Graphic Packaging Q3 Adjusted EPS Falls 60.3% to $0.23 as Inflation Squeezes Margins
Graphic Packaging's third-quarter adjusted earnings fell 60.3% to $0.23 per share as $83 million of commodity and operating cost inflation squeezed margins, even though sales edged higher and volumes grew 1%.
Net sales were $2.192 billion, up from $2.190 billion a year earlier, according to the earnings release the consumer packaging maker filed with an 8-K on Tuesday. Net income dropped 84.5% to $22 million, or $0.07 per diluted share, from $142 million, or $0.48. Adjusted net income was $67 million, down from $172 million.
The $2 million sales increase came from a $19 million gain in volume and mix, partly offset by $15 million of lower pricing and $2 million of unfavorable foreign exchange and other effects.
Inflation hits EBITDA
Adjusted EBITDA declined 24.5% to $289 million from $383 million, and the adjusted EBITDA margin narrowed to 13.2% from 17.5%. The company attributed the $94 million drop mainly to $83 million of higher commodity input and operating cost inflation and $15 million of unfavorable pricing. It said the margin expanded sequentially for the second straight quarter.
"Our strong relative performance despite elevated inflation reflects the resilience of our business and the benefits of our structural cost reduction and productivity initiatives," CEO Robbert Rietbroek said in the release. He said the company's actions this year support "a return to EBITDA growth next year."
Cash flow turns positive
Adjusted cash flow for the first nine months was $314 million, a $646 million swing from negative $332 million a year earlier, helped by a steep cut in capital spending to $287 million from $808 million. Third-quarter capital expenditures were $64 million, versus $267 million a year ago.
Net debt fell to $5.18 billion at the end of September from $5.48 billion at the end of the second quarter and $5.33 billion at year-end 2025. Because trailing adjusted EBITDA has fallen, though, the net leverage ratio rose to 4.8 times from 3.8 times at the end of 2025.
Graphic Packaging paid $98 million in dividends in the first nine months and did not repurchase stock, according to its cash flow statement.
2026 outlook
The company expects 2026 net sales of an estimated $8.6 billion, adjusted EBITDA of an estimated $1.05 billion and adjusted EPS of an estimated $0.65, the company said. It reaffirmed full-year adjusted cash flow of $600 million to $700 million, up from $169 million in 2025, and capital spending below $450 million.
By the numbers
- Net sales: $2.192 billion, up from $2.190 billion
- Diluted EPS: $0.07, down from $0.48
- Adjusted EPS: $0.23, down 60.3%
- Adjusted EBITDA margin: 13.2%, down from 17.5%
- Nine-month adjusted cash flow: $314 million
- Net leverage: 4.8 times
Sources
- Graphic Packaging Holding Company Form 8-K with third-quarter 2026 earnings release, filed Nov. 3, 2026 (accession 0001408075-26-000047)
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