Atlanta– 

Q2 2021 Highlights

• Net Sales were $1,737 million versus $1,611 million in the prior year quarter.
• Net Organic Sales increased 5% in the quarter driven by demand for sustainability-supported, innovative consumer packaging solutions.
• Net Income was $38 million versus $52 million in the prior year quarter.
• Earnings per Diluted Share were $0.13 versus $0.19 in the prior year quarter.
• Adjusted Earnings per Diluted Share were $0.26 versus $0.26 in the prior year quarter.
• Adjusted EBITDA was $248 million versus $260 million in the prior year quarter; positively impacted by $15 million of volume/mix related to net organic sales growth and $36 million in favorable net performance, offset by $67 million of commodity input cost inflation.
• Executing $400 million in pricing actions to address commodity input cost inflation.
• Announced the acquisition of AR Packaging in Europe for approximately $1.45 billion in cash; on track to close by year end, creating premier, global provider of sustainable fiber-based consumer packaging solutions.
• Exchanged International Paper's remaining partnership units for shares; completion of transaction returns ownership of partnership interest back to 100%.
• Global liquidity was $1.9 billion at quarter end.
• Completed acquisition of Americraft Carton, Inc. on July 1st.
• Raised approximately $530 million in secured bank debt in July to support announced acquisitions.

Graphic Packaging Holding Company, (the "Company"), a leading provider of sustainable fiber-based consumer packaging solutions to food, beverage, foodservice, and other consumer products companies, today reported Net Income for second quarter 2021 of $38 million, or $0.13 per share, based upon 295.8 million weighted average diluted shares. This compares to second quarter 2020 Net Income of $52 million, or $0.19 per share, based upon 280.5 million weighted average diluted shares.

The second quarters of 2021 and 2020 were negatively impacted by a net $38 million and a net $20 million of special charges, respectively. The charges are detailed in the Reconciliation of Non-GAAP Financial Measures table attached. When adjusting for charges, Adjusted Net Income for the second quarter of 2021 was $76 million, or $0.26 per diluted share. This compares to second quarter 2020 Adjusted Net Income of $72 million, or $0.26 per diluted share.

Michael Doss, the Company's President and CEO said, "Strong demand continued across our markets in the second quarter as consumer preferences are driving conversions to our fiber-based packaging solutions. Increased consumer mobility and consumption outside of the home resulted in higher sales in our Foodservice markets up 22% year over year, while Food, Beverage and Consumer markets continued to show healthy growth of 4%. Our teams worked tirelessly to meet customer demand, and we swiftly implemented pricing actions to offset rising commodity input costs which impacted our results in the quarter. We expect to generate significantly higher Adjusted EBITDA in the second half of 2021 driven by price-cost recovery from the successful execution of approximately $400 million of implemented and recognized pricing actions, and continued momentum from organic sales growth and strong productivity. As we address the near-term inflationary headwinds, we remain unwavering in our commitment to introduce new and innovative packaging solutions across global markets supportive of the move to a more circular economy."

Doss added, "Sustainable packaging is increasingly a factor for consumers when deciding what products to purchase. We are focused on providing the best packaging solutions for consumers through our innovative 'design for the environment' approach and extending our capabilities and geographic reach with strategic acquisitions. We recently closed the Americraft Carton acquisition, gaining seven well-capitalized converting facilities in North America, and I am pleased to welcome this outstanding group of talented employees to our Company. The regulatory approval processes for our announced acquisition of AR Packaging are underway and we anticipate closing that transaction by year end."

Operating Results

Net Sales

Net Sales increased 8% to $1,737 million in the second quarter of 2021, compared to $1,611 million in the prior year period. The $126 million increase was driven by $76 million of improved volume/mix related to organic growth from conversions to fiber-based packaging solutions, $14 million of pricing and $36 million of favorable foreign exchange.

Attached is supplemental data highlighting Net Tons Sold for the first and second quarters of 2021 and for each quarter of 2020.

EBITDA

EBITDA for the second quarter of 2021 was $214 million. After adjusting both periods for business combinations and other special charges, Adjusted EBITDA was $248 million in the second quarter of 2021 versus $260 million in the second quarter of 2020. When comparing against the prior year quarter, Adjusted EBITDA in the second quarter of 2021 was positively impacted by $36 million in net productivity, $15 million of volume/mix, $14 million of price and $4 million of favorable foreign exchange. Adjusted EBITDA was unfavorably impacted by $67 million of commodity input cost inflation and $14 million of other inflation.

Other Results

Total Debt (Long-Term, Short-Term and Current Portion) decreased $77 million during the second quarter of 2021 to $3,788 million compared to the first quarter of 2021. Total Net Debt (Total Debt, net of Cash and Cash Equivalents) decreased $50 million during the second quarter of 2021 to $3,699 million compared to the first quarter of 2021. The Company returned $24 million in capital to stakeholders in the second quarter of 2021 through dividends and partnership distributions. The Company's second quarter 2021 Net Leverage Ratio was 3.69 times Adjusted EBITDA compared to 3.26 times at the end of 2020.

At June 30, 2021, the Company had available liquidity of $1,883 million, including the undrawn availability under its global revolving credit facilities.

Net Interest Expense was $29 million in the second quarter of 2021 as compared to $30 million reported in the second quarter of 2020. Capital expenditures for the second quarter of 2021 were $200 million compared to $154 million in the second quarter of 2020. Second quarter 2021 Income Tax Expense was $26 million, compared to $18 million in the second quarter of 2020.

Please note that a tabular reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS, Adjusted Net Cash Provided by Operating Activities, Adjusted Cash Flow and Total Net Debt is attached to this release.

Earnings Call

The Company will host a conference call at 10:00 a.m. EST today (July 27, 2021) to discuss the results of second quarter 2021. The conference call will be webcast and can be accessed from the Investors section of the Graphic Packaging website at www.graphicpkg.com. Participants may also listen via telephone by dialing 833-900-1527 from the United States and Canada, and 236-384-2052 from outside the United States and Canada. Telephone participants are required to provide the conference ID 8992459.