Graphic Packaging Holding Company Reports net loss for Q2
Friday, August 06, 2010
Press release from the issuing company
- Q2 Adjusted Earnings per Share were $0.04 versus $0.01 in the prior year period.
Graphic Packaging Holding Company (NYSE: GPK), a leading provider of packaging solutions to food, beverage and other consumer products companies, today reported a Net Loss for second quarter 2010 of $(32.8) million, or $(0.10) per share based upon 343.7 million weighted average shares. This compares to second quarter 2009 Net Income of $19.6 million, or $0.06 per share based upon 344.3 million weighted average diluted shares. Adjusted Net Income for the quarter, which excludes $46.6 million of charges associated with the combination with Altivity Packaging, LLC ("Altivity"), was $14.7 million, or $0.04 per diluted share. This compares to second quarter 2009 Adjusted Net Income of $4.8 million, or $0.01 per diluted share. Second quarter 2009 Adjusted Net Income excluded charges associated with the combination with Altivity as well as the Alternative Fuel Tax Credits Net of Expenses.
"Strong operating performance during the quarter offset the negative impacts of higher input costs and lower contractual pricing," said David W. Scheible, President and Chief Executive Officer. "Cost inflation has begun to moderate, however, particularly for secondary fiber and wood. We should also see year-over-year pricing turn positive in the second half of the year as our contracts reset to pass along inflation experienced in the second half of 2009. As a result, I expect to meet our full year targets as we realize these benefits and continue to execute on our continuous improvement initiatives."
On a segment basis, in Paperboard Packaging, tons sold increased 1.0% but net sales declined 1.3% compared to the second quarter of 2009. The decline in net sales was driven by lower pricing primarily related to contractual deflationary pass-throughs. Net sales in the Multi-wall Bag and Specialty segments increased 2.6% as a 3.2% increase in volumes was partially offset by unfavorable mix and the divestiture of the Handschy ink business in 2009.
Attached is supplemental data showing second quarter 2010 net sales and net tons sold by each of the Company's business segments: Paperboard Packaging, Multi-wall Bag and Specialty Packaging.
Net interest expense was $45.0 million for second quarter 2010 as compared to net interest expense of $52.5 million in second quarter 2009. The decrease was primarily due to lower debt balances.
Second quarter 2010 income tax expense was $10.2 million, predominately attributable to the non- cash expense associated with the amortization of goodwill for tax purposes. The Company has a $1.3 billion net operating loss carry-forward which may be available to offset future taxable income in the United States.
Capital expenditures for second quarter 2010 were $21.5 million compared to $30.4 million in the second quarter of 2009 reflecting the higher level of capital expenditures last year as a result of integration activities.
Under the terms of its Credit Agreement, the Company must comply with a maximum consolidated secured leverage ratio. As of June 30, 2010, the Company's ratio was 2.89 to 1.00, in compliance with the required maximum ratio of 4.75 to 1.00. The calculation of this covenant, along with a tabular reconciliation of EBITDA, Adjusted EBITDA, Credit Agreement EBITDA, Adjusted Net Income (Loss), Net Leverage Ratio and Net Cash Provided by Operating Activities excluding Alternative Fuel Tax Credits are attached to this release.
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