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GRAPHIC PACKAGING HOLDING CO (GPK)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was resilient operationally but margin-challenged: Net Sales $2.19B (-1% YoY) and Adjusted EBITDA $383M (17.5% margin) vs $433M (19.5%) a year ago; Adjusted EPS $0.58; GAAP EPS $0.48 .
  • Versus S&P Global consensus*, revenue beat by ~1.3% ($2.19B vs $2.161B), EPS was essentially in line ($0.58 vs $0.569), while Adjusted EBITDA was slightly below consensus ($383M company vs $386.7M consensus)* .
  • FY25 guidance narrowed/lowered on profitability: Net Sales maintained ($8.4–$8.6B), Adjusted EBITDA cut to $1.40–$1.45B (from $1.45–$1.55B), Adjusted EPS to $1.80–$2.00 (from $1.90–$2.20) as GPK balances production with demand (≈$15M Q4 impact) amid elevated market uncertainty .
  • Strategic catalyst: Waco recycled paperboard mill produced first saleable rolls in October, ahead of plan; ramp to full production expected in 12–18 months, anchoring Vision 2030 execution and 2026 FCF inflection ($700–$800M targeted) .

What Went Well and What Went Wrong

  • What Went Well

    • Early Waco start-up (first saleable rolls in October), accelerating cost/quality advantage; ramp to full production in 12–18 months . Quote: “We expect to reach full production in 12 to 18 months…Waco will be the world's most efficient producer of recycled paperboard” — CEO Mike Doss .
    • Innovation momentum supported outperformance vs end-market volumes; 2% of Q3 sales from innovation ($52M) . Quote: “Our innovation engine [is] open[ing] new markets for paperboard packaging” — CEO .
    • Sequential inventory reduction and disciplined cost control; third-quarter inventories declined and SG&A down YoY (Q3 SG&A $163M vs $191M LY) .

  • What Went Wrong

    • Margin pressure from pricing behavior in bleached board (SBS) spilling into packaging pricing, compressing Adjusted EBITDA margin to 17.5% (from 19.5% LY) despite execution .
    • Packaging volumes -2% YoY as consumers remain stretched; mix and promotional intensity remain inconsistent, especially in beverage and foodservice .
    • FY25 profit guidance lowered (Adjusted EBITDA and EPS) reflecting year-to-date trends and Q4 production alignment (~$15M EBITDA impact) amid weaker visibility .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Sales ($B)$2.216 $2.204 $2.190
GAAP Diluted EPS ($)$0.55 $0.34 $0.48
Adjusted EPS ($)$0.64 $0.42 $0.58
EBITDA ($M)$417 $323 $361
Adjusted EBITDA ($M)$433 $336 $383
Adjusted EBITDA Margin (%)19.5% 15.3% 17.5%

Estimate comparison (S&P Global vs Reported):

MetricQ3 2025 Consensus (S&P Global)*ActualSurprise
Net Sales ($B)$2.161*$2.190 +$0.029B; +1.3%
EPS (Primary) ($)0.5689*0.58 (Adj. EPS) +$0.011; ~+2%
Adjusted EBITDA ($M)386.7*383 -$3.7M; ~-1%

Notes: “Primary EPS” per S&P Global often aligns to adjusted EPS for this issuer.
*Values retrieved from S&P Global.

KPIs and Balance Sheet (Q3 2025):

  • Packaging volumes: -2% YoY .
  • Capex: $267M (vs $313M LY) .
  • Share repurchases: 1.8M shares/$39M in Q3; YTD 6.8M shares/$150M; net shares -2.3% YTD .
  • Total Debt: $5.941B; Net Debt: $5.821B; Net leverage 3.9x (vs 3.0x at YE 2024) .
  • Cash from operations YTD: $320M; Adjusted net cash from ops YTD: $476M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($B)FY 2025$8.4–$8.6 $8.4–$8.6 Maintained
Adjusted EBITDA ($B)FY 2025$1.45–$1.55 $1.40–$1.45 Lowered
Adjusted EPS ($)FY 2025$1.90–$2.20 $1.80–$2.00 Lowered
Capex ($M)FY 2025≈$850 Not updated in Q3 8‑K; 2026 ~5% of sales (mgmt) —
Net Leverage (x)YE 2025—3.5–3.7 (target) New color

Management added that Q4 actions to match production with demand are expected to impact Adjusted EBITDA by ≈$15M .

Earnings Call Themes & Trends

TopicQ1 2025 (Q-2)Q2 2025 (Q-1)Q3 2025 (Current)Trend
Innovation-led growthInnovation sales +$44M; price increase to restore margins; Middletown closure announced; Waco on track Innovation +$61M; volumes +1% Innovation ~+$52M (~2%); new categories (produce punnets, etc.) Sustained; expanding into new categories
Consumer/macroConsumers trading down; affordability pressure Promotional activity modestly supportive Stretched consumer; uneven demand; private label share gains; targeted promos Demand visibility still low
Competitive landscape (bleached board)——Unusual SBS discounting pressuring packaging pricing; not sustainable, focus on margin defense Heightened competitive pressure
Capacity & assetsWaco on track Q4 start-up Waco on track for Q4 start-up Waco first saleable rolls in Oct; East Angus to close 12/23; 12–18 month ramp Execution ahead of plan
Cost/SG&A & inventory—Net Performance negative due to inventory reduction Sequential inventory reduction; seeking further SG&A/cost cuts Tightening cost discipline
Capital allocation & leverageNew $1.5B repurchase authorization $111M buyback; leverage 3.7x $39M buyback; YE leverage target 3.5–3.7x; $400M delayed draw term loan for 2026 maturity Deleveraging priority with FCF inflection in 2026

Management Commentary

  • Strategic positioning: “This marks the completion of our Vision 2025 transformation, and we now turn our full attention to our Vision 2030 priorities: innovation, execution, reaching investment grade, and returning cash to stockholders.” — CEO Mike Doss .
  • Waco advantage: “Waco will be the world's most efficient producer of recycled paperboard…This…extends our economic and quality advantage in recycled paperboard across all of North America.” — CEO .
  • Competitive dynamics: “We continue to see highly unusual competitive pressure from bleached packaging producers…offering discounts…that essentially matches recycled packaging pricing…We don’t believe that this situation is sustainable.” — CEO .
  • 2026 free cash flow: “I’m confident in our ability to generate our targeted $700–$800 million in free cash flow in 2026.” — CEO .
  • Waco economics: “Very confident in Waco’s ramp-up in delivering the $80 million [EBITDA]…in 2026…another $80 million behind that [in 2027].” — CEO .

Q&A Highlights

  • No share loss; volumes reflect customer ordering patterns; innovation added 2% of sales in Q3 ($52M) .
  • Waco start-up costs $65–$75M (cumulative), phased ~2/3 in 2025 and ~1/3 in 2026; largely pre-start operating/training costs; capitalized interest ceases as assets enter service .
  • 2026 bridge: capex decline to ~5% of sales (from ~$850M FY25), inventory release, SG&A/plant cost actions underpin $700–$800M FCF target; federal cash taxes near zero in 2026 per interim CFO .
  • Competitive pricing from SBS producers compressing packaging pricing; GPK will protect margins and share leveraging CRB cost advantage and “Rene” premium CRB grade .
  • Balance sheet/liquidity: $400M delayed draw term loan (Oct) to refinance Apr-2026 bonds; floating rate 35 bps below revolver; current cost of debt ~4.5%; YE net leverage targeted at 3.5–3.7x .

Estimates Context

  • Revenue beat: $2.190B actual vs $2.161B consensus*; EPS in line: $0.58 vs $0.569*; Adjusted EBITDA slight miss: $383M vs $386.7M* .
  • Implication: Street models likely trim FY25 EBITDA/EPS to company’s lowered range; 2026 projections could shift mix from earnings to cash (lower capex, deleveraging), with upside if competitive pressure abates and innovation-driven volume recovers .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue resilience with modest beat, but profitability under pressure from competitive pricing; margin defense and cost actions are central near term .
  • Waco ahead of plan is a structural positive; expected to contribute ~$80M EBITDA in 2026 (plus another ~$80M in 2027) and expand CRB quality/cost advantage .
  • FY25 profit guidance trimmed; management proactively aligning production with demand (~$15M Q4 EBITDA impact) to protect margins and customer service .
  • 2026 setup is a cash flow story: capex down to ~5% of sales, inventory release, SG&A/plant cost discipline, and low cash taxes drive targeted $700–$800M FCF; deleveraging and returns prioritized .
  • Watch competitive normalization in SBS, beverage/foodservice demand stabilization, and private label trends; easing pressure supports margin rebuild .
  • Capital deployment: continued buybacks/dividends balanced with deleveraging; $400M term loan provides runway on 2026 maturity at attractive pricing .
  • Near-term trading catalysts: progress updates on Waco ramp, Q4 production-balancing impact, signs of pricing normalization, and early 2026 capex guidance detail .

Appendices (select data points)

  • Q3 2025 GAAP to non-GAAP: Net Income $142M (GAAP) vs Adjusted Net Income $172M; Adjusted EPS $0.58 vs GAAP $0.48 .
  • Balance sheet snapshot: Total Assets $11.878B; Net Debt $5.821B; Net leverage 3.9x .
  • YTD cash metrics: CFO $320M; Adjusted CFO $476M; Capex $808M .

Sources: Q3 2025 8‑K and press release –; Q3 2025 earnings call transcript –; Q2 2025 8‑K –; Q1 2025 8‑K –.