GRAPHIC PACKAGING HOLDING (GPK)·Q4 2025 Earnings Summary

Graphic Packaging Q4 2025 Earnings: Revenue Beat, But New CEO Signals Major Overhaul Ahead

February 3, 2026 · by Fintool AI Agent

Graphic Packaging (GPK) reported mixed Q4 2025 results with revenue flat year-over-year while earnings missed significantly. The bigger story: new CEO Robbert Rietbroek used his first earnings call to announce a comprehensive transformation plan, pivoting the company away from growth investments toward aggressive cash flow generation and deleveraging . The Waco facility is now "substantially complete," startup costs came in $20M below plan, and management expects $700-800M of adjusted free cash flow in 2026 .

Did Graphic Packaging Beat Earnings?

Revenue: Beat — Q4 net sales came in at $2.1B, essentially flat year-over-year . Volumes and pricing were both down slightly less than 1%, more than offset by a $40M foreign exchange benefit .

Adj. EPS: Miss — Reported $0.29, a 51% decline from $0.59 in Q4 2024, missing consensus of $0.35 by 17%.

Adj. EBITDA: Miss — Came in at $311M, down 23% year-over-year . The decline reflects ~$40M headwind from pricing and volumes, commodity/operating cost inflation in a similar range, and production curtailment impacts .

The full year picture is equally sobering: FY2025 net sales fell ~2% to $8.6B, Adj. EBITDA dropped to ~$1.4B, and Adj. EPS declined 28% to $1.80 . Net leverage ended at 3.8x, reflecting EBITDA headwinds, Waco investments, and the repurchase of more than 2% of shares outstanding .

What Did Management Guide?

The 2026 outlook is a tale of two narratives: deteriorating earnings but surging free cash flow.

The dramatic free cash flow improvement stems from three drivers:

1. CapEx collapse: Dropping to ~$450M from $935M as the Waco facility investment completes
2. Inventory reduction: Targeting 15-16% of sales from ~20% at year-end, releasing ~$260M
3. Lower cash taxes: Benefit from 2025 tax law changes

The EBITDA guidance includes temporary production curtailments as management runs the business to demand rather than to capacity — approximately $45M impact in Q1 and $40M in Q2 .

Quarterly Cadence

Management provided unusual quarterly detail given the moving parts :

Important: Recent severe weather across the central and eastern U.S. impacted operations at several facilities, creating a $20-30M headwind to Q1 Adjusted EBITDA .

What Changed From Last Quarter?

New leadership, new priorities. CEO Robbert Rietbroek, who joined from Primo Brands with 25+ years of CPG leadership experience, has initiated a 90-day comprehensive business review .

Key changes under the new strategy:

1. Transformation Office launched with a new Chief Transformation Officer to drive productivity and cost savings

2. External advisors engaged to supplement the internal team and support enterprise transformation

3. Jean-Francois Roche promoted to Chief Commercial Officer to drive customer-centric growth

4. Selective portfolio review initiated — examining which businesses provide durable competitive advantage and where the company has "the right to win"

5. Footprint optimization under review, with management examining global manufacturing footprint for consolidation opportunities

What Are the Key Business Drivers?

Waco facility substantially complete. The new recycled paperboard facility in Waco, Texas is now "substantially complete" and producing top-quality recycled paperboard . Total project cost came in at ~$1.67B including ~$80M capitalized interest, with $1.58B spent through year-end 2025 . Notably, startup costs came in at $40M vs. the original $60M expectation, with zero startup costs expected in 2026 .

Market headwinds persist. Management cited overcapacity in commodity bleached paperboard putting downward pressure on finished packaging pricing . Recycled and unbleached markets remain "in good balance," but bleached paperboard is oversupplied with producers not earning cost of capital at current prices .

Customer dynamics shifting. CPG customers are highly focused on: (1) cost reduction through packaging rationalization, (2) share of shelf/queue to regain volume, and (3) pack-price architecture changes to hit lower price points with smaller portions . Private label is "embracing innovation quickly" and gaining share in categories previously insulated from private label growth . Management also noted customers navigating GLP-1 and MAHA (Make America Healthy Again) trends affecting consumer demand .

Innovation on target. Innovation sales growth of ~2% of sales expected in 2026, with new products like PaceSetter Rainier, ProducePack, and PaperSeal driving adoption in produce, fresh food, protein, and household products .

How Did the Stock React?

GPK shares closed at $14.78 on February 2, up 0.9% ahead of earnings. However, aftermarket trading showed the stock dropping to $14.33, down 3% from the close, suggesting investors were disappointed despite the revenue beat.*

*Values retrieved from S&P Global

The stock has been under significant pressure throughout 2025, falling from over $28 to current levels as earnings deteriorated and leverage concerns mounted.

Capital Allocation Priorities

Management laid out a clear hierarchy for capital deployment :

1. Deleveraging — Highest near-term priority. Net leverage at 3.8x, with ~$500M debt paydown expected in 2026 . Investment grade rating targeted by 2030

2. Dividends — Committed to returning capital through dividends, though no change announced for 2026

3. Share repurchases — More than 2% of shares repurchased in 2025 . Expect to increase repurchase activity as leverage declines

Key Risks and Concerns

Near-term earnings pain: 2026 Adj. EPS guidance of $0.75-1.15 represents a 36-58% decline from 2025, with production curtailments and weather impacts pressuring Q1 results .

Industry overcapacity: Bleached paperboard is "the most fragmented of the paperboard grades" with substantial overcapacity putting pressure on pricing . Current prices don't allow bleached producers to earn cost of capital returns .

Consumer weakness: CPG and QSR customers face affordability challenges, with consumers seeking value and GLP-1/MAHA trends affecting demand patterns .

Waco project cost overrun: Total project spend of $1.67B exceeded original plans. Management noted a "review of the root causes" is underway with "appropriate corrective actions" to prevent recurrence .

Execution risk: The transformation plan requires successful cost takeout, portfolio optimization, and demand recovery — all while onboarding a new CEO and leadership approach.

Q&A Highlights

On margin recovery path: Management believes EBITDA margins can return to "higher teens level" over the long run through restored demand and cost productivity, but "it's too early to tell exactly where that's going to happen" .

On bleached paperboard pricing: While GPK sees some price pressure on recycled packaging from bleached producers looking for volume, they "haven't lost volume." Management noted bleached packaging selling at recycled prices is "not sustainable long-term" .

On 2027 free cash flow bridge: Cash flow will continue benefiting from tax benefits and additional inventory reduction. Interest rates are declining. Management declined to give specific 2027 guidance but expressed confidence in the $700M+ trajectory .

On dividends: No dividend change committed for 2026. "Our highest near-term priority is debt paydown" .

What to Watch Next

1. Q1 2026 execution — Weather impact ($20-30M) plus production curtailments ($45M) make Q1 a key test, with EBITDA guided to $200-240M

2. 90-day business review completion — Results expected in Q1 with potential for additional restructuring and portfolio actions

3. Free cash flow execution — Inventory reduction from 20% to 15-16% of sales is critical to the $700-800M FCF target

4. Volume trends — Management targeting -1% to +1% volume growth; recovery depends on CPG customer stabilization

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Related: GPK Company Profile | Q4 2025 Earnings Transcript | Prior Quarter (Q3 2025)