GRAPHIC PACKAGING HOLDING CO Q4 FY2024 earnings call

• Divested Augusta Georgia bleached paperboard facility in May 2024, with capital redirected for stockholders.
• Executed virtual power purchase agreement to increase renewable energy use in European operations.
• Repurchased ~2% of common shares with Augusta divestiture proceeds in Q2 2024 and paid $122 million in dividends in 2024. Board increased quarterly dividend by 10% to $0.11 per share effective April 2025.
• Volumes turned positive in second half 2024, up 1%, but full year volumes down ~1%.
• Delivered $205 million in innovation sales in 2024, with $63 million in Q4. Well-positioned for 2% innovation sales growth in 2025.
• Waco, Texas recycled paperboard investment on schedule for Q4 2025 start-up. Made equipment purchases and signed recovered fiber contracts.
• Strong employee engagement with 87% global participation in survey, showing improvement in key categories.

For the full year 2024, Graphic Packaging sales were $8.8 billion, adjusted EBITDA was $1.7 billion, margins were 19.1%, and adjusted EPS was $2.49. In the fourth quarter, sales were $2.1 billion, adjusted EBITDA was $404 million, margins were 19.3%, and adjusted EPS was $0.59. After divesting the Augusta Georgia bleached paperboard manufacturing facility, 95% of sales come from high-value consumer packaging.

• Expect 2025 sales growth in low single-digits including 2% innovation sales growth. Adjusted EBITDA range in 19% range assuming year not very different from 2024.
• Over Vision 2030, confident in low, mid, and high single-digit growth for sales, adjusted EBITDA, and adjusted EPS.
• Foreign exchange headwind from late 2024 is an ~$120 million sales headwind and ~$20 million adjusted EBITDA headwind in 2025. Base model excludes currency impact.
• 2025 capital spending targeted at $700 million, down from previous estimate, with 2026 capital spending expected to be ~5% of sales.

• Tariffs: Potential impact on cross-border sales, though relatively small (~3% of total sales).
• Foreign exchange fluctuations: Can impact sales and adjusted EBITDA as seen in 2024.
• Volume challenges: Customers facing volume challenges, affecting overall business volume growth.
• Consumer spending pressures: Inflation and consumer under pressure can reduce volumes and impact sales.

Q: Lewis Merrick asked about impacts from possible tariffs mentioned by President Trump and second-order effects.

A: Michael Doss said tariffs on Canada and Mexico are relatively small (~3% of sales), with ~$300 million of paperboard/cartons flowing cross-border. Tariffs are on hold for 30 days, and they'll respond if needed.

Q: Anthony Pettinari asked about relative strength in different substrates and operating rates post-divestiture of Augusta.

A: Michael Doss said the system is operating well, with solid bleached paperboard and unbleached grades integrated into operations. Imports don't significantly impact the business. Investing heavily in coated recycled paperboard, with Waco project on track for Q4 2025 start-up.

Q: Phil Ng asked about Q4 performance, 2025 volume assumptions, and innovation wins.

A: Steve Scherger said Q4 had volume-driven shortfall and FX impact. 2025 volume growth largely from 2% innovation sales growth. Michael Doss highlighted wide innovation portfolio, including Rainier with high-quality, low-cost product.

Q: Matt Roberts asked about ongoing contract initiatives and price benefits.

A: Steve Scherger said they've made progress in renegotiating contracts, with high receptivity to transparent price change mechanisms. Margin stability improved over the years due to these efforts.

Q: George Staphos asked about risks in guidance, foodservice growth, and cash flow from Waco.

A: Stephen Scherger said risks relate to volume and consumer variability. Michael Doss mentioned ongoing foodservice innovation and growth. Stephen Scherger highlighted cash flow inflection from Waco start-up and its impact on earnings and capital allocation.

Q: Arun Viswanathan asked about inventory balance and new capacity/import threats.

A: Michael Doss said inventories are balanced, with some paperboard inventory built for Waco start-up. New capacity and imports don't significantly impact their business as they're integrated and focused on high-value consumer packaging.