Graphic Packaging Q2 Earnings Call Highlights

Second-quarter results were broadly in line with expectations: Net sales fell 1% year over year to $2.2 billion, while adjusted EBITDA declined $89 million to $247 million. Cost reductions and operational improvements helped lift the EBITDA margin sequentially to 11.3%. Higher inflation led to a more cautious outlook: Graphic Packaging raised its estimated 2026 incremental input-cost inflation to approximately $150 million from $60 million-$65 million previously and expects full-year adjusted EBITDA near the low end of its $1.05 billion-$1.25 billion range. The company also lowered its adjusted cash-flow outlook to $600 million-$700 million. Debt reduction and portfolio optimization remain priorities: Net debt fell $100 million to $5.5 billion, and the company plans to repay $400 million-$500 million in 2026. Plant closures, the Croatia divestiture and potential expansion of recycled paperboard production at Waco are intended to improve efficiency and support future growth. Graphic Packaging NYSE: GPK reported second-quarter 2026 results that management said were in line to modestly above expectations, as cost-reduction initiatives and operational improvements helped offset elevated inflation and uneven consumer demand. Net sales declined 1% from a year earlier to $2.2 billion, while adjusted EBITDA totaled $247 million, down $89 million year over year. Adjusted EBITDA margin improved sequentially by 50 basis points to 11.3%. Adjusted earnings per share were $0.14, and adjusted cash flow was $138 million, up $55 million from the prior-year quarter. “Our second quarter performance reflects the disciplined execution of our global teams and the resilience of our business model,” President and Chief Executive Officer Robbert Rietbroek said. He said volumes were steady year over year despite higher gas prices affecting consumer behavior. Inflation pressures prompt revised outlook Senior Vice President and Interim Chief Financial Officer Chuck Lischer said the quarter’s EBITDA decline was driven largely by $60 million of commodity input and operating-cost inflation, including logistics, resins, labor, secondary fiber and chemicals. The inflation total was $10 million higher than management had expected entering the quarter. The company now expects full-year incremental input-cost inflation of about $150 million, compared with its prior estimate of $60 million to $65 million. It consequently expects full-year adjusted EBITDA at the low end of its previously stated $1.05 billion to $1.25 billion guidance range. Graphic Packaging expects third-quarter adjusted EBITDA of $280 million to $300 million. The company maintained its full-year and third-quarter volume outlook of a 1% decline to 1% growth year over year, while forecasting that foreign exchange and other factors will reduce results by about $20 million in each of the third and fourth quarters. Management said pricing actions should support results. The company expects favorable pricing to add about $60 million to full-year 2026 sales and EBITDA, with a greater benefit in the fourth quarter than the third. Those actions are expected to produce an annualized run rate of about $145 million. Third-party recognition in July of a $60-per-ton price increase for bleached cupstock and a $40-per-ton increase for bleached folding carton is expected to contribute about $5 million in 2026, with most of the benefit coming in 2027. The company has also announced further price increases for bleached cupstock, folding carton, recycled paperboard and unbleached paperboard. Lischer said additional pricing actions, if fully recognized, could represent more than $200 million of additional annualized