GRAPHIC PACKAGING HOLDING CO Q4 FY2025 earnings call

• Robbert Rietbroek introduced his background and initial observations, emphasizing focus on cost reduction, productivity, and customer centricity. • Initiated comprehensive operational and business review including footprint, systems, organization, portfolio assets, and financial performance. • Established transformation office to drive operational improvements. • Addressed Waco and Kalamazoo projects, noting Waco is complete and producing high-quality recycled paperboard. • Focus on reducing inventory, rightsizing cost structure, and driving disciplined organic growth with innovation. • Jean-Francois Roche promoted to Chief Commercial Officer to drive sustainable growth. • Emphasized innovation as a competitive advantage, aiming to accelerate commercialization of innovations.

No specific product segment breakdown provided in the transcript. Net sales in Q4 were $2.1 billion, flat YOY. Full year net sales were $8.6 billion, down ~2%. Adjusted EBITDA in Q4 was $311 million. Full year adjusted EBITDA was approximately $1.4 billion.

• 2026 net sales expected in range of $8.4 billion to $8.6 billion, assuming volumes down 1% to up 1% including 2% innovation sales growth. • Adjusted EBITDA expected in range of $1.050 billion to $1.250 billion reported and $1.2 billion to $1.4 billion pro forma. • Adjusted cash flow expected to be $700 million to $800 million in 2026, driven by reduced capital spending, inventory reduction, and improved profitability. • Adjusted EPS expected in range of $0.75 to $1.15. • Factors affecting 2026 include seasonality, maintenance schedules, inventory curtailment activity, and weather impacts.

• Overcapacity in commodity bleached paperboard markets putting pressure on finished packaging. • Uneven demand trends for consumer staples due to affordability and macroeconomic uncertainty. • Higher than required paperboard and finished goods inventory levels. • Production curtailment decisions impacting profitability. • Severe weather impacting operations at several facilities.

Q: Matt Roberts from Raymond James asked about the difference in approach compared to before and focus on reaching free cash flow projections.

A: Robbert Rietbroek mentioned focusing on cost reduction, productivity, operational excellence, customer centricity, disciplined CapEx, and selective portfolio review. Chuck Lischer added details on bridges to cash flow.

Q: Ghansham Panjabi from Baird asked about pricing dynamics in the paperboard industry and EBITDA margin profile.

A: Robbert Rietbroek discussed balance in recycled and unbleached markets, overcapacity in bleached, and confidence in restoring EBITDA margins. Chuck Lischer referenced AFA data.

Q: Arun Viswanathan from RBC Capital Markets asked about customer feedback on SKU rationalization, packaging strategy, and MAHA.

A: Robbert Rietbroek talked about customers focusing on cost, SKU rationalization, share of shelf, private label innovation, and sustainability trends.

Q: Lewis Merrick from BNP Paribas asked about factors determining core or non-core assets.

A: Robbert Rietbroek mentioned focus on core businesses with durable competitive advantage, synergies, and integration rates, with initial review underway.

Q: Mark Weintraub from Seaport Research asked about pricing impact and Waco start-up costs.

A: Chuck Lischer discussed contracts tied to published pricing and Waco start-up costs coming in below expectation with no further start-up costs in 2026.

Q: Gabe Hajde from Wells Fargo asked about seasonal working capital and inventory reduction impact on leverage.

A: Charles Lischer talked about cash flow seasonality and commitment to reducing inventory to target ranges.