Graphic Packaging Holding’s first quarter was marked by a sharp market disappointment, as the company’s results fell below consensus expectations amid continued consumer belt-tightening and input cost inflation. CEO Mike Doss cited stretched consumers and lackluster promotional activity as the main reasons for lower sales volumes, especially in the Americas, with ongoing cost pressures further eroding profitability. Doss acknowledged, “We have taken actions to offset higher costs and continue to generate innovation sales growth,” but also described the backdrop as “very challenging” and signaled that near-term headwinds are unlikely to resolve quickly.
Is now the time to buy GPK? Find out in our full research report (it’s free).
Graphic Packaging Holding (GPK) Q1 CY2025 Highlights:
- Revenue: $2.12 billion vs analyst estimates of $2.13 billion (6.2% year-on-year decline, in line)
- Adjusted EPS: $0.51 vs analyst expectations of $0.58 (11.5% miss)
- Adjusted EBITDA: $387 million vs analyst estimates of $397.5 million (18.3% margin, 2.6% miss)
- The company dropped its revenue guidance for the full year to $8.35 billion at the midpoint from $8.8 billion, a 5.1% decrease
- Management lowered its full-year Adjusted EPS guidance to $2 at the midpoint, a 24.7% decrease
- EBITDA guidance for the full year is $1.5 billion at the midpoint, below analyst estimates of $1.68 billion
- Operating Margin: 10.4%, down from 12.3% in the same quarter last year
- Sales Volumes fell 1.9% year on year (-5% in the same quarter last year)
- Market Capitalization: $6.4 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Graphic Packaging Holding’s Q1 Earnings Call
- Ghansham Panjabi (Baird) asked if volume declines were driven more by affordability or other factors. CEO Mike Doss attributed weakness primarily to affordability, noting, “Affordability is a key part of that,” and highlighted reformulation pressures on customers.
- Arun Viswanathan (RBC Capital Markets) questioned if further industry capacity cuts were needed. Doss responded that additional competitor closures would keep the market balanced and supported ramp-up plans for Waco with closures offsetting new capacity.
- Matt Roberts (Raymond James) pressed for details on cost inflation drivers. CFO Steve Scherger explained that inflation was broad-based across energy, chemicals, logistics, and external paper, with fiber costs stable and some hedging in place for natural gas.
- Mark Weintraub (Seaport Research) asked about the drivers behind the lowered guidance. Scherger confirmed the bulk of the reduction was due to higher inflation and volume declines, emphasizing the company’s intent to match supply with demand.
- Lewis Merrick (BNP Paribas) sought clarification on margin recovery. Scherger stated that margin improvement would come as price increases work through the system and as the Waco facility contributes incremental EBITDA over the next two years.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be closely monitoring (1) the pace at which announced price increases flow through to margins, (2) execution and ramp-up of the Waco paperboard facility and associated cost savings, and (3) any signs of stabilization or improvement in consumer demand trends, particularly in key food, beverage, and household product categories. Changes in the competitive landscape and sustained capital discipline will also be important markers of progress.
Graphic Packaging Holding currently trades at $21.20, down from $25.29 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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