customer destocking. “I think the question becomes how fast does it bounce back?” said CEO Mike Doss. GPI highlighted $37 million of “innovation” sales growth in the first quarter, with key contributions from its Boardio rigid fiber canisters, Nissin Cup Noodles fiber cups and Chick-fil-A fiber cold beverage cups. Executives reiterated that GPI introduced its Vision 2030 plan in February to replace a 2025 plan, emphasizing a focus on innovation and growth as a consumer packaging manufacturer and less on making raw materials for the open market.
- Consumer trends: “Reports that consumers are feeling the impact of price inflation and more focused on value are consistent with what we hear from our customers,” said CFO Stephen Scherger. He explained that trend often correlates with more at-home eating and drinking, which better aligns with GPI’s customer base. However, Doss noted that volumes were sluggish in the food and household products categories, notably in cereal and frozen pizza; that trend was offset by growth in beverage and food service.
- Augusta mill sale: Executives discussed the sale of the Augusta, Georgia, bleached paperboard mill to Clearwater Paper, a deal that GPI first announced just before February’s earnings call and that closed Wednesday. GPI estimates net proceeds of about $550 million. Following the sale, “open-market paperboard sales, which has historically been a significant source of earnings volatility for us, will be a very small part of the business,” Doss explained. GPI expects to incur a $50 million year-over-year negative impact to earnings before interest, taxes, depreciation and amortization from the facility sale to occur in Q2.
- Waco facility buildout: Executives are pleased with progress on GPI’s recycled paperboard mill in Waco, Texas, that is expected to begin operations in 2026. The recycled paperboard machine there is “nearly identical” to the one installed at the upgraded facility in Kalamazoo, Michigan, he said, and many of the Waco employees will train in Kalamazoo. Waco will “utilize high-value scrap from our wood fiber paperboard manufacturing facilities” and others in the region, plus GPI plans to collect paper cups as a feedstock, he said. Following Waco’s opening, GPI will close recycled paperboard manufacturing facilities in Middletown, Ohio, and East Angus, Quebec, to lower overall costs.
- Outlook: “We expect to generate positive full-year sales growth in 2024,” Doss said, predicting further volumes improvements in Q2 and accelerated volume growth in the second half of the year.
