Graphic Packaging Slashes FY23 Sales Outlook Amid Inventory Normalization & Fluctuations In Consumer Purchasing Behavior

Graphic Packaging Holding Co GPK reported a Q3 FY23 revenue decrease of 4% Y/Y to $2.349 billion, missing the consensus of $2.469 billion. Revenue was impacted by $223 million of unfavorable volume and mix. 

Adjusted EBITDA rose 9% Y/Y to $482 million, positively impacted by $92 million in pricing, $32 million in commodity input cost deflation, $19 million in favorable net performance, and $5 million in foreign exchange translations.

Adjusted EPS increased 10% Y/Y to $0.74, beating the consensus of $0.71.

GPK returned $39 million to stockholders, which includes $31 million via dividend payments and $8 million in share repurchases in Q3. 

As of September 30, 2023, the company had cash and equivalents of $146 million. 

In Q3, the company reduced paperboard production by 150,000 tons as a part of the disciplined approach to production and actively managing supply to the current demand environment. 

The company closed the acquisition and started integration of Bell Incorporated in September.

FY23 Outlook: Graphic Packaging cuts guidance for revenue to $9.5 billion - $9.6 billion from $10 billion prior and revised adjusted EPS outlook to $2.85 - $3.00 from $2.70 - $3.10 earlier. 

Michael Doss, the Company's President and CEO said, "Despite the continuing modest impact to packaging volume caused by inventory normalization and some fluctuations in consumer purchasing behavior, we delivered Adjusted EBITDA growth and margin expansion in the quarter."

"During the quarter, we reduced paperboard production by 150,000 tons. Importantly, we remain on track to achieve $1.9 billion in Adjusted EBITDA, the midpoint of guidance for 2023, an increase of $300 million from 2022."

Price Action: GPK shares are trading higher by 3.40% at $21.58 premarket on the last check Tuesday.