Marietta, Ga. -
- Q4 Adjusted Earnings per Share were $0.06 versus $0.03 in the prior year period.
- Q4 Net Sales increased 3.4% versus the prior year period.
- Q4 Adjusted EBITDA was $132.7 million versus $123.7 million in the prior year period.
- Q4 Net Debt declined by $119.0 million, resulting in full year 2010 Net Debt reduction of $210.0 million.
Graphic Packaging Holding Company, a leading provider of packaging solutions to food, beverage and other consumer products companies, today reported Net Income for fourth quarter 2010 of $19.6 million, or $0.06 per share based upon 348.8 million weighted average diluted shares. This compares to fourth quarter 2009 Net Income of $31.8 million, or $0.09 per share based upon 346.5 million weighted average diluted shares.
Adjusted Net Income for the quarter, which excludes a $1.0 million Loss on Modification or Extinguishment of Debt, was $20.6 million, or $0.06 per diluted share. This compares to fourth quarter 2009 Adjusted Net Income of $8.6 million, or $0.03 per diluted share. Fourth quarter 2009 Adjusted Net Income excluded Alternative Fuel Tax Credits Net of Expenses, Asset Impairment and Shutdown Charges and Charges Associated with the Combination with Altivity.
For the full year 2010, Net Income was $10.7 million, or $0.03 per diluted share, based on 347.4 million weighted average diluted shares. This compares to 2009 Net Income of $56.4 million or $0.16 per diluted share, based on 344.6 million weighted average diluted shares. Excluding $55.1 million of Charges Associated with the Combination with Altivity and an $8.4 million Loss on Modification or Extinguishment of Debt, full year 2010 Adjusted Net Income was $74.2 million, or $0.22 per diluted share. This compares to 2009 Adjusted Net Income of $10.4 million, or $0.03 per diluted share.
"We delivered a solid fourth quarter as both higher volumes and favorable pricing contributed to a healthy increase in the top line," said CEO David Scheible. "Although end-consumer demand remained soft for food and beverage items, we produced and sold more tons than a year ago. At the same time, we continued to realize the benefit of higher pricing from contractual inflation recovery and on the open market."
"I'm pleased with the progress we made in 2010 toward deleveraging our balance sheet and improving our margins and credit profile. Our continued focus on operating performance, cost reduction initiatives and working capital management helped deliver $210 million in Net Debt reduction. As a result, our Net Leverage Ratio declined to 4.3 times Adjusted EBITDA from 4.8 times a year ago. Going forward, we remain fully committed to further deleveraging, thereby adding value for our shareholders."
Net sales increased 3.4% to $1,011.6 million during fourth quarter 2010, compared to fourth quarter 2009 net sales of $978.6 million. The $33 million increase resulted from $22.8 million of increased pricing, $8.4 million of favorable volume/mix and $1.8 million of favorable exchange rates. Full year 2010 net sales were $4,095.0 million, essentially flat to full year 2009 net sales of $4,095.8 million.
On a segment basis, Paperboard Packaging sales, which comprised 83.4% of total fourth quarter net sales, increased 3.2% compared to the fourth quarter of 2009. The increase reflected strong inflationary price recovery, higher open market board pricing and increased volumes.
Beginning with the fourth quarter of 2010, the Company will be reporting results for its Flexible Packaging Segment. This newly named segment combines the former Multi-wall Bag Segment and the Specialty Packaging Segment. Sales in the Flexible Packaging segment increased 4.3% compared to the fourth quarter of 2009. The increase was primarily the result of inflationary price recovery.
Attached is supplemental data showing quarterly 2010 net sales and net tons sold by each of the Company's business segments: Paperboard Packaging and Flexible Packaging.
EBITDA for fourth quarter 2010 was $131.7 million. Excluding $1.0 million for Loss on Modification or Extinguishment of Debt, Adjusted EBITDA was $132.7 million. This compares to fourth quarter 2009 EBITDA of $146.9 million and Adjusted EBITDA of $123.7 million. Full year 2010 EBITDA was $510.4 million. Excluding $55.1 million of Asset Impairment and Shutdown Charges and an $8.4 million Loss on Early Extinguishment of Debt, full year 2010 Adjusted EBITDA was $573.9 million compared to full year 2009 Adjusted EBITDA of $556.4 million.
When comparing against the prior year quarter, Adjusted EBITDA in the fourth quarter of 2010 was positively impacted by $22.8 million of favorable pricing and $19.3 million of improved operating performance and cost reduction initiatives. These were partially offset by $31.8 million of input cost inflation.
At the end of 2010, the Company's total debt was $2,579.1 million, or $221.1 million lower than debt of $2,800.2 million at the end of 2009. Taking cash and cash equivalents into account, total Net Debt at the end of 2010 was $2,440.4 million. This represents a reduction of $210.0 million in net debt during 2010. The Company's Net Leverage Ratio decreased to 4.25 times Adjusted EBITDA at the end of 2010 from 4.76 times at the end of 2009. Including cash and cash equivalents, at December 31, 2010, the Company had available liquidity of approximately $502.3 million including the undrawn availability under its $400 million revolving credit facility.
The Company generated $169.1 million of Net Cash Provided by Operating Activities in the fourth quarter of 2010. This compares to $143.4 million in the fourth quarter 2009, when excluding cash received from the Alternative Fuel Tax Credit. Net Cash Provided by Operating Activities was $338.1 million in 2010 compared to $368.7 million in 2009, when excluding 2009 Alternative Fuel Tax Credits.
Net interest expense was $40.5 million for fourth quarter 2010 compared to $38.4 million in fourth quarter 2009. Fourth quarter 2009 net interest expense included a $13.8 million credit related to an interest rate swap assumed from Altivity. Full year 2010 net interest expense was $174.5 million compared to $196.4 million in 2009. The decrease was due to both lower debt balances and lower interest rates.
Fourth quarter 2010 Income Tax Benefit was $2.3 million, primarily due to a credit of $9.8 million for the Company's noncash expense associated with the amortization of goodwill for tax purposes. This compares to a fourth quarter 2009 Income Tax Benefit of $5.6 million. Full year 2010 Income Tax Expense was $27.5 million and was also predominately attributable to the tax amortization of goodwill. This compares to full year 2009 Income Tax Expense of $24.1 million. 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 fourth quarter 2010 were $48.9 million compared to $33.6 million in the fourth quarter of 2009. As expected, the timing of 2010 capital expenditures was weighted to the latter part of the year. For full year 2010, capital expenditures were $122.8 million compared to $129.9 million in 2009.
Under the terms of its Credit Agreement, the Company must comply with a maximum consolidated secured leverage ratio. As of December 31, 2010, the Company's ratio was 2.73 to 1.00, in compliance with the required maximum ratio of 4.75 to 1.00. The calculation of this ratio along with a tabular reconciliation of EBITDA, Adjusted EBITDA, Credit Agreement EBITDA, Adjusted Net Income, Net Leverage Ratio and Net Cash Provided by Operating Activities excluding Alternative Fuel Tax Credits are attached to this release.